As reported by Reuters, Novo Nordisk, the world's largest insulin maker, is facing a Danish police probe after the company was reported by the Danish Financial Supervisory Authority for not disclosing at once that its new diabetes drug, Tresiba, had been refused U.S. FDA approval.
On the evening of Friday, February 8, Novo received the Complete Response Letter from the FDA stating that the agency was refusing to approve Tresiba, and its sister drug Ryzodeg, without more safety data. On Sunday, February 10th Novo issued a press release announcing the February 8th rejection.
The FSA contends that Novo should have issued a statement about the U.S. decision on the 8th, because despite the fact that the news came after the Danish market was closed, it was still possible to trade Novo shares over the counter and through banking systems.
A Novo press release states "even if the disclosure obligation could be said to apply already on the Friday evening, the company was entitled to delay public disclosure until the implications of the decision had been adequately analysed, which they had been on the Sunday."
While the financial impact on Novo is negligible (typical fines for disclosure violations do not exceed $37,000), the event raises interesting questions regarding the pharmaceutical industry's obligations to shareholders versus its ethical missions as a drug companies (to make safe and effective drugs).
One question being, what is the appropriate amount of time a company should be given to digest and disseminate a sensitive announcement, such as an FDA rejection, bearing in mind that there are patients potentially waiting on specific drug approvals for treatment but also that such setbacks have financial implications for investors?
As the reputation of the pharma industry declines, and the "industry's relationship with media" and "lack of transparency in reporting disappointing results" top the list of complaints, should drug companies be given a grace period in which to digest treatment-related announcements (provided patient safety is not at risk)?