The Serious Fraud Office today began criminal proceedings against five pharmaceutical companies after a four-year investigation into alleged price-fixing of generic drugs sold to the NHS.

Nine company executives have also been named in the charges, accused of conspiracy to defraud hospitals of up to £150 million by overcharging for the blood-thinning agent warfarin and a range of widely-available antibiotics.

The criminal action follows an extensive SFO probe into alleged collusion between suppliers to artifically inflate the price of the prescription treatments - including the named brand Marevan and four penicillin-based drugs - for five years until 2001.

The companies named are responsible for more than 50 per cent of NHS supplies of generic medicines - drugs that are out of patent and therefore available for any manufacturer to produce without having to pay royalties. All deny the charge.

Philip Lewis, the squad's assistant director, said that he believed the legal action was likely to have a significant impact on the business culture of medical suppliers.

The investigation, Operation Holbein, is said to be the largest ever conducted by the SFO with papers for the investigation at one stage filling an entire floord of the squad's office in Central London.

Ajit Patel and Kirti Patel, two of the nine men due to be arrested when they surrender to bail in the next three days, issued an immediate denial of any wrongdoing.

The Patels, directors of the Goldshield Group plc - the only listed firm among the five charged with conspiracy to defraud - said that they "did not act in a way that was unlawful or improper".

The SFO carried out raids on the offices of several suspects four years ago after a parliamentary select committee investigation into unusual movements in the prices of a range of widely used drugs. It is believed that detailed information was provided to the SFO by an insider who is not among the nine facing prosecution.

Seven other executives who worked for the firms under investigation are: Denis O’Neill and John Clark, both of wholesaler Kent Pharmaceuticals Ltd; Jonathan Close and Nicholas Foster, both formerly of Norton Healthcare Ltd, a subsidiary of the American group Ivax; Luma Auchi, formerly of Regent-GM Laboratories Ltd (now in liquidation); Michael Sparrow, formerly of Generics (UK) Ltd, part of German group Merck; and Anil Sharma, formerly of Ranbaxy (UK) Ltd.

The individuals will be bailed following charge to attend Bow Street Magistrates’ Court on April 27 when the companies were also required to be represented.

Mr Lewis said: "This important case involving an allegation of dishonest price-fixing by companies is likely to have a significant impact upon the business culture of this country."

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