Billions of pounds in public money were wasted worldwide on buying drugs to combat a swine flu "pandemic that never was", says Newport West MP Paul Flynn.
He has compiled a report on the H1N1 virus for the Council of Europe.
He told BBC Wales' Dragon's Eye the World Health Organisation (WHO) made a "terrible mistake" in causing panic.
WHO said it reminded the public in its pandemic assessments that most people had mild symptoms and made a full recovery without medical treatment.
Dr Tony Jewell, chief medical officer for Wales, said: "It is easy with hindsight to say things should have been done differently."
Mr Flynn, one of the 47 parliamentarians from across Europe who sits on the human rights-focused Council of Europe, said: "They [WHO] frightened the whole world with the possibility that a major plague was on the way."
He added: "The result of that was that the world spent billions and billions of pounds on vaccines and anti-virals that will never be used. It is huge waste of money."
Mr Flynn's report will be debated by the Council of Europe later.
He claimed that the decision by WHO, a body of the United Nations, to declare a pandemic had been influenced by pharmaceutical companies.
He said: "The firewall that should exist between the commercial interests, the pharmaceutical bodies, and the scientists has been breached.
"We know the only people who benefited were pharmaceutical companies. They had a huge influence in defining what a pandemic is."
Mr Flynn said WHO was not being transparent in not explaining who had sat on the emergency committee that had declared H1N1 a pandemic.
He said as a result "resources and priorities in health services in dozens of countries were distorted".
Globally, more than 15,000 people died as a result of the H1N1 virus compared to the two to four million deaths that had been predicted by WHO, he said.
"The mistake was to say this was the most dangerous form of flu. It created vast over-buying that wasn't necessary," said Mr Flynn.
WHO has rejected Mr Flynn's conclusions, saying they had not exaggerated the dangers.
In a statement, it said: "In every assessment of the pandemic, WHO consistently reminded the public that the overwhelming majority of patients experienced mild symptoms and made a rapid and full recovery, even without medical treatment."
Mr Flynn said governments, while "damned if they acted, and damned if they didn't," did have a choice in how they responded to the warning from WHO.
While the UK spent £500m on anti-viral drugs that will now never be used, Poland spent nothing, explained Mr Flynn.
The UK ordered 90 million doses of H1N1 vaccine and 4.63 million doses were used in England.
Vaccines and public awareness campaigns cost Wales £35m, according to official figures.
Dr Jewell said: "Our response to the pandemic has been clear.
"When the infection first arrived, we didn't know how severe it would be and the potential impact. Therefore the only prudent course of action was to plan for a worst-case scenario - based on scientific advice. To do otherwise would have been irresponsible."
A spokesperson for the Department for Health, in England, said that pandemic decisions had been based on advice from independent experts.
"The response was the result of careful preparation and thoughtful consideration, this continues to be the case.
"It is important that we learn lessons. A review into the WHO's handling of the pandemic is currently underway and this is happening in the UK too. This will ensure we remain one of the best prepared countries in the world for any future pandemics."
Mr Flynn said that while WHO had done incredible work, including eliminating smallpox, it had "cried wolf four times".
He said: "With Sars, CJD, avian flu and swine flu, none of them justified the billing as mass killers.
"WHO can't go on crying wolf and expect to have its views respected."
WHO convened a panel earlier this year to conduct a "credible and independent review" of how it and national authorities handled the outbreak.
Two experts on the panel resigned recently because of their close ties to the UN health body and concerns over conflict of interest.