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Just a quarter of new medicines launched globally in the last decade have been subsidised in Australia, putting life-changing treatments out-of-reach for patients, in a situation that pharmaceutical companies warn is becoming untenable.
Eighteen key innovative treatments for cancer, mental illness, cardiology, immunology, rare diseases and infectious disease that are transforming people’s lives overseas are not available under Australia’s Pharmaceutical Benefits Scheme (PBS).
Medicines Australia, the peak pharmaceutical industry body, says local patients are missing out because of a complex and lengthy approvals process that is turning off drug companies, as the Trump administration stokes global pricing pressures.
“The Australian market is no longer commercially attractive, or in some cases viable,” the lobby group says in a new report. “Australia’s low willingness to pay for innovative medicines has weakened the incentives for global pharmaceutical companies to launch new therapies in Australia.”
Unavailable drugs include the first new schizophrenia treatment in a generation, and new interventions for narcolepsy, advanced prostate cancer and idiopathic pulmonary arterial hypertension (IPAH).
‘It’s a job just to leave the house’
For 26 years Tina Powney, of Shepparton, Victoria, has lived with IPAH – a rare disease characterised by high blood pressure in the lung’s arteries – and is regularly out of breath and fatigued. Her treatment involves a continuous IV infusion connected to a catheter on her heart, controlled by a specialised pump she must wear in a band around her chest, 24 hours a day.
Powney has had to go to hospital in Melbourne several times in the last six months to get new lines in, a 2.5-hour drive from home. She carries a bag containing medication and back-up pumps all the time, in case something fails.
“I have a whole bedroom that’s just medication. To go on holidays is to fill the whole car with suitcases, dressings. You can’t just go down to the supermarket – you have to pack a backpack with everything. It’s a job just to leave the house, to visit a friend,” Powney said.
A new drug, Sotatercept, was approved in the US and European Union in 2024. “It would require an injection every three weeks and that’s it,” Powney said. “It would change my whole life. I’d be able to go for a swim, go camping with my family, enjoy life like everyone else.”
But it’s not on the PBS, under which the government subsidises drugs, so they cost Medicare cardholders $25 per script at most. Sotatercept’s out-of-pocket cost is about $16,000 – a sum that makes it inaccessible for Powney.
The chief executive of Medicines Australia, Elizabeth de Somer, said it was cases like Powney’s that showed Australia had gone from a leader to laggard in funding new medicines.
“The real number of missing medicines is likely to be much, much higher, but these 18 medicines should be all the proof anyone needs that health standards in Australia are slipping and that is due to one thing – chronic underinvestment in the PBS,” she said.
“I think if the public knew just how many innovative medicines are now bypassing Australia because of an outdated process, they would be justifiably alarmed.
“This is not a hypothetical any more. It is a bitter pill to swallow for patients with schizophrenia, prostate cancer, Crohn’s disease and rare conditions who are missing out on treatments already helping people elsewhere.”
According to the industry group’s analysis, investment in innovative medicines has fallen from 6.2 per cent to 4.1 per cent of the health budget since 2015-16. Over the same period, the likelihood a new medicine is reimbursed in Australia within two years’ approval in the US has dropped from 20 to 10 per cent.
A McKell Institute survey this year found 43 per cent of Australians had been prescribed a medicine not on the PBS, and 29 per cent had to pay for a non-listed medicine in the last three years.
Why there are long delays in approvals
Delays are often due to Australia’s process for approving and subsidising drugs. The Australian government negotiates cheaper prices by buying medicines in bulk, but the method for assessing cost-effectiveness means a new medicine cannot be more expensive than its lowest-priced competitor, unless it is proven to be significantly safer or better.
It means it is harder for new medicines to compete against old versions that have become extremely cheap over time. Nor does it necessarily account for innovation – such as when a tablet replaces an injection, or small improvements to side effects that may improve the patient experience.
This leads to long delays in approvals as drug companies and the government go back and forth gathering sufficient evidence – sometimes taking years.
Health Minister Mark Butler commissioned a Health Technology Assessment (HTA) review of these processes in 2022. In May 2024, it gave him 50 recommendations to speed up approvals and improve reimbursement pathways. These are currently being reviewed.
But industry argues the task has been made more urgent as the Trump administration tries to bring medicine prices down in the US with a “most favoured nation” policy, which pushes drug companies to sell to the US at the lowest prices they sell at overseas. The risk is that manufacturers then avoid launching their products in smaller and lower-priced markets, such as Australia, so that they do not set a lower global baseline price.
Butler has acknowledged that the US, and also China, were driving change in the medicines pricing.
“We know patients want faster access to cutting-edge medicine and treatments. I recently met with 80 patient and consumer representatives to get their feedback on HTA, and I will continue to work with patients and industry to drive these reforms forward,” the minister said.
“Work has been completed or is underway in response to number of the recommendations. Many of the HTA recommendations will be responded too as part of the strategic agreement with the medicines industry.”
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