Novo Nordisk’s management faces a number of tough accusations in the American judicial system, as the Danish pharma group, as well as former CEO Lars Rebien and current CFO Jesper Brandgaard, has been sued by US pension fund Lehigh County Employees’ Retirement System.

According to Law360, the Pennsylvania-based fund claims that the drug company’s management team has been hiding increasingly poor financial results from investors in part by colluding with its competitors to raise prices.

The fund has initiated a proposed class action case in New Jersey federal court and according to this, Novo Nordisk executives had been misleadingly rosy in reports to investors holding its American Depositary Receipts (ADRs) telling them the company would meet modest sales goals and issuing glowing financial reports when the insulin maker knew the revenue numbers were propped up by a collusion scheme.

Illegal price deals

The suit claims Novo kept sales numbers inflated through unlawful price deals with rivals Sanofi, Eli Lilly, and Merck & Co.

"The inflated financial results reported to investors concealed the true extent of the pricing pressures the company was experiencing in the US, which Novo Nordisk was only able to conceal by engaging in collusive activity," the retirement fund says according to Law360.

Novo Nordisk says it will not comment on the matter, as it is policy not to comment on ongoing judicial activities.

The fund seeks to represent a class of investors who bought Novo Nordisk ADRs between April 30, 2015, and October 27, 2016. This has been confirmed in a press release by the law firm Bernstein Litowitz Berger & Grossmann, which represents the retirement fund.

Novo Nordisk and its management have already met widespread criticism for not reacting timely to an increased pressure on prices in the US. After continuously saying it saw a flat development in prices in the US in 2017, it finally changed its tune in its interim report for the first six months of 2016 in August last year.

It now said it expected prices to drop two to six percent on the biggest drug market in the world, an announcement that came months after its rivals had already accepted this new reality.

Aggressive rival

In late October, there were more depressing news from Novo as its Q3 report saw it lowering its short-term targets and cutting its guidance for long-term earnings in half, in both cases due to developments in the US.

Management said it had been impossible to gain a perfect overview of the situation before it had concluded negotiations with payers, adding that Eli Lilly’s decision to price a biosimilar version of Sanofi’s top-seller Lantus lower than expected had caught the entire market off guard.

But it has now led to a law suit, as the retirement fund believes Novo should have informed the market about all these things sooner. Lehigh County Employees’ Retirement System manages investments to the tune of USD 425 million for its roughly 3,600 members and it had bought shares in Novo Nordisk during that period of uncertainty last year.

 Rebien: We have to cut back on research and US operations 

 Analyst: Novo has cut to the bone now 

 Novo Nordisk imposes hiring freeze in Denmark 

- translated by Martin Havtorn Petersen

Would you like to receive the latest news from MedWatch directly in your e-mail inbox? Sign up for our free English newsletter below.