Open consultation

Proposed review of the 2025 scheme to control the cost of branded health service medicines

Published 14 March 2025

Executive summary

The Department of Health and Social Care (DHSC) proposes to amend the legislation setting out the statutory scheme for branded medicine pricing. This consultation document seeks views on the proposals, particularly from the pharmaceutical industry and NHS patients.

The statutory scheme is set out in legislation in The Branded Health Service Medicines (Costs) Regulations 2018 (‘the statutory scheme’). It is one of 2 schemes, alongside the 2024 voluntary scheme for branded medicines pricing, access and growth (VPAG), that control the costs of branded medicines to the NHS. VPAG replaced the 2019 voluntary scheme for branded medicines pricing and access (VPAS), which expired at the end of 2023.

The statutory scheme was last amended on 1 January 2025 to align terms of that scheme with certain aspects of the 2024 VPAG. This update implemented the department’s consultation response published October 2024. At the time of the consultation response, data was available up to quarter 1 (Q1) 2024, and the calculated statutory scheme headline payment percentage for 2025 (15.5%) was broadly commercially equivalent to the forecast VPAG headline payment percentage for 2025 (15.3%). See the Proposed update to the statutory scheme to control the cost of branded health service medicines consultation response.

However, sales data for Q2 and Q3 2024 has subsequently become available showing higher than expected newer medicines sales growth. This has the effect of increasing the payment required from eligible (that is, non-exempt) newer medicines in 2025, requiring an increase in the payment percentage rate on newer medicines. As a result of this, the VPAG headline payment percentage for 2025 was set at 22.9%, and so the headline payment percentage set in the statutory scheme is no longer considered to deliver on the department’s longstanding policy objective of broad commercial equivalence between the 2 schemes.

This consultation sets out the department’s proposals to update the statutory scheme such that payment rates are set on the basis of the most up-to-date data and to maintain the principle of broad commercial equivalence. For operational purposes, the statutory scheme needs to be updated on the first date of a new quarter, and 1 July 2025 is the earliest feasible date for implementation of the proposals set out in this consultation.

Whereas the VPAG rate for 2025 is known (22.9%), the VPAG rates for 2026 and 2027 are, at the time of consultation publication, unknown and we do not have an official forecast for VPAG payment percentages in those years. This is because the VPAG payment percentages for 2026 and 2027 will be determined based on currently unknown measured sales up to the end of Q3 2025 and Q3 2026 respectively, and by the level of sales growth that is forecast, as of the end of Q3 2025 and Q3 2026 respectively, for 2026 and 2027. Sales growth forecasts that were made at the time of negotiations for growth in those years are currently subject to a process of review between the department and the Association of the British Pharmaceutical Industry (ABPI). There is a possibility that forecast sales growth may change for the time of negotiations forecast.

However, in the interests of the predictability of the scheme and in line with past practice, we intend to set statutory scheme rates for 2026 and 2027. We therefore must do so using the best sales data and sales growth forecast that is available to us at the time of publication. This is sales data up to Q3 2024 and the sales growth forecast at the time of negotiations (the same data as used to set the VPAG payment percentage for 2025), while acknowledging that, as with all statutory scheme consultations, it is possible that actual sales growth could differ. Changes to the statutory scheme rates in 2026 and 2027 are not indicative of what will happen to VPAG rates in those same years.

We therefore propose to increase the statutory scheme headline payment percentage for 2025 to 23.8%. This rate results from recalculating the required payment needed from eligible newer medicines due to updating medicines sales data to Q3 2024, as well as amending the allowed sales baseline adjustments for 2025 and 2026. For more information, see the accompanying impact assessment.

As this amendment will not be in force until 1 July 2025, companies that made statutory scheme payments in the first half of 2025 (at the lower rate of 15.5%) will instead pay an uplifted rate of 32.2% from 1 July 2025.

We propose that payment percentages are set at 24.7% for 2026, and 26.4% for 2027. This is an increase from 17.9% and 20.1% respectively.

To achieve this while maintaining the statutory scheme allowed growth rate of 2% each year, we propose to amend the baseline adjustments made in the previous consultation such that the total value of the baseline adjustments is unchanged, but the implementation of two-thirds of the adjustment intended for 2025 is delayed to 2026. This gives baseline adjustments of £50 million, £430 million and £380 million each year in 2025, 2026 and 2027 respectively.

We also propose to introduce new data assurance requirements for presentation level data returns.

In proposing these updates, consideration is given to the Secretary of State for Health and Social Care’s public sector equality duty, duties under the Family Test and sections 1 to 1GA of the National Health Service Act 2006 (the NHS Act 2006). Consideration has also been given to the environmental principles policy statement. An analysis of these duties is provided in the in the ‘Statutory duties’ section of this consultation, with additional information provided in the accompanying impact assessment.

