Pharmac escapes US plea for Donald Trump to tariff Australia over drug prices

Associate Health Minister David Seymour said the Government was watching developments closely. Photo / Mark Mitchell

Associate Health Minister David Seymour said he was “closely monitoring developments in the United States” after a large American pharmaceutical lobby group asked the tariff-happy Trump Administration to slap tariffs on Australia because of its Pharmac-style drugs agency.

The Pharmaceutical Research and Manufacturers of America, known as PhRMA lodged a formal complaint with President Donald Trump’s trade chief, US trade representative Jamieson Greer, complaining about “[e]gregious and discriminatory pricing policies in several markets including Australia, Canada, the European Union, Japan and Korea”.

The letter said these practices “undervalue American innovation, threaten billions of dollars in lost sales and undermine American competitiveness, jobs and exports”.

The Sydney Morning Herald reported the group donated $US1 million ($1.57m) to Trump’s inauguration in January, and its chief executive, Stephen Ubl, dined with the president at Mar-a-Lago in December alongside Pfizer chief Albert Bourla and Eli Lilly chief David Ricks, both of whom are PhRMA board members.

The letter singled out a number of countries including China, Canada, Chile, Japan, Korea, and Australia. Australia’s Pharmaceutical Benefits Scheme (PBS), a near equivalent to Pharmac, was singled out. PhRMA is urging the President to target Australia when he imposes “reciprocal tariffs” on trading partners next month.

While Pharmac and the PBS fulfil similar roles in the New Zealand and Australian health systems, they use slightly different models.

The letter argued the PBS used “damaging pricing policies” that undervalued the efforts of American pharmaceutical companies.

New Zealand was not mentioned in the letter, but the singling out of Australia’s very similar scheme could be cause for concern.

Seymour said there had been”nothing to indicate that New Zealand is a direct target of US tariffs”.

“I have confidence in Pharmac’s model as a purchaser of medicines. They have advised my office they are aware of media reporting regarding potential tariffs, and are keeping a close eye on the situation and any potential impacts to New Zealanders,” Seymour said.

Foreign Minister Winston Peters this week wrapped up a visit to Washington DC where he met Secretary of State Marco Rubio. Peters discussed tariffs in that meeting. It is not clear whether it went well enough to exempt New Zealand from any US tariffs.

Reciprocal tariffs could target New Zealand health firms, many of which export to the United States.

Pharmac’s chief executive Sarah Fitt told the Herald, “Pharmac regularly monitors the global pharmaceutical landscape. We are aware of media reporting regarding potential tariffs, and are keeping a close eye on this situation and any potential impacts to New Zealanders.”

Pharmac’s model, which involves the agency negotiating prices with manufacturers, has long been a bugbear for the United States. There were fears that New Zealand’s negotitions with the United States for the Trans-Pacific Partnership trade agreement might see the model weakened.

Thomas Coughlan is deputy political editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the Press Gallery since 2018.