Ministers have opened an investigation into the spiralling price of prescription drugs, which is costing the NHS millions of pounds.

Ministers have opened an investigation into the spiralling price of prescription drugs, which is costing the NHS millions of pounds.

The cost of many generic drugs, which are normally far cheaper than their "branded" equivalents, has more than quadrupled in the past year. And the problem has been compounded by a shortage of supply, meaning that hospitals and family doctors are often being forced to prescribe the branded versions, which can cost up to five times as much.

Normally generic drugs, which can be produced by anyone who meets health and safety regulations for their production, are much cheaper than branded drugs because competition between the dozen or so companies in Britain keeps down the prices.

The Government, concerned to keep the £5bn NHS drugs bill as low as possible, recommends doctors prescribe these generic drugs.

The British Generic Manufacturers Association, which represents more than 70 per cent of the companies, said yesterday that the increase in prices has been driven by the lack of supply. The closing down of one manufacturer, and the switch from bulk supplies to individual packaging, after a European directive at the beginning of the year, were to blame, said John Close, chairman of the association.

"It is a real shortage of supply that has caused the increase in prices," said Mr Close. "Generic manufacturers have been left to their own devices in switching to individual packets of drugs, which cost more to manufacture. The supply will recover."

He said a company in northwest London that supplied over 10 per cent of the generic drugs market, was shut down last year by the Medical Control Agency. "This had a massive effect on the market and caused nationwide shortages," he said.

The Department of Health said it was very concerned about the increase in prices and was in discussion with manufacturers, wholesalers, and community pharmacists to look at ways of easing the situation.

"There have been substantial rises in the prices of generics this year. We are concerned that the scale of the rises may well be unjustified," said a spokesman. "We are aware that the current situation is serious and are examining every possible option to see how a more normal market situation can be restored."

The price of generic drugs such as amoxycillin, an antibiotic that is mainly used to treat chest infections, has risen from 47p for 15 tablets to 169p in the past 12 months, a rise of 260 per cent. Thyroxine, which is taken for thyroid deficiency, has risen from 19p to 87p since last year.

When a particular drug is in short supply the Department of Health puts it on a category D list, which lets doctors and pharmacists prescribe the more expensive branded drugs. The number of drugs on the list has risen from 30 in September 1998 to 190. If the trend continues, the additional cost to the NHS could be £250m.

Peter Bradley, MP for The Wrekin, who is meeting John Denham, a Health minister, to discuss the issue today, said: "We need assurance from ministers that they are looking at the situation and are going to control the scandalous behaviour of drugs companies who are charging high costs for generic drugs. The money that is being pledged to frontline care is very welcome. But it is being siphoned off by the drugs companies by the back door of the NHS and is of great concern."