Competition explodes amid weight loss drug shortage

Ongoing shortages of popular weight loss and diabetes drugs in the U.S. have spurred fierce competition between established drugmakers and an emerging market of compounded versions as telehealth companies look to tap into the fast-growing industry. 

GLP-1 medications like Ozempic and Mounjaro have become highly popular for their ability to aid weight loss. According to the health policy nonprofit KFF, 1 in 8 U.S. adults has taken a GLP-1 medication. 

This skyrocketing demand has contributed to years-long shortages of drugs like semaglutide and tirzepatide, the active ingredients of Ozempic and Mounjaro, respectively. When medications are in shortage, compounding pharmacies are allowed to provide copycat drugs to help patients continue receiving care. 

Major telehealth companies like Hims & Hers and Noom are taking full advantage of this scenario. 

“There's never been such a demand, or a mismatch between branded supply and demand, that has driven this kind of explosion in compounding pharmacies and online platforms that basically deliver or create access for product,” said Jaime Almandoz, medical director of the University of Texas Southwestern Medical Center Weight Wellness Program.

Pharmaceutical giants have opened a legal battle against companies that provide semaglutide products not sourced from them directly. Neither Hims & Hers nor Noom has been sued by the manufacturers as of writing. 

Apart from industry outcry, federal agencies have signaled some concern over reports of adverse events linked to compounded semaglutide due to patients miscalculating self-administered doses. 

Regulatory gray zone

Compounded drugs are not generic forms of the medications they’re meant to replace, and while compounding pharmacies are regulated by the Food and Drug Administration (FDA), the products they sell are not FDA-approved. 

Compounding pharmacies typically produce altered forms of medications for patients who are unable to take the FDA-approved version. This may be because they’re allergic to a dye used in making the medicine or they’re unable to swallow pills.

There are two types of compounding pharmacies: 503A facilities that are designated to make drugs specific to a patient’s prescription and 503B compounding pharmacies, which can also fulfill patient-specific prescriptions and manufacture large batches of products to be sold to health care facilities. 

Due to providing larger batches of product, 503B compounding pharmacies are subject to higher standards and regulation. 

According to Scott Brunner, CEO of the Alliance for Pharmacy Compounding (APC), compounded drugs like the compounded GLP-1s that have entered the market are not simple stand-ins for their FDA-approved counterparts. 

“A prescriber, for instance, could not write Wegovy on the prescription and send it off to the pharmacy and the pharmacy looks at the shelves and says, ‘Oh I don't have any Wegovy. I'm just going to compound semaglutide,” Brunner explained. “Doesn't work that way. The script has to specifically be for compounded semaglutide.” 

Big Pharma lashes out

While providing compounded versions of patented drugs is legal when the FDA-approved versions are in shortage, manufacturers like Novo Nordisk and Eli Lilly have taken legal action against these pop-up competitors.

Novo Nordisk, the maker of the semaglutide products Ozempic and Wegovy, has filed lawsuits against 40 pharmacies, spas and clinics for selling “copycat” drugs, which the company claims are contaminated, subpar products. 

Eli Lilly, which manufacturers Mounjaro and Zepbound, announced six new lawsuits against compounding pharmacies, online retailers and medical spas in June, warning the products sold through these companies were unsafe. 

“Lilly is deeply concerned about the proliferation of counterfeit, fake, and other unapproved and untested incretin knockoffs, which are often obtained through telehealth entities,” a spokesperson said. 

Telehealth companies cut costs 

Speaking to The Hill, representatives for both Hims & Hers and Noom confirmed they source their compounded semaglutide products from 503B facilities.  

Neither company accepts insurance for their GLP-1 products, but the versions they sell are vastly cheaper than those sold by Novo Nordisk and Lilly. 

Noom’s compounded semaglutide starts out at $149 per month and can go up to $279. Out-of-pocket costs for a month’s supply of Ozempic is roughly $1,000 in comparison, though insurance and manufacturer coupons can significantly cut out-of-pocket costs for patients. 

“Those numbers are interesting because they're quite similar to the pricing of these medications in most of the world. It's really only in the U.S. that the pricing is, you know, five times that on the brand name drug,” Noom CEO Geoff Cook said of the prices for his company's compounded semaglutide. 

Novo Nordisk’s CEO was grilled this week on its drastically elevated prices in the U.S. market for weight loss drugs, but blamed pharmacy intermediaries and noted insured patients pay far below the sticker price. 

The status quo around compounded drugs only exists because Ozempic and Mounjaro are in shortage. This could change if the FDA changes that determination. But the telehealth companies that spoke with The Hill signaled little concern over that eventuality.  

“Even in a post-shortage world, we expect the continued expansion of our product portfolio in this category, particularly personalized treatments, to create an offering that is safe, accessible and durable in the long term,” a Hims & Hers spokesperson told The Hill, adding that its service can personalize semaglutide to help patients avoid going off the drug, as many end up doing. 

“I think we're in uncharted territory with this one,” Cook, the Noom CEO, said of the potential end to the shortage declaration. 

“I think this is unlike many other situations where you have a situation where the drug actually becomes less accessible, for all intents and purposes, as soon as the shortage is declared over, if it's declared over without any regard to the price of the name brand medications.” 

Questions about sourcing  

For a physician like Almandoz, one question that arises around compounded semaglutide is how it’s being sourced. 

“Where are they getting semaglutide from, right? These are complex chemicals. What is the actual supply?” Almandoz said. “And I think that's something that has a lot of people concerned. These are on-patent medicines that are not easy to make.” 

When asked how the company sources semaglutide for its compounded product, the Hims & Hers spokesperson said they source from “manufacturers regulated by the FDA” and are “produced exclusively in FDA-regulated 503B facilities in the United States.” 

Speaking of the 503B pharmacy his company works with, Cook from Noom said, “We are quite familiar with how they're sourcing the medications, how they're manufacturing them, and, you know, we would not conflate and we don't think should be conflated, this concept of kind of counterfeit meds which, of course, are problematic and should be banned and illegal.” 

Brunner from APC said there are currently 20 FDA-registered manufacturers of semaglutide listed on the agency’s website.

“Compounders are going to those FDA registered facilities to acquire the [active pharmaceutical ingredient],” he said. “Most compounding pharmacies are getting it from a wholesaler who's a middleman.” 

Doctors express concern 

With so many flocking to get on GLP-1s, Almandoz said he and other obesity specialists try to avoid putting their patients on compounded medications if possible. 

“There's FDA guidance that says specifically that compounded versions of semaglutide should not be prescribed when others are available,” Almandoz noted.  

“You have professional societies like the Obesity Society, which is kind of one of the main professional societies for obesity specialists like myself, saying you should not prescribe compounded versions when others are available.” 

He opined that the medical and legal risk of putting patients on a compounded version of a weight loss medication like semaglutide is significant, citing the FDA’s concerns around potential overdoses. 

Speaking on the telemedicine platforms offering GLP-1s, Almandoz said, “It's not that they have like zero medical supervision because they're probably having to log into the platform for regulatory reasons to do so. But it's performative. It's not meaningful, and I think that that's a real change that makes me worried that people aren't going to have the best outcomes.” 

Nathaniel Weixel contributed.