The district court denied plaintiffs’ motion for class certification in its entirety

On February 5, 2024, Judge Brian Martinotti of the U.S. District Court for the District of New Jersey unsealed a 120-page opinion denying the motion for class certification brought by the plaintiffs in In re Insulin Pricing Litigation. The plaintiffs, who claim that they paid “unconscionable” or “unfair” prices for insulin, sought certification under New Jersey law of a nationwide class of consumers who purchased certain insulin products from our client Novo Nordisk and from Sanofi. In the alternative, they sought certification of a multi-state class and of several individual state classes. Judge Martinotti agreed with Davis Polk’s arguments and rejected all of the proposed classes. This case is the earliest-filed of what are now almost 50 cases related to insulin pricing that have been brought against Novo Nordisk, Sanofi and other defendants. This decision is likely to be a significant one in pharmaceutical pricing litigation for years to come.

The plaintiffs’ complaint alleges that Novo Nordisk and other insulin manufacturers engaged in an “unfair and unconscionable pricing scheme by artificially inflating the list prices for their analog insulin products.” The plaintiffs allege that Novo Nordisk and the other manufacturers “inflated” those list prices in order to fund discounts used to convince pharmacy benefit managers (PBMs) to include their products on formularies that the PBMs create for insurers. It was undisputed that, absent such discounts, PBMs could – and did – prevent insulin manufacturers from selling their products to American consumers.

As to the nationwide class, Judge Martinotti rejected it for two independent reasons. First, he held that the plaintiffs were unable to establish an element of their New Jersey law claim. That is, he found that the plaintiffs could not establish that, as a matter of New Jersey law, they had suffered an “ascertainable loss” from their purchases of insulin, a product with substantial value. Second, he held that even assuming arguendo that plaintiffs could show an ascertainable loss, the nationwide class failed because “individual questions predominate over any common ones that may exist.” Among other things, he explained that class members could not uniformly show what caused any alleged harm, because what triggered any alleged “overpayment” for insulin would vary depending on a host of individual circumstances, including whether the individuals were insured “or had the opportunity to be insured,” the terms of their insurance coverage and their reasons for choosing it, whether they had alternative options for coverage and how their pharmacy calculated the price they actually paid. He also noted that individualized inquiries would be needed to determine how and whether individual consumers “benefited from” the discounts that the manufacturers offered to PBMs in exchange for having their products included on formularies.

Judge Martinotti also rejected the proposed multi-state and individual state classes, again on predominance grounds. He noted that many consumers have choices in selecting insurance coverage and that the record established that some class representatives elected to choose coverage that may have increased their out-of-pocket payment for pharmaceuticals in exchange for other benefits. As to the multi-state class, he separately concluded that individualized issues were “further compounded” by legal variations among the state consumer protection laws at issue and that those differences also presented “individualized issues that overwhelm common questions of law and fact and defeat predominance.”

The Davis Polk litigation team included partners James P. Rouhandeh (who, along with counsel for Sanofi, presented the argument) and Neal Potischman, counsel Andrew Yaphe (who led the briefing team), David B. Toscano and Cristina M. Rincon and associates Elaine M. Andersen, Chui-Lai Cheung, Tiffany Z. Chung-Arzeno, Andrei Gribakov Jaffe, Michael B. Haney, Ian Hogg, Jennifer Kim, Natalie Stoecklein and Keon Zemoudeh. Members of the Davis Polk team are based in the New York and Northern California offices.

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