Australia will “never negotiate” on cheaper medicines as the threat of US tariffs on pharmaceuticals looms, the Health Minister says.
Australian diplomats in Washington are focused on trying to get tariff exemptions on pharmaceuticals after unsuccessfully pushing the Trump administration for a pass on steel and aluminium tariffs.
Those steel and aluminium tariffs are a big blow for Australian smelters, but even more medicines are exported to the US each year.
“This is not the first time that big pharma in the US have pushed against us,” Health Minister Mark Butler told the ABC on Thursday.
“Their interest is in selling medicines at top dollar. Our interest is in making medicines cheaper for Australians.”
“We determine the price here in Australia and a Labor government will never negotiate over the PBS (Pharmaceutical Benefits Scheme).”
The Labor government has made an election pledge to cap the PBS price of prescriptions at $25 if re-elected. The Albanese government has enacted two prior PBS caps this term, bringing the maximum you spend at the pharmacist down to $42.50 and then $30.
“This will save those patients more than $200m each and every year on top of the $1.3bn we’ve already saved patients in the pharmacy counter through the previous cheaper medicines measures,” Mr Butler said of the $25 cap promise.
But pressure on the US government from pharmaceutical companies could spill over into US-Australia negotiations on other issues.
The previous Trump administration awarded Australia an exemption on steel and aluminium tariffs; however, this time around there was no such allowance.
And now American pharmaceutical giants have written to the Trump administration, calling Australia’s PBS an “unfair trade practice” and calling for “reciprocal” tariffs.
The collective letter claims Australia “penalises legitimate efforts by innovators to protect their intellectual property rights”, “systematically devalues US medicines” and fails to “appropriately recognise innovation” by preferencing cheaper “generic” versions.
Mr Butler said Australia would not weaken the PBS based on pressure from the US.
“We have to make it crystal clear as a government that we will not negotiate over the PBS,” he said.
“We will not negotiate over cheaper medicines. This is utterly central – not just to people’s household budgets, but as I said, to a well-functioning healthcare system. We have one of the best in the world, and the PBS is central to that.
“We’re continuing to make negotiations through Kevin Rudd and other officials; that it is no one’s interest in Australia to put tariffs on pharmaceutical trade.
“We export pharmaceuticals to the US every year, but they export $3.5bn to us, so we’re both benefiting from free trade.”
Four out of five PBS medicines will come at or under the $25 cap. Pensioners and concession cardholders will continue to pay $7.70, which is frozen until 2030, for PBS medicines.