A report finds the medicines pricing control mechanism makes Britain less competitive and less attractive for life sciences investment. 

The UK could lose out on £11 billion in pharmaceutical research and development (R&D) investment by 2033, and see fewer new medicine launches in the NHS, unless very high and unpredictable medicines sales clawbacks are addressed, according to WPI Economics.

The report from the economics consultancy looks at a subset of R&D activity in the UK and modelled the impact of prolonged high medicines payment rates. In the UK, a medicines pricing control mechanism – Voluntary Scheme for Branded Medicines Pricing, Access, and Growth (VPAG) – requires companies to pay the Department of Health and Social Care (DHSC) up to a third their UK revenue from sales of branded medicines to the NHS. 

The report shows that if high new medicine payment rates continue, the UK could lose out on £11 billion of R&D investment by 2033. If new medicine payment rates are returned to pre-2023 levels of below 10%, then such losses can still be avoided.

Less competitive and less attractive

The report was commissioned by the Association of the British Pharmaceutical Industry (ABPI) which has long campaigned on the issue. 

“The UK will not realise its ambition and potential to be a global leader in health research if it continues to value the products of that research so poorly,” said ABPI chief executive Richard Torbett.

In recent years, rocketing payment rates have resulted in industry payments to the government going from around £590 million in 2021 to £3.5 billion in 2025. In parallel, the ABPI says, there is growing evidence of investments in R&D and manufacturing going to other countries.

“In the last decade, it is clear the UK has become less competitive and less attractive for life sciences investment due to high medicines rebate rates, low access and uptake of innovative medicines, and declining activity in clinical trials,” said Steve Hopkinson, vice president and general manager of US pharmaceutical company AbbVie UK. 

In a survey of its members, ABPI said that 19% of respondents anticipate a reduction in R&D investment as a direct result of the 2025 VPAG payment rate. In 2022, 30% of respondents stated that the UK was in the top three countries globally to launch medicines; this year, only 13% stated that this was the case.