UK Pharmaceutical Pricing Analysis: Impasse in VPAG Review Undermines Patient Access and Market Growth

The accelerated review of the UK’s Voluntary Scheme for Branded Medicines Pricing, Access, and Growth (VPAG) concluded without agreement in August 2025. The review focused on soaring payment rates. These require companies to pay up to 35.6% of their revenue from NHS sales. Despite good faith efforts, no solution was reached.

Key Insights

A key finding was the stark disparity between UK payment rates and those of comparable countries. The UK’s 2025 rate reached 23.5%-35.6%. Other European nations had lower rates. France was at 5.7%, Italy at 6.8%, and Germany at 7%. Spain was at 7.5%, Belgium at 7.9%, and Ireland at 9%. The review also revealed severely constrained UK market growth. It grew at only 1.1% annually from 2014-2018 and 2% from 2019-2023. After inflation, this is an 11% decline in real terms. This contrasts with a 33% real-term NHS budget growth and reinforces concerns about the sector’s sustainability.

The failure to agree has immediate consequences. Companies are already making decisions that affect patient access. One company disbanded its entire NHS partnership team. This closed 35 service projects worth over £1.5 million. while another company delayed a haematology product launch for the NHS. It will now only launch on the private market.

Implications

The unsuccessful negotiation has profound implications. It affects the UK’s global market position and patient access to new treatments. High payment rates deter investment and can lead to delayed or canceled UK product launches. This widens the gap between innovation and patient access.

The cost-effectiveness framework also faces scrutiny. NICE thresholds of £20,000-30,000 per QALY are unchanged for nearly 25 years. Adjusted for inflation, they would exceed £50,000 per QALY today which suggests a systematic undervaluation of new treatments. This pressure has contributed to a doubling in companies terminating their NICE appraisals.

The government said it proposed “ambitious, generous” reforms. These aimed to increase medicines spending and improve access. However, it regretted that industry members would not take these proposals to a vote. Continuing the existing scheme may perpetuate competitive disadvantages. This has contributed to the UK falling in international rankings. For more insights, refer to the ABPI’s official update.