UK VPAG Payment Rate for Newer Medicines Fell to 14.5% for 2026

The Voluntary Scheme for Branded Medicines Pricing, Access and Growth (VPAG) is the agreement between the UK Government and the pharmaceutical industry that controls NHS spending on branded medicines. Member companies make payments on their eligible NHS sales, and the headline payment rate is recalculated each year according to the growth in spending. In 2025 the rate for newer medicines reached 22.9%, which reporting described as a record level. An accelerated review of the scheme in 2025 ended without agreement between the Government and the Association of the British Pharmaceutical Industry (ABPI).

In December 2025 the Government announced that the 2026 payment rate for newer medicines would be 14.5%, a fall of about a third. Companies also pay an additional 1% investment programme contribution on top of the newer and older medicines rates in 2026. The ABPI described the wider UK–US agreement as good news for NHS patients and for UK life sciences competitiveness.

The reduction followed a UK–US agreement on pharmaceuticals announced in December 2025. Under it, the UK committed that the VPAG payment rate for newer medicines would not exceed 15% for the three years 2026 to 2028. Reporting on the 2026 calculation indicates that the cap did not need to be applied, because slower growth in NHS use of newer medicines across 2025 produced a calculated rate below 15%. The Government also committed to increase spending on new medicines from 0.3% of gross domestic product to at least 0.6% by 2036.

As part of the same package, the standard cost-effectiveness range used by the National Institute for Health and Care Excellence (NICE) was raised from 20,000 to 30,000 pounds per quality-adjusted life year to 25,000 to 35,000 pounds. Minutes of the VPAG operational review dated 23 July 2026 record that the change took effect on 2 April 2026 and that nine medicines had since been approved under the new threshold.

Companies that do not join VPAG are covered by the statutory scheme, which acts as a legal backstop. Its headline payment rate for newer medicines had been set at 24.3% for 2026. The DHSC consulted from 10 February to 21 April 2026 on reducing the rate to restore broad commercial equivalence with VPAG. Its response, published in June 2026, confirmed that the headline payment percentage for newer medicines will be 16.5% for 2026 and later years.

Because companies paid at 24.3% in the first half of 2026, the Government set a lower rate of 8.7% for 1 July to 31 December 2026 so that the full-year average would be 16.5%. Secondary sources describe the gap between the statutory and voluntary rates in slightly different ways, and companies should consult the consultation response and final-stage impact assessment for the exact basis of calculation.

VPAG is intended to run until 31 December 2028. The Government and the ABPI have agreed to hold talks on a more sustainable model from 2029 onwards, and trade press reporting of operational review minutes indicates that the parties are working towards a seven-year successor scheme, with principles agreed covering growth, innovation, uptake, competition and links to investment. The final design of the successor scheme had not been published at the time of checking.

For companies, the lower 2026 rates improve the commercial case for UK launches, but the payment rate remains a significant cost that should be built into UK pricing and forecasting. Market access teams should model the capped rate to 2028, plan NICE submissions against the revised threshold range and monitor the negotiations on the 2029 scheme, which will determine the terms for products launching later this decade.

The changes also matter outside the market access function. Lower payment rates and a higher NICE threshold range may influence global launch sequencing decisions, as companies weigh the UK alongside other early-launch markets. Health economists preparing NICE submissions should note which threshold range applies to their appraisal, and finance teams should check that the correct scheme rate is applied to each product’s eligible sales, particularly for companies that move between the statutory scheme and VPAG. Teams should rely on DHSC, ABPI and NICE publications for the definitive figures, since secondary reporting has occasionally rounded or described the rates differently.