Date: September 22, 2023Attorney: Mohamed H. Nabulsi and Christopher T. Zona

Recently, pharmaceutical companies like Novo Nordisk (Ozempic, Wegovy, and Rybelsus) and Eli Lilly (Mounjaro) filed lawsuits in federal courts across the country against medical spas and wellness centers, compounding facilities, and pharmacies, including one of our pharmacy clients, who dispense drugs containing the active pharmaceutical ingredient semaglutide (Novo Nordisk) or tirzepatide (Eli Lilly). These lawsuits currently are pending in New York, Florida, Tennessee, Texas, Arizona, Georgia, Minnesota, South Carolina, and Utah.

Each company is following a similar line of attack, in that each is alleging that compounding facilities and pharmacies are engaging in unfair and deceptive trade practices under state law by selling a compounded drug containing semaglutide (Novo Nordisk) or tirzepatide (Eli Lilly) without FDA approval. And each company is alleging that the targeted medical spas and wellness centers are engaging in trademark infringement for marketing and selling treatments containing semaglutide (Novo Nordisk) or tirzepatide (Eli Lilly).

You should know that, under the Federal Food, Drug, and Cosmetic Act (21 U.S.C. §301, et seq.), there are two exceptions to the premarket approval requirement that the pharmaceutical companies claim to be at issue in the above-referenced cases. First, Section 503A allows drug compounding without FDA approval either after the receipt of a prescription or before the receipt of a prescription when it is based on a “history” of receiving prescription orders for compounding so long as the compounded drug is not “essentially a copy” of a commercially available drug and is not compounded regularly or in more than small quantities. Second, Section 503B allows outsourcing facilities to compound large quantities of drug products without patient-specific prescriptions and to sell bulk compounded products to providers and practitioners as office stock. To qualify for this exception, the facility must meet a number of statutory criteria, the drug being compounded must be named on an FDA-approved clinical need or drug shortage list, and the drug being compounded cannot be “essentially a copy” of an FDA-approved drug. The FDCA also contains a provision that prohibits private enforcement of its provisions, including by way of using state law claims that seek to circumvent a direct action brought under the FDCA. In at least one federal case in the Ninth Circuit, this provision has been held to preempt state law claims trying to enforce the FDCA for money damages. That said, the current lawsuits have not yet been tested, and the companies seem more intent on seeking injunctive relief.

If you are currently dispensing compounded drugs containing either semaglutide or tirzepatide—whether directly or pursuant to a central-fill arrangement—it is advisable that you evaluate, among other things, the prescription for the compounded drug and your related marketing and dispensing practices to prevent or mitigate your risk of exposure to potential claims and violations under your state’s laws governing unfair and deceptive practices, the FDCA, and any analogue state statute in the state(s) in which you operate.

Mandelbaum Barrett PC’s Healthcare Practice Group consists of healthcare regulatory attorneys, experienced litigators and trial attorneys, and a licensed pharmacist who regularly synthesize their know-how and skills to advise pharmacies, medical spas and wellness clinics, and other medical providers on compliance-related matters and defend them in commercial litigation and governmental investigations. Please do not hesitate in contacting us if you would like to further discuss your business and dispensing practices related to these, or other, compounded drugs as this is an area where increased litigation and governmental involvement is highly likely.

Mohamed Nabulsi

Chair, Healthcare Practice Group

Christopher Zona

Partner, Healthcare Litigation and White Collar & Criminal Defense