ABPI comment on 2025 VPAG rates of 22.9%

The Voluntary Scheme for Branded Medicines Pricing and Access (VPAG) payment rate for newer medicines has been set at 22.9% in 2025, well above expectations, putting UK industry growth and investment at risk.

In December 2023, industry signed up for a new VPAG agreement, aimed at balancing the cost of branded medicines to the NHS with predictability and increased headroom for the UK pharmaceutical industry to grow over a five-year period.

Despite being a tough deal requiring payment rates on sales of branded medicines to the NHS to start at around 15.3%, industry signed up to the agreement in the expectation that rates would trend back toward a more internationally competitive and sustainable level over the lifetime of the scheme. [1] [2].

Unfortunately, for reasons not yet fully understood, latest data shows that the 2025 payment rate has instead increased to the highest-ever level – 22.9% for newer medicines in 2025. This puts a very real strain on companies, which will not have factored this rate into their business plans for 2025. It means the industry will need to pay around £3.4 billion to the government this year, more than the total payments made over the 5-year scheme 2014-2018.

The ABPI is working urgently and collaboratively with government to understand this issue, with a view to supporting the government’s ambitions for sector growth. 

Richard Torbett, Chief Executive of the ABPI, said: “Successive governments have rightly identified life sciences as a critical growth sector for the economy. However, the sector can't fulfil this potential when payment rates are far in excess of those set in competing countries.

“We are in close discussions with government to fully understand what has driven these rates and how we can return the UK to a more internationally competitive position.”

The NHS currently invests a smaller share of overall healthcare costs on medicines than any comparable country, just 9% of the UK’s overall healthcare spend compared to Germany and Italy, which invest 17%, or France, which invests 15%

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, the actual value of the branded market has declined by over a tenth (11%). In the same period, the NHS budget grew by one third in real-terms (33%).