Is the GLP-1 compounding boom over?

It’s official: following October’s resolution of the shortage of Eli Lilly’s tirzepatide — also known by its brand names Zepbound and Mounjaro, the FDA has officially declared an end to the supply squeeze on Novo Nordisk's GLP-1 semaglutide, which is also branded as Ozempic and Wegovy.

The supply update likely spells the end of widespread GLP-1 compounding in the U.S., which became an immensely popular avenue for patients to access weight loss drugs while Novo and Lilly’s branded products were in shortage.

Currently, U.S. regulations allow companies to offer compounded versions of drugs only when the brand-name versions are in short supply. Since GLP-1 drugs have been in shortage since 2022, several companies such as Hims & Hers, Ro, and WeightWatchers have had greater latitude to offer compounded versions of the drugs to meet the increased demand at a much lower cost than the popular brand name versions.

However, with GLP-1 drugs no longer in shortage, many of these companies will soon be unable to sell the current compounded versions. FDA has given these companies a facility-dependent grace period of 60 to 90 days to stop selling compounded GLP-1 drugs before the agency takes enforcement action, aiming to avoid unnecessary disruptions in patient care.

Compounders are not closing up shop quietly, however. They are suing the Food and Drug Administration again, claiming that the agency’s decision to remove Novo Nordisk’s semaglutide from its shortage list will adversely affect patients. In a complaint filed in federal court for the Northern District of Texas, the Outsourcing Facilities Association and North American Custom Laboratories claimed the FDA's decision was “arbitrary, capricious, and contrary to law” because the agency didn’t notify compounders in advance, nor allow for public comment.

The compounders argue a shortage still exists because the FDA acknowledged that there may still be “intermittent and limited localized supply disruptions as the products move through the supply chain,” while Novo has stated that “supply constraints” may still continue. The FDA “acted to benefit special interests, raise drug prices, and deprive much of the public access to a needed medicine,” the complaint said.

On an investor call last month, the CEO of the telehealth company Hims & Hers Health — which had seen its shares climb more than 350% from May 2024 when it started selling compounded semaglutide acknowledged that the company will need to shift away from selling semaglutide injections. Hims shares promptly dropped 26%.

With Hims and its telehealth peers reeling, Lilly quickly made a play for the customers who will soon be seeking alternatives to compounded GLP-1 drugs.

Lilly has for months sold a cheaper version of Zepbound delivered in vials, rather than in autoinjector pens, for patients paying with cash through Lilly’s own in-house online pharmacy. The company said soon after the FDA’s announcement that it was lowering prices for the dosage levels it already offers through the site, and adding new dosage levels.

The new prices are still higher than the prices under which compounded GLP-1 drugs are generally sold. 

The rise of the compounders has unsettled investors, raising questions about whether Lilly and Novo can meet the extraordinary expectations for their GLP-1 franchises. Now, with the compounders on their heels, Lilly is looking to grab their patients.

While It's unclear how many employers cover the full spectrum of obesity care, since the information isn't public, roughly one-third of employers are already covering GLP-1s as part of their healthcare benefits. What does the FDA's decision mean for them and the people whose treatment is at risk of being disrupted, or at least made more expensive?

Six million people lost their commercial coverage of GLP-1 drugs for weight loss between 2024 and 2025, GoodRx reported recently. In the weeks after the FDA's announcement, health care providers and patient groups have pressed the country's top workplaces for women, including Nike, Hilton and Comcast NBCUniversal, to cover comprehensive obesity care for workers. Employers should cover all evidence-based obesity care options, including drugs, nutrition therapy, behavioral health services and surgery, the groups say.

The groups, led by the Alliance for Women's Health and Prevention, note in a letter that obesity is a chronic condition that costs employers approximately $425.5 billion annually. The advocacy campaign has backing from Eli Lilly, the manufacturer of Wegovy, according to a news release from AWHP.

We will have to wait and see whether GLP-1 compounders will scale back or continue to fight for GLP-1 market share in a market that is truly open to them only under the conditions of a GLP-1 shortage. What’s clear is that this rapidly changing landscape demands that employers remain vigilant and focused on their priorities: the health and safety of their people.

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