Mark Mikhael, PharmD, has lost 50 pounds over the past 12 months. He no longer has diabetes and finds himself “at my ideal body weight,” with his cholesterol below 200 for the first time in 20 years. “I feel fantastic,” he said.
Like millions of others, Mikhael credits the new class of weight loss drugs. However, he isn’t using brand-name Wegovy or Zepbound. Mikhael, CEO of Olympia Pharmaceuticals in Orlando, Florida, uses copies of the drugs formulated by his company.
Mikhael and other industry officials estimate that several large compounding pharmacies like his are supplying up to 2 million American patients with regular doses of semaglutide (the active ingredient in Novo Nordisk’s Wegovy, Ozempic, and Rybelsus) or tirzepatide (the active ingredient in Eli Lilly’s Zepbound and Mounjaro).
Novo Nordisk and Lilly oppose the compounding business. They group the compounders with unregulated medical spas selling bogus semaglutide and have legal teams trying to stop them. Novo Nordisk has filed at least 21 lawsuits nationwide against companies making copies of its drugs, according to spokesperson Brianna Kelley. The FDA has also cautioned about the potential danger of these compounds, and leading obesity medicine groups warn patients against their use.
This compounding practice is not illegal, though it operates in a gray area. The FDA allows and even encourages compounding pharmacies to produce and sell copycats when a drug is in short supply. GLP-1 drugs have faced enduring shortages—first reported in March 2022 for semaglutide and in December 2022 for tirzepatide. These drugs have shown unprecedented success in weight loss and promise against heart, kidney, and liver diseases. They are also being tested for conditions such as Alzheimer’s disease and drug addiction.
In recent years, the U.S. health care system has relied on compounding pharmacies to fill supply gaps for crucial drugs like cisplatin, methotrexate, and 5-fluorouracil. Most compounded drugs are old, cheap generics. However, semaglutide and tirzepatide are under patent and generate billions of dollars annually for Novo Nordisk and Lilly.
While the companies cannot keep up with demand, they dispute the right of compounders to make and sell copies. Lilly spokesperson Kristiane Silva Bello expressed “deep concern” about the “serious health risks” from compounded drugs that “should not be on the market.”
Despite these concerns, compounded forms are significantly cheaper than branded drugs. Patients pay about $100 to $450 a month, compared with list prices of roughly $1,000 to $1,400 for Lilly and Novo Nordisk products.
Five compounders and distributors interviewed for this article said they conduct due diligence on every lot of semaglutide or tirzepatide they buy or produce, maintaining standards of purity, sterility, and consistency similar to those in the commercial drug industry. Compounders operate under strict federal and state standards.
However, the raw materials used in the compounded forms may differ from those produced for Novo Nordisk and Lilly, according to GLP-1 co-inventor Jens Juul Holst, of the University of Copenhagen. Care must be taken in drug production to avoid potentially harmful immune reactions.
To date, according to FDA spokespeople, reports of side effects from taking compounded versions have not raised major alarms. However, everyone in the industry, including the compounders themselves, worry that a single batch of a poorly made drug could cause serious harm and undermine confidence in their business.
Mikhael likened the compounding industry to the airline industry: “When you have an airline crash, it hurts everybody.”
The industry faced such a catastrophe in 2012 when the New England Compounding Center released a contaminated injectable steroid that killed at least 64 people and harmed hundreds more. In response, Congress and the FDA strengthened oversight. Mikhael’s company is an outsourcing facility, or 503B compounding pharmacy, licensed to make slightly different versions of FDA-approved drugs in response to shortages or special patient needs.
The law created two classes of compounding pharmacies: The FDA regulates the larger 503B compounders with standards similar to commercial drug companies, while 503A pharmacies make smaller lots of drugs and are largely overseen by state boards of pharmacy.
The 503A facilities also produce compounded semaglutide and tirzepatide for hundreds of thousands of patients. These operations take the active ingredient, produced as a powder in FDA-registered factories, mostly in China, and reconstitute it with sterile water and an antimicrobial in small glass vials.
