**ACKNOWLEDGEMENTS OMITTED**
There are a few big questions, though, in our portfolio, health, ageing, but also disabilities, and the interface between those three big areas.
But the big question I want to focus a little bit on today is the issue of medicines.
Last year, I shared a message that still holds true today: there is another, often overlooked story in productivity in Australia, which is the theme of this year perhaps and that is the story of our health system.
As I pointed to last year, the Productivity Commission found that over the course of the last decade, quality adjusted multi factor productivity in health grew by 3 per cent a year.
To put this into perspective, multi factor productivity growth in the market sector was estimated to be just around 0.8 per cent per year.
Those gains didn’t come from cutting corners or reducing services.
The Productivity Commission made it clear that the real drivers were improvements in treatment quality — particularly the growing impact of modern medicines that help people recover faster, avoid complications, and stay well for longer.
About a quarter of that productivity growth has been advances in medical science, particularly in the cancer space, that saw quality adjusted productivity around medicines grow by about nine or 10 percent per year during that period, particularly those areas where new treatments have driven major improvements in health outcomes.
Diseases that were once considered terminal now often have much better outcomes. In cancers especially, five‑year survival rates keep improving because we’re so lucky to be living in an turbo-charged era of medical discovery.
These incredible new treatments are stretching business models just as they stretch government budgets, but the gains they have given us in lives saved and lives extended far outweigh their cost in dollar terms.
As the Productivity Commission put it, and I quote, “we've spent more on health care, but it's been worth it”.
Put simply, when medicines are more effective and more affordable, people can manage their conditions effectively, stay engaged in work and contribute to a stronger economy.
When medicines help Australians avoid hospitalisations or reduce complications or return to work sooner, their impact extends far beyond the health system.
And we know the international evidence reinforces this.
Studies in comparable economies have shown that advances in medicines can generate gains in productive work time and wages, demonstrating measurable economic benefits when people receive effective, timely treatments.
Here in Australia, as you’ll all know, we only fund new medicines when the evidence shows they genuinely work and offer good value for taxpayers.
This principle, embedded through the PBS framework, has contributed to Australia remaining one of the world’s highest performing health systems at a sustainable cost.
Medicines policy is therefore not just health policy, it’s also economic policy.
When we strengthen access to effective therapies, we strengthen the nation’s productivity.
But it hasn’t always been the view that spending on medicines could be managed sustainably while still delivering major health gains.
The first two Intergenerational Reports, very early in this century, showed that the major driver of increased health spending was projected to be the PBS, responsible for more than 70 per cent of the increase projected in the 2002 report and more than half the increase published in the 2007 report.
The 2002 IGR Report predicted that PBS spending would explode - going from about 0.6 per cent of Australia’s economy to around 3.4 per cent GDP by 2040.
But that never happened. In fact, today PBS spending is actually lower than it was in 2002, at about 0.5 per cent of GDP.
I should add that this figure is net spend after rebates through special pricing arrangements.
In response to those dire predictions back in 2002, industry and successive governments have negotiated permanent savings measures to deliver ongoing sustainability for the PBS through price disclosure and statutory price reduction or SPRs.
It shows that a sustainable PBS doesn’t just support better health but it can support a stronger, more resilient economy and a more sustainable budget. And it’s delivering some genuine step changes in patient outcomes.
When I was first a junior Minister in the health portfolio – not the last decade, but the decade before, which is showing my age, Hepatitis C was a looming public health catastrophe.
Around a quarter of a million people were living with chronic hepatitis C infection.
Without an effective and well tolerated treatment available at that time, our Government was working on plans to manage a massive surge in liver cancer and demand for liver transplants.
But it was a profoundly different picture when I returned as Health Minister more than a decade later with a new treatment that clears the virus entirely listed on the PBS and transforming the lives of tens of thousands of Australians, a completely different story.
Today, we are seeing immunotherapies emerge as a major advancement in cancer treatment.
A few weeks ago, I announced the world-first single multi-cancer PBS listing for immunotherapies Opdivo and Yervoy.
For the first time, enabling access for multiple cancers under one listing, essentially at the clinicians discretion, removing the previous “once in a lifetime” rule, and preventing patients from facing treatment costs that could exceed $100,000 per course of treatment.
A particularly important innovation for patients with rarer cancers.
