While a win for consumers, the regulatory action did nothing to stem the manufacture of compounded versions of the popular obesity drugs that are made by Novo Nordisk and Eli Lilly. In fact, the FDA seems to be signaling that “some level of compounded product is acceptable,” according to BMO Capital Markets.
The FDA on Friday revealed a “green list” import alert for GLP-1 ingredients in an effort to slow the use of illegal active pharmaceutical ingredients in compounded versions of the weight loss drugs. While the move was a win for consumers, the action did nothing to stem the manufacture of compounded versions of the popular obesity drugs that are made by Novo Nordisk and Eli Lilly.
BMO Capital Markets analysts predicted that the move would pressure both companies’ shares. Novo was down about 1.5% Monday morning to $54, while Lilly dropped about a quarter of a percent to $726.
The green list, issued by the Center for Drug Evaluation and Research (CDER), provides a collection of compounders that have acceptable standards and use APIs from FDA-inspected facilities.
“By strengthening oversight of imported APIs and cracking down on illegal drugs entering the U.S., we are taking aggressive action to protect consumers from poor-quality or dangerous GLP-1 drugs,” FDA Commissioner Marty Makary said in a statement.
But the FDA did not take a stance against compounders, instead acknowledging the public’s use of these unapproved pharmacy-created medicines. Compounders on the list will get a boost from the listing, while those not listed will be subject to detention without examination.
“While this should stop importation of dangerous product, it shows FDA is not more aggressive in stopping production/sales of counterfeit product,” BMO wrote.
This is great news for consumers, who will have an added bit of certainty that the compounded products they use are safe, BMO added. However, the agency seems to be signaling that “some level of compounded product is acceptable as long as it meets quality standards.”
“It is clear that Novo and Lilly will continue to need to rely on litigation to stop production of compounded product,” BMO wrote.
Novo lowered guidance during its second quarter earnings report in August, partly blaming compounded versions of semaglutide, the key ingredient in its GLP-1 blockbusters, in the U.S. market for the reduction. The Danish pharma has filed 140 lawsuits and issued 1,000 cease and desist letters against GLP-1 compounders, BMO noted.
Novo has not yet taken any legal action against Hims & Hers, its one-time partner in selling branded versions of semaglutide, which is marketed as Wegovy for weight loss. The two companies came together in April to sell Wegovy at a reduced price, only to split months later when Novo accused the telehealth provider of continuing to sell compounded versions.
Should this dispute make it to court, BMO said it could be a “game changer” in the fight against compounders.
Lilly has been less impacted by compounders, although the company has filed lawsuits against medical spas and others involved in compounding.
“Bottomline, the compounded GLP1 saga continues and is unlikely to end anytime soon,” BMO concluded.
The FDA removed Lilly’s tirzepatide from the drug shortage list in December 2024 and Novo’s semaglutide in February this year. Compounders were supposed to cease manufacturing their versions in the months after, but many have continued, buoyed by the consumer-driven market and the vast network of options that essentially have the agency playing whack-a-mole.
