I’m Keith Sakata, and this is The Signal—a newsletter that cuts through the noise to surface the strongest arguments in healthcare. No fluff. Just steelmanned debates, deep dives, and clear thinking on medicine, policy, and innovation.
Today's Read: 11 minutes
The Big Issue
The end of the GLP-1 drug shortage. On February 21, 2025, the FDA declared the nearly three-year shortage of Semaglutide officially over. These GLP-1 medications, popular for weight loss and diabetes management, have sparked intense debate over the affordability and accessibility of treatment. Although compounding pharmacies have provided a cheaper alternative during the shortage, they’ll be required to stop producing Semaglutide by late April and May of 2025. As compounded versions disappear, many patients may face higher costs for brand-name medications.
So What?
This shift could seriously impact diabetes and weight loss treatment access for millions of Americans. Despite the official end of the shortage, it's clear that demand is sky high. Now, online communities and telehealth companies alike are seeking ways to dodge these new rules.
The Big Picture
The shortage of GLP-1 medications, including Ozempic and Mounjaro, began in early 2022 due to surging demand and limited manufacturing capacity of its producers Eli Lilly and Novo Nordisk. Compounding pharmacies stepped in to fill this gap by creating custom formulations from commercially available drug ingredients. Traditionally, these pharmacies have served patients needing tailored dosages or specific drug formulations unavailable through standard pharmacies. But during the GLP-1 shortage, they emerged as critical sources of medication, offering alternatives up to ten times cheaper than branded options, and dramatically improving patient access.
Section 503A of the Food, Drug, and Cosmetic Act allows compounding pharmacies to create medications that are "essentially copies" of commercially available drugs, only if those drugs are listed on the FDA's shortage list. Under these conditions, the FDA does not consider the drug to be "commercially available," and allows compounding within certain limits, such as avoiding regular or excessive production. Actually, despite this regulatory green light, compounding pharmacies still remain susceptible to patent infringement claims under intellectual property laws by the manufacturer.
Since 2022, compounding pharmacies have offered GLP-1 medications at approximately $200 per month, significantly lower than branded alternatives at an average of $1000 per month. Over 6.7 million Americans accessed compound GLP-1 medications through these pharmacies, with 80 million prescriptions for compounded semaglutide filled in 2024 alone. Telehealth companies, like Hims and Ro, further expanded the reach of their compounded pharmacies through targeted marketing campaigns, using "patient influencers" to promote affordable programs. These typically include telehealth consultations, compounded medication evaluations, and home delivery without involving insurance.
However, compound pharmacies were never intended to provide price competition for branded drugs, and pharmaceutical companies have taken action. In June 2023, Novo Nordisk filed lawsuits against wellness clinics and medical spas over marketing of compounded semaglutide. And by October 2024, Eli Lilly also sued retailers for selling compounded tirzepatide. In February 2025, the FDA officially ended the semaglutide shortage, setting firm deadlines (April 22, 2025, for 503a pharmacies, and May 22, 2025 for 503b outsourcing facilities) to cease compounding these medications. Legal battles continued with injunctions against compounded products, and Novo actively petitioned the FDA to classify these drugs under the Demonstrable Difficulties for Compounding (DCC) criteria, aiming to restrict future compounding.
On social media, scores of users have expressed anxiety about the impending end of affordable medication. To avoid higher costs, some individuals have begun creating their own formulations at home, purchasing powdered semaglutide or tirzepatide from online sources that often label these products for "research use only." Online communities have formed around DIY compounding, sharing instructions, sourcing information, and warnings about potential safety risks. Meanwhile, compounding pharmacies and telehealth providers are finding loopholes, such as offering medications combined with vitamins, unusual administration methods like gummies, or slightly adjusted doses to classify prescriptions as "medically necessary."
Today, we'll explore reactions to the shortage resolution from Big and Small healthcare perspectives. Then, my thoughts.
The Decentralized Point of View
- Some argue that the FDA's claims on shortage resolution are too early.
- Others warn that restricting compounding will push patients toward unsafe sources.
- Advocates highlight the necessity of treatments that are unavailable commercially.
At the Alliance for Pharmacy Compounding, Scott Brunner said the FDA’s assessment of the shortage might be overly optimistic:
“I’m just not persuaded that the data on which the FDA is relying in this doubling-down on its shortage resolution decision is complete enough to say the shortage is really over. We continue to hear from pharmacies that the FDA-approved tirzepatide drugs are not attainable from wholesalers in quantities needed to meet demand by patients transitioning from compounded to commercial versions of the drug,” Brunner wrote. “FDA acknowledges in its letter that “many” patients may still be inconvenienced in the short term by the unavailability of the commercial drug. It’s nice of them to note that, but it’s cold comfort if you’re one of those patients.”
“FDA’s announcement may not be the end of the story,” Brunner said. “Though the agency is doubling down on its October 2 shortage resolution, there’s still litigation out there. Today’s statement from the agency certainly informs that litigation, but it’s not a decision by a court. It’s a unilateral action by the agency, so don’t confuse the two.”
