Novo Nordisk A/S (ADR) (NYSE:NVO) is the latest pharmaceutical company to come under scrutiny in the US over illegal marketing practices. The Danish company is accused of engaging in a ‘white coat’ marketing scheme to have its three diabetes drugs get preferential treatment from doctors when it comes to prescriptions.
Novo Nordisk White Coat Allegations
According to people with knowledge of the matter, the company reportedly hired Certified Diabetes Educators (CDEs) as sales reps to market the drugs directly to doctors. Through the Changing Life with Diabetes Program the company runs, sales representatives allegedly got unprecedented access to doctors where they marketed NovoLog, Levimir, and Victoza.
The Department of Justice in its lawsuit alleges that because the sales reps were titled as CDEs they had an unfair advantage against other sales reps when it comes to meeting doctors. The government is suing the company because the three drugs are all covered by federal health insurance programs
Victoza is the biggest of the three and one of the fastest growing when it comes to sales having produced 20 billion kroner last year. According to data compiled by Bloomberg sales of the drugs could soar to highs of 22.6 billion Kroner this year. Sales of the three drugs accounted for 10% of the company’s worldwide sales in 2013 on generating $6 billion in revenues.
Novo Nordisk Settlement
The government investigations which began in 2011 also allege that Novo Nordisk paid kickbacks to persuade doctors to prescribe its drugs. Some of the kickbacks were allegedly in the form of funded training sessions for doctors and patients as well as blood testing log books. The actions violated the U.S false claims laws that prohibit companies from getting insurance reimbursements at the back of illegal marketing tactics.
It has since emerged that the company has reached an agreement with the Department of Justice although terms of the deal still remain under wraps.
“We’ve reached an agreement in principle to settle certain claims related to this investigation. The process is not finalized, and as such, we can’t provide further comment on this matter at this time,” said Ken Inchausti, Novo spokesman in an emailed statement.
Novo Nordisk stock was down by $0.10 in Friday trading session ending the week at $38.68 a share.
