Progress towards treatments for cancer and other diseases will slow down if the health watchdog continues to "underestimate" the benefits of new medicines, according to a new report.
Experts at University College London's School of Pharmacy said investment in research and new drugs will be undermined if the National Institute for Health and Care Excellence (Nice) continues to declare so many drugs unaffordable.
The report, mainly funded by pharmaceutical giants Bayer and Novartis, said Nice's actions also appear to promote the increased use of medicines "off label" as a way of saving money.
This means doctors use a cheaper alternative to a specific medicine, even if it is not licensed for that condition.
While this is unlikely to have so far significantly harmed public health, it does "challenge the integrity of medicines licensing, and may threaten overall public interests in sustained innovation", the report - Licensed to Cure? - said.
It added: "Continuing NHS 'austerity' and an increased emphasis on saving cash could lead to more serious future problems stemming from the use of unlicensed comparators, unless abuses are checked.
"Nice should not become a serial instigator of new forms of unlicensed medicines use."
Report author, Professor David Taylor, said: "Nice has some excellent work to its credit. Its success came in the wake of 20th century achievements, when Britain was at the forefront of pharmaceutical development. But that position is slipping away.
"If we systematically undervalue today's innovations and say that they are unaffordable when that is not in fact the case we risk undermining both investment and patient confidence in the NHS."
Patient Association co?chair Dr Mike Smith, said: " Nobody should be made to feel they have to beg for treatments that might extend their lives, or battle for attention when they need help and support.
"If a health technology assessment centred culture does not deliver better services for people it is not providing value for money."
The report said that at the "coal face" of health care, there are "strong pressures to use the cheapest version of any medicine thought to be more or less equivalent to more expensive presentations, regardless of whether or not it is licensed for the indication concerned".
But it argued that the "rigorous safety testing and drug licensing requirements that have been developed since the thalidomide tragedy exist to protect the public's interests in medicines development and their appropriate use. They should not be bypassed simply to save money".