Lilly weight-loss drug copycats struck a blow when the shortage ended

Eli Lilly & Co.'s blockbuster weight-loss and diabetes drugs are no longer in short supply in the U.S., threatening to upend the many counterfeits that became popular when patients couldn't find the brand-name drugs.

The Food and Drug Administration said Wednesday that the shortage of Lilly's Zepbound and Mounjaro had been resolved. The agency added that there are “legal restrictions on the manufacture of copies of FDA-approved drugs” when there is no shortage.

The FDA first introduced the deficiency classification in late 2022. This designation allowed pharmacies to sell knock-offs of the brand-name drugs – Mounjaro for diabetes and Zepbound for obesity – without having to go through the same laborious testing process. These copycats are widely used in medical spas and telehealth companies, often at a much lower cost.

Shares of Hims & Hers Health Inc., a telemedicine company that sells copycat weight-loss drugs, fell as much as 9.8% before markets opened Thursday in New York. Shares of Indianapolis-based Lilly's were little changed in premarket trading, while rival Novo Nordisk A/S, maker of anti-obesity drug Wegovy, rose 0.9% in Denmark.

Lilly has invested heavily in manufacturing to increase supplies of the popular shots and has aggressively sought to limit compounded versions of the drugs. She raised concerns about quality, saying some were contaminated with bacteria or chemical contaminants. Compounders have said they follow regulations and produce high-quality drugs.

The drugmaker said Wednesday that while all doses of Zepbound and Mounjaro are available, the refrigerated drug supply chain is complex and patients' ability to find specific doses in pharmacies can still vary.

“We know that many people rely on our medicines, which is why we have invested significantly to expand production and bring new options to market,” Patrik Jonsson, president of Lilly Cardiometabolic Health and Lilly USA, said in a statement Statement sent by email.

Experts estimate that hundreds of thousands of Americans have used copycat versions of Lilly's drugs or similar vaccines from Novo, which have also been in short supply. Makers of such compounded drugs collectively generate up to $1 billion a year, according to investment bankers who work with the industry.

Compounding also attracted telemedicine companies that marketed services to connect patients with health care providers who can prescribe the drugs.

The end of the shortage is likely to limit future worsening of shortages, but some may be allowed to continue under other U.S. policies.

The FDA's announcement does not mean that the drug will be available everywhere and at all times.

“Patients and prescribers may still experience intermittent local supply disruptions as products move through the supply chain from the manufacturer and distributor to local pharmacies,” the agency said.

Swetlitz and Muller write for Bloomberg.