The UK government, NHS England and the Association of the British Pharmaceutical Industry (ABPI) have agreed to a landmark deal that is set to save the NHS £14bn in medicine costs over the next five years.
The Voluntary Scheme for Branded Medicines Pricing, Access and Growth (VPAG) will provide patients with the latest lifesaving treatments and boost the UK’s global position in advanced healthcare, technology and clinical research.
The agreement, which will run until 31 December 2028, will secure savings for the NHS to provide the best possible treatments and care for patients, grow the workforce and cut waiting lists.
Additionally, it will set a yearly cap on the total amount of sales allowed of branded medicines to the NHS annually, which will double from 2% in 2024 to 4% by 2027.
Medicines currently represent the second highest proportion of NHS spending worth £19.2bn, £14bn of which was branded, with the pharmaceutical industry paying back the NHS £2bn in rebates in 2022 to 2023.
As part of the agreement, a new affordability mechanism for older medicines will be introduced, which will be required to pay a top-up rate of 25% in addition to the older medicine rate of 10% if they have not seen price reductions.
The mechanism income will support lower payment rates for more innovative medicines, making the agreement pro-innovation and pro-competition.
Additionally, the development of a Local Formulary National Minimum Dataset will be used to address implementation of the National Institute of Health and Care Excellence’s guidance to enhance access to clinically and cost-effective treatments.
Alongside the VPAG, the pharmaceutical industry will invest £400m over the next five years through the Life Sciences Investment Programme to accelerate UK innovation, sustainability and growth.
The investment will accelerate work on clinical trials, manufacturing and health technology assessment agencies, encouraging UK economic growth, collaboration and innovation in the sector.
Richard Torbett, chief executive, ABPI, said: “Allowing the sector to grow faster than it has under the previous scheme should increase the UK’s international competitiveness over time… [and the] need to invest more in building NHS capacity to partner with industry on science and research to support innovation and economic growth.”