GLP-1 lawsuits are being filed with increasing frequency by brand manufacturers alleging claims ranging from trademark infringement, violation of misbranding and adulteration provisions of state Food Drug & Cosmetic Acts, Lanham Act and Unfair Competition and deceptive marketing.
Medical Necessity Under Attack
The latest round of lawsuits allege ‘unlawful corporate practice of medicine’ (CPOM), where telehealth corporations rather than doctors are making medical decisions. Perhaps even more problematic, however, to the practice of compounding are new litigation claims that attack the very basis of compounding outside the telehealth realm. The manufacturer is now alleging lack of ‘medical necessity.’[1] Specifically, the manufacturer is alleging that the combination of the GLP-1s with additional ingredients (in this case glycine and L-arginine) and the unique formulations are not personalized but mass-manufactured, have no ‘medical necessity’, and do not advance patient care.
Compounding is the preparation of personalized medications based on a patient’s specific needs. Once a drug is taken off the FDA 506e shortage list, 503A compounders are prohibited from compounding ‘essentially of copy’ of a commercially available drug.[2] However, pursuant to section 503A(b)(2) of the FD&C Act, “a compounded drug product is not essentially a copy of a commercially available drug product if a change is made for an identified individual patient, and the prescribing practitioner has determined that the change will produce a significant difference for that patient.” The determination is documented on the individual prescription. 503A compounders may compound under section 503A where a change is made for an identified individual patient that produces a significant difference for that patient. FDA has no jurisdiction over the practice of medicine and as such has repeatedly stated that it ‘does not intend to question prescriber determinations that are documented in a prescription.’
The new claims in these lawsuits are tantamount to challenging the very basis of compounding. The allegation is made that the compounds have been prescribed without a medical reason and do not advance patient care. The plaintiffs also allege the compounds are not for any individualized purpose and are mass-manufactured. The mass-manufacturing allegation is simply rebuttable based on the sheer volume of patients on GLP-1s.
The Manufacturer Faces an Uphill Battle
Whether a drug is medically necessary in any particular case often involves subjective clinical judgment on which medical professionals may reasonably disagree, making these cases among the most difficult to prosecute. These cases are rendered more difficult by the deference traditionally given to physicians and the reluctance of courts to second-guess the medical community. Medicare, Medicaid and health insurers have very detailed criteria for denial of claims due to lack of medical necessity. For compounds, the standard is clinical difference which is very broad and undefined. For example, a compound’s clinical difference for a particular patient could be to prophylactically prevent certain GLP-1 side effects such as muscle wasting or nausea and vomiting. The manufacturer will have a difficult time trying to prove a compounded drug was unnecessary assuming each prescription contains a prescriber’s notation for rationale.
How Frier Levitt Can Help
Whether you are involved in 503A compounding, 503B outsourcing, or own a clinic or wellness spa, it is important to know the legal framework including all applicable laws, rules, and regulations governing these matters at both the federal and state level. Pharmacies should ensure they accurately understand all aspects of this nuanced area of the law and highly regulated industry. Pharmacies should always seek legal counsel and input when receiving any communication from GLP-1 manufacturers. Contact Frier Levitt for assistance.
To explore how similar legal trends are impacting telehealth prescribing of GLP-1 medications, read our related article here.
[1] Eli Lilly & Co. v. Mochi Health Corp, et al., No. 3:25-cv-03534 (N.D. Cal.) (filed April 23, 2025); Eli Lilly & Co. v. Aios Inc. DBA Fella Health & Delilah, No. 3:225-cv-03535 (N.D. Cal.) (filed April 23, 2025).
[2] FDA Guidance. Compounded Drug Products That Are Essentially Copies of a Commercially Available Drug Product Under Section 503A of the Federal Food, Drug, and Cosmetic Act. Guidance for Industry. Jan 2018.
