UK’s £14 billion pharma accord with NHS and pharma industry ushers in new era of healthcare savings

UNITED KINGDOM — In a move set to reshape the National Health Service (NHS), a landmark agreement named the Voluntary Scheme for Branded Medicines Pricing, Access, and Growth (VPAG) has been forged, promising to save a £14 billion (US$17.4 billion) over the next five years in medicine costs.

This strategic collaboration between the government, NHS England, and the Association of the British Pharmaceutical Industry (ABPI) replaces the existing medicine pricing agreement, doubling the savings for the taxpayer-funded health service.

Running until December 31, 2028, the VPAG aligns seamlessly with the Prime Minister’s agenda, emphasizing enhanced treatment, workforce expansion, and reduced waiting lists.

Medicines, constituting the second-highest proportion of NHS spending at £19.2 billion (US$24.1 billion) in England in 2022/23, are subject to a fresh approach under the VPAG, featuring a yearly cap on the total sales value of branded medicines. Sales surpassing the cap trigger a levy, ensuring fiscal responsibility.

The agreement introduces an annual growth rate doubling from 2% in 2024 to 4% by 2027 for sales of branded medicines.

Crucially, an innovative affordability mechanism for older medicines is instated, requiring a top-up rate of up to 25%. This mechanism supports lower payment rates for more innovative medicines, positioning the VPAG as explicitly pro-innovation and pro-competition.

Health and Social Care Secretary Victoria Atkins lauded the broad benefits of the agreement, emphasizing millions of NHS patients set to gain from substantial savings, rapid access to life-saving medicines, and an infusion of hundreds of millions into research, clinical trials, and manufacturing.

Chancellor of the Exchequer Jeremy Hunt echoed this sentiment, hailing the deal as a landmark agreement ensuring patient access to the best medicines and treatments.

Effective in 2024, the VPAG includes a £400 million (US$501.2 million) investment over five years through the Life Sciences Investment Programme.

This investment aligns with the government’s commitment to allocate £520 million (US$651.6 million) for life sciences manufacturing.

For over 65 years, the government and the pharmaceutical industry have collaborated to manage medicine affordability, ensuring rapid access to new treatments and supporting the UK’s life sciences sector.

As part of the VPAG, the pharmaceutical industry will invest £400 million (US$499 million) over five years to drive forward UK innovation, including improving the clinical trial capacity of the NHS, boosting manufacturing, and working on innovative health technology assessments.

The latter comprises new approaches to paying for ground-breaking advanced therapy medicinal products (ATMPs), such as personalized cancer therapies and one-time gene therapies.

Building on the NHS’s commercial capabilities, this approach aligns with the NHS’s track record of securing cutting-edge treatments and implementing innovative medicines access and uptake programs.

The VPAG, building on the achievements of the current voluntary scheme for branded medicines pricing and access (VPAS) agreement, reflects the ongoing commitment to tackling health challenges.

Richard Torbett, Chief Executive at the ABPI, acknowledged the toughness of the deal but emphasized its essential role in addressing future health challenges.

Despite restrictions, the industry supports the agreement for its role in supporting patients and the NHS, providing access to transformative treatments.

The deal includes commitments to establish a data-driven approach to medicine use, ensuring timely access to the latest medicines.

Initiatives like the Local Formulary National Minimum Dataset aim to reduce health inequalities by addressing variations in the implementation of NICE guidance.

Additionally, the agreement details plans for a new Patient Support Programme (PSP) database to encourage local NHS services to partner with manufacturers and promote novel approaches to patient support post-treatment.

Earlier this year, both AbbVie and Eli Lilly withdrew from the VPAS scheme, citing increasing revenue clawbacks, with levy rates of nearly 27%.

At the time, Laura Steele, Eli Lilly’s general manager for Northern Europe, said that “the current scheme has harmed innovation, with costs spiralling out of control, and the UK falling behind other major countries to be left as a global outlier.

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