Greg has to inject himself four times a day. An inhaler could treat his diabetes better. Why can't he have one?

Because the NHS is denying him - and tens of thousands of patients with other diseases - treatments that are available in Europe

Greg Turner can clearly remember his horror when the doctors first told him he would be using needles every day for the rest of his life. He was 14. Greg had been told he was diabetic, and would need to inject himself with insulin four times a day. For ever.

"I was quite distraught," he said. "There was no way I could stick a needle in myself four times a day. I kept refusing to do it."

He eventually learnt to begin injecting, but still finds it unpleasant and painful. The needles sometimes fail to work, or hit nerves or blood vessels.

Then last week, Greg, an 18-year-old aspiring actor, learned of a new insulin treatment - a revolutionary inhaler that greatly reduces the need for injections.

Diabetes experts were excited. They predicted that the inhaler, called Exubera, would dramatically cut the number of diabetics who fail to keep taking their insulin. That would help reduce the dangerous and costly complications suffered by diabetics - blindness, amputations and kidney failure; illnesses that cost the health service at least £5bn a year.

But the inhaler is highly unlikely to become available on the NHS. Last Tuesday, the Government's drugs evaluation agency, the National Institute for Health and Clinical Excellence (Nice), said it planned to reject Exubera on cost and medical grounds.

Its decision - chiefly because it costs about £1,000 a year per patient, double the normal costs of injectable insulin - caused a furore. The maker, Pfizer, was "extremely surprised and angry", while diabetic charities denounced it as short-sighted because it ignored the long-term health problems the inhaler could have prevented.

And the row has again focused attention on rationing in the NHS and - to the discomfort of ministers - reinforced the UK's reputation as a country that is increasingly resistant to new treatments and medical innovations.

An investigation by The Independent on Sunday has found growing evidence that pharmaceutical firms believe the UK is too difficult a place to launch new medicines. Pfizer has accused Nice of being "inflexible" and secretive in its approach to new drugs and treatments.

So the world's drugs firms are quietly dropping plans to launch new treatments in Britain, and are choosing other countries, such as Germany. As a result, it is alleged, tens of thousands of Britons, including cancer patients those with Alzheimer's disease, are being denied the latest, most effective drugs.

Ian Crosbie, a City financier with the investment firm Ferghana Partners, who advises pharmaceutical firms, said three companies had told him in the past three months that they were not bringing drugs to the UK because of these barriers. "Companies can go elsewhere in Europe and get swifter decisions more empathetic to developers of new drugs," he said.

Even the Department of Health admits that the UK is the slowest country in Western Europe to introduce new treatments. Britain, it confirmed, is 50 per cent slower than comparable European countries in accepting new medicines - taking five years longer for half of new treatments.

The pharmaceutical industry meanwhile is facing its own crisis. The biggest firms are struggling to find the "blockbuster" drugs that they rely on to earn the vast sums needed to invest in new drugs, as the lucrative patents for their existing blockbusters run out. Lipitor is Pfizer's biggest earner, bringing in nearly a quarter of its $51bn annual sales. When its patent ends, allowing other manufacturers to introduce "generic" copies, 90 per cent of Pfizer's $12.5bn annual earnings from Lipitor will disappear.

Simon Best, the head of the BioIndustry Association, said his company's new drug for erectile dysfunction, Invicorp, will be launched in Germany. "Even before the Exubera decision, the UK was losing its attractiveness as a market," he said. "It has become very obvious that there is a problem."

Andrew Dillon, the chief executive of Nice, admitted that the UK was a "conservative" market for new treatments, but said that caution often saved lives.

Greg understands why the NHS has to ration treatments, but is puzzled why something that can make the lives of several million diabetics easier is not regarded as cost-effective.

He is not alone. Many "needle-phobic" diabetics routinely avoid that painful chore - putting their long-term health at risk.

THE COSTS

Exubera is claimed to be the biggest breakthrough for Britain's 2.1 million diabetics since insulin was invented more than 80 years ago, allowing sufferers to get better control of the illness and helping them to avoid life-threatening complications later. Diabetes-related illnesses cost the NHS £5bn a year - diabetic kidney failure alone costs £30m a year. Diabetics spend 1.1 million days a year in hospital and have a five times higher risk of heart disease. So the extra £500 a year for Exubera is a smart investment, campaigners say.