Sativex, the cannabis-based drug has performed little better than a dummy drug in trials in the UK, raising doubts about its effectiveness in treating multiple sclerosis (MS).
The mouth spray, containing THC, the active ingredient in cannabis, is being used as a painkiller by around 1,400 MS sufferers in Britain.
Sativex makers, Wiltshire-based GW Pharmaceuticals, are hoping to market it to ease the muscle spasms associated with MS and the pain of cancer.
However, its worth has been thrown into doubt by a test involving more than 300 MS patients.
While half of those taking Sativex found their pain was reduced by at least 30 per cent, those using a dummy spray fared almost as well.
GW said the result could be explained by an "unexpectedly strong placebo response" - in which symptoms are eased by the simple belief that a treatment will work.
The news sent the company's shares plummeting by as much as 31 per cent. GW, however, remains adamant there was a place for Sativex on the pharmacist's shelf.
Managing director Justin Gover said there was a ' desperate need' for new pain treatments and the drug had a "real role" to play.
The treatment, which is sprayed under the tongue four or five times a day, first went on the market in Canada in 2005.
Britain's drug regulators have yet to deem it safe and effective. However, doctors can prescribe it on a 'named patient' basis, which means they take personal responsibility for giving the drug.
A typical daily treatment of five sprays costs around £4.
GW grows 40,000 cannabis plants a year at a secret location in the English countryside.