Does Australia really take too long to approve medicines, as the US says?

Australia’s drug approval system is under fire, with critics in the United States claiming it is too slow to approve life-saving medicines.

Australia’s Therapeutic Goods Administration balances speed with a rigorous assessment of safety, efficacy and cost-effectiveness.

So does Australia really lag behind the US Food and Drug Administration? And do we need to change how we approve medicines?

The drug development pipeline

Drug development usually begins when something new is discovered about a disease. This usually involves identifying either a change in an important protein or finding a new protein involved in the disease.

When scientists know the shape of the protein, they can design a drug that can block or activate it.

Scientists will then undertake laboratory, petri dish-type, experiments to see if the drug works on the protein in the way they designed. If it passes those tests, they will then move onto animal testing and formulation.

Formulation is the step where scientists decide what form the medicine will take, such as a tablet, injection or patch. There are more than 150 different pharmaceutical dosage forms to choose from.

The final steps are human testing. This requires the completion of three types of clinical trials. Each seeks to answer different specific questions about the drug:

• Phase I trials: is the drug safe? What are its side effects?
• Phase II trials: does the drug work?
• Phase III trials: is the drug better than currently available medicines?

At the end of the trials, a company can apply to the Therapeutic Goods Administration (TGA) for approval to market and sell the drug.

Getting a drug to market is time-consuming and costly. It takes around 15 years from the initial concept and design to government approval and costs more than A$3.5 billion.

But the failure rate is high: more than 90% of drugs that undergo development never gain government approval.

How are drugs approved in Australia?

The decision to approve new medicines for sale in Australia is made based on safety and efficacy evidence provided by the sponsoring company.

Once approved, the drug is added to the Australian Register of Therapeutic Goods.

Listing a medicine on the Pharmaceutical Benefits Scheme (PBS) is a separate process from approval, and is based on financial considerations and a cost-benefit analysis, rather than safety and efficacy.

The TGA typically takes 240 to 260 working days (around a full calendar year) from receiving a new medicine application to an approval decision. This is longer than it takes the US Food and Drug Administration (FDA) – 180 to 300 days.

Where there is a pressing need, the approval process can be faster. The first COVID treatment was approved in Australia just two weeks after it was submitted for consideration.

Then why do Americans often get medicines first?

There can be several reasons why a drug approval can be delayed in Australia when it has already been approved overseas.

First, with a population of 27 million out of 8 billion world-wide, Australia is a relatively small market. So it is not always a high priority for companies to apply for approval here. Regions with large populations such as China, India and Europe are a bigger focus for companies. This can therefore delay when they submit to Australia.

Other reasons for delays can be that the TGA requires additional safety or efficacy evidence other regions did not request, or because new information about the drug has come to light since the drug was approved overseas.

What about delays getting drugs onto the PBS?

When a drug is listed on the PBS, Australians can access the medicine for $31.60 (or $7.70 concession) instead of the cost of a private prescription which might be hundreds or even thousands of dollars.

The time it takes for medicines to be approved on the PBS has also been a focus of criticism.

The Pharmaceutical Benefits Advisory Committee (PBAC), which makes PBS listing recommendations to the Federal Minister of Health, only sits three to six times per year.

US Chamber of Commerce vice president John Murphy claims the PBAC takes, on average, 32 months to make a recommendation about listing a drug after an application has been submitted.

Once a recommendation is made, the minister usually takes a minimum of five months to make a final decision.

Read more: Australia’s PBS means consumers pay less for expensive medicines. Here’s how this system works

To speed up the process, the TGA does allow parallel applications for drug approval and PBS listing.

The time taken to make a PBS listing decision is reasonable, given the scheme’s overall cost. In 2023–24, the total cost of the PBS to the government was $17.7 billion. So a decision to list can’t be made lightly.

So should Australia change how it approves medicines?

Criticising the time it takes to get regulatory approvals appears to be part of a wider plan of attack by the US government. It is putting pressure on Australia to open its market to higher prices for medicines made by US pharmaceutical companies.

Australia has a world-class regulatory agency in the TGA which ensures medicines that are approved are both safe and effective. And the PBS scheme is a key part of our public health care system and the envy of the world.

The Australian government should resist any changes to the regulatory approval processes that come from the US.