Why does the USA attack our PBS?

Protecting the Pharmaceutical Benefits Scheme

From The Squiz

Even the threat of US tariffs won’t affect Australia’s commitment to the Pharmaceutical Benefits Scheme (PBS) after both major parties said it’s not up for negotiation yesterday. The US pharmaceutical lobby has asked US President Donald Trump to use tariffs (aka taxes) as retaliation for the scheme, which it says breaches the free trade agreement between Australia and the US. Both PM Anthony Albanese and Coalition leader Peter Dutton said no deal to that idea - instead, they’ve both promised to invest more money into the PBS if elected.

Why doesn’t US pharma like the PBS?

Because it costs them money. The PBS makes hundreds of medicines cheaper for the Aussies who need them by subsidising the cost. We’ve dived into how this all works in our latest Squiz Shortcut, but the upshot is that because those subsidies help keep prices down, US pharma companies aren’t big fans. The argument goes that because prices are lower, that means less money to invest in medical research, but Australia still gets to reap the benefits of that research without contributing to the cost. That’s why US industry lobby group PhRMA has written to President Trump, asking him to put tariffs on our pharmaceutical imports as retaliation for the existence of the PBS.

Is that something he would do?

TBD, but as recent history tells us, Trump does like a tariff - and he flagged in his first term that pharma products were on his radar. When he brought in global tariffs on steel and aluminium, Australia argued that we should be exempt because of our trade surplus with the US - which is when they sell more to us than we sell to them. That hasn’t worked so far, but guess what… We also have a trade surplus on pharmaceuticals, so that point might come up again. And it’s not stopping at pharma… Reports say our News Bargaining Incentive - which would see big US tech companies who don’t do deals with Aussie news publishers for their content pay a levy instead - is also in the firing line.