Will Novo face criminal charges?

Will Novo face criminal charges?

Yesterday Novo Nordisk (NYSE:NVO) issued a press release which stated;

“The office of the US Attorney for the District of Massachusetts has served Novo Nordisk with a subpoena calling for the production of documents regarding potential criminal offences relating to the company’s marketing and promotion practices for the following products:  NovoLog® , Levemir®, and Victoza®. Novo Nordisk will cooperate with the US Attorney in this investigation. “

Diabetic Investor has been aware that Novo sales representatives were being interviewed by Massachusetts investigators for some time.  Although details are unclear on the exact nature of this investigation Novo is well known for paying physicians above average rates as speaking fees. While the practice of paying speaker fees is commonplace, Novo has taken this practice to a new level.  As Novo reps have told Diabetic Investor the company will do anything to buy as much business as possible.

Diabetic Investor is not surprised the company may face criminal charges.  At one time there was no question that Novo was the unrivaled leader in diabetes. However the company now facing stiffer competition from Sanofi-Aventis (NYSE:SNY) seems to have lost their way. Novo also knows that they will soon face even stiffer competition in the highly important GLP-1 market from Bydueron.

Just how desperate has the company become?

Although no one will go on the record Diabetic Investor has been investigating reports that Novo was the company behind the studies published linking Lantus and cancer.  Back when these studies were first published Diabetic Investor always thought Novo’s well-prepared response to this controversy was just a little too well-prepared, almost as if they knew these studies were going to be published. Privately many have speculated that Novo orchestrated this series of events in an effort to slow sales of Lantus and get physicians to convert patients to their long acting insulin Levemir®.

Diabetic Investor also noted that Novo has worked with that crusading cardiologist Dr. Steven Nissen on Victoza® cardiovascular studies.  Once again in a situation similar to the Lantus/cancer studies, Amylin (NASDAQ:AMLN), Lilly (NYSE:LLY) and Alkermes (NASDAQ:ALKS) were blind-sided when the FDA issued a complete response letter for Bydueron which asked the company to conduct some additional cardiovascular related studies. Novo understands all too well that the once-weekly Bydueron will trump their once-daily Victoza in the GLP-1 market and that the longer they can delay Bydueron the better chance they have to establish Victoza in the marketplace.

Is it just coincidence that Novo just happens to hire Dr. Nissen, who in spite of his public statements, does carry an incredible, yet undeserved, amount of influence with the FDA? Is it also just a coincidence that the FDA asked Amylin to conduct additional cardiovascular related studies for Bydueron?

The simple fact is this once great company, now facing stiff competition on all fronts, has decided to win at all costs. This Machiavellian approach is already doing serious damage to the company’s once stellular reputation. The truly sad part here is there really was no need for the company to resort to such despicable tactics.  While it is true they bungled the Victoza submission, there is a place for Victoza in the market even when Bydueron does arrive.   

Diabetic Investor has been aware of many issues going on at Novo for some time. We believed the company was just going through some sort of phase, like a teenage child who rebels against their parents. We had hoped just as teenagers eventually grow out of this stage, the company would return to their roots. Sadly this phase is not over for Novo and now could cost the company more than just damage to their already damaged reputation.

The time has come for the company to take ownership of their problems and begin the process of repairing their reputation. The company should get back to their historical roots which includes developing some great insulin’s and patient friendly insulin delivery systems. They should get back to taking on the completion, not with under-handed tactics, but by providing better options for patients. This is what vaulted Novo to the leadership position in diabetes and there is no reason to believe they cannot regain their title.  However at the moment Novo can no longer take the high road, as sadly, they fallen into the gutter.