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Government proposals to raise the levy payable by drugs manufacturers under the UK’s statutory scheme for branded medicines from 15.5% to 32.2% shows that “the UK medicines market is fundamentally broken”, the Association of the British Pharmaceutical Industry (ABPI) has said.
Under the Department of Health and Social Care’s (DHSC) proposals to review the statutory scheme for branded medicines, published on 14 March 2025, the increased levy will apply from 1 July 2025 until the end of the year for manufacturers that made payments in the first half of 2025 at the 15.5% rate.
The DHSC proposes that payment percentages are set at 24.7% and 26.4% for 2026 and 2027, respectively, which would increase from 17.9% and 20.1%, respectively.
The current statutory scheme requires companies to pay a levy to the government on the sales of branded medicines to the NHS. There is a cap on allowed growth in sales, with sales above this cap being subject to the levy. Under the statutory scheme for branded medicines, the allowed growth rate is 2% per year.
It is one of two schemes, with the other being the Voluntary Scheme for Branded Medicines Pricing, Access and Growth (VPAG). As most companies choose to sign up to VPAG, the ABPI said that “only a very small proportion (2%) of the total branded medicines market is subject to the statutory scheme”.
In its proposed review of the statutory scheme for branded medicines, the DHSC said data from the first two quarters of 2024 showed higher than expected newer medicines sales growth, requiring an increase in the levy rates.
As a result, the statutory scheme headline payment percentage for 2025 would be set at 23.8%, but the higher 32.2% would be due for the remainder of the current year to compensate for the lower 15.5% in the previous part of the year.
The DHSC’s proposals are aimed to update the statutory scheme for branded medicines so that payment rates are set on the basis of the most up-to-date data “and to maintain the principle of broad commercial equivalence” with the VPAG.
Commenting on the proposals, Richard Torbett, chief executive of the ABPI, said: “The government has rightly identified life sciences as a critical growth sector for the economy, but unless these excessive payment rates under both the VPAG and statutory scheme are addressed, the UK will not see the growth and investment we all want.
“We need an urgent ministerial commitment to work with industry to get the UK back to an internationally competitive position.”
The consultation on the proposed changes to the statutory scheme for branded medicines closes on 25 April 2025.
