By Nick Triggle
BBC News, health reporter
The NHS is probably using too many expensive treatments, according to health economists and managers.
NICE judges drugs on cost effectiveness
New drugs are generally used only if they cost under £30,000 for each year of good health they provide.
But some claim this is too high and forces potentially more effective care to be ditched with limited funds.
It comes as the NHS is reviewing the way it judges new treatments, with officials hinting the threshold is more likely to increase.
The National Institute for Health and Clinical Excellence (NICE) is responsible for deciding whether new treatments are used in the NHS.
It works out what it costs to provide a year of good health by looking at how long a drug extends life by, what the quality of health a person will have and any potential side-effects of the treatment under a system known as Quality Adjusted Life Year (Qaly).
The £30,000 figure - which has not changed since it was set eight years ago - is only a rough threshold as NICE has approved treatments which cost more if there are few alternative treatments or the disease is particularly debilitating.
However, the methodology has proved controversial and NICE is currently reviewing how they carry out appraisals.
It comes after the House of Commons' Health Committee has launched an investigation into NICE and ahead of a high-profile court case in June over a decision to block Alzheimer's drugs.
Primary care trusts, which are in charge of paying for local services, often complain that once NICE approves drugs close to the £30,000 threshold they have to stop doing other better value treatments because of a limited budget.
Gill Morgan, chief executive of the NHS Confederation, said: "It is not so much a question of cutting services, but not being able to develop new ones like taking on more community nurses even though they may be much more cost effective.
"I think PCTs are probably right, but the thing is we do not have the evidence. What we need to do is work out, like NICE does for new treatments, what the cost effectiveness of the other things the NHS does.
"If they show that the average of what we do is much less than the current threshold, than yes it should be pulled down."
WHAT IS A QALY
Qaly stands for Quality Adjusted Life Year
It is basically a calculation of what it costs to provide a year of perfect health
In calculating the cost of a Qaly, experts take into account factors such as how long life is extended by, the quality of the person's health and potential side effects
Professor Alan Maynard, a leading health economist at York University, said the threshold was "too generous".
He said research by his colleagues had shown that cancer treatment on average costs £13,100 per good year of life added, while circulatory disease therapy costs £8,000.
"This research and what we are hearing from PCTs indicate that the threshold is too high. I would say something like £20,000 or just under would be more appropriate if we are to get the best of out of the NHS."
Such a move would raise questions over a range of new drugs coming on to the market, including breast cancer so-called 'wonder-drug' Herceptin, which was judged to have cost £18,000 per Qaly.
Patient Concern said any move to reduce the threshold and thereby exclude more drugs from the "NHS list" would be unpopular with patients.
"It would be a crying shame if many of the new drugs being developed were not to be available on the NHS."
And NICE chairman Sir Michael Rawlins said: "It is important we have a public debate on what we are prepared to pay."
But he said if anything the threshold was likely to be increased a little as it had not changed for years.