The weight loss drug market has gotten messy. What to know.
Compounded weight loss drugs have been mostly off the market for about a month, but the weight loss drug industry remains as unsettled as ever.
Earlier this week, Novo Nordisk tore up a partnership with the telehealth storefront Hims & Hers Health, which had allowed Hims to sell the Novo weight loss drug Wegovy at a lower price for cash-paying patients.
The spat between the two companies, which sent Hims shares down more than 30% on Monday, is just the latest disruption for patients looking to lose weight using GLP-1 drugs sold by Novo and its rival, Eli Lilly.
The massive growth last year of the market for legal knockoff weight loss drugs caused huge complications for Novo and Lilly, which had seen big gains in market value amid the waves of hype that had greeted the launch of their respective obesity blockbusters, Wegovy and Zepbound.
By early 2025, both stocks had pulled back amid a broader reconsideration of the weight loss opportunity.
Today, the legal knockoffs are mostly gone, but the market for the weight loss drugs is as unsettled as ever. Here's what to know about the weight loss drug market now, and where it's going.
Why can't you buy compounded semaglutide anymore?
When a branded drug is in shortage in the U.S., compounding pharmacies are allowed to make and sell knockoff versions. That's not usually a major issue for pharmaceutical companies, but the prolonged shortages of Zepbound and Wegovy—combined with massive demand— created an opportunity that the ascendant telehealth industry seized.
Companies like Hims & Hers, Ro, Noom, and other smaller competitors leapt into the compounded semaglutide market last year, selling the legal knockoff drugs at prices generally starting around $200 for the first month of treatment, and $300 per month as dosage levels increase. That was a steep discount to Wegovy's list price of $1,350 per month, and consumers leapt at the opportunity to get a cheaper version of a GLP-1 weight loss drug.
Novo says it thinks that more than a million people were taking compounded GLP-1 drugs by early 2025.
When the Food and Drug Administration determined that the shortages of Zepbound and Wegovy were over, it set deadlines for compounding pharmacies to stop making semaglutide in bulk. That deadline expired on May 22. Since then, the compounding pharmacies that supply the telehealth firms haven't been allowed to make compounded semaglutide to sell on a commercial scale.
What choices do patients have?
For patients whose insurance covers Zepbound or Wegovy, nothing has changed.
But for the patients without coverage who lost access to compounded semaglutide as of late May, Lilly and Novo offered an alternative: Cash-pay options for Wegovy and Zepbound that are cheaper than the list price, but more expensive than the compounded versions.
Novo's direct-to-consumer offering comes in an injector pen just like the version that patients get through normal pharmacy channels, while Lilly's direct-to-consumer Zepbound comes in a vial patients need to draw and inject themselves.
Through its in-house online pharmacy, Novo sells Wegovy to patients without insurance coverage for $499 per month. (It's currently running a special offer for a month of Wegovy for $199.) Lilly, through its own online pharmacy, sells Zepbound for $499 per month for most dosage levels, and $349 per month for the starter dose.
Both Novo and Lilly have set up partnerships that allow some of the telehealth firms that sold compounded GLP-1s to offer the cheaper direct-to-consumer version of their branded weight loss shots. Novo announced arrangements with Hims, LifeMD, and Ro in April, while Teladoc Health and LifeMD have access to Lilly's pharmacy.
The partnership between Hims and Novo blew up early this week, sending Hims shares down sharply.
Why are some telehealth pharmacies still selling compounded semaglutide?
It's still easy to find online pharmacies advertising compounded semaglutide. Hims, for one, is advertising 'personalized compounded GLP-1" injections for $165 per month for patients who pay for a full year up front.
While the compounding pharmacies can't compound semaglutide in bulk anymore, U.S. law and FDA rules do seem to allow them create a prescription for an individual patient, under certain circumstances.
The compounding semaglutide still legally available is likely being sold as a personalized prescription that's tweaked in some way such that it's different, perhaps in dosage size, from commercially available Wegovy. Novo's contention on Monday was that Hims was using the 'false guise" of personalization to keep selling compounding semaglutide. The Hims CEO, in a social media post, said Novo had been pushing the company to 'steer patients to Wegovy."
Is all this confusion good for the drugmakers?
Probably not. What is increasingly clear, though, is that Lilly is looking to be the long-term winner. In a note on prescription data published June 20, Cantor analyst Carter Gould wrote that based on reports thus far, Zepbound sales will likely be up 24% from the first quarter of the year to the second quarter, while Wegovy sales will be up 5% to 6%.
Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com
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