The National Health Service's annual drugs bill is being inflated by some £262 million through "extortionate" price hikes on a group of medicines controlled by a handful of millionaire businessmen, claims a report in The Times.

The paper's investigation has identified four companies that have set eye-watering price increases - often as high as 1,000 percent - for more than 50 off-patent medicines use by the NHS, which have been 'unbranded' so they are no longer governed by the country's cost-limiting Pharmaceutical Price Regulation Scheme.

It claims that these companies have picked medicines with little or no existing competition - as they are no longer profitable enough to be interesting to larger firms - to re-market under new names, providing the freedom to set prices at whatever level they choose.

In one case cited by The Times, the price of hydrocortisone tablets had been pushed up 12,500 percent, from 70 pence per packet in 2008 to the current £85, and it also highlights increases for doxepin 50mg tablets, which has jumped from £5.71 to £154 over the last five years, and dipipanone 10mg/cyclizine 30mg tablets, up from £9.57 to £353.06.

"The sort of pricing behaviour described in the Times investigation today - over 12,000 percent price increase for an old out of patent product - is cynical and exploitative," said Dr Richard Torbett, executive director commercial at the Association of the British Pharmaceutical Industry. "It does not reflect the values of our members who are focussed on researching and developing new medicines to meet the medical needs of NHS patients".

Inappropriate behaviour around the pricing of old medicines should be tackled, he said, but also noted that such examples are rare, "and overall the UK has a highly competitive market where competition drives efficiency and low prices".

A Department of Health spokesperson said: "These are serious allegations and no pharmaceutical company should be exploiting the NHS. The Secretary of State has asked the CMA to urgently look at the evidence uncovered by The Times as part of their continuing investigations into excessive drugs pricing."