The problem occurs because of how powerful the tool is, and because it contains a vast amount of enchantments. You get the "too expensive!" note if you don't have enough exp, but you're trying to repair it with another diamond pickaxe, not raw diamonds. Try using raw diamonds and you should be able to repair it with a sufficient amount of exp.
Keep in mind that this is the vanilla method of getting around of it, and it is greatly expensive. It might be such a burden that it would be worth trying to enchant a new pickaxe from 30 levels.
The level cost on an anvil is capped at 40. Any combination or repair that costs more than 40 levels will never be possible in survival mode, no matter how many levels you actually have. There is no cap in creative mode.
Each time you repair or combine an item, the level cost increases by 2. You can mitigate this, somewhat, by renaming the item first. This will add some to the level cost for future repairs/combinations, but it makes the item exempt from the increasing cost each time you do.
This is no longer valid as of 1.8.
The easier method is if you're hosting a server, and you installed the Bukkit plugin you can do the command
/repair in chat and it will automatically repair that piece to full durability.
You can also get the plugin Better Anvils for a server to migate the exp cap.