Drug firms raided by police in NHS price-fixing inquiry

Twenty-seven homes and businesses were raided yesterday by detectives investigating claims that drug companies have defrauded the National Health Service of up to £400m.

The operation, co-ordinated by the Serious Fraud Office (SFO), centred on the employees of six pharmaceutical firms across Britain. The SFO, backed by the National Crime Squad and police forces, is examining allegations that the companies have colluded to keep two drugs widely used by the NHS at an artificially high price for four years.

In one of the biggest single operations carried out by the SFO, more than 200 officers raided 11 homes and 16 businesses. The searches, which may continue today, were supported by lawyers, financial investigators and forensic computer specialists. No one was arrested but computer equipment and files were understood to have been removed for further examination. About 100 officers from the National Crime Squad, detectives from the Metropolitan Police's fraud squad and Strathclyde Police took part in the operation, which began at 6.30am.

The inquiry is focusing on the alleged price fixing of two drugs – prescribed penicillin-based antibiotics, the most commonly used antibiotics, and warfarin, an anti-blood clotting agent routinely given to patients before operations.

The suspected fraud, which if proven will have cost the taxpayer millions of pounds, is alleged to have taken place between January 1996 and December 2000.

Six pharmaceutical companies involved in the raids were named by the SFO in a statement. They are Generics UK, which is a subsidiary of the German drugs giant Merck; Kent Pharmaceuticals; Regent-GM Laboratories; Goldshield Group; Norton Healthcare, a subsidiary of the Florida-based Ivax Corporation which makes copies of brand-named drugs; and Ranbaxy (UK), a subsidiary of the Indian-based company Ranbaxy Laboratories.

News of the inquiry caused shares in Goldshield Group, which sells vitamins and off-patents, to be suspended on the London Stock Exchange. They lost more than a third of their value within an hour of the announcement. Goldshield is the only UK-listed company under investigation. The company, based in Croydon, south London, started in 1991 and describes itself as "a profitable, marketing- led, emerging British pharmaceutical and healthcare company".

Kent Pharmaceuticals, based in Ashford, was founded in 1986. It sells drugs to NHS trusts and hospitals and has a turnover of £50m.

It has depots in Ashford, Barton-under-Needwood in Staffordshire and Cumbernauld, Strathclyde.

The medicine manufacturer Regent-GM Laboratories has one base, at Park Royal, north-west London.

Generics UK, based in Potters Bar, Hertfordshire, has offices around the country.

Norton Healthcare describes itself as a non-profit-making network of medical services.

Ranbaxy (UK) is based in Park Lane, central London. A spokesman for its parent company, Ranbaxy Laboratories Ltd, said: "Ranbaxy and its subsidiaries worldwide never break any laws in any country, including our subsidiary in the UK, and we have nothing to fear or hide."

The SFO said the inquiry was extremely complex and no charges were imminent.

A spokeswoman said: "The searches are in connection with a major SFO investigation into a suspected conspiracy to defraud the NHS in relation to prices charged by suppliers for prescribed penicillin-based antibiotics and warfarin between January 1 1996 and December 31 2000."