While all of biopharma felt the sting of tough talk from President-elect Donald Trump on Wednesday, Novo Nordisk faced some fresh concerns of its own. A New York law firm said it filed a class action suit against the Danish pharma for its role in alleged “collusive price fixing,” two months after U.S. lawmakers called for an investigation into the insulin market.
On behalf of a Pennsylvania county's public retirement system, Bernstein Litowitz Berger & Grossmann sued Novo, CFO Jesper Brandgaard and former CEO Lars Rebien Sørensen, alleging the company “reported materially false and misleading earnings and forecasts” that were “inflated” by price fixing.
The suit also claims the drugmaker “misrepresented and concealed the true extent” of intense payer pricing pressures, which have been dragging on insulin makers for some time now.
Novo said it’s “aware of the complaint” but does “not comment on ongoing lawsuits.”
The company’s shares fell on the news, tracking with most of the sector as comments made on Wednesday by U.S. President-elect Donald Trump rattled investor sentiment. Trump lambasted the industry for "getting away with murder" and promised to institute competitive bidding to bring down drug prices.
The Novo lawsuit comes shortly after frequent pharma critics Sen. Bernie Sanders and Rep. Elijah Cummings asked the Justice Department and Federal Trade Commission to look into whether insulin makers Eli Lilly, Novo Nordisk and Sanofi have been colluding on price increases.
“Not only have these pharmaceutical companies raised insulin prices significantly—sometimes by double digits overnight—in many instances the prices have apparently increased in tandem,” the lawmakers wrote at the time.
In a blog post about pharmacy benefits managers (PBMs) and their role in Novo's price increases, Jakob Riis, Novo's head of North America operations, said the company "monitored market conditions to ensure our prices were competitive with other medicines as part of our business model."
Adamantly denying the price-fixing charge, Lilly responded that a complex reimbursement system places an unfair burden on diabetes patients. “The insulin market in the U.S. is highly competitive,” the Indianapolis-based drugmaker said. Even though insulin prices have gone way up in recent years, drugmakers aren’t collecting that payday, Eli Lilly has argued. Instead, it’s the PBMs.
For its part, Novo is no stranger to those pressures amid an ongoing wave of attention to the industry’s price-hiking ways. The company said last month that it would limit itself to single-digit percentage increases.