{"id":593881,"date":"2026-04-08T17:59:13","date_gmt":"2026-04-08T17:59:13","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/593881\/"},"modified":"2026-04-08T17:59:13","modified_gmt":"2026-04-08T17:59:13","slug":"why-australia-is-right-to-put-affordable-medicine-ahead-of-beating-us-pharmaceutical-tariffs","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/593881\/","title":{"rendered":"Why Australia is right to put affordable medicine ahead of beating US pharmaceutical tariffs"},"content":{"rendered":"

From July 31, the United States will impose<\/a> up to 100% tariffs on pharmaceuticals coming into the US. Some Australian-made exports look set to pay that highest rate, while some other countries \u2013 including the UK, Japan and the European Union \u2013 have negotiated lower rates.<\/p>\n

The new US tariffs are not specific to Australian-made products. However, the US pharmaceutical industry has long called for tougher tariffs on Australia because of the Pharmaceutical Benefits Scheme (PBS), a subsidised scheme that supports cheaper medicines<\/a> for Australians. <\/p>\n

Following the announcement of the new tariffs, Health Minister Mark Butler said<\/a> Australia\u2019s position hasn\u2019t changed, promising:<\/p>\n

this will not impact drug prices for Australian consumers [\u2026] There will be no negotiation around the PBS under an Albanese government.<\/p>\n

What could these new tariffs mean for affordable medicine in Australia? And is there anything Australia could offer to get a better deal?<\/p>\n

How the tariffs will apply<\/p>\n

US President Donald Trump first threatened to bring in pharmaceutical tariffs of up to 200%<\/a> last year. <\/p>\n

These sector-specific tariffs are separate from last year\u2019s \u201cLiberation Day\u201d tariffs, which have been ruled unlawful<\/a> by the US Supreme Court.<\/p>\n

The pharmaceutical tariffs have been introduced under section 232 of the US Trade Expansion Act<\/a>, used for other products such as steel and aluminium. These tariffs are legal and can apply indefinitely.<\/p>\n

Starting from July 31<\/a>, the US will:<\/p>\n

impose a 100% duty on the total value of some import pharmaceuticals
\nbut with some exceptions, set to pay only zero, 15% or 20% duties. <\/p>\n

Broadly speaking, essential and generic medicines will pay zero tariffs. <\/p>\n

Companies can receive a discounted 20% tariff for four years<\/a> if they offer the US competitive pricing and commit to manufacturing in the US.<\/p>\n

Products from trading partners Japan, the EU, South Korea, Switzerland and Liechtenstein will be charged a 15% tariff.<\/p>\n

The UK has struck what might appear to be the best deal<\/a> for zero-tariff access for UK-made medicines to the US for three years. But the UK got that deal by agreeing to pay more for medicines<\/a> \u2013 which some warn<\/a> could cost the UK\u2019s National Health System more than it saves.<\/p>\n

Most Australian exporters won\u2019t pay 100%<\/p>\n

The US is Australia\u2019s biggest pharmaceutical export market, worth around A$2.1 billion<\/a> in 2024.<\/p>\n

Most of those exports (87%) are blood plasma products, an essential medicine that\u2019s exempt from the incoming tariffs, mainly from manufacturing giant CSL. <\/p>\n

CSL has said<\/a> it expects most of its products to be exempt from the 100% tariff. Smaller medicines maker Mesoblast manufactures in the US, so is also exempt<\/a>.<\/p>\n

That leaves only a fraction of smaller Australian pharmaceutical makers set to pay the 100% tariff.<\/p>\n

The PBS saves Australians hundreds a year<\/p>\n

The federal government has promised<\/a> to try for a better deal. So what concessions might the US ask for?<\/p>\n

The US pharmaceutical industry<\/a> has long pushed for changes to Australia\u2019s PBS<\/a>, which forces them to negotiate on prices with just one buyer: the Australian government. The industry says<\/a> the scheme \u201cundermines American competitiveness, jobs and exports\u201d.<\/p>\n

But the scheme makes a big difference for Australians needing affordable medicines. No matter the cost of the medicine, under the PBS Australians pay a maximum<\/a> of A$25 per script (or $7.70 for concession card holders).<\/p>\n

In 2023, an average of 13 PBS-funded prescriptions<\/a> were dispensed per person over the year. <\/p>\n

On average, that government funding saved individuals around $641 per person for the year. For people living in lower socioeconomic areas, that personal saving was even greater: $714 per person. <\/p>\n

Read more:
\n Australia\u2019s PBS means consumers pay less for expensive medicines. Here\u2019s how this system works<\/a><\/p>\n

What the tariffs mean for prices in Australia and the US<\/p>\n

Assuming the Albanese government sticks to its position \u2013 keeping the PBS out of negotiations over the pharmaceutical tariffs \u2013 medicine prices in Australia should not change after July 31.<\/p>\n

In fact, the maximum cost of PBS-listed medicines<\/a> has actually fallen since the start of 2026.<\/p>\n

Instead, the US tariffs are likely to raise the cost of medicines for Americans<\/a>. Looking at who had paid the price of previous Trump tariffs on imports into the US, Federal Reserve Bank of New York economists recently found<\/a> \u201cnearly 90% of the tariffs\u2019 economic burden fell on US firms and consumers\u201d.<\/p>\n

What could Australia offer for a better deal?<\/p>\n

Until now, Australia has done better than many countries with Trump\u2019s tariffs.<\/p>\n

It may seem tempting to match the UK\u2019s zero-tariff deal. But on balance, protecting affordable medicines for Australians is worth far more than a deal for a small number of exporters.<\/p>\n

However, there could be one avenue for offering to work on the PBS, which could also offer a win for Australians in getting faster access to new medicines.<\/p>\n

National industry body Medicines Australia has urged<\/a> the federal government to streamline how soon drugs that are officially approved are made available under the PBS. In 2016-2021, Medicines Australia says that time blew out to 466 days. <\/p>\n

A 2024 government review<\/a> backed the need to speed up the PBS listing process. <\/p>\n

The speed of Australian medicine approvals is only one of the US industry\u2019s complaints<\/a> about the PBS, so it\u2019s not a major bargaining chip.<\/p>\n

But it could be worth offering as a win for US companies exporting to Australia, all while keeping bigger changes to the PBS firmly off the negotiating table.<\/p>\n","protected":false},"excerpt":{"rendered":"From July 31, the United States will impose up to 100% tariffs on pharmaceuticals coming into the US.…\n","protected":false},"author":2,"featured_media":593882,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[43,44,41,39,42,40],"class_list":["post-593881","post","type-post","status-publish","format-standard","has-post-thumbnail","category-headlines","tag-headlines","tag-news","tag-top-news","tag-top-stories","tag-topnews","tag-topstories"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/593881","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=593881"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/593881\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/593882"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=593881"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=593881"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=593881"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}