We prevailed in having the complaint dismissed with prejudice

On March 16, 2022, Davis Polk secured dismissal of a lawsuit brought against its client Novo Nordisk Inc. The lawsuit alleged that various drug manufacturers and pharmacy benefit managers artificially inflated the price of certain insulin products. The lawsuit was brought by Harris County, Texas, one of several government plaintiffs to have filed similar lawsuits. It asserted claims under RICO and under Texas law, and alleged that Harris County overpaid for insulin purchases.

In February 2022, the federal district court issued a decision that led to the dismissal of all claims against the defendants, with judgment entered in their favor on March 16. As to RICO, the court accepted an argument that Davis Polk has successfully raised in a number of similar cases going back to 2018. The court concluded that the plaintiff had failed to plead that it had purchased insulin directly from any of the defendants, including Novo Nordisk. After extensively canvassing out-of-circuit caselaw and legal scholarship, the court concluded that the plaintiff was thus barred from maintaining a RICO claim by the so-called indirect purchaser rule, and that an exception to that rule for purchasers who bought products from an alleged co-conspirator to a price-fixing conspiracy did not apply. The court went on to dismiss Texas consumer protection act and other claims on similar bases.

This is the first occasion on which a court has dismissed a complaint involving insulin pricing claims brought by a government entity against insulin manufacturers.

The Davis Polk team includes partners James P. Rouhandeh and Neal A. Potischman, counsel Andrew Yaphe, David B. Toscano and Patrick W. Blakemore and associates Ian Hogg, Chui-Lai Cheung, Jennifer Kim and Elaine M. Andersen. Members of the team are based in the New York and Northern California offices.