Statutory Scheme repayments: the DHSC dots the i's and crosses the t's

On Friday, the DHSC published the latest consultation to update the repayment percentage under the Statutory Scheme. This consultation proposes an unprecedented repayment rate of 32.2% in respect of sales of branded newer medicines to the NHS in the second half of 2025.

Statutory Scheme repayments

This consultation follows the DHSC’s announcement that the 2025 headline newer medicines repayment percentage under VPAG is 22.9%. The DHSC has a longstanding policy of maintaining broad commercial equivalence between the two schemes. Therefore, given the recent uplift in the repayment rate under VPAG, a similar bump to the equivalent repayment rate under the Statutory Scheme is not surprising.

This announcement follows the usual pattern of the DHSC consulting on changing the Statutory Scheme repayment percentage a few months after the VPAG repayment rate is announced.

The consultation also proposes higher repayment percentages for 2026 and 2027 (24.7% and 26.4% respectively). The DHSC acknowledges that these rates may be subject to change and that “changes to the statutory scheme rates in 2026 and 2027 are not indicative of what will happen to VPAG rates in those same years”. However, the mood in industry is bleak and we doubt that anyone in industry is optimistic that the trend of increasing repayment rates will be reversed any time soon without government intervention.

Consequences

Although a 32.2% repayment rate is eye-catching, the effective repayment rate for newer medicines under the Statutory Scheme for 2025 will be 23.8%. This is because the repayment percentage for the first six months of 2025 will remain at the current rate of 15.5%, with the uplifted 32.2% repayment rate only applying from 1 July 2025 until the end of the year.

Companies under both schemes are facing punishing repayments on sales of branded newer medicines to the NHS. Both environments are unattractive. We note the potential for there to be practical differences from an accountancy perspective between the way in which repayments are structured under the two schemes. Under VPAG, the rate is the same throughout the whole of 2025, whereas under the Statutory Scheme companies pay a different rate in the first and second halves of the year.

For companies in the Statutory Scheme, there is unfortunately no mechanism to rejoin VPAG during the middle of the year before the 32.2% rate kicks in.

Response from industry

The ABPI reaction to the announcement was strong, in its reaction the ABPI urges ministerial intervention to fix what it describes as a “broken system”. Industry will look to the autumn 2025 review, in which ABPI and DHSC representatives will meet formally to review the terms of VPAG, for some respite. However, our understanding at this stage is that this review is unlikely to result in material changes to the scheme that may deliver respite from the punishing repayments.