Open consultation

Proposed changes to headline payment percentage and approach to consultations of the statutory scheme to control the cost of branded health service medicines - consultation document

Published 10 February 2026

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. Both schemes are UK-wide, applying to England, Wales, Scotland and Northern Ireland.

The statutory scheme was last amended on 1 July 2025 to update the headline payment rate for new medicines. This update implemented DHSC’s consultation response published in June 2025.

The headline payment percentage for VPAG has been set at 14.5% for 2026. This is significantly lower than the headline payment percentage of 24.3% set for the statutory scheme in 2026. We therefore propose to amend the statutory scheme to maintain broad commercial equivalence with the new, lower VPAG rate.

This consultation sets out DHSC’s proposal to decrease the statutory scheme headline payment percentage to 16.5% from 2026 onwards. The proposed statutory scheme headline payment percentage of 16.5% is chosen as it is 1% point higher than the combined 2026 VPAG headline payment percentage and investment programme payment percentage. This reflects our support for the important partnership and commitments between industry and government developed under the voluntary scheme. It also follows the precedent as to the level of the gap between the statutory scheme and voluntary scheme payment percentages that has been considered to represent broad commercial equivalence in the past. DHSC will keep this rate under review in future years to ensure it continues to represent broad commercial equivalence.

For operational purposes, the statutory scheme should be updated on the first day of a new quarter, and 1 July 2026 is the earliest feasible date for implementation of the proposals set out in this consultation. Therefore, companies who made statutory scheme payments in the first half of 2026 at the higher rate of 24.3% would pay a lower rate of 8.7% from 1 July 2026 to 31 December 2026 to achieve a full year average rate of 16.5%.

The consultation also seeks respondent views on proposals for a simplified method for consulting with industry and patient groups on any future amendment to the statutory scheme for the remainder of the duration of the VPAG.

In proposing these updates, consideration is given to the Secretary of State’s duties under:

• sections 1 to 1GA of the National Health Service Act 2006 (‘the NHS Act 2006’)
• the public sector equality duty under the Equality Act 2010
• the Family Test
• the environmental principles policy statement

An analysis of these duties is provided 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 in England, Scotland and Wales, and Health and Social Care Northern Ireland (HSCNI). 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 DHSC consultation response in December 2023, the schemes also apply to all biological medicines (with active substances produced by, or extracted from, a biological source, such as bacteria or viruses, blood, tissues or living cells in culture), regardless of whether they are marketed under a brand name or not.

Medicines represent the second highest proportion of NHS spend. In England, the 2024 to 2025 spend on prescribed (generic and branded) medicines, appliances and medical devices by the NHS was approximately £21.6 billion (gross of central rebates) of which £14.6 billion is estimated to relate to branded medicines. VPAG was agreed between DHSC, NHS England and the Association of the British Pharmaceutical Industry (ABPI) in December 2023 and came into force on 1 January 2024. The scheme will last for 5 years, until 31 December 2028. The headline payment percentage in VPAG for 2026 is 14.5%. Companies additionally make payments (1% in 2026) 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 DHSC under the schemes are allocated to each of the 4 countries on an agreed basis each year.

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 was last updated in July 2025 with headline payment rates for newer medicines of:

• 23.4% in 2025
• 24.3% in 2026
• 26.0% 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 of sales to the NHS each year
• sales of low-cost presentations with a list price below £2
• parallel imports
• exceptional central procurements (ECP) and centrally procured vaccines (CPV)
• new active substances (NAS)

Given the VPAG rate for 2026 has now been set at 14.5%, significantly lower than the rate currently set for the statutory scheme in 2026, this consultation sets out DHSC’s proposal to decrease the statutory scheme rate from 2026 in order to restore broad commercial equivalence between the 2 schemes. DHSC proposes to set the statutory scheme rate at 16.5% from 2026 onwards. DHSC will keep this rate under review in future years to ensure it continues to represent broad commercial equivalence.

