The costs of GP prescriptions have reached an all-time high and could undermine the NHS modernisation programme, the Audit Commission has warned.

In a report published on Thursday the NHS watchdog revealed that family doctors are now spending £5.5 billion a year issuing prescriptions.

The data shows that spending in the area has soared by nearly 30 per cent over the last four years.

Drug costs are forecast to increase by a further 12 per cent in 2002/03, a rise of over £670 million.

The report warns that a 10 per cent budget increase will still leave primary care trusts (PCTs) needing to find £110 million.

The commission says these increases are largely driven by the implementation of the government's National Service Frameworks.

The report, "Primary care prescribing", finds that over £130 million could be saved over the next three years through more effective prescribing.

It warns that doctors should only prescribe anti-biotics where there is a clinical need and medical benefit to the patient.

Last year, four specific types of drug accounted for half the total increase in spending.

These were lipid regulators, which lower cholesterol; anti-hypertensives, which reduce blood pressure; anti-psychotics; and drugs to treat diabetes.

By far the biggest growth area has been statins - drugs which lower cholesterol.

"As prescribing costs rise rapidly, it is vital that every penny is spent well," said Audit Commission chairman James Strachan.

"New drugs are now available which can have a tremendous impact on people's health, provided that they are given to the right patients.

"At the same time, the NHS must ensure that the increased spending does not adversely affect other services.

"The success stories in this report show how much can be achieved when PCTs, GPs and the Audit Commission work together to reduce ineffective prescribing and put the NHS drugs budget to better use.

"All PCTs should review their performance to see how they, too, can free up the funds to ensure people get the medicines they need."

Responding to the report, the Royal College of General Practitioners warned that spending on some treatments should not be allowed to create shortfalls in other areas.

"A substantial amount of funding is going into four areas in particular: cholesterol lowering drugs; medication to provide more intensive treatment for hypertension; diabetic drugs; and atypical anti-psychotic drugs," the royal college said in a statement.

"There is no doubt that such medication saves lives and improves the quality of life.

"However, funding for these drugs is a huge upfront cost for the NHS.

"While it is a valid investment, it should not be at the expense of other primary care treatments."