Introduction

The statutory scheme is one of 2 schemes (alongside the 2024 voluntary scheme, VPAG) that control the costs of branded medicines to the NHS. Any company that supplies eligible branded health service medicines is subject to the statutory scheme unless they consent to join the voluntary scheme.

A branded medicine is defined in the regulations. The definition refers to a medicine to which a brand name has been applied that enables the medicine to be identified without reference to the ‘common name’ (the generic or international non-proprietary name). As set out in the department’s consultation response in December 2023, the schemes also apply to all biological medicines, regardless of whether they are marketed under a brand name or not. See the Review of the scheme to control the cost of branded health service medicines consultation.

Medicines represent the second highest proportion of NHS spend, worth £20.6 billion in England in the 2023 to 2024 financial year, £14.4 billion of which was on branded medicines. VPAG is the latest in a series of voluntary schemes to control NHS spend on branded medicines going back to 1957. It was agreed between DHSC, NHS England and the ABPI in December 2023 and came into force on 1 January 2024 for 5 years until 31 December 2028. The headline payment percentage in VPAG for 2025 is 22.9%. Companies will additionally make payments at 0.6% to support the VPAG investment programme.

DHSC administers VPAG and the statutory scheme on behalf of each of the devolved governments and the payments that companies make to the department under the schemes are allocated to each of the 4 countries on an agreed basis each year.

VPAG aims to promote better patient outcomes and a healthier population, support UK economic growth and contribute to a financially sustainable NHS. 

The overarching policy objectives of the statutory scheme, as set out in a 2019 review of the regulations, are to:

• limit the growth in costs of branded health service medicines to safeguard the financial position of the NHS
• ensure medicines are available on reasonable terms, accounting for the costs of research and development
• deliver the above objectives in a way that is consistent with supporting both the life sciences sector and broader economy

The statutory scheme works by limiting the growth in allowed sales of branded medicines. Since the start of 2024, payment percentages have been set to keep net sales growth for sales of branded medicines subject to the scheme to an allowed growth rate of 2% (nominal) per year. The allowed growth rate is applied on top of the baseline, with the baseline being the total level of allowed sales in the previous year, plus any adjustments made. In the previous consultation, the department set out a timeline for baseline adjustments that matched those in VPAG (£150 million in 2025, £330 million in 2026, £380 million in 2027) on the basis that this would support broad commercial equivalence with VPAG. (See the Proposed update to the statutory scheme to control the cost of branded health service medicines consultation.)

The 2024 amendments introduced, as of 1 January 2025, a differentiated approach to setting payment percentages for older and newer medicines, equivalent to that which was implemented for the 2024 VPAG. The purpose of this was to ensure stability of both schemes and ensure the same incentives for competition and innovation that exist in VPAG.

From 1 January 2025, the headline payment percentage for newer medicines was set at:

• 15.5% in 2025
• 17.9% in 2026
• 20.1% in 2027

The basic payment rate for older medicines was set at the following rates, also subject to payment of a top-up payment percentage of between 0 to 25%:

• 10.6% in 2025
• 11% in 2026
• 10.9% in 2027

Payment exemptions apply in some instances, subject to satisfaction of relevant conditions. Exemptions apply to:

• sales of pharmacy only (P) and general sales list (GSL) medicines
• small companies with under £6 million sales to the NHS each year
• sales of low-cost presentations costing less than £2 (specifically, a list price below £2)
• parallel imports
• exceptional central procurements (ECP) and centrally procured vaccines (CPV)
• new active substances (NAS)

This consultation sets out our proposal to increase the statutory scheme headline payment percentage for 2025 to 23.8%. For more information on how this rate has been set, see the accompanying impact assessment. As this amendment will not be in force until 1 July 2025, companies who made statutory scheme payments in the first half of 2022 at the lower rate of 15.5% will instead pay an uplifted rate of 32.2% from 1 July 2025.

It further sets out our proposal to increase the statutory scheme headline payment percentage to 24.7% in 2026, and 26.4% in 2027.

We also propose to introduce new data assurance requirements for presentation level data returns.

The attached impact assessment models 5 options plus a do-nothing scenario. This is in response to feedback from stakeholders that while a do-nothing scenario is a useful counterfactual, they would value the ability to compare the impact of our proposals against a wider range of possible alternative scenarios. The chosen scenarios involve variations to the allowed growth rate and to the level and profile of baseline adjustments, taking those in VPAG as their starting point.

These options include scenarios where the allowed growth rate in the statutory scheme is increased above 2%, however we do not propose to make such a change. As set out in our consultation response from December 2023, we consider 2% to be an appropriate long-term growth rate for branded medicines, noting that increasing allowed growth beyond this (outside of the context of a time-bound negotiated voluntary agreement with mutual benefits for government and industry) could increase the risk of unsustainable growth in spending on branded medicines in the longer term.

