Drug company Concordia overcharged the NHS by millions for a key thyroid treatment, the Competition and Markets Authority has provisionally found.
The CMA said that last year the NHS spent £34m on its drug, liothyronine, up from about £600,000 in 2006.
The amount the NHS paid per pack rose from around £4.46 in 2007 to £258.19 by July 2017, an increase of almost 6,000%.
Concordia said it did “not believe that competition law has been infringed”.
The price change occurred in the years after the drug was de-branded in 2007. The CMA said the price rise took place despite “broadly stable” production costs.
Canadian drugs giant Concordia sells drugs to patients in more than 100 countries.
Liothyronine tablets are primarily used to treat hypothyroidism, a condition caused by a deficiency of thyroid hormone affecting at least two in every 100 people and which can lead to depression, tiredness and weight gain.
Until earlier this year, Concordia was the only supplier of the drug.
CMA chief executive, Andrea Coscelli, said: “Pharmaceutical companies which abuse their position and overcharge for drugs are forcing the NHS – and the UK taxpayer – to pay over the odds for important medical treatments.
“We allege that Concordia used its market dominance in the supply of liothyronine tablets to do exactly that.”
Analysis: Michelle Roberts, BBC News Online health editor
Prescription medicines that are still under patent can be expensive, but the government caps profits from any that are sold to the NHS to keep costs low.
But this system does not cover so-called “generic medicines”, where a drug’s patent has run out.
The loophole means the price of older, established drugs coming off patent can rocket.
A company, after filing and obtaining appropriate approval, can start trading the rebranded medicine and set a high price for it through a process known as “debranding”.
It’s something the Competition and Markets Authority has challenged a number of drugs companies over.
‘Open and transparent’
Mr Coscelli stressed that, at this stage in the investigation, the findings were provisional and there had been no definitive decision that there had been a breach of competition law.
Concordia said the pricing of liothyronine had been conducted “openly and transparently with the Department of Health in the UK over a period of 10 years”.
“Over that time, significant investment has been made in this medicine to ensure its continued availability for patients in the UK.
“We continue to work co-operatively with the CMA as it proceeds with its investigation.”
It added that the CMA’s statement included matters that pre-dated Concordia’s ownership of its international segment, which it bought in 2015 from investment firm Cinven and other sellers, including Hg Capital. The CMA has also written to those two firms.
An NHS England spokesperson said: “This action sends an important enforcement signal to relevant generic drug manufacturers, and also wholesalers, that taxpayers and the NHS will not tolerate market abuses.”
Dr Mark Vanderpump, former president of the British Thyroid Association, explained how he saw the cost of liothyronine rocket: “Historically the drug cost the NHS about £20-30 a month. The new cost was over £300 a month.
“Patients were telling me they could go to a foreign capital and pay about £4-5 a month, so there was a massive difference in what the NHS was being charged versus what people were accessing it at at a European level.”
If the provisional finding is upheld the CMA can impose a fine of up to 10% of Concordia’s annual worldwide turnover.
Earlier this year, Concordia was also accused of pushing up the price of a “lifesaving” NHS drug by striking a deal not to compete with another firm.
The CMA said in provisional findings that Actavis and Concordia fixed the market for hydrocortisone tablets. Concordia also said then it did not think it was in breach of competition law.
The CMA said the liothyronine case was one of a number it was looking at within the pharmaceutical sector.
Previously, the watchdog has fined drugs giant Pfizer and Flynn Pharma nearly £90m in relation to what it called “excessive and unfair prices” for the anti-epilepsy treatment, phenytoin sodium capsules.
It also fined a number of pharmaceutical companies a total of £45m in relation to anti-depressant medicine paroxetine.
Both those decisions are under appeal.
The CMA is pursuing another seven investigations into several companies in relation to drug pricing and competition issues.