Nicholas Reville at Recursive Adaptation warned about unintended consequences for patient safety:
“If you cut everyone off, patients will switch to unlicensed peptide vendors. While tirzepatide is considered a more effective drug for weight loss, the end of tirzepatide compounding was not earth shaking—patients switched to compounded semaglutide and still maintain most of the benefits,” Reveille wrote. “Taking away semaglutide as well, however, will truly cut people off from medicine that has transformed their lives.”
“If semaglutide compounding ends, patients will be in a panic. Eli Lilly and Novo Nordisk argue that their branded supply keeps people safe, but if licensed compounders shut down, people will flock to unregulated peptide suppliers outside the US,” Reveille wrote. “These services offer powdered semaglutide and tirzepatide, which patients mix with water to reconstitute, at prices that are even cheaper than compounders.”
Andrew Dudum on X argued that patient-focused compounding remains essential despite Big Pharma pressures:
“Obviously, critical to personalization is the need to compound medication. We do this because it is the right thing to do for the patient. We don’t compound every medication, even if we believe it would help our profits,” Dudam wrote. “Now that the FDA has determined the drug shortage for semaglutide has been resolved, we will continue to offer access to personalized treatments as allowed by law to meet patient needs. We’re also closely monitoring potential future shortages, as Novo Nordisk stated two weeks ago that it would continue to have “capacity limitations” and “expected continued periodic supply constraints and related drug shortage notifications.” We know that demand remains high, despite the $1200+ Novo Nordisk charges in the US compared to the $135-$300 it charges in its native Denmark.”
Dudum continued, “Since we have spoken out on the need to fix today’s “Stuck & Sick” health care system, we’ve seen Big Pharma react by questioning the need for affordable compounded options or purposely scaring regular Americans by making broad strokes about the “safety” of compounded medicines.”
The Centralized Point of View
- Some criticize the marketing practices of compounders as potentially misleading.
- Others argue that insufficient regulation leads to safety risks.
- Academics stress the need for higher standards and oversight.
Nikhil at OutofPocket highlighted consumer risks linked to loosely regulated compounding:
“There’s a ton of companies trying to pitch to consumers to get them to buy their version of GLP-1s. Everyone from Hims to Ro to a variety of med spas are all selling the drug, maybe some wrap-around services to help with side effects of the drug, or other products like supplements/vitamins,” Nikhil wrote. “And expectedly, there’s quite a bit of sketchiness from sellers and compounders which might add ingredients or mess up the dosages which can be a risk to patient safety.”
“If a patient can’t afford something but they really want it then they will flock to the cheapest option even if it’s dangerous,” Nikhil explained. “We see this with cosmetic surgeries and horror stories of getting them done abroad and we see this with shady compounding pharmacies for GLP-1 drugs. IMO if we go down this route, the government should be in charge of setting a minimum quality threshold for healthcare services to prevent outlier bad actors. Audits of compounding pharmacies. You can still choose to go there, but you’re doing the ‘gas food/food poisoning’ analysis mentally.”
Scott Alexander on Astral Codex Ten criticized telehealth companies’ legal tactics:
“I am not a lawyer but this is all stupid. What are the [compounding] companies thinking?” Alexander asked. “They might be hoping they can offload the stupid parts to doctors. Everyone else in healthcare is supposed to do what doctors tell them, especially if the doctors use the magic words ‘medically necessary.’ So pharmacies and telehealth startups (big companies, easy to regulate) can tell doctors (random individuals, hard to regulate) ‘wink wink hint hint, maybe your patient might need exactly 0.51mg of semaglutide, nod nod wink wink.’ The pharma company can probably still sue telehealth startups and pharmacies over the exact number of nods and winks that they do. But maybe they won’t want to take the PR hit if those pharmacies limit themselves to continuing to serve existing patients.”
“Overall, I think the past two years have been a fun experiment in semi-free-market medicine,” he wrote. “I don’t mean the patent violations—it’s no surprise that you can sell drugs cheap if you violate the patent—I mean everything else. For the past three years, ~2 million people have taken complex peptides provided direct-to-consumer by a less-regulated supply chain, with barely a fig leaf of medical oversight, and it went great. There were no more side effects than any other medication. People who wanted to lose weight lost weight. And patients had a more convenient time than if they’d had to wait for the official supply chain to meet demand, get a real doctor, spend thousands of dollars on doctors’ visits, apply for insurance coverage, and go to a pharmacy every few weeks to pick up their next prescription. Now pharma companies have noticed and are working on patent-compliant versions of the same idea. Hopefully there will be more creative business models like this one in the future.”
T. Joseph Mattingly at JAMA expressed concerns about aggressive marketing tactics by compounders:
“To capitalize on demand, several companies have launched marketing campaigns and have engaged ‘patient influencers’ to promote weight-loss programs,” Mattingly explained. “Unlike originator products, the 2002 Thompson v Western States Medical Center Supreme Court decision ruled that advertising prohibitions on compound pharmacies and their products are a violation of the First Amendment. Consequently, the advertising pursued by compounding pharmacies on GLP1 RAs do not appear to be illegal, but they do appear to violate Congress’s intent to support patient access to safe and effective drugs.”
