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Demand from patients for obesity medication is unrelenting. So, too, is the battle over who gets to develop and distribute the treatments.
While major drugmakers Eli Lilly and Co. and Novo Nordisk tussle for market supremacy, they are also taking on compound pharmacies that have not stopped selling obesity drugs despite the end of the shortage of such drugs.
That battle is playing out in courthouses and statehouses, as well, including in Indiana, where lawmakers appear poised to pass legislation regulating compound pharmacies.
Since 2023, Indianapolis-based Lilly has filed lawsuits against dozens of compound pharmacies, weight-loss centers and health spas that produced and sold copies of its Type 2 diabetes treatment Mounjaro and weight-loss treatment Zepbound.
Both drugs use tirzepatide — a glucagon-like peptide-1, or GLP-1 — as an active pharmaceutical ingredient.
The global market for GLP-1 drugs is expected to grow rapidly over the next decade, from $62.9 billion last year to $315.3 billion by 2035, according to India-based health care consulting firm Towards Healthcare.
“We’re going after this with our legal tools,” Lilly CEO David Ricks told Bloomberg News in 2024. “We send letters to people and threaten them. We can challenge the physicians who are doing the prescribing.”
Denmark-based Novo is involved in a high-profile spat with telehealth platform and compounder Hims & Hers Health Inc., which in a quarterly report in November said it had 2.5 million subscribers.
On Feb. 5, San Francisco-based Hims announced it would sell a $49-a-month copycat version of Novo’s Wegovy weight-loss pill. That’s about $100 less than the drugmaker charges self-pay patients.
Novo’s pill became widely available in early January, more than four years after the drugmaker introduced its injectable Wegovy treatment. Novo also produces diabetes and weight-loss drug Ozempic.
Indiana Life Sciences Association CEO Kristin Jones called the move by Hims egregious.
“How audacious of them to say that you’re going to copy a new medicine that has just been announced,” she told IBJ. “What kind of Wild West is this?”
The U.S. Food and Drug Administration responded Feb. 6, saying it would take action against non-FDA-approved compounded GLP-1 drugs, including the pill from Hims. “These actions are aimed to safeguard consumers from drugs for which the FDA cannot verify quality, safety, or efficacy,” FDA Commissioner Martin Makary said in the announcement.
Hims dropped its plan to sell Wegovy copycats the next day. But that did not stop Novo, which has a manufacturing plant in Bloomington, from filing a lawsuit two days later in which the drugmaker argued Hims is breaching its U.S. patent on semaglutide, the active GLP-1 ingredient in Ozempic and Wegovy.
In a statement on X, Hims called the lawsuit, “a blatant attack by a Danish company on millions of Americans who rely on compounded medications for access to personalized care. Once again, Big Pharma is weaponizing the US judicial system to limit consumer choice.”
Compound pharmacies are regulated by the federal Food, Drug and Cosmetics Act and individual state boards of pharmacies. Compounded versions of FDA-approved drugs can be produced when those drugs are in shortage. That was the case for about three years until last spring as Lilly and Novo worked to increase their supply of weight-loss drugs when demand far outpaced supply. Last April, the FDA ordered compounding pharmacies to stop producing copycat weight-loss drugs, but sales have continued.
“They’re meant to fill in the gaps when commercial products are not appropriate or available,” Shabbir Imber Safdar, executive director of the San Francisco-based Partnership for Safe Medicines, told IBJ. “It cannot be that you spend billions of dollars to bring a safe and effective drug to market, and four weeks later, someone starts making knockoffs of it. That’s not a sustainable economic model.”
Hims saw its revenue skyrocket after the FDA opened the doors to compounded weight-loss drugs. The company in November reported nearly $600 million in third-quarter revenue. It also spent $681 million on marketing during the first nine months of last year. Hims will announce its 2025 fourth-quarter results on Monday.
George Ball, an associate professor of operations and decision technologies at Indiana University’s Kelley School of Business in Bloomington, said the FDA’s allowing compounders to step in created a self-induced conundrum for the agency.
“I think that you’d rather have a shortage than have unfettered access to unregulated drugs,” Ball said. “But I don’t think the government sees it that way, and so they’ve allowed compounders to copy drugs.”
In Washington, U.S. Sens. Jim Banks, R-Indiana, and Martin Heinrich, D-New Mexico, this month co-sponsored the Safeguarding Americans from Fraudulent and Experimental Drugs Act.
One provision in the bill would clarify that compounded drugs with the same active ingredient as an approved medicine are considered “essentially a copy” unless clinically different for a specific patient. Other provisions would set a monthly limit on how many “essential copies” a compounder can produce and define a “commercially available drug product” to prevent compounders from mass-producing approved medicines.
Scott Brunner, CEO of the Alliance for Pharmacy Compounding, said the big picture to watch is how people react to losing access to compounded weight-loss drugs.
