The 2026 payment rate for newer medicines under the Voluntary Scheme for Branded Medicines Pricing and Access (VPAG) will be 14.5%, down from a record 22.5% in 2025, the UK government has announced.  

This news follows the recent announcement of the UK-US trade agreement in which commitments were made to secure and expand access to drugs and drive crucial investment in the sector. Among these commitments included the agreement that the medicines payment rate in the Voluntary Scheme would not exceed 15% of company sales revenue to the NHS for the next three years.  

The VPAG’s newer medicines payment rate is calculated by the extent to which the NHS’s demand for new medicines exceeds its capped budget for such spending, with industry required to cover the shortfall.

The payment rates for older branded medicines however remain unchanged next year. Companies will continue to pay between 10% and 35% on the sales of older medicines to the NHS.  

Additionally, as part of a pre-agreed voluntary contribution, companies will also pay an extra 1% on top of the newer and older payment rates to support an industry funded investment programme. This means once the investment programme payment is included, companies will pay a rebate of 15.5% for newer medicines in 2026.  

Competitive struggles in the UK  

High and unpredictable payment rates in the UK have impacted the country’s competitiveness in recent years. For instance, in the last decade, UK spending on medicines has been 9% of total health spending, while other countries such as France, Spain and Germany have spent closer to 15%.

To remain competitive, the UK plans to increase investment in new medicines from 0.3% of GDP to 0.6%, over the next 10 years. Additionally, spending on medicines will rise from 9% to 12% of total health spending. This will amount to around £1 billion in additional spending over the next three years, the government predicts.

To ensure this is delivered, talks between the ABPI and the UK government to design and agree a new, more sustainable scheme model from 2029 onwards will begin in the New Year.

Companies now have until 16 December to decide whether to participate in the VPAG scheme. If they do not, they will join the Statutory Scheme, which currently has a 24.3% payment rate for 2026.

Richard Torbett, Chief Executive of the ABPI, said: “It’s good that the amount of revenue companies will need to pay to the UK government has come down in 2026. The newly proposed cap on future payment rates for newer medicines should also provide companies with greater certainty up to 2028.

“However, this is only the first step in returning the UK to a more competitive position. Payment rates remain much higher than in similar countries, and there is work to do to accelerate the NHS’s adoption and use of cost-effective medicines to improve patient care.

“The ABPI looks forward to working with the government to set out a sustainable alternative to the VPAG scheme, which will better support the NHS use of medicine, while also encouraging more UK-based research, and larger investment into UK life sciences.”