American big pharma boss does not support tariffs on Australian medicines
The head of one of America’s largest pharmaceutical companies says he does not support tariffs on Australian pharmaceuticals as US President Donald Trump considers more trade restrictions.
“We do not support tariffs on medications anywhere, and we certainly wouldn’t be excited to see a policy like that,” Eli Lilly CEO David Ricks told 7.30.
The comments come two weeks after American pharmaceutical giants, including Eli Lilly, represented by the Pharmaceutical Research and Manufacturers of America industry lobby group (PHrMA), wrote to the Trump administration’s Trade Representative venting their frustrations with Australia’s $18 billion Pharmaceutical Benefits Scheme (PBS).
In its submission, PHrMA said the PBS was “egregious and discriminatory”. It noted the Pharmaceutical Benefits Advisory Committee’s (PBAC) slow approval processes and called for an end to Australia’s “damaging pricing policies”.
Eli Lilly CEO David Ricks says he does not support tariffs on Australian medicines. (Reuters: Leah Millis)
It also blamed the PBS for unreasonable delays in access to medicines for Australian patients and for always taking the lowest cost option.
“The Australian government employs pricing policies that do not appropriately recognise innovation, such as using the lowest-cost comparator when setting the prices of new medicines,” the PHrMA submission reads before urging the US Trade Representative to “use all available trade enforcement tools to eliminate the unfair and non-reciprocal trade practices”.
Mr Ricks said he was not seeking tariffs on Australian medicines exported to the US.
“That wouldn’t be my interpretation of that. I think what we’re talking about is non-tariff trade barriers,” he said.
“And here we’re talking about availability of access to the market and fair principles of valuation … and that’s around the world. We’re not picking on Australia here. I think we have complaints with that, with many systems.”
Trump’s assessment of Australia’s PBS
President Donald Trump says pharmaceutical tariffs will be announced at “some point” in the future. (AP: Jacquelyn Martin)
The submission comes at a crucial time for Australia, as the Trump administration considers whether to impose tariffs on Australian pharmaceuticals.
In 2023, Australia exported $US1.06 billion worth to the US, representing 40 per cent of its total pharmaceutical exports of about $US2.6 billion.
A decision on the next round of tariffs was set to be made by April 2, although the American president has muddied the waters in recent days, saying the pharmaceutical tariffs would be announced at “some point”.
On Monday, Mr Trump said: “We’ll be announcing pharmaceuticals at some point in the not too distant (future) because we have to have pharmaceuticals.
“So we’ll be announcing some of these things in the very near future, not the long future, the very near future.”
Mr Ricks dined with Mr Trump and other members of the industry lobby group in December and said the president is committed to making the system fairer.
“He’s frequently publicly commented on the disparity between pricing,” he told 7.30.
“He was elected with a mandate from our country to look at global trade and say, well, it’s had many advantages, what have been the drawbacks, and should we rebalance the system so that there’s more fairness and equity?
“I think that’s his driving force.”
Australia ‘undervalues’ breakthrough medications
Pharmaceutical companies say Australia’s PBS takes too long to approve new medicines. (ABC News: Patrick Stone)
The Australian PBS system requires pharmaceutical companies to scrupulously detail the benefits of a drug before it is approved.
Pharmaceutical companies say the system minimises innovation and doesn’t allow Australians to access the medications they desperately need quick enough.
“We think it’s important to fairly value breakthroughs that have a real consequence on the health of Australians … and we should be rewarded for that,” Mr Ricks said.
“When we don’t deliver medicines that do that, we shouldn’t be rewarded.”
Asked whether the pharma industry would drop the pressure on the PBS if the system sped up its approval process, Mr Ricks reiterated the pharmaceutical industry wanted to see changes but ultimately the decision was up to the Australian government.
“I think really the decision is up to Australia. Do you want medicines faster, breakthrough medicines? Do we want to have a system where citizens and doctors can use them in a timely manner?” Mr Ricks said.
“If the society in Australia wants those things, you can change your system. If you don’t, that’s OK. It doesn’t actually move the deal dramatically for us.”
Australian PBS system ‘too slow’
Anthony Albanese says the PBS is “not up for negotiation”. (ABC News: Matt Roberts)
Both sides of politics have vowed to protect the PBS, which provides subsidised medicines for millions of Australians.
Prime Minister Anthony Albanese said the PBS was “not for sale” and “not up for negotiation” while Opposition Leader Peter Dutton said a Coalition government would protect the “sacrosanct” scheme.
Last week, the Australian government invested another $689 million into the PBS, reducing the maximum price for a PBS-listed drug from $31.60 to $25.
Treasurer Jim Chalmers used his budget night speech on Tuesday to reaffirm the government’s commitment to the PBS, calling the scheme a “great Australian institution”.
“We are strengthening it because Australians need us to, not weakening it because American multinationals want us to,” he said.
Jim Chalmers says the government will not weaken the PBS “because American multinationals want us to”.
While both sides of parliament continue to stand by the PBS, the Health Technology Assessment (HTA) report commissioned in 2022 handed down 50 recommendations in 2024 to improve the scheme.
The review found Australians are waiting 22 months for medicines to be listed on the PBS.
Mr Ricks said pharmaceutical companies are looking for an improvement in the length of the process.
“Australia is kind of an outlier on the slow end … certainly compared to G7 nations or other Commonwealth states,” he said.
“We’ve had experiences that take several years beyond what we expect in markets like the UK and Canada to get to the Australian market.”
Health Minister Mark Butler is reviewing the recommendations of the HTA but conceded the PBS approvals process was too slow.
“The goal is faster access to the best therapies, at a cost that patients and the community can afford,” he said in September.
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