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The shortage of Novo Nordisk’s (NVO+5.33%) blockbuster diabetes and weight-loss drugs is officially over, according to the U.S. Food and Drug Administration (FDA).
The FDA updated its drug shortage database on Friday, marking the shortage of semaglutide — the active ingredient in Ozempic and Wegovy — as resolved. The news puts pressure on companies that have been able to sell off-brand, also known as compounded versions, of GLP-1 weight-loss drugs due to widespread shortages.
GLP-1 drugs, which mimic hormones that regulate blood sugar and suppress appetite, have become highly sought after for their weight loss effects. Soaring sales for these treatments have transformed Novo Nordisk and its rival Eli Lilly (LLY+0.44%), the maker of competing drugs Mounjaro and Zepbound, into the most valuable pharma companies in the world. However, Skyrocketing demand and the drugs’ high list price has made it difficult for some patients to fill their prescriptions. Semaglutide had been listed on the FDA shortage list since March 2022.
“We are pleased the FDA has declared that supply of the only real, FDA-approved semaglutide medicines is resolved, affirming that Novo Nordisk is meeting or exceeding current and projected nationwide demand,” said Dave Moore, executive vice president of U.S. operations at Novo Nordisk, in a statement. “No one should have to compromise their health due to misinformation and reach for fake or illegitimate knockoff drugs that pose significant safety risks to patients.”
Novo Nordisk stock jumped over 4% on Friday.
The millennial-focused telehealth platform Hims & Hers (HIMS-24.45%), which began offering a compounded version of semaglutide last May, saw its stock drop by over 22% during Friday’s trading session.
Compounding refers to the customization of an approved drug by a pharmacy or physician to meet the specific needs of an individual patient.
Typically, the Food, Drug, and Cosmetic Act prohibits compounding drugs that are just copies of commercially available medications. But drugs that are in shortage are not considered by the FDA to be commercially available. The limited supply of highly coveted and expensive brand name weight-loss drugs has spurred several digital healthcare companies to take advantage of that provision.
“Now that the FDA has determined the drug shortage for semaglutide has been resolved, we will continue to offer access to personalized treatments as allowed by law to meet patient needs,” Hims & Hers CEO Andrew Dudum said in a statement. “We’re also closely monitoring potential future shortages, as Novo Nordisk stated two weeks ago that it would continue to have ‘capacity limitations’ and ‘expected continued periodic supply constraints and related drug shortage notifications.’”
In July, the company added Kåre Schultz, a longtime Novo Nordisk executive, to its board of directors. At the time, Schultz told Bloomberg that the company has a “long future” in selling compounded semaglutide. When asked if pharmacies will still be able to make compounded semaglutide after the shortages end, Schulz said he wasn’t worried because there would still be cases where patients need individualized prescriptions.
What’s next for the compounded GLP-1 market
The FDA said on Friday that state-licensed pharmacies and physicians, known as 503A compounders, must stop making and distributing semaglutide products by April 22. Outsourcing facilities, known as 503B’s, have until May 22 to do the same.
However, the FDA’s decision will likely face challenges from compounders, who have already sued the agency over its decision to declare a shortage of another weight-loss drug as resolved.
The FDA originally declared the shortage of tirzepatide — the active ingredient in Eli Lilly’s Zepbound — over in October. However, an industry group, the Outsourcing Facilities Association (OFA), filed a lawsuit in Texas against the agency just days later, challenging its decision to remove the drug from its shortage list and demanding that the move be reversed.
In its lawsuit, the group called the FDA’s decision “reckless and arbitrary,” and argued that it would “deprive patients of a vital treatment for type 2 diabetes and obesity.” The FDA said, in a court filing, that pharmacists could temporarily resume making compounded tirzepatide as it reconsiders its decision
In a December letter, the agency stated that its review found Eli Lilly has sufficient supply to meet and exceed both current and future demand for the drugs. As a result, it set deadlines for compounding pharmacies — Feb. 18 for 503As and Mar. 19 for 503B’s — to stop selling off-brand versions of tirzepatide.