Josh Nathan-Kazis
A rapid-fire reversal from the Food and Drug Administration has injected even more uncertainty into what was already a wild weight-loss-drug market, sending shares of companies selling knockoff versions of the branded weight-loss medicines climbing on Monday morning.
In a court filing Friday, the FDA said it would "re-evaluate" a declaration it made on Oct. 2 that Eli Lilly's blockbuster drug tirzepatide, sold under the brand names Zepbound and Mounjaro, is no longer in shortage.
That October declaration undermined an enormous, legal market for knockoff versions of Zepbound, and Novo Nordisk's similar drug Wegovy, which has exploded in recent months.
Companies such as Hims & Hers, Weight Watchers, and privately held Noom of New York have rushed to offer copycat versions of the drugs, which U.S. compounding pharmacies have been allowed to manufacture so long as the branded medicines remain in shortage.
An end to the shortage appeared to mean an end to the copycat market.
Though online pharmacies and compounders could keep selling knockoff versions of Novo's drug, which remains in shortage, the FDA's removal of Lilly's drug from its shortage list signaled that the agency was moving to return the market to normal.
And then, just as patients and compounders were trying to figure out what the end of the shortage would mean, the FDA reversed course.
In a federal court filing Friday made in response to a lawsuit brought by an industry group representing compounders, the agency said it would re-evaluate its decision.
The filing was an unopposed motion, which the court granted shortly after it was filed. The FDA said in the motion that, for now, it would not enforce the law barring compounders from manufacturing tirzepatide, seemingly returning the industry to the status quo before the agency removed the drug from the shortage list less than two weeks ago.
The FDA has yet to clarify its decision, and did not respond to a request for comment from Barron's. The FDA's online drug-shortage database still lists the tirzepatide shortage as "resolved" as of Monday morning.
The Alliance for Pharmacy Compounding, which represents compounders, said in an email to members on Saturday that the implications of the filing were not yet clear. "We think it's...unlikely the FDA will take enforcement action against any pharmacy during this stay," the organization said. "But that's what we think, not what we know."
Investors seemed to take the court filing as a sign that the knockoff weight-loss-drug market is much more durable than it appeared last week.
Shares of WeightWatchers, which rolled out a knockoff Wegovy offering days after the FDA ended the tirzepatide shortage, were up 10.3% Monday, while shares of Hims & Hers were up 8.2%.
Lilly shares, meanwhile, dropped 0.5%. "Nothing changes the fact that, as FDA has recognized, Mounjaro and Zepbound are available and the shortage remains 'resolved,'" the company said in a statement to Barron's. "All doses of Lilly's FDA-approved medicines are available and it is important that patients not be exposed to the risks in taking untested, unapproved knockoffs."
A Hims & Hers spokesperson did not respond to a request for comment. The company does not sell compounded tirzepatide, only compounded semaglutide, at this time.
The quick reversal by FDA is just one more unusual development in what's been an increasingly strange market. The compounders making the knockoff GLP-1 drugs generally make copycat versions of generic medicines that fall into shortage, not branded drugs, and certainly not the hottest branded drugs on the market.
This confluence of chronic shortages, enormous demand, and high prices for the branded medicines has allowed compounders and their telemedicine partners to spin up an enormous industry that Noom CEO Geoff Cook told Barron's in September is providing over a million patients with weight-loss medicines.
The FDA's abrupt announcement in early October that tirzepatide was no longer in shortage highlighted urgent questions about the future of that industry: How long will it exist? And what happens, both to companies and to patients, when it ends?
Far from answering those questions, last week's reversal only deepens the murk around the new industry, and the unanswered questions for patients, and for investors.
Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
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October 14, 2024 11:30 ET (15:30 GMT)
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