Science minister Patrick Vallance signals higher NHS drug spending and pricing reforms to end a bitter feud with Big Pharma as global investment drifts away

The UK government has opened the door to paying more for branded medicines in a bid to mend relations with global drugmakers and stem a slide in life sciences investment. Lord Patrick Vallance, the new science minister, said this week that ministers are prepared to reset the commercial terms underpinning NHS drug purchasing “to get those companies back again”—a striking shift in tone after months of acrimony over rebates and pricing caps.

The remarks follow a string of warnings from multinational pharmaceutical groups that labelled Britain uncompetitive and, in some cases, paused or scrapped UK projects. Executives point to a sharp escalation in so‑called ‘clawback’ payments under the 2024 Voluntary Scheme for Branded Medicines Pricing, Access and Growth (VPAG), which requires companies to return a portion of sales above a pre‑set growth rate. Industry bodies say the mechanism—designed to protect the NHS budget—has become unpredictable and punitive, particularly for newer medicines.

Vallance’s intervention amounts to the clearest signal yet that the government is willing to recalibrate those settings. People close to the talks say officials are exploring options ranging from modestly higher list prices and lower rebates, to updates in the way England’s health watchdog evaluates value, including long‑criticised parameters that have not been fully adjusted for inflation or modern clinical realities for decades. Any change would represent a political gamble: higher near‑term outlays for the NHS in exchange for the promise of faster access to innovative therapies and renewed investment in manufacturing and research sites.

Investment on ice

The stakes are visible in a mounting investment chill. Over recent weeks, several pharma majors—including MSD (Merck in the US), AstraZeneca and Eli Lilly—have delayed or shelved elements of their UK footprint, citing uncertainty over VPAG rates and a deteriorating business case. Trade association data indicate that payment rates on newer medicines have surged again in 2025—well above the single‑digit levels that prevailed for much of the past decade—fuelling concerns that Britain is an outlier among European peers.

The rhetoric has sharpened. Eli Lilly’s chief executive described the UK as “probably the worst country in Europe” for branded drug pricing, while other groups warn that oncology and rare‑disease launches could slip down their global priority lists. For the government, the timing is awkward: ministers are selling Britain as a science superpower and have championed biotech clusters from Cambridge to the Golden Triangle, yet boardrooms are openly questioning whether the market still merits first‑wave access to cutting‑edge treatments.

Signals of détente—and a test of nerve

Against that backdrop, Vallance’s promise to “end the feud” is landing as an olive branch. People involved in the discussions say an immediate priority is to stabilise the VPAG trajectory and give companies multi‑year clarity on payment rates. Another is to smooth the health technology assessment pathway, ensuring that cost‑effectiveness tools capture broader system benefits—for example, when a therapy prevents hospital admissions, frees clinician time or allows patients to return to work sooner.

Yet any détente will be tested by arithmetic. NHS England’s medicines bill has risen as breakthrough treatments expand into broader populations, even as pandemic‑era procurement fades. Treasury officials will want firm evidence that relaxing rebate pressures won’t simply fuel price inflation. Pro‑reform voices counter that the pendulum has swung too far: unpredictable levies deter launches, reduce competition and can ultimately keep prices higher by shrinking the pool of available options.

A divided industry

The sector’s response is not monolithic. On Thursday, Moderna opened a new mRNA facility at Harwell in Oxfordshire as part of a long‑term partnership with the UK government, insisting that its strategic commitments remain intact. Executives there argue that vaccines and pandemic preparedness create a different commercial profile, and say the UK’s scientific ecosystem—from academic partners to clinical trial infrastructure—still ranks highly. The contrast underscores the complexity of a single scheme (VPAG) spanning products with wildly different lifecycles and economics.

For research‑intensive pharma, the worry is about the launch environment for specialty drugs in oncology, immunology and rare diseases—areas where UK patients have historically enjoyed early access, and where regulators are moving faster worldwide. Company insiders say that if Britain falls from a “tier‑one” to a “tier‑two” launch market, the shift can become self‑reinforcing: fewer early launches mean less real‑world evidence, which in turn weakens Britain’s pull for clinical trials and high‑value manufacturing.

What reform could look like

Officials are canvassing a package that could combine lowered top‑line rebate rates with stronger guardrails to protect the NHS. One idea under discussion is a tiered system that rewards the earliest, most transformative medicines with lighter clawbacks for a defined period, while pressing older brands for greater contributions as competition arrives. Another would modernise value metrics to reflect inflation and incorporate broader societal gains into cost‑effectiveness thresholds.

Beyond pricing, industry wants faster and more predictable market access decisions, broader use of conditional approvals, and a scale‑up in manufacturing incentives. Advocates point to the US Inflation Reduction Act’s manufacturing subsidies and Europe’s race to onshore critical bioproduction. Britain’s new £50m competition for large life‑sciences capital projects is a start, they say, but will need to be larger and more durable to move the needle on multibillion‑pound siting decisions.

Patients in the middle

Lost in the crossfire are patients who face delays to new therapies when companies slow or defer launches. Cancer groups warn that treatment gaps can widen quickly when a country slips from the front of the queue. Conversely, unchecked price growth would squeeze other NHS services. The government’s pitch is that a rebalanced scheme can do both: accelerate access to the most valuable medicines while anchoring overall spending growth in a sustainable range.

Clinicians and health economists caution that the details matter. Rebates can feel painless to the public, but they are still funded by fewer launches and thinner pipelines. Price flexibility can broaden access, but poor targeting simply hands windfalls to long‑mature brands. The calculus will hinge on how precisely reforms concentrate incentives on genuine step‑change innovations—and on whether the Treasury is willing to invest transitional cash while the benefits work through.

Global optics, domestic choices

The political context is tricky. Washington and Brussels are both tightening cost controls in different ways, and cross‑border pricing reference rules amplify each change. A UK move to pay more may carry reputational risk abroad, yet the alternative—drifting into a second‑tier launch market—has already prompted boardrooms to redirect budgets. Vallance’s calculation appears to be that credibility with industry is itself a public‑health asset: if Britain is seen as a reliable partner for early launches and trials, patients benefit faster.

For now, negotiators are working to de‑escalate. Industry groups have signalled they would return to the table if rates stabilise and timelines are clarified. The government, for its part, is framing the reset as a growth strategy as much as a health policy: more labs and lines, more clinical trials, more exports. The coming weeks will show whether warm words are enough to thaw relations—and whether paying more up front can deliver both innovation and value over the long run.

Editor’s note: This article reflects developments through September 25, 2025, including public statements by Science Minister Patrick Vallance and industry responses during the ongoing VPAG dispute.