The UK’s payment rate for newer branded medicines will fall to 14.5% in 2026 under the Voluntary Scheme for Branded Medicines Pricing and Access (VPAG), a sharp retreat from this year’s record high of 22.9%.
The move comes only a week after the UK–US pharmaceuticals deal was inked, guaranteeing that at least £5bn of UK medicine exports will continue to enter the US tariff-free, avoiding the 100% duties that were on the table. In return, the UK agreed that VPAG rebates for newer medicines will not exceed 15% of net NHS sales between 2026 and 2028, offering multinationals a hard ceiling on repayment levels after years of sharp swings.
A win for industry?
For next year, however, the cap was not required. Slower-than-expected growth in NHS use of innovative medicines meant the VPAG formula itself generated a 14.5% rate under existing rules. Companies will still pay an additional 1% contribution into an industry-funded investment programme, bringing the effective rebate on newer products to 15.5% in 2026.
Industry leaders cautiously welcomed the step but warned that more reform is needed if the UK is to regain its competitive edge. Richard Torbett, CEO, ABPI, said it was “good that the amount of revenue companies will need to pay to the UK government has come down in 2026” and that the proposed cap “should also provide companies with greater certainty up to 2028”. But he added that this “is only the first step in returning the UK to a more competitive position”, noting that payment rates remain “much higher than in similar countries” and that the NHS must accelerate its adoption of cost-effective medicines if patients are to benefit.
Fallout elsewhere
Alongside the changes to VPAG, the government has also signalled a shift in how value is assessed, with plans to raise baseline NICE cost-effectiveness thresholds from £20,000–£30,000 per QALY to roughly £25,000–£35,000. If implemented as described, the reforms could make it easier for certain innovative medicines to secure favourable recommendations at sustainable prices, potentially increasing the leverage afforded by a lower and more predictable VPAG rate.
Companies now have until 16 December to decide whether to remain in VPAG or move into the Statutory Scheme, where the 2026 payment rate is set at 24.3%. That choice will serve as an early test of whether the combination of reduced rebates, tariff protection in the US and promised investment is enough to convince global pharma that the UK is once again worth prioritising for launches, trials and manufacturing.