We also propose a simplified consultation process for future changes to the statutory scheme payment percentages for the purposes of maintaining broad commercial equivalence. Rather than publishing the consultation on GOV.UK, we propose engaging directly with:

• trade associations representing the pharmaceutical industry:
  • ABPI
  • Medicines UK
  • the Ethical Medicines Industry Group (EMIG)
  • BioIndustry Association (BIA)
• the Charity Medicines Access Consortium (CMAC), representing NHS patients

It is proposed that this engagement would take the form of 2 or more workshops (separately with industry and patient representatives) where DHSC would set out the proposals in detail and allow opportunity for feedback and discussion.

Any more significant change to the regulations, including any amendment that would significantly change the policy of broad commercial equivalence, would require a full public consultation.

The attached impact assessment models the proposed option and assesses its impacts against business-as-usual.

Reason for proposed changes

VPAG and the statutory scheme work together to help to ensure value for money for the taxpayer. They also enable the NHS to continue investing in patients’ access to new medicines and non-pharmaceutical services. This is 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. Broad commercial equivalence is a longstanding policy objective of DHSC.

The most recent legislative changes to the statutory scheme took effect on 1 July 2025. These amendments implemented DHSC’s response of June 2025 to a consultation carried out between 14 March and 25 April 2025.

The VPAG rate for 2026 has been set at 14.5%, a figure significantly lower than the rate currently set for the statutory scheme in 2026. To restore broad commercial equivalence between the 2 schemes, a new 2026 statutory scheme headline rate is therefore proposed. This has been calculated using a simplified methodology of setting the statutory scheme rate 1% point above the combined 2026 VPAG headline payment percentage (14.5%) and investment programme rate (1%).

The statutory scheme rate being slightly higher than the VPAG rate reflects the wider differences between the schemes. It also supports the important partnership and commitments between industry and government developed under the voluntary scheme. These include the commitment by all parties to promote a clear and joined up market access ecosystem that benefits patients and improves the health of the population.

The choice of this 1 percentage point, as a reasonable level of uplift to achieve this, is also informed by precedent from previous years, where the differential between schemes has been at similar levels, including the differential of exactly 1% set in 2023. This simplified methodology will be more comprehensible to non-experts and be less operationally burdensome, enabling a faster amendment process to restore broad commercial equivalence when needed.

The deal made with the USA on pharmaceuticals in December 2025 included confirmation that VPAG headline rates will not exceed 15% for the remainder of the scheme. Failure to adopt the revised methodology could lead to very different headline payment percentages, and increased instability, for the 2 schemes.

For operational purposes, the statutory scheme must be updated on the first day of a new quarter, and 1 July 2026 is the earliest feasible date for implementation of the proposals set out in this consultation.

DHSC is also seeking views on a streamlined process for consulting with stakeholders on any future update to the statutory scheme. The details of how this would work in practice are set out in this consultation document. A simplified consultation process will reduce the burden on companies, patient groups and DHSC, and will enable a faster amendment process to restore broad commercial equivalence when needed.

Consultation proposals

Setting new headline payment percentage for 2026 and beyond

The 2026 payment percentage for VPAG, published in December 2025, is 9.8 percentage points below the statutory scheme rate currently set for 2026. An additional payment of 1 percentage point applies in 2026 under the VPAG investment programme, meaning the 2 schemes cannot be considered to have broad commercial equivalence.

The existing definition of broad commercial equivalence was set out in the June 2025 explanatory memorandum accompanying the change in legislation:

Broad commercial equivalence means that government aims to set payment percentages in the statutory scheme that are comparable (but not necessarily identical) to those in the voluntary scheme.

We will retain the existing policy of broad commercial equivalence but use a new simplified methodology to set the 2026 rate to streamline our approach to calculating payment rates.

Previous updates to the statutory scheme have calculated rates with respect to:

• a baseline: the starting level of allowed sales in any given year
• an allowed growth rate: the rate at which allowed sales increases at the start of each year

The aim of the output of this calculation was a rate in broad commercial equivalence with VPAG. For example, at the last consultation we set the statutory scheme rate of allowed growth at 2% per year, along with baseline adjustments:

• £50 million in 2025
• £420 million in 2026
• £380 million in 2027

This resulted in a payment percentage in 2025 of 23.4% which was in broad commercial equivalence with the 22.9% rate in VPAG over the equivalent period.

