The NHS could potentially be saved millions of pounds after the competition watchdog reached a deal to prevent a vital medication for bipolar patients being withdrawn from the market.

The Competition and Markets Authority (CMA) said that Essential Pharma will increase the price of its bipolar medication Priadel, which thousands of Britons rely on, but not push ahead with plans to withdraw the drug altogether.

The price will go up to £7.50 for a packet of 200mg pills, and £8.50 for 400mg tablets, the CMA said. It is a major increase from the £2.76 and £4.02 charged previously, but is still significantly cheaper than one of the main alternatives, which is also sold by Essential.

Last month, the competition watchdog started looking into concerns that Essential might have abused its dominant position in the market by proposing the withdrawal.

“Since the CMA intervened just last month, Essential Pharma has agreed to carry on supplying Priadel at a price agreed with the DHSC (Department of Health and Social Care), which we hope will give peace of mind to the thousands of patients who rely on it,” said Ann Pope, the authority’s senior director of antitrust.

If Priadel was withdrawn, it would have forced the NHS to pay for patients to switch to other lithium-based drugs such as Camcolit, a much more expensive medicine that is also owned by Essential.

It would have cost the health service around £15 million a year if the drug was withdrawn, according to one estimate.

Professor Oliver Howes, chairman of the Psychopharmacology Committee at the Royal College of Psychiatrists, said: “This is good news for patients receiving lithium, as many had been very concerned about potential changes to their prescriptions. It is also good news for mental health services which were facing a significant increase in their medicine costs.”

Even after the planned price increase, Camcolit is more than five times as expensive as Priadel, at more than £48 per packet. The alternative drug is also only sold in packets of 400mg tablets, with no 200mg option.

Around 28,000 individual prescriptions of 200mg Priadel tables are made to patients in primary care in England each month, according to a letter that the Royal College of Psychiatrists and others sent to Health Secretary Matt Hancock in September.

They added that switching patients would not just have a financial cost, it could affect the health of patients.

“The various brands are not necessarily comparable and, in switching, we risk either losing the effectiveness of the medicine or the development of serious toxicity,” the letter, which was co-signed by 12 experts, said.

These experts, and others with opinions on the matter, now have until December 9 to respond to a consultation on the new proposals that the CMA is holding.

If the CMA accepts Essential Pharma’s offer, it will close the competition probe.

Ms Pope said: “We will carefully consider any responses to the consultation on the proposed commitments offered by Essential Pharma before reaching our final decision, with the best protection for patients in mind.”

NHS chief executive Simon Stevens added: “It will come as a relief for all those with bipolar who benefit from Priadel that it will remain available now Essential Pharma has backed away from their threat to withdraw this drug from the UK market.”