The Unfortunate Gray Market for Obesity Medicines

A gray market for obesity medicines is thriving. The quality of the products in this market range from reasonable to sketchy to utterly unreliable. But millions of people are taking a chance on them. Big pharma companies innovated to bring fully vetted formulations of important medicines to market, spending billions of dollars to do it. So they detest the existence of these knock-offs and their dubious quality. They have legions of lawyers challenging those businesses.

And yet we can trace the emergence of this robust gray market for obesity medicines back to failures of the innovators.

Short Supply Opens the Door

FDA-regulated facilities, called 503B compounding pharmacies, can make knock-offs of semaglutide and tirzepatide with relative impunity for only one reason. Because Novo Nordisk and Eli Lilly cannot meet the market demand for these essential drugs to treat serious diseases.

Lee Rosebush is a PharmD, attorney, and chair of the Outsourcing Facility Association, a trade group for 503B compounding pharmacies. He has a blunt message for pharmaceutical companies that don’t like the thriving business for cheap versions of their patented medicines:

“If you don’t want a 503B facility to make a copy, it’s pretty simple: Don’t go short. FDA created this system because these are necessary drugs.”

In other words, compounding pharmacies regulated by FDA exist to serve as a stopgap when companies like Novo Nordisk and Eli Lilly don’t do their job of assuring an adequate supply of the drugs they bring to market.

An Abundant Cheap Supply

Scores of companies have registrations with FDA to supply semaglutide and tirzepatide for compounding pharmacies. So compounding pharmacies can obtain these drugs cheaply and make a good profit dispensing them to patients for a fraction of the price of branded versions like Wegovy or Tirzepatide.

While 503B compounding pharmacies operate at a scale that requires FDA regulation, 503A compounding pharmacies are largely regulated by state boards of pharmacy because they prepare drug doses on an individual basis for specific patients. Both types of pharmacies have greater latitude for producing knock-offs when the innovator drugs are in short supply.

Shady Operators

Licensed and regulated compounding pharmacies offer an acceptable alternative when drugs are in shortage. But the unusual problem with high prices and an inadequate supply of semaglutide has also spurred shady operators to put people at risk with counterfeit versions of these drugs – versions that might not even contain the active drug they are supposed to deliver.

This is criminal activity. The former director of FDA’s criminal investigations says it is shocking, but not entirely surprising:

“Such high demand and short supply and such a desperate population – that’s a recipe for disaster.”

As the shortage of semaglutide and tirzepatide drags on, this gray market becomes more entrenched. And ironically, the companies that hate it the most played a large part in bringing it to life.

For further perspective, this report from CBS News and KFF is quite informative. You can find additional perspective here and here.

The Selling of the Shadow, woodcut by Ernst Ludwig Kirchner / WikiArt

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July 22, 2024