Novo Nordisk A/S (NYSE:NVO) is accused of unlawfully extending its monopoly over its diabetes drug Victoza through a multiyear anticompetitive scheme designed to delay generic competition.
• What’s ahead for NVO stock?
The class action complaint, filed in the U.S. District Court, Eastern District of New York by JM Smith Corporation (d/b/a Smith Drug Company), argued that the strategy allowed Novo to preserve billions in profits while shifting patients to its newer GLP-1 drug, Ozempic, before generics could enter the market.
Victoza, a liraglutide injection pen manufactured and sold by Novo Nordisk, is used to improve glycemic control in patients aged 10 and older with Type 2 diabetes and to reduce cardiovascular risks in certain patients.
Thomson Reuters published a copy of the lawsuit online last Friday. In addition, numerous law firms have published press releases seeking clients who lost money.
The lawsuit states that Victoza generated more than $5 billion in U.S. sales in 2018 alone.
The complaint centers on the expiration of Novo's last active pharmaceutical ingredient patent for Victoza in August 2022. With pediatric exclusivity, Novo's marketing protection extended through February 22, 2023.
Absent the alleged conduct, generic Victoza would have launched immediately afterward, sharply reducing prices as prescriptions shifted to lower-cost alternatives.
Instead, plaintiffs alleged that Novo Nordisk implemented a scheme to delay generic entry while transitioning prescriptions from Victoza to Ozempic, its second-generation GLP-1 drug that did not face imminent generic competition.
Ozempic is indicated for glycemic control in adults with Type 2 diabetes and for reducing cardiovascular and kidney-related risks in certain patients.
According to the filing, Novo Nordisk wrongfully listed device patents in the FDA's Orange Book, triggering regulatory delays under the Hatch-Waxman Act. The lawsuit also points to a 2019 settlement between Novo Nordisk and Teva Pharmaceutical Industries Ltd. (NYSE:TEVA), the first potential generic Victoza entrant.
That agreement allegedly included an unlawful reverse payment that delayed Teva's launch until June 24, 2024, while granting Teva exclusive generic sales for the first 180 days.
Plaintiffs argue Novo Nordisk further reinforced the delay by preventing other generic manufacturers from challenging the disputed patents, effectively blocking FDA approval of competing generics until after Teva's exclusivity period expired.
The alleged conduct delayed generic Victoza by at least 16 months, preserved Novo's monopoly pricing, and enabled both Novo and Teva to charge supracompetitive prices, the lawsuit claims.
Plaintiffs say the scheme forced purchasers to overpay not only for Victoza and its generics, but also for Ozempic, which they argue would have faced reduced demand had cheaper generic Victoza been available sooner.
The action seeks to recover hundreds of millions of dollars in alleged overcharges tied to Victoza, generic Victoza and Ozempic purchases during the affected period.
NVO Price Action: Novo Nordisk stock is down 0.87% at $58.82 at publication on Friday, according to Benzinga Pro data.
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