Are GLP-1 Compounders Nearing the End of Their Rope?
Was the multi-million dollar spend by Hims & Hers on a Super Bowl ad the last gasp of a doomed business? Or was it a clever play for regulatory latitude that could keep them going? Conventional wisdom suggests that GLP-1 compounders should be nearing the end of their rope. But some political observers think they may get a reprieve.
When Novo Nordisk announced their results for the last quarter of 2024, they told investors they expect the FDA to remove semaglutide – both Ozempic and Wegovy – from its drug shortage list “in the near term.” Under current rules, that would bar production of compounded semaglutide on a scale that led to a 300% rise in Hims & Hers stock price.
Yes, this has been a windfall for opportunistic compounding pharmacies while it lasted.
End of the Rope?
Writing for the Wall Street Journal, David Wainer compares and contrasts the regulatory challenge of GLP-1 compounders with Uber:
“While Uber disrupted the taxi industry, Hims & Hers is up against Eli Lilly, Novo Nordisk and the entire pharmaceutical and health-insurance complex. And the law is pretty clear that when a shortage is deemed over, mass compounding can’t continue. That is why Hims & Hers doesn’t sell compounded versions of Zepbound.
“It may take a few more quarters, but Novo Nordisk will eventually produce enough supply to end the shortage of its drug. When that happens, despite their efforts to influence public opinion, compounded versions will likely be severely curtailed, and Hims, like its competitor Ro, which sells compounded versions to cash-paying customers and branded versions through insurers, will probably have to play by the regular channels or see its business diminished.”
Or Maybe Not?
While this makes perfect sense, dissenting views of this are also circulating. Former FDA commissioner Scott Gottlieb recently offered his view:
“FDA has clearly now asserted the shortage of tirzepatide is over. They will step into the market and try to sweep some of the existing compounders off the market. They’ll probably go after the larger compounders first.
“This is going to be a long fight for the FDA. The political environment for them, at least over the next four years, isn’t great. I don’t think they’re going to get a lot of support from a Republican administration and Congress to enforce in this space.”
Indeed, the nominee for FDA commissioner, if confirmed, will come from a telehealth business that sells compounded GLP-1s. This will be an interesting space to watch.
Click here for free access to reporting about this in the Wall Street Journal, here and here for further perspective.
End of the Rope, photograph by Bill Smith, licensed under CC BY 2.0
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February 11, 2025
