Novo Nordisk A/S (NVO) is facing a class action lawsuit that accuses the pharmaceutical giant of orchestrating a multiyear scheme to block generic competition for Victoza, its blockbuster diabetes medication. The goal, according to the complaint filed in the U.S. District Court for the Eastern District of New York, was to protect billions in revenue while nudging patients toward Ozempic before cheaper alternatives could disrupt the market.
The lawsuit was brought by JM Smith Corporation, doing business as Smith Drug Company, and paints a picture of carefully timed patent maneuvers and strategic settlements designed to extend Novo's pricing power well beyond what the law intended.
The Victoza Cash Machine
Victoza, a liraglutide injection pen used to improve glycemic control in patients with Type 2 diabetes and reduce cardiovascular risks, was a financial juggernaut for Novo Nordisk. In 2018 alone, it generated more than $5 billion in U.S. sales. That kind of revenue doesn't just walk away quietly.
The complaint focuses on what should have been a routine transition. Novo's last active pharmaceutical ingredient patent for Victoza expired in August 2022. With pediatric exclusivity factored in, marketing protection lasted through February 22, 2023. At that point, generic versions should have flooded the market, driving prices down as prescriptions shifted to lower-cost alternatives.
That's not what happened.
The Alleged Delay Tactics
Instead, plaintiffs claim Novo Nordisk executed a plan to keep generics at bay while steering doctors and patients toward Ozempic, its second-generation GLP-1 drug that wasn't facing imminent generic competition. Ozempic treats glycemic control in adults with Type 2 diabetes and reduces cardiovascular and kidney-related risks in certain patients.
According to the filing, Novo wrongfully listed device patents in the FDA's Orange Book, which triggered automatic regulatory delays under the Hatch-Waxman Act. These weren't patents on the drug itself, but on the delivery device, which plaintiffs argue shouldn't have blocked generic approvals in the first place.
Then came the settlement with Teva Pharmaceutical Industries Ltd. (TEVA), the first company poised to launch a generic version. In 2019, Novo and Teva reached an agreement that allegedly included an unlawful reverse payment. The deal delayed Teva's launch until June 24, 2024, and granted Teva exclusive generic sales for the first 180 days.
Plaintiffs argue this settlement didn't just delay one competitor. It created a bottleneck that prevented other generic manufacturers from challenging the disputed patents, effectively blocking FDA approval of any competing generics until after Teva's exclusivity period ended.
The Financial Impact
The alleged scheme delayed generic Victoza by at least 16 months, according to the lawsuit. During that window, Novo preserved its monopoly pricing on Victoza, and both Novo and Teva were able to charge supracompetitive prices once Teva's version finally launched.
But the financial damage didn't stop there. Plaintiffs claim purchasers were forced to overpay not just for Victoza and its generics, but also for Ozempic. Had cheaper generic Victoza been available sooner, demand for the pricier Ozempic would have been lower, they argue.
The lawsuit seeks to recover hundreds of millions of dollars in alleged overcharges tied to purchases of Victoza, generic Victoza, and Ozempic during the affected period.
Thomson Reuters published a copy of the lawsuit online last Friday, and numerous law firms have since issued press releases seeking clients who lost money on the purchases.
Stock Reaction
Novo Nordisk stock was down 0.87% at $58.82 on Friday, according to MarketDash data.
