The Rising Demand for Weight Loss Drugs
With the introduction of new FDA-approved drugs, the recent demand for weight loss drugs has skyrocketed. Even the media seems ready, willing, and able to cover anything having to do with peptides and semaglutide. So what are peptides and semaglutide, and what are the legal and regulatory considerations for pharmacies sourcing, compounding, and dispensing such products?
What Are Peptides and Semaglutide?
Peptides are strings of amino acids that make up proteins. The human body naturally produces peptides. Manufactured peptides can mirror natural peptides and have been used in medications to treat certain conditions. One such peptide drug is tirzepatide, which is used to treat type 2 diabetes and obesity. Semaglutide is a medicine that contains a peptide known to increase insulin release, lower glucagon release, and reduce appetite.
The Rise of Compounded Semaglutide
Recently, given the high demand and the shortage of FDA-approved semaglutide products (like Ozempic and Wegovy), many people are turning to compounded semaglutide. “Drug compounding” refers to the process by which a pharmacist or doctor combines, mixes, or alters ingredients to create a medication tailored to the needs of an individual patient. Section 503A of the Food Drug and Cosmetic Act (“FDCA”) regulates pharmacy compounding as it relates to traditional, state-licensed pharmacies and physicians, while Section 503B regulates federally-registered outsourcing facilities.
Section 503A Requirements for Compounding
Under Section 503A, drug products are exempted from normal new drug approval requirements when compounded by a licensed pharmacist in a state licensed facility (or by a licensed physician) for an identified individual patient based on the receipt of a valid prescription, approved by the prescribing practitioner, on the prescription order that a compounded product is necessary for the identified patient, and made from approved drug products using ingredients that comply with national standards.[1]
Semaglutide Shortage and FDA Compounding Guidance
Congress recognized the important role of Section 503A compounding to meet the supply gap when a drug is on the U.S. Food and Drug Administration (“FDA”) shortage list. Semaglutide has been on the FDA shortage list since March 2022 and the FDA issued a statement regarding the compounding of semaglutide due to the shortage. The FDA permits the compounding of semaglutide because commercially available products containing semaglutide are on the FDA’s shortage list, provided that the product is compounded by pharmacies pursuant to requirements of Section 503A of the FDCA.[2]
Restrictions on Semaglutide API Use
The FDA has instructed that compounded semaglutide must have the same Active Pharmaceutical Ingredient (“API”) that is used in the FDA-approved product and should not be compounded using the salt-based product. This creates certain additional considerations when seeking to source semaglutide APIs, as many repackagers are distributing the salt formulation of the product.
State Board of Pharmacy Regulations
In addition to the rules set forth in Section 503A of the FDCA, compounding pharmacies also must follow state-specific Board of Pharmacy rules for sterile compounding and/or Board of Medicine rules for semaglutide ordering. Provided that a compounding pharmacy complies with the FDCA and the state Board of Pharmacy rules, compounded semaglutide is permitted during the shortage. However, certain State Boards have waded into the issue of semaglutide compounding. For example, the New Jersey Board of Pharmacy has explicitly stated that the salt form of the product may not be used in compounding, and that even if a pharmacy obtains semaglutide base for potential compounding use, the pharmacy must ensure that the API received is a pharmaceutical grade product, accompanied by a valid certificate of analysis, and is sourced from an establishment registered with FDA. Likewise, the Mississippi Board of Medicine released guidance regarding semaglutide-based medications and stated that the off-label use of semaglutide-based legend drugs was “prohibited” by Board regulation, and further, that licensed physicians were strongly advised to refrain from prescribing, dispensing or administering any compounded semaglutide until further notice.
FDA Oversight and Quality Concerns
The FDA enforces the requirements of the FDCA and its enforcement aims to keep safe compounded drugs while weeding out the poorer quality compounds. “The FDA’s compounding program aims to protect patients from poor quality compounded drugs, while preserving access to lawfully marketed compounded drugs for patients who have a medical need for them.”[3] If not compounded properly, pharmacies and other providers risk FDA and Board of Pharmacy repercussions. The FDA has specifically highlighted its concerns with compounded semaglutide, suggesting that it has received adverse event reports after patients used compounded semaglutide, and is actively encouraging patients to seek out the FDA-approved versions, where available.[4]
Manufacturer Pushback Against Compounded Semaglutide
Notably, manufacturers that create the semaglutide API and are subject to FDA approval have a vested interest in protecting the market share of their products. Even where semaglutide might be technically permissible under FDA and State Board rules, several manufacturers have taken aggressive actions towards pharmacies and physicians ordering, compounding or administering compounded semaglutide. For example, manufacturers have sued compounding pharmacy to prevent the pharmacies from selling compounded versions of the FDA-approved drugs, they have sued wellness spas and clinics for false advertising, and they have sent cease and desist demands to API manufacturers in an attempt to cut off the API supply chain.
Business Models and Regulatory Risks
In addition, given that the individual weight loss market has become incredibly lucrative, many compounders have explored partnerships with ordering physicians to expand access and prescription volume. These have taken the form of direct referral relationships, white bagging for in-office administration, and even telemedicine arrangements. Even Eli Lilly, the manufacturer of Mounjaro, recently unveiled the LillyDirect program, coordinating prescribing through telemedicine providers and dispensing through affiliated fulfillment pharmacies.
However, these relationships are not without regulatory risk. In addition to the Federal Antikickback Statute and Stark Law, several states maintain laws that limit the ability of pharmacies to provide compensation to or share fees with prescribing physicians, even where third party insurance is not involved.
Insurance Reimbursement and PBM Audits
Finally, while most compounded semaglutide remains self-pay, health insurance companies are starting to reimburse for certain forms of semaglutide (including FDA-approved variations). However, due to the cost of the drug, audits from PBMs are sure to arise. This is especially true where many of these drugs are prescribed and dispensed off-label, potentially requiring the pharmacy to demonstrate the clinical justification for dispensing the medication after-the-fact.
The Importance of Legal Guidance
Given the various rules and laws that apply to compounding semaglutide, legal guidance is critical for every component of the process. Whether you are a physician, compounding pharmacy, or manufacturer, the importance of staying within the boundaries of the law is critical.
How Frier Levitt Can Help
Frier Levitt represents healthcare providers, pharmacies, and other entities in the healthcare and life sciences industries in litigation as well as providing regulatory and legal advice. We can provide guidance regarding the numerous laws applicable to sterile compounding. Contact us to learn more.
[1] The full text of Section 503A of the FDCA can be found at https://www.fda.gov/drugs/human-drug-compounding/section-503a-federal-food-drug-and-cosmetic-act.
[2] See https://www.fda.gov/drugs/postmarket-drug-safety-information-patients-and-providers/medications-containing-semaglutide-marketed-type-2-diabetes-or-weight-loss.
[3] https://www.fda.gov/drugs/guidance-compliance-regulatory-information/human-drug-compounding.
[4] https://www.fda.gov/drugs/postmarket-drug-safety-information-patients-and-providers/medications-containing-semaglutide-marketed-type-2-diabetes-or-weight-loss.
