The federal government is staring down threats from American medical giants targeting the “egregious” Pharmaceutical Benefits Scheme (PBS), promising to make medicines even cheaper from next year.
As American drug makers wrote to a senior US trade official complaining of “damaging pricing policies” in Australia, the federal government has unveiled a promise to slash the cost of most PBS medications to a maximum cost of $25, down from $31.60.
Australians are set to save a combined $200 million a year under the plan, which will cost $690 million over the next four years, with the money to be included in next week’s budget.
Prime Minister Anthony Albanese said a re-elected Labor government would pass legislation to enact the changes, which would come into effect from January 2026.
“Cheaper medicines is another way we are helping with the cost of living, while putting downward pressure on inflation — our number-one focus,” he said.
“With cheaper medicines, more free GP visits and a stronger Medicare, we say to Australians: we’ve got your back.”
The Coalition said it would match the policy, which its health spokesperson Anne Ruston said would “ensure Australians have more affordable access to the medicines and treatments they need, at a time when healthcare has never been more expensive.”
The PBS is a program where the government subsidises certain medications to make them cheaper for Australians to buy.
An independent body recommends what is listed on the PBS, with about 930 prescription medicines currently on the scheme.
The PBS has long been targeted by the US pharmaceutical industry, which sees it as a barrier to profitability because of the government price controls in place.
Labor has already categorically ruled out touching the PBS in any trade negotiations, but there is concern the frustrations over the scheme could see the Trump administration retaliate by hitting Australian pharmaceutical exports — which were worth $US1.2 billion in 2023 — with punitive tariffs.
Labor seeks to make health a key plank of its cost-of-living pitch
Four out of five PBS medications will cost $25 under the plan, with Australians expected to save $786 million over four years.
Pensioners and concession cardholders will continue to pay $7.70 for their PBS medicines, with the price frozen at its current level until 2030.
Labor has been seeking to make health a key plank of its cost-of-living pitch at the next election, trying to contrast its record with the Opposition Leader Peter Dutton, who was health minister when the then-Abbott government sought to introduce a highly controversial mandatory fee for GP visits, a policy it later dumped.
The PBS announcement is the latest in a growing list of big-spending health announcements, with the government last month promising to expand the bulk billing incentive to all Australians at a cost of $8.5 billion over four years.
“The last time Australians paid no more than $25 for a PBS medicine was over 20 years ago. Cheaper medicines are good for the hip pocket and good for your health,” Health Minister Mark Butler said.
“The contrast this election is clear: cheaper medicines with a re-elected Albanese government, or the frankly terrifying legacy of Peter Dutton, who wants medicines to cost more, not less.”
The Coalition has been trying to neutralise Labor’s attacks on its health record, swiftly matching the $8.5 billion bulk billing incentive plan and a half-a-billion funding promise for women’s health.
