June 18, 2025 • 14 mins
Medicine in Australia could soon become more expensive and harder to come by.
The Pharmaceutical Benefits Scheme – the safety net that keeps our prescriptions cheap – has been drawn into Donald Trump’s trade war, after the US president signed an order saying the United States should not pay more for medicines than its peer countries.
Drug companies have now paused new PBS listings and warn some treatments may never reach Australian patients.
Today, special correspondent for The Saturday Paper, Jason Koutsoukis, on how one decision in Washington could force Australians to pay more for vital drugs – and whether Canberra has the leverage to stop it.
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Guest: Special correspondent for The Saturday Paper, Jason Koutsoukis.
Photo: AP Photo/Julio Cortez
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
From Schwartz Media. I'm Daniel James. This is seven AM.
Medicines in Australia might be about to get more expensive
and harder to come by. Australia's Pharmaceutical Benefits scheme, the
safety net that keeps our prescriptions cheap, has become a
target of Donald Trump's trade war, and after the US
(00:24):
President signed an executive order stating the US shouldn't pay
more for medicines than its peers, drug companies are pausing
UPBS listings and warning some medicines might never reach our shelves.
Today's special correspondent for the Saturday Paper, Jason kotsukis on
how one decision in Washington could leave Australians paying more
for vital drugs and whether Australia has the leverage to
(00:47):
do anything about it. It's Thursday, June nineteenth.
Speaker 2 (01:01):
Well, the G seven summit in Canada today will look
a little more like a G six with Donald Trump,
as we heard pulling the pin earlier to head back
to Washington, DC. It means Anthony Alberinezi now has a
gaping hole in his diary where talks with.
Speaker 1 (01:14):
The Anthony Aberneze was just ghosted by Donald Trump who
left the G seven summit in Canada before the two
leaders got a chance to meet.
Speaker 3 (01:22):
Was that expected, Well, it wasn't expected. Daniel V Prime
Minister's office was very pleased to announce on the weekend
that they had secured this long anticipated meeting with the US.
Speaker 4 (01:36):
President seriously, and I look forward to tomorrow's meeting, and
not just with President Trump. It is important to say.
Speaker 3 (01:46):
But perhaps it's not unexpected that Donald Trump would want
to change the script, and that's what he did, letting
us all know that he was going to leave the
G seven early and get back to Washington to keep
a closer eye on what's happening in the Persian Gulf, where,
(02:06):
of course Israel has launched a series of attacks on
Iran's nuclear facilities.
Speaker 4 (02:12):
Now, it's perfectly understandable the decision that he made that
meant that the meetings were scheduled not just with myself
but with India.
Speaker 3 (02:22):
It must have blind signed it, Anthony Elbanezi on the
one hand, But on the other hand, it is understandable
that Donald Trump would want to be in the situation
Room at the White House with all of that national
security establishment of the US government.
Speaker 1 (02:38):
Do we have any idea of whether the two will
have a chance to get to meet soon.
Speaker 3 (02:41):
We don't. The talk around Parliament House is that the
earliest they could possibly get back together is on the
sidelines of the UN General Assembly, which takes place in September.
I personally don't think it really matters all too much
if Anthony eberenezid a meeting with Donald Trump or not.
(03:02):
We know that these meetings can be quite fraught. Donald
Trump is, of course a very capricious president. He's changing
his mind all the time, particularly on things like tariff's
the other big issues. Of course orcas it's an uncertain
time and I don't think a meeting with Donald Trump
necessarily locks things down for the rest of Donald Trump's term.
Speaker 1 (03:25):
In offers, one of the main issues if the two
are to meet for Australia is US tariffs, as the
Prime Minister fires to get Australia an exemption on those,
and one specific target of Trump's trade war has been
Australia's pharmaceutical Benefit Scheme the PBS. So why has this
scheme become a target?
Speaker 3 (03:44):
Well, the US pharmaceutical industry has long hated Australia's PBS.
