Following months of debate and negotiation, an agreement has been reached between the government, NHS England, and the pharmaceutical industry on the successor to the Voluntary Scheme for Branded Medicines Pricing and Access (VPAS) scheme.
The new deal is projected to save the NHS £14 billion over five years in medicines cost, will enable patients to access the latest lifesaving treatments more consistently, and will boost the UK’s status as a global life sciences superpower.
The voluntary scheme for branded medicines pricing, access, and growth (VPAG) scheme, will be the successor to the VPAS scheme and will run for 5 years until 31st December 2028, and is defined by its capability to double the annual allowed growth in the sales of branded medicines, from 2% in 2024 to 4% by 2027. The new scheme also implements a mechanism to support lower industry payment rates for more innovative branded medicines. Older medicines which have not seen price reductions, will have to pay a top-up rate of up to 25% in addition to the older medicines base rate of 10%. The top-up tapers down for older medicines that have already seen significant price reductions, ensuring the recognition of when competition has worked effectively to make savings for the NHS.
Under this agreement, the pharmaceutical industry will also provide an investment of £400 million over 5 years through the Life Sciences Investment Programme to drive forward UK innovation, sustainability, and growth. This programme will focus primarily on pioneering clinical trials, manufacturing, and innovative health technology assessments.
The agreement comes after months of uncertainty from industry, with ABPI warning that unless the UK took action to reduce the rebate rates levied on branded medicines sales, it could lose £1.9 billion investment in R&D spending in 2028. As such, the new agreement marks the successful capability for the government to continue to collaborate with the pharmaceutical industry to manage medicine affordability for the NHS and ensure rapid access to medicines to keep the UK at the forefront of global life sciences.
Chancellor of the Exchequer Jeremy Hunt said: “This landmark agreement will not only save the NHS money, but help patients get access to the very best medicines and treatments for years to come. With significant new industry investment in research, clinical trials and manufacturing, this deal will bolster Britain’s position as the largest life sciences hub in Europe, and support a sector so critical to our country’s health, wealth, and resilience.”
Robert Kettell, NHS England’s Director of Medicines Negotiation and Managed Access, who led day-to-day negotiations, stated: “This 5-year agreement will enable NHS England to build on our track record of securing innovative, life-changing treatments for millions of patients across the country at a fair price for taxpayers.”