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 CMA said the price rise took place despite “broadly stable” production costs.
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.”
He stressed that, at this stage in the investigation, the findings were provisional and there has been no definitive decision that there had been a breach of competition law.
The CMA said it was one of a number of cases 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.