PBS listing delays: Bureaucratic bottleneck or strategic negotiation?

Funding decisions for new medicines have long been criticised for avoidable delays. A new study reframes this debate, questioning whether the time taken by government and pharmaceutical companies to reach agreement on Pharmaceutical Benefits Scheme (PBS) listings reflects bureaucratic impediment or a more deliberate form of negotiation.

Drawing on data from 634 Pharmaceutical Benefits Advisory Committee (PBAC) submissions covering 400 therapies between 2005 and 2018, Monash University researchers found that the timeframe from first PBAC submission to when a positive recommendation is secured took a median of 16 months, while 71% of individual negotiation rounds ended without a deal.

The analysis shows a clear pattern in what drives both delay and approval outcomes. Therapies that were less cost-effective, carried greater uncertainty in clinical or economic evidence, or had a large projected budget impact took longer to be funded and were less likely to ultimately receive listing. In contrast, therapies judged to be clinically important, those addressing serious unmet need, and those attracting higher public attention tended to progress more quickly through the system.

“A delay in agreement is not merely an administrative lag. Rather, it reflects strategic timing of negotiations: a rational response to evolving evidence, budget constraints, and therapeutic alternatives,” the authors wrote.

The findings are interpreted through dynamic bargaining theory, in which both parties act strategically under conditions of uncertainty. Within this framework, pharmaceutical companies delay submissions to strengthen perceived value, while the government slows approvals to manage cumulative budget impact or signal caution where evidence remains incomplete.

The study also examined how negotiations evolved across successive submission rounds. PBAC confidence in the supporting evidence tended to increase with each resubmission, and cost-effectiveness ratios typically improved, suggesting that manufacturers adjusted pricing strategies or refined evidence packages following earlier rejections.

Public attention also appeared to influence outcomes. Surges in internet search activity leading up to decisions were positively associated with agreement, indicating that heightened consumer interest may increase the perceived urgency or salience of a therapy. Patient need, proxied by Food and Drug Administration (FDA) priority review designation, was also associated with significantly shorter delays, consistent with faster decision-making where clinical urgency is high and therapeutic alternatives are limited.

The research additionally identified a “small indirect effect of US prices on the probability of agreement”. This finding aligns with concerns around international reference pricing, where higher US prices may influence local expectations, raising incremental cost-effectiveness ratios due to cross-market spillover effects and shaping how agencies assess value.

This dynamic is expected to become more pronounced as the ripple effects of most-favoured nation (MFN) pricing policies extend into the Australian market. Early evidence indicates that, across European markets referenced in the GLOBE and GUARD models, the average number of new medicine launches fell by 43% in the 10 months following MFN implementation compared with the 10 months prior.

Already, Australia is experiencing medicine withdrawals and delayed launches, with manufacturers citing uncertainty in global pricing conditions. The potential for an earlier Strategic Agreement negotiation process has also been rejected due to pricing uncertainty.

While the Monash University authors acknowledge they are not privy to “conditional listings and risk-sharing arrangements” between the government and pharmaceutical companies, they characterise PBS listing as a structured negotiation system in which delay plays a functional and strategic role.

“The results suggest that delay is not simply passive waiting but part of a strategic process in which both parties weigh the value of waiting against the risks of concession,” the authors said. “For the agency, additional time can clarify evidence and reveal how further listings affect expenditure within therapeutic classes; for companies, the incentives to accelerate or defer agreement depend on how continuation values evolve across negotiation rounds and indications.”

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