Australia’s Pharmaceutical Benefits Scheme (PBS) is facing renewed criticism over its efficiency after the innovative type 2 diabetes drug Mounjaro (tirzepatide) was not included in the government subsidy list. As a result, around 450,000 patients are unable to access subsidised treatment and must pay high out-of-pocket costs.
The Pharmaceutical Benefits Advisory Committee (PBAC) had previously recommended listing the GLP-1 injectable drug under the PBS for adults with poorly controlled blood sugar levels. However, after prolonged price negotiations between the federal government and manufacturer Eli Lilly broke down, the company ultimately withdrew from the PBS application process. Reasons cited include Australia’s proposed price being too low and commercially unviable conditions.
Medicines Australia has criticised the outcome, describing it as evidence of a “systemic failure” in the PBS. It argues that the drug approval and listing process is overly complex and slow, taking an average of around 22 months from approval to PBS listing, delaying patient access to new treatments.
Under the PBS system, patients normally pay a heavily subsidised price for medicines. However, as Mounjaro is not listed, patients are forced to pay thousands of dollars per year. Some patients report reducing their dosage or adjusting treatment plans due to financial pressure in order to maintain access to the medication.
Health Minister Mark Butler said the government continues to negotiate with pharmaceutical companies and emphasised that price negotiations are a key part of maintaining the sustainability of the PBS. Meanwhile, another drug in the same class, Ozempic, is already listed on the PBS, and Wegovy has been recommended for inclusion.
Commentary
The PBS has long been considered a strength of Australia’s public healthcare system, using centralised government bargaining to lower drug prices and ensure affordability. However, in the face of rapidly emerging innovative medicines, the system is increasingly seen as rigid, with delays and restrictions ultimately shifting costs onto patients and failing to fully reflect the value of medical innovation.
If the PBS is to remain a pillar of public healthcare, the key issue is not simply tighter price control or easier listing of drugs, but improving negotiation efficiency and regulatory flexibility. This would ensure that genuinely effective new treatments can reach patients more quickly and fairly, rather than allowing the system itself to become a barrier between innovation and those who need it most.