Australians living with multiple sclerosis will continue receiving cheaper access to life-changing medical treatments, after an expert advisory panel decided to maintain taxpayer subsidies for key drugs.
Government confirms continued subsidies for three MS drugs
The health minister, Mark Butler, confirmed on Thursday that the drugs – Ocrevus, Kesimpta and Lemtrada – would not be removed from the Pharmaceutical Benefits Scheme, ending uncertainty sparked by their manufacturers, which were pushing the government to pay more. Butler said he supported the drugs remaining on the PBS because of their clinical benefits.
However, the advisory committee has also called for a rapid review of the use of MS drugs, set to be completed before the end of the year, when a final decision will be made.
Context: drug companies pulling products from PBS
It comes after a number of pharmaceutical companies have pulled drugs – or said they could be withdrawn – from the PBS in recent months. The moves have led to key questions about the government scheme: why are some PBS treatments under threat, and how much is US policy influencing this?
How the PBS works
In Australia, to keep prices down, about 90% of medicines are subsidised through the PBS. This enables affordable access to medicines that would otherwise cost thousands of dollars. An independent expert body, the Pharmaceutical Benefits Advisory Committee (PBAC), first evaluates the health benefits and cost-effectiveness of a drug and recommends whether it should be subsidised.
The government then negotiates and sets the wholesale price of each PBS medicine with the relevant drug company – but does not actually buy them. Instead, it subsidises the retail price at the chemist, at $7.70 for pensioners and $25.00 for others. The cost of the PBS to the government is the difference between the wholesale and the retail price. The PBS system means a company gets access to a much bigger and guaranteed market: if a drug is cheaper, many more people will use it and doctors will more readily prescribe it. This increased volume can offset the wholesale price reduction.
Reference pricing and its role in this case
The PBS also uses reference pricing, which works on the premise that if multiple different drugs treat the same condition – and all of them are safe and similarly effective – the lowest-cost drug will set the pricing benchmark. And if a cheaper treatment becomes available, the government informs all other manufacturers that it will cut what it pays for their drugs. If the company doesn’t accept this price change, the government can remove that particular drug from the PBS, while leaving the cheaper ones on it.
In the case of MS treatments Kesimpta and Ocrevus, a third drug, Briumvi (produced by TG Therapeutics), was added to the PBS in late 2025 at a cheaper cost. The government told drug companies Novartis and Roche that it would now be paying them the same price as it pays for Briumvi. While pricing negotiations are kept confidential, there were reports this might mean a 50% price cut for the drug companies.
In the US, Kesimpta can cost more than US$10,000 a month. In Australia, a monthly dose of Kesimpta costs the government $2,231, while a course of ocrelizumab costs $16,500 – of which patients contribute just $25 under the PBS.
Roche’s general manager, Dr Nic Horridge, has said: “This cut, should it stand, would make it impossible to keep Ocrevus on the PBS.” The advocacy group MS Australia also says it is wrong to treat the three treatments as the same because MS is a heterogeneous disease and no single therapy is best for all patients. Roche and Novartis also say their drugs are innovative and unique, and that cutting prices punishes this innovation.
Expert perspective on pricing pressures
The convener of advocacy group the Australian Fair Trade & Investment Network (Aftinet), Dr Patricia Ranald, has studied the PBS for 20 years. Ranald rejects the argument that high US prices fund life-saving medical research and innovation, and that prices should also be relatively high in Australia. “They [drug companies] are amongst the most profitable companies in the world, and that’s because they have a 20-year monopoly on medicines that people really need,” Ranald says. “It’s true they spend money on research and development, but they spend more money on promoting their products. What is going on at the moment is really a concerted push at the US government level and at the pharmaceutical company level to just get higher prices across the board.”
US policy influence: Trump's Most Favoured Nation policy
Donald Trump has argued pharmaceutical companies have been discounting drugs to get into foreign markets, which is offset by higher prices charged in the US. In 2025, he introduced the “Most Favoured Nation” drugs pricing policy, requiring US prices to align with the lowest prices paid in other developed countries. Critics of the policy say pharmaceutical companies will not compromise their US profits, and will either raise their prices in smaller markets or pull out of those markets altogether. Other countries with systems similar to the PBS, such as Sweden, are facing similar pressures.
The head of the Public Health Association of Australia (PHAA), adjunct professor Terry Slevin, says drug companies are leveraging this situation. “Like every business they will seek to maximise shareholder return,” he says. “We need a strong government determined to protect its interest and the interest of Australian patients requiring pharmaceuticals, and the Australian taxpayer who helps to subsidise them.”
The PHAA and Aftinet have also written a joint letter to Butler rejecting Trump’s claim that US consumers are subsidising lower prices in other countries. “The truth is that the US is the only advanced industrialised country which does not have a system to regulate the wholesale price of medicines,” the letter says. On Tuesday, Butler said US pressure was “a significant concern”.
Future of the PBS
Butler acknowledged in June that while it is a world-leading system, “the PBS needs reform”. On Thursday, he said the PBAC had proposed a new consultation on how MS drugs were being used on the PBS, to ensure it was line with contemporary evidence. “To that end, PBAC recommend a rapid review be completed by December this year and I have accepted that advice,” Butler said. The drugs will remain on the PBS and the health department will work with the companies on future supply.
In 2024, the government published findings from the Health Technology Assessment (HTA) Review, which examined the way it assesses health technologies – including drugs – and whether this remains fit for purpose. The review found having a range of treatment options for a condition is often necessary, because the impact of each on individual patients may be very different. It also found that while the PBS accepts this, companies aren’t always showing evidence to support why their drug is better or unique and should cost more. The government is unclear on what kind of evidence its experts need to approve a higher price. “We are seeing situations where innovative therapies are held back because of how they would be assessed against older, much cheaper medicines,” Butler said.
