Every NHS patient should be a "research patient" with their medical details "opened up" to private healthcare firms, says David Cameron.
The PM says it will mean all those who use the NHS in England will be helping in the fight against disease.
He hopes the result will be that patients get faster access to new treatments and Britain's life sciences sector will become a world leader.
But critics say commercial interests are being put ahead of patient privacy.
In a speech in London Mr Cameron said he would consult on changing the NHS constitution, which governs how the the health service is run, so that all patients' data is used for medical research unless they want to opt out.
He also announced that three million patients with chronic illnesses like diabetes or heart conditions are to get hi-tech equipment to monitor their health at home.
The Prime Minister said it was "simply a waste" to have a health service like the NHS and not to use the medical data it generated.
"Let me be clear, this does not threaten privacy, it doesn't mean anyone can look at your health records, but it does mean using anonymous data to make new medical breakthroughs.
"The end result will be that every willing patient is a research patient and every time you use the NHS you are playing a part in the fight against disease at home and around the world."
The government believes that as a result Britain can become a world leader in the field of life sciences - an industry already worth £50bn a year and employing 160,000 people - because of the expertise within the NHS and its strong university-based research.
"The end-game is for the NHS to be working hand-in-glove with industry as the fastest adopter of new ideas in the world," he said.
That would act as a "huge magnet to pull new innovations through, right along the food-chain - from the labs, to the boardrooms, to the hospital bed".
The announcement came as the Prime Minister unveiled a range of measures designed to boost Britain's pharmaceutical industry, encourage medical breakthroughs and get life-saving drugs to patients faster.
The "tele-health" drive will allow vital health checks to be carried out and sent electronically to GPs without the need for patients to make an appointment or visit a clinic.
"We've trialled it, it's been a huge success, and now we're on a drive to roll this out nationwide," he said. "The aim - to improve three million lives over the next five years.
"This is going to make an extraordinary difference to people. Diabetics taking their blood sugar levels at home, and having them checked by a nurse.
"Heart disease patients having their blood pressure and pulse rate checked, without leaving their home."
Patient Concern said it had real worries about the proposal to make patients' medical data available to private firms as the information would include postcodes and age profiles which would be possible to trace back to the individuals concerned.
"The aim is laudable... but the methods, they stink frankly," Joyce Robins, the organisation's founder, said.
"Our records should not be passed around by the Department of Health as they see fit or sold to private companies without our permission."
Data should only be made available on the basis of patients' "informed consent", she added.
Labour has said it will not allow Mr Cameron to "throw away essential safeguards" in his desperation to develop a credible industrial strategy.
But the pharmaceutical industry said "robust" safeguards were already in place and it was impossible to trace back anonymised data to individuals.
"We need people to understand that the benefits for all of us - our children and people who have got illnesses - are absolutely essential when it comes to using health records for research," said Neil Patel, from the Royal Pharmaceutical Society.
The NHS had a "unique resource" of medical records dating back to the 1940s, he added, and these had already been widely used in furthering understanding of conditions such as HIV and lung cancer.