Reason for proposed changes

VPAG and the statutory scheme work together to help to ensure value for money for the taxpayer and enable the NHS to continue investing in patients’ access to new medicines and non-pharmaceutical services, in a way consistent with supporting both the life sciences sector and broader economy.

Broad commercial equivalence ensures the stability of both schemes, such that the statutory scheme can provide a viable alternative to the voluntary scheme without undermining the important partnership between industry and government developed under the voluntary scheme agreement. Broad commercial equivalence is a longstanding policy objective of the department.

The most recent legislative changes to the statutory scheme took effect on 1 January 2025. These amendments implemented the department’s response of October 2024 to a consultation carried out between 18 March and 26 April 2024.

At the time of the consultation response, data was available up to Q1 2024, and the calculated statutory scheme headline payment percentage for 2025 (15.5%) was broadly commercially equivalent to the forecast VPAG headline payment percentage for 2025 (15.3%, see Annex 3 in ‘Annexes to the 2024 voluntary scheme for branded medicines pricing, access and growth’).

However, sales data for Q2 and Q3 2024 has subsequently become available showing higher than expected newer medicines sales growth. As a result of this, the VPAG headline payment percentage for 2025 was set at 22.9%, and so the headline payment percentage set in the statutory scheme is no longer considered to deliver broad commercial equivalence.

This consultation therefore sets out the department’s proposals to update the headline payment percentage in the statutory scheme to maintain the principle of broad commercial equivalence between the schemes.

For operational purposes, the statutory scheme needs to be updated on the first date of a new quarter, and 1 July 2025 is the earliest feasible date for implementation of the proposals set out in this consultation.

Not proceeding with the proposed updates risks the integrity and stability of both schemes, which would likely negatively impact the certainty of NHS expenditure on medicines, as well as creating a volatile commercial and investment environment for pharmaceutical companies.

The proposals in this consultation are intended to return broad commercial equivalence between the statutory scheme and VPAG following the unexpectedly high growth in newer medicines sales in Q2 and Q3 2024.

Consultation proposals

Rate of allowed growth

The statutory scheme works by setting payment percentages intended to maintain growth in net branded sales (sales to the NHS of relevant branded medicines including parallel imports, net of payments made under the statutory scheme) to a target level against our forecast for branded medicines sales. Since 2024, the allowed growth rate has been 2% (nominal), with growth controlled to this level every year. This represents an increase compared to the 1.1% nominal allowed growth rate between 2018 and 2023.

The allowed growth rate is applied on top of the baseline, with the baseline being the total level of allowed sales in the previous year, plus any adjustments made. In the previous consultation, the department set out a timeline of baseline adjustments that matched those in VPAG (£150 million in 2025, £330 million in 2026, £380 million in 2027) on the basis that this would support broad commercial equivalence with VPAG.

As set out in the accompanying impact assessment and in brief below, we have considered several options for the allowed growth rate and baseline, including the continuation of the approach taken last year. This analysis shows that repeating the methodological approach taken last year but with the most up-to-date sales data would result in a statutory scheme headline payment percentage for 2025 that does not optimise broad commercial equivalence with VPAG, especially when taking into account the investment programme contributions (at 0.6%) required to be made by VPAG members.

As such, we propose to maintain both the 2% rate of allowed growth and the overall value of the baseline adjustments made in the statutory scheme, but to delay implementation of two-thirds of the adjustment previously proposed for 2025 to 2026. This gives a total baseline adjustment of £50 million in 2025, £430 million in 2026 and £380 million in 2027.

This approach achieves payment percentages that maintain broad commercial equivalence while ensuring a clear methodology for the calculation of such rates that can act independently as a backstop to VPAG if needed. The determination that broad commercial equivalence is achieved on this basis is carried out using the latest available data up to Q3 2024. Should further data become available before publication of the department’s response to this consultation, an assessment will be made as to whether this continues to be the optimal approach to achieving broad commercial equivalence.

Question

Do you agree or disagree with our proposal to maintain the level of allowed growth in the scheme to 2% each year, with baseline adjustments of £50 million in 2025, £430 million in 2026 and £380 million in 2027?

• Agree
• Neither agree nor disagree
• Disagree
• Don’t know

Please explain your answer and provide evidence to support further development of our analysis. (Optional, suggested word limit 500 words)

Do not include any personally identifiable information.

Headline payment percentage

The 2025 payment percentage for VPAG, published in December 2024, exceeds the current statutory scheme’s rate by 7.4 percentage points, with an additional payment of 0.6% points applying under the investment programme. If the department does not proceed with the updates proposed in this consultation, there is significant risk that the schemes may not work together effectively to control the costs of branded medicines, exacerbating risks to the financial sustainability of the NHS and patient access to medicines.

Based on annual allowed sales growth of 2% and baseline adjustments of £50 million in 2025, £430 million in 2026 and £380 million in 2027, we propose to update the statutory scheme payment percentage for 2025, 2026 and 2027 as set out in the table below.

