Demand for Obesity Drugs Pressures FDA’s Shortage Review (1)

The FDA’s decision-making process is under scrutiny after the agency flip-flopped on its declaration that the shortage of Eli Lilly’s blockbuster weight-loss drug tirzepatide was over.

The Food and Drug Administration’s methodology for monitoring drug shortages wasn’t heavily scrutinized before weight-loss drugs arrived, attorneys say, but the agency is now facing calls to increase its transparency around how it determines whether compounding pharmacies are free to make copycat versions of Eli Lilly & Co.‘s popular diabetes and obesity treatment, which are branded as Mounjaro and Zepbound.

The intense consumer demand for weight-loss drugs raises the stakes for the regulator, drugmakers, and the compounding industry.

“These are blockbusters in ways that we haven’t seen with a lot of other drugs, and that has far-reaching implications that ripple throughout FDA law and the compounding of these products,” said William Garvin, co-chair of the FDA & biotechnology section at Buchanan Ingersoll & Rooney.

“This drug shortage determination now legally determines whether you can or cannot compound a drug, so all becomes much more contentious.”

Whether the shortage is resolved matters to a compounding industry that is estimated to exceed $1 billion in annual sales. Compounded tirzepatide can be purchased for a few hundred dollars, while Lilly’s list price for its injections typically costs around $1,000 a month. The number of people taking compounded GLP-1s is unknown, but KFF Health News estimates that up to 2 million patients in the US take it.

Lilly’s third quarter sales and earnings announced Wednesday were lower than the expected, with its shares falling on the news that its weight-loss and obesity drugs missed targets. Zepbound had sales of $1.26 billion and missed the $1.63 billion expected on average by analysts. Mounjaro’s sales were $3.11 billion, also missing analysts’ expectations for $3.62 billion.

Lilly blamed the fall on wholesalers buying less of the product.

Tirzepatide had been in shortage since 2022 due to demand, which allowed traditional compounding pharmacies and outsourcing facilities to produce unapproved copies of the drug. The FDA on Oct. 2 said it confirmed with Lilly that the availability and manufacturing capacity for tirzepatide could meet the present and projected demand.

The FDA was then hit with a lawsuit from the Outsourcing Facilities Association and compounding pharmacy FarmaKeio Custom Compounding, challenging the determination that the shortage had been resolved. Days later, the FDA asked a federal court in Texas to remand the decision to the agency for reconsideration.

‘More Clarity’

The FDA wouldn’t comment on pending litigation, but its website outlines how it monitors shortages.

The FDA tracks shortages at the national level and receives information from manufacturers about their ability to supply the market. The agency’s drug shortage team also considers information from distributors and market share data.

A drug is considered to be in shortage “when the total supply of all versions of a commercially available product cannot meet the current demand, and a registered alternative manufacturer will not meet the current and/or projected demands for the potentially medically necessary use(s) at the patient level,” according to the FDA.

A “current” shortage is moved to “resolved” when all drugmakers combined are able to meet total national pre-shortage supplies as seen with market data, or what meets current market needs, as supply amounts level out.

But challengers of the FDA’s determination may dispute the calculations and process for ensuring that the shortage is over, attorneys say.

This is because Congress determined under the Federal, Food, Drug, and Cosmetic Act that when a drug is in shortage, compounding is allowed in certain situations to ensure that patient treatment can occur.

The determination becomes controversial with tirzepatide because the shortage resulted in an industry making copycat and cheaper versions of the drug.

“It’s important that there be more clarity in the process for resolving these shortages,” said Courtney Sullivan, an attorney at Boesen & Snow LLC. “There needs to be an understanding that there’s more than just manufacturer input here.”

“There’s going to be regional insufficiencies, there’s going to be supply chain issues. Ultimately, if a patient can’t get their medication for weeks or months, and particularly a medication like this that requires a constant dose, they have to start all over.”

The Outsourcing Facilities Association’s lawsuit alleges the FDA provided no opportunity for public comment and the agency should have gone through notice-and-comment rulemaking before making a final decision.

“When an agency makes a decision like this, it has to explain itself,” Andrew Grossman, counsel for plaintiffs in the case and co-leader of the appellate and major motions team at Baker & Hostetler LLP, said in an interview.

“The agency didn’t do any of that. It just really updated its website with some boilerplate information and removed the drug substance from the list.”

The court on Oct. 11 granted a stay for the case while the shortage decision is remanded and ordered parties to file a joint status report by Nov. 21.

Battles After Chevron

The shortage review may indicate the FDA is moving cautiously after the US Supreme Court took steps last term to curb federal agency power, attorneys say.

The high court in June in Loper Bright Enters. v. Raimondo ended the decades-old Chevron doctrine, which guided courts to accept a federal agency’s reasonable interpretation of its rulemaking authority when a statute was determined ambiguous.

The FDA wrote in a motion that remanding the decision to the agency would provide it the opportunity to cure “any legal errors that may exist.” Remand would also allow plaintiffs to submit additional information regarding tirzepatide’s availability, the FDA wrote.

“Courts, and even public opinion, are much more skeptical of the FDA,” Garvin said. “With Chevron deference ending, I think there’s a feeling in FDA that there’s a need to survive through this period of intense judicial scrutiny without losing any major battles or powers.”

This lawsuit seeking to block a shortage determination also centers on a topic that isn’t typically disputed in court—making it a notable challenge testing the FDA’s decision-making, said Anjali Deshmukh, an assistant law professor at Georgia State University.

“FDA’s shortage list has historically not been especially controversial, but the financial dynamics around weight-loss drugs creates really interesting lucrative new markets and thus new controversies and litigation incentives,” Deshmukh said.