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The National Institute for Health and Clinical Excellence (NICE) said the Vidaza drug, used to treat patients with myelodysplastic syndromes (MDS), is too expensive to use: it costs around £45,000 a year per patient.
MDS is a disease whereby the bone marrow does not produce enough of one or more types of blood cell.
In around a third of all cases, patients develop acute myeloid leukaemia, a very aggressive form of cancer.
Tests carried out have shown that patients receiving conventional methods of treatment, such as chemotherapy, survive just 15 months.
But those who receive Vidaza survive for around 24.5 months.
NICE published its draft report on the use of the treatment earlier this month, but will reconsider following an appeal by the MDS UK Patient Support Group, the Leukaemia Society and the Rarer Cancers Forum, as well as Celgene, which manufactures the drug.
Copyright Press Association 2010