Australia could be next to pay more for pharmaceuticals under Trump trade plan
Washington: A trade deal the Trump administration persuaded the U.K.’s National Health Service to pay 25 percent more for new drugs now serves as a model for pushing other developed countries like Australia to spend more money on drugs.
Under the deal, announced overnight, the NHS will increase the net price it pays for new medicines by 25 per cent and some rebates paid by pharmaceutical companies to the NHS will be reduced.
In exchange, British medicines will be exempt from potentially triple-digit US tariffs for the remainder of President Donald Trump’s term, as well as investigations into future trade practices involving the medicines.
It was not immediately clear whether British consumers would be forced to pay more as a result. However, UK media reported that it would cost the NHS around £3 billion ($6.1 billion).
The overall structure of the deal, in which other countries pay more for drugs or the United States faces punitive trade measures, provides a model for global negotiations, said a White House official who asked not to be named.
But they said details such as the 25 per cent rate or changes to the NHS discount process would not necessarily be a reference point for other deals.
“For decades, Americans have subsidized global pharmaceutical research and development by paying several times more for the same drugs than our peers in other wealthy countries pay,” White House spokesman Kush Desai said in a statement.
“President Trump has vowed to use every tool of his executive authority to put America first, and the administration’s drug deal with the United Kingdom is a historic step toward ensuring other developed countries finally pay their fair share.
“Americans make up only 4 percent of the world’s population, and we cannot and will not cover more than 75 percent of the costs of developing new drugs for the rest of the world.”
US Trade Representative Jamieson Greer stated that he now wants to make similar agreements with other countries, without naming any countries.
“The Trump administration is reviewing the drug pricing practices of many other U.S. trading partners and hopes they will follow suit through constructive negotiations,” he said.
Greer’s office has been contacted for further comment.
Treasurer Jim Chalmers has warned that Australian pharmaceutical products, particularly from biotech giant CSL, are more exposed to US tariffs than steel and aluminium, but warned the Pharmaceutical Benefits Scheme is not a bargaining chip.
“We’re not willing to compromise on PBS. We’re not willing to negotiate or trade off what is a really important feature of the health care system,” Chalmers said.
Health Minister Mark Butler said in August: “America exports more medicines to Australia than we do to them. They do it duty-free, which has served both our countries very well, and we will continue to argue the case for continued free trade in medicines.”
The British government has said the trade deal with the US will allow the NHS to approve innovative drugs that may have previously been rejected purely on cost-effectiveness grounds, including ground-breaking cancer treatments or treatments for rare diseases.
UK Science Secretary Liz Kendall said: “This vital agreement will ensure UK patients get the cutting-edge medicines they need sooner, and our world-leading UK companies will continue to develop treatments that can change lives.”
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Michael Koziol is the North America correspondent for The Age and the Sydney Morning Herald. He is a former Sydney editor, Sun-Herald deputy editor and a federal political correspondent in Canberra.Connect with: excitement or email.
