The cutoff day for copycat Ozempic and Wegovy is imminent. What’s next?
To drugmakers’ disdain, telehealth providers have pushed “personalized” versions of GLP-1s, which they might be able to continue selling after May 22.
Pharmacies that sell compounded semaglutide, the active ingredient in Ozempic and Wegovy, will have to stop making exact copies after Thursday, throwing a wrench in the business models of telehealth companies that made a killing selling cheaper versions of the popular weight-loss drugs.
Before February 21, semaglutide was in shortage, which allowed pharmacies to make exact copies of it to fill the gaps in demand. This led to a boom in sales for telehealth companies like Hims & Hers and others that emerged, offering semaglutide for a fraction of the price of branded versions sold by its patent holder, Novo Nordisk.
When the Food and Drug Administration declared that the drug is no longer in shortage, it gave compounding pharmacies a 90-day off-ramp period that ends on May 22. But that doesn’t necessarily mean the party is over for the telehealth companies that rode the GLP-1 wave.
Personalization
Compounding pharmacies can still sell adjusted versions of drugs that aren’t in shortage based on a patient’s need, such as an allergy to a certain ingredient or to make a dose that the drugmaker doesn’t manufacture. The latter is particularly common for semaglutide.
Novo manufactures pens with set doses, while compounding pharmacies typically produce vials based on a prescription. Pharmacies and telehealth providers say a high rate of side effects leads doctors to prescribe versions of the drug that Novo doesn’t make, often referring to them as “personalized” or “customized.”
Patients who get a GLP-1 prescription via telehealth platforms typically fill out a survey and briefly speak to a physician — the process can take as little as 15 minutes. Drugmakers say telehealth companies likely steer patients toward mass-produced, “personalized” versions of their drugs so they can keep selling them. Hims, for one, insisted on its most recent earnings call that it does not influence providers.
Tirzepatide offers an early look
Tirzepatide — the active ingredient in Zepbound and Mounjaro, Eli Lilly’s GLP-1 drugs — was taken off the shortage list in December. There are significantly fewer patients on compounded tirzepatide than semaglutide, so the scale of patients and companies affected by the May 22 deadline is much greater, but it offers an early look at how things might go with semaglutide.
Many telehealth companies didn’t stop selling personalized compounded tirzepatide. Then Eli Lilly came for them.
In one case, it sent a cease and desist letter to OrderlyMeds, which responded by saying the warning meant “nothing.” Then Lilly sued four telehealth providers — Mochi Health, Fella Health, Willow Health, and Henry Meds — accusing them of mass producing “personalized” or “tailored” versions of their patented drug.
What’s next for Hims?
About $230 million of Hims’ $1.5 billion in revenue last year came from selling compounded semaglutide. It’s unclear how much revenue Hims will be able to keep from personalized semaglutide sales.
The company’s stock took a hit after the FDA shortage was lifted, but it has rebounded significantly as investors got a clearer picture of how Hims’ would handle the regulatory landscape. Weight loss is the company’s fastest-growing segment, and it dedicated a Super Bowl commercial to it in February.
Hims has diversified its weight-loss portfolio to include other products, including through a recent partnership with Novo that allows them to offer Wegovy, the drugmaker’s branded semaglutide pen. The company said it expects revenue from its weight-loss business to reach $725 million in 2025.
There’s also the possibility that Hims and others may be hit with a lawsuit from Novo similar to the one Lilly fired off last month. Novo recently pushed out its CEO, in part because its GLP-1 sales are slowing down and failing to impress investors.
