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The price the NHS in England agrees to pay for new medicines is too high, causing more harm than good overall, an analysis suggests.

University of York researchers say the special cancer drugs fund is particularly poor value, diverting money from other patient services.

They argue the drugs advice body, NICE, has set its price threshold too high.

But NICE says lowering prices could force the NHS to close the door on newer therapies.

The health service has to balance the costs of new treatments alongside investments made in more routine care.

The increasing pressure to approve new drugs more quickly at prices that are too high will only increase the harm done to NHS patients overall Prof Karl Claxton, Researcher

To do this the National Institute for Health and Care Excellence (NICE) uses a measure called quality-adjusted life years (QALY).

A similar approach is used in Wales and Northern Ireland.

The formula looks at the cost of using a drug for a year and weighs it against how much someone's life can be extended and improved.

At current limits, if a medicine costs more than £20,000 to £30,000 per QALY, it would not generally be recommended as cost-effective.

But researchers at York say the level should be closer to £13,000 to provide the most benefit across the NHS.

They argue that when NICE recommends the purchasing of drugs at higher prices, funds are diverted from other services and could lead to increased deaths from cancer, heart and lung and gut diseases across the NHS.

A separate pot of money, the cancer drugs fund, does allow for more expensive life-extending medications.

But the report suggests that for every healthy year gained by this fund, five QALYs could be lost across the NHS.

'Price matters'

Co-author Prof Karl Claxton said: "Our research makes the unidentified NHS patients who bear the real costs a little more real.

"The increasing pressure to approve new drugs more quickly at prices that are too high will only increase the harm done to NHS patients overall."

But Sir Andrew Dillon, chief executive of NICE, said: "Unless you think that drug companies will be prepared to lower their prices in an unprecedented way, using a threshold of £13,000 per QALY would mean the NHS closing the door on most new treatments.

"At the other end of the spectrum, we obviously can't just say yes to anything and everything.

"We don't have enough money - and anyway, not everything is worth having.

'Achieved a balance'

"And drug companies need the discipline of a critical market to make sure that price matters.

"Over the last 16 years, we've achieved a balance between these two extremes that reflects what we believe the public expects the NHS to do."

The research is funded by the National Institute of Health Research and Medical Research Council.

Scotland has a different system for assessing drugs, used by the Scottish Medicines Consortium.