Australia's "free-ride" in pharmaceuticals: Can it last?

Abstract

The pharmaceutical subsidy scheme in Australia works in the public interest bykeeping prices low while assuring access to drugs across most of the drug classes.By separating the approval to market drugs from the decision to subsidise them,the Commonwealth is able to take advantage of its position ? to ?free-ride? onresearch and development expenditure in other countries. The first part of this paperexamines the factors which allow Australia to free-ride. The second part exploressome international and domestic factors which may influence the sustainability ofthe free-riding strategy.