Why compounders and telehealth providers aren’t deterred by the potential end of weight loss drug shortages (video)

Earlier this month, the US Food and Drug Administration removed a top weight-loss drug from its shortage list, threatening the business of GLP-1 drug compounders and some telehealth providers. A lawsuit ensued over how the agency reached its conclusion — and the FDA is now reconsidering.

Compounders and online suppliers know that at some point the GLP-1 compound business will end, but they don’t expect it to be anytime soon in light of the demand they continue to see.

When the FDA notified Eli Lilly’s (LLY) the active ingredient in diabetes drug Mounjaro and weight loss drug Zepbound, tirzepatide, was reportedly delisted on Oct. 2, after nearly two years, a 60-day countdown began for some compounding pharmacies to stop making medicines – others would have to be stopped immediately. Eli Lilly had the first the agency announced that its shortfall was resolved in Augustand the FDA went through its own process to validate and declare the issue resolved.

A trade group representing some affected pharmacies (also known as 503B), the Outsourcing Facilities Association, then filed a lawsuit claiming that the FDA was depriving patients of access to the drug amid ongoing shortages.

The FDA said as much in its own announcement: “Even when a drug is available, patients may not always be able to fill their prescription immediately at a particular pharmacy.”

The move wasn’t sudden, but the reaction was significant as aggregators and online platforms benefit from a tight market. The result was an unprecedented reconsideration of the movement, by the FDA, which reset the clock.

Since the lawsuit was filed, both composes and providers of telehealth services have more room to work. The FDA sent a letter last week saying that while the decision is in a review period, it won’t enforce the deadline — and once it makes a decision, it will be another two weeks before the FDA takes no action against compounds. This is if the decision is to keep tirzepatida on the shortage list.

“As part of the litigation, the decision to remove tirzepatide from the FDA’s drug shortage list was sent to the agency for reevaluation. The FDA sent a letter on October 17, 2024, in response to a question about the agency’s intended approach to the combination of tirzepatide drug products during the review period,” the FDA said on its website this week.

Novo Nordisk’s (NGOs) active ingredient, semaglutide, found in the diabetes drug Ozempic and the weight loss drug Wegovy, is still on the shortage list for some doses, giving the compounders the opportunity to continue making a version of the drug.

The long-term threat to business is why investors are worried about how telehealth platforms like Hims & Hers (HE), which sells only semaglutide, will manage its patient population that continues to lose weight.

“The real issue with the stock is the intellectual property (IP) concerns around GLP-1. Clearly, these compounding pharmacies were very opportunistic in taking advantage of the FDA shortage list, but the debate is how long will the party last?” Jefferies analyst Glen Santangelo wrote of Hims in a note to clients this month.

Telehealth company Sesame, which offers access to compounded GLP-1 through its doctors, believes the shortage won’t end anytime soon. Co-founder Michael Botta said in an interview with Yahoo Finance that he thinks it’s a smart short-term strategy — to keep offering the compounded version while semaglutide is still in short supply.

“I have no reason to believe that semaglutide will be in short supply anytime this year, and most likely not next year either. So I think this is here to stay in the short to medium term,” said Botta.

Unsatisfied request

Michael Walker, president and co-founder of GLP-1 compounder Strive Pharmacy, said that’s the million-dollar question — literally.

The company has the active ingredient in powder form, which is mixed into vials to create the weight loss drug that is sold in bulk and can cost millions. When Lilly’s drug was delisted, it created a potentially massive loss for his business.

Meanwhile, the mixed and finished product is kept ready for customers — about a week’s worth of product on average at any given time, Walker said.

He and others have argued that because the FDA relies on the brand manufacturer to determine when it meets the offer, it gives an incomplete picture.

“One problem with that is the biased information that I get from these drug manufacturers that say, ‘We can fill the need now.’ Where we, the ground-level composes, (see that) we can’t meet any demand,” Walker told Yahoo Finance.

A key question that remains unanswered is exactly how big the capitalization market is. Novo has estimated at least 20% of the total market, but there are no official figures. The the total market it is expected to reach more than $100 billion by 2030. Eli Lilly and Novo Nordisk reported nearly $18 billion in GLP-1 revenue through June together.

“And to assume that they will be able to keep up with the demand, if the drug shortage has been eliminated… I feel that the demand is so great that it will take a lot of production to be able to fill it. capabilities that, I think, neither Eli Lilly nor Novo Nordisk have those capabilities right now,” Walker said.

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Walker’s belief is held by others, which is why the association and telehealth communities have pushed back against the FDA and remain unmoved by the threat of the shortage ending in the near future.

Telehealth platforms Sesame, Ro and Hims & Hers, for example, continue to advertise. In fact, Ro CEO Zach Reitano told Yahoo Finance that the entire slimming business (Ro offers both branded and compounded versions) is a key growth area for the company — which has been negatively impacted by the post-pandemic demand for telehealth.

“It (would be) intellectually dishonest to say that our entry into what is probably the largest healthcare category ever hasn’t massively accelerated the business even more. But it wasn’t like it was a lifeline, it was a … jetpack,” Reitano said, adding that the company still offers sexual health, fertility, hair and skin care.

Sesame, which previously partnered with Costco (COST) to offer telehealth services to members, it recently announced is the first company to offer GLP-1 combined in all 50 states, adding California, Alabama, Louisiana and Mississippi this month.

Botta said when Mississippi decided earlier this year to approve access to compounded GLP-1, patients in the state “were looking to do something more reputable than going to the local medspa, where God knows what compounded drug supply is coming from,” Botta said.

Quality concerns are long-standing, as some spas and medical clinics have opted to mix unapproved salt-based bases, B12, and other non-FDA-approved ingredients into compounded formula.

Novo Nordisk recently provided a study looking at combination versions of its drug that caused 10 deaths and 542 hospitalizations or adverse reactions between October 2018 and June 2024.

The study was used to urge the FDA to remove the drug from the shortage list because patients are being exposed to synthetic versions of the drug that can cause unwanted consequences compared to the biologic that Novo uses for its approved version. (The FDA doesn’t approve copycats when there’s a shortage, but it did advised against improper use of composite versions.)

Botta claimed that Sesame vetted the compounding pharmacy it contracted with before offering it through its telehealth platform.

“We’re usually relatively agnostic about where patients get a prescription,” he said, but if a trusted compounding source is an option and patients want it, “we’re happy to point people in that direction “.

The FDA is currently in the midst of re-evaluating the decision to remove tirzepatide from the shortage list and proposed a status update to the district judge on November 21. This is the first time the FDA has removed a drug from the shortage list. contested.

Eli Lilly has not commented on the lawsuit, although it has sent legal notices to the compounders to stop making its drug. The topic is likely to be discussed on an upcoming earnings call on October 30.

Anjalee Khemlani is the senior health reporter at Yahoo Finance, covering all things pharma, insurance, care services, digital health, PBMs, and health policy and politics. That includes GLP-1, of course. Follow Anjalee on most social media platforms @AnjKhem.

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