A drug licences-for-cash scandal has engulfed Italy's medicines regulatory agency with leading officials arrested along with people linked to major pharmaceutical companies.

The most senior figure to have been held is Pasqualino Rossi, vice-president of Aifa (the Italian Agency for Pharmaceuticals). Dr Rossi is also one of Italy's most senior representatives at the European Medicines Agency.

Five drugs company lobbyists have also been arrested, and an eighth person is being sought. Arrest warrants were issued after Turin's investigating judge Sandra Recchione saw a 400-word police report suggesting money had changed hands in return for the falsification of clinical data required for drug licences.

At the centre of the investigation are licences awarded to around 30 medications, mostly thought to be generic products. The two-year investigation, centred on Turin, Rome (where AIFA headquarters are based), Padova and Alessandria, involved use of wire-tapping, and convert cameras.

The scandal came to light in Turin following the routine comparison of a branded medicine and its generic equivalent. It emerged that the generic drug had undergone fewer tests than were officially claimed and that data endorsing the product had been falsified.

The discovery sparked a major investigation by the city's prosecutor, Raffaele Guariniello. Following the arrests he said: "In this case the corruption and risks to people's health were bound-up together. And the web and the magnitude of events that we're shedding light on have unthinkable and very grave consequences."

Italy's La Repubblica newspaper named the drug giants Bayer and GlaxoSmithKline, as two companies with links to some of the arrestees. Daniele Rosa, a spokesman for Bayer's Italian division said: "The investigation does not concern the behaviour of the company, but alleged behaviour that could be traced back to some collaborators whose behaviour the company has no knowledge of. We will cooperate, as always, with the investigating authorities for everything that will be requested."

Massimo Escani, a spokesman for GSK in Italy, denied that any associates of the company were involved in the scandal. "The claims are completely untrue. We deny any involvement whatsoever. These reports are groundless," he said.

Initially, Aifa issued a brief statement denying that its employees were among those being investigated. When the Italian press named the senior officials arrested, however, the statement was removed from the website and the spokesman said that a new one was being prepared.

Martin Jarvis, a spokesman for the London-based EMEA, said: "We are aware of the reports and we have written to the Italian authorities in order to clarify Dr Rossi's status. Our concern is that he is in a position to perform his duties at the EMEA."