The Ozempocalypse Is Nigh

Sorry, you can only get drugs when there's a drug shortage.

Three GLP-1 drugs are approved for weight loss in the United States:

• Semaglutide (Ozempic®, Wegovy®, Rybelsus®)

• Tirzepatide (Mounjaro®, Zepbound®)

• Liraglutide (Victoza®, Saxenda®)

…but liraglutide is noticeably worse than the others, and most people prefer either semaglutide or tirzepatide. These cost about $1000/month and are rarely covered by insurance, putting them out of reach for most Americans.

…if you buy them from the pharma companies, like a chump. For the past three years, there’s been a shortage of these drugs. FDA regulations say that during a shortage, it’s semi-legal for compounding pharmacies to provide medications without getting the patent-holders’ permission. In practice, that means they get cheap peptides from China, do some minimal safety testing in house, and sell them online.

So for the past three years, telehealth startups working with compounding pharmacies have sold these drugs for about $200/month. Over two million Americans have made use of this loophole to get weight loss drugs for cheap. But there was always a looming question - what happens when the shortage ends? Many people have to stay on GLP-1 drugs permanently, or else they risk regaining their lost weight. But many can’t afford $1000/month. What happens to them?

Now we’ll find out. At the end of last year, the FDA declared the shortage over. The compounding pharmacies appealed the decision, but the FDA recently confirmed its decision is final. As of March 19 (for tirzepatide) and April 22 (for semaglutide), compounding pharmacies can no longer sell cheap GLP-1 drugs.

Let’s take a second to think of the real victims here: telehealth company stockholders.

Some compounding pharmacies are already telling their customers to look elsewhere, but not everyone is going gently into the good night. I’m seeing telehealth companies float absolutely amazing medicolegal theories, like:

• Compounding pharmacies are allowed to provide patients with a drug if they can’t tolerate the commercially available doses and need a special compounding dose. Perhaps our patients who were previously on semaglutide 0.5 mg now need, uh, semaglutide 0.51 mg. In fact, they need exactly 0.51 mg or they’ll die! Since the pharma companies don’t make 0.51 mg doses, it has to be compounded and we can still sell it.

• Compounding pharmacies are allowed to provide patients with special mixes of drugs if they need to take two drugs at the exact same time. Perhaps our patients who were previously on semaglutide 0.5 mg now need, uh, a mix of semaglutide and random vitamins. They need to have the random vitamins mixed in or they’ll die. Since the pharma companies don’t make semaglutide mixed with the exact random vitamins we do, it has to be compounded and we can still sell it.

• Compounding pharmacies are allowed to provide patients with drugs formulated for unusual routes of administration. All of our patients just developed severe needle phobia, sorry, so they need semaglutide gummies. Since the pharma companies don’t make semaglutide gummies, it has to be compounded and we can still sell it (thanks to Recursive Adaptation for their article on this strategy).

I am not a lawyer but this is all stupid. What are the companies thinking?

They might be hoping they can offload the stupid parts to doctors. Everyone else in healthcare is supposed to do what doctors tell them, especially if the doctors use the magic words “medically necessary”. So pharmacies and telehealth startups (big companies, easy to regulate) can tell doctors (random individuals, hard to regulate) “wink wink hint hint, maybe your patient might need exactly 0.51 mg of semaglutide, nod nod wink wink”. The doctor can write a prescription for exactly 0.51 mg semaglutide, add a note saying the unusual dose is ‘medically necessary’, and then everyone else can provide it with a “clean” “conscience”. If the pharma company sues the pharmacy or telehealth startup, they’ll say “we were only connecting patients to doctors and following their orders!” If the pharma company sues the doctors, the pharma company will probably win, but maybe telehealth companies can find risk-tolerant doctors faster than the pharma company can sue them.

The pharma company can probably still sue telehealth startups and pharmacies over the exact number of nods and winks that they do. But maybe they won’t want to take the PR hit if those pharmacies limit themselves to continuing to serve existing patients. Or maybe there are too many pharmacies to go after all of them. Or maybe DOGE will fire everyone at the FDA and the problem will solve itself. I don’t know - I don’t really expect any of this to work, but from a shareholder value perspective it beats lying down and dying.

But the compounders aren’t the only ones boxing clever. Novo Nordisk and Eli Lilly, the pharma companies behind semaglutide and tirzepatide respectively, have opened consumer-facing businesses about halfway between a traditional doctor’s appointment and the telehealth/compounder model that’s getting banned. So for example, Lilly Direct offers to “find you a doctor” (I think this means you do telehealth with an Eli Lilly stooge who always gives you the meds you want) and “get medications delivered directly to you”. The price depends on dose, but an average dose would be about $500 - so about halfway between the cheap compounding price and the usual insurance price. Not bad.

Pharma companies don’t like dose-based pricing (that is, charging twice as much for a 10 mg dose as a 5 mg dose). Part of their objection is ethical - some people have unusual genes that make them need higher doses, and it seems unfair to charge these people twice as much for genetic bad luck. But there’s also an economic objection - they want to charge the maximum amount the customer can bear, but if they charge a subset of people with genetic bad luck twice as much as they can bear, those people won’t buy their drug. So usually they sell all doses at a similar price, opening an arbitrage opportunity: if they sell both 5 mg and 10 mg for $500/month, and you need 5 mg, then buy the 10 mg dose, take half of it at a time, stretch out your monthlong supply for two months, and get an effective cost of $250/month. But here Eli Lilly is doing something devious I’ve never seen before. They’re selling their medication in single-dose vials, deliberately without preservatives, so that you need to take the whole dose immediately as soon as you open the vial - the arbitrage won’t work! So although this looks on paper like a $300 price increase ($200 to $500), the increase will be even higher for people who were previously exploiting the dose arbitrage.

The mood on the GLP-1 user subreddits is grim but defiant.

Some people are stocking up. GLP-1 drugs keep pretty well in a fridge for at least a year. If you sign up for four GLP-1 telehealth compounding companies simultaneously and order three months from each, then you can get twelve months of medication. Maybe in twelve months the FDA will change their mind, or the pharmacies’ insane legal strategies will pay off, or Trump will invade Denmark over Greenland and seize the Novo Nordisk patents as spoils of war, or someone will finally figure out a diet that works.

Others are turning amateur chemist. You can order GLP-1 peptides from China for cheap. Once you have the peptide, all you have to do is put it in the right amount of bacteriostatic water. In theory this is no harder than any other mix-powder-with-water task. But this time if you do anything wrong, or are insufficiently clean, you can give yourself a horrible infection, or inactivate the drug, or accidentally take 100x too much of the drug and end up with negative weight and float up into the sky and be lost forever. ACX cannot in good conscience recommend this cheap, common, and awesome solution.

But overall, I think the past two years have been a fun experiment in semi-free-market medicine. I don’t mean the patent violations - it’s no surprise that you can sell drugs cheap if you violate the patent - I mean everything else. For the past three years, ~2 million people have taken complex peptides provided direct-to-consumer by a less-regulated supply chain, with barely a fig leaf of medical oversight, and it went great. There were no more side effects than any other medication. People who wanted to lose weight lost weight. And patients had a more convenient time than if they’d had to wait for the official supply chain to meet demand, get a real doctor, spend thousands of dollars on doctors’ visits, apply for insurance coverage, and go to a pharmacy every few weeks to pick up their next prescription. Now pharma companies have noticed and are working on patent-compliant versions of the same idea. Hopefully there will be more creative business models like this one in the future.