Table 1: current and proposed statutory scheme payment percentages, 2025 to 2027

	2025	2026	2027
Current headline payment percentage	15.5%	17.9%	20.1%
Proposed headline payment percentage	23.8%	24.7%	26.4%

We propose that these updates come into force on 1 July 2025. This is because scheme payments are made on a quarterly basis, and this is the earliest date where, allowing time for consultation, updates can be made on the first day of a new quarter with a view to minimising operational and administrative disruption.

To account for these changes taking effect part way through the year, companies who made statutory scheme payments in the first half of 2025 at the lower rate of 15.5% will pay a rate of 32.2% from 1 July 2025 to account for this such that their payment rate is modelled to be accurate on a full year basis.

We believe that payment rates at these levels are appropriate as they are broadly equivalent to the payment rates established under VPAG, a scheme agreed by the UK pharmaceutical industry, and are within the range of precedents within the statutory scheme.

As no forecast is failsafe, and there is no published VPAG forecast from 2026, there is greater uncertainty about the appropriateness of payment rates set from next year. Nonetheless, the current forecast remains the best data available to the department, and its use to calculate future payment rates supports the principle of broad commercial equivalence.

The calculation of headline payment percentages is made using the latest available data up to Q3 2024. Should further data become available before publication of the department’s consultation response, the calculations will be updated and an assessment will be made as to whether the updated rates based on our current proposed rate of allowed growth and baseline adjustments continue to achieve broad commercial equivalence.

Question

Do you agree or disagree with the levels at which we propose to set the statutory scheme payment percentages, and the rationale provided for this?

• Agree
• Neither agree nor disagree
• Disagree
• Don’t know

Please explain your answer and provide evidence to support further development of our analysis. (Optional, suggested word limit 500 words)

Do not include any personally identifiable information.

Assurance of company data

Under existing regulations, statutory scheme companies are required to provide quarterly sales reports, annual sales reports, and annual presentation level sales reports (PLRs). All reports are initially submitted in unaudited form, however annual sales reports are subsequently required to be audited.

With the introduction from 1 January 2025 of the price erosion mechanism for older medicines, PLRs are now used by the department for several new purposes, in addition to previous use cases. These include:

• to calculate the split of sales of older and newer medicines in 2023, and to validate the reported split of older and newer medicines in subsequent years
• to calculate the reference price of applicable older presentations
• to establish the average selling price of older presentations used to calculate the applicable top-up payment percentage for that presentation
• to establish whether older presentations qualify for the exemption from top-up payment percentage due to having less than £1.5 million in annual sales across a given virtual therapeutic moiety (VTM)

Given the additional importance of presentation reports, the department is considering, and seeking views on, alternative methods of seeking assurance to the accuracy of these reports. Such assurance is intended to give greater confidence as to the quality of the presentation report provided. In doing so, we aim to give companies and the department greater confidence that the headline payment percentage has been calculated based on an accurate assessment of the split between newer and older medicines. This will also give greater confidence in the accuracy of the calculation of reference prices and top-up payment percentages. We are working with the ABPI in consultation with companies on what this might look like in the context of VPAG.

To minimise the administrative burden that additional assurance requirements will put on companies, the department does not propose that this would take the form of a full audit. Instead, we propose that an independent auditor would conduct additional assurance procedures on presentation reports. The department is seeking views through this consultation on what these procedures could look like in practice.

We propose that the timelines for such a report would be aligned with those for the existing requirement for an audit of the annual sales report.

Question

Do you agree or disagree with the proposal to introduce some form of additional assurance requirement on presentation level sales reports (PLRs)?

• Agree
• Neither agree nor disagree
• Disagree
• Don’t know

Please explain your answer and provide evidence to support further development of our analysis. (Optional, suggested word limit 500 words)

In particular, please provide evidence as to the expected additional cost of this requirement, and how this might differ between companies of different sizes.

Do not include any personally identifiable information.

Impact of the proposals

The impact assessment published alongside this consultation sets out that proposals will help to ensure the continued effectiveness of the statutory scheme and expands on the methodology used to calculate the proposed increase to payment percentages.

Question

If you have any comments on the proposed methodology used in determining the payment percentages (as set out in the accompanying impact assessment), please set them out here.

Please give reasons and provide any evidence or analysis that would support any refinement you think the department should make. (Optional, suggested word limit 500 words)

Do not include any personally identifiable information.

Specific consultation requirements in the NHS Act 2006

The statutory scheme was established using powers under section 263(1) of the NHS Act 2006. The Health Service Medical Supplies (Costs) Act 2017 amended the NHS Act 2006 to include requirements that consultation about the exercise of powers in section 263(1) must include consultation about the:

• economic consequences for the life sciences industry in the United Kingdom
• consequences for the economy of the United Kingdom
• consequences for patients to whom any health service medicines are to be supplied and for other health service patients

See the accompanying impact assessment for further detail.

