Practices and clinical commissioning groups (CCGs) must consider how individual treatment costs affect all patients to preserve the NHS as free at the point of use, he said.
Speaking at the NICE annual conference in Birmingham on Wednesday, Mr Lansley also confirmed NICE will be stripped of its role deciding how much the NHS will pay for new medicines.
Under new 'value-based pricing' arrangements from January 2014, the government will instead decide the price at which a drug provides good value for the NHS.
In his speech, Mr Lansley said the NHS must do better to incorporate evidence into treatment decisions.
He said: 'If a treatment is the not most appropriate available, if it represents very poor value for the taxpayer, then why is the NHS doing it?
'Evidence and transparency must be written throughout the heart of every decision the NHS makes, from every GP practice to every hospital and every CCG across England.'
Mr Lansley addressed doctors directly, reminding them of their responsibility to practise cost-effective medicine.
He said: 'I profoundly disagree that the job of clinical professionals is solely to treat the patient in front of them without regard to anyone else. As the GMC guidance for doctors states, doctors have a duty to the health of the wider community.'
He added: 'The ethical responsibility of all NHS staff is not only to provide the best and most appropriate care for the patient they're caring for, but also to understand and act on information about the implications for all their patients of the use of resources.'
It is ‘imperative' to consider cost alongside outcomes if the NHS is to remain free at the point of use, he said.
The health secretary also spoke about the need to integrate services to prevent costly readmissions: 'It's not enough just to look at improving clinical outcomes, we need to improve the whole experience of care for patients and we need to do far more to keep people healthy and out of hospitals.'
From 2014, NICE will no longer judge a medicine's value based on its controversial threshold of £30,000 per quality-adjusted life years (QALYs) gained, Mr Lansley confirmed.
However, NICE will still conduct 'a rigorous appraisal of evidence to show the relative benefits of a new medicine', Mr Lansley said, which will include the wider societal benefits and fulfilment of unmet need.
This will be used by government to set price points the NHS is willing to pay in negotiations with pharmaceutical companies. The government hopes this will stimulate the launch of more innovative medicines. Discussions with the industry will begin later this year.