Lilly global CEO takes aim at PBS over Mounjaro price fight

Eli Lilly’s global CEO has accused the Pharmaceutical Benefits Scheme (PBS) of failing to keep pace with a new era of transformational medicines, as the world’s first trillion-dollar pharmaceutical company takes an increasingly hard line in its standoff with the Albanese Labor government.

David Ricks, speaking to ABC’s 7.30, said Lilly is seeking to have its blockbuster diabetes and weight-loss drug Mounjaro (tirzepatide) listed on the PBS, but rejected the terms proposed by the government.

The dispute comes as Mounjaro and Novo Nordisk’s rival GLP-1 drug, semaglutide, continue to reshape the treatment of diabetes and obesity worldwide.

Earlier this year, Lilly walked away from PBS negotiations, saying the proposed price did not adequately reflect the value of the medicine. Ricks said Lilly had tried at least three times to secure PBS listing and described Australia’s position as part of a broader problem with how governments value innovative medicines.

“Australia is not an island as it comes to pricing,” stated Ricks.

The warning carries particular weight because the United States is increasingly challenging the global pharmaceutical pricing model. US President Donald Trump’s Most Favoured Nation (MFN) pricing policies require pharmaceutical companies to cut US drug prices while pushing other countries to pay their fair share.

“When we consider the price point, it ripples across the world and can debase the the medicine everywhere, which has an effect on our ability to reinvest in R&D. So we’re not interested in access at any price point,” argued Ricks.

The PBS had sought to place a cap on the number of Australians eligible for the drug, with Lilly responsible for costs above that threshold.

“That was a major issue,” he said, noting that the company cannot accept an uncapped financial liability for a drug whose prescribing and utilisation it does not control.

Ricks also broadened the attack beyond Mounjaro, claiming Australia has become increasingly reluctant to pay for new medicines. Lilly has launched 13 new medicines over the past eight years, but only two have been listed on the PBS.

“The overall value of medicines in the total health system has fallen from about 6% of the budget 10 years ago to about 4% now,” Ricks said. “Medicines have been devalued in a way by 50%.”

Ricks rejected the suggestion that Lilly’s insistence on higher prices was primarily linked to boosting the company’s already enormous profits. He acknowledged that novel medicines generate substantial returns, but argued those returns finance the long and expensive process of discovering future drugs.

“The success of a drug like Mounjaro is literally paying for dozens of medicines that will appear in a decade’s time,” he said.

His broader argument is that wealthy countries should contribute more to the cost of pharmaceutical research in exchange for earlier access to breakthrough medicines.

“The question is, what share of that cost should Australians bear so that in 10 years there’s another new medicine?” Ricks stated. “…don’t say [Australia is] making a choice to adopt innovative medicines and then not do it.”

The stakes extend well beyond Mounjaro. Ricks cited a Lilly breast cancer medicine that had been TGA approved but remains unavailable in Australia roughly 800 days later.

When asked about the hype surrounding artificial intelligence (AI) and drug discovery, Ricks pushed back warning that the technology is still in its infancy when applied to biology. Unlike language models, which can train on enormous bodies of text, scientists do not have anything approaching a complete map of biology. While AI may eventually transform drug discovery, the data infrastructure required to make that possible does not yet exist at scale.

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