Full Breakdown
Eli Lilly Refuses PBS Listing for Mounjaro, Highlighting Tensions in Australia’s Drug-Pricing System
4/28/2026, 11:07:13 AM
The Standoff Over Tirzepatide (Mounjaro)
The Pharmaceutical Benefits Advisory Committee (PBAC) recommended that tirzepatide—marketed as Mounjaro—be subsidised on the Pharmaceutical Benefits Scheme (PBS) for adults with inadequately controlled type 2 diabetes. After the March meeting, the PBAC concluded that 15 mg and 10 mg doses, costing roughly AU$550-$700 per month privately, were cost-effective, while the 5 mg dose required a lower price. Eli Lilly, however, announced it would not proceed with the PBS process, citing “unrealistic and unviable” price conditions offered by the Australian government.
Background: PBS, HTA Review, and Pricing Mechanics
The PBS provides medicines at a subsidised patient cost of AU$25 (AU$7.70 for concession holders). A 2024 health-technology assessment (HTA) review—its first in three decades—identified systemic delays, with a median of 22 months from regulator approval to PBS listing, and called for streamlined processes. Under PBS negotiations, the government seeks to limit taxpayer exposure by sharing excess cost if uptake exceeds forecasts.
Key Stakeholders
- Eli Lilly (Australia & NZ) – General Manager Manny Simons.
- PBAC – Independent advisory body that recommended listing.
- Health Minister Mark Butler – Requested departmental advice on negotiations.
- Medicines Australia – Industry body led by CEO Liz de Somer.
- Patient – Ingrid Baas-Becking, 74, double-diabetic pensioner.
- Health Economist – Philip Clarke, University of Melbourne.
Data & Statistics
- Private cost of Mounjaro: AU$550-$700 per month (? AU$700 per two months for a 15 mg dose).
- Median time for new medicines to reach PBS: 22 months.
- PBAC considered tirzepatide in four meetings over 28 months before recommendation.
- Existing GLP-1 options: semaglutide (Ozempic) already listed; Wegovy (same active ingredient) recommended for PBS.
Patient Impact: On-the-Ground Report
Ingrid Baas-Becking reports dramatic health improvements—weight loss and a 50 % reduction in insulin use—since starting Mounjaro. Yet she is forced to ration the drug because she cannot afford a higher dose, stating she “doesn’t do anything other than buy the Mounjaro.”
Official Statements & Government Response
Health Minister Mark Butler said his department had been asked for advice on the negotiations, emphasizing that “robust price negotiations … are a very big reason why we have such a successful and sustainable Pharmaceutical Benefits Scheme.” The PBAC’s cost-effectiveness assessment was based on new patient-uptake estimates supplied by Eli Lilly and a revised risk-management approach. The government is reviewing the 2024 HTA recommendations to address the “system is broken” concerns raised by Medicines Australia.
Criticism & Opposition
Liz de Somer argued that the PBS pricing model “does not keep pace with innovation” and undervalues new medicines, contributing to “billions of dollars in lost sales.” Health economist Philip Clarke warned that low PBS prices create trade-offs, potentially limiting funding for other drugs in a constrained budget environment.
Conflicting Reports & Gaps
The exact price terms negotiated between the government and Eli Lilly remain undisclosed, making it difficult to assess the financial risk to the company. Clarke noted uncertainty about whether Lilly’s refusal reflects a genuine cost barrier or a strategic bargaining position.
Verbatim Quotes
- “Our decision was driven by the simple reality that the price conditions proposed by the Australian government are unrealistic and unviable," Mr Simons said.” — Manny Simons, General Manager, Eli Lilly Australia & NZ
- “I think the real issue that's being raised here are issues that have been widely discussed for several years now — the system in Australia is broken,” — Liz de Somer, CEO, Medicines Australia
- “There are often very robust price negotiations between big multinational drug companies and the federal government, the officials that we ask to do that work for us,” — Mark Butler, Health Minister
- “It is hard to judge the financial costs and risk to Eli Lilly as the prices the government actually pays for new drugs are often not disclosed,” — Philip Clarke, Health Economist
Why It Matters: Implications for Access and Budget
The stalemate underscores a broader tension between ensuring affordable access to innovative therapies and protecting the PBS’s fiscal sustainability. If high-cost, high-value drugs remain off the scheme, patients may face financial hardship or suboptimal treatment, while the government risks under-utilising effective medicines that could reduce long-term health expenditures.
What’s Next: Policy Review and Potential Reforms
The federal government is consulting an advisory group on the HTA review’s recommendations, with expectations of reforms to streamline PBS listings and adjust risk-sharing arrangements. Ongoing dialogue between Eli Lilly, the PBAC, and the health ministry will determine whether a revised pricing agreement can be reached before the next budget cycle.
