The maximum price Australians will pay for PBS-listed medicines will be slashed to $25, as the federal government promises not to bow to Big Pharma looking to charge "top dollar".
From January 1, the maximum amount patients would pay for prescription medicines listed on the government's subsidy scheme will be reduced from $30 to $25, Labor has promised if re-elected.
The coalition was quick to match the proposal.
Under Labor's plan, four out of five Pharmaceutical Benefits Scheme medicines would become cheaper, saving Australians $200 million every year and reducing the program's patient cost cap to its lowest level in two decades.
"Cheaper medicines are good for the hip pocket and good for your health," Health Minister Mark Butler said.
The $689 million proposal will be included in the federal budget, to be handed down on Tuesday.
Alongside stronger Medicare and more free GP visits, cheaper medicines showed Labor had Australians' backs, Prime Minister Anthony Albanese said.
"What this is about is putting cost of living relief for people who need it, but also it will put downward pressure on inflation," he told ABC Radio Melbourne.
The Pharmacy Guild of Australia said that if Labor is re-elected, and the policy is implemented, prescription costs will fall to the lowest in 20 years.
"If this action had not been taken, Australians would be paying up to $50 per script in 2026," national president Trent Twomey said.
Opposition Leader Peter Dutton said the coalition supported the plan and had gone to the last election with a similar policy.
"We support affordable medicines," he told 2GB radio on Thursday.
"It's good for prevention, it's good for people to have well-managed medication programs, and you get better health outcomes in the system."
While the PBS has unanimous support in Australia, big US pharmaceutical companies resent not being able to extract maximum profits from Australians for their essential medicines.
The Pharmaceutical Research and Manufacturers of America (PhRMA), a peak lobby group representing US pharmaceutical companies, wrote to President Donald Trump calling for him to add Australian medicine manufacturers to his tariff hit list.
Mr Butler ruled out allowing the PBS to be used as a bargaining chip in tariff discussions, saying it wasn't the first time Big Pharma had pushed against Australia.
"Their interest is in selling medicines at top dollar," he said.
"Our interest is in making medicines cheaper for Australians.
"We have to make it crystal clear as a government that we will not negotiate over the PBS. We will not negotiate over cheaper medicines."
PhRMA claimed PBS listings dictate access to the Australian market and that "unnecessary" supplemental data requests and other administrative motions cause significant delays.
"Egregious and discriminatory pricing policies in several markets, including Canada, Japan and Korea, continue to undervalue American innovation, threaten billions of dollars in lost sales and put American competitiveness, jobs and exports at risk," the group wrote in a submission.
Its submission further claimed that PBS pricing policies can have a "chilling effect" that prevents Australians from gaining fast access to new medicines.