Rather than calculating a statutory scheme specific sales growth cap and calibrating the allowed growth inputs towards broad commercial equivalence, we are instead proposing to set the 2026 statutory scheme payment percentage in reference to the equivalent 2026 VPAG rates.

For 2026, 1 percentage point will be added to the combined 2026 VPAG rate (14.5%) and investment programme rate (1%). We consider that this maintains broad commercial equivalence while reflecting the wider differences between the schemes. The choice of 1 percentage point uplift was chosen as reasonable, informed by precedent from previous years where the differential between voluntary and statutory scheme payment percentages has been at similar levels, including exactly 1% in 2023.

This new methodology does not require any amendment to the current regulations.

Using the new methodology outlined above, we propose a headline statutory scheme rate of 16.5% from 2026. DHSC will keep this rate under review in future years to ensure it continues to represent broad commercial equivalence.

We propose that these updates come into force on 1 July 2026. 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 2026 at the higher rate of 24.3% will pay a rate of 8.7% from 1 July 2026 until 31 December 2026 to account for this such that their payment rate is modelled to be accurate on a full-year basis.

We consider that payment rates at these levels are appropriate as they have broad commercial equivalence with 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.

If DHSC does not adjust the rate to provide broad commercial equivalence with VPAG, there is a 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.

Procedure for future consultations

There is a requirement to consult on changes to the statutory scheme regulations, as established by section 263(1) of the NHS Act 2006:

The Secretary of State may, after consultation with the industry body and any other person the Secretary of State thinks appropriate, make a scheme (referred to in this section and section 264 as a statutory scheme) for one or more of the following purposes–

(a) limiting the prices which may be charged by any manufacturer or supplier for the supply of any health service medicines,

(b) limiting the profits which may accrue to any manufacturer or supplier in connection with the manufacture or supply of any health service medicines,

(c) providing for any manufacturer or supplier of any health service medicines to pay to the Secretary of State an amount calculated by reference to sales or estimated sales of those medicines (whether on the basis of net prices, average selling prices or otherwise).

The exact mechanism of consultation is not specified, beyond that it must be with the industry body, and any other person the Secretary of State for Health and Social Care thinks appropriate. Previously, this has been carried out through a public consultation published on GOV.UK.

Given the frequency of consultation over recent years, this presented a considerable burden for respondents, while also leading to a significant delay in restoring broad commercial equivalence between the VPAG and statutory schemes where required.

We therefore propose an alternative approach to discharging the statutory duty cited above through direct engagement. The requirement to consult with the industry body will be met through a workshop held with DHSC officials and delegates of ABPI, Medicines UK, EMIG and BIA, who represent different groups of pharmaceutical companies. Delegates will include officials from the relevant trade associations as well as representatives of individual companies nominated by the relevant trade associations.

The requirement to consult with ‘any other person the Secretary of State thinks appropriate’ will be met with another workshop held with CMAC, who represent 25 health charities, representing millions of people across a range of disease areas. This organisation represents the non-industrial stakeholders in future changes in payment percentage. Either CMAC or DHSC may at their discretion invite representatives of any other health charity or patient organisation to attend the workshop.

The last 4 statutory scheme consultations (over the period 2022 to 2025) have received an average of 55 responses. Of these consultations:

• 2 primarily addressed payment percentages (average 28 responses)
• 2 concerned more complex changes (average 77 responses)

Our most recent public consultation, which primarily concerned a change of payment percentage, received 23 responses, of which:

• 3 were from industry bodies
• 1 was from an individual
• 1 was from an integrated care board
• 1 was from a group representing patients
• 17 were from individual pharmaceutical companies

We received a higher number of responses from individuals for consultations concerning more significant changes to the terms of the statutory scheme.

