Regulatory scrutiny has steadily increased since “viral” Tik Tok videos caused semaglutide shortages and compounding pharmacies rushed to fill the unmet need. More recently, certain state boards of pharmacy have issued statements condemning this practice. A close reading of the statute, however, reveals that the law appears to be ambiguous, and does not squarely support their interpretation.

At the Health Law Alliance, we have written previously about risks associated with off-label prescribing and dispensing, including intense patient demand leading to shortages of semaglutide, branded as Ozempic, Wegovy and Rybelsus here. Given the market short-supply of these products, many pharmacies turned to compounding to meet demand from diabetics and/or overweight patients. Accordingly, we are issuing this bulletin because state regulators have increased their rhetoric against semaglutide compounds, but the plain language of the statute appears to permit broader activities than regulators’ restrictive interpretations.

UPDATE: Not surprisingly, on June 20, 2023, Novo Nordisk announced that it had filed lawsuits for trademark infringement and other claims relating to false advertising by the defendants in those cases. The manufacturer has previously raised concerns over the integrity of semaglutide drugs except, of course, the FDA-approved versions of its branded products. In any event, Novo’s lawsuit relates to allegedly deceptive claims made about the compounded products, not the legality of the compounds themselves (and changes nothing we discuss below).

SECOND UPDATE: On July 6, 2023, Novo filed additional lawsuits against Florida compounding pharmacies, accusing them of violating state “unfair” competition laws. Our analysis of those lawsuits, which demonstrates that Novo’s claims are baseless, can be found here.

I. Section 503A of the Federal Food, Drug & Cosmetic Act Permits Compounded Copies of Drugs that Currently Are in Short-Supply

Section 503A of the FD&C Act describes the conditions that must be satisfied for licensed pharmacists and physicians to compound human drug products. Among other requirements, compounds cannot include “any drug products that are essentially copies of a commercially available drug product,” unless an exception exists.

One such exception is when the drug is not “commercially available,” such that it appears on the FDA drug shortage list under Section 506E of the FD&C Act. At the time of this publication, semaglutide drugs are listed as currently in shortage, meaning that compounders may copy the drug. While Novo Nordisk, the manufacturer of certain branded semaglutide drugs, may object, the FD&C Act has preempted the field such that patent infringement claims will not lie in these circumstances. And such a result falls squarely within the FDA’s mandate to ensure the availability of vital medicines to patients in need.

That said, contrary to the FDA’s efforts, Novo attempts to limit the availability of semaglutide base for such