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Actavis UK has been accused of overcharging the NHS for a lifesaving drug by raising the price by more than 12,000%.

The Competition and Markets Authority (CMA) has accused Actavis UK of breaking competition law by raising the price for 10mg hydrocortisone tablets from 70p to £88 over eight years.

Hydrocortisone treats life-threatening conditions such as Addison's disease.

Actavis UK's current owner, Teva, said it would defend the allegations.

Between 2008 and 2015, the CMA claims that the NHS's spending on the drug rose from £522,000 to £70m.

'Taken advantage'

Actavis UK acquired the rights to make generic hydrocortisone tablets in 2008 from Merck Sharp & Dohme, which had produced a branded version of the treatment. De-branded or "generic" drugs are not subject to price regulation.

The CMA compared the price of 10mg and 20mg hydrocortisone tablets that Actavis is charging now to Merck Sharp & Dohme's prices in 2008.

It claims that Actavis UK charged the NHS £102.74 a pack for 20mg pills, whereas the branded version previously cost £1.07 a packet.

Andrew Groves, senior responsible officer at the CMA, said: "This is a lifesaving drug relied on by thousands of patients, which the NHS has no choice but to continue purchasing.

"We allege that the company has taken advantage of this situation and the removal of the drug from price regulation, leaving the NHS - and ultimately the taxpayer - footing the bill for the substantial price rises."

'Policy concerns'

Teva recently acquired the Actavis UK business as part of its deal to buy Actavis Generics from drug firm Allergan.

In a statement, Teva said that competition from the generic medicine market saved the NHS in England and Wales £13.5bn, with its medicines accounting for about £3.2bn of that total.

It added: "Although the pricing of the acquired Actavis product (Hydrocortisone) under investigation was never under Teva's effective control, Teva believes that intervention by the CMA in prices for generic medicines raises serious policy concerns regarding the roles of both the CMA and the Department of Health."

The CMA said that at this stage, its findings were provisional and that no conclusion could be drawn that Actavis UK, which used to be known as Auden McKenzie, had broken competition law.

The competition watchdog has been clamping down on drugs companies for overcharging the NHS.

Earlier in December, the CMA fined Pfizer a record £84.2m for raising the price of an anti-epilepsy treatment by up to 2,600%. It also fined Flynn Pharma £5.2m for overcharging the NHS for phenytoin sodium capsules which prevent and control seizures.

Both companies are to appeal against the decisions.