U.S. Targets Compounded Weight-Loss Drugs; Hims Shares Plummet

The recent announcement from the U.S. Food and Drug Administration (FDA) has sent shockwaves through the telehealth sector, particularly impacting Hims & Hers Health. The FDA declared its intention to take action against the company’s $49 weight-loss pill, a compounded drug that mimics the effects of approved medications like Wegovy, produced by Novo Nordisk.

FDA’s Actions Against Compounded Weight-Loss Drugs

On February 6, 2023, the FDA cited concerns regarding the quality and safety of Hims’ product. As a result, the agency plans to restrict access to GLP-1 ingredients used in non-approved compounded medications. This decision could significantly affect Hims’ operations and market introduction, as the pill had been marketed as the most affordable GLP-1 therapy available in the U.S.

Impact on Hims Shares

The FDA’s announcement led to a 14.1% drop in Hims shares during after-hours trading. This decline reflects investor concern about potential regulatory constraints that might limit the company’s ability to market its compounded drugs.

Legal Consequences and Industry Reactions

The situation escalated further when the Department of Health and Human Services referred Hims to the Department of Justice. The referral raises the possibility of legal action based on potential violations of federal law concerning compounded drugs.

• Hims proposes to sell an alternative to Wegovy at $49 per month, nearly $100 less than its brand-name counterpart.
• The FDA’s actions are designed to curb illegal mass production of unapproved compounded drugs.
• Legal actions could include warning letters, court injunctions, or administrative seizures of products.

In a statement, Hims asserted its commitment to consumer safety and expressed intentions to collaborate with regulators to ensure the continued availability of affordable healthcare options.

Responses from Competitors

The news has drawn attention from competitors as well. Novo Nordisk has indicated that it would seek legal redress against Hims for its plans to offer compounded versions of their drug. Eli Lilly also voiced support for the FDA’s actions, emphasizing the dangers patients face when unapproved alternatives are marketed without clinical validation.

The Compounding Landscape

Compounding allows pharmacies to create customized medications but must adhere to strict regulatory protocols. Under current federal law, such practices are legal if they are performed in response to specific medical needs or shortages. However, Hims’ compounded pill lacks FDA approval and has not undergone clinical trials to demonstrate its safety or efficacy.

The FDA’s crackdown aims to protect patient safety and ensure that medications are both effective and appropriately marketed. It emphasizes that advertisers cannot claim compound drugs are generics or equivalent to FDA-approved treatments.

The unfolding situation around Hims & Hers highlights ongoing tensions in the evolving landscape of weight-loss therapeutics, regulatory oversight, and market accessibility. As the FDA enforces its policies, the future of compounded weight-loss medications remains uncertain.