According to the Financial Association on December 20 (edited by Niu Zhanlin), the U.S. Food and Drug Administration (FDA) announced on Thursday that Eli Lilly and Co's best-selling weight loss drug, Zepbound, is no longer in shortage, which will have a serious impact on the multi-billion dollar compound drug market. Following the announcement, Hims & Hers Health's stock price dropped over 10%.

The FDA clarified that the shortage of Zepbound, which began in December 2022, has been resolved, and it will continue to monitor the supply and demand situation of these products. Semaglutide is the main active ingredient in Eli Lilly's diabetes drug Mounjaro and weight loss drug Zepbound.

A spokesperson for Eli Lilly and Co stated that any individual or company promoting or selling unapproved semaglutide must cease immediately to ensure that patients are using drugs that have been reviewed and confirmed safe and effective by the FDA.

Since the end of 2022, this weight loss medication, sold in various dosages, has remained on the FDA's shortage list, with patients, doctors, and pharmacists complaining about the difficulty of obtaining the drug.

Due to the inability to obtain weight loss drugs from Novo-Nordisk A/S and Eli Lilly, some patients have turned to compounded formulations. The FDA allows the creation of such drugs in situations of shortage to help patients access necessary treatments.

However, the FDA does not approve these compounded formulations nor does it regulate them in the same way as traditional prescription drugs. This means that even though the compounded formulations contain the same active ingredients as the original drugs, their preparation processes, quality control, and safety may not be subject to the same regulatory standards as commercially produced drugs.

Therefore, the FDA announced on Thursday that as the era of Zepbound shortages ends, certain pharmacies will have to stop the production, sale, or distribution of compounded semaglutide formulations.

It is reported that compound pharmacies must stop producing compounded versions of semaglutide within the next 60 to 90 days, in order to give patients enough time to transition from the compounded version to the FDA-approved brand medication.

This is a heavy blow for compound pharmacies, which stated that their generic medications can help patients who do not have coverage for Zepbound insurance and cannot afford the high monthly price of about $1,000. Zepbound and other weight-loss medications are expensive and have limited insurance coverage.

Meanwhile, Eli Lilly and Co and Novo-Nordisk A/S have begun suing these compound drug companies, citing marketing and quality issues regarding the weight-loss medications. Eli Lilly and Co had previously invested billions to expand the production capacity of tirzepatide, hoping to meet unprecedented market demand.

Scott Brunner, CEO of the American Pharmacy Compounding Coalition, stated that this announcement is not surprising, but it is not necessarily the end of the story, and does not believe that the shortage of Zepbound has really ended.

Bernstein Analyst Courtney Breen believes the FDA's decision indicates that the "compound drug frenzy" is coming to an end, but due to many patients likely still being unable to afford the high costs of Zepbound, the overall demand and prescription volume for these drugs may not be greatly impacted.