The Department of Health (DH) is "seeking views" on a cut in medical drug prices of between 10% and 20% and changing how drugs are assessed for value.
The DoH has launched consultation on the statutory pharmaceutical pricing scheme, which covers the prices the NHS pays for branded drugs not covered by the voluntary Pharmaceutical Price Regulation Scheme (PPRS).
The National Institute for Health and Care Excellence (NICE) has also been asked to assess new medicines as part of value-based pricing, linking the price of a drug to its value, which will be introduced in January 2014.
They will work with patient groups, the NHS and the drugs industry to decide exactly how to value new drugs.
Health minister Lord Howe said; "We cannot simply spend more and more on drugs [because] this would mean spending less and less elsewhere.
"That's why we have asked NICE to look at the impact that drugs can have on people's ability to work or contribute to the economy and society.
"A drug that brings a lot of extra benefits may justify the NHS paying more, but equally the NHS might pay less for a drug that does not deliver wider benefits."
