Rebate hike sparks pharma industry fury in the UK

U.K. – The UK pharmaceutical industry has reacted with concern to the government’s proposal to raise the Statutory Scheme payment rate from 15.5% to 32.2% of companies’ NHS sales in the second half of this year.

The Association of the British Pharmaceutical Industry (ABPI) has warned that the sharp increase, alongside a rising rebate rate for the Voluntary Scheme for Branded Medicines Pricing, Access, and Growth (VPAG), could harm growth and investment in the UK life sciences sector.

The Statutory and Voluntary Schemes set a limit on the total sales value of branded medicines supplied to the NHS each year. If sales exceed the cap, companies must pay back the excess to the government.

While most pharmaceutical firms prefer the Voluntary Scheme, recent sharp increases in rebate rates have led some to switch to the Statutory Scheme.

Despite this, the ABPI estimates that only about 2% of the total branded medicines market is covered by the Statutory Scheme, while VPAG typically offers slightly better terms.

The proposed hike would mean pharmaceutical companies could lose nearly a third of their revenue to government rebates.

This would bring the Statutory Scheme’s average rate for the year to 23.8%, aligning closely with the VPAG’s 22.9%.

Industry experts argue this move contradicts the UK government’s ambition to position life sciences as a key pillar of its industrial strategy.

“We need an urgent ministerial commitment to work with industry to get the UK back to an internationally competitive position,” said ABPI Chief Executive Richard Torbett.

He highlighted that other countries have significantly lower sales rebate rates, including Germany at 7%, Ireland at 9%, and France at 12%.

The ABPI has also pointed out that the UK spends a smaller proportion of its total healthcare budget on medicines compared to similar countries.

Currently, medicines account for only 9% of the UK’s healthcare spending, whereas Germany and Italy allocate 17% and France 15%.

“There is a real risk the rates continue to increase beyond record levels for years to come – unless ministers intervene to fix the broken system,” the ABPI warned.

The association argues that limiting government spending on branded medicines has led to long-term underinvestment in medicines, while industry costs have risen sharply.

“Most recently, this has been exacerbated by a rapid expansion of NHS spending, without any corresponding increase to allowed spending on medicine,” the trade body added.

Earlier this month, the ABPI released a white paper urging the government to prioritize medicines in the NHS’s upcoming 10-year plan.

The paper proposed that medicines should be a “fourth shift” in healthcare policy, alongside shifting care from hospitals to the community, integrating digital technologies, and focusing more on disease prevention.

The government has yet to respond to these concerns, but with mounting pressure from the pharmaceutical industry, it may face growing calls to reconsider its pricing policies and ensure the UK’s competitiveness in life sciences.