Just yesterday, I announced Keytruda, the other major immunotherapy treatment, will be expanded to include treatment of three new cancer types at a relatively early stage.
It is expected that over 10,000 patients could benefit from this listing. Without the PBS subsidy, patients could pay more than $15,000 per infusion.
And conversations are continuing on listing Keytruda as a treatment for pan tumours, alongside Opdivo and Yervoy.
Medicines look very different today than they did when the PBS was created.
The past decade has seen dramatic advances in treatments for cancer, cardiovascular disease, immune disorders and various chronic conditions.
Today’s therapies are more targeted, more personalised and more complex in both development and evidence requirements.
This means we have seen fewer broad “mass‑market” additions to the PBS and more highly specialised medicines, which often come with higher per‑patient costs even when patient numbers are relatively small.
It’s been decades since we’ve seen a medicine added to the PBS that benefit very large numbers of Australians, like statins did a couple of decades ago.
But that’s about to change, with breakthrough therapies and new approaches to treatment on the horizon, opening the door to PBS listings that can improve health at a population level.
For example, the TGA has approved a suite of novel GLP-1 medicines – including Ozempic, Wegovy and Mounjaro – for type 2 diabetes, chronic weight management and, more recently, obesity related indications.
We all know the economic impact of obesity in Australia is simply enormous. The Global Obesity Observatory estimates around $40 billion a year, or almost two per cent of our entire economy.
And if nothing changes, that impact is projected to blow out to more than $250 billion by 2060.
New GLP‑1 treatments offer the potential to reduce those pressures, helping people stay healthier for longer, and easing the economic strain on the health system in the long term.
We also need to be upfront about the challenges that come with GLP‑1 medicines.
We know that when people stop taking GLP‑1s, weight regain is common — with several studies showing people regain most of the weight they lost within a year of stopping treatment.
There are also practical challenges — from global supply constraints to the need for an assessment system that can respond quickly to new evidence and changing patterns of use.
So, as we look at the huge potential of GLP‑1s, we also need to navigate these risks carefully and make sure any assessment weighs up long term value and real-world impact.
We also need, as Michael again indicated, to consider equity of access. As highlighted in a paper from the Medical Journal of Australia, obesity has a much greater impact on Australians who live in lower socio‑economic communities.
Obesity rates are 13 percentage points higher in the poorest communities in Australia compared to the richest.
People in these communities are also more likely to experience serious obesity‑related health problems, which places a greater burden on our public health system.
Yet despite this higher need, Australians with type 2 diabetes who live in lower‑income postcodes are significantly less likely to be prescribed GLP‑1 medications.
And PBAC has advised in a letter to me in December last year:
Particular population cohorts should be prioritised when it comes to GLP-1 roll-out.
A slow and managed roll-out of access to subsidised GLP-1 treatments in the Australian health system would help to limit use outside of the subsidised populations and uncertainties around long-term use, outcomes, and emerging adverse events.
Wrap around support services, such as diet and exercise support, are obviously an important component of obesity care.
But the PBAC were clear that PBS-subsidised access to GLP-1s should not be contingent upon use of wraparound services as this would create a barrier to accessing therapy, leading to greater inequity.
We have every reason to believe GLP‑1s could save the health system substantial money in the long run, but there is a lack of studies in Australia to evidence this.
The same MJA paper pointed to a study in the UK as potentially offering the evidence that we need.
The NHS has launched a £40 million pilot to allow GPs to prescribe up to two years of semaglutide for people with a BMI over 35 and at least one weight‑related health condition.
The key objective of this pilot is to determine whether there are downstream cost reductions in procedures and waiting lists for elective surgery.
Now, it’s important to acknowledge that the NHS pilot has attracted some criticism.
There are concerns about funding pressures, inconsistent clinical processes, a lack of standardised models of care still, and the limited availability of the wraparound services needed to support sustained weight loss. And global supply issues have also delayed the program’s start.
But those controversies aren’t the main story here.
If the NHS pilot ultimately shows that expanding access to GLP‑1s leads to fewer surgical procedures, shorter waiting lists, and lower long‑term costs, it could provide exactly the kind of real‑world evidence currently not available.
Evidence that could demonstrate that investing in GLP‑1s isn’t just good for patients, it may be good economic policy.
There is no doubt that GLP-1s have the ability to reshape our approach to chronic disease.