Question

Do you agree or disagree with the analysis in the impact assessment of our proposals, including impacts on those areas where the NHS Act 2006 requires that we consult?

• Agree
• Neither agree nor disagree
• Disagree
• Don’t know

Please explain your answer and provide evidence to support further development of our analysis. (Optional, suggested word limit 500 words)

Do not include any personally identifiable information.

Statutory duties

There are some specific duties that must be considered when proposing updates to the statutory scheme. These include consideration of the Secretary of State’s duties under the NHS Act 2006, the public sector equality duty under the Equality Act 2010 and the Family Test.

Duties under the NHS Act 2006

1. To promote a comprehensive health service (section 1 of the NHS Act 2006)

The Secretary of State is required to continue the promotion in England of a comprehensive health service designed to secure improvement in:

• the physical and mental health of the people of England
• the prevention, diagnosis and treatment for physical and mental illness

The proposed increase to the statutory scheme headline payment percentage from 1 July 2025 will mean that the department receives higher statutory scheme payments than under the current regulations. This equates to an increase in income for the NHS of between £10 million and £50 million between 2025 and 2027 compared to continuing with the current regulations.

These payments will be apportioned to the NHS across the UK and will be used in the best interest of patients. The scheme ensures the ongoing affordability of NHS medicines spending and supports the ability of the NHS to continue investing in patient access to medicines. This is further supported by continuing to control sales growth at a rate of 2% per year.

Updating the payment percentage will also secure the stability of the statutory scheme by ensuring it can continue to act as a broadly commercially equivalent alternative to VPAG. The effective operation of the scheme means that the department can continue to receive an appropriate amount in payments from industry and that the scheme can continue to fulfil its broader objectives of supporting the life sciences sector and the wider economy.

In contrast, if the department were to proceed with the business as usual (BAU) option of maintaining the current headline payment percentage, we consider that the statutory scheme may not be perceived as a broadly commercially equivalent and therefore viable alternative to the voluntary scheme, which could impact upon the stability of the 2 schemes and so the perceived stability of the UK as a market for the life sciences industry. Potential movement of companies from VPAG into the statutory scheme would result in the NHS receiving less income than is required to control growth to the agreed levels in both schemes, and so being less able to deliver a comprehensive service. 

We therefore consider that the proposed changes best advance the Secretary of State’s duty to promote a comprehensive health service and support the relationship between the Secretary of State and industry, ensuring that the statutory scheme has the confidence of all parties involved.

 2. To act with a view to securing continuous improvement in the quality of services (section 1A of the NHS Act 2006)

The Secretary of State is required to exercise his NHS functions with a view to securing continuous improvement in the quality of services provided to individuals.

Taking steps to ensure the scheme can continue to meet its objectives from 2025 onwards will ensure continued effective operation of and confidence in the statutory scheme.

This will help to ensure sales growth continues to be controlled, allowing the NHS to budget effectively and make decisions in the best interest of patients about the provision of services, including ensuring a quality service.

We are committed to an ongoing review process in order to update the regulations to ensure they continue to align with the overarching policy objectives of the statutory scheme.

In discharging this duty, the Secretary of State must have regard to the National Institute for Health and Care Excellence (NICE) quality standards, which define quality and quality improvement for particular kinds of care and treatment. As set out above, a decision to update the payment percentage helps to ensure the effective operation of the schemes and ensures NHS costs are controlled, supporting the Secretary of State to meet duties in securing continuous improvement in quality of services.

3. To have regard to the NHS Constitution

Regard must be given to the values, principles, pledges and rights in the NHS Constitution.

The NHS Constitution has been taken into account when developing the proposals in this consultation. In particular, this has included considering the following principles:

• principle 1: the NHS provides a comprehensive health service available to all
• principle 4: the patient will be at the heart of everything the NHS does
• principle 6: the NHS is committed to providing the best value for taxpayers’ money

We have also considered these proposals in the context of the NHS Constitution’s pledges to, and the rights of, NHS patients. In particular, this has included consideration of the rights in relation to nationally approved treatments, drugs and programmes, which set out patients’ rights to:

• drugs and treatments that have been recommended by NICE for use in the NHS, where the patient’s doctor says they are clinically appropriate
• receive the vaccinations that the Joint Committee on Vaccination and Immunisation (JCVI) recommends that patients should receive under an NHS-provided national immunisation programme

As set out above, a decision to make changes to the statutory scheme helps to ensure its effective operation, which is to the benefit of the NHS and industry and means that appropriate payments are made to the health service. This supports the NHS to provide a more comprehensive health service by allowing the NHS to continue to invest in pharmaceutical and non-pharmaceutical services. It also ensures access to medicines recommended by NICE as clinically and cost effective for patients and therefore value for money to the NHS and taxpayers.

