The Department of Health has asked the Competition and Markets Authority (CMA) to consider investigating the owner of Boots over drug pricing.
Health Minister Steve Brine said he had asked the CMA to consider an investigation after the Times claimed Boots had ripped off the National Health Service (NHS) with excessive pricing.
The newspaper claimed Boots charged the NHS £3,220 for a medicinal mouthwash used by cancer patients which can be bought on the high street for £93.
It said Boots had used a legal loophole to allow suppliers to set their own prices for the drugs.
The mouthwash is part of a category of drugs called specials which do not have set prices.
Brine said: “The British public will take an extremely dim view of any company found to be exploiting our NHS and patients, and we have asked the Competition and Markets Authority to consider investigating as a priority.
“We have changed the law to enable us to place pharmacies and manufacturers under much stronger scrutiny. Where there is evidence of collusion between pharmacies and suppliers swift action will be taken to claw back funds and penalise offenders”.
A Walgreens Boots Alliance spokesperson said: "We firmly reject accusations of overcharging the NHS. Our senior company leaders have already recently met with officials from the Department of Health to discuss the specials products. We would welcome any further conversations with relevant authorities and stakeholders on this matter, including with the CMA."
Boots is owned by US pharmacy giant Walgreens which bought a 45 per cent stake in Boots in 2012 before acquiring the remaining 55 per cent stake in 2014.