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Rebates given by pharmaceutical companies NHS More than a third is being cut next year following the recent tariff agreement with the US.
Government The cost of rebates to companies – the proportion of revenue from new branded drug sales that pharmaceutical companies must pay back to the NHS – will fall from 22.9% this year to 14.5% in 2026.
It follows the UK-US tariff agreement earlier this month, which will see zero tariffs imposed on British pharmaceutical products imported into the US in return for increased spending on medicines by the NHS.
As part of the deal, it was also agreed that reimbursement rates on NHS drug prices would be capped at 15% for the first three years.
This is the amount that pharmaceutical companies pay back to the NHS to ensure that it does not spend more than its allocated budget for branded medicines.
The government said it was able to offset lower rebates because of falling drug costs, partly due to drugs coming off patent.
But Downing Street It was acknowledged shortly after the trade deal that the agreement to raise the limit on what the NHS pays for new medicines by 25% would lead to additional spending of around £1 billion a year by 2029.
The Association of the British Pharmaceutical Industry (ABPI) said that “high and unpredictable” rebate costs have been a “significant constraint on UK life sciences competitiveness in recent years”.
Richard Torbett, Chief Executive Officer ABPISaid: “It is good that the amount of revenue companies have to pay to the UK government has been reduced in 2026.”
He added: “However, this is only the first step towards returning the UK to a more competitive position.
“Payment rates are much higher than in similar countries, and there is still work to be done to accelerate the adoption and use of cost-effective medicines by the NHS to improve patient care.”
department for Health He said the low discount costs should make the UK an attractive location for investment by pharma companies, for clinical trials and early launch of new medicines.
Health Innovation Minister Dr Zubir Ahmed said that along with the tariff agreement, it “will help secure and boost investment in the sector, ensuring the UK remains a powerhouse for life sciences for the benefit of our patients, our NHS and our economy”.
Science Minister Lord Vallance said: “We need our fantastic life sciences companies to find and get vital new medicines to patients in the NHS and to create jobs in the UK.
“This new rate helps achieve that.”