States Form New Battleground for Pharma’s Fight Against Copycats

The drug industry’s efforts to rein in the proliferation of less expensive copycats of their blockbuster products are shifting to the states, where lawmakers are pushing measures to limit or restrict the practice of customizing medications.

Around a dozen bills in 10 states across the country have proposed stricter rules or prohibitions around a process known as compounding that involves pharmacies mixing ingredients to create unapproved, tailored medications for patients.

The measures come as state lawmakers have grown increasingly skeptical of compounded drugs flooding the market, raising concerns about the safety of ingredients in unauthorized treatments that range from pain medications to weight loss drugs. The explosion has been tied to compounded GLP-1 drugs that treat obesity and diabetes, making the bills another avenue in efforts by Novo Nordisk A/S and Eli Lilly & Co. to curb copies of their popular branded drugs.

“There’s a big lobbying effort going on by the major GLP-1 manufacturers,” said Jesse Dresser, head of Frier Levitt’s pharmacy practice group that represents compounders.

“A lot of the legislation and regulation we’ve seen is just more restating FDA rules around making sure that pharmacies don’t make essentially copies of commercially available products,” Dresser added. “Some of it seeks to go a step further.”

To date, Indiana remains the only state to have such a bill passed. California’s General Assembly last week voted to send proposed compounding restrictions to the state Senate.

Most of the 2026 efforts fizzled out during the legislative process. In Colorado, legislation was postponed indefinitely, while Virginia is slated to continue it into the next session. Still, the compounding industry expects a bigger fight ahead.

“We do expect them to come back with legislation in several of these states next year,” said Scott Brunner, chief executive officer of the Alliance for Pharmacy Compounding.

Novo said it regularly engages with stakeholders at both the federal and state level on issues related to patient safety and access to authentic, FDA‑approved medicines.

“As part of this engagement, we share information and perspectives to help inform policy discussions,” a Novo spokesperson said in an email.

A spokesperson for Lilly similarly said it continues to back state efforts to protect consumers from what it calls “knockoffs” of its drugs.

State Movement

Compounded medications are crucial for patients when a standard treatment isn’t appropriate. The products are often cheaper than branded drugs, making them an accessible option for patients.

A compounded version of Novo’s semaglutide injection can cost as low as $199 per month supply, depending on the supplier and dosage, while branded Ozempic can run as high as $499 per month without insurance. Novo and Lilly, however, have started to slash the prices of their drugs under deals with the Trump administration.

GLP-1 manufacturers have taken the biggest hit from compounders after copycats started eating into their sales amid supply issues in recent years. It’s estimated that over 1 million patients are taking compounded weight loss drugs.

The legislation offered in states raises concerns about compounded drugs using ingredients from foreign suppliers that haven’t undergone federal review or inspection.

Measures from Florida, Colorado, Georgia, and Arizona focused on compounded weight loss treatments, with some bills requiring pharmacies to use ingredients from Food and Drug Administration-approved facilities, or prohibiting the practice unless specified documentation is provided to the state.

Meanwhile, legislative efforts from Washington, Mississippi, and Indiana largely reiterated federal regulations that outline when compounding is allowed.

Patient advocacy and consumer groups have been backing the bills as actions that address safety concerns of compounded medications with that can include dosing errors and contamination.

“We have encountered what we consider to be the Wild West,” said Nancy Glick, policy director of food and nutrition for the National Consumer League. “We want to make sure that the ingredients are safe—that they come from valid sources.”

People are “starting to realize” that compounded drugs are “not the same as an FDA-approved medication in terms of regulatory safety,” said Shabbir Imber Safdar, executive director for The Partnership for Safe Medicines, who was asked by Novo to speak to California lawmakers as a subject matter expert. The state is currently weighing AB 1990.

The bills have become another front for Novo and Lilly to lobby for any efforts that would crack down on misbranded products that may harm the drugmakers’ image.

The companies have launched several lawsuits and cease-and-desist letters against copycats after the FDA determined that they can no longer be legally mass-marketed, with allegations largely focused on unlawful compounding and marketing practices.

But the fight among state bills has only succeeded so far in Indiana, where Lilly is headquartered and Novo has a manufacturing site.

There are “billions of dollars that went into finding out about these new drugs and molecules,” said Indiana state Sen. Justin Busch (R), who worked on legislation signed into law in March. “We want to make sure we’re also protecting them as well.”

‘Trojan Horses’

Compounders, however, say the bills aggressively narrow practices that are essential to millions of patients.

“Many of them risk using a sledgehammer approach when a more scalpel approach is needed,” said Dae Lee, co-chair of the pharmacy practice group at Buchanan Ingersoll & Rooney PC.

Compounders also argue that the majority of the bills are packaged as patient safety legislation, but they’re really a pharmaceutical industry tactic to impose barriers on state-licensed compounding pharmacies.

“They’re very much Trojan horses,” Brunner said. “They are drugmakers’ efforts to curtail compounding.”

While the majority of the legislative efforts have died, the latest bills signal more aggression as some of them target specific drugs, said Tenille Davis, chief advocacy officer for the Alliance for Pharmacy Compounding.

“Bills that are broad were easier to defeat,” she said. “The more recent versions of the bills are a lot more targeted to just GLP-1s, and those are obviously a little more difficult to argue against.”