The World Health Organization has criticised the way the government's drugs watchdog decides which treatments should be made available on the NHS.
Nice decides which drugs should be available on the NHS
The report, which was commissioned by the National Institute for Clinical Excellence, said the current process was not transparent enough.
It criticised the fact that data on drugs is often kept confidential.
Nice has welcomed the report and said it would discuss the findings with the pharmaceutical industry.
The watchdog asked the WHO to carry out the study after a critical report last year by the Commons health committee.
MPs also demanded greater transparency in the way Nice decides which treatments should be made available on the NHS.
In addition, they urged the watchdog to take greater account of the impact its decisions have on patients' quality of life.
This latest report by the WHO took three months to compile. The £58,000 cost of the study was paid for by Nice.
The authors criticised the way the watchdog tries to appear open and transparent while accepting confidential information from pharmaceutical companies.
They urged Nice to address this "inherent contradiction". They suggested that being open, transparent and accountable to the public is more important than protecting the interests of industry.
"There is an apparent contradiction in the current policy that allows material that is designated confidential to be used as a basis for decision making," the report says.
"This obscures the transparency of decisions and possibly jeopardises the quality of the Nice assessment process.
"The commitment of Nice to transparency and public accountability should override the confidentiality issues."
The report also criticised the way pharmaceutical industry representatives are involved in the decision-making process.
It suggested that this could lead to potential conflicts of interest, particularly if members of one company were given information about a rival product.
However, the report also praised the watchdog, saying it had a "well-deserved reputation for innovation".
The authors said the many of Nice's guidelines were now being adopted in other countries.
"Published Nice appraisals are already being used as international benchmarks - an obvious recognition of their credibility," said Kees de Johncheere, WHO regional advisor for health technology and pharmaceuticals and one of the report's authors.
Sir Michael Rawlins, chairman of Nice, welcomed the report.
"It is very fair," he said. "The assessment is pretty complimentary about the way we do things.
"But they have made plenty of recommendations. We wanted them to make some suggestions and proposals, otherwise it would have been a waste of money."
Sir Michael acknowledged that the confidentiality of drugs information is an important issue.
He said the matter was being discussed with the pharmaceutical industry.
He expressed the hope that other companies would follow the example set by GlaxoSmithKline, which allows all of its information submitted to Nice to be made public.