The 2024 voluntary scheme for branded medicines pricing, access and growth: payment percentage for 2025
Published 16 December 2024
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Summary
This publication sets out the calculation of the headline payment percentage for 2025 payable on eligible sales of newer medicines. The headline payment percentage is calculated in line with annexes 4 and 5 of the 2024 voluntary scheme for branded medicines pricing, access and growth (VPAG) and is based on VPAG and statutory scheme (SS) company sales data and parallel import sales data.
The headline payment percentage for 2025 payable on eligible sales of newer medicines is set at 22.9%.
Measured sales growth rates
The headline payment percentage is calculated based on:
- the growth in the measured sales of newer medicines
- the fixed forecast growth rate for measured sales of older medicines as set out in table 1 of annex 3 to the 2024 VPAG
- the growth of parallel import sales
Growth in measured sales is calculated from the sales in the 2024 VPAG, the SS and parallel imports.
The 2023 to 2024 growth rate is calculated using data from quarter 1 to quarter 3 2024 and the equivalent data for quarter 1 to quarter 3 2023, in accordance with paragraph 72 of annex 4 to the 2024 VPAG.
In accordance with paragraph 75 of annex 4 to the 2024 VPAG, companies whose sales exceeded £6 million for the first time and, therefore, were included in measured sales for the first time in 2024, are excluded from the growth calculation.
The calculation of quarter 1 to quarter 3 2024 year-to-date growth is outlined in table 1. The measured sales of newer and of older medicines include sales in the 2024 VPAG and the SS. For quarter 1 to quarter 3 2023, the latest outturn data is stated. For quarter 1 to quarter 3 2024, the latest outturn data is reported for the measured sales of newer medicines and parallel import sales and, here, ‘older medicines’ means the assumed measured sales of older medicines.
An updated 2023 measured sales of newer medicines and of older medicines baseline is calculated based on full-year 2023 company sales returns and the ratio of newer to older medicines in 2023. The ratio of newer to older medicines in 2023 is calculated from 2023 company presentation level returns. The Department of Health and Social Care (DHSC) carried out assurance activities to validate this data, including through engagement with companies.
The ratio of newer to older medicines in quarter 1 2024 (the transition quarter) is taken as the halfway point of the ratio of newer to older medicines in 2023 (as calculated above) and the ratio of newer to older medicines in quarter 2 2024. Outturn data for newer medicines for quarter 1 2024 is taken as the proportion of total industry measured sales from quarter 1 2024 associated with newer medicines according to this ratio.
Table 1: measured sales included in the 2024 growth rate calculation
Measured sales of newer and older medicines include both the 2024 VPAG and the SS. For quarter 1 to quarter 3 2024, ‘older medicines’ refers to the assumed measured sales of older medicines.
| Newer medicines | Older medicines | Parallel imports | |
|---|---|---|---|
| Quarter 1 to quarter 3 2023 measured sales | £5,800 million | £4,015 million | £533 million |
| Quarter 1 to quarter 3 2024 measured sales | £6,631 million | £4,198 million | £499 million |
| Year-to-date growth | 14.34% | 4.56% | -6.28% |
The growth rates outlined in table 1 are applied to the latest outturn 2023 sales returns to produce 2024 annual sales figures. The sum of the measured sales of newer medicines, assumed measured sales of older medicines and parallel import sales gives the total measured sales for 2024. Total measured sales and the associated growth are outlined in Table 2.
Table 2: total measured sales and growth in total measured sales
Measured sales of newer and older medicines include both the 2024 VPAG and the SS. For 2024, ‘older medicines’ refers to the assumed measured sales of older medicines.
| Newer medicines | Older medicines | Parallel imports | Total measured sales | Growth in total measured sales | |
|---|---|---|---|---|---|
| Latest outturn 2023 | £7,825 million | £5,417 million | £703 million | £13,945 million | Not applicable |
| Forecast 2024 | £8,947 million | £5,665 million | £659 million | £15,271 million | 9.50% |
Table 2 shows that the total measured sales growth rate between forecast 2024 sales and the latest outturn 2023 sales is 9.50%. These growth rates are used, along with other data outlined in annex 4 to the 2024 VPAG, to calculate the headline payment percentage for 2025.
Headline payment percentage
In addition to the measured sales growth, the 2025 headline payment percentage reflects rectifying its portion of the calculated underpayment from 2024 as stated in paragraph 4.34 of the 2024 VPAG. Table 3 sets out the data used to set the 2024 headline payment percentage and the implied recalculated headline payment percentage from the latest outturn 2024 data. The payment percentage in the transition quarter, quarter 1 2024, was 19.5%. However, this is not considered in calculations of under- or over-payments in accordance with paragraph 74 of annex 4 to the 2024 VPAG. The 2024 headline payment percentage applies to quarter 2 to quarter 4 2024 as set out in table 1 of annex 3 to the 2024 VPAG.
Table 3: Data used to set the 2024 headline payment percentage and the implied recalculated headline payment percentage from the latest outturn 2024 data
| Data used to set 2024 headline payment percentage | Latest outturn 2024 data and implied recalculated headline payment percentage | |
|---|---|---|
| Measured sales of newer medicines (including small company exemptions movers) | £7,556 million | £8,942 million |
| Exemptions from eligible sales of newer medicines - new active substance (NAS) and medium-sized company (MSC) sales | 8.45% | 6.36% |
| Adjusted sales of newer medicines | £6,918 million | £8,373 million |
| Proportion of adjusted sales of newer medicines attributable to SS sales | 0.00% | 1.68% |
| Eligible sales of newer medicines | £6,918 million | £8,232 million |
| Headline payment percentage | 15.1% | 21.0% |
| Resulting 2024 under-payment | not applicable | £373 million |
Table 3 outlines the exemptions from eligible sales of newer medicines. This includes NAS sales, MSC sales and statutory scheme sales as a percentage of measured sales of newer medicines.
The above have contributed to a headline payment percentage in 2025 of 22.9%.
General notes
- The information in all tables is that held on DHSC’s database on 15 November 2024.
- Totals may not sum due to rounding.
- All tables are subject to future correction such as where audited data replaces best available data. They will be updated at each quarterly publication point to reflect the latest available information. The audit and reconciliation arrangements are set out in paragraphs 4.68 to 4.74 of the 2024 VPAG.