The PBS is a scheme that goes back to the
nineteen forties in Australia.
Speaker 5 (03:57):
The Pharmaceutical Benefit Scheme covers aver two thousand and five
hundred different medicines. It helps you make previous prescription medicines affordable.
In addition, there's a safety in it for people or
families who need a lot on medicine.
Speaker 3 (04:09):
It's a system that sees the Australian government by vital
medicines on behalf of Australian consumers, and the Australian government
negotiates a price directly with the pharmaceutical manufacture for these
individual medicines. The Australian consumer then buys the drugs, but
(04:30):
ultimately it's the Australian government that pays for them, and
the Australian consumer is then charged a flat fee which
is very different to what US consumers pay. That price
is heavily discounted to what the same drugs are sold
for in the United States.
Speaker 6 (04:51):
Why doesn't somebody fate the drug price situation meaning equalization?
Speaker 1 (04:55):
There's a term and.
Speaker 3 (04:57):
On May twelfth, Donald Trump signed an executcutive order to
try to do something about this. He wants US consumers
to pay the same that consumers and other countries pay.
And so ultimately, what that means is that he wants
US consumers to pay less, but he wants Australian consumers
(05:17):
to pay more.
Speaker 6 (05:18):
We're subsidizing others healthcare countries where they paid a small
fraction of what for the same drug that what we
pay many, many times and more for. And we're no
longer tolerate profiteering and prase gouging.
Speaker 3 (05:33):
From What Trump's executive order is likely to do is
take a group of countries, a basket of countries, and
the US is going to benchmark the prices paid by
the countries that are in that basket, and then that's
the benchmark price that US consumers will then pay. What
that is likely to mean is that Australian consumers will
(05:56):
pay more and US consumers will pay lets. And I
think this is a pattern that we see with Donald Trump,
not just with pharmaceuticals. The whole issue that is driving
Donald Trump's tariff increases is this idea that the US
is getting ripped off. You know, if there's one thing
(06:16):
that Donald Trump hates, it's the suggestion that the US
is paying more for something that other countries are getting
at a discount now, given that Prime Minister Anthony Albanezi
has drawn a line in the sand when it comes
to the PBS, I think a very difficult conversation is
likely when the two meet over what the US President
(06:38):
wants to do when it comes to Australians getting drugs
cheaper than US consumers get them.
Speaker 1 (06:45):
You've been speaking on drug companies. What have they been
saying to you about the impact of Trump's order?
Speaker 3 (06:51):
I think this order has created a lot of uncertainty
about what prices drug companies will receive for the medicines
they menfacture. From talking to drug companies and also the
peak industry body medicines Australia, the main impact right now
is that drug companies are pausing putting new drugs forward
(07:13):
to be listed on the PBS, and that pause could
be extended for quite some time, and ultimately it could
lead to some vital medicines that Australian consumers want and
need from overseas may not be listed as soon as
(07:34):
they would like on the PBS.
Speaker 1 (07:38):
After the break, Can the government halt the worst impacts
of Trump's executive order? Jason, Drug companies are delaying listing
with the PBS because it could affect their pricing overseas.
(07:58):
So can you tell me what kind of medications we
may be missing out on.
Speaker 3 (08:02):
Well, Daniel, I think potentially it's a whole new generation
of drugs that are coming onto market in countries overseats.
Take one example, Daniel, don Anamab, a.
Speaker 7 (08:13):
New drug has been held as a turning point in
the fight against Alzheimer's.
Speaker 8 (08:18):
Now US drug maker Elain Lilly says it's experimental drug,
d nanomab, can slow down the development of the disease.
Dananomab has a price tag of more than forty thousand
dollars a year because it's not yet subsidized by the government.
It will be considered for inclusion on the Pharmaceutical Benefit
Scheme midyear, but there are no guarantees now.
Speaker 3 (08:41):
Health Minister Mark Butler revealed last month that the Pharmaceutical
Benefits Advisory Committee will be considering dnanomab in July.
