Australia’s HTA system was one of the world’s first, but outdated methods mean patients now wait an average of 466 days for subsidised access to new medicines. We look at the 2024 HTA Review and whether its reforms can close the gap.
The health system in Australia
Australia’s health system is a mix of universal public coverage and private supplementation. Medicare, the national scheme, is funded through a mix of general taxation and an income-based levy, and covers most costs of public hospital treatment and subsidised out-of-hospital medical services. Around half of Australians also hold private health insurance, largely to access private hospital care and avoid the Medicare Levy Surcharge. Total health expenditure across Commonwealth, state, territory, and private sources was estimated at over $270 billion in 2023-24, or just over 10% of GDP, and it is growing substantially. Of this $270 billion, federal and state governments fund $188 billion, or 70% of the total, while non-government sources fund the remaining $82 billion, or 30%.
Two Commonwealth-funded schedules do most of the work of subsidising technology. The Pharmaceutical Benefits Scheme (PBS) covers most prescription medicines, while the Medicare Benefits Schedule (MBS) covers medical services – including GPs, public hospitals and other public health services, some medical devices, tests, and procedures. Vaccines are mainly funded through the Commonwealth-funded National Immunisation Program (NIP). Neither medicines, vaccines nor medical devices are funded without passing through Australia’s HTA architecture first. Medical devices can also be funded through private health insurance.
Australia’s HTA architecture rests on two committees. The Pharmaceutical Benefits Advisory Committee (PBAC) assesses medicines seeking PBS listing and vaccines for the NIP, drawing on comparative effectiveness, cost-effectiveness, and total cost to government as core decision criteria. The Medical Services Advisory Committee (MSAC) performs the equivalent function for medical services and, since 2016, high-cost medical devices funded through hospital pricing arrangements. Both committees operate a defined submission cycle. PBAC works to a 17-week assessment timetable; MSAC’s process runs longer, largely because it includes an additional Protocol Advisory Sub-Committee (PASC) step to agree the assessment scope before evidence is even submitted.
The assessment process in practice
Market authorisation from the Therapeutic Goods Administration (TGA) is a separate step, and Australia has increasingly allowed sponsors to pursue TGA registration and PBAC or MSAC assessment in parallel rather than in strict sequence. This has genuinely accelerated speed to market as companies have gradually made use of this provision. It has also, as the PBAC itself has acknowledged to government, introduced new challenges: companies can now submit evidence earlier than before, which may lead to greater uncertainty around efficacy and cost-effectiveness and may also limit opportunities for engagement with the patient community.
The PBAC Guidelines set out, in detail, what a submission must contain and how the committee expects clinical and economic evidence to be presented. Codependent technologies, where a drug and a companion diagnostic must be assessed together, follow a combined pathway involving both committees, a coordination challenge that both agencies are only now starting to formalise, having been one of the first systems to introduce a joint assessment process. This is made more complicated by the fact that while the Commonwealth (federal) government funds medicines and some devices, the Australian sub-national state and territory governments are responsible for providing public hospital services and are sometimes responsible for delivering the administration of codependent devices. Special pricing arrangements, managed entry schemes, and risk-sharing agreements give the PBAC flexibility on price once a technology clears the cost-effectiveness bar, and are used more often for medicines than for MBS-listed devices and services.
On paper, Australian HTA is a mature system, both from a methodological and process viewpoint. In practice, several of its working assumptions have not kept pace with how medicines are now developed, priced, and valued internationally, and the strain is starting to show. Much of Australia’s HTA methods, assumptions and architecture were established in the late 1980s and early 1990s and are starting to show their age.
Methodological challenges
There are various methodological issues in Australia’s HTA system that have caused much debate, discussion and, at times, disagreement in the country. One of the most contested of these is comparator selection. PBAC Guidelines direct sponsors toward the lowest-cost alternative treatment as the benchmark for cost-effectiveness, even where that comparator is not what clinicians would actually replace in practice. No comparable HTA body applies quite so rigid a rule. Even Canada’s “minimum practice” approach leaves more room for clinical judgement. The effect is a persistently low price ceiling, and it is a major reason why some manufacturers have recently declined to proceed after a positive recommendation.
