The price of waiting: How strategic negotiation affects access to publicly funded medicines in Australia

CHE RESEARCH BITES

By Jing Jing Li and Anthony Harris

27 March, 2026

Public funding decisions for new medicines have long been criticised for unnecessary delay. This study asks whether the time it takes to reach agreement in Australia's Pharmaceutical Benefits Scheme (PBS) reflects something more deliberate: strategic behaviour by both parties, not simply slow administration or bureaucratic inefficiency.

Using data from 634 submissions covering 400 therapies between 2005 and 2018, the authors found that reaching agreement took a median of 16 months, and 71% of individual negotiation rounds ended without a deal. Therapies that were less cost-effective, had greater uncertainty in their clinical or economic evidence, or carried a large projected budget impact took longer to be funded and were less likely to be funded at all. Conversely, therapies deemed clinically important, those addressing serious unmet need, and those attracting higher public attention were listed more quickly.

The study also tracked how negotiations evolved over successive rounds. Agency confidence in the supporting evidence tended to increase with each resubmission, and the cost-effectiveness ratio typically improved, suggesting that companies adjusted their pricing or evidence packages in response to earlier rejections.

The authors interpret these patterns through the lens of dynamic bargaining theory – a framework in which both parties behave strategically under uncertainty. Companies may delay resubmission to gather stronger evidence, whilst the agency may withhold agreement to manage budget exposure or wait for greater certainty.

The findings suggest that the PBS listing process operates as a structured negotiation in which delay serves a functional role, allowing evidence to mature and offers to converge, rather than simply reflecting administrative inefficiency.

Li JJ, Harris A. Strategic Delay and Bargaining Over Public Insurance Coverage for Drugs in Australia. Health Economics. 2026.

Find out more about the Economic Behaviour, Incentives and Preferences in Health and Economic Modelling of Health Policies and Technologies themes.

CHE Research Bites are short, easy-to-understand summaries of our recent academic papers highlighting new evidence and insights on topical issues in the health and healthcare sectors.

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