Will the trade war in the USA boost the price of drugs in Australia? Will there be shortages of drugs?

Talks about commercial dispute between the United States and Australia regarding the cost of medicines undoubtedly meant that many Australians were scratching their heads.

With all this conversation Attacks on the pharmaceutical benefits program (PBS) and the perspective of tariff for Australian drugs entering the USA, many think about two key problems.

Does this mean that the price of medicines will boost? And has any of the commercial dispute, can it lead to drug deficiencies?

Let’s see how it can play in the country.

What is the pharmaceutical benefits program?

PBS provides Australians with subsidized drugs, maintaining low costs for consumers.

To receive a subsidy from Australian taxpayers, all pharmaceutical (not only American) companies must provide evidence to Advisory Committee for Pharmaceutical Benefits (PBAC), which assesses whether the medicine is profitable compared to existing alternatives.

This process ensures that Australian taxpayers will obtain a price -quality ratio for drugs and that the government does not waste money on medicines that are too steep for their benefits.

With restricted resources, the federal government must decide which drugs should be subsidized.

Our center has a contract with the federal government to review applications to PBAC. When the PBAC presents recommendations for replacing the drug at PBS, the federal government then enters double -sided (one in one) negotiations with each drug company regarding the price that they will collect in Australia.

These price negotiations often include confidential discounts and discounts, which can cause delays in the scope of PBS and people obtaining a person at the subsidized rate.

Patients pay eternal co -transit to PBS, regardless of the price negotiated. This is Currently USD 31.60 for most PBS or USD 7.70 with a concession card. The Australian government raises the rest of the costs.

Can the USA influence the price for consumers?

The United States has long claimed that PBS does not properly recognize the value of the development of pioneering pharmaceutical products, because it focuses on the demonstration of drugs ensuring the price.

American pharmaceutical companies have recently marked PBS “glaring and discriminatory“

PBS works to maintain low prices, and therefore benefits consumers. Price negotiations are carried out between the federal government and each pharmaceutical company separately for each drug. It is tough to see how the US government can affect these specific negotiations between a private and often global pharmaceutical company and a sovereign government.

In any case, prices paying by consumers depend on the amount of the subsidy on the federal government. Regardless of whether the cost of the drug for the Australian government is USD 50 or USD 5000, consumers still pay $ 31.60 (or USD 7.70 for a concession card).

It is also tough to see how to apply tariffs to Australian pharmaceutical exports to the USA, how it was marked, it can affect this process. This is unless these problems are drawn into a larger trade or political agreement.

Both the labor party and the coalition came out PBS defenseSpeaking, it would not be a chip in any trade war.

What about drug tariffs?

Then there is the potential of tariffs to Australian pharmaceuticals exported to the USA. In 2023, Australia was exporting Value of USD 1.06 billion To the USA, constituting 40% of total pharmaceutical exports in the amount of approximately USD 2.6 billion.

If Trump imposes tariffs, this will boost the prices of Australian drugs sold in the US in relation to the US produced by the US. In the case of Australian patented drugs, in which there are no alternatives, this will hurt consumers whose only option would be to pay higher prices and less. In the case of other drugs, demand for drugs produced in the US would boost, supporting local production.

The demand for drugs produced in Australia would fall (according to how uncertain), creating incentives for Australian producers to make them more productive. This may mean transferring production abroad in a long term to countries with lower tariffs or increasing marketing activities in other countries.

But this would not necessarily create fresh drug deficiencies in Australia. This is because about 90% Among the pharmaceuticals we employ in Australia, they are produced abroad, not produced in the country.

What if Australia took revenge with its own tariffs for imported pharmaceuticals in the US? Some 21% Our imported pharmaceuticals come from the USA. Only then can the tariffs affect the price negotiations regarding PBS. It would be a bad idea for access to Australians to pioneering patented drugs. This is due to the fact that in negotiations no other alternatives would boost, and prices, so restrictions would have to be used and access.

Where now?

It is tough to know how these trade negotiations will play and we will probably hear more about them in the coming weeks.

In general, it is tough to see how the US can affect prices that Australians pay for pharmaceuticals, especially in the case of recent preliminary elections announcement Further reduction of drug costs in patients up to USD 25.