The Department of Health and Social Care has published the official payment percentage for the third year of the 2024 Voluntary Scheme for Branded Medicines Pricing, Access and Growth (VPAG). This guidance, released on 10 December 2025, sets the headline payment rate for 2026 at 14.5%. This figure represents a significant drop from the 22.9% rate applied in 2025, signaling a shift in the financial landscape for the UK life sciences sector.
The substance of this announcement stems from a technical update to the five-year agreement reached between the Department of Health and Social Care, NHS England, and the Association of the British Pharmaceutical Industry. The scheme is designed to balance the need for a financially sustainable NHS with the desire to support economic growth. Under the terms of the agreement, the payment percentage is calculated annually based on the difference between the allowed growth in the branded medicine bill and the actual growth in sales.
The 2026 rate of 14.5% applies specifically to 'newer' medicines. This category generally includes products that are still under patent protection or have not yet faced generic competition. The reduction reflects the planned 'step-up' in the allowable growth cap within the scheme. While the growth cap for the branded medicine bill was restricted to 2% in 2024 and 2025, it is permitted to rise in the later years of the agreement, reaching 4% by 2027 and 2028. Consequently, data are now showing that the repayment burden is beginning to align with these more generous growth allowances.
Previously, the 2025 rate of 22.9% placed a heavy repayment requirement on companies, which many argued hindered the commercial viability of the UK market. The new 14.5% rate provides a more favourable environment for products in the 'newer' medicines category. However, 'older' medicines—those that are off-patent—continue to operate under a separate mechanism. These products are subject to a base 10% payment plus a variable top-up if their price has not fallen by at least 35% below the original list price.
The announcement also serves as a reminder of the broader commitments within VPAG, including the £400 million 'Access and Growth' investment programme. This fund, financed by the industry, is intended to speed up the rollout of innovative medicines and bolster the UK’s clinical trial capacity. No further consultation window is required for this specific rate, as it is the result of the pre-agreed calculation formula. Implementation will begin on 1 January 2026, with companies required to adjust their quarterly financial planning accordingly.
Source: UK Department of Health and Social Care
Link: The 2024 voluntary scheme for branded medicines pricing, access and growth: payment percentage for 2026
Date: 10 December 2025