PERTH, Australia – Probably nobody was as surprised by the results of Australia's national election than re-elected Liberal Party Prime Minister Scott Morrison, but he has a lot to answer to when it comes to policy initiatives that affect the life sciences sector here.

The fate of the research and development tax incentive (RDTI) remains unclear, with the Coalition's plans to apply a $2.4 billion cut to the scheme through a series of changes remaining stalled in Parliament. This year's budget included a further $1.2 billion cut to the popular scheme.

The May budget provides no details on the RDTI, and the word "innovation" was not mentioned once. Leading up to the election, Australia's Labor Party took note of the omission and was quick to put out a release that it planned to reform the R&D tax incentive.

In its current form, the R&D tax incentive gives 43.5% of every dollar spent on R&D back to companies in a cash payment. That number was down in last year's budget, and industry was closely watching to see how it would be affected in the new budget.

The life sciences industry issued a plea to the returned Coalition government to consider the impacts of the proposed cuts.

"Supporting the RDTI would be an immediate contribution to creating high-value jobs, attracting clinical research, growing the economy and improving health outcomes for Australians," said AusBiotech CEO Lorraine Chiroiu. "The fate of the popular program remains the sector's number one concern, with many describing it as the most important government program for their company when developing life-enhancing and life-saving technologies."

A multistakeholder consortium from the medical technology, biotechnology and pharmaceutical industry sector sent out a plea to government "to adopt a common approach to R&D and to take action to support health and medical research by supporting the conditions that allow industry to do its part." (See BioWorld, May 7, 2019.)

AusBiotech's 2019 research shows that over the past year there has been a "stinging drop" in the industry's confidence that the operating environment was conducive to growing a biotech business (37% to 14%) and a strong increase in the view that the operating environment was working against the industry (16% to 26%).

AusBiotech said it welcomed the opportunity to work with the returned Coalition government, and to continue demonstrating how life sciences is a key contributor to Australia's economy and its social fabric, and why the RDTI is so important.

Health budget

The Morrison government is investing a record AU$104 billion (US$71 billion) in 2019-20 for the health budget, up from $75 billion in 2012-13, as part of a comprehensive, patient-focused investment of $435 billion over the next four years.

The plan guarantees Medicare, makes a range of life-saving medicines and services more accessible and affordable, reduces out-of-pocket costs, strengthens primary care and mental health and invests in breakthrough medical research.

Medicare funding will be increased by AU$6 billion, up from AU$24.9 billion in 2018-19, to AU$30.7 billion in 2022-23. The Medicare Guarantee Fund, established in 2017-18, allocates AU$36.6 billion in guaranteed funds for spending on the Medicare Benefits Schedule (MBS) and the Pharmaceutical Benefits Scheme (PBS) in 2019-20.

The Medicare rebate will be increased for diagnostic services, including ultrasound and X-ray imaging to reduce costs to patients (AU$198.6 million investment). It will invest AU$151.9 million to expand the number of Medicare-eligible MRI machines to more than 50 newly funded units in the past 12 months.

The government has provisioned AU$40 billion for new drugs to be added to the government-subsidized PBS list. Health Minister Greg Hunt said that new listings on the PBS are averaging about 31 new or amended listings per month. (See New PBS listings, below.)

Funding for medical research

The government is funding AU$6 billion for medical research, with AU$3.5 billion for the National Health and Medical Research Council, AU$500 million for the Biotechnology Translation Fund, and AU$2.3 billion for the Medical Research Future Fund – up from AU$222 million in 2018-19 to AU$650 million in 2022-23.

It is committing to a new AU$5 billion 10-year MRFF investment plan across four themes: patients, researchers, missions and translation.

For patients, an additional AU$931 million will be committed for a total of AU$1.3 billion allocated for development of new treatments, which includes: clinical trials for rare cancers and rare diseases; emerging consumer-driven research; global health tackling antimicrobial resistance and drug-resistant tuberculosis.

The government will commit AU$444.6 million for a total of $792.8 million to support medical researchers to make breakthrough discoveries, develop their skills and progress their careers in Australia. An additional AU$1.4 billion will be invested in sizeable health issues to bring new treatments to proof of concept, which includes: Australian Brain Cancer Mission; Million Minds Mental Health Research Mission; Genomics Health Futures Mission; Ageing, and Aged Care and Dementia Mission; Indigenous Health Futures; Stem Cell Mission; Cardiovascular Mission; and Traumatic Brain Injury.

For translational services, an additional AU$1.2 billion will be invested for a total of AU$1.5 billion to progress research ideas from the lab to the clinic. Those include increasing infrastructure, medical research commercialization and translation centers.

New PBS listings

Beginning May 1, the following drugs will be available for AU$6.50 for lower-income and elderly patients, and for AU$40.30 per subscription for other patients:

• Ibrance (palbociclib, Pfizer Inc) for treatment of inoperable advanced metastatic breast cancer. Without the subsidy, patients would pay AU$55,000 per year.

• Bavencio (avelumab, Merck Serono Australia) for treatment of metastatic merkel cell carcinoma, a rare and highly aggressive type of skin cancer. Without subsidy, patients would pay AU$150,000 per year.

• Besponsa (inotuzumab ozogamicin, Pfizer Inc.) for treatment of acute lymphoblastic leukemia. Without subsidy, patients would pay $120,000 per year.

• Tagrisso (osimertinib, Astrazeneca plc) for treatment of lung cancer. Without subsidy, patient would pay AU$88,000 per course of treatment.

• Opdivo/Yervoy (nivolumab/ipilimumab, Bristol-Myers Squibb Co.) for advanced renal cell carcinoma. Without subsidy, patients would pay AU$254,200 per course of treatment.

• Venclexta (venetoclax, Abbvie Inc.) in combination with rituximab for chronic lymphocytic leukemia. Without subsidy, patients would pay around AU$165,000 per course of treatment.