Knockoff weight loss drugs were supposed to be 'gone and illegal.' Now they're bigger than ever

When Eli Lilly sued Shaun Noorian's compounding pharmacy for making cheaper versions of its weight loss drugs, many companies would have settled quietly. Noorian is fighting back.

"We're here to customize personalized medicine so it results in a better treatment outcome compared to one size fits all approach that Big Pharma shoves down our throats," said Noorian, the CEO and founder of the Houston-based Empower Pharmacy, which he says is the largest dispenser of GLP-1 drugs other than Eli Lilly and Ozempic maker Novo Nordisk themselves.

Noorian’s approach reflects a broader defiance among compounding pharmacies that pharmaceutical giants thought they had defeated when the Food and Drug Administration banned copycat weight loss drugs earlier this year. But instead of retreating, Empower and other compounding pharmacies are using a legal loophole that allows "customized" versions of the drugs, offering alternatives as low as $8 per month, compared to $500 to over $1,000 for brand-name versions.

Just weeks after regulators cracked down on these compounded weight loss drugs, the market for cheap alternatives to Ozempic and Eli Lilly’s Zepbound is bigger than ever, according to Sabina Hemmi, who tracks pricing and providers in the GLP-1 market.

"If you read a lot of the headlines, you think it's gone and illegal,” she said. “That could not be further from the truth. There are still a lot of companies doing customized compounds.”

A weight loss drug boom fuels a copycat boom

The copycat weight loss drug boom started with a blockbuster success story that turned into a supply disaster. When the FDA approved Novo Nordisk’s Wegovy for weight loss in June 2021, it became the first new weight loss drug approved since 2014. Eli Lilly followed with Zepbound in November 2023. The drugs were so effective and generated so much buzz from celebrities and on social media that sky-high demand led to widespread shortages by late 2022. 

Those shortages created a legal opening. Compounding pharmacies, usually a behind-the-scenes part of the healthcare system, mix customized medications for individual patients. They can legally make copies of FDA-approved drugs when those drugs are in short supply without running afoul of laws designed to protect pharmaceutical patents. What was supposed to be a temporary stopgap became a booming industry, big enough that the telehealth firm Hims & Hers bought its first Super Bowl commercial this year to promote its compounded weight loss treatments.

But the FDA declared the shortages over in February based on data from Eli Lilly and Novo Nordisk showing they could meet demand, giving compounders a few months to wind down production. One compounding pharmacy group unsuccessfully challenged that decision in court and has since appealed. While the FDA banned exact copies of GLP-1 drugs, federal law still allows compounding pharmacies to create "customized" versions tailored to individual patients. The distinction has become a lucrative gray area.

Instead of making identical copies of the weight loss drugs, Empower and other compounders combine a GLP-1, either semaglutide or tirzepatide, with vitamin B12, change the dosage strength, or offer different delivery methods. These modifications, however minor, legally transform a "copy" into a "custom formulation."

"The compounding law is clear," Geoff Cook, CEO of digital health company Noom, which continues prescribing compounded semaglutide, told Axios. "There must be an individual patient benefit to the personalization."

Empower's business had already exploded before the crackdown. Noorian said the company is growing its patient base by 100% annually and has become so large that it can buy raw ingredients "by the drum," driving costs down by 30% in the past year alone. GLP-1s have become Empower's top product among the 430 medications it compounds.

Empower has responded to Eli Lilly’s lawsuit by going on the offensive, bringing its own suit challenging Lilly's patents. Empower filed what's known as an Inter Partes Review challenging the fundamental patents that give Lilly exclusive rights to tirzepatide, the active ingredient in Zepbound and Mounjaro. If successful, the challenge could invalidate patents worth billions — and open the floodgates for generic competition.

“FDA and a federal court have both made clear that compounders ‘must cease production’ of compounded tirzepatide knockoffs,” according to a Elil Lilly spokesperson. “Empower continues to mass compound tirzepatide referring to it as “personalized,” “tailored” or something similar, and anyone continuing to mass compound tirzepatide is deceiving patients and putting their health at risk.”

