Thousands of arthritis sufferers will be denied treatment with proven benefits by a decision not to pay for a new drug.

Guidance issued by the National Institute for Health and Clinical Excellence (NICE), the watchdog that controls access to drugs on the NHS, will recommend today that the drug does not represent value for money, although it has been shown to improve dramatically the severest symptoms of arthritis in almost half of patients.

The draft ruling comes on the day that Alan Johnson, the Health Secretary, will announce that he is tearing up a price-fixing agreement with pharmaceutical companies in an attempt to reduce unneccessary waste of drug funds.

The Times has learnt that the Health Secretary has decided to take on pharmaceutical giants as the NHS’s £8 billion annual drugs bill comes under pressure from expensive new medicines.

Abatacept, which has the brand name Orencia, is the latest of a new generation of drugs to be blocked by NICE on the ground that it is not cost-effective.

About 400,000 people in the UK have rheumatoid arthritis, of whom a tenth (40,000) have a severe form. Many benefit from a class of drugs called anti-TNFs but about a third do not. This group, of around 12,000 patients, could potentially benefit from new drugs such as abatacept. Its manufacturer, Bristol Myers Squibb, estimated in its application to NICE that around 3,500 patients a year would benefit.

Published data shows that in trials abatacept produced a 50 per cent reduction in symptoms in about 40 per cent of the patients who used it in conjunction with an older drug, methotrexate.

The cost would be about £9,300 a year for an average patient, but all would be sufferers who had already been treated unsuccessfully with anti-TNF drugs, which are equally expensive. Those who gained no benefit would have been taken off the drug swiftly.

The NICE decision was described by patient groups as devastating. Ailsa Bosworth, chief executive of the National Rheumatoid Arthritis Society (NRAS), said: “This is extremely bad news for people living with severe rheumatoid arthritis.

“Denying patients the option of abatacept leaves some of them with the unacceptable choices of being put back on to treatments they have already failed on, palliative care or taking large doses of steroids, which have unacceptable side-effects over the long term.”

The NICE ruling will be open to consultation, and final guidance is not expected until the end of the year. A spokesman said: “Having examined cost-effectiveness analyses on the drug against a range of comparators, the committee concluded that abatacept could not be considered a costeffective use of NHS resources.”

The problems of balancing drug costs against benefits have led a growing number of patients who are denied treatments to resort to legal action.

The Government hopes to free more money for treatments by renegotiating the five-year profit control agreement that it signed with drug companies just two years ago. The move comes after a report by the Office of Fair Trading recommended that the NHS move to a new system that matched the price it pays for drugs to how effective they are, after finding widespread evidence of overcharging.

Some of the most inflated prices are for treatments for blood pressure, cholesterol and stomach acid, which are prescribed to millions of patients a year. Although some cost ten times as much as alternatives they offer little or no extra benefit, the report found. It concluded: “We have identified hundreds of millions of pounds of expenditure per year that could be used more cost-effectively under value-based pricing, allowing patients greater access to drugs and other healthcare benefits they are currently being denied.”

Representatives of pharmaceutical firms were warned by Mr Johnson that he was intending to tear up the agreement. A statement from the Department of Health will seek to strike a conciliatory tone, emphasising the contribution made by drugs giants to the economy and in developing new medicines.

Nevertheless, the drugs industry is likely to fiercely resist attempts to renegotiate the price regulation scheme. In the wake of the competition watchdog’s report this year Richard Barker, the director-general of the Association of the British Pharmaceutical Industry, said: “The UK gets its life- improving and life-saving medicines at a fair and reasonable price.”

A Department of Health official told The Times that Mr Johnson could not ignore the findings of an independent watchdog after a thorough 18-month investigation that compared the prices paid in Britain with those paid abroad. He added that the Health Secretary had not yet decided whether to accept the recommendations in full.

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