The House of Commons health select committee said it was 'unacceptable' that proposed value-based pricing changes were still not explained despite government plans to implement the measures in less than 12 months.
The committee of MPs called for the issue to be resolved by March. The DH said negotiations with the pharmaceutical industry over the plans were ongoing.
The verdict forms part of a report by the committee on the future role of NICE, which will take on a greater role in health and social care from April.
At present, NICE assesses whether the NHS should fund new medicines and technologies based on the manufacturer's price. The government wants to replace this with 'value-based pricing' - a system that determines a price the NHS is willing to pay based on the perceived value of a medicine.
'Decisions need to be taken'
But MPs said that after consulting on the plans in December 2010, little else had been clarified about how the system will work in practice.
Committee chair Stephen Dorrell MP (Con, Charwood), said the lack of clarity had 'persisted for too long'.
He said: 'Decisions need to be taken, and the details of the scheme made public to avoid problems with the transition to the new system at the beginning of 2014.
'We hope the government will respond positively to our suggestion that this situation should be clarified before the end of March this year.'
NHS Confederation chief executive Mike Farrar said: 'We need strong evidence to show that changes to the system will deliver maximum benefit to patients, without creating significant additional costs for commissioners or taxpayers.'
A DH spokesman said: 'Making sure patients get better access to innovative and effective drugs and treatments is a priority of this government. We want to do that by linking the price the NHS pays for new medicines to their value to NHS patients and society.
The spokesman added that negotiations with the Association of the British Pharmaceutical Industry (ABPI) were ongoing, and that it would respond formally to the MPs' report in due course.
MPs also called for an analysis of the outcomes of patients recieving treatment through the Cancer Drug Fund to assess the impact of the scheme. Any evidence of benefit should be built on when constructing the new drug pricing plans, they said.