4. To have regard to the need to reduce health inequalities (section 1C of the NHS Act 2006)

With their functions in relation to the NHS, the Secretary of State must have regard to reducing inequalities between the people of England with respect to the benefits that they can obtain from the NHS.

We do not envisage any negative impacts on health inequalities as a result of the proposal. Ensuring the continued sustainability of NHS medicines spending is critical to enabling the NHS to provide widespread access to medicines and respond to health inequalities.

5. To promote research (section 1E of the NHS Act 2006)

In exercising his functions in relation to the NHS, the Secretary of State must promote:

• research on matters relevant to the NHS
• the use in the NHS of evidence obtained from research

The proposed approach will ensure the long-term sustainability of NHS medicines spend and the use of medicines in the UK. Sustainable growth in sales allows the NHS to invest in innovative products, in clinical research and in process innovation.

The department considers that research and development (R&D) investment leads to ‘spillover’ effects - for example, through the generation of knowledge and human capital - which generate net societal benefits, compared to other companies spending their capital on other things. In addition, research and development investment could lead to improved medicines in the future that would be of benefit to patients and the health service.

In contrast, if the department were to proceed with the BAU option of maintaining the current headline payment percentage, we consider that potential movement of companies from VPAG into the statutory scheme would result in a reduction in income generated by the VPAG investment programme, and so a reduction in funding available for supporting UK-based clinical trials under that scheme. 

The department has previously received and considered evidence about the relationship between the commercial environment and inward investment. We remain open to receiving further evidence about this relationship in the responses to this consultation.

6. To secure education and training (section 1F of the NHS Act 2006)

The Secretary of State must exercise his NHS (and other) functions to secure an effective system for the planning and delivery of education and training for the persons employed, or considering becoming employed, in the NHS or connected activities.

We have considered this duty in relation to our proposals and do not consider that they would affect education and training.

7. To review treatment of providers (section 1G of the NHS Act 2006)

The Secretary of State is required to keep under review any matter which might affect the ability of healthcare providers to provide NHS services or the reward available to them for doing so.

We do not consider the proposals would affect the ability of healthcare providers to provide NHS services or the reward available to them for doing so.

8. To report on workforce systems (section 1GA of the NHS Act 2006)

The Secretary of State must, at least once every 5 years, publish a report describing the system in place for assessing and meeting the workforce needs of the health service in England.

We do not consider this duty to be affected by the proposals in this consultation.

Public sector equality duty

This duty comprises 3 equality objectives, each of which needs to be considered separately. Ministers have regard to the need to:

• eliminate discrimination, harassment, victimisation and any other conduct that is prohibited by or under the Equality Act 2010
• advance equality of opportunity between persons who share a relevant protected characteristic and persons who do not share it
• foster good relations between persons who share a relevant protected characteristic and persons who do not share it

The protected characteristics covered by this duty are age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex, and sexual orientation.

We believe that overall, our proposals will have a broadly positive impact on the equality objectives. This is because, by updating the statutory scheme, we are ensuring that the statutory scheme continues to function as a viable scheme and can meet its objectives in relation to safeguarding the NHS budget and ensuring medicines are available while supporting the life sciences sector. We consider that meeting these objectives is in the interest of all patients and therefore likely to benefit those who share protected characteristics.

The proposals would mean that the NHS can continue to use its funds, including revenues from the statutory scheme, in the best interest of patients, including those with protected characteristics. The changes are designed to protect patients’ access to clinically and cost-effective medicines, including innovative new medicines which may benefit individuals with specific protected characteristics, therefore advancing equality of opportunity.

In particular, we believe that ensuring the sustainability of the medicines pricing system and securing access to medicines is likely to benefit specific groups where illness and use of medicines tend to be higher than in the rest of the population. These groups include those sharing protected characteristics, such as older people and those with disabilities and long-term health conditions.

Moreover, the changes are designed to ensure the long-term sustainability and viability of the UK medicines pricing schemes. The proposals would ensure that growth continues to be controlled at 2% each year, allowing the NHS to invest in other services that benefit patients, including those with protected characteristics.

We do not consider duties 1 and 3 to be affected by this consultation.

The Family Test

The Secretary of State must consider, where sensible and proportionate, whether to apply the Family Test when making policy. The Family Test questions are:

• what kind of impact might the policy have on family formation?
• what kind of impact will the policy have on families going through key transitions such as becoming parents, getting married, fostering or adopting, bereavement, redundancy, new caring responsibilities or the onset of a long-term health condition?
• what impacts will the policy have on all family members’ ability to play a full role in family life, including with respect to parenting and other caring responsibilities?
• how does the policy impact families before, during and after couple separation?
• how does the policy impact on those families most at risk of deterioration of relationship quality and breakdown?

We have considered the Family Test and believe the proposals will not have a negative impact in relation to any of the relevant questions.

