* NICE rejects GSK's appeal on block for Tyverb
* Drug will remain available due to reassessment
LONDON, Oct 14 (Reuters) - Britain's drug funding watchdog NICE said on Thursday patients taking GlaxoSmithKline's breast cancer pill Tyverb can continue with the drug while it assesses its use in advanced cases compared with Roche's Herceptin.
The National Institute of Clinical Excellence (NICE) said it wanted to assess the pill against Herceptin in cases where cancer had progressed, for which Herceptin, which is given by injection, is not licensed but is frequently used.
The issue of expensive cancer drugs has been particularly controversial for NICE, which had rejected Tyverb for use in Britain's National Health Service (NHS) saying it had only limited benefits which were not justified by its high price.
Glaxo had appealed against the block on the drug's use in combination with another Roche medicine, Xeloda, for women with an aggressive form of breast cancer.
The health costs watchdog said on Thursday it had rejected the appeal, but it did not take its usual step of issuing guidance that the NHS should not pay for the treatment, as it awaits further research into its use compared with Herceptin.
"We think that it is in the interests of patients -- and the NHS -- to fully consider what effect using lapatinib (Tyverb) in these circumstances might have on the use of NHS resources," it said.
NICE said it had asked the Department of Health for permission to carry out an assessment, and in the meantime patients receiving Tyverb could continue to do so.
About 2,000 women with breast cancer who over-express a protein called HER2, causing the aggressive type of cancer, may be eligible to receive Tyverb, a NICE spokeswoman said. (Reporting by Paul Sandle; Editing by David Holmes)