The Department of Health and Social Care (DHSC) has launched a consultation to amend the Branded Health Service Medicines (Costs) Regulations 2018. This proposal ensures the statutory scheme maintains broad commercial equivalence with the voluntary sector. Under the new framework, the headline payment percentage for 2026 will drop to 16.5 per cent. This represents a significant reduction from the 24.3 per cent rate previously set in July 2025. This move recalibrates the financial burden for manufacturers opting out of the voluntary framework. It prevents the statutory route from becoming prohibitively expensive compared to its voluntary counterpart.
The policy shift directly follows the 2026 rate for the Voluntary Scheme for Branded Medicines Pricing, Access and Growth (VPAG) being set at 14.5 per cent. This is accompanied by a 1 per cent investment programme payment. Officials are now applying a simplified methodology that sets the statutory rebate exactly 1 percentage point above the combined 15.5 per cent voluntary requirement. This strategy also aligns with the terms of a pharmaceutical trade deal reached between the United Kingdom and the United States of America in December 2025. That deal confirmed that VPAG headline rates would not exceed 15 per cent for the remainder of the current term.
Implementation of the revised rate is scheduled for 1 July 2026. This date coincides with the start of a new financial quarter. Because manufacturers will have already made payments at the higher 24.3 per cent rate during the first half of 2026, the government will implement a corrective rate of 8.7 per cent for the final six months. This mechanism ensures the full-year average for 2026 accurately reflects the 16.5 per cent target.
Beyond fiscal adjustments, the Secretary of State for Health and Social Care is seeking to reform the institutional framework for future decision-making. The proposal introduces a streamlined consultation process where the government will replace open public scrutiny with direct engagement. Officials intend to discharge their statutory duties through targeted workshops with the Association of the British Pharmaceutical Industry (ABPI). Other participants include Medicines UK, the Ethical Medicines Industry Group (EMIG), and the BioIndustry Association (BIA). Patient representation will be funnelled through the Charity Medicines Access Consortium (CMAC).
The impact assessment quantifies the friction between fiscal sustainability and industrial incentives. While the lower rebate offers a £2.1 million net present value benefit to shareholders, it reduces available funding for health service treatments. Ministers estimate the resulting loss of income at £7 million to £8 million through 2028. The impact assessment converts this funding reduction into health impacts using a marginal cost of £15,000 per Quality Adjusted Life Year (QALY). Applying a societal willingness to pay of £70,000 per unit, officials estimate a monetised Net Present Societal Value (NPSV) of -£33.9 million for the health loss. This trade-off reflects a strategic decision to prioritise long-term market stability and research investment over immediate rebate revenue.
The consultation remains open until 21 April 2026. Stakeholders, including individual professionals, pharmaceutical companies, and patient groups, may submit responses through the official online survey. Following the submission deadline, DHSC will conduct targeted workshops to discuss the proposals before the Secretary of State for Health and Social Care makes a final determination. The department will subsequently publish its decision and a summary of responses on the central government website.
Source: Department of Health and Social Care
Link: Proposed changes to headline payment percentage and approach to consultations of the statutory scheme to control the cost of branded health service medicines - consultation document
Date: 10 February 2026
