What delgocitinib reveals about Australia's Pharmaceutical Benefits Scheme

When the Pharmaceutical Benefits Advisory Committee (PBAC) recommended delgocitinib for listing on Australia's Pharmaceutical Benefits Scheme (PBS) in November 2025, the decision attracted little public attention. The medicine had been assessed under Australia's established reimbursement framework and judged on its clinical and cost-effectiveness merits.

Its commercial history, however, raises a broader question.

Delgocitinib was originally discovered and developed by Japan Tobacco (JT). LEO Pharma subsequently licensed the rights to develop and commercialise the medicine outside Japan, marketing it in Australia as Anzupgo®. At the time PBAC recommended the medicine for PBS listing, Australian clinicians prescribed a medicine supplied by a conventional pharmaceutical company. Yet the underlying commercial and intellectual property remained connected to JT through existing licensing arrangements. 

None of this suggests that PBAC reached the wrong decision. Nor does it imply that LEO Pharma acted inappropriately. Australia's reimbursement system is designed to assess medicines according to their safety, efficacy and cost-effectiveness. Delgocitinib was assessed on those criteria, as it should have been.

Why does this matter? The tobacco, vaping and nicotine industry occupies a unique position in health policy. Unlike most industries, its products directly contribute to diseases that Australia's health system spends billions of dollars preventing and treating. For decades, governments and health organisations have sought to minimise tobacco industry influence across healthcare.

The question raised by delgocitinib is whether that longstanding commitment to transparency should also extend to publicly funded medicines.

Following the money

The objective is to ensure governments, clinicians, patients and the public understand when financial benefits from publicly funded medicines may ultimately flow to industries whose products contribute to the disease burden those medicines are intended to treat.

The case nevertheless illustrates how pharmaceutical innovation has changed.

Medicines increasingly emerge from collaborations involving multiple organisations, jurisdictions and commercial arrangements. Intellectual property may originate in one company, development occur in another, manufacturing in a third and commercialisation through several regional partners. Licensing agreements, royalty streams and intellectual property transfers have become routine features of pharmaceutical development.

The legal sponsor appearing before PBAC is often only one participant within that broader commercial network.

After PBAC's recommendation, Shionogi acquired the intellectual property associated with delgocitinib, ending the tobacco industry's commercial connection with the product. The commercial arrangements changed. Australia's governance framework did not. Had the transaction not occurred, the PBS would still have contained no mechanism requiring those relationships to be identified, disclosed or considered.

The case resolved itself. The underlying policy question remained.

Regulating increasing complex commercial relationships

The earlier debate surrounding Philip Morris International's acquisition of Vectura focused largely on ownership. Delgocitinib points elsewhere. Commercial relationships increasingly sit behind licensing agreements, royalty streams and intellectual property rights rather than corporate ownership alone. The company named on a PBS application may reveal only part of the commercial picture.

Pharmaceuticals are hardly unique.

Across many sectors, regulation has had to adapt to increasingly complex international supply chains. Australia's Modern Slavery Act, for example, does not prohibit complex commercial arrangements. Instead, it requires organisations to identify and disclose risks within them, recognising that transparency is often a prerequisite for accountability.

Medicines present different policy considerations, but they raise a similar governance question. As pharmaceutical development becomes increasingly collaborative, should transparency frameworks evolve alongside it?

One possible response would be to require pharmaceutical sponsors seeking PBS listing to disclose whether tobacco, vaping or nicotine industry interests are connected to a medicine through ownership, investment, licensing arrangements, intellectual property, royalty streams or other commercial relationships. Such disclosures would not determine whether a medicine should receive public funding. Clinical effectiveness, safety and cost-effectiveness would remain the central considerations. They would, however, provide governments, clinicians, patients and the public with information that is not currently collected in any systematic way. This is the approach recently proposed by the Thoracic Society of Australia and New Zealand in its policy paper on medicines supply chain transparency. 

Whether disclosure should ultimately lead to additional policy responses is a separate question. Some may conclude that transparency alone is sufficient. Others may argue that different commercial relationships warrant different policy approaches. Those debates can only occur if the relevant information is available.

Delgocitinib is unlikely to be the last medicine whose commercial history spans multiple organisations, jurisdictions and licensing arrangements. Pharmaceutical innovation will continue to evolve. Australia's PBS has repeatedly adapted to advances in clinical science and health technology assessment. Whether its transparency frameworks should evolve alongside the commercial realities of modern medicine is a question now worth considering.

Vincent So is Chief Executive Officer of the Thoracic Society of Australia and New Zealand. He has previously worked in healthcare, investment banking, government and public policy.