Warnings From the Past
The industry endured just such a catastrophe in 2012, when the New England Compounding Center released a contaminated injectable steroid that killed at least 64 people and harmed hundreds more.
In response, Congress and the FDA had strengthened oversight. Mr. Mikhael’s company is an outsourcing facility, or 503B compounding pharmacy — so-named for a section of the 2013 law that set new requirements for drug compounders. The companies are licensed to make slightly different versions of FDA-approved drugs in response to shortages or a patient’s special needs.
The law created two classes of compounding pharmacies: The FDA regulates the larger 503B compounders with standards like commercial drug companies, while 503A pharmacies make smaller lots of drugs and are largely overseen by state boards of pharmacy.
The 503A facilities also are producing compounded semaglutide and tirzepatide for hundreds of thousands of patients. Like the 503Bs, these operations take the active ingredient, produced as a powder in FDA-registered factories, mostly in China, then reconstitute it with sterile water and an antimicrobial in small glass vials.
Together, the compounding pharmacies may account for up to 30% of the semaglutide sold in the United States, Mr. Mikhael said, although he cautions that is a “wild ballpark figure” since no one, including the FDA, is tracking sales in the industry.
The compounders say the companies should increase production if they’re worried about competition. Like the dozens of other drugs they produce for hospitals and medical practices, the compounders say, the two diet drugs are essential products.
“If you don’t want a 503B facility to make a copy, it’s pretty simple: Don’t go short,” said Lee Rosebush, chair of a trade association for 503B pharmacies. “FDA created this system because these are necessary drugs.”
Novo Nordisk hasn’t specified why it can’t keep up with demand, but the bottleneck apparently lies in the company’s inability to fill and sterilize enough of its special drug auto-injectors, said Evan Seigerman, a managing director at BMO Capital Markets.
The company announced June 24 that it was investing $4.1 billion in new production lines at its Clayton, North Carolina, site. In 2023, the FDA issued a warning over procedural violations at the site and separate cautions at an Indiana facility that Novo Nordisk took over recently.
Compounding for Dummies
At least 28 companies, mostly in China, are registered with the FDA to produce or distribute semaglutide. At least half the companies have entered the market in the past 12 months, driving the raw material’s price down by 35%, according to Scott Welch, who runs a 503A pharmacy in Arlington, Virginia.
Compounders can buy powdered semaglutide from some US distributors for less than $4,000 a gram, said Matthew Johnson, president and CEO of distributor Pharma Source Direct. That comes out to as little as $10 per weekly 2.5-microgram dose – not including overhead and other costs.
While Ozempic or Wegovy patients use a Novo Nordisk device to inject the drug, patients using compounded products draw them from a vial with a small needle, like the device diabetics use for insulin.
Some medical practices provide the compounded drug to patients as part of a weight loss package, with markups. In July 2023, Tabitha Ries, a single mother of six who works as a home health care aide in Garfield, Washington, found an online clinic that charged her $1,000 for 3 months of semaglutide along with counseling. She has lost 35 pounds.
She gets the drug from Mindful Weight Loss, a mostly telehealth-based operation led by physician Vivek Gupta, MD, of Manhattan Beach, California. Dr. Gupta said he’s prescribed the weight loss drugs to 1,500 patients, with about 60% using compounded versions from a 503A pharmacy.
He hasn’t seen any essential difference in patients using the branded and compounded forms, although “some people say the compounding is a little less effective,” Dr. Gupta said.
There’s some risk in using the non–FDA-approved product, he acknowledged, and he requires patients to sign an informed consent waiver.
“Nothing in life is without risk, but I would also argue that the status quo is not safe for people who need the medicine and can’t get it,” he said. “They’re constantly triggered by all this food that’s causing their weight to go up and their sugar to go high, increasing their insulin resistance and affecting their limbs and eyes.”
Compounding semaglutide is a helpful sideline for pharmacists like him, Mr. Welch said, especially given the pinch on drug sale revenue that has led many independents to close in recent years. He figures he earns 95% of his revenue from compounding drugs, rather than traditional prescriptions.
It’s important to distinguish compounded semaglutide from unregulated powders sold as “generic Ozempic” and the like, which may be contaminated or counterfeit, said FDA spokesperson Amanda Hils. But since compounded forms of the drug are not FDA approved, those who make, prescribe, or use them also should have “an increased level of responsibility or awareness,” she said.