The Food and Drug Administration (FDA) has reaffirmed its decision to declare the end of the shortage for Eli Lilly’s (LLY) tirzepatide, the active ingredient in the blockbuster weight-loss drug Mounjaro and diabetes treatment Zepbound. This decision, following a lawsuit by compounding pharmacies, has significant implications for these businesses and telehealth platforms that relied on supplying tirzepatide during the shortage.
The FDA’s renewed stance reinforces its October declaration, initiating a 60-day countdown for compounding pharmacies to cease production of tirzepatide copies. This move underscores Lilly’s successful efforts to increase manufacturing capacity and meet the surging demand for these medications. Lilly emphasized its commitment to providing patients with safe and approved medications, urging an immediate halt to the distribution of unapproved tirzepatide alternatives.
Compounding pharmacies, which had legally filled the supply gap during the shortage by producing tirzepatide, now face significant business challenges. The FDA’s decision effectively reinstates full patent enforcements for Lilly’s products. This shift also impacts Novo Nordisk (NVO), whose GLP-1 drugs, Ozempic and Wegovy, are anticipated to be removed from the FDA shortage list following the company’s November notification of increased availability.
The repercussions extend to telehealth platforms like Allurion (ALUR) and Hims & Hers (HIMS), which had incorporated tirzepatide and semaglutide copycats into their weight-loss programs. Allurion’s stock plummeted over 13%, while Hims experienced a nearly 10% decline. While analysts at Piper Sandler suggest Hims may be unaffected in the short term, the FDA’s firm stance signals a stricter approach towards compounding pharmacies, potentially necessitating closer collaboration with pharmaceutical companies for future access to these medications.
Sesame, a telehealth platform, proactively addressed this potential disruption by partnering with Eli Lilly to provide patients with access to branded medications like Zepbound at more affordable prices. This strategic move highlights the evolving landscape and the need for adaptability in the telehealth sector.
The Outsourcing Facilities Association, representing compounding pharmacies, expressed dissent with the FDA’s decision, arguing that patients still face difficulties accessing branded tirzepatide products. They cited ongoing reports of out-of-stock or limited availability from pharmacy distributors. Hims & Hers supported this claim by submitting a survey indicating continued shortages experienced by their members.
The FDA’s decision marks a critical juncture in the pharmaceutical and telehealth landscape, underscoring the importance of balancing patient access to essential medications with the protection of intellectual property rights. The long-term effects of this ruling on the availability and affordability of GLP-1 drugs remain to be seen.
