UK cost agency rejects British company GW's cannabis drug

* NICE (Milan: NICE.MI - news) says modest benefit of Sativex does not justify use

* GW says "terrible shame" drug unavailable in home country

* Sativex already approved in more than 20 countries

By Ben Hirschler

LONDON, Oct 8 (Reuters) - A pioneering cannabis drug developed by British firm GW Pharmaceuticals (NasdaqGM: GWPH - news) for treating spasticity in multiple sclerosis has been rejected as not cost-effective in the company's home market.

The National Institute for Health and Care Excellence (NICE), which determines if medicines are worth using on England's state health service, said on Wednesday the modest benefits and high cost of Sativex did not justify its use.

Sativex, which is sprayed under the tongue, has been developed from cannabis plants grown at a secret location in the English countryside. It is sold as a prescription drug in Britain by GW's partner, German group Bayer (Milan: BAY.MI - news) .

It won a UK regulatory licence five years ago but, as with other drugs, the key determinant in how widely it will be used in the country is the view of NICE on whether it offers good value for money for the state health system.

In the event, a major review by the agency on improving care for multiple sclerosis (MS) patients in a variety of ways concluded that the drug was not worth using.

"There are better ways to improve care for people with MS," said Paul Cooper, a consultant neurologist at the Greater Manchester Neuroscience Centre, who chaired the guideline group.

NICE also rejected another non-cannabis drug, Fampyra, which was developed by Acorda Therapeutics (NasdaqGS: ACOR - news) and is sold outside the United States by Biogen Idec (NasdaqGS: BIIB - news) .

With a typical patient taking four sprays of Sativex a day, GW estimates the real-life daily cost of treatment with Sativex is 5.56 pounds ($8.95). For some patients the cost could be higher, since the maximum daily limit is 12 sprays.

"We think it is a terrible shame that, because of cost-cutting presented as science, MS patients in England are being denied a treatment which works in many cases," a GW spokesman said. "It is sad that it should be put out of the reach of many patients in the very country where it was developed."

Sativex is approved in more than 20 countries.

Interest in cannabis as a therapeutic treatment has been spurred recently by the legalisation of recreational marijuana shops in Colorado and Canada's move to create a federally regulated medical marijuana industry.

GW, however, distances itself from these developments by emphasising its ability to extract key ingredients in cannabis for medicinal use, in the same way that pain-killing opioids have been developed from opium.

Shares (Berlin: DI6.BE - news) in the company hit a record high earlier this year on growing hopes for another of its cannabis-based medicines, known as Epidiolex, that has produced promising results in children with hard-to-treat epilepsy.

(1 US dollar = 0.6213 British pound) (Editing by Mark Potter)