Some 250,000 patients yearly are admitted to hospital in the UK with adverse reactions to drugs at a cost of £466 million, a report suggests.
Serious reactions to medicines can include sudden death, respiratory failure and heart attacks.
The British Medical Association report calls on health professionals to inform regulators every time an unwanted reaction to a drug is suspected.
It claims that adverse reactions are "significantly under-reported".
A study in 2004 found 6.5% of people admitted to hospital had experienced an adverse drug reaction, (ADR) and that in 80% of these cases the reaction was the cause of the admission.
"When a drug is first marketed ...relatively little may be known about its safety in the population at large"
It also found that 2% of patients admitted to hospital with an ADR died.
The BMA wants to see reporting rates increase in a bid to protect patients' health and save lives.
It gives the example of how reporting of adverse effects of herbal drug kava kava on the liver led to it being withdrawn in the UK.
Dr Vivienne Nathansan, head of the BMA Ethics and Science, said doctors had a professional duty to report all adverse drug reactions, especially if children and the elderly were involved.
"Unfortunately too many health professionals are confused about reporting procedures.
"Doctors must make sure they report any suspected adverse drug reaction and at the same time increase awareness among their patients about the reporting process."
'Yellow card'
She also warned doctors to be particularly vigilant in reporting reactions to new drugs because of the limitations of clinical trials.
Reflecting the report's conclusions, she said: "When a drug is first marketed, its effectiveness may be well understood but relatively little may be known about its safety in the population at large."
Therefore it was especially important that information was gathered on any reactions to these new medicines.
'Avoid complacency'
The BMA report wants doctors to continue to use what is known as the Yellow Card Scheme to report adverse drug reactions directly to regulators the Medicines and Healthcare products Regulatory Agency (MHRA).
The scheme was set up in 1964 after the Thalidomide tragedy and since then more than a half a million reports have been collected.
When it was first introduced only doctors and dentists could issue a warning, but this has now been extended to pharmacists, nurses and coroners.
The paper warns, however, that doctors should not be complacent about reporting adverse reactions.
"If, therefore, a doctor deems it necessary to issue a yellow card they should do so even if there is a possibility that someone may have done the same," it argues.
'Richer detail'
The MHRA welcomed the report, saying healthcare professionals had a key role in reporting unwanted side effects of medicines.
Dr June Raine, who runs the Yellow Card Scheme for the MHRA, said she continually encouraged healthcare professionals to use it.
"There is no need to prove that the medicine caused the adverse reaction - just the suspicion is good enough."
She added that allowing patients to report adverse reactions had provided much "richer detail" on experiences.
Healthcare professionals and patients can complete electronic Yellow Card reports via www.yellowcard.gov.uk or by free phone to the Yellow Card hotline 0808 100 3352.
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