The National Institute for Health and Clinical Excellence said on Friday that while Zelboraf was effective for melanoma patients with a particular genetic mutation, its longer-term effect on survival was uncertain.

NICE said that, as a result, it could not recommend the drug as a cost-effective treatment for the deadliest form of skin cancer within the state-run National Health Service (NHS), even after an undisclosed price discount offered by Roche.

The list price for Zelboraf, also known as vemurafenib, is 1,750 pounds ($2,700) for a week's supply.

"We need to be sure that new treatments provide sufficient benefits to patients to justify the significant cost the NHS is being asked to pay. Vemurafenib is an expensive drug and its long term benefits are difficult to quantify," NICE chief executive Andrew Dillon said.

Roche said the decision showed NICE's method of assessing drugs was ill-suited to the new era of "valued-based" pricing the government plans to bring in from 2014.

"Zelboraf ticks all the boxes when considering the types of medicines that value-based pricing aims to encourage pharmaceutical companies to develop," Roche UK managing director John Melville said. "Zelboraf is innovative and addresses an unmet need."

NICE was expected to play a central role in determining value under the new pricing system, designed to encourage development of novel medicines.

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Roche has had numerous previous run-ins with NICE over cancer medicines - including a snub for its top-seller Avastin - and the company said the agency had now turned down nine of the last 10 end-of-life cancer drugs.

While NICE has angered other drugmakers, it has many supporters among medics who say a central body was needed to make rational decisions on how to spend scarce resources.

Melville said he was disappointed, especially as Zelboraf had been widely used in recent months by British doctors through the Cancer Drugs Fund, set up by the government as a bridge to value-based pricing.

The twice-daily pill was approved in Europe in February and has been hailed as a prime example of personalized medicine, or targeting drugs according to genetic profile. It is designed to be used alongside a companion diagnostic test, also from Roche.

NICE said the longer-term survival benefits from using Zelboraf were uncertain because many patients in a key trial switched treatment as their disease progressed.

Roche said this occurred, in part, because the company, on compassionate grounds and at the request of regulators, had allowed patients not receiving Zelboraf to get the drug once its benefits became clear.

Such cross-over is common in cancer trials and Roche said it was being penalized by NICE for acting ethically.

NICE's draft decision to reject Zelboraf is now open for consultation, after which further guidance will be published.

(Reporting by Ben Hirschler; Editing by Dan Lalor)

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