Payment percentage for statutory branded medicines scheme drops to 16.5%

The amount pharmaceutical companies need to pay back to the government via the statutory scheme for branded medicines will fall by 7.8 percentage points this year, it has been announced.

The government said that the scheme – which allows the NHS to claw back costs when spending on branded medicines grows beyond an agreed cap – will now have a payment rate of 16.5% in 2026, down from 24.3%.

This means that once NHS spending on newer, branded medicines exceeds the agreed threshold, companies must return 16.5% of their eligible sales revenue to the government.

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The change is to ensure that the statutory scheme remains ‘broadly equivalent’ to the voluntary scheme for branded medicines (VPAG) which has a rate of 14.5% this year and a 15% cap, according to the Department of Health and Social Care (DHSC).

The department said the earliest these changes can be enacted is 1 July, so companies that made payments in the first half of 2026 – at a higher rate of 24.3% - will pay a reduced rate of 8.7% for the remainder of the year.

VPAG is a voluntary pricing scheme for branded medicines agreed in 2023 by the government, NHS England, and the ABPI as a five-year deal. Drug companies who opt out of VPAG are subject to the statutory scheme instead.

Both schemes limit how much the NHS spend on branded medicines. When spending exceeds this cap, pharmaceutical companies must pay rebates to the government – essentially returning excess revenues above the agreed threshold.

The statutory scheme usually has a clawback rate that is 1% higher than VPAG and it does not offer the same stability as the five-year deal. The statutory scheme is therefore less popular and DHSC figures show that it currently only covers around 5% of total sales.

The US-UK pharmaceutical trade deal, announced in December 2025, placed a cap of 15% on the VPAG headline payment percentage for newer medicines and agreed to update the statutory scheme in line with this.

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The department also plans to launch an alternative method for consulting on future amendments to the statutory scheme payment percentages, through workshops with industry and patient groups.

However, the DHSC stressed that others will be able to provide feedback because there will still be an option to submit written evidence.

These changes are the product of a public consultation which ran from 10 February to 21 April 2026. The ABPI said the consultation outcome was ‘positive but not unexpected'.

DHSC said it received 16 responses to the consultation and 81% of them disagreed with the payment percentage proposal. Some felt that the payment percentage for new medicines is too high in general, making the UK market ‘uncompetitive’ compared to other countries.

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In response, DHSC said: ‘We consider the UK to be an attractive market for pharmaceutical companies as there is a national funding mandate for medicines: the NHS in England is legally obliged to fund medicines recommended by the National Institute for Health and Care Excellence (NICE) as being both clinically effective and cost-effective within set timescales.

‘The NHS retains the unique selling point of allowing companies to access a market of 55 million people with a single commercial deal.’