“There have been millions of patients who’ve been provided access to what is admittedly a wonder drug at a time when the drugmakers could not provide that access,” Brunner told IBJ. “And so it’ll be interesting to see if the agency restricts their ability to access these drugs and how America will respond.”
State-level concern
The debate over compounded weight-loss drugs is taking place in statehouses around the country, including Indiana, California, Florida, Mississippi, Ohio and Washington.
In Indiana, Senate Bill 282, authored by Republican Sens. Ed Charbonneau of Valparaiso and Justin Busch of Fort Wayne, would require compound pharmacies that develop GLP-1 weight-loss drugs to comply with provisions of the Food, Drug and Cosmetic Act, such as that the drugs must be developed by a state-licensed pharmacist and that the Indiana Board of Pharmacy would investigate and enforce compliance by compound pharmacies.
The bill would also require medical spas that distribute GLP-1 drugs to register under the Medical Licensing Board of Indiana.
The Senate passed the bill Jan. 29 with a 47-1 vote. The bill received a public hearing Tuesday in the House Public Health Committee. The committee voted 12-0 to approve the bill on Thursday. It is scheduled for a second reading in the House of Representatives on Monday.
The original version of SB 282 would have regulated all medications produced by compound pharmacies, but senators approved amendments to narrow the bill’s focus to just GLP-1 drugs.
“This is very difficult,” Charbonneau said at a Jan. 14 Senate Health and Provider Services Committee meeting. “It’s one that you wish the parties involved would get together and resolve … without us getting involved. … But we will. We have to address this problem.”
In a written statement, a Lilly spokesperson said reforms in SB 282 “will help protect patients from dangerous ingredients from foreign sources.”
“Patients deserve better than untested knockoffs that are sold without clinical evidence that they are safe or even work,” the statement sent by Lilly Associate Director of Public Affairs Jared Shapiro said. “We applaud efforts by FDA and the Indiana State Legislature to protect Americans from the latest of these illegal copycat drugs.”
Jones with the Indiana Life Sciences Association, which represents the state’s life sciences industry, said legislation is necessary to ensure patient safety and protect the intellectual property of pharmaceutical companies that spend billions of dollars on drug development. “We need a national solution, but most things start at the state level and grow up from there,” she said.
Brunner argued that most bills under consideration throughout the country “don’t do anything to improve patient safety.” But he said he supports Indiana’s amended bill because it aligns the state with others that have set standards to hold compound pharmacies accountable to the Food, Drug and Cosmetic Act.
“These bills generally purport to be about counterfeiting and illicit substances, and they are not,” he said. “The bills impose on traditional compounding pharmacies restrictions, reporting requirements, compliance standards that are more appropriate for a mass manufacturer of drugs.”
John Hertig, a pharmaceutical consultant and licensed pharmacist, told IBJ his preference would be for SB 282 to apply to all compounded drugs.
“The focus is GLP-1s because that’s what’s really driving much of this,” Hertig said. “But we want all of our active pharmaceutical ingredients that come into this state to be of high quality, regardless of whether it’s a weight-loss drug or hormone-replacement therapy or anything else.”
Continuing innovation
As Lilly prepares for the release of its own oral weight-loss drug, orforglipron, the company is looking to ensure it does not experience the same shortages it did in the early days of Mounjaro and Zepbound.
Lilly expects to receive FDA approval for orforglipron next quarter. In November, the drugmaker received the FDA’s Commissioner’s National Priority Voucher, a pilot program for accelerated drug review for companies supporting national interests, according to the FDA.
A Securities and Exchange Commission filing last week said the drugmaker had a $1.5 billion in pre-launch inventory of the drug on hand as of Dec. 31.
To support demand for its sought-after medications, Lilly recently announced the fourth of four new U.S. manufacturing plants, part of a $27 billion reshoring investment. The plants will be in Alabama, Pennsylvania, Texas and Virginia.
The company has made $50 billion in U.S. expansion commitments since 2020, which includes four rounds of investment, totaling $13.5 billion, at the LEAP Research and Innovation District in Lebanon to build a manufacturing campus and the Lilly Medicine Foundry.
“We’re finding these [obesity] medicines are quite popular, but we still have work to do to expand access, to improve affordability,” Ricks said at the Jan. 30 plant announcement in Pennsylvania.
Ball told IBJ that Lilly’s ability to continue making investments in new medications is dependent on the company’s being able to enjoy its period of exclusivity and capture revenue from its most popular drugs without competition before generic versions are available. Lilly’s patent for tirzepatide expires in 2036, and FDA-approved generic versions of Mounjaro and Zepbound could be available in 2039.
“If we don’t give them at least a little time to capture that revenue back, we can’t expect innovation like this in the future,” Ball said. “For those investments … to pay off, they need some of that time period where they don’t have generic drug competition.”•
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