In no case is Italy blocking new anaesthetic (7)
I believe the answer is:
neither
'in no case' is the definition.
(in neither case)
'italy blocking new anaesthetic' is the wordplay.
'italy' becomes 'i'.
'blocking' indicates putting letters inside.
'new' becomes 'n' (common abbreviation eg NT for New Testament).
'anaesthetic' becomes 'ether' (ether is a kind of anaesthetic).
'n'+'ether'='nether'
'i' placed into 'nether' is 'NEITHER'.
'is' acts as a link.
(Other definitions for neither that I've seen before include "both are rejected" , "Negative word" , "Not one of two" , "None of the two" , "And not; nor yet" .)