Eli Lilly And Co. (NYSE:LLY) is ramping up its legal campaign against the compounding companies temporarily allowed to make and sell copycat versions of its blockbuster drugs for weight loss until a U.S. shortage.

Last week, the FDA determined the shortage of Eli Lilly tirzepatide injection, a glucagon-like peptide 1 (GLP-1) medication, has been resolved.

The U.S. health regulator reminded compounders of the legal restrictions on making copies of FDA-approved drugs. The update has sparked concern among medical professionals, patients, and drug compounding facilities.

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Tirzepatide injection, branded as Mounjaro and Zepbound, has been in shortage since 2022 due to increased demand, allowing compounding pharmacies and outsourcing facilities to produce the drug and meet patient demand.

The compounding groups Outsourcing Facilities Association and FarmaKeio Custom Compounding filed a complaint alleging that removing the drug from the shortage list is based solely on the manufacturer's production capabilities.

The FDA's decision to withdraw the drug without prior notice or public consultation has been criticized for depriving patients of essential care, potentially driving up drug prices, and favoring special interests.

The Bloomberg report adds that the U.S. pharmaceutical giant has issued hundreds of cease-and-desist letters to telehealth companies, compounding pharmacies, and medical spas, demanding they halt the production, sale, and promotion of products that imitate its drugs, Mounjaro and Zepbound.

The industry estimates that compounded versions of drugs from Lilly and Novo Nordisk A/S (NYSE:NVO) may be generating up to $1 billion in annual sales, with hundreds of thousands of Americans using them. However, compounded drugs have certain risks, as they aren't subject to regulatory review for safety and efficacy like brand-name or generic medications.

Despite these concerns, compounded drugs provide an alternative for patients facing shortages of weight-loss medications and are often a more affordable option, costing significantly less than the over $1,000 monthly price tag of brand-name injections.

The trade group has urged pharmacies to "immediately stop preparing and dispensing compounded versions of Mounjaro and Zepbound." While some have complied, others insist they will keep producing customized versions of Lilly's drugs for specific patients.

U.S. regulations permit compounders to create tailored versions of medications when prescribed for medical necessity.

Price Action: LLY stock is down 0.77% at $912.67 at last check Thursday.

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