Speaker 7 (08:50):
There is still a fair way to go, though, to
determine whether or not this will be reimbursed by the
federal government, and if so, for which patients.
Speaker 3 (09:00):
Before that drug can be listed on the PBS. Elo
Lilly's global head Office will have to approve the price
that is offered by the Australian government. And that's where
we're seeing the impact of this pause that the global
head officers of these pharmaceutical manufacturers, that's where the hold
(09:20):
up is coming because they are saying, let's just hold
off on approving this price because we might get a
better price once Donald Trump gets into the act and
negotiates with Australia about the future of the PBS itself.
Speaker 1 (09:39):
The Prime Minister has said repeatedly that the PPS is
not upfit negotiation when it comes to negotiations on tariffs
and what way does Trump want Australia to alter the PBS.
What regulations are under pressure here?
Speaker 3 (09:52):
Well, he wants the Australian government to pay more for
the drugs that US companies are making, and he's saying
the the prices that Australia negotiates are just way too
low and don't compensate US companies fairly for the research
and development, the investment that they put into developing these
(10:12):
new drugs. So US drug companies have long opposed the PBS,
and Australia's PBS does deliver some of the lowest medicine
prices in the developed world. They argue that the PBS
systematically drives down what they can charge Australians for the
drugs that they make, and that that the low price
in Australia ultimately undermines the global pricing power that they
(10:37):
have and it limits their ability to recoup what they
argue are the high costs of research and development.
Speaker 1 (10:44):
Will Trump's strategy for one of the better term actually
work in driving US prices down, Jason.
Speaker 3 (10:51):
That's really difficult to assess. One thing that I didn't
know about is that the prices that the Australian government
lists that it pays drug companies for the medicines that
we consume doesn't actually reflect the real price that is paid.
So on the one hand, yes, there's a listed price
and this money is paid to the drug companies, but
(11:12):
then the next month the drug companies pay back what
they call a rebate to the Australian government, which is
effectively means that the price that is actually paid is
even lower than the listed price, and I think drug
companies end up paying back around thirty percent of the
total cost of the PBS, which is quite staggering when
(11:34):
you think about it. And so perhaps the Australian government
might be able to work out a way where they
increase the listed price, so perhaps keep Donald Trump happy
by saving face that there's been a price increase, But
the Australian government might then be seeking an increase in
the rebate that is paid kind of under the table,
if you like, by the drug companies back to the
(11:57):
Australian government.
Speaker 1 (11:58):
So is there anything else that the government can do
about all of this, Jason, I.
Speaker 3 (12:02):
Think it's going to be really difficult because if Donald
Trump does include Australia in this basket of countries against
which US drug prices will be benchmarked, then I think
it really does put the government in a difficult position
because we have some of the lowest prices and I
think that will lower the average of drug prices overall.
(12:23):
I think the Australian government is going to have a
lot of difficulty pushing back against that.
Speaker 4 (12:27):
We will only sign up to things that are in
Australia's national interest, so on things like the Pharmaceutical Benefit Scheme,
the Media Bargaining Code, our biosecurity in agriculture, they're not
on the table as far as we're concerned.
Speaker 3 (12:45):
And as the Prime Minister has so clearly stated that
Australia won't be intimidated by the US. It does create
a potentially big political problem for the Prime Minister and
his government.
Speaker 1 (13:01):
Jason always great to speak with you.
Speaker 3 (13:03):
Daniel, thank you so much. Great to speak with you.
Speaker 7 (13:13):
Also in the news today, the United States military is
reportedly sending additional fighter jets to the Middle East and
extending existing deployments to bolster its presence amid the Israel
Iran conflict. In a social media post, US President Donald
Trump stated that we now have complete and total control
of the skies over Iran. US officials have declined to
(13:35):
provide specific numbers of jets that have been deployed, and
insist that the US military has not taken any direct
offensive action against Iran. And restrictions around sexually active, gay
and bisexual men donating blood and plasma are being loosened
Under new more inclusive rules. From July fourteen, Australian Red
(13:55):
Cross Lifeblood will remove restrictions which state gay and bisexual men,
as well as transgender women who have sex with men,
cannot donate blood or plasma if they've been sexually active
in the past three months. Seven am will be back tomorrow.
