The prime minister and opposition leader have presented a united front against a US drug company attack on the PBS, vowing the medicines subsidy scheme will never become a bargaining chip in US President Donald Trump’s ongoing tariff campaign.
The powerful pharmaceutical lobby in the United States has targeted Australia’s Pharmaceutical Benefits Scheme in a letter to the White House as Mr Trump considers a next round of tariffs on goods.
The industry’s lobbying body, PhRMA, urged Mr Trump to slap tariffs on Australian pharmaceutical imports to the US as a “reciprocal” measure, claiming the PBS subsidies are an “egregious and discriminatory” trade instrument.
Under the shadow of an imminent federal election campaign, the major parties have both rushed to the defence of the PBS, which knocks hundreds and even thousands of dollars off the cost of many medications for Australians, saying there is no way that PhRMA will get its wish to “eliminate” the PBS.
Prime Minister Anthony Albanese said the PBS was “not for sale”, and Coalition frontbencher James Paterson told Sky News the scheme was “sacrosanct” and “not on the table” in any negotiations on tariffs.
“What we’re going to do is continue to advocate for Australia’s national interests, not the interests of big pharma,” Mr Albanese said on Thursday morning.
Speaking at the Lowy Institute, Opposition Leader Peter Dutton said the PBS was “the envy of the world”.
“We will fight against any big drug company imposing tariffs,” Mr Dutton said.
In a sign that neither party will shy away from continued investment into the PBS, Mr Albanese on Thursday promised a further $690 million over four years to lower the price for PBS listed medications from $31.60 to $25, which the Coalition has promised to match.
Big pharma revives decades old war on PBS
More than 20 years ago the pharmaceutical giants lobbied against the PBS during Australia’s free trade negotiations with the US, with then-health minister Tony Abbott saying the drug companies did not like the PBS because it kept down the price of medicines.
The price the government pays to purchase medications to be listed on the PBS is negotiated between the Department of Health and the supplier of the drug — with a rule that once a drug is listed, its comparators cannot be sold at a higher price, meaning that those drugs are generally sold to Australia much cheaper than in other major markets.
Drug companies argue higher prices are necessary to fund further medicines research, and that Australia is enjoying the benefits of that research without helping to pay for it; though the companies are not short on cash — a US Senate inquiry last year found the 10 largest American drug companies made more than $US112 billion ($176 billion) in profits in 2022.
Even during those negotiations two decades ago, the Australian government argued that the PBS was not a trade instrument because it did not discriminate between whether drugs were produced in America or Australia.
The former Howard government also faced a campaign against the PBS by pharmaceutical companies. (AAP: Alan Porritt)
On Thursday morning, Health Minister Mark Butler recalled that dispute, saying just like then, the government would ensure the PBS was protected.
“This is not a new position from big pharma in the US, obviously they want to sell their medicines at top dollar, we want to make them cheaper, so there is an inherent conflict there,” Mr Butler told SKy News.
Mr Dutton said the protection of the PBS in free trade agreements had been “paramount”, and would continue to be in future trade negotiations.
The health minister said Australia would seek an exemption if tariffs were imposed, and would again make the case that America had a trade surplus with Australia on pharmaceuticals — an argument that failed to secure Australia an exemption from US tariffs on steel and aluminium imposed last week.
Mr Butler said Australia sells about $2 billion worth of pharmaceuticals to the US, while the US sells about $3.5 billion to Australia.
Mr Trump has signalled pharmaceuticals among other goods are in his sights for a next round of tariffs to be decided next month, but has not confirmed whether the sector will be subject to import duties.
A tariff on Australian pharmaceuticals would impose an additional cost at the US border, paid by the purchaser of those products.
