FDA Announces End to Semaglutide Shortage, Impacting Compounders and Telehealth Providers Offering Injectable GLP-1 Drugs

As a result, most copycat versions of blockbuster drugs Ozempic or Wegovy will be unlawful to compound, significantly impacting the telehealth companies, compounding pharmacies, and other businesses that have arisen to meet increased patient demand since the shortage began in 2022.

Read the FDA’s announcement here.

Currently, there are only two FDA-approved semaglutide injection products on the market: Ozempic and Wegovy. Both have been on the FDA’s drug shortage list since 2022. Generally, under the Federal Food, Drug, and Cosmetic Act, it is unlawful to compound a drug that is “essentially a copy” of an FDA-approved drug. However, an exception to this general prohibition exists when the FDA-approved drug appears on the FDA’s drug shortage list. In such situations, the FDA may allow copies to be compounded to meet patient need.

During the shortage of Ozempic and Wegovy, many telehealth platforms emerged to connect patients with health care providers who could prescribe compounded semaglutide products for weight loss and management. These platforms have proved popular with patients, offering convenient access to compounded semaglutide products at a fraction of the price of the brand-name drugs. Critics, however, have questioned the quality of these products and the marketing practices that businesses have deployed to sell them. Among the most vocal critics has been Novo Nordisk, the manufacturer of Ozempic and Wegovy, which has filed numerous lawsuits against medical spas, weight loss clinics, pharmacies, and other companies for allegedly “unlawful marketing and sales of compounded drugs claiming to contain semaglutide.”

Following the FDA’s recent announcement, compounders will no longer be able to lawfully compound, distribute, or dispense products that are “essentially a copy” of Ozempic or Wegovy. However, the FDA is giving compounders a 60- or 90-day wind-down period, depending on the type of compounding facility, “to avoid unnecessary disruption to patient treatment and to help facilitate an orderly transition.” The agency intends to exercise enforcement discretion (i.e., not take enforcement action) until April 22 for compounding performed by state-licensed pharmacies and physicians, and until May 22 for FDA-registered outsourcing facilities.

The impact on telehealth companies that have built business models around the availability of compounded semaglutides will be substantial. These companies must pivot quickly as they face the challenge of transitioning their patient base to the FDA-approved branded products, which may involve renegotiating supply agreements and adjusting pricing strategies. Additionally, the end of the shortage will likely lead to increased competition from traditional health care providers and pharmacies, necessitating strategic adjustments, such as diversifying service offerings and enhancing customer support to maintain market presence and customer loyalty.

The FDA’s removal of Ozempic and Wegovy from the drug shortage list has already prompted at least one lawsuit. On February 24, the Outsourcing Facilities Association, a compounding industry group, and a compounding pharmacy operator sued the FDA in federal court in Texas. The parties claim that the FDA’s finding that there is no longer a shortage of the drugs’ active ingredient semaglutide was arbitrary and capricious. This legal action underscores the competitive landscape for weight loss drugs that has intensified since the shortage, and is a reminder to those affected by the FDA’s decision to stay informed about the evolving market dynamics and legal developments involving semaglutide products.

Our team will continue to monitor developments and provide updates as they become available. Please reach out to your ArentFox Schiff attorney contact or one of the authors with questions or concerns.