Together, the compounding pharmacies may account for up to 30% of the semaglutide sold in the U.S., Mikhael estimated, though he cautioned that this is a “wild ballpark figure” since no one, including the FDA, tracks sales in the industry.
The compounders argue that companies should increase production if they are worried about competition. Like other drugs they produce for hospitals and medical practices, the compounders view the two diet drugs as essential products.
“If you don’t want a 503B facility to make a copy, it’s pretty simple: Don’t go short,” said Lee Rosebush, chair of a trade association for 503B pharmacies. “The FDA created this system because these are necessary drugs.”
Novo Nordisk has not specified why it cannot keep up with demand, but the bottleneck appears to lie in the company’s inability to fill and sterilize enough of its drug auto-injectors, said Evan Seigerman, managing director at BMO Capital Markets. The company announced on June 24 that it was investing $4.1 billion in new production lines at its Clayton, North Carolina, site. The FDA last year issued a warning over procedural violations at the site and separate cautions at an Indiana facility that Novo Nordisk recently acquired.
At least 28 companies, mostly in China, are registered with the FDA to produce or distribute semaglutide. At least half have entered the market in the past 12 months, driving the raw material’s price down by 35%, according to Scott Welch, who runs a 503A pharmacy in Arlington, Virginia.
Compounders can buy powdered semaglutide from some U.S. distributors for less than $4,000 a gram, said Matthew Johnson, president and CEO of distributor Pharma Source Direct. This equates to as little as $10 per weekly 2.5-microgram dose, excluding overhead and other costs.
While Ozempic or Wegovy patients use a Novo Nordisk device to inject the drug, patients using compounded products draw them from a vial with a small needle, similar to insulin injections.
Some medical practices provide the compounded drug to patients as part of a weight loss package, with markups. Last July, Tabitha Ries, a single mother of six who works as a home health care aide in Garfield, Washington, found an online clinic that charged her $1,000 for three months of semaglutide along with counseling. She has lost 35 pounds.
Ries gets the drug from Mindful Weight Loss, a mostly telehealth-based operation led by physician Vivek Gupta of Manhattan Beach, California. Gupta said he has prescribed the weight loss drugs to 1,500 patients, with about 60% using compounded versions from a 503A pharmacy.
He has not seen any essential difference in patients using the branded and compounded forms, although “some people say the compounding is a little less effective,” Gupta said.
There is some risk in using the non-FDA-approved product, he acknowledged, and he requires patients to sign an informed consent waiver.
“Nothing in life is without risk, but I would also argue that the status quo is not safe for people who need the medicine and can’t get it,” he said. “They’re constantly triggered by all this food that’s causing their weight to go up and their sugar to go high, increasing their insulin resistance and affecting their limbs and eyes.”
Compounding semaglutide is a helpful sideline for pharmacists like Welch, especially given the decline in drug sale revenue that has led many independents to close in recent years. He estimates that 95% of his revenue comes from compounding drugs, rather than traditional prescriptions.
It is important to distinguish compounded semaglutide from unregulated powders sold as “generic Ozempic” and the like, which may be contaminated or counterfeit, said FDA spokesperson Amanda Hils. However, since compounded forms of the drug are not FDA-approved, those who make, prescribe, or use them should have “an increased level of responsibility or awareness,” she said.
Novo Nordisk and Lilly, in lawsuits against competitors, report finding bacteria and other impurities in products made by compounding pharmacies. They also cite patent infringement, but compounders, pointing to the FDA loophole for drugs in shortage, appear to have defeated that argument for now.
When the FDA removes the drugs from the shortage list, 503B compounders must immediately stop selling them. Smaller compounders may be able to produce their products for a reduced number of patients, said Scott Brunner, CEO of the Alliance for Pharmacy Compounding, which represents 503A compounders.
The sudden disappearance of the compounded drug supply could shock patients.
“I dread it,” said David Wertheimer, MD, an internist in Franklin Lakes, New Jersey, who prescribes compounded semaglutide to some patients. “People are not going to be able to plunk down a grand every month. A lot of people will go off the drug, and that’s a shame.”