A drug that could prolong the lives of children with a rare muscle-wasting disease has been approved by the NHS in England after lengthy negotiations with the manufacturer over the high price.

Spinraza could help between 600 and 1,200 children and adults in England and Wales who have the genetic condition spinal muscular atrophy (SMA). It affects the nerves in the spinal cord, making muscles weaker and causing problems with movement, breathing and swallowing. It can shorten the life expectancy of babies and toddlers.

The drug can slow the progress of the disease but the company making the drug, Biogen, was asking for a high price, that effectively amounted to more than £400,000 for a year of good quality life, according to the National Institute for Health and Care Excellence (Nice), which assesses value for money. Nice said there was limited data on its long-term effectiveness and turned it down last August, to the distress of affected families.

Simon Stevens, the NHS England chief executive, said agreement had been reached and children would shortly get Spinraza, the market name of the drug nusinursen.

“This promising treatment has the potential to be life changing for children and their families,” said Stevens. “The NHS has now reached one of the most comprehensive deals in the world, which allows us to assess real-world evidence of its long-term benefits.

He hinted strongly that other drug companies should also agree to compromise. The US company Vertex is still refusing to drop the price of Orkambi for cystic fibrosis, which was launched at £105,000 per patient per year.

Stevens said: “This latest deal, coming on the heels of a number of other recent successful negotiations, demonstrates that there is no reason for other companies not to show equivalent flexibility in order to benefit NHS patients, taxpayers and indeed themselves.”

Spinraza will be available as part of a managed access scheme. The results in patients will be collected and assessed so NHS England can decide whether to continue paying for it.

Families campaigning for Orkambi for children with cystic fibrosis are hopeful that the NHS and Vertex can also do a deal.

Facebook Twitter Pinterest Luis Walker, who has cystic fibrosis, with his mother, Christina. Photograph: Martin Godwin/The Guardian

Christina Walker, whose eight-year-old son Luis could benefit, said: “I’m delighted for the patients and families of those who’ve campaigned so hard for access to Spinraza, as I am doing for access to Orkambi for my son Luis.

“I knew that Biogen was working with Nice and desperately wish that Vertex would adopt the same strategy. Instead, Vertex has spent more than three years trying to circumvent Nice. Even after a Commons health select committee inquiry told the company it must go through the usual channels in March, we are still apparently no closer to that happening. Meanwhile, Luis is losing health rapidly.”

Catherine Woodhead, the chief executive of Muscular Dystrophy UK, which has been campaigning for Spinraza to be made available on the NHS, said: “Today’s announcement is fantastic news that gives families hope. Children already receiving treatment are reaching milestones never thought possible and living longer, and now hundreds of others will be given that same chance.

“Every day counts for people with SMA, and we need to ensure this decision is implemented as soon as possible and made available UK-wide. Our work here is not done. The lengthy, frustrating delays, which we have seen throughout this process must not be allowed to happen again.

“During this time, there will have been irreversible decline in SMA patients’ health. The appraisal system for new treatments for rare diseases needs to be urgently overhauled to make it fit for purpose for future treatments for rare conditions.”