The taxpayer could foot a bill of around £40m after the Serious Fraud Office (SFO) was forced to drop a high-profile case against Goldshield Group.
The SFO had accused pharmaceutical company Goldshield of conspiring to defraud the NHS through an alleged pharmaceutical cartel.
However, the SFO's original indictment only related to price-fixing, which alone is not an offence. When the SFO tried to amend the indictment to include conspiracy to defraud the Department of Health between 1996 and 1999 its application was refused. As such the case has been abandoned.
Jones Day litigation partner Craig Shuttleworth, who led Goldshield's legal team, said the charges should never have been brought in the first place.
"The SFO brought a case against Goldshield based on a legal assumption that was simply defective," said Shuttleworth. "This whole affair is another example of the SFO's investigative failings.
"Proceeding on the misconceived assumption that price-fixing alone can constitute a conspiracy to defraud, the Serious Fraud Office has ultimately ended up costing the taxpayer millions of pounds."
Goldshield chairman Keith Hellawell added: "It has been an appalling waste of money for the taxpayer with an estimated £40m spent to date, not including our own legal costs of over £6m."
Goldshield had already reached financial settlements with health services in England, Scotland and Ireland without admission of liability. Last June it agreed to pay £4m to the NHS to settle a claim related to the alleged price-fixing of generic medicine.
The SFO has said it will appeal the ruling by Mr Justice Pitchford at Southwark Crown Court today (11 July).
Shuttleworth instructed Tom de la Mare from Blackstone Chambers, while the SFO used the Treasury Solicitors.