Novo Nordisk A/S (ADR) (NYSE:NVO) In $58.7 Million Settlement With U.S. Government

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Novo Nordisk A/S (ADR) (NYSE:NVO) has agreed to pay amounts totaling $58.7 million as a settlement following claims that sales staff of the drugmaker downplayed warnings issued by the U.S. Food and Drug Administration that Victoza, its diabetes medication, posed a cancer risk. According to the Department of Justice, claims that Novo Nordisk’s sales representatives were supplied with information which created the misleading or false impression that warnings were unimportant or wrong would be resolved by the settlement.

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“When a drug manufacturer fails to share accurate risk information with doctors and patients, it deprives physicians of information vital to medical decision-making,” said Chad Readler, Acting Assistant Attorney General, in a statement.

Federal Food, Drug, and Cosmetic Act

The development will see the U.S. government receive $12.15 from the settlement from Novo Nordisk after being found in violation of the U.S. Federal Food, Drug, and Cosmetic Act in the period ranging from 2010 to 2012. The remaining $46.5 million will settle claims that the drugmaker violated the False Claims Act in the period ranging between 2010 and 2014.

The False Claims Act prohibits pharmaceutical firms from receiving insurance reimbursements from programs of the federal government after employing illegal marketing tactics. According to a former sales manager at Novo Nordisk, the drugmaker would send sales representatives who posed as diabetes educators and experts into the offices of doctors in order to illegally market its products including Victoza.

No admission of wrongdoing

To reach the settlement Novo Nordisk did not, however, admit wrongdoing. Investigations on the marketing and sales practices of Victoza started in 2011. Novo Nordisk’s head of North American operations, Doug Langa, said in a statement that while pharmaceutical firm continued to deny any wrongdoing on its part and was not in agreement with the conclusions reach by the U.S. authorities, it was happy to have reached a settlement.

Langa insisted that the drugmaker takes its responsibility of communicating the clinical and safety benefits of its products seriously. The drugmaker would also continue to address any safety questions that healthcare professionals may have.

On Tuesday shares of Novo Nordisk A/S fell by 0.55% to close the day at $46.98.

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