Last updated: October 24th, 2025
The UK’s Voluntary Pricing and Access Scheme (VPAG) is redefining how medicines are priced, accessed, and funded. Beyond managing NHS budgets, it carries implications for global pharma strategy, investment, and patient access. Understanding VPAG’s structure, risks, and opportunities is essential for companies aiming to navigate this evolving landscape effectively.
What Is VPAG and Why Does It Matter?
The Voluntary Pricing and Access Scheme for Branded Medicines (VPAG) is a UK-based framework designed to manage the delicate balance between medicine affordability for the National Health Service (NHS) and sustainable innovation for the pharmaceutical industry.
At its core, VPAG provides a structured mechanism for setting pricing rules, managing budget caps, and ensuring patients can access essential medicines without overwhelming public health budgets.
How VPAG Is Changing Launch Planning and Market Access in the UK
The 2024 Voluntary Scheme for Branded Medicines Pricing and Access (VPAG) represented a significant evolution in UK health policy. It took on the challenge of aligning three objectives often seen as conflicting: protecting NHS budgets, stimulating the life sciences economy, and expanding timely patient access to innovative therapies.
Breaking from the cost-containment focus of earlier frameworks, VPAG introduced differentiated pricing rules for newer and older medicines and pledged EUR 400 million to strengthen the nation’s clinical research capacity—signaling a shift toward a more balanced and forward-looking model for medicines access.
What Challenges and Risks Does VPAG Create for Pharma and the NHS
Since its 2024 rollout, VPAG has introduced significant volatility in pharma and the NHS. Payment rates rose to 22.9%, approximately a 50% increase, which has increased uncertainty for manufacturers, while dual-scheme complexity complicates financial planning (2,4).
This tension undermines all three pillars of VPAG’s triple mandate: affordability, economic growth, and patient access. While the NHS may achieve short-term budget control, companies report reassessing R&D commitments (expected 19% R&D cuts) [7], and patient access is threatened as launches are delayed or deferred.
In August 2025, negotiations collapsed after the ABPI rejected Health Secretary Wes Streeting’s proposal, which included lower future rebate rates, higher launch prices for new medicines, and a commitment to increase NHS spending on branded drugs. Streeting ended talks, keeping VPAG unchanged—a decision that upheld fiscal discipline but strained industry relations.
Globally, UK investment competitiveness faces pressure from markets like Germany and France, where healthcare budgets support more predictable reimbursement. Specialty and rare-disease therapies are particularly vulnerable under VPAG’s rebate rules.
The government’s EUR 400 million Investment Programme—supporting clinical trials, manufacturing, and HTA innovation—offers partial mitigation, but without stabilizing rebate structures, uncertainty persists. For the life sciences sector, VPAG’s current design presents both strategic opportunity and risk, demanding careful scenario planning and collaboration.
How Pharma Can Manage Risk and Ensure Long-Term Sustainability
Despite challenges, VPAG provides tools for long-term planning. Predictability in rebate structures, once better stabilized, allows companies to model financial exposure and prioritize investments efficiently.
Strategies for risk management include:
Portfolio-wide scenario modeling to account for potential rebate fluctuations.
Early engagement with regulators to shape PICO alignment and trial endpoints.
International launch sequencing informed by UK market signals, balancing global access and financial returns.
Collaboration is essential. By working with payers, government stakeholders, and patient groups, pharma companies can help refine VPAG’s implementation while protecting commercial viability and supporting timely patient access.
Navigating the Uncertainties of VPAG
The triple mandate—NHS sustainability, economic growth, and patient access—is under strain. Without recalibration, VPAG risks undermining UK competitiveness, discouraging investment, and creating long-term challenges for innovation. Companies can mitigate some exposure through careful planning, scenario modeling, regulatory engagement, and real-world evidence generation. While the underlying uncertainty remains, proactive management can reduce the most disruptive impacts on both patients and the industry.
Need guidance on navigating VPAG risks?
Meet The Author
Nic Gwatkin
Principal
Nic is a senior global and regional leader with a proven track record in developing innovative strategies and executing them effectively. With extensive experience in both large-scale and mid-sized pharmaceutical companies, as well as a background in market access and operational expertise spanning the EU, US, Japan, and China, Nic brings a wealth of knowledge to the table. Beyond his corporate roles, Nic has successfully established three consulting firms specializing in market access and early commercialization. His expertise lies in guiding pharmaceutical development from phase 2 onwards, with a remarkable portfolio boasting the launch of 14 market-leading medicines across various therapeutic areas such as Cardiovascular, Hematology, Ophthalmology, CNS, CG&T, and Infectious Diseases.
FAQs on VPAG and Medicines Access
- What is VPAG in pharma?
VPAG is the UK’s Voluntary Pricing and Access Scheme, which caps branded medicine spending and ensures faster patient access in exchange for industry rebates. - How does VPAG affect drug pricing?
It limits price flexibility and ties reimbursement to health system value, requiring pharma companies to prove economic as well as clinical benefits. - Why is VPAG important for pharma launches?
It shapes launch strategy by defining acceptable pricing, access speed, and budgetary commitments. - Can VPAG become a global model?
Yes. Many countries are studying it as a potential template for balancing healthcare affordability with innovation. - Does VPAG threaten pharma innovation?
It creates challenges, but when managed well, VPAG offers predictability that can actually support R&D investment. - How should pharma prepare for VPAG?
By engaging early with payers, building strong health-economic evidence, and aligning launch strategy with long-term affordability goals.
Reference:
Beyond Crisis: Transforming VPAG into a Model for Medicines Access — Decisive Consulting
Additional References:
[1] Department of Health and Social Care. ‘2024 voluntary scheme for branded medicines pricing, access and growth.’ GOV.UK, December 14, 2023.
[2] ABPI. ‘ABPI comment on 2025 VPAG rates of 22.9%.’ January 27, 2025.
[3] The Pharmaceutical Journal. ‘Manufacturers repay nearly £600m to NHS in first three months of new voluntary pricing scheme.’ October 15, 2024.
[4] ABPI. ‘UK doubles statutory payment rate on pharmaceutical sales from July.’ June 11, 2025.
[5] Pharmaceutical Technology. ‘ABPI calls on UK Government to resolve ‘VPAG crisis’.’ April 3, 2025.
[6] ABPI. ‘Life sciences growth requires payment rates to return to internationally comparable levels.’ May 8, 2025.
[7] ABPI. ‘The UK must act to stem £11bn loss to health research.’ June 4, 2025.
[8] NICE. ‘Health Technology Assessment Innovation Laboratory (HTA Lab).’ NICE, 2025.
[9] The Guardian. ‘Wes Streeting’s row with pharma firms grows as they reject NHS drug pricing offer.’ August 22, 2025.
[10] Financial Times. ‘Wes Streeting issues private ultimatum to pharma groups in NHS pricing talks.’ August 20, 2025.
[11] The Guardian. ‘Wes Streeting criticises ‘short-sighted’ drug firms for rejecting pricing offer.’ August 25, 2025.
[12] The Guardian (Nils Pratley). ‘Tough talk from Streeting – but he still needs a deal with big pharma.’ August 27, 2025.