Commissioners are being pushed into spending too much money on life-saving drugs by the National Institute for Health and Clinical Excellence, economists have warned.

Trusts are struggling to pay for the expensive treatments it has recommended, the Commons health select committee has heard.

More cost-effective treatments may be getting squeezed out as a result.

In an evidence session before the committee last week, director of the centre for health economics at York University Professor Peter Smith said primary care trusts should not fund treatments costing more than£20,000 for each additional year of full health they bring the patient.

This way of calculating the cost effectiveness of medicines is known as a quality adjusted life year. NICE does not have a formal limit for the cost of drugs, but uses a de facto cut-off point of about£30,000 per QALY.

Professor Smith highlighted research he had conducted for the Health Foundation, which shows PCTs spend an average of about£12,000 per QALY for circulatory diseases and£19,000 for cancer.

'These figures suggest that the existing costs of these programmes of care may be less than many commentators have assumed,' he said.

NICE's 'liberal' threshold could be 'driving out more cost-effective conventional treatments,' he added.

Over budget

Director of the health economics faculty at Birmingham University Professor Bryan Stirling also expressed concerns about whether the£30,000 limit was too high.

In written evidence, he stated: 'My unease results from hearing repeatedly from those working at a local level that NICE is issuing guidance the NHS cannot afford to implement.'

'Local NHS organisations will find it even more difficult to remain within budget' unless the limit is reduced, he said.

NHS Confederation PCT network director David Stout told HSJ he shared the economists' concerns.

'It's possible that PCTs are disinvesting in services that may be more clinically cost-effective than the things NICE say we should fund,' he said.

The threshold should take account of local financial positions, he added.

The principle of a variable threshold was discussed at the committee but dismissed by the economists.

However, NHS Alliance chief officer Michael Sobanja said the threshold was too crude and should either be scrapped or take greater account of a patient's background and the costs to other services.

'We've got to take into account costs to social services and the other costs to society,' he said.

NICE declined to comment. A judicial review into its decision to restrict Alzheimer's drugs is ongoing.