FDA moves to end Ozempic knockoffs, but Hims & Hers says it will keep selling compounded versions
Mar 20, 2025
Key Points
- The FDA is ending its authorization for bulk-compounded GLP-1 drugs like Ozempic and Wegovy knockoffs now that obesity drug shortages have officially ended, with enforcement deadlines starting Wednesday.
- Hims & Hers says it will continue selling individualized compounded versions under existing FDA law, a legally untested strategy that could expose the company to nine-figure settlements from Eli Lilly and Novo Nordisk.
- Hims & Hers stock has already fallen nearly 50% from its $15 billion February peak as the FDA signaled enforcement, reflecting investor concern that the compounding business was a major growth and margin driver.
Summary
The FDA has moved to halt bulk compounding of GLP-1 drugs, including Ozempic and Wegovy knockoffs, now that it has declared the official end of obesity drug shortages. The deadline for pharmacy-prepared versions of Zepbound starts Wednesday, with knockoffs of Ozempic and Wegovy to follow later in spring.
Hims & Hers Health, the telehealth platform that built significant revenue from selling compounded versions, says it will continue offering individualized compounded versions of these drugs. Other compounding firms and telehealth pharmacies plan to do the same. Current FDA law allows compounding pharmacies to make special individualized versions of drugs unavailable commercially.
The legal ground is untested at scale. No one has previously operated compounding at this volume, and the law may not definitively prohibit what Hims & Hers proposes. The company could face nine-figure settlements from Eli Lilly and Novo Nordisk if it loses a court fight, but continued sales could justify that risk.
Hims & Hers has hired two lobbying firms as of January. The company frames the issue as consumer choice and competition against entrenched pharmaceutical pricing. Compounded versions sell for $100 to $300 a month versus $1,000-a-month branded prices, making them accessible to Americans priced out of the original drugs.
Hims & Hers peaked at a $15 billion market cap on February 18, then dropped nearly 50% as the FDA signaled enforcement. The company retains significant customer base and subscription revenue from non-GLP-1 products like hair care and erectile dysfunction treatments, but the compounding business was a major growth driver and margin contributor. Any resolution through litigation, regulatory change, or negotiated settlement will reshape telehealth economics and competitive dynamics between startups and pharma incumbents.