VPAG

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The UK and US governments have announced that they have reached an agreement on pharmaceutical pricing and tariffs. Under the arrangement, the tariffs charged by the US government on imports of pharmaceutical products from the UK will remain at zero for three years, in exchange for the UK agreeing to pay higher amounts for innovative medicines and reducing the rebates payable by pharmaceutical companies on newer branded medicines.

The changes to UK pricing of medicines have been welcomed by industry, which has criticised the UK environment for supply of and access to medicines.Continue Reading US-UK Pharmaceutical Pricing Deal: UK agrees increase in amounts it can pay for innovative medicines and reduction of rebate rates

The Association of the British Pharmaceutical Industry (ABPI) and the Department of Health and Social Care (DHSC) have confirmed that they have ended negotiations on  amendments to the 2024 Voluntary Scheme for Branded Medicines Pricing, Access and Growth (VPAG). The breakdown of the talks between the government and the ABPI mean that the pharmaceutical industry will continue to pay annual rebates on sales calculated by the current mechanism under VPAG, which produced a repayment rate of 22.9% on “newer” medicines for 2025.Continue Reading UK government and pharmaceutical industry fail to reach agreement on amendments to medicines pricing scheme

The Association of the British Pharmaceutical Industry (ABPI) has published a report (the Report) setting out its members’ concerns regarding the operation of the 2024 Voluntary Scheme for Branded Medicines Pricing, Access and Growth (VPAG).

VPAG is an agreement between the Department of Health and Social Care (DHSC), NHS England and ABPI, which came into effect on 1 January 2024.  It is the latest in a series of voluntary schemes, intended to manage NHS expenditure on branded health service medicines and operates by controlling prices, limiting profits and, importantly, by imposing a requirement for scheme members to make repayments to Government, reflecting NHS expenditure on medicines in excess of permitted growth and calculated as a percentage of eligible sales.  A key driver for changes introduced in VPAG was recognition that the level of repayments under the previous scheme had become unsustainably high (21.2% in 2023).  Therefore, while industry accepted what is described in the Report as an “exceptionally tough deal” this was in the expectation that the new scheme would, over time, bring repayment rates for newer medicines down to below 10%, consistent with the position up until 2021. However, while the repayment rate for newer medicines was set at 15.1% in the first year of VPAG, the rate for 2025 is 22.9% (with an additional 0.6% payable under an investment programme). The Report describes rates of this magnitude as “unsustainable”.

The Report analyses the reasons that repayment rates for newer medicines have ended up so much higher than predicted under VPAG, and calls for the Government to work with industry on its proposed solutions. It also sets out the consequences of requiring industry to pay such high repayments rates, including worse access to medicines for UK patients and lower investment by industry in the UK.Continue Reading ABPI calls for changes to “unsustainable” medicines pricing scheme