Reckitt Benckiser, the drug company, is facing accusations of ripping off the NHS with a secret plan to maintain a monopoly in the supply of Gaviscon, the lucrative heartburn medicine.

Internal documents show Reckitt Benckiser executives plotted under the codename "Project Eric" to create obstacles to block rival manufacturers from selling cheap generic copies of the indigestion treatment.

In a statement this morning, Reckitt Benckiser said: "We are shocked by the allegations made in the press today, and by the inappropriate sentiment expressed in some of the internal correspondence of 2003.

"Reckitt Benckiser is a responsible company in the way it conducts its business, and we have therefore instigated an immediate internal investigation, and will take action."

The company said that it does not accept much of what has been alleged and that it does not have the power to achieve what has been suggested.

Gaviscon is one of Britain's most common remedies, prescribed in large quantities to people with heartburn. It costs little to produce but its high price makes millions for its Hull-based manufacturer.

Although Gaviscon has been out of patent for almost ten years, no other manufacturer has developed a cheap generic version. Such a drug could have saved the NHS up to £40 million.

Reckitt's tactics have been revealed by a senior whistle-blower from the drug company. The former senior executive said Reckitt had "cheated the NHS" and could have saved it "millions of pounds".

The company's data shows it costs only 74p to produce a bottle of Gaviscon. It and its variants are sold to the NHS for £2.70.

The Office of Fair Trading is now expected to look into the matter, to examine whether Reckitt was in breach of competition law.

The leaked documents reveal the existence of Project Eric, a plan to delay the development of a generic version of the drug, which allowed Reckitt to carry on selling Gaviscon to the NHS for three times the cost of a generic.

Executives also influenced regulatory bodies to delay the introduction of a generic name for Gaviscon. The generic name should have been published in 2000 but Reckitt objected. The same happened again in 2003 and Reckitt made further objections in 2005 and 2006.

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