Our proposals would ensure the sustainability of the statutory scheme and ensure that the costs of medicines to the NHS are controlled to affordable levels and patients continue to have access to medicines. This will help support family members who require medicines and their carers to play a full role in family life through access to medicines and any services required through the NHS.

Environmental principles policy statement

The Environment Act 2021 requires ministers of the Crown, and those making policy on their behalf, to have ‘due regard’ to the environmental principles policy statement when making policy.

Ministers must identify the potential environmental effects (positive and negative) of the proposed policy and consider the 5 environmental principles:

• integration
• prevention
• rectification at source
• polluter pays
• precautionary

Ministers must incorporate the relevant principles in a proportionate manner.

Following consideration of this duty and the 5 principles, we do not consider that there will be any disproportionate environmental impacts as a result of these changes.

We consider that the use of medicines in the NHS may have some negative secondary (indirect) environmental effects. These include indirect greenhouse gas emissions, and contamination of the environment from the production and freight of medicines procured by the NHS. However, the changes to regulations will have no material additional impact on the production or freight of medicines procured by the NHS in comparison with the counterfactual (where the regulations are not updated). We therefore do not consider the changes to the statutory scheme will result in environmental impacts from changes in patient use of medicines in the NHS.

With regard to the broader environmental impacts from the use of medicines in the NHS, environmental considerations have been integrated throughout the way the NHS purchases medicines. For example, the NHS England Public Board has approved a roadmap to help suppliers align with the net zero ambition between now and 2030. This approach builds on UK government procurement policy (procurement policy note 06/20 and procurement policy note 06/21). Other policies that aim to address the environmental impacts of medicine use are in place across the UK.

We therefore do not consider that it would be proportionate to include further measures within the statutory scheme to meet this duty, given the associated economic and social benefits to society of the policy’s primary objectives, and that impacts are being addressed through more proportionate means.

Conclusion on statutory duties

We believe that the proposals will help to ensure the Secretary of State continues to promote a comprehensive health service. The proposed changes ensure the long-term sustainability of the statutory scheme which, in turn, supports the sustainability of NHS spending on medicines and patients’ access to these medicines.

Question

Do you agree or disagree with our initial conclusions about the impact that the proposed updates to the statutory scheme will have when taking into account the statutory duties of the Secretary of State?

• Agree
• Neither agree nor disagree
• Disagree
• Don’t know

Please explain your answer and provide evidence to support further development of our analysis. (Optional, suggested word limit 500 words)

Do not include any personally identifiable information.

How to respond

The consultation will close at 11:59pm on 25 April 2025. We welcome responses from any interested person, business or organisation.

You can respond to this consultation by using the online survey.

If you have any queries on this consultation or require an alternative format, email statutoryschemeconsultation@dhsc.gov.uk. Do not send any personal information to this email address.

Confidentiality of information

We manage the information you provide in response to this consultation in accordance with the Department of Health and Social Care’s personal information charter, which includes the department’s privacy notice.

The information we receive, including personal information, may be published or disclosed in accordance with the access to information regimes (primarily the Freedom of Information Act 2000 (FOIA), the Data Protection Act 2018 (DPA) and the Environmental Information Regulations 2004).

If you want the information that you provide to be treated as confidential, please be aware that under the FOIA, there is a statutory code of practice with which public authorities must comply and which deals, among other things, with obligations of confidence.

In view of this, it would be helpful if you could explain to us why you regard the information you have provided as confidential. If we receive a request for disclosure of the information, we will take full account of your explanation, but we cannot give an assurance that confidentiality can be maintained in all circumstances. An automatic confidentiality disclaimer generated by your IT system will not, of itself, be regarded as binding on the department.

The department will process your personal data in accordance with the DPA and in most circumstances, this will mean that your personal data will not be disclosed to third parties.

Privacy notice

Information provided will be managed in accordance with the DHSC privacy notice. It explains your rights under the Data Protection Act 2019 and the United Kingdom General Data Protection Regulation (UK GDPR).

Consultation questions

About you

In what capacity are you responding to this survey?

• An individual sharing my personal views and experiences
• An individual sharing my professional views
• On behalf of an organisation

Questions for individuals sharing their personal views and experiences

What is your age? (Optional)

• Under 16
• 16 to 24
• 25 to 34
• 35 to 44
• 45 to 54
• 55 to 64
• 65 to 74
• 75 or above
• Prefer not to say

What is your sex? (Optional)

• Male
• Female
• Prefer not to say

Is the gender you identify with the same as your sex registered at birth? (Optional)

• Yes
• No
• Prefer not to say

Questions for individuals sharing their professional views

Which of the following best describes your area of work? (Optional)

• NHS or health service delivery
• Other public sector
• Charity or voluntary sector
• Private sector
• Other, please specify

Questions for organisations

What is the name of your organisation? (Optional)

Where does your organisation operate or provide services? (Optional, select all that apply)

• England
• Wales
• Scotland
• Northern Ireland
• The whole of the UK
• Outside the UK

