The Court of Appeal has ruled that NHS England does indeed have the legal power to fund what campaigners refer to as a "game-changing" drug to prevent the transmission of HIV under a strategy called Pre-Exposure Prophylaxis (PrEP).

Recent evidence indicates that the approach can be highly effective in preventing transmission of the disease as long as the drugs are taken regularly; data from the pilot phase of the PROUD study show that PrEP using Gilead's Truvada (emtricitabine and tenofovir disoproxil) cut the incidence of HIV infection by 86 percent.

The once-daily pill costs around £360 a month, according to the AIDS charity the Terrence Higgins Trust, but it points out that this is still cheaper than the cost of treating HIV.

However, in a legal battle with The National AIDS Trust (NAT), NHS England argued that it doesn't have the legal power to fund a national PrEP service, and that this should instead fall under the remit of local authorities, as they control preventative health.

But both the High Court and the Appeal Court disagree, ruling that NHS England has the ability - but not the obligation - to fund a PrEP service.

NHS England welcomed the decision and said it would now "formally consider" whether to fund PeEP, and discuss with local authorities how NHS-funded PreP medication could be administered by the sexual health teams they commission. But it also said it will "immediately ask the drug manufacturer to reconsider its currently proposed excessively high pricing", as well as explore options for using generics.

"We are delighted to have been vindicated by the Court a second time," said Deborah Gold, chief executive of NAT.

"HIV is a critical issue in the UK where over 4,000 people acquire HIV every year. PrEP works, it saves money, and most importantly it has the power to prevent HIV acquisition for thousands of people, at the same time as beginning to end the HIV epidemic. This judgement brings that possibility one step closer."

The Association of the British Pharmaceutical Industry responded by calling for NHS England "to commit to constructive dialogue considerate of breakthrough medical advances" to help shape a a commissioning process "that is transparent, consistent and fair".

"This case shows that NHS England's existing system for specialised commissioning is opaque and unpredictable," said executive director Dr Richard Torbet.

"Instead of attempting to negotiate pricing through press releases, we believe that NHS England should comprehensively assess the value of a medicine to patients, through a clearly laid out commissioning and decision-making process. This will give patients and industry confidence that NHS England is making fair and appropriate decisions".