Novo Nordisk Sued Over Alleged Pay-for-Delay Scheme
- 4 days ago
- 2 min read
Pharmaceutical giant Novo Nordisk is facing a class-action lawsuit for allegedly orchestrating a multi-year anticompetitive strategy to protect its billion-dollar diabetes franchise. The complaint, filed by South Carolina-based wholesaler Smith Drug Company, claims Novo Nordisk unlawfully delayed generic versions of its drug Victoza to preserve profits and transition the market to its newer blockbuster, Ozempic.
At the heart of the lawsuit is a 2019 settlement between Novo Nordisk and Teva Pharmaceutical. Plaintiffs allege this agreement included an "unlawful reverse payment" that prevented Teva from launching a cheaper generic version of Victoza until June 2024. Without this deal, experts argue a generic could have hit the market as early as 2023, following the expiration of Novo’s primary patents.
Key details of the alleged scheme include: 16-Month Delay: The lawsuit claims generic competition was pushed back by nearly a year and a half. Monopoly Pricing: By blocking generics, Novo and Teva were allegedly able to charge supracompetitive prices. Strategic Pivot: Plaintiffs argue the delay allowed Novo to shift prescriptions from Victoza to Ozempic before generic alternatives could drive down prices.
Victoza was a first-generation blockbuster, generating over $5 billion in U.S. sales in 2018 alone. The lawsuit now seeks to recover hundreds of millions of dollars in overcharges on behalf of purchasers who were forced to pay higher prices for Victoza, its generic, and Ozempic.
Beyond the courtroom, the U.S. Federal Trade Commission (FTC) and the Department of Justice (DOJ) are reviewing the 2019 settlement. A regulatory finding of anticompetitive behavior could force Novo to unwind the deal or face significant penalties.
Despite the legal "noise," institutional investors appear to remain bullish on Novo Nordisk. Data shows net inflows of $8.44 billion over the past year, suggesting that the "smart money" views the lawsuit as a manageable risk rather than a threat to the company’s long-term cash flow from its GLP-1 portfolio.
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Novo Nordisk Sued
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