Novo Nordisk faces $1.8 billion lawsuit over US insulin sales

Novo Nordisk is facing a lawsuit from disgruntled investors seeking around $1.8 billion in compensation, saying the company failed to properly update the market about the situation regarding its under-pressure insulin franchise in the US.

According to press reports around 260 pension funds with a vested interest in the Danish pharma are alleging that Novo Nordisk misled the public about its insulin sales in the US.

The drugmaker late last week issued its own proactive statement about the matter, saying that the claims are similar to those in a previously announced class-action lawsuit filed in 2017, adding that it would contest the allegations.

The lawsuit is filed in the Danish district court of Glostrup, and alleges that the company failed to properly inform the market about its increased insulin revenues in the US.

At the heart of the problem is the market situation in the US, where insulin list prices have increased at the same time as the rebates paid to “middlemen” in the system.

These rebates are supposed to fund investment elsewhere in the system, and the company has argued that it has to increase list prices to cover the cost of the rebates.

The rebates have eaten into profits from insulins, and Novo Nordisk is instead hoping that its GLP-1 class drug franchise will become a revenue mainstay in the future.

Revenues from GLP-1 drugs in the first half of 2019 were 14,887 billion Danish kroner ($2.2 billion), up 24% compared with the first half of 2018.

In contrast sales of insulins were flat compared with last year’s H1 at 30,302 billion Danish kroner (almost $4.5 billion).

Insulin prices are under pressure in the US because of cheaper biosimilar copycats of Sanofi’s Lantus (insulin glargine), as well as scrutiny from politicians who are concerned about the out-of-pocket costs of the drugs paid by patients.

In the US patients may pay all or some of the costs of their prescription medicines, depending on their insurance arrangements.

A Novo Nordisk spokesperson said: “The lawsuit alleges that Novo Nordisk made misleading statements and did not make appropriate disclosures regarding its sales of insulin products in the USA.

“The lawsuit appears to contain broadly similar allegations to those of the previously announced securities class-action lawsuit filed in the USA in 2017 on behalf of all purchasers of Novo Nordisk American Depository Receipts (ADRs).

“Novo Nordisk disagrees with the allegations and is prepared to defend the company in this matter.”