Despite an outcry from the biopharmaceutical industry, the U.K. government has kept the rebate rate under a national drug-cost scheme at a higher level compared with previous years.
Following a public comment period, the U.K. government has decided that drugmakers who participate in the statutory scheme must pay a 31.3% rebate on sales of branded medicines in the second half of 2025.
The new rate marks a slight step down from the previously proposed 32.2%, but it still almost doubles the 15.5% level that drug manufacturers are paying in the first half of the year, bringing the full-year average to 23.4%.
The U.K. maintains two programs to limit increases in annual drug spending under the National Health Service system. The updated statutory scheme rate was calculated to “maintain broad commercial equivalence” with the other program, called the voluntary scheme, according to the British government. Drugmakers must pick one of the two plans to participate in.
As the new rate wasn’t a far departure from the original plan proposed in March, the biopharma industry was again critical of the payments.
“The UK’s sky-high and unpredictable payment rates send a terrible message to international investors at a time when the UK is trying to position life sciences research and development as an engine for health and growth,” Richard Torbett, chief executive of the Association of the British Pharmaceutical Industry (ABPI), said in a Wednesday statement.
“We urge the government to chart a clear path to reverse the UK’s historic underinvestment in medicines, through meaningful changes to both the Voluntary Scheme and Statutory Scheme,” Torbett said.
As the ABPI noted, the statutory payment’s annual rate is much higher than Germany’s 7% rebate rate or France’s 5.7%. Those two European countries respectively spend 17% and 15% of their overall healthcare expenditures on medicines, whereas the U.K. only applies 9%, according to the industry association.
If the new medicine rebate rates stay above 20%, the U.K. could lose about 11 billion pounds sterling ($14.9 billion) in R&D investment by 2033, the ABPI warned, citing a recent WPI Economics report commissioned by the pharma organization.
On the flip side, if the rates stay below 10% as they were before 2023, the U.K. could enjoy a GDP boost of 61 billion pounds sterling and a 20 billion pounds sterling increase in tax revenues over the next 30 years, the WPI research report found.
The British government initially proposed the hike in March after noticing that recent drug sales numbers—which were used to determine the rate—exceeded expectations. More recently, the small rate tweak was based on the most updated sales data up to the fourth quarter of 2024. To control NHS costs, the U.K. currently caps the allowed annual growth of spending on branded medicines at 2%.
During a consultation period that ended in April, 80% of respondents—most from the pharma industry—disagreed with the original proposal, with some attacking the basis for the 2% cap. More than half of the respondents suggested that the country’s drug price control schemes would impact the scale of their operations and headcount.
In response, the U.K. government said it believes the changes won’t introduce any uncertainty and that the country “remains a suitable early launch market.”
However, the government said it also recognizes the impact that the voluntary scheme’s rates have had on the biopharma industry. That’s why the Secretary of State has committed to expedite the re-review of the voluntary scheme so that it's complete in June 2025 rather than the usually planned fall timeframe.
For the ongoing re-evaluation, the U.K. said it aims to “understand the challenges industry is facing and scope options for a mutually beneficial amendment to the voluntary scheme.”
If any changes were to be brought to the voluntary scheme following the mid-scheme review, the U.K. may consider adjusting the statutory scheme to maintain that broad commercial equivalence, according to the government. But because the voluntary scheme’s rate is not subject to change this year, the U.K. government figures changes to the statutory scheme should be enacted as soon as possible.
Together with the 2025 rate, the U.K. also published headline statutory scheme payment percentages for 2026 and 2027, at 24.3% and 26%, respectively. The numbers were 0.4 percentage points lower than the originally proposed rates. Those numbers may be subject to change according to the outcome of the voluntary scheme review.
The biopharma industry is fighting for higher drug expenditures in the U.K. as the Trump administration works to even the drug cost difference between the U.S. and other developed countries through its “most favored nation” policy. Part of that initiative includes pushing for increased drug spending in foreign countries.
U.S. Commerce Secretary Howard Lutnick, the U.S. Trade Representative Jamieson Greer and Treasury Secretary Scott Bessent are including drug price discussions in trade negotiations with other countries, Pfizer CEO Albert Bourla said Monday at the Goldman Sachs annual global healthcare conference.
The U.S. is spending about 0.8% of GDP per capita on innovative drugs in the first 10 years of their launch, versus 0.3% in the U.K., according to Bourla.