Accelerated review of VPAG concludes without agreement

The ABPI can confirm that industry and government have been unable to reach an agreement on changes to a controversial medicines payment scheme which is undermining UK patient access to innovative medicines and the competitiveness of the UK life sciences industry.

In April 2025, the ABPI and government agreed to bring forward a planned mid-scheme review of the 2024 Voluntary Scheme for Branded Medicines Pricing, Access, and Growth (VPAG) [1].

This review was tasked with finding a mutually agreed way to address soaring VPAG payment rates, which now require pharmaceutical companies to make record payments up to a quarter to a third (23.5%-35.6%) of their revenue from sales of branded medicines to the NHS [2]. The challenge this presents is outlined in a report from the ABPI in March of this year [3].

Despite good faith and best efforts on both sides, industry and government have not been able to reach an agreed way forward that will meaningfully deliver on:

  • the UK government’s ambition for the life science sector and wider economic growth
  • industry's ambition to ensure the latest medical breakthroughs and treatments can reach all the NHS patients who can benefit from them
  • the commitments set out in the UK-US Economic Prosperity Deal

Specifically, industry and government have not been able to reach agreement on the changes needed to rapidly return the UK to single-digit, internationally competitive payment rates on medicines sales to the NHS, nor address the way in which NICE fundamentally values innovation, for which the standard decision-making parameters have not changed for almost a quarter of a century.

Richard Torbett, Chief Executive of the ABPI said: “While this review has concluded without reaching agreement, the issues it was set up to resolve remain unaddressed and continue to demand urgent action. We need to reach a solution that improves patient access to future innovation, allows the sector to fulfil its growth potential, and does not require industry to pay back nearly three times as much of its revenues as is required in other European countries. Together with global industry leaders, we want to continue constructive dialogue with government to find that solution.

“The NHS’s demand for innovative medicines has continued to grow in line with health demands. Yet the UK’s willingness to invest in new treatments has continued to fall, driven by uncompetitive and punitive rebates on company revenues, and cost-effectiveness thresholds used by the decision-making body NICE that have not fundamentally changed for nearly a quarter of a century.

“The UK will not realise the high ambition it has set for its life sciences sector until it addresses the core issue holding the UK back. For too long, the UK has sought to be the place where innovation happens, but not the place where it is used. Without change, the UK will continue to fall down international league tables for research, investment, and patient access to medicines.”

While no other country has an identical scheme to the UK, the 2025 payment rate has left the UK significantly out of line with comparable countries, with France’s average payment rate at 5.7%, Italy at 6.8%, Germany at 7%, Spain at 7.5%, Belgium at 7.9%, and Ireland at 9% [4].

Over the past decade, growth in the UK branded medicine market has been capped at between 1.1% (2014-2018) and 2% (2019-2023) per year. After accounting for inflation, this growth has declined by over a tenth (11%). In the same period, the NHS budget grew by a third in real terms (33%). [5]

The UK’s decades of disinvestment in medicines and vaccines have left the NHS lagging international peers in terms of access to and use of innovative treatments. Unless something changes, these trends will continue.

 

TAGS
  • Economy and Industry
  • Health and Access to Medicines
  • Medicines sales
  • Voluntary Scheme
  • Voluntary Scheme News
  • VPAG
  • VPAG (1)

Last modified: 22 August 2025

Last reviewed: 22 August 2025

[1] ABPI, ‘The government and ABPI agree to accelerate a planned review of VPAG,’ 04 April 2025
[2] The specific rate paid by any one company will depend on the make-up of its specific portfolio, as different products will attract different payment rates depending on whether they are considered newer or older and various other exemptions and rules listed under the scheme. For full details, please refer to: https://www.gov.uk/government/publications/2024-voluntary-scheme-for-branded-medicines-pricing-access-and-growth
[3] ABPI, Delivering a Voluntary Scheme for Health and Growth, 20 March 2025
[4] Analysis undertaken by Neil Grubert Consulting, available on request.
[5] NHS Funding and Expenditure, House of Commons Library, p.13

The ABPI exists to make the UK the best place in the world to research, develop and use new medicines. We represent companies of all sizes who invest in discovering the medicines of the future. 

Our members supply cutting edge treatments that improve and save the lives of millions of people. We work in partnership with Government and the NHS so patients can get new treatments faster and the NHS can plan how much it spends on medicines. Every day, we partner with organisations in the life sciences community and beyond to transform lives across the UK.