Thanks for listening.
From Schwartz Media. I'm Daniel James. This is seven AM.
Medicines in Australia might be about to get more expensive
and harder to come by. Australia's Pharmaceutical Benefits scheme, the
safety net that keeps our prescriptions cheap, has become a
target of Donald Trump's trade war, and after the US
(00:24):
President signed an executive order stating the US shouldn't pay
more for medicines than its peers, drug companies are pausing
UPBS listings and warning some medicines might never reach our shelves.
Today's special correspondent for the Saturday Paper, Jason kotsukis on
how one decision in Washington could leave Australians paying more
for vital drugs and whether Australia has the leverage to
(00:47):
do anything about it. It's Thursday, June nineteenth.
Speaker 2 (01:01):
Well, the G seven summit in Canada today will look
a little more like a G six with Donald Trump,
as we heard pulling the pin earlier to head back
to Washington, DC. It means Anthony Alberinezi now has a
gaping hole in his diary where talks with.
Speaker 1 (01:14):
The Anthony Aberneze was just ghosted by Donald Trump who
left the G seven summit in Canada before the two
leaders got a chance to meet.
Speaker 3 (01:22):
Was that expected, Well, it wasn't expected. Daniel V Prime
Minister's office was very pleased to announce on the weekend
that they had secured this long anticipated meeting with the US.
Speaker 4 (01:36):
President seriously, and I look forward to tomorrow's meeting, and
not just with President Trump. It is important to say.
Speaker 3 (01:46):
But perhaps it's not unexpected that Donald Trump would want
to change the script, and that's what he did, letting
us all know that he was going to leave the
G seven early and get back to Washington to keep
a closer eye on what's happening in the Persian Gulf, where,
(02:06):
of course Israel has launched a series of attacks on
Iran's nuclear facilities.
Speaker 4 (02:12):
Now, it's perfectly understandable the decision that he made that
meant that the meetings were scheduled not just with myself
but with India.
Speaker 3 (02:22):
It must have blind signed it, Anthony Elbanezi on the
one hand, But on the other hand, it is understandable
that Donald Trump would want to be in the situation
Room at the White House with all of that national
security establishment of the US government.
Speaker 1 (02:38):
Do we have any idea of whether the two will
have a chance to get to meet soon.
Speaker 3 (02:41):
We don't. The talk around Parliament House is that the
earliest they could possibly get back together is on the
sidelines of the UN General Assembly, which takes place in September.
I personally don't think it really matters all too much
if Anthony eberenezid a meeting with Donald Trump or not.
(03:02):
We know that these meetings can be quite fraught. Donald
Trump is, of course a very capricious president. He's changing
his mind all the time, particularly on things like tariff's
the other big issues. Of course orcas it's an uncertain
time and I don't think a meeting with Donald Trump
necessarily locks things down for the rest of Donald Trump's term.
Speaker 1 (03:25):
In offers, one of the main issues if the two
are to meet for Australia is US tariffs, as the
Prime Minister fires to get Australia an exemption on those,
and one specific target of Trump's trade war has been
Australia's pharmaceutical Benefit Scheme the PBS. So why has this
scheme become a target?
Speaker 3 (03:44):
Well, the US pharmaceutical industry has long hated Australia's PBS.
The PBS is a scheme that goes back to the
nineteen forties in Australia.
Speaker 5 (03:57):
The Pharmaceutical Benefit Scheme covers aver two thousand and five
hundred different medicines. It helps you make previous prescription medicines affordable.
In addition, there's a safety in it for people or
families who need a lot on medicine.
