Health authorities are struggling to deal with an unexpected budget surplus which could amount to hundreds of millions of pounds, thanks to last year's cut in the cost of drugs.

The emerging underspend has come too late for many HAs to use the money on something else, and they may face problems carrying it forward to the next financial year.

The windfall follows the pharmaceutical industry's agreement to implement price cuts in September after a massive hike which had crippled HAs financially.

Although the Department of Health predicted roughly what savings would be, HAs are just finding out the actual savings - and they are proving to be greater than expected.

The Prescription Pricing Authority only managed to get September's financial data to HAs last month and the October figures have just come out.

Professor Mark Baker, medical director of North Yorkshire HA, estimates that his authority will eventually have a£2m underspend on its drugs budget.

'It is a totally new experience for us to be underspent', he said. 'The problem is the total lack of information. We will not know the final figure until July - by then it will be too late.

'Nationally the sums involved could be£200-300m. If there is a solution to handling that money it has got to be at national level. '

Lincolnshire HA has a projected£592,000 underspend on its drugs budget and a total underspend of£1. 4m, but is unable to spend the money on anything else at such short notice.

Andy Leary, the HA's finance director, said Trent regional office has agreed to£320,000 being carried forward to next year.

But he admitted that at this late stage in the financial year there is not the capacity locally in either the NHS or private sector to suddenly take on more operations to clear waiting lists.

Avon HA has spent£1. 6m less on prescribing costs than it had budgeted for - although it argues there is a shortfall in the other budget heads which had to be raided to cover other unexpected costs.

Dick Beath, the HA's prescribing finance lead accountant, said the main problem was the delay in getting information from the PPA, which has had a huge backlog of prescriptions to process.

'They are very late, ' he said.

'When you come across problems like this it is very difficult to do anything before the end of March.

It is a big problem.

'We just do not know where we are, and by the time we do it is too late. '

'We have only in the last 24 hours had the October figures and that is a significant time-lag, ' said Nick Webb, director of finance at South Staffordshire HA, which expects an underspend of between£1. 5-£2m. He says the money will help pay off an outstanding loan from the regional office.

'It has had a helpful side-effect for us, but we are a bad example, ' he added.

John Smith, finance director at the PPA, admitted it was behind with sending information to HAs.

'We receive 40-50 million prescriptions every month, ' he said.

'It is a very unfortunate position.

We provided the information as fast as we could. '

A DoH spokesperson said talks were taking place to make best use of the available money.

'We are trying to achieve as much flexibility as possible so that underspends are carried forward where practicable, ' he said. 'Health authorities must be concerned, as we are, that money is put to the best use sooner rather than later. '