What's Happening?
The UK has announced changes to its Voluntary Pricing and Access Scheme (VPAG) as part of a new trade deal with the United States. The agreement, effective from December 2025, prevents the US from imposing tariffs on UK pharmaceutical exports for three
years. In return, the UK will increase its spending on medicines, with branded drug spending expected to rise from 0.3% to 0.6% of GDP over the next decade. This change is facilitated by raising the cost-effectiveness threshold for drug approvals by the National Institute for Health and Care Excellence (NICE), allowing more expensive treatments to be recommended. The rebate rate for new branded medicines will decrease to 14.5% in 2026, down from 22.9% in 2025.
Why It's Important?
The changes to VPAG are significant for both the UK and US pharmaceutical industries. For the UK, the increased spending on medicines is expected to enhance patient access to new treatments, potentially making the UK one of the fastest places in Europe for drug approvals by 2030. This could lead to improved health outcomes and stimulate economic growth through increased investment and job creation. For the US, the deal secures a stable market for its pharmaceutical exports, fostering stronger trade relations. However, the increased spending on drugs may have opportunity costs, potentially impacting other areas of the UK's healthcare system.
What's Next?
The UK government will need to monitor the impact of these changes on drug access and healthcare costs. This includes assessing the effectiveness of the new cost-effectiveness threshold and the impact on non-submissions to NICE. Stakeholders, including pharmaceutical companies and patient advocacy groups, will likely engage in discussions to ensure that the changes lead to improved access without compromising other healthcare priorities. The government may also explore additional measures to support the pharmaceutical industry and enhance patient access to innovative treatments.
