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3w ago

UK Cuts NHS Rebate on New Branded Drugs to 14.5% for 2026 Under US Trade Framework

The cut follows a US–UK agreement that brings zero tariffs on British pharmaceuticals in exchange for higher NHS outlays on new medicines.

Used blister packets that contained medicines, tablets and pills are seen, in this picture illustration taken June 30, 2018. REUTERS/Russell Boyce/Illustration
UK spending on medicines has fallen from 14 per cent to 9 per cent of total health spending over the past decade

Overview

  • The 2026 headline payment rate for newer medicines under the VPAG scheme is set at 14.5%, down from a record roughly 22.5%–22.9% this year.
  • Britain pledged the VPAG rate will not exceed 15% for the first three years of the US–UK arrangement, which includes zero tariffs on UK pharma and medical devices.
  • Payment rates for older branded medicines remain unchanged for 2026, staying within the 10% to 35% range.
  • The government says the move should encourage investment, clinical trials and earlier launches in the UK, while the ABPI welcomes predictability but warns rates remain high versus peers.
  • Downing Street estimates a 25% rise in the NHS cost‑effectiveness threshold for new medicines will add about £1 billion a year by 2029, with a consultation under way on updating NICE valuation ranges.