Is Australia any closer to the negotiation table on U.S. medicines pricing?

The U.S. tariff debate, alongside pressure for a ‘Most-Favored-Nation’ pricing model, continues to cast uncertainty over government policy and industry decision-making in the local pharmaceutical sector. In response, the Australian government has met with the Pharmaceutical Research and Manufacturers of America (PhRMA) to gauge the evolving landscape, which is intensifying under international pressure.

Across the Atlantic, UK Prime Minister Keir Starmer has written to the Association of the British Pharmaceutical Industry (ABPI), urging the industry to find ways to collaborate with the UK government, which is seeking to support the Trump Administration’s “Most-Favored-Nation” pricing model within the broader trade and tariff negotiation agenda.

Over the past decade, the net spending on the Pharmaceutical Benefits Scheme (PBS) has declined, dropping from 14% to 12%, despite an overall growth in health expenditure. When compared with other OECD countries, Australia ranks 25th out of 33 for medicines investment as a proportion of total health expenditure, trailing behind nations such as Japan, Germany, Canada, and Korea. In terms of access to reimbursed new medicines, Australia ranks 16th out of 20 OECD countries.

U.S. lawmakers and industry lobbyists are intensifying efforts to push Australia toward higher medicine prices. In mid-July, 18 Republican senators sent a letter to U.S. Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick, urging the Trump Administration to leverage trade negotiations to dismantle “foreign price controls” on medicines. The senators called for foreign countries to “pay their fair share toward the cost of pharmaceutical research and development” and to “appropriately value medicines developed and produced in the United States.” The letter also requested that the USTR appoint a senior political official to “lead the charge on enforcing pharmaceutical pricing commitments globally.”

While these international debates unfold, Australian patients continue to wait for timely and equitable access to life-saving and life-changing therapies.

The HTA Review Implementation Advisory Group (IAG) milestones reveal a complex and lengthy process for translating the 50 recommendations into practice. The IAG has now delivered its interim report to Federal Minister for Health, Ageing and Disability, Mark Butler, with recommendation-specific advice expected by the end of August and a final report due in January 2026. Minister Butler has highlighted the scale of the reform, describing it as “a big reform that will set the PBS up for the next coming few decades at least.”

Medicines Australia is urging action on low-cost and straightforward recommendations from the HTA Review report. The peak industry body is calling for interim funding in the Mid-Year Economic and Fiscal Outlook (MYEFO) to kickstart reform and for the Labor government to prepare a policy package ahead of the next federal budget.

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