Rejecting an appeal by Bayer AG (BAYN.XE), the U.K.'s healthcare cost-effectiveness watchdog Wednesday confirmed that Britain's state health system shouldn't pay for the German company's liver-cancer drug Nexavar, "because its high cost could not be justified by its marginal benefit."

Nexavar, also known by the generic name sorafenib, is made by Bayer and Onyx Pharmaceuticals Inc. (ONXX).

Bayer had appealed an earlier decision made by the National Institute of Health and Clinical Excellence, or NICE, last year after the regulator rejected Nexavar in a preliminary review.

Bayer then offered to provide every fourth pack for free, but that concession didn't satisfy NICE. Drug companies negotiating with NICE sometimes offer free products instead of lowering their price, because they fear a concession on price would lead other countries to demand lower prices, too.

The independent body was considering Nexavar to treat advanced hepatocellular carcinoma, or HCC, in patients who are unable to have surgery or other treatments. Normal life expectancy for these patients is less than 24 months.

Nice said trial evidence it saw "showed that sorafenib increases survival by an average further 2.8 months, but at a cost of GBP27,000 per patient. Half of the patients who gained some benefit received less than this amount of additional life."

Andrew Dillon, chief executive of NICE said: "We were disappointed not to have been able to recommend the use of sorafenib, but after carefully considering all the evidence, including the proposed patient access scheme in which the manufacturer offered to provide every fourth pack free, sorafenib does not provide enough benefit to patients to justify its high cost."

Noting that the regulator has changed its approach to appraising high cost treatments, which can potentially extend life for terminally ill patients, Dilllion said: "We looked at sorafenib in just the same way but the price is simply too high to justify using NHS [National Health Service] money which could be spent on better value, more effective cancer treatments."

Web site: http://guidance.nice.org.uk/

-By Sten Stovall, Dow Jones Newswires; +44 207 842 9292; sten.stovall@dowjones.com

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