The news: Compounding pharmacy Strive Specialties is suing Novo Nordisk and Eli Lilly over allegedly using anti-competitive conduct to prevent Strive from providing copycat GLP-1 medications to patients.

Catch up quick: GLP-1 compounders have been in a back-and-forth legal battle with Novo and Lilly for a few years. Drugmakers argue compounders’ unapproved knockoff drugs are unsafe, while compounders say their lower-cost forms improve accessibility for patients.

The FDA’s position is that compounders can’t mass-produce copycat GLP-1s now that shortages are over. Compounders may develop individualized versions of GLP-1s (which is what Strive makes) that have slight formulation changes when medically necessary.

Digging into the details: The antitrust lawsuit accuses Novo and Lilly of “using their dominant market positions to undermine the compounding pharmacy industry” by making it more difficult for healthcare providers to prescribe compounded weight loss drugs.

The lawsuit alleges that:

• Both drugmakers bar partner telehealth firms from working with compounding pharmacies if they want access to pharma’s D2C GLP-1 discounts.
• Lilly is interfering with compounding pharmacies’ relationships with payment processors, limiting Strive’s ability to accept cash payments for prescriptions.
• Novo’s letters to doctors demanding that they cease “unlawful participation” in the distribution of compounded GLP-1s limit physicians’ ability to prescribe compounded versions even if they think it's best for the patient.

Strive is seeking undetermined monetary damages and an order barring Lilly and Novo from enforcing the alleged telehealth exclusivity agreements, per Reuters.

Why it matters: Strive’s legal challenge to Novo’s and Lilly’s closed-door contracts with telehealth firms is important because compounders rely on similar partnerships with online platforms to expand access.

Novo and Lilly are forging tie-ups with telehealth firms to offer the drugmakers’ GLP-1s at a lower cash-pay price so long as they do not sell compounded versions—a major incentive for many telehealth companies to stop providing compounded GLP-1s.

• For instance, Hims & Hers and Noom both sell compounded GLP-1s and don’t have tie-ups with Novo and Lilly. Both companies were left off Novo’s initial list of telehealth companies that the drugmaker is partnering with to expand access to its new Wegovy weight loss pill.
• Other leading telehealth players, including Ro and WeightWatchers, have stopped prescribing compounded GLP-1s to secure weight loss drug partnerships with Novo and Lilly.
• About half of GLP-1 patients paying out of pocket use telehealth, per STAT—a large market that compounders are increasingly losing access to. Insurance doesn’t cover compounded weight loss drugs since they’re not FDA-approved.

Implications for the weight loss drug market: Strive’s lawsuit is unlikely to change drugmakers’ telehealth agreements, meaning the walls are starting to close in on GLP-1 compounders.

Compounders can still make copycat weight loss drugs, but are losing their market advantage of widespread telehealth distribution and favorable pricing as brand-name GLP-1 prices decline, including for new pills. Some telehealth weight loss players without Novo or Lilly ties are offering microdosed compounded GLP-1s to attract a different subset of consumers, but they’ll likely need to reduce reliance on copycat GLP-1s and pivot to other high-demand prescription categories.