Unsafe copycat weight-loss drugs are flooding the US market amid shortage

NEW YORK – The first dose of a copycat weight-loss drug that Ms Lindsay Posey took from a new pharmacy worked well. The second did not quite suppress her appetite. It was the third dose that she thinks gave her trouble.

Acne erupted on her cheeks, nose, chin and forehead. “My skin just went absolutely crazy,” said the 38-year-old who works in online customer service. Acne is not listed as a side effect of the US Food and Drug Administration (FDA)-approved formulation. 

Ms Posey had resorted to buying the knock-off medicine through a telehealth company because she did not think her insurance would cover the brand-name version.

She trusted the situation because the drugs were made at a licensed facility in the US. “It just seemed safe,” she said.

Her doctor suggested it might have been a problem with the medicine itself. “That’s not really something you want to hear,” Ms Posey said.

The drugs were produced without going through the rigorous approval process required for brand-name or generic medications.

They are made by so-called compounding pharmacies, an obscure corner of America’s pharmaceutical market that relies on a legal loophole to produce copies of treatments in short supply.

Doctors worry this shadow industry may be putting patients at risk.

Normally focused on producing bespoke therapies, these pharmacies started making

copies of weight-loss drugs

en masse after demand outstripped the supply of Eli Lilly’s and Novo Nordisk’s medications.

Health insurers are not racing to cover the roughly US$1,000-a-month (S$1,300) brand-name drugs, leading people to seek cheaper alternatives elsewhere.

Bankers estimate that compounders are making as much as US$1 billion in annual weight-loss drug sales, but the haul could be much higher, given how little information is available. 

It is rare for lucrative drugs to so quickly go into short supply and stay that way for this long, said Mr Carson Riley, a vice-president at Bourne Partners who specialises in compounding.

He called the recent explosion of copycat weight-loss drugs “unprecedented”.  

Problems are cropping up all over.

In Louisiana, one pharmacy produced nearly 300 vials of weight-loss shots without doing proper contaminant testing, according to state records. In Arizona, a pharmacy mixed the medicines in non-sterile conditions, state records show. Massachusetts’ and Mississippi’s pharmacy boards also have investigations under way. 

It is nearly impossible to know who is taking these drugs.

Compounded medications are generally not paid for by insurance, putting them out of view of systems that normally track prescriptions.

The FDA does not monitor how many prescriptions are filled for compounded drugs, and at least 20 state boards of pharmacy told Bloomberg they are not keeping a record either. 

In that blind spot, experts estimate hundreds of thousands of Americans are taking medicine that has not been vetted by the FDA for safety and effectiveness the way a typical prescription drug would be.

State regulators oversee one type of compounder, and a federal licence is required for another type that makes products in bulk. Because of the shortages, both types of pharmacies can make weight-loss drugs.

“I can’t say with any consistency that everybody’s doing it safely,” said Mr Eric Kastango, a pharmacist who was an expert witness in a high-profile compounding lawsuit.

Even with his background, he said there is no “easy way to differentiate a good pharmacy from a pharmacy that I would stay away from”. 

With brand-name weight-loss drugs costing over US$1,000 a month, telehealth providers are luring in customers with lower prices.

For US$249 a month, Henry Meds offers a membership that includes dissolving tablets or droplets of semaglutide. The company also offers subscriptions for injectable drugs for more money. 

Its chief medical officer, Dr Stephen Peacock, said patients might prefer their offerings because they are afraid of needles.

When asked what data Henry Meds has to show that its dissolving drugs are as effective as the shots, Dr Peacock did not provide any.

Discussing the calibre of the company’s products, he said: “I’m very confident in the safety and efficacy of our medications.” 

They are not exact replicas of what has been approved by the FDA.

Changing drugs from shots into other FDA-approved forms can take years of work.

Neither Lilly nor Novo is selling weight-loss pills, though both are studying them – Novo’s is based on its shot, but Lilly’s is an entirely new medication.

Research to get Lilly’s pill approved by the FDA is expected to take four years from start to finish.

When Hims & Hers Health said in May that it was going to start offering compounded weight-loss drugs, its market value rose by nearly US$900 million in a day.

Family offices, private equity firms and even “ordinary people” are trying to buy compounding pharmacies in the hope of making what could be millions of dollars a month, said Mr Anthony Mahajan, a former federal prosecutor and founding partner of law firm Health Law Alliance, which represents compounding pharmacies. 

“They’re making money hand over fist,” he said.

Free pass

Prior to the advent of modern manufacturing, all medicines were compounded, meaning mixed from raw ingredients by pharmacists themselves.

With the rise of the FDA, most drug-making moved into facilities that were highly regulated by the government. 

The agency chose not to exercise much oversight over those that continued to compound, as they were usually making small quantities of drugs for individual patients.

The FDA, for decades, essentially gave them a free pass. 

Compounders started to work on a bigger scale in the 1990s and early 2000s, raising concerns.

But lawmakers’ attempts to reform the system were successfully fought by pharmacies, resulting in scatter-shot regulation.

That came to a head in 2012, when at least 64 people died and over 700 got sick from contaminated compounded drugs made by one pharmacy. 

The following year, Congress passed a law more clearly laying out how compounders could operate. That established two categories of pharmacies and required higher levels of FDA oversight for those making drugs in bulk.

But drugs in shortage can be made by either type. 

Mr Kastango said: “The quality chasm between manufacturing and compounding done at a pharmacist level is still quite wide and quite varied.”

An FDA spokesperson said in a statement that the 2013 law added more oversight to compounding and that the agency might inspect state-licensed facilities if there are serious issues. “Compounded drugs are not approved by the FDA,” the spokesperson said. 

Emerging trouble

In 2023, a patient injected a copycat version of Lilly’s Mounjaro made by Galleria Medical Pharmacy, which allegedly caused burning and inflammation, according to state records.

A Louisiana Board of Pharmacy investigation found the drug was not tested for sterility or endotoxins, which are fragments of bacteria.

At least 297 prescriptions were made from five different lots of weight-loss drugs that had not been tested properly.

Galleria said the problem that caused the person’s symptoms was due to a malfunctioning pH meter, rather than toxins or a lack of sterility. “There was no finding that the lack of specified testing was associated with any adverse event,” the pharmacy said.

Galleria has since been fined, and has replaced the faulty pH meter and added new training and compliance measures.

“We have taken the matter very seriously and continue to be committed to addressing the concerns raised to ensure the highest standards of patient safety and pharmaceutical care,” it said.

In Arizona, DeeFlat Pharmacy’s licence was voluntarily suspended in June after the pharmacy board found that compounded weight-loss drugs were being made improperly.

The pharmacy appeared to be compounding the drugs “under non-sterile conditions”, according to state records.

Some DeeFlat drugs were not labelled as compounded.

A label said one was Novo’s “Ozempic”, but it did not look like the drugmaker’s product. In another case, a vial was labelled “research use only”, which generally means it should not be used in compounding.

All in all, state records show that the pharmacy allegedly dispensed “almost a thousand” prescriptions that were illegitimate, mislabelled or misbranded, though it is unclear if those were all for weight-loss drugs.

DeeFlat’s attorney, Mr Mahajan of Health Law Alliance, declined to comment.

The spate of issues is causing concern for brand-name drugmakers, who are working to protect their products’ reputations.

Lilly and Novo have been trying to limit compounding by filing dozens of lawsuits against compounding pharmacies and clinics offering copycats. 

Novo alleged in suits that some compounded drugs had impurities or lower concentrations than they should. Lilly said in a press release that some contained bacteria, high levels of impurities and in one case, a drug was “nothing more than sugar alcohol”. BLOOMBERG