They have the potential to improve life expectancy, reduce disease burden and, in turn, even further enhance national productivity.
The PBS was built on the principle of equitable access, and preserving that means making measured, responsible decisions about how we bring new therapies into the system.
As these disruptors emerge the PBS will need to evolve, but it must do so in a way that protects its core purpose: affordable, reliable access to medicines for all Australians.
Our task is to manage that evolution carefully, so the breakthroughs of tomorrow strengthen the PBS rather than overwhelm it, ensuring it can keep delivering for decades to come.
As well as being sustainable, the PBS must remain nimble enough to evaluate value, affordability and access in a way that continues to protect patients while also protecting the integrity of the system.
Which is one of the reasons the Health Technology Assessment Review is so important.
This review represents the most comprehensive analysis of Australia’s assessment and reimbursement framework in well more than a decade.
In 2010, the most expensive medicine on the PBS cost the taxpayer $24,000. By 2024, the most expensive medicine on the PBS cost the taxpayer $2.5 million, 100 times the amount.
Australia’s HTA capability and processes must prepare for, and be able to respond to, the volume of gene-modified cell therapies in the pipeline, which is simply jaw dropping. As of January 2024, there were 7 cell RNA therapies registered by the TGA, 7; 46 were registered in comparable jurisdictions around the world; but a jaw dropping 3,951 were in the development pipeline.
The Review confirmed Australia has a world-class evaluation system, but one designed in an era when therapies were less complex and evidence requirements were more predictable.
The Review identified opportunities to reduce duplication, streamline processes and better align system resources with evolving clinical and scientific needs.
In September last year I announced a number of immediate actions in response to the interim report by the HTA Review Implementation Advisory Group.
This included consultation on streamlined assessment pathways and a rolling review of the PBAC Guidelines, beginning with comparator selection and discount rate used by the committee.
The Department now have the right experts on board to begin this important work.
It’s expected targeted stakeholder engagement will commence in April, and I will receive an update by mid year.
Our ambition is to reduce unnecessary delays, enhance transparency and ensure patients get timely access to high value innovations.
These reforms will also help industry bring new therapies to Australians sooner, while preserving the rigorous, evidence driven approach that makes the PBS so trusted.
It seems almost glib to say right now, that as medicines evolve, so too do the global systems that produce, price and distribute them.
The most seismic developments has been US moves to implement ‘Most Favored Nation’ pricing policies for prescription medicines in that country.
In Australia, we understand the importance of affordable or cheaper medicines.
We see the benefits of lower prices every day - better access for patients and a more sustainable health system.
In that context, perhaps it should be at no surprise that President Trump has sought to secure cheaper medicines for Americans that have long paid the highest prices in the world.
The United States simply dominates the global pharmaceutical market: around 50 per cent of worldwide pharmaceutical volume passes through the US, generating roughly 70 per cent of global profits.
For companies developing the most innovative medicines and treatments, that figure can rise to as much as 80 per cent. For global pharma it matters, it matters a lot.
A major driver of higher prices, of course, in the US system, is the role of intermediaries, which is why the Administration launched the typically eponymous Trump RX, allowing consumers to purchase medicines directly from manufacturers at discounted prices circumventing all of the intermediaries in that system.
It goes without saying, reducing US prices creates price pressure in every other market.
Over time, Australian medicine prices are likely to be used in international basket or reference pricing to benchmark prices in the United States.
We are concerned, as I think is every other country around the world that it could have a chilling effect on pharmaceutical companies’ willingness to bring new medicines to market like ours.
Especially given the disciplined pricing model of our PBS.
And this global instability is obviously going to influencer our ongoing response to the HTA Review.
The PBS is both a health program but it’s also an economic stabiliser, helping Australians afford medicines, stay well and participate in work and all that life in this country has to offer.
Recent reforms like 60‑day prescriptions and lower co-payment reflects Labor’s belief that access to medicines is essential for equity and economic strength.
As new therapies emerge, our task is to ensure Australians can access them affordably and sustainably.
Australia has strong evaluation systems and a clear reform agenda to balance innovation, cost as well as fairness.
Above all, the PBS endures because Australians trust it to be there when they need it. It’s one of the nation’s most successful public policy achievements.
Thank you all for having me today and all the best for the rest of your conference.