Novo Nordisk has reached an agreement in principle to end a long-running dispute around the pricing of insulin with a group of pension and retirement fund investors.
The case was filed in January 2017 and relates to information provided by the company about the pricing pressures it was under in relation to its insulin products.
The investors allege that while its competitors announced their profits would dimmish as a result of pricing pressure from US healthcare middlemen, the pharmacy benefit managers, Novo Nordisk said it would not be affected and that sales and profits would continue to grow.
“In truth, Novo Nordisk faced the same pricing pressures as its competitors, which was disclosed to the market beginning on 5 August 2016, when the company announced disappointing earnings and lowered sales and growth forecasts,” said lawyers for the investors. In spite of this, Novo “reassured investors that the company would grow its profits at a 10% rate”.
The lead plaintiffs in the case were Lehigh County Employees’ Retirement System, Boston Retirement System, Oklahoma Firefighters Pension and Retirement System and Central States, Southeast and Southwest Areas Pension Fund.
The settlement was reached through a voluntary mediation process and resolves all the claims, said Novo, adding that the $100m payment was covered by insurance.
“Novo Nordisk believes that the plaintiffs’ claims are without any merit, but is settling the lawsuit to avoid the burden, inherent risk and expense of further litigation,” the company said in a statement.
General counsel at Novo Nordisk, Tomas Haagen, said. “While we are confident in the facts and merits of our position, we believe that resolving this matter is the right business decision for Novo Nordisk and our shareholders.”
The settlement is subject to a court approval process, which could take several months.
Novo Nordisk also faces political pressure in the US over the pricing of its insulin products. In March, six Democrat lawmakers wrote to the acting chairwoman of the Federal Trade Commission calling for an investigation into potential collusion by the company and other insulin market leaders Eli Lilly and Sanofi.
The letter noted that the companies raised their insulin prices at the same time and that the prices almost doubled between 2012 and 2016. “It is a uniquely American phenomenon that patients with diabetes are regularly forced to ration insulin and risk death,” wrote one of the signatories, Congresswoman Katie Porter of California.