Medicines Australia says US drug pricing reforms are reshaping global launch decisions, with Australia at risk of slipping further down the queue for innovative medicines unless the PBS and HTA system are overhauled.
Medicines Australia has warned that Australia can no longer behave like a “small aggressive price suppressor” in a globally interconnected medicines market, arguing that US pricing reforms are already changing pharmaceutical launch strategies and threatening patient access to new therapies.
In a new report, the lobby group said longstanding Australian policies that “undervalue innovation” were now colliding with international pricing changes driven by the US, creating what it called a “twin threat” to access to new medicines.
“The PBS cannot stand still while the world changes around it,” the report said. “The reimbursement system has not kept pace with innovation.
“It was designed for a simpler era and is now being stretched to accommodate precision medicine, rare disease innovation, oncology advances, and cell and gene therapies.”
The report argued that Australia’s low medicine prices, lengthy reimbursement timelines and increasingly aggressive post-listing price reductions were making the country a less attractive launch market for multinational pharmaceutical companies.
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In April, Eli Lilly Australia decided not to list its dual GIP and GLP-1 receptor agonist tirzepatide on the PBS, despite receiving a positive recommendation from the Pharmaceutical Benefits Advisory Committee, citing “unviable and unsustainable conditions” that left it “with no other option”.
Medicines Australia said the problem had become more acute following the introduction of US “most favoured nation” pricing policies, which benchmarked American medicine prices against lower-priced countries overseas.
“The interplay of these policies means that any pharmaceutical company accepting a low price for a medicine launched in a smaller market, such as Australia, risks damaging consequences in larger overseas markets,” the report said.
Federal health minister Mark Butler previously acknowledged concerns about the global implications of US pricing reform, warning in March that it could have a “chilling effect” on pharmaceutical companies’ willingness to bring medicines to markets like Australia.
Medicines Australia said survey data from member companies suggested those fears were already materialising.
According to the report, 84% of respondents said Australia’s position in their company’s global launch sequence had deteriorated in the past two years or was expected to deteriorate in the near future.
No respondents expected Australia’s position to improve.
The report also escalated industry criticism of the PBAC’s increasing reliance on “lowest cost comparator” pricing, a controversial mechanism that compared new medicines against the cheapest available therapy rather than the treatment most commonly used in clinical practice.
Medicines Australia said the approach was becoming a major barrier to PBS listing negotiations and launch decisions.
“This process is placing disproportionate weight on lowest cost comparators,” the report said.
“By using cost as a dominant factor for comparison, medicines are being inappropriately compared. It is like comparing the latest smartphone to a model that was released several years earlier and judging that they are the same.”
An Evohealth report published earlier this month found that 80% of sponsors had experienced comparator substitution by the PBAC in the past five years, with all substitutions involving the lowest-cost alternative.
Medicines Australia said almost 100 medicines had lowest-cost comparators applied between 2016 and mid-2025, with 63 of those medicines still not listed on the PBS.
The report also directly criticised the PBAC’s approach to obesity medicines, using GLP-1 therapies as an example of what it described as a poorly calibrated cost-effectiveness framework.
Medicines Australia pointed to PBAC concerns that newer obesity therapies currently in development could outperform existing GLP-1s, potentially increasing future PBS costs.
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“In short, PBAC raised concerns about listing current GLP-1s on the PBS because more effective medicines might be available in the future,” the report said.
“As a result, Australian patients cannot currently access approved GLP-1s for weight management on the PBS.
“This ‘wait and see’ approach only acts to dampen innovation and prevent patients from realising improved health through timely access to effective new, innovative medicines.”
The report repeatedly referenced frustration over the lack of implementation of the 2024 Health Technology Assessment Review, despite broad agreement that the PBS reimbursement system required modernisation.
“The case for PBS reform has been long recognised, with both this government and its predecessor commissioning reviews and acknowledging structural weaknesses,” Medicines Australia said.
But the group noted that “none of the 50 recommendations have been implemented and further reviews have been initiated”.
Following the publication of the HTA Review’s final report in September 2024, Mr Butler established the Implementation Advisory Group, which went on to publish an interim report on 3 September 2025.
The final report from the IAG was due to be given to the government in January 2026, but has not been seen since.
Medicines Australia chief executive Elizabeth de Somer previously described the PBS listing system as “outdated”, “not fit for purpose” and too slow to keep pace with scientific innovation.
The latest report warned that Australians were now waiting an average of 3.6 years for reimbursed access to first-in-class medicines already available in comparable countries, while only around 30% of such medicines assessed were funded through the PBS.
Medicines Australia said the next Strategic Agreement negotiations with the commonwealth – due to begin later this year – represented a critical opportunity to reset the PBS and avoid Australia slipping further behind.
“The decisions we make now will shape whether Australia falls further behind or takes this opportunity to build a stronger system that equips us with the latest advances and innovation for a healthy and prosperous future,” the report said.
Recently the federal government opened two new consultations – one on the new draft 2026–27 Cost Recovery Implementation Statement (CRIS) and the other on the draft Framework for consumer engagement in HTA.
