Researchers found at least 10 per cent of these cases are preventable.
The study, led by experts from Brighton and Sussex Medical School, found in some cases this even resulted in patients dying.
The authors said patients are ‘particularly vulnerable’ to problems with their medications in the period after they have been sent home from hospital.
They set out to discover the level of harm and what it costs the NHS each year in the study, published in the British Journal of Clinical Pharmacology.
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It examined data on 1,280 patients over the age of 65 who had been discharged from three hospitals in the south of England.
The patients, who had an average age of 82, were tracked for eight weeks after discharge.
The authors found 37 per cent of older patients experience medication-related harm.
Among the patients who experienced some level of harm, 81 per cent (336) were classed as ‘serious’, with four patients dying.
Medicines found to be linked with the highest levels of harm were opiates, antibiotics, and benzodiazepines.
Half of the cases were deemed to be potentially preventable by the experts, with 11 per cent thought to be ‘definitely’ avoidable.
Harm came as a result of adverse drug reactions, non-adherence to taking drugs and medication errors.
Professor Chakravarthi Rajkumar, chairman of geriatrics and stroke medicine at Brighton and Sussex Medical School, said: ‘Medication-related harm can be life-threatening and similarly decisions to prescribe high-risk medicines should be taken after a comprehensive discussion with the patient.
‘While the cost implications are significant, the magnitude extends beyond finances to adversely affect the quality of life for patients and families.’
Four out of every five patients who experienced harm then utilised NHS services, and 8% of patients were readmitted to hospital as a result.
‘In addition to distress and potential dangers to patients, this harm costs the NHS in England an estimated £396 million annually,’ the authors added.
They estimate that of this £243 million is ‘potentially preventable’.