4 questions about the future of compounding pharmacies

At Second Opinion, we like to get creative and try new things. So, one series I’ve been thinking about for a while is “4 Questions With.” It’s exactly what you’d think. It’s a set of questions to an expert on a topic we’re all wondering about and tracking in health tech.

What this series is not:

• An interview with someone talking about why they’re so great or a sub-sector is so hot;

• A bunch of predictions or opinions (if you want to contribute that, consider reaching out about a column instead);

• A lot of softball questions.

So, without further ado, let’s get into our first topic: Compounding pharmacies.

News outlets like WSJ have been ahead in covering this trend and the implications (both positive and negative) for a few years now. Compounding pharmacies, for those not familiar, refers to large-scale compounders that make custom versions of medications in bulk without individual prescriptions. Per the FDA, a drug may be compounded for a patient who cannot be treated with an FDA-approved medication or someone who can’t swallow a tablet and needs medication in a different form. The FDA is explicit that compounders can also prepare versions of a drug on its shortages list if the compounded drug meets certain conditions. The drugs that are at the center of this trend are weight loss medicines, which millions of people want to take. However, there are shortages, and the cost of the brand name is too high. That has opened up an opportunity for companies making compounded versions of blockbuster drugs like Wegovy and Zepbound.

The question now is: What happens when there is no longer a supply issue? And how do regulators respond, particularly as more companies in digital health have partnered with pharmacies that make compounded versions of these popular drugs? To get some answers to these questions, I snagged some time with my colleague — health-tech legal expert Randi Seigel — who’s been paying close attention. There’s a lot more to say on this topic, so it’s one that we’ll be watching closely.

Note: This interview primarily focuses on the issue of shortages; there’s a lot more to say about patient safety, especially as many healthcare providers have shared concerns with the ingredients used in compounded versions of these drugs. We’ll get into that in another interview! 

SO: There are a lot of companies in digital health that have jumped on the compounding pharmacy bandwagon. If there’s no shortage, can this trend continue?

RS: “FDA has announced there is no longer a shortage of tirzepatide, the active ingredient in both Zepbound® and Mounjaro®, manufactured by Lilly. However, there remains a shortage of the active ingredient in Novo Nordisk’s banner weightloss drugs (Ozempic®, Wegovy®). I would expect more regulatory oversight of providers marketing and offering GLP-1s that are identical or nearly identical to Lilly’s drugs, given that providers can no longer prescribe compounded versions of the drug for all its patients, and also compounding pharmacies to make and dispense the compounded versions of Lilly’s drugs. A provider can only prescribe a compounded drug similar to Zepbound or Mounjaro if “there is a change that produces for an individual patient a clinical difference, as determined by the prescribing practitioner, between the compounded drug and the comparable approved drug” (see Section 503B(d)(2)(A)-(B) (codified at 21 U.S.C. § 353b(d)(2)(A)-(B). The FDA gives examples of when a compound drug may used.

This means the prescribing provider would have to determine that a specific patient (not patients at large) need a compound version of the GLP-1, which will make it challenging for a provider to market or advertise the availability of the compounded drug and/or prescribe it to all of its patients.”

SO: What are the legal risks you foresee for companies?

RS:  I expect increased regulatory scrutiny by the FDA and Boards of Pharmacy of compounding pharmacies and potentially by the Boards of Medicine of prescribing providers. The FDA has already signaled it is concerned with compounded versions of the GLP-1. 

The FDA and FTC may also get involved if either agency believes these providers’ and/or pharmacies’ marketing practices are false or misleading about the drugs being marketed. We know there is already some reputational harm for these practices if there is a negative patient outcome or agency finding related to the compounding pharmacy - we’ve already seen some negative press. Beyond that, there may be lawsuits by pharmaceutical manufacturers to protect their patents and potential patient malpractice actions against the prescriber and/or compounding pharmacy if the compounded drug was inappropriate for the patient (or worse, the patient was harmed). 

SO: What are the reasons that regulators typically allow compounding? Is price among them?

RS: Price is not. The FDA allows compounding of an FDA-approved drug only when the drug is on the shortage list. Per regulators: “When a drug is on FDA’s drug shortages list, compounders may be able to make a compounded version of that drug if they meet certain federal law requirements.” The FDA does not regulate the ability of a patient to access the drug due to price or other factors other than whether the drug manufacturer can meet market demand (based solely on supply).

SO: What should companies in the compounding pharmacy business do now to get ahead of this?

RS: Be thoughtful and prioritize compliance and patient safety with careful oversight by legal experts and clinicians, respectively. Diversify! Create other programs for weight loss where the prescription is just one component, and a patient may be able to be weaned off it and still be supported in their weight loss journey. Consider putting public pressure on the manufacturer to reduce the drug costs if cost is the primary issue for patients in the population served.  Get smart on patient assistance programs, also known as PAPs, which can help patients pay for high-cost drugs and see if any patients served could qualify.   

Who should we talk to next? And what topic should we cover? Shoot me a note at [email protected]