The debate over compounded GLP-1s: What employers need to know 

The popularity of GLP-1 drugs continues to build – at this point, they are discussed at the dinner table as frequently as in the doctor’s office. Healthcare providers and patients are also well aware of the coverage gaps and supply chain challenges that affect access to GLP-1 drugs for both diabetes treatment and weight management. Demand has exceeded the available supply from pharmaceutical manufacturers for the past two years, resulting in persistent shortages of products like Ozempic, Wegovy, and Mounjaro, which have disrupted treatment plans and frustrated patients, pharmacies, and providers. This has created an opening for entrepreneuring healthcare ventures, primarily telehealth companies, to offer compounded GLP-1 products through their programs, primarily targeting individuals whose insurance plans do not include coverage for weight-loss drugs. The products offered by Weight Watchers, Him & Hers Health, Ro, and others have added new layers of complexity to an already intricate landscape. As we’ll discuss, there are regulatory and safety risks associated with compounded GLP-1s that weigh against facilitating access to them in employer-sponsored health programs.

Concerns and controversies with compounded GLP-1s

Compounding is a practice where a licensed pharmacist or physician combines, mixes, or alters ingredients of a drug to create a medication tailored to the needs of an individual patient. Pharmacies may produce compounded drugs when the commercially available versions appear on the FDA’s drug shortages list, but once a product is removed from the list they must cease immediately. While the FDA and state boards of pharmacy have some jurisdiction over compounding facilities/pharmacies and their promotional activities, the products themselves are not FDA-approved. Thus, the widespread advertising of compounded semaglutide has drawn consumers into a semi-unregulated area. Serious patient illness and deaths have been associated with poor quality compounded drugs, prompting the FDA to increase surveillance and guidance in recent years. The FDA has issued information regarding its concerns after receiving several reports of adverse events related to compounded GLP-1 drugs.

Areas of concern include:

• Dosing. Compounded products are only available in vial and syringe form, whereas the commercially available products are pre-filled pens. Dosing errors, at times leading to hospitalization, have occurred from patients miscalculating the dose or from being prescribed a dose beyond what is approved in the FDA-approved drug label.
• Product issues. Some pharmacies are using semaglutide salt to compound rather than semaglutide base, the active ingredient in the FDA-approved versions. Additionally, some companies are selling unapproved versions of GLP-1s intended for research purposes only and not human consumption. Product concentrations and potency may also vary, meaning a patient may get too little, too much, or no GLP-1 at all.
• Illegally marketed versions. Although the FDA monitors the internet for fraudulent activity related to unapproved drugs, and issues warning letters to stop the distribution of these illegal products, counterfeit versions of Ozempic and other GLP-1s are still being sold online. Illegal products often contain the wrong (sometimes harmful) ingredients, and may contain too little, too much, or no active ingredient at all. It’s estimated 95% of all online pharmacies operate unlawfully.

Alongside the FDA’s efforts in this area, manufacturers are also taking legal action to curb competition from GLP-1 compounders, targeting false claims suggesting that compounded drugs are FDA-approved or generics. In a recent appeal to the FDA, Novo Nordisk (the maker of Wegovy and Ozempic) asserted that semaglutide is too complex for compounding pharmacies to make safely and should be placed on the FDA’s “Demonstrable Difficulties for Compounding” list. This would ban all compounding of semaglutide, even if a shortage exists. The FDA is reviewing the petition.

Finally, Pharmacy Benefit Mangers generally do not allow compounded GLP-1 products to process under the prescription benefit. As a result, employees using compounded products are paying out-of-pocket, whether or not the FDA-approved class of drugs is a covered benefit. (This means that actual GLP-1 utilization in the entire employee population may be underestimated –something for plan sponsors to keep in mind when considering coverage strategies.)

The benefits of compounded GLP-1s

Despite these serious issues, the fact remains that compounded GLP-1s come with more favorable price tags than their commercial counterparts, ranging in cost from $130-$300 per month, which comparesto about $1,000 per month before discounts, rebates, and other pricing concessions for commercially available drugs. Manufacturers offer coupons and other assistance to patients without insurance coverage that lowers the price to around $500-$650 per month, but this is still about twice the cost (or more) of compounded versions.

From a clinical perspective, the persistent shortages of GLP-1s used in the management of type 2 diabetes results in disruption to glucose-lowering regimens that can be frustrating and scary for patients. While in most cases other medication options are available, in some instances a compounded product from a state- or FDA-regulated facility is a reasonable option to bridge a gap in product availability with proper patient education and training.

The question for plan sponsors: Are compounded GLP-1s a viable lower-cost option?

Understandably, the lower price of compounded GLP-1s is appealing to consumers and plan sponsors. However, given the regulatory and safety risks that exist, plan sponsors should proceed with extreme caution when considering adoption of coverage policies or benefits for compounded GLP-1s via a telehealth provider or other provider. While there may be savings from use of lower-cost products, at this time the potential risks and unknowns likely exceed the benefit.  

The good news is that with manufacturers ramping up capacity, supply of commercial GLP-1 drugs is finally starting to catch up to demand and shortages are easing, if not already ended. Most recently, the FDA announced in early October 2024 that tirzepatide, the active ingredient in Eli Lilly’s Mounjaro and Zepbound, is no longer in shortage. This means compounders cannot legally fill any new tirzepatide orders, and not surprisingly, this update has been met with some resistance. One compounding group has already sued the FDA, claiming the tirzepatide shortage is not over; Eli Lilly and the FDA have yet to publicly comment.

We will have to wait and see whether GLP-1 compounders will scale back or continue to fight for GLP-1 market share in a market that is truly open to them only under the conditions of a GLP-1 shortage. What’s clear is that this rapidly changing landscape demands that employers remain vigilant and focused on their priorities: the health and safety of their workers.