The Domino Effect… AU Federal Court Confirms Compulsory PBS Price Drop Knocks Price of Related Drugs

Gilead Sciences Pty Ltd v Minister for Health and Ageing [2026] FCA 232

Introduction

In March this year, Justice Downes of the Federal Court of Australia delivered her decision in Gilead Sciences’ (Gilead) case against the Minister for Health and Ageing (the Health Minister).  Finding against Gilead, her Honour held that once Alphapharm’s generic of Gilead’s Descovy® (which contains 2 antiviral compounds) is PBS listed, price reductions would also apply to Gilead’s Odefsey® and Biktarvy® (each containing the same 2 compounds plus another), and Genvoya® (containing the same 2 compounds, plus 2 others) under s 99ACC of the National Health Act 1953 (Cth) (the Act).  Her Honour’s decision has wide-reaching implications for the pricing of combination drugs.

While Gilead has not appealed Justice Downes’ decision, the battle between Gilead and Alphapharm is far from over.  In May 2026, Gilead Sciences commenced patent infringement proceedings against Alphapharm, seeking and then obtaining (by consent) an interlocutory injunction in July 2026 to prevent the PBS listing and launch of Alphapharm’s Dencovir®.  These proceedings follow Gilead’s preliminary discovery application filed in March 2026 and resolved by consent orders later that month, with Alphapharm agreeing to provide Gilead with certain requested information regarding Dencovir®.

Background

The Legislation

Division 3A of the Act provides, amongst other things, that when the first generic brand of a pharmaceutical item is PBS listed, price reduction provisions will apply to brands of pharmaceutical items that are connected to the newly listed generic brand.  In particular, pursuant to s 99ACC:

• Price reductions apply to:
  • an existing brand of a combination item, that is, in summary, a drug that contains at least 2 other drugs or medicinal preparations, at least one of which is a listed component drug; and
  • a new generic brand of a pharmaceutical item that has that component drug which is listed for the first time.
• On the day the price reduction takes effect, the approved ex-manufacturer price (AEMP) of the single brand of the combination item is reduced in accordance with the method set out in the regulations (namely, reg. 65A).

Gilead’s PBS Listed Products

Gilead has the following products listed on the PBS:

• Descovy® (Emtricitabine + Tenofovir Alafenamide);
• Odefsey® (Emtricitabine + Rilpivirine + Tenofovir Alafenamide);
• Genvoya® (Tenofovir Alafenamide + Emtricitabine + Elvitegravir + Cobicistat); and
• Biktarvy® (Bictegravir + Emtricitabine + Tenofovir Alafenamide).

Following Alphapharm’s listing of Dencovir® (a generic version of Descovy®) on the ARTG in January 2026, Gilead became concerned that Alphapharm would soon PBS list Dencovir®.

Key Issues

Both parties agreed that, if Dencovir® was listed on the PBS, Division 3A of the Act would have the effect that a first new brand price reduction would apply to Dencovir®, and the same price reduction would apply to Descovy® itself.

The key question on which the parties disagreed was: would the listing of Dencovir® result in price reductions for any other products which included emtricitabine and tenofovir alafenamide (i.e. Odefsey®, Genvoya® and Biktarvy®)?

Gilead argued that there should not be any price reductions for Odefsey®, Genvoya® and Biktarvy®; the Health Minister disagreed.  Answering this question required Justice Downes to determine whether each of these products (i.e. Odefsey®, Genvoya® and Biktarvy®) is a combination item and whether the drug in each of them contains a listed component drug, namely “emtricitabine with tenofovir alafenamide”.

Gilead argued that if the Health Minister’s approach is correct, then reg. 65A (which provides the mechanism by which the price reduction is calculated) is invalid, stating that:

• Reg. 65A does not provide any direction as to how to choose between the different possible combinations of a combination product’s constituents when selecting the components to which the formula in reg. 65A(2) is applied; and
• as a result, the choice as to how to apply the formula was an entirely arbitrary one, generating different results depending on the choices made.

The Health Minister disputed Gilead’s position.

Consideration

Justice Downes analysed the statutory provisions and definitions.  Her Honour held that the price reductions would apply to Odefsey®, Genvoya® and Biktarvy® under s 99ACC of the Act if Dencovir® was PBS listed because each of Odefsey®, Genvoya® and Biktarvy® is a combination item.  Why?  Because Odefsey®, Genvoya® and Biktarvy® are each a pharmaceutical that contains at least 2 other drugs, at least one of which is a listed component drug (namely, “emtricitabine with tenofovir alafenamide”).  Her Honour also held that reg. 65A was not invalid.  Why?  Because her Honour considered that the manner in which reg. 65A works was not as stated by Gilead, and so rejected Gilead’s position.

Outcome and Implications

Gilead failed on all its arguments, with Justice Downes holding that the price reduction that would result if Dencovir® was to be listed on the PBS would also apply to Gilead’s Odefsey®, Genvoya® and Biktarvy®.  Gilead was also ordered to pay the Health Minister’s costs.

Her Honour’s decision has wide-reaching implications for the pricing of combination drugs.  The statutory price reductions which result from the listing of a generic product on the PBS will now impact the pricing of combination products that include the same listed component drug.

Her Honour’s decision also impacts innovator drug companies’ market enforcement strategies when faced with the imminent generic entry for a combination drug.  Gilead has moved swiftly to protect its Australian market position by commencing patent infringement proceedings against Alphapharm in May 2026 and obtaining (by consent) an interlocutory injunction to prevent the PBS listing and launch of Alphapharm’s Dencovir®.

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