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The NHS has agreed a deal with global pharmaceutical companies after tense negotiations, raising the growth cap on the health service’s bill for branded drugs from a 2 per cent annual increase to 4 per cent from 2027.

The Association of the British Pharmaceutical Industry, the drugmakers’ trade body, said it supported “this tough deal” even though the agreement would continue to restrict pharmaceutical companies’ sales to the NHS.

Drugmakers have been critical of the government after the tax on excess sales that surpass the threshold rose to 26.5 per cent this year from about 5 per cent of total UK revenues.

Some US groups left the voluntary scheme in protest as a result of the increase to the rebate while others said it had led them to rethink their presence in the UK.

Richard Torbett, ABPI chief executive, said the agreement would “improve access to cutting-edge treatments for NHS patients”, while supporting the financial sustainability of the system.

Under the new Voluntary Scheme for Pricing, Access and Growth or VPAG deal the health service expects to save twice as much as under the current pricing agreement, which expires at the end of 2023.

The Department of Health said on Monday that the deal would save the NHS £14bn in rebates over five years, as well as boosting the UK’s position as a global leader in life sciences.

Victoria Atkins, health secretary, said: “This deal will also ensure the UK remains a world leader in driving forward innovative healthcare while boosting our economy, with hundreds of millions of pounds invested in vital research, clinical trials and manufacturing.”

The last voluntary scheme, which ran for five years, limited the NHS’s drug bill to a yearly rise of 2 per cent, regardless of how many or which drugs were bought. If the total rose above this threshold, companies had to pay back money through a levy.

The new deal, which runs until the end of 2028, will gradually raise annual allowed growth in sales to 4 per cent by 2027. It also favours newer and more innovative medicines, which will be subject to a lower rebate levy.

Jeremy Hunt, chancellor, said on Monday that the “landmark” deal would help patients access the best drugs for “years to come”.

Eli Lilly, which had withdrawn from the previous voluntary scheme, welcomed its successor as “an important compromise”. Laura Steele, the US company’s UK and northern Europe general manager, said: “The new agreement favours the newest innovative medicines and should provide much-needed predictability over the next five years.”

Under the VPAG deal, which comes into force in 2024, the pharmaceutical industry agreed to invest an additional £400mn over five years through the UK life sciences investment programme “to drive forward UK innovation, sustainability, and growth”.

The programme will support clinical trials in the NHS, sustainable drug manufacturing and innovative health technology assessments.

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