PATIENTS across the UK will benefit from innovative and life-changing treatments following a cut in rebate costs for companies, the government announced today. One medtech expert said the news “should be seen as a declaration that the UK is open for life science innovation again”.
The Voluntary Scheme for Branded Medicines Pricing, Access and Growth (VPAG) requires companies to make payments to the government based on a percentage of their sales of branded medicines to the NHS.
The 2026 payment percentage will be 14.5% — down more than a third from 22.9% in 2025. The lower rate has in part been driven by falling costs, including due to drugs going off patent, so lower revenues can be absorbed within existing budgets.
This lower rate, the Government says, will make the UK a more attractive destination for clinical trials, manufacturing investment and the early launch of new medicines — helping NHS patients benefit sooner from cutting-edge treatments and boosting economic growth.
It follows the landmark UK-US pharmaceutical deal announced on December 1, which will see tens of thousands of patients benefit from Britain becoming the only country to have deal with the US securing 0% tariffs on branded pharmaceuticals, strengthening the UK’s position as a global hub for life sciences.
Greater investment in medicines and innovation helps people live healthier, more independent lives for longer – reducing hospital admissions, cutting waiting times and easing long-term pressure on the NHS.
Driving investment
Health Innovation Minister Dr Zubir Ahmed said: “As a practicing surgeon, I know firsthand how vital it is that patients have access to the latest medicines and innovative treatments.
“This government has already delivered an agreement with the US that will expand access to tens of thousands of patients and make us the only country in the world to have a deal that secures zero percent tariffs on branded pharmaceuticals to the US.
“The fall in the rebate rate will cement this, answering the call from leaders in the pharmaceuticals and life sciences sector for a lower and more stable payment rate for branded medicines.
“Together, this will help secure and drive investment in the sector, ensuring Britain remains a powerhouse for life sciences for the benefit of our patients, our NHS and our economy.”
The VPAG scheme helps to keep the NHS medicines bill sustainable for taxpayers. For newer medicines, rebates are made through the headline payment percentage, set each December for the year ahead.
Investment in innovative medicines builds on the government’s commitment to turbocharge medical research through better and faster access to NHS data for researchers via a new Health Data Research Service (HDRS) that will slash red tape for researchers.
Launchpad for innovation
Simon Jones, Chief Operating Officer at VP MED Ventures, a medtech firm, said the UK government’s decision to lower the VPAG rebate rate from 22.9% in 2025 to 14.5% in 2026 should be seen as a strategic signal and “a declaration that the UK is open for life science innovation again”.
He continued: “This is a calculated course correction, and one that recognised that the UK was becoming uninvestable due to excessive clawbacks and unpredictable pricing structures.
“By slashing the rebate rate by a third, the government is effectively acknowledging the economic damage done and is now actively repositioning the country as a launchpad for innovation, not a dead-end for R&D pipelines.”
Photo by Towfiqu barbhuiya on Unsplash