The vast majority of stakeholder interest in the changes to the statutory scheme payment percentage comes directly from the pharmaceutical industry. We therefore consider it appropriate and proportionate to directly target industry groups when consulting as per the government consultation principle 6 (discussed below). We additionally think that it is valuable to take steps to ensure that we improve the level of engagement with patients on the statutory scheme payment percentages. This is because they are the other group most affected by these proposed changes, and they have not previously accounted for much of the data collected through previous consultations on payment percentage changes.

Workshops will take place following the calculation of the proposed amended statutory scheme payment percentage but before such rates are published or finalised. Attendees will be provided with information concerning the government proposals in advance of any workshop, including:

• detail of the proposed payment percentage(s)
• detail of the dates from which it is proposed that these payment percentage(s) will apply
• details of any transitional arrangements that will apply to companies who pay at an old rate for part of a given scheme year

Attendees will also be provided with a consultation stage impact assessment. At workshops, which will be scheduled for a minimum of 60 minutes, government will present the proposed payment percentages and anticipated impact, and attendees will be invited to comment and to ask questions. Following workshops, a discussion summary will be circulated to attendees, providing an opportunity for attendees to ensure contributions were accurately understood and recorded. DHSC will consider the responses from attendees and will make a final decision on payment percentages. DHSC will then publish the consultation response, including the decision and rationale, on GOV.UK along with the consultation documentation and an updated final stage impact assessment.

The consultation will follow the government’s consultation principles, with particular attention drawn to:

Principle 1: consultations should be clear and concise

This proposed approach responds to feedback that the existing process is overly burdensome and unclear, delivering an improvement on clarity and concision for more straightforward consultations.

Principle 2: consultations should have a purpose

We will consult on payment rates prior to forming a final view on them and responses will be taken into account when finalising rates.

Principle 3: consultations should be informative

We will provide information in advance, as outlined above, clearly stating the changes proposed and their benefits and disadvantages. Information will be provided in advance of engagement workshops, such that participants will have sufficient time to review and form an opinion on the questions. We will discuss with industry the preferred timeframe for consideration of proposals.

Principle 5: consultations should last for a proportionate amount of time

Each of the 2 planned workshops would last for 60 minutes, giving time for all participants to offer their responses. As these shorter consultation arrangements will only concern changes in headline payment percentages, we consider this time to be proportionate. More complex changes will go to full public consultation as before.

Principle 6: consultations should be targeted

We will ensure fairness in the consultation procedure by engaging with a range of people, businesses and industry bodies affected by the policy. A workshop will be held with pharmaceutical trade associations (ABPI, Medicines UK, EMIG and BIA), representing businesses affected by the proposed changes. Another workshop will be held with the CMAC, who will represent NHS patients. We will use our existing relationship with some of these organisations to inform them of the forthcoming consultation. We will initiate and develop relationships with the remaining representative organisations.

Principle 7: consultations should take account of the groups being consulted

We have received indications from stakeholders that the current consultation process is operationally burdensome for respondents. Previous consultations have received increasingly few responses, in particular from organisations representing patients. We consider that workshops with representative organisations will make it easier for respondents to contribute. In particular, the workshops will provide a better opportunity for patient voices to be heard, and for DHSC to take their viewpoints into account when forming policy. Providing information as outlined above, a period to consider the proposals, and a 60-minute session for discussion, allows sufficient transparency of the purpose and impact of the consultation to both industrial and other stakeholders.

Principle 8: consultations should be agreed before publication

As before, collective agreement would be achieved through standard government processes. We will also engage with representatives of the devolved government.

Principle 9: consultations should facilitate scrutiny

Sending information in advance, and encouraging engagement at the workshop, are intended to promote scrutiny of the proposals. Minutes of the workshops will be distributed to participants to give an opportunity for their comments and corrections. As before, the government response to the consultation will be published on GOV.UK - this response would include a summary of the points made at the workshops.

Conclusion

This revised approach is to be used only for changes to statutory scheme payment percentages to ensure continued alignment to the principle of broad commercial equivalence. Wider changes, including those that would abolish or materially alter the principle of broad commercial equivalence, will be subject to public consultation.

