Drug prices agreed under the government’s proposed new pricing system would have to remain secret if drug companies are to buy into it, a senior figure in the pharmaceutical industry has warned.

The Department of Health wants to introduce value-based pricing by 2014 in an attempt to reward innovation and improve access to new drugs.

Currently the National Institute for Health and Clinical Excellence makes a judgement on whether the price put forward for a drug by a company is cost effective.

The new pricing scheme is expected to include more negotiations about what the NHS should pay, taking into account factors such as the wider benefits to society and what extra benefits the medicine offers compared to existing drugs.

However, the UK price for a drug is used by a lot of other countries, which do not have an equivalent organisation to NICE, to set their own price.

Association of British Pharmaceutical Industry director of value and access Paul Catchpole told delegates at the NICE annual conference there was concern a low UK price would drag down prices elsewhere.

He said: “A real disappointment would be if the UK was no longer an attractive country for companies to launch medicines early. I think there is a real risk that that may happen if we don’t create the right system.

“If the VBP price is lower than the list price it would have to be secret.”

The DH consulted on value-based pricing last year but has yet to put forward detailed proposals.

Asked about the ethics of keeping drug prices secret, NICE chair Michael Rawlins said his priority was getting the best deal for England.

“Let the French and Germans look after themselves,” he added.

However, a number of attendees questioned the need for a complete overhaul of the existing system.

James Raftery, professor of health technology assessment at Southampton University, warned it could turn into an “innovation drugs fund” that was not the best value for the NHS.

“The current system isn’t broken but the political unacceptability of NICE saying no leaves the secretary of state in a difficult position.”