Australia in talks with US over Trump demands to pay more for medicine

Australia is talking to the Trump administration and global drug companies about the United States’ push to make countries pay more for medicines – an effort that gained pace overnight with a new deal to make the United Kingdom pay 25 per cent more for new pharmaceuticals.

Health Minister Mark Butler on Tuesday acknowledged there had been a “significant change of policy by the US administration” as he revealed the Albanese government was deeply engaged in discussions in Washington.

“We are trying to make sure we understand this dynamic shift that’s happening in the global pharmaceutical market, to ensure that we can deliver access to as many medicines as possible at the most affordable price possible for the Australian people,” Butler said at a press conference.

Under the deal between the US and UK, announced overnight, the UK’s National Health Service will increase the net price it pays for new medicines by 25 per cent, and certain rebates paid by drug companies to the NHS will be reduced.

That trade deal now serves as a model to compel other developed nations, such as Australia, to fork out more for drugs – something US President Donald Trump has been pushing for this year.

In return, British medicines will be exempt from potentially triple digit US tariffs, as well as any future trade practices investigations involving pharmaceuticals for the rest of President Donald Trump’s term.

It was not immediately clear whether British consumers could be forced to pay more as a result. But UK media reported the cost to the NHS would be about £3 billion ($6.1 billion).

In Australia, the Pharmaceutical Benefits Schemes buys medicines in bulk from drug companies, and Australians are charged a flat fee at the pharmacy. The government might pay thousands of dollars for a product that is ultimately available to consumers at a maximum $31.60 per script – due to become $25 next month.

Butler said the government remained committed to listing more medicines on the Pharmaceutical Benefits Scheme and offering them at cheaper prices to Australians.

“Our PBS has delivered extraordinary things for the Australian people for more than 80 years now – access to the world’s best medicines at affordable PBS prices… So the first assurance I want to give the Australian people is that we will never compromise those two important elements of the PBS for the Australian people,” he said.

“We’re engaging closely, not just with the US administration, particularly through the embassy in Washington, but also with global pharmaceutical companies that will be impacted with this as well.

“I talk with them very regularly, and I’m making sure that we have a set of policies in place in Australia that continues to deliver those PBS outcomes for the Australian people.”

A White House official, requesting anonymity, said the general structure of the UK deal – under which other countries pay more for drugs or face punitive trade measures by the US – was the model for global negotiations.

“For decades, Americans have subsidised global pharmaceutical research and development by paying several times more for the same exact drugs than our peers in other wealthy nations do,” White House spokesman Kush Desai said in a statement.

“President Trump pledged to use every lever of executive power to put America first, and the administration’s pharmaceutical deal with the UK is a historic step towards ensuring that other developed countries finally pay their fair share.”

Without naming any countries, US Trade Representative Jamieson Greer indicated he was looking to strike similar deals with other nations.

“The Trump administration is reviewing the pharmaceutical pricing practices of many other US trading partners and hopes that they will follow suit with constructive negotiations,” he said.

Greer’s office has been contacted for further comment.

Butler said he would not pre-empt the outcomes of the government’s discussion with the US administration or pharmaceutical companies.

“I’m not going to go into those discussions, except to say that, as I said, this is very deep engagement between our government,” he said.

“We’ll continue to have those discussions, but we’re one of 193 other countries who are engaging with the Americans about this.”

The British government said the trade deal with the US would allow the NHS to approve innovative medicines that might have previously been declined purely on cost-effectiveness grounds, such as breakthrough cancer treatments or therapies for rare diseases.

The deal would “ensure UK patients get the cutting-edge medicines they need sooner, and our world-leading UK firms keep developing the treatments that can change lives”, UK Science Secretary Liz Kendall said.

But the Liberal Democrats’ health spokeswoman Helen Morgan said the deal was really a “Trump shakedown of the NHS that nobody voted for”, and it should be put to a vote in the British parliament.

“The government will divert billions of pounds away from frontline NHS services – all on the whim of a foreign president,” she said. “Trump demanded these pay rises to put Americans first, and our government rolled over.”

Asked at a briefing on Tuesday (AEDT) if there were any guarantees that the extra money taken in by US drug companies under the deal would be passed on to American consumers, White House press secretary Karoline Leavitt said: “I’ll get you the answer to that question after the briefing.”

With AP, Clay Lucas

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