This proposed change has the objective of reducing the burden on respondents and speeding up the process. This means we can minimise the gap between setting the VPAG rate and setting the statutory scheme rate for a given year, while maintaining an acceptable level of fairness and transparency. Delays to this restoration of broad commercial equivalence each time risk the stability of the 2 schemes, again exacerbating risks to the financial sustainability of the NHS and patient access to medicines.

Impact of the proposals

The impact assessment published alongside this consultation sets out that the proposals will help to ensure the continued effectiveness of the statutory scheme.

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 3 issues below. The relevant information from the impact assessment which accompanies this consultation is summarised here. A full assessment of the likely impact of the proposals on these areas can be found in the consultation stage impact assessment published alongside this consultation document.

1. Economic consequences for the life sciences industry in the UK

The direct effect of a reduction in the statutory scheme headline payment percentage returns an estimated benefit to UK shareholders with a central net present value (NPV) of £2.1 million. Reducing the statutory scheme headline payment percentage may also support mitigating the risk of a drastic reduction in investment in the UK pharmaceuticals industry and supports delivering the UK’s commitments, set out in the UK-USA pharmaceuticals deal. 

2. Consequences for the economy of the UK

The above effects on the UK life sciences industry represent the identified effects this change will have on the economy of the UK. 

3. Consequences for patients to whom any health service medicines are to be supplied and for other health service patients

The reduction in statutory scheme newer medicine income can be translated into a quantified impact on patients using the established methodology set out in annex C of the impact assessment. The reduction in statutory scheme newer medicine income is converted into quality adjusted life years (QALY) using the estimated £15,000 cost per additional QALY generated at the margin in the NHS. This value is then multiplied by the societal willingness to pay value per QALY of £70,000. This gives a net present societal value (NPSV) of –£33.9 million in the central scenario.

The changes provide unquantified benefits to patients through meeting the objectives of the statutory scheme. This is done by setting the rate in a way that keeps medicines prices affordable and safeguards NHS finances, while also giving UK patients access to branded medicines and supporting investment in the UK pharmaceutical industry.

They also support the UK-USA pharmaceuticals deal, which benefits UK patients through supporting access to innovative medicines.

Statutory duties

There are some specific duties that the Secretary of State must consider when proposing updates to the statutory scheme. These include consideration of:

• duties under the NHS Act 2006
• the public sector equality duty under the Equality Act 2010
• the Family Test
• the environmental principles policy statement

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
• prevention, diagnosis and treatment for physical and mental illness

The proposed decrease to the statutory scheme headline payment percentage from 1 July 2026 will mean that DHSC receives lower statutory scheme payments than under the current regulations.

The value of reduced statutory scheme payments in relation to newer medicines is estimated at a value of between £7 million and £8 million cumulatively across 2026 to 2028. This loss of income equates to a societal QALY loss of between £31 million and £37 million between 2026 and 2028 compared with continuing with the current regulations.

Payments are apportioned to the NHS across the UK and will be used in the best interest of patients. They will ensure the ongoing affordability of NHS medicines spending and supporting the ability of the NHS to continue investing in patient access to medicines.

Updating the payment percentage and making the process for calculating this percentage and consulting on its implementation more streamlined will make achieving broad commercial equivalence with VPAG simpler. This will:

• reduce the time required between changes in VPAG rates and amending the statutory scheme to set new rates
• help to secure the stability of the 2 schemes

The effective operation of the schemes means that DHSC 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 DHSC were to proceed with the business-as-usual option of maintaining the current headline payment percentage, we consider that the statutory scheme would not be perceived as having broad commercial equivalence with, and therefore being a viable alternative to, the voluntary scheme. This 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 delays to calculating and implementing new payment rates could likewise lead to losing broad commercial equivalence, and risk stability of the 2 schemes.

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 their 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 2026 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 keeping the regulations under review to ensure that 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 and streamline the process of calculating and implementing changes in payment percentage, helps to ensure the effective operation of the schemes. It also 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 for England.