Which of the following best describes the work of your organisation? (Optional)

• A pharmaceuticals company - member of the statutory scheme
• A pharmaceuticals company - member of the voluntary scheme (VPAG)
• An organisation representing the pharmaceutical industry
• Other pharmaceutical and life science sector, please specify
• A provider of goods or services to the NHS
• Other private sector organisation, please specify
• An NHS organisation
• Research or education
• Other public sector organisation, please specify
• An organisation representing patients, the public and carers
• Other voluntary sector organisation, please specify

If asked to specify, please provide further detail about the work of your organisation. (Optional)

Email address

As part of this survey, there are 2 reasons why we may need your email address:

• if you need to contact us about amending or deleting your response, the only way we can verify that it is your response is using your email address
• if our policy team have a follow-up question to ask you, we can contact you

Enter your email address here. (Optional)

Your contact details will not be shared with anyone outside the department.

Consultation proposal: rate of allowed growth

The consultation proposes to maintain both the allowed growth rate at 2% per year and the overall value of the baseline adjustment (but delay implementation of two-thirds of the adjustment to 2026). This is intended to optimise broad commercial equivalence between the schemes.

Do you agree or disagree with our proposal to maintain the level of allowed growth in the scheme to 2% each year, with baseline adjustments of £50 million in 2025, £430 million in 2026 and £380 million in 2027?

• Agree
• Neither agree nor disagree
• Disagree
• Don’t know

Please explain your answer and provide evidence to support further development of our analysis. (Optional, suggested word limit 500 words)

Do not include any personally identifiable information.

Consultation proposal: headline payment percentage

The consultation proposes to raise the statutory scheme headline payment percentages for 2025, 2026 and 2027 to 23.8%, 24.7% and 26.4% respectively (from the current values of 23.8%, 24.7% and 26.4%). These updates would come into force on 1 July 2025. Companies who made statutory scheme payments in the first half of 2025 at the lower rate of 15.5% will pay a rate of 32.2% from 1 July 2025 to account for this. These levels are broadly equivalent to the payment rates established under VPAG.

Do you agree or disagree with the levels at which we propose to set the statutory scheme payment percentages, and the rationale provided for this?

• Agree
• Neither agree nor disagree
• Disagree
• Don’t know

Please explain your answer and provide evidence to support further development of our analysis. (Optional, suggested word limit 500 words)

Do not include any personally identifiable information.

Consultation proposal: assurance of company data

The consultation seeks respondent views on additional assurance requirements for presentation reports, given the additional importance of these reports to the price erosion mechanism introduced on 1 January 2025. DHSC is seeking views on what these procedures could look like in practice, and proposes that timelines for the report would align with the existing annual sales report audit. The proposal suggests that an independent auditor would conduct any additional assurance procedures.

Do you agree or disagree with the proposal to introduce some form of additional assurance requirement on presentation level sales reports (PLRs)?

• Agree
• Neither agree nor disagree
• Disagree
• Don’t know

Please explain your answer and provide evidence to support further development of our analysis. (Optional, suggested word limit 500 words)

In particular, please provide evidence as to the expected additional cost of this requirement, and how this might differ between companies of different sizes.

Do not include any personally identifiable information.

Impact of the proposals

If you have any comments on the proposed methodology used in determining the payment percentages (as set out in the accompanying impact assessment), please set them out here.

Please give reasons and provide any evidence or analysis that would support any refinement you think the department should make. (Optional, suggested word limit 500 words)

Do not include any personally identifiable information.

Specific consultation requirements in the NHS Act 2006

The statutory scheme is required to include consultation about the economic consequences for the life sciences industry in the United Kingdom, consequences for the economy of the United Kingdom, and consequences for patients to whom any health service medicines are to be supplied and for other health service patients. This is set out in the impact assessment accompanying this consultation.

Do you agree or disagree with the analysis in the impact assessment of our proposals, including impacts on those areas where the NHS Act 2006 requires that we consult?

• Agree
• Neither agree nor disagree
• Disagree
• Don’t know

Please explain your answer and provide evidence to support further development of our analysis. (Optional, suggested word limit 500 words)

Do not include any personally identifiable information.

Statutory duties

Several specific duties must be considered when proposing updates to the statutory scheme, including:

• duties under the NHS Act 2006
• the Family Test
• the environmental principles policy statement

We believe that the proposals will help ensure the Secretary of State for Health and Social Care continues to promote a comprehensive health service and that the proposed scheme supports the sustainability of NHS spending on medicines and patients’ access to these medicines.

Do you agree or disagree with our initial conclusions about the impact that the proposed updates to the statutory scheme will have when taking into account the statutory duties of the Secretary of State?

• Agree
• Neither agree nor disagree
• Disagree
• Don’t know

Please explain your answer and provide evidence to support further development of our analysis. (Optional, suggested word limit 500 words)

Do not include any personally identifiable information.