$Hims & Hers Health (HIMS.US)$ shares are trading higher Monday after the U.S. Food and Drug Administration said it would reconsider a decision barring drug compounders from selling their own versions of blockbuster weight loss drugs.

The FDA on Friday said in a court filing that it would allow drug compounders to continue offering compounded drugs while the agency reviews whether or not there is a shortage of the active ingredient used in $Eli Lilly and Co (LLY.US)$ weight loss and diabetes drugs, per Reuters.

The decision came in response to a lawsuit by compounding industry group Outsourcing Facilities Association related to the FDA's recent decision to remove tirzepatide, the active ingredient in Eli Lilly's Mounjaro and Zepbound, from its shortage list. Mounjaro had been on the regulator's shortage list since late 2022, and Zepbound had been on the list since April.

Hims & Hers Health sells cheaper versions of the drugs mentioned above, known as compounded drugs. Regulators allow compounded versions of drugs to enter the market to meet demand when there is a shortage. Hims & Hers Health shares surged in May after the company said it would begin selling compounded versions of GLP-1 injections.

The Outsourcing Facilities Association reportedly put its lawsuit on hold after the FDA on Friday said it would reconsider its decision. The group claimed in its lawsuit that the FDA removed tirzepatide from its shortage list despite it remaining in short supply.

The limited supply for weight-loss and diabetes drugs from Lilly and rival $Novo-Nordisk A/S (NVO.US)$ have sparked a demand boom for compounded drugs. Semaglutide, the active ingredient in Novo Nordisk's drugs, remained on the FDA's shortage list as of Monday.