Speaker 3 (04:09):
It's a system that sees the Australian government by vital
medicines on behalf of Australian consumers, and the Australian government
negotiates a price directly with the pharmaceutical manufacture for these
individual medicines. The Australian consumer then buys the drugs, but
(04:30):
ultimately it's the Australian government that pays for them, and
the Australian consumer is then charged a flat fee which
is very different to what US consumers pay. That price
is heavily discounted to what the same drugs are sold
for in the United States.
Speaker 6 (04:51):
Why doesn't somebody fate the drug price situation meaning equalization?
Speaker 1 (04:55):
There's a term and.
Speaker 3 (04:57):
On May twelfth, Donald Trump signed an executcutive order to
try to do something about this. He wants US consumers
to pay the same that consumers and other countries pay.
And so ultimately, what that means is that he wants
US consumers to pay less, but he wants Australian consumers
(05:17):
to pay more.
Speaker 6 (05:18):
We're subsidizing others healthcare countries where they paid a small
fraction of what for the same drug that what we
pay many, many times and more for. And we're no
longer tolerate profiteering and prase gouging.
Speaker 3 (05:33):
From What Trump's executive order is likely to do is
take a group of countries, a basket of countries, and
the US is going to benchmark the prices paid by
the countries that are in that basket, and then that's
the benchmark price that US consumers will then pay. What
that is likely to mean is that Australian consumers will
(05:56):
pay more and US consumers will pay lets. And I
think this is a pattern that we see with Donald Trump,
not just with pharmaceuticals. The whole issue that is driving
Donald Trump's tariff increases is this idea that the US
is getting ripped off. You know, if there's one thing
(06:16):
that Donald Trump hates, it's the suggestion that the US
is paying more for something that other countries are getting
at a discount now, given that Prime Minister Anthony Albanezi
has drawn a line in the sand when it comes
to the PBS, I think a very difficult conversation is
likely when the two meet over what the US President
(06:38):
wants to do when it comes to Australians getting drugs
cheaper than US consumers get them.
Speaker 1 (06:45):
You've been speaking on drug companies. What have they been
saying to you about the impact of Trump's order?
Speaker 3 (06:51):
I think this order has created a lot of uncertainty
about what prices drug companies will receive for the medicines
they menfacture. From talking to drug companies and also the
peak industry body medicines Australia, the main impact right now
is that drug companies are pausing putting new drugs forward
(07:13):
to be listed on the PBS, and that pause could
be extended for quite some time, and ultimately it could
lead to some vital medicines that Australian consumers want and
need from overseas may not be listed as soon as
(07:34):
they would like on the PBS.
Speaker 1 (07:38):
After the break, Can the government halt the worst impacts
of Trump's executive order? Jason, Drug companies are delaying listing
with the PBS because it could affect their pricing overseas.
(07:58):
So can you tell me what kind of medications we
may be missing out on.
Speaker 3 (08:02):
Well, Daniel, I think potentially it's a whole new generation
of drugs that are coming onto market in countries overseats.
Take one example, Daniel, don Anamab, a.
Speaker 7 (08:13):
New drug has been held as a turning point in
the fight against Alzheimer's.
Speaker 8 (08:18):
Now US drug maker Elain Lilly says it's experimental drug,
d nanomab, can slow down the development of the disease.
Dananomab has a price tag of more than forty thousand
dollars a year because it's not yet subsidized by the government.
It will be considered for inclusion on the Pharmaceutical Benefit
Scheme midyear, but there are no guarantees now.
Speaker 3 (08:41):
Health Minister Mark Butler revealed last month that the Pharmaceutical
Benefits Advisory Committee will be considering dnanomab in July.
Speaker 7 (08:50):
There is still a fair way to go, though, to
determine whether or not this will be reimbursed by the
federal government, and if so, for which patients.
