A radical "no cure, no fee" approach to cut the cost of expensive multiple sclerosis treatment, including beta interferon, is being planned by the Department of Health to head off a damaging confrontation with drug manufacturers.

Negotiations have opened on the scheme, which could potentially be used for other high-cost treatments.

In August, the National Institute for Clinical Excellence (Nice) made a preliminary ruling that the drugs should not be available on the NHS because their benefit was not great enough to justify the cost, which is £6,500 to £8,500 per patient per year.

A final ruling from Nice due tomorrow is widely expected to confirm the negative preliminary ruling. It will then be subject to appeal.

Ministers are understood to have been alarmed that the companies might seek a judicial review of the Nice decision.

A spokesman for the Department of Health said it was feared that a negative ruling would introduce a source of inequity into the NHS in the shape of "historical postcode prescribing".

The department had always guaranteed that patients already on the drugs would continue to receive them, but a negative Nice ruling would mean that new patients would be denied them, he said.

Assessing the cost effectiveness of the drugs was difficult because of the unique nature of multiple sclerosis, which could cause relapses at intervals of more than a year, the spokesman said. As beta interferon and the similar drug glatiramer acetate were claimed to postpone relapse, very long trials were necessary to test their effectiveness.

Under the "risk-sharing" proposal being discussed by the Government and the four manufacturers, up to 10,000 patients with MS would be selected to receive either beta interferon or glatiramer acetate on the NHS and would be looked at over "several years".

When the patients were assessed, the Department of Health would seek to recover the cost of the drugs prescribed to those who had not progressed."We would get into a process of reducing and potentially reclaiming the cost of the drugs in those for whom they had failed," the spokesman said.

Yesterday, the drug companies seemed to have understood the plan differently. Glyn Wright, the general manager of Teva Pharmaceuticals, manufacturers of Copaxone (glatiramer acetate) said the cost of the drugs would only be repaid if "forecasts of clinical and cost effectiveness were not met".

The Association of the British Pharmaceutical Industry said extending the "no cure, no fee" approach would be unworkable. "Why not extend it to every health intervention? In most cases assessing effectiveness is very difficult. The bureaucracy needed to judge it would be horrendous."

The ABPI criticised the Nice assessment of the MS drugs. A spokesman said: "How do you put a price on human life?"

* Women who are screened for breast and cervical cancer were warned yesterday not to expect it to provide foolproof protection against the diseases. Leaders of the NHS screening programme said that although screening saved thousands of lives a year, expectations were sometimes over-optimistic.

Launching an information campaign to allow women to make an informed choice, the Health minister, Lord Hunt of Kings Heath, said it heralded a new relationship of "trust and honesty" between patients and the NHS.