UK reduces drug rebate rate to 14.5% after a year of pharma pull-back, following US trade deal

In September 2025, relations between the UK government and major pharmaceutical companies hit a low point when the government announced a steep increase in the share of sales of new branded medicines that must be repaid to the NHS, rising from 15.5% to 31.3%.

The move prompted several large firms, including AstraZeneca and Merck, to pause or scale back R&D investment commitments and led to parliamentary questioning of their representatives.

Over the following year, the UK negotiated a trade arrangement with the United States that exempts prescription drugs imported to the US from tariffs for three years, in exchange for the UK agreeing to pay 25% more for new drugs.

As part of that broader settlement, the UK announced a reduced rebate rate for new medicines in 2026, lowering it to 14.5% of sales to the NHS, down from 22.9% in 2025.

While the lower rebate may ease some cost pressures for pharma, industry leaders continue to describe the UK market as increasingly challenging for innovation.