Appeals Court Hears GLP-1 Compounding Testimony

A three-judge panel of the 5th Circuit Court of Appeals heard oral arguments on 3/30 in a challenge to FDA’s finding that popular weight loss drugs are no longer in short supply and thus cannot be legally compounded except in very restricted circumstances. Courthouse News Service reports that the arguments in cases involving Lilly’s Zepbound (tirzepatide) and Novo Nordisk’s Ozempic and Wegovy (semaglutide) focused on whether FDA followed the right procedure and whether it looked at shortage data correctly.

The attorney for the compounders argued that FDA’s action in removing the drugs from its shortage list was a “prospective legal prohibition on compounding for an entire industry,” making it an agency rule that requires notice-and-comment rulemaking under the Administrative Procedure Act (APA).

FDA’s attorney responded that the APA defines “adjudication” as everything that isn’t rulemaking, and said that removing the drugs from the shortage list applied a statutory definition of “shortage” to a snapshot of market facts on supply and demand without creating a new policy.

While the compounders argued that FDA took the company’s supply and demand data at face value, the agency and the companies said FDA probed the information with detailed questions and asked for additional data.

“The agency was not captured by Novo,” the FDA attorney said. “Sometimes the agency makes decisions that are in a manufacturer’s favor, and sometimes it makes decisions that are about what the compounders want.”

Both sides agreed before the panel that the shortage is factually over today. Lilly and Novo Nordisk have ramped up production, and neither drug has been on the shortage list in more than a year. However, the compounders said patients still face spot shortages at some pharmacies, especially for starter doses, and that compounded versions remain much less expensive.

The panel gave no indication when a ruling would be issued, the news service says.

Meanwhile, on 4/1, FDA clarified its policies on how compounding pharmacies should operate as supply constraints for the popular GLP-1 drugs begin to ease. The notice signals that regulators are tightening oversight as shortages of drugs like semaglutide and tirzepatide stabilize, reducing the flexibility compounders previously relied on during supply disruptions.

Under Section 503A of the Federal Food, Drug, and Cosmetic Act, FDA reiterates that compounded drugs must be made for individual patients based on a valid prescription and cannot be produced in bulk as “essentially copies” of commercially available products. The agency defines such copies as products with the same active ingredient, similar strength, and same route of administration as approved drugs—unless a prescriber documents a meaningful clinical difference for a specific patient. FDA also clarifies that combining ingredients, such as adding vitamin B12 to semaglutide, would still be considered a copy if the formulation remains largely equivalent in dosing and delivery.

However, the agency indicates limited enforcement discretion, stating it does not currently intend to take action against compounders producing small volumes — defined as four or fewer prescriptions per month—of such copies. This carveout provides a narrow pathway for continued compounding in limited circumstances.

For outsourcing facilities operating under Section 503B, the FDA emphasizes stricter rules: bulk drug substances may only be used if they appear on the agency’s approved “bulks list” or if the drug is listed on the FDA shortage database. Notably, neither semaglutide nor tirzepatide currently qualifies under these criteria, meaning large-scale compounding of these GLP-1 therapies is generally not permitted.