The government strategy for cutting drug-related crime has been severely criticised in a report by the influential UK Drug Policy Commission.
Some heroin users die within days of being released from prison
The independent panel said evidence to show what worked in drug treatment was "seriously weak or absent".
More than £330m is spent in England and Wales on treating offenders annually.
The panel said some treatment services risked doing more harm than good. It criticised the Carat service, which took on 78,000 new prisoners last year.
Return to drugs
In a report seen by BBC home editor Mark Easton, the commission said the treatment service cost £31m to run but "there are no evaluations of its effectiveness".
It found for the 40,000 prisoners who go through detox while in jail, a lack of proper aftercare meant many went straight back to using hard drugs when they left prison.
And that one in 200 injecting heroin users would be dead from an overdose within a fortnight of being released.
There was also a lack of evidence for the effectiveness of drug-free wings in prisons, it said.
"Given the considerable ongoing investment in criminal justice system drug interventions, it is striking that we still know so little about the effectiveness of many of them, especially those in prisons and crucially whether they represent value for money", it added.
While community programmes appeared to work better, they were no magic bullet.
In February, the government launched its 10-year drugs strategy, which saw more money focused on drug-dependent offenders.
But the commission said: "We simply do not know enough about which programmes work best for whom.
"Answers to even basic questions are not freely available and the weakness of the evidence base severely hampers good practice."
The report was highly critical of the quality of treatment in jails, where "provision often falls short of even minimum standards... a major concern for the health and well-being of prisoners and the subsequent impact on crime".
But the government said there was a growing body of evidence treating offenders could reduce drug-related crime.
Its new drugs strategy made "proactively targeting and managing drug-misusing offenders" a key element.
An additional £25m a year will be spent on treating offenders by 2011.
Justice Minister David Hanson welcomed the commission's report. He said it recognised the challenges, difficulties and recent improvements in drug treatment.
He said 53 prisons would benefit from health funding for enhanced clinical drug services by April.
The £175m Drugs Intervention Programme treated 40,000 offenders in the community last year.
Six months later, 47% had reduced their offending. But 28% had increased.
The report said plans to widen treatment to drug users whose habit was not directly related to their offending was "likely to be inefficient and could be harmful".
The risk was that younger recreational drug users would fail to complete some treatment programme and would end up being further criminalised.
The law of diminishing returns could kick in, making the scheme less effective and more expensive, it warned.
Chairman of the British Medical Association's forensic medicine committee, George Fernie, said the prison system lacked a "comprehensive care package" from when someone entered the custodial chain to when they were released.
"Technically, it is not that difficult to get somebody off drugs," he said. "It is the follow-through that we have to have, with stable housing, employment and family support."
He backed community treatment, saying: "Prisons are perhaps not awash with drugs, but illegal substances are readily available.
"We would like people treated effectively in the community if the alternative is a short prison sentence."