On Thursday, shares of Novo Nordisk A/S (NYSE:NVO) traded lower as the company entered the spotlight of a legal dispute. The Danish pharmaceutical giant faces allegations from Strive Specialties, a compounding pharmacy, accusing Novo Nordisk and Eli Lilly and Co (NYSE:LLY) of anticompetitive conduct restricting access to alternative forms of their widely prescribed GLP-1 weight-loss medications.
The lawsuit, filed on Wednesday in a federal district court located in San Antonio, Texas, centers on claims that Novo Nordisk and Eli Lilly exerted their market position to prevent patients from obtaining compounded, and presumably more affordable, versions of drugs such as Ozempic and Wegovy. Strive Specialties asserts that the two companies entered into exclusive contracts with major telehealth platforms that effectively barred physicians from prescribing compounded GLP-1 formulations, even in instances when individualized dosing would be clinically advantageous.
Furthermore, Strive contends that both pharmaceutical firms went beyond restricting prescribing practices by interfering with its business relationships involving payment processors and technology partners. The pharmacy argues that compounders fulfilled a vital role during medication shortages by offering alternatives unavailable through branded options, yet these companies’ actions hindered access to such compounded products.
Strive Specialties is pursuing financial compensation for damages sustained as well as seeking a court injunction to prevent Novo Nordisk and Eli Lilly from enforcing the alleged exclusivity agreements that restrict compounded drug access. Novo Nordisk has publicly refuted these accusations, stating, “The claims in this litigation are without merit, and we will vigorously defend against them in court.”
Market reaction was prompt, with Novo Nordisk shares declining by 3.40% to $56.91 during Thursday trading sessions at the time of reporting according to Benzinga Pro data. Eli Lilly’s shares likewise demonstrated pressure, reflecting the connection to the dispute.
This legal development occurs against a backdrop where GLP-1 class drugs have become pivotal in obesity and weight management therapies, contributing substantially to market dynamics and competition concerns. The lawsuit underscores the complexities of pharmaceutical distribution channels and the challenges compounding pharmacies face when attempting to offer tailored medication options at potentially lower costs.
In summary, the litigation initiated by Strive Specialties paints a picture of alleged market manipulation by two dominant pharmaceutical entities, illustrating tensions between branded drug manufacturers and the compounding sector. The outcome of this case will be consequential in shaping access and competitive landscapes related to GLP-1 medications.