Speaker 3 (09:00):
Before that drug can be listed on the PBS. Elo
Lilly's global head Office will have to approve the price
that is offered by the Australian government. And that's where
we're seeing the impact of this pause that the global
head officers of these pharmaceutical manufacturers, that's where the hold
(09:20):
up is coming because they are saying, let's just hold
off on approving this price because we might get a
better price once Donald Trump gets into the act and
negotiates with Australia about the future of the PBS itself.
Speaker 1 (09:39):
The Prime Minister has said repeatedly that the PPS is
not upfit negotiation when it comes to negotiations on tariffs
and what way does Trump want Australia to alter the PBS.
What regulations are under pressure here?
Speaker 3 (09:52):
Well, he wants the Australian government to pay more for
the drugs that US companies are making, and he's saying
the the prices that Australia negotiates are just way too
low and don't compensate US companies fairly for the research
and development, the investment that they put into developing these
(10:12):
new drugs. So US drug companies have long opposed the PBS,
and Australia's PBS does deliver some of the lowest medicine
prices in the developed world. They argue that the PBS
systematically drives down what they can charge Australians for the
drugs that they make, and that that the low price
in Australia ultimately undermines the global pricing power that they
(10:37):
have and it limits their ability to recoup what they
argue are the high costs of research and development.
Speaker 1 (10:44):
Will Trump's strategy for one of the better term actually
work in driving US prices down, Jason.
Speaker 3 (10:51):
That's really difficult to assess. One thing that I didn't
know about is that the prices that the Australian government
lists that it pays drug companies for the medicines that
we consume doesn't actually reflect the real price that is paid.
So on the one hand, yes, there's a listed price
and this money is paid to the drug companies, but
(11:12):
then the next month the drug companies pay back what
they call a rebate to the Australian government, which is
effectively means that the price that is actually paid is
even lower than the listed price, and I think drug
companies end up paying back around thirty percent of the
total cost of the PBS, which is quite staggering when
(11:34):
you think about it. And so perhaps the Australian government
might be able to work out a way where they
increase the listed price, so perhaps keep Donald Trump happy
by saving face that there's been a price increase, But
the Australian government might then be seeking an increase in
the rebate that is paid kind of under the table,
if you like, by the drug companies back to the
(11:57):
Australian government.
Speaker 1 (11:58):
So is there anything else that the government can do
about all of this, Jason, I.
Speaker 3 (12:02):
Think it's going to be really difficult because if Donald
Trump does include Australia in this basket of countries against
which US drug prices will be benchmarked, then I think
it really does put the government in a difficult position
because we have some of the lowest prices and I
think that will lower the average of drug prices overall.
(12:23):
I think the Australian government is going to have a
lot of difficulty pushing back against that.
Speaker 4 (12:27):
We will only sign up to things that are in
Australia's national interest, so on things like the Pharmaceutical Benefit Scheme,
the Media Bargaining Code, our biosecurity in agriculture, they're not
on the table as far as we're concerned.
Speaker 3 (12:45):
And as the Prime Minister has so clearly stated that
Australia won't be intimidated by the US. It does create
a potentially big political problem for the Prime Minister and
his government.
Speaker 1 (13:01):
Jason always great to speak with you.
Speaker 3 (13:03):
Daniel, thank you so much. Great to speak with you.
Speaker 7 (13:13):
Also in the news today, the United States military is
reportedly sending additional fighter jets to the Middle East and
extending existing deployments to bolster its presence amid the Israel
Iran conflict. In a social media post, US President Donald
Trump stated that we now have complete and total control
of the skies over Iran. US officials have declined to
(13:35):
provide specific numbers of jets that have been deployed, and
insist that the US military has not taken any direct
offensive action against Iran. And restrictions around sexually active, gay
and bisexual men donating blood and plasma are being loosened
Under new more inclusive rules. From July fourteen, Australian Red
(13:55):
Cross Lifeblood will remove restrictions which state gay and bisexual men,
as well as transgender women who have sex with men,
cannot donate blood or plasma if they've been sexually active
in the past three months. Seven am will be back tomorrow.
Thanks for listening.
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