A Health Select Committee has criticised NICE for its "narrow remit and structure" in denying people with early stage Alzheimer's specific drug treatments.
The Health Committee added that the economic evaluations made by the National Institute for Health and Clinical Excellence (NICE) did not adequately take into account the wider benefits of treatment to society, including the benefit to carers.
The Alzheimer's Society said that people with early stage dementia should never have been denied treatment.
Chief Executive of the Alzheimer's Society Neil Hunt said: "Today's report confirms that people with Alzheimer's disease should not have been denied access to drugs. This is a victory for common sense. It is good news for patients."
"We hope the Department of Health will implement the suggested reforms. This will reduce the number of challenges against NICE, such as ours on Alzheimer's drugs, and enable it to regain the public confidence it has lost."