Another example is discounting. The PBAC’s base case discount rate has sat at 5% for years, well above the rates now used across comparable systems: 3.5% in England and New Zealand; 2.5% in France; 1.5% in Canada. The consequence is not abstract. At a 5% discount rate, the present value of a human life is roughly 20 years; at the 1.5% rate used elsewhere, it is closer to 48. Treatments with high upfront costs and benefits that accrue over decades, such as adolescent HPV vaccination or gene therapies, are the most heavily penalised by this choice. OHE research comparing methods across 14 HTA agencies, including the PBAC, found Australia among the outliers still using an older discounting convention that most peer systems have already revised.
More generally, other methodological issues have been highlighted in Australia’s HTA system. The lack of an explicit cost-effectiveness threshold, a tendency to try to minimise fiscal uncertainty for government and what industry has described as relatively low acceptable price points by international standards have complicated the medicine listing process for the PBS in Australia.
Together, these technical settings have produced a headline statistic that is hard to defend: the average wait between TGA approval and PBS subsidy is now around 466 days. For an industry and a patient community that increasingly benchmark Australia against faster-moving systems, that figure has become a rallying point in itself. Moreover, the pharmaceutical industry in Australia argues that only around 25% of medicines that have been launched globally over the past decade have been reimbursed in Australia, compared to 46% in the United Kingdom.
Implementing methodology changes
The 2024 HTA Policy and Methods Review, commissioned by the Commonwealth government and delivered after wide consultation with clinicians, consumers, and industry, made 50 recommendations addressing many of these technical and policy gaps, including
- comparator selection, discounting, streamlined pathways for codependent technologies,
- more consistent engagement with consumers and with Aboriginal and Torres Strait Islander communities,
- better mechanisms for assessing technologies aimed at populations, such as children and people with rare cancers, who are routinely excluded from pivotal trials.
Both PBAC and MSAC cautioned that change should be incremental rather than wholesale. Industry groups have pushed for faster and bolder implementation.
An Implementation Advisory Group (IAG), chaired by former PBAC Chair Professor Andrew Wilson, was established to sequence the Commonwealth government’s response. Its interim report in September 2025 prompted the Commonwealth Health Minister, Mark Butler, to commit to immediate action:
- a rolling review of the PBAC Guidelines beginning with comparator selection and the discount rate, rapid research into what counts as “high unmet clinical need” and “high added therapeutic value”,
- a new HTA stakeholder engagement framework with a particular focus on consumers and patients. Targeted stakeholder engagement on the guideline review was due to begin in April 2026, with a further update expected by mid-year.
The final report of the IAG was provided to the Minister in January 2026 and, at the time of writing, the Commonwealth government is still considering its response. In recent public comments, the Minister has flagged that the implementation of the HTA Review may be rolled into discussions about the upcoming industry-government strategic agreement negotiations, scheduled to start this year.
Whether this rolling, incremental approach delivers meaningfully faster or fairer outcomes remains to be seen. The Commonwealth government has signalled that a broader reform package will be considered as part of the 2026-27 Federal Budget, which suggests an opportunity for the pace of change to finally pick up. But the IAG’s final report and implementation roadmap, expected in early 2026, have still not been made public in full.
There is also a wider structural question the Review only partly answers. Australia’s HTA settings were designed for a world of single new medicines competing against established standards of care. They are now expected to cope with codependent diagnostics, cell and gene therapies with genuinely unprecedented pricing, and funding levels that have failed to keep pace with the growth in Australia’s economy and population. Updating things like a comparator rule or a discount rate addresses some of the technical HTA issues but does not, on its own, resolve the deeper mismatch between how technologies are now developed and how Australia’s assessment system was built to evaluate and fund them, an issue that many HTA bodies are now facing.
Australia built one of the world’s earliest and most capable HTA systems, and that legacy is not in question. What is in question is whether a rolling, guideline-by-guideline reform process, however carefully sequenced, can outpace an environment that is changing faster than the committees reviewing it. With the negotiations for the next industry-government agreements in pharmaceuticals about to commence, there is much anticipation among health sector stakeholders about getting real progress on reform and investment in Australia’s health and HTA systems.