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 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
• to receive the vaccinations that the Joint Committee on Vaccination and Immunisation 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 the effective operation of the statutory scheme, 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 supporting budget sustainability. It also supports access to medicines recommended by NICE as both clinically effective and cost effective for patients and secures 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)

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 their 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.

DHSC considers that research and development (R&D) investments 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, R&D investment could lead to improved medicines in the future that would be of benefit to patients and the health service.

In contrast, if DHSC were to proceed with the business-as-usual option of maintaining the current headline payment percentage, and less streamlined calculation methodology and consultation process, we consider that this could lead to instability between VPAG and the statutory scheme, which would no longer work together in broad commercial equivalence. Further, the significantly higher payment percentage in the statutory scheme could be perceived as a sign of an uncompetitive commercial environment, and a disincentive for research investment from industry.

DHSC has previously received and considered evidence about the relationship between the commercial environment and inward investment. DHSC remains open to receiving further evidence about this relationship in responses to this consultation.

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

The Secretary of State must exercise their 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 must have regard to the need to:

1. Eliminate discrimination, harassment, victimisation and any other conduct that is prohibited by or under the Equality Act 2010.
2. Advance equality of opportunity between persons who share a relevant protected characteristic and persons who do not share it.
3. 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
• sexual orientation

We consider that overall, our proposals will have a broadly neutral to positive impact on the equality objectives. This is because, by updating the statutory scheme, we are ensuring that the statutory scheme can continue to function as a viable scheme and meet its objectives in relation to:

• safeguarding the NHS budget
• ensuring innovative medicines are available to patients
• 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, relevant to objective 2.

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 medicines which are both clinically effective and cost effective, including innovative new medicines which may benefit individuals with specific protected characteristics, therefore advancing equality of opportunity.

In particular, we consider 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.

Regarding objective 1, we do not consider that our proposals will have a significant positive or negative impact on eliminating discrimination, harassment, victimisation or any other prohibited conduct. Our proposals are unlikely to impact conduct.

Regarding objective 3, we do not consider that our proposals will have a significant positive or negative effect on fostering good relations between persons who share a relevant protected characteristic and persons who do not share it. Our proposals do not address relationships between groups of patients.

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:

1. What kind of impact might the policy have on family formation?
2. 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?
3. 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?
4. How does the policy impact families before, during and after couple separation?
5. 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 do not consider the proposals will 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 business-as-usual (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 consider 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.

How to respond

Please respond through our online survey.

Do not provide personal data when responding to free-text survey questions. Any personal data included will be removed before analysis of these responses and will therefore not be considered in the consultation outcome.

The consultation is open for 10 weeks and will close at 11:59pm on 21 April 2026. If you respond after this date, your response will not be considered.

If you have any queries on this consultation, email statutory_scheme_consultation@dhsc.gov.uk. Do not send your consultation answers or any personal information to this email address.

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)

Setting new headline payment percentage for 2026 and beyond

We propose to set a statutory scheme headline payment percentage of 16.5% for 2026 and following years.

Do you agree or disagree with the level at which we propose to set the payment percentage?

• 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.

Procedure for future consultations

We propose a simplified approach to future consultations on changes to payment percentages, where workshops are held with industry bodies, and with the Charity Medicines Access Coalition. More significant changes would involve a full public consultation as has been used before.

Do you agree or disagree with the proposed procedure for future consultations?

• 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.

Impact of the proposals

A full analysis of the areas which the NHS Act 2006 requires that we consult on is provided in the impact assessment and summarised within the consultation document. These topics are:

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

Do you agree or disagree with the analysis in the impact assessment of our proposals 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

The Secretary of State for Health and Social Care must consider the following specific duties when proposing updates to the statutory scheme:

• duties under the NHS Act 2006
• the public sector equality duty under the Equality Act 2010
• the Family Test
• the environmental principles policy statement

These are considered in detail in the consultation document.

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.

