Cabazitaxel, which is marketed as Jevtana, can extend the life of late-stage patients by an average of three months.
But the NHS rationing body, the National Institute for Health and Clinical Excellence (Nice), today said it is not value for money despite admitting it works.
Nice confirmed its original decision in January, rejecting an appeal by the drug’s manufacturers Sanofi.
But cancer charities said the decision could mean a postcode lottery and effectively prevent thousands of men from accessing life-extending treatment.
Each year around 37,000 men in the UK are diagnosed with prostate cancer and 10,000 die from the disease.
It is the second most common cause of cancer death in men, accounting for 13 per cent.
Nice said that while the drug is clinically effective, at £22,000 per patient it does not offer value for money for the NHS, and there are concerns over side-effects.
Nice chief executive Sir Andrew Dillon said: ‘We need to be sure that new treatments provide sufficient benefits to patients to justify the significant resources the NHS would need to make available.
‘Although cabazitaxel can extend life for some patients, its price remains well above what the independent committee appraising this drug considered acceptable, given the benefits it offers.
‘Cabazitaxel is also associated with a number of side effects, and the committee was concerned about the nature of the health-related quality of life information provided by the manufacturer.’
Whenever a new drug is made available, the money to fund it has to come from elsewhere in the NHS.
Nice said it must look at the benefit for patients the NHS can get for the money the drug company is asking.
But Professor Jonathan Waxman of Imperial College London said the cost argument was false.
He said: ‘This decision seeks to limit what we as clinicians can do for our patients and their families.
‘The cost argument on which Nice bases their decision is false, giving a much higher estimate of true cost than applies in reality.
‘As a result, yet another successful and effective cancer treatment is denied our patients, a mortifying blow to cancer care in England.
‘As the only route to access is now the Cancer Drugs Fund, a temporary arrangement that operates very differently around the country, I fear we’re heading towards a re-emergence of the postcode lottery.’
Emma Malcolm, chief executive of the charity Prostate Action, said: ‘Cabazitaxel is one of only two licensed drugs available in the UK that offers the hope of precious extra time and quality of life benefits to men living with advanced prostate cancer.
‘Nice’s decision not to recommend this drug means that men in England with advanced prostate cancer have to access it through the Cancer Drugs Fund.
‘We know that there are inconsistencies across the country with how this fund is awarded, which means some men will only be able to access one of these drugs in some areas.
‘Men with advanced prostate cancer have so few treatment options available to them that they should be able to access both of these new treatments.”
The Cancer Drugs Fund, set up in 2010 to allow access to drugs rejected by Nice or not yet licensed, is only available until 2014 and only applies in England.
Prostate cancer patients are also waiting for Nice to issue their decision on abiraterone, another life-extending treatment, which is due soon.