Investor Presentaiton
Novo Nordisk Annual Report 2023
Introducing Novo Nordisk
Strategic Aspirations
Risks
Management
Consolidated statements
Additional information
3.5 Provisions and contingent liabilities
DKK million
At the beginning of the year
Provisions
for sales
rebates¹
Provisions
Provisions
for legal for product
disputes
returns
Other
provisions²
69,499
2,376
1,030
Additional provisions, including increases to existing provisions
285,266
1,937
1,010
Amount used during the year
(250,316)
(226)
(531)
Adjustments, including unused amounts reversed during the year
(2,364)
(240)
12
(431)
2023
Total
1,972
74,877
588
288,801
(173) (251,246)
(3,023)
Effect of exchange rate adjustment
(2,207)
(61)
11
(25)
99,878
3,786
1,532
451
3,763
613
1,931
1,822
(2,282)
107,127
6,649
2022
Total
55,894
207,715
(190,278)
(1,668)
3,214
74,877
4,590
99,427
23
919
109
100,478
70,287
At the end of the year
Non-current liabilities³
Current liabilities
1. Provisions for sales rebates are related to US Managed Care, Medicare, Medicaid, 340B Drug Pricing Program and other types of US rebates, as well as rebates in a number of European countries and Canada. 2. Other provisions
consists of various types of provisions, including obligations in relation to employee benefits such as jubilee benefits. 3. For non-current liabilities, provisions for sales rebates are expected to be settled after one year, provisions for
product returns will be utilised in 2024 and 2025. In the case of provisions for legal disputes, the timing of settlement cannot be determined.
Contingent liabilities
Novo Nordisk is currently involved in pending litigations, claims and investigations
arising out of the normal conduct of its business. While provisions that Management
deems to be reasonable and appropriate have been made for probable losses, there
are inherent uncertainties connected with these estimates.
Pending litigation against Novo Nordisk
Since January 2021, Novo Nordisk has made a number of changes to its policy in
the US related to facilitating delivery of its discounted medicines to commercial
pharmacies that contract with covered entities participating in the 340B Drug Pricing
Program. On 30 January 2023, the US Court of Appeals for the Third Circuit issued a
ruling holding that Novo Nordisk's drug distribution policy was consistent with the
340B statute. However, rulings in similar cases involving other manufacturers are
pending before the US Courts of Appeals for the Seventh and DC Circuits, and such
cases may be subject to further discretionary appellate review before the US Supreme
Court. Depending on the outcome of any subsequent rulings and appeals in these
matters, there may be a material impact on Novo Nordisk's financial position, net
sales and cash flow.
Mosaic Health Inc. and Central Virginia Health Services, Inc. (both 340B covered
entities) filed a putative class action lawsuit in Federal Court in New York against
Novo Nordisk, Eli Lilly and Company, Sanofi and AstraZeneca alleging a conspiracy
among the manufacturers to artificially fix prices of diabetes medications through
changes to their policies relating to the distribution of 340B drugs. The lawsuit was
subsequently dismissed by the Court on 2 September 2022. Plaintiffs have filed an
amended complaint. Novo Nordisk does not expect this matter to have a material
impact on Novo Nordisk's financial position, operating profit or cash flow.
Novo Nordisk is currently defending several lawsuits, including putative class actions,
relating to the pricing of diabetes medicines in the US. The first lawsuit was filed in 2017
and in August 2023 a multi-district litigation was created in the United States District
court for the District of New Jersey. Nearly all pending matters also name Eli Lilly and
Company and Sanofi as defendants, while certain matters also name Pharmacy Benefit
Managers (PBMs) and related entities. Plaintiffs generally allege that the manufacturers
and PBMS colluded to artificially inflate list prices paid by consumers for diabetes
products, while offering reduced prices to PBMs through rebates used to secure
formulary access. Novo Nordisk does not expect the lawsuits to have a material
impact on Novo Nordisk's financial position, operating profit or cash flow.
In 2016, Novo Nordisk received a Civil Investigative Demand (CID) from the US
Department of Justice (DOJ) relating to potential off-label marketing of NovoSevenⓇ
(including high dose and for prophylactic use) and interactions with physicians and
patients. The DOJ investigation was likely prompted by a lawsuit filed in 2015 by a
former Novo Nordisk employee, who alleged Novo Nordisk caused the submission of
false claims to Medicare, Medicaid, Federal Employees Health Benefits Program and
private insurers in California as a result of the same conduct that was the subject of
the DOJ CID. In May 2023, at the Plaintiffs' request, the case was transferred to the United
States District Court for the Western District of Washington. Following transfer, in July
2023, Plaintiffs filed a motion to revive their nationwide Medicare claims and their
Delaware Medicaid claims. Novo Nordisk filed a motion to dismiss these claims. Novo
Nordisk does not expect the lawsuits to have a material impact on Novo Nordisk's
financial position, operating profit or cash flow.
Novo Nordisk, along with Eli Lilly, are defendants in numerous product liability lawsuits
(including in the US) related to the use of GLP-1-based treatments. Plaintiffs have alleged
that the use of these treatments, including Ozempic®, WegovyⓇ and Rybelsus®, have
caused various gastrointestinal and other injuries. Novo Nordisk is taking actions to
address the lawsuits. Novo Nordisk does not expect these lawsuits to have a material
impact on Novo Nordisk's financial position, operating profit or cash flow.
Pending claims against Novo Nordisk and Investigations involving Novo Nordisk
Novo Nordisk has received Civil Investigative Demands (CIDS) or subpoenas from several
US authorities including Attorneys General from the states of Minnesota, New Mexico,
Washington, Colorado, Vermont, Texas and the US Federal Trade Commission that call
for the production of documents and information relating to, among other things, the
company's trade practices relating to its insulin and GLP-1-based products. Novo Nordisk
is cooperating with the relevant government authorities in each of these investigative
matters and does not expect these matters to have a material impact on Novo Nordisk's
financial position, operating profit or cash flow.
In December 2021, Novo Nordisk received a CID from the DOJ relating to the company's
financial relationships with healthcare professional and prescriptions for OzempicⓇ and
RybelsusⓇ during the period of 1 January 2016 to present. Novo Nordisk is cooperating
with the DOJ in this investigation and does not expect this matter to have a material
impact on Novo Nordisk's financial position, operating profit or cash flow.
Other contingent liabilities
In addition to the above, Novo Nordisk is engaged in certain litigation proceedings and
various ongoing audits and investigations. In the opinion of Management, neither
settlement nor continuation of such proceedings, nor such pending audits and
investigations, are expected to have a material effect on Novo Nordisk's financial position,
operating profit or cash flow.
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