A pricing stalemate between the pharma company and the government means the former is calling time on its PBS application.
Eli Lilly has “regretfully” abandoned its quest to have tirzepatide listed on the PBS for type 2 diabetes after it was unable to secure a viable funding recommendation for the drug.
The pharma company made its announcement just minutes after the Pharmaceutical Benefits Advisory Committee (PBAC) released the results of its March meeting, which included a positive recommendation for tirzepatide (Mounjaro).
Manny Simons, general manager of Lilly Australia and New Zealand, said the company could not proceed with the listing under the proposed conditions.
“We do not make this decision lightly. After four reimbursement submissions and extensive departmental engagement over three years, we were left with no other option,” said Mr Simons.
“We understand how disappointing this will be for up to 450,000 Australians living with type 2 diabetes who should have access to Mounjaro through the PBS.”
In its March meeting outcomes report released late on Friday afternoon, the PBAC “recommended the listing of tirzepatide (Mounjaro) for the treatment of adults with inadequately controlled type 2 diabetes mellitus”.
“The PBAC recalled input from individuals, health care professionals and organisations in relation to the July 2025 submission, noting benefits of tirzepatide use including improved daily blood glucose readings, improved HbA1c results and weight loss and noting the high cost of tirzepatide making it difficult for some people to access,” the report said.
“The PBAC acknowledged the clinical need for additional effective treatment options for people with type 2 diabetes mellitus, noting that a proportion of patients do not achieve adequate glycaemic control with currently PBS-listed therapies.
“The PBAC noted that tirzepatide is currently available through the private market and considered that PBS listing would improve equity of access, particularly for patients for whom cost may be a barrier.”
The PBAC noted that it had previously considered tirzepatide at its July 2023, November 2024 and July 2025 meetings, and that the current submission included revisions in response to the PBAC deferring making a recommendation for tirzepatide at its July 2025 meeting.
These revisions included changes to the proposed pricing, updated estimates of the number of patients that would use tirzepatide and a revised approach to managing financial risks.
“The PBAC considered tirzepatide 10mg and 15mg strengths to be cost-effective, and tirzepatide 5mg would be cost-effective with a reduced price,” the report said.
“The PBAC accepted the sponsor’s revised estimates of the number of patients that would use tirzepatide, considering these to be reasonable for the purposes of the submission, while acknowledging ongoing uncertainties related to changes in the market dynamics and supply constraints.
“The PBAC accepted the supply of tirzepatide under normal PBS arrangements and considered this appropriate to support equitable access through community pharmacy.
“The PBAC requested that arrangements for managing financial risks be progressed separately between the sponsor and the Department.”
The development effectively draws a hard line under one of the most closely watched therapies in type 2 diabetes. Up to 450,000 Australians are now unlikely to access the therapy through subsidised pathways.
At issue is not efficacy, which was acknowledged by PBAC in the positive recommendation, but the economic architecture underpinning access.
Lilly maintains that the proposed price, funding caps and risk-sharing conditions render long-term supply commercially untenable, particularly in a system where distribution margins divert a significant share of expenditure away from the manufacturer.
The company said it was not alone, noting that about 100 positive PBAC recommendations had not progressed to PBS listings over the past five years.
“Our decision was driven by the simple reality that the price conditions proposed by the Australian Government are unrealistic and unviable, independent of global pricing dynamics influenced by the US Administration’s Most-Favoured-Nation policy,” said Mr Simons.
“Health stakeholders know that Australia’s medicines access system is in a state of disrepair.
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“They also know that a fix is within reach if the federal government fully implements the recommendations of the Health Technology Assessment review and matches these reforms with a substantial increase in budget allocated to innovative medicines.
“While the door to a PBS listing for type 2 diabetes is now shut, we remain focused on finding new ways to make Mounjaro more accessible for Australians with chronic cardiometabolic conditions – including working with the government on potential solutions outside of the PBS.”
Associate Professor Sof Andrikopoulos, CEO of peak body the Australian Diabetes Association, told Dermatology Republic he was disappointed by the outcome.
“We don’t have visibility, or any insights into the negotiations that Lilly and the government are in,” he said.
“Clearly there’s a positive recommendation for PBS listing and that’s great, that’s what we would want, and as a health professional organisation, that’s what we advocate for.
“We advocate for drugs to be listed. We advocate for choice. We advocate for individualised, personalised care and having multiple options within a drug class gives you that ability to individualise care, which is critically important because somebody may not respond to one particular brand, but will respond to another brand.
“The fact that these negotiations have not progressed, means that the person with type two diabetes is impacted. So that’s concerning, clearly, from both the lived experience and also from the health professional who’s trying their best to deliver the best possible care.”
Tirzepatide, a dual GIP/GLP-1 receptor agonist, has been positioned globally as a step-change therapy for glycaemic control and cardiometabolic risk.
Its absence from subsidised access entrenches reliance on older comparators, some decades old, used as price benchmarks in the current health technology assessment framework.
In its statement, Lilly highlighted one of the benchmark drugs was a “medicine that is 20 years old, is no longer available in Australia and involves 14 times as many injections”.
The World Health Organization has designated tirzepatide an essential medicine for type 2 diabetes, and reimbursement is already in place across 11 countries, including the UK and lower-GDP markets such as China.
In contrast, Australian patients face full out-of-pocket costs, effectively stratifying access along socioeconomic lines.
Professor Andrikopoulos said the outcome was symptomatic of “chronic undervaluing of medical innovation”.
“Australians living with type 2 diabetes are being penalised by the chronic undervaluing of medical innovation,” he said.
“Type 2 diabetes is the single greatest challenge facing Australia’s health system. In spite of significant advancements in treatment, over 850,000 Australians living with this condition have inadequately managed blood glucose levels.”
For prescribers, the policy signal is equally consequential. Restrictions embedded in the proposed listing including broad prescribing eligibility without enforceable safeguards, would have shifted financial risk onto the sponsor, an arrangement Lilly said was incompatible with sustainable supply.
The company explained the recommendation included strict funding caps that would have assigned disproportionate financial risk to Lilly. The PBAC rejected proposed safeguards to restrict prescribing only to eligible patients, meaning Lilly would have to pay for the treatment of other patients.
The fallout extended beyond diabetes, Mr Simons said.
The same systemic constraints could impact future submissions for obesity and related cardiometabolic indications, where tirzepatide has also demonstrated significant clinical benefit.
The prospect of similar reimbursement outcomes raises concern that Australia’s pathway for next-generation metabolic therapies is narrowing at a time of escalating disease burden.
“Based on today’s outcome, it is difficult to see how a PBS listing for Mounjaro could be secured for Australians living with obesity or obesity-related disease,” Mr Simons said.
“Lilly would like to thank the diabetes community for their vocal support of equitable access to Mounjaro in Australia.”