Privacy notice

Data controller

DHSC is the data controller.

What personal data we collect

We will collect information in relation to the following:

• whether the respondent is sharing their personal views and experiences, their professional views and experiences or responding on behalf of an organisation
• for those responding as an individual, information on their protected characteristics (age, sex and gender) - it is not mandatory for individuals to provide this information to respond to the policy questions in the consultation
• for those responding as an individual, and are sharing their professional views and experience, information on what sector they work in (the NHS, elsewhere in the public sector, private or voluntary sector and so on) - it is not mandatory for individuals to provide this information to respond to the policy questions in the consultation
• for those responding on behalf of an organisation, information on the type of the organisation they are responding as (for example whether it is a pharmaceuticals company who is a member of either branded medicine pricing scheme, sector representative organisation, charity, NHS organisation and so on)

How we use your data (purposes)

We will collect personal information through the survey for the consultation. If you write or email us directly then we will collect your personal information through this channel.

We need to hold your information to understand in what capacity you’re responding, as this is crucial in our analysis of how our proposals will affect different individuals and organisations.

We ask you to provide information about your protected characteristics so that we can understand the range of individuals represented in the response to the consultation, as we would like to ensure that a broad cross section of the population is included in the consultation.

Legal basis for processing personal data

Under article 6 of the United Kingdom General Data Protection Regulation (UK GDPR), the lawful basis we rely on for processing this information is:

• (e) the processing is necessary to perform a task in the public interest or for our official functions and the task or function has a clear basis in law (necessary to perform a task in the public interest or in the exercise of our official functions)

Data processors and other recipients of personal data

Personal data will only be shared internally within DHSC with employees involved in this consultation.

This consultation is hosted on an online platform owned by SocialOptic, who are a contracted supplier of DHSC. SocialOptic will delete any personal data in line with the retention and disposal periods outlined in this privacy notice, or earlier if instructed to do so by DHSC.

International data transfers and storage locations

Data will be stored within DHSC on a secure platform. Storage of data by SocialOptic is provided via secure servers located in the UK.

Retention and disposal policy

We will keep your information for one year and then will dispose of it from our DHSC secured platform. SocialOptic will securely erase the data held on its system one year after the online survey closes, or when instructed to do so by DHSC if the data has served its intended purpose (whichever happens earlier).

How we keep your data secure

All data is stored on a secure DHSC platform and only people involved in the consultation will have access to this.

Your rights as a data subject

By law, data subjects have a number of rights, and this processing does not take away or reduce these rights under the EU General Data Protection Regulation (2016/679) and the UK Data Protection Act 2018 applies.

These rights are:

• the right to get copies of information - individuals have the right to ask for a copy of any information about them that is used
• the right to get information corrected - individuals have the right to ask for any information held about them that they think is inaccurate, to be corrected
• the right to limit how the information is used - individuals have the right to ask for any of the information held about them to be restricted, for example, if they think inaccurate information is being used
• the right to object to the information being used - individuals can ask for any information held about them to not be used. However, this is not an absolute right, and continued use of the information may be necessary, with individuals being advised if this is the case
• the right to get information deleted - this is not an absolute right, and continued use of the information may be necessary, with individuals being advised if this is the case

Comments or complaints

Anyone unhappy or wishing to complain about how personal data is used as part of this programme, should contact data_protection@dhsc.gov.uk in the first instance or write to:

Data Protection Officer
1st Floor North
39 Victoria Street
London
SW1H 0EU

Anyone who is still not satisfied can complain to the Information Commissioners Office. Their website address is www.ico.org.uk and their postal address is:

Information Commissioner’s Office
Wycliffe House
Water Lane
Wilmslow
Cheshire
SK9 5AF

Automated decision making or profiling

No decision will be made about individuals solely based on automated decision making (where a decision is taken about them using an electronic system without human involvement) which has a significant impact on them.

Changes to this policy

We keep this privacy notice under regular review, and we will update it if necessary. All updated versions will be marked by a change note on the consultation page. This privacy notice was last updated on 10 February 2026.