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Australia says it will not compromise on drug subsidies as Trump reviews US prices

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Reuters 14/05/2025 | 09:55 MYT
Australia says it will not compromise on drug subsidies as Trump reviews US prices
US President Donald Trump aims to close the gap between high US drug prices and cheaper rates abroad, where medicines cost about a third of US prices. - REUTERS/Filepic
SHANGHAI, China: Australia will "not compromise" on its policy to subsidise the cost of some medicines, the government said on Wednesday, after U.S. President Donald Trump's executive order to lower domestic drug prices roiled the global pharmaceutical industry.


AI Brief
  • Trump aims to cut US drug prices by pressuring other countries to raise theirs, targeting nations like Australia and Europe where drugs cost less.
  • Australia rejects US pressure, insisting its Pharmaceutical Benefits Scheme, which subsidises medicine costs, is not up for negotiation.
  • Europe and Australia watch closely as Trump's tariff strategy may reshape global drug pricing and trade dynamics.


The Trump administration wants to reduce the gap between U.S. drug prices and those in other developed countries, including many in Europe, where prescription drugs cost, on average, one-third of the cost in the U.S.

"We have been clear that Australia will not compromise on our policy setting. The Pharmaceutical Benefits Scheme (PBS) is not up for negotiation," a spokesperson for Australia's Department of Foreign Affairs and Trade told Reuters in a statement.

Australia has "always been a strong advocate for open and rules-based trade," the statement said.

On Monday, Trump said he wanted to "equalize" prices with other countries by implementing tariffs.

In Australia, pharmaceutical companies are able to freely set medicine prices on the private market but the government subsidises the cost of some medicines used in community and outpatient settings through the PBS.

A recent analysis by the Australia Institute, a public policy think tank, found that some medicines in the U.S. were more expensive than in Australia.

During U.S.-Australia free trade negotiations more than two decades ago, Washington pushed hard to include provisions to water down the PBS, but the final changes were not as significant as the U.S. pharmaceutical industry had wanted, according to the think tank.

European governments are examining whether Trump can force them to pay more for prescription medicines, Reuters reported earlier on Wednesday.





#tariffs #Donald Trump #pharmaceutical industry #Australia #English News