Patricia Hewitt has told her cabinet colleagues that hospitals will have to close if Britain is to afford "hundreds" of expensive new drugs such as Herceptin.

The Secretary of State for Health will present the stark choices facing the NHS in a series of speeches this week. She faces a hostile reception at the Royal College of Nursing conference in the wake of thousands of job losses as cash-strapped hospitals lay off workers.

The RCN released a survey yesterday suggesting that a majority of senior nurses say they do not have enough staff to provide appropriate care.

The revelation came as it was reported last night that overspending on NHS salaries is £610m, at least double the amount admitted to by ministers.

Ms Hewitt will insist that the reforms - including hospital closures - are needed if Britain is to afford expensive new drugs about to come on to the market.

In a presentation to the Cabinet last week Ms Hewitt said there were "hundreds of new Herceptins in the pipeline" - a reference to the expensive new breast cancer treatment denied some patients on cost grounds.

A senior aide said: "This is a huge challenge - unless we start to do more to cut inefficiencies we are never going to be able to fund new drugs."

Patients and GPs were furious last week after Nice, the NHS body that rules on new drugs, refused to approve a new insulin inhaler for diabetes. It is one of a number of crucial decisions the body must make in the coming months. But an investigation by The Independent on Sunday has found that pharmaceutical firms are increasingly reluctant to launch new medicines in the UK, choosing other European countries such as Germany instead.

Tens of thousands of Britons, including cancer patients and Alzheimer's sufferers, are being denied the latest and most effective treatments as a result, it is claimed. The Department of Health admits the UK is the slowest country in western Europe to introduce new treatments.On the continent, Alzheimer's sufferers at all stages of the disease get new drugs such as Reminyl, which Nice has restricted to people with a moderate form of the disease. There are similar problems for drugs that treat non-Hodgkin's lymphoma, called Rituximab, or Alimta, which treats lung cancer. The RCN survey of 1,000 senior nurses found that almost two-thirds said they were under too much pressure in their job. Eight out of 10 complained they are working unpaid overtime several times a week.

"This survey shows that senior nurses are under pressure, under-resourced and under-appreciated," said Dr Beverley Malone, the general secretary of the RCN. "Patient care is suffering because of the huge pressures and demands these nurses are facing. They are working extremely hard in difficult circumstances."

Additional reporting by Danny Fortson