Insulin that can be inhaled rather than injected has been rejected by NHS advisers on grounds of cost.
Many people with diabetes must have regular shots of insulin
The drug, Exubera, is designed to offer adults with diabetes an alternative to their daily insulin injections.
Exubera for Type 1 and 2 diabetes costs £1,100 per person per year but patients would still need injections at night.
Campaigners said the draft guidance by the watchdog the National Institute for Health and Clinical Excellence for England and Wales was disappointing.
The inhaled insulin is the first non-injected option for insulin therapy since the discovery of the treatment for diabetes in the 1920s.
About 800,000 people in the UK manage their condition with daily injections.
During clinical trials, researchers found inhaled insulin generally was as effective as injections in controlling blood sugar levels.
The drug has already been given approval by the European licensing body, but the National Institute for Health and Clinical Excellence was testing it on cost-effectiveness grounds for England and Wales.
Charity Diabetes UK said the inhaler was a "medical breakthrough" and access to new developments "should not be restricted on the basis of cost".
A spokesman added: "Many people with diabetes will be deeply disappointed that they are being denied this alternative form of treatment.
"There is an urgent need for more research to support the improvements made by using inhaled insulin on quality of life."
Manufacturers Pfizer said: "NICE has dismissed the robust scientific and medical evidence used by international medical experts in the US and Europe to grant widespread approval for this medicine.
"The choice here is quite simple: force patients to keep enduring the burden of multiple daily injections and poor compliance, as they have since the 1920s, or give them an alternative."
NICE said its guidance was not yet final and healthcare professionals and the public could comment before a final statement is published in October.
Andrea Sutcliffe, deputy chief executive at NICE and executive lead for the appraisal, added: "Our review of the evidence indicated that inhaled insulin should not be recommended because it could not be proven to be more clinically or cost effective than existing treatments.
"The clinical experts we asked advised us that using injected insulin is not usually a concern for the majority of people with diabetes."