Battle Over Compounded Weight-Loss Medications - Sustainability and Regulation

In the rapidly expanding weight-loss drug market, telehealth provider Hims & Hers Health, Inc. HIMS has found a niche by offering affordable alternatives to popular anti-obesity medications like Eli Lilly And Co’s LLY Zepbound and Novo Nordisk A/S’ NVO Wegovy.

These alternatives cater to customers who are either unable to access the original drugs due to shortages or are deterred by their high costs.

However, concerns are growing over the sustainability of this business model, especially as big pharmaceutical companies ramp up production to meet demand.

Also Read: BioAge Labs Files For $100M IPO, Becomes The New Entrant In Obesity Drugs Race.

Hims & Hers has significantly benefited from selling a compounded version of the GLP-1 treatment at $199 monthly—far less than Wegovy’s $1,349 price tag.

This strategy led to a 70% jump in their stock price shortly after the drug’s introduction in May. The Financial Times reports that U.S. regulations may soon pose challenges despite the success.

These rules allow compounding only during drug shortages or for creating patient-specific doses, which could limit Hims’ ability to sustain its newfound revenue stream once shortages resolve.

Amidst these regulatory hurdles, Eli Lilly and Novo Nordisk are making strides to alleviate shortages. Lilly recently introduced a less expensive version of Zepbound to compete with lower-cost options and maintain its market share.

The ongoing shortage of GLP-1 medications, a key component in these drugs, continues to disrupt the market, prompting a legal and regulatory clash over the compounding of patented medications.

Despite potential obstacles, Andrew Dudum, co-founder of Hims, remains optimistic, viewing their compounded drugs as an additive rather than a cannibalistic solution to the market.

However, competitors like Michael Botta of Sesame are more cautious, suggesting they may discontinue such offerings once the shortages end and normal supply resumes.

This evolving landscape indicates a potential shift in how weight-loss drugs are distributed and regulated, with implications for consumers seeking affordable options and the pharmaceutical giants aiming to protect their innovations.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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Photo via Eli Lilly and Company