Pharmaceutical giants aren't taking this quietly. Novo Nordisk has filed almost 120 lawsuits across 34 states against companies marketing or selling knockoff GLP-1 drugs, winning 28 final judgments so far, according to Novo Nordisk. Eli Lilly has taken filed 31 actions related to compounding, including against Empower.

"Anyone continuing to sell mass compounded tirzepatide, including by referring to it as 'personalized,' 'tailored' or something similar, is breaking the law and putting patients at risk," a Novo Nordisk spokesperson said in a statement.

Novo Nordisk has focused particularly on safety concerns, noting that all semaglutide imported into the United States for compounding in 2024 was manufactured in China and that more than half of the Chinese suppliers aren't permitted to manufacture semaglutide for patients in China.

In June, Novo Nordisk ended its collaboration with telehealth provider Hims & Hers, citing concerns about "illegal mass compounding and deceptive marketing" of semaglutide products.

Noorian said Empower sources ingredients from the same FDA-registered manufacturers used by traditional pharmaceutical companies. "Quality isn't about geography. It's about standards and enforcement," he said.

Empower itself has faced regulatory scrutiny, with the FDA issuing warning letters as recently as April citing problems with sterile drug production and contamination controls, according to a Houston Chronicle investigation.

Noorian said these warning letters are how the FDA holds every manufacturer accountable and Empower is investing in new technology to surpass industry safety standards.

"We don’t view them as adversarial," he said. "We treat them as moments to improve. Every time the FDA steps foot in one of our facilities, we consider it a chance to learn, to sharpen our processes, and to demonstrate our commitment to continuous improvement."

What comes next

The legal battles have created confusion for doctors and patients. While many compounders offering GLP-1s are still filling doctor’s prescriptions, others have stopped offering the drugs because of legal worries, Hemmi said. Some have stockpiled compound versions to supply their patients for as long as possible or are trying to keep a low profile and maintain their current customer list.

The confusion has driven some patients to buy from unregulated online sites that sell research chemicals not intended for human use. Unlike compounding pharmacies, which are state-licensed and regulated, these operations have no oversight.

"Patients are in a precarious situation right now," Noorian said. "So a lot of them are just going to these ‘Research Use Only’ websites. Don't get me wrong — these are illegal pharmacies."

The situation is further complicated by economics that have little to do with drug shortages. 

Many traditional pharmacies are deciding not to carry FDA-approved GLP-1 drugs because they lose about $90 to $100 every time they dispense one, according to Scott Brunner, the chief executive for the Alliance for Pharmacy Compounding, an industry group. Pharmacy benefit managers, the drug middlemen that play a key role in the industry, reimburse pharmacies less than what they pay to acquire the drugs, Brunner said. So even people with the money to pay for name-brand versions might be struggling to get the drug.

"It makes it look like the FDA-approved drug is still in shortage, when in fact pharmacies are making a business decision: 'We're not going to carry this,'" Brunner said.

The battle comes as Novo Nordisk, the Ozempic maker that defined the GLP-1 market, faces its own challenges. The Danish pharmaceutical giant's stock has plunged more than 50 percent from its peak last summer, and it ousted CEO Lars Fruergaard Jørgensen in May after losing market share to both Eli Lilly and compounding pharmacies.

Eli Lilly and Novo Nordisk are both racing to develop next-generation treatments, though these could face the same compounding pressures if they follow similar pricing patterns. Eli Lilly's orforglipron, a daily GLP-1 pill, could be available as soon as next year and would eliminate the need for injections. Novo Nordisk recently announced promising results for three new weight loss drugs, including an oral option.

Noorian said he plans to continue operating as the legal battles play out. Empower Pharmacy hasn’t changed how it serves patients and providers since before the shortage was declared over, Noorian said, and he expects demand to keep growing regardless of the litigation.

"Someone has to fight for patient access," he said. "And if it's not us, who else is going to?"