“Congress’s intent in passing DQSA was to extend long-standing protections from unsafe, substandard, or fraudulent products to compounded pharmacy practices,” he said. “They were not intended to create a window of time where opportunistic vendors exploit a shortage to gain market share and drive new demand through aggressive marketing tactics. The advertisements are just a snapshot of the online marketing for GLP-1 RA-focused weight-loss programs. They are misleading and fail to adequately address potential risks or adverse effects of these products.”
How I See It
"How I See It" is where I share my perspective. Got feedback or criticism? I’d love to hear it—just reply to this email or drop a comment.
- Ending GLP-1 compounding will hurt patients who rely on affordable access, especially those with serious need.
- Legally, the FDA is on solid ground–but practically, the fallout could drive people to unsafe options.
- If we want both innovation and access, we need smarter policies that lower costs without killing future drug development.
As with most healthcare debates, I think it's useful to break this down into two dimensions: the impact on the system, and the impact on the patient. I often find myself split—where the case for good patient care resonates deeply, but the broader consequences to the system give me pause, or vice versa.
In the case of the FDA's decision to end compounding of GLP-1 medications, I'm frustrated by the effect on patients, but satisfied with the legal choice.
From the patient's side, the issue is straightforward: people who genuinely need these medications are going to lose access. As a physician, I see how transformative GLP-1s can be–especially for patients on antipsychotics who suffer from severe, illness-inducing weight gain. Compounding pharmacies helped bridge a dangerous gap during the shortage, and access has clearly improved lives. When the system fails to provide, it's the government's job to step in. And if pharma companies can't meet demand or keep prices reasonable, cutting off compound alternatives risk real harm here–and can push people into even riskier territory.
That's the part that worries me the most. We're already seeing patients on Reddit swapping DIY instructions, sourcing powdered peptides from sketchy suppliers, and injecting homemade solutions based on loose internet math. Some vendors don't even have websites, just email addresses. One user shared how a decimal error led others to inject gargantuan doses of semaglutide. These aren't edge cases. This is what happens when you rug pull affordable, regulated options.
Ironically, compounding itself has been pretty safe–especially for GLP-1s. The Drug Quality Security Act, passed after the tragic 2012 New England Compounding Center meningitis outbreak (where 753 were infected and 64 were killed), created strict FDA oversight to ensure sterile, high-quality practices. Since then, compounders have largely followed the rules, and adverse outcomes have been extremely rare. So yes, I get why the FDA wants patients to stick with approved manufacturers. But in this case, compounding has been a stable, lifesaving stopgap. Ending it with so much demand feels more like a technical win rather than a practical one.
Zooming out, the system-level view is murkier–but just as important. The reason drugs like GLP-1s exist in the first place is because we incentivize their development with massive profits. The tradeoff is intentional: we in the United States sacrifice immediate affordability and access in exchange for long-term innovation and the development of new medications. Without the promise of a twenty-year monopoly and sky-high prices, companies like Novo Nordisk and Eli Lilly wouldn't spend ten years and $2.5 billion chasing FDA approval with no guaranteed payoff.
And just to clarify: this conversation is about brand-name drugs–not generics. The two are often lumped together, but they're fundamentally different debates. Generic drugs are overpriced because of broken market dynamics (looking at you, Martin Shkreli). Brand drugs are expensive by design–because they fuel the innovation engine. And frankly, other countries get cheaper meds because the U.S. shoulders that cost. It's a deliberate trade-off with global benefits.
That's why compounding can't become a permanent workaround. Compounders and telehealth companies were never meant to compete directly with pharma companies. Their role is to temporarily fill in during true shortages–not create an alternate supply chain that undercuts the innovation model we rely on.
What I keep coming back to is this: how sensitive is innovation to changes in pharma revenue? The data suggests very. RAND research shows that even modest price regulations could reduce pharmaceutical innovation and lower human life expectancy in the U.S. by nearly a whole year by 2060. That's not a small trade-off. The best path forward seems to be reducing costs for patients–copay assistance, ensured market competition, better insurance coverage–without slashing manufacturer revenue. That way, we can protect both current access and future longevity.
In the near term, though, the biggest impact will be financial. Coverage remains limited across Medicaid, ACA plans, and many employer-based insurers. Only 13 states cover GLP-1s for obesity as of August 2024, with most citing cost as a barrier. A recent JAMA study found Wegovy would need an 80% price cut to be cost-effective; Zepbound would need a 30% drop.
Novo Nordisk is investing $6.5 billion to ramp up production this year. I hope it helps. But I'm skeptical it'll be enough to stop patients from seeking alternatives. Regulators need to get serious about prosecuting shady peptide traffickers and enforcing quality standards across the board. Trump's FDA pick, Dr. Marty Makary was the CMO of telehealth company Seseme, which sells compounded semaglutide, so we'll see if things change going forward. Because if we’re going to end legal compounding, we better make damn sure we’re not driving people toward something worse.
Don’t see it the same way? That’s fair—this is just one perspective. Share your thoughts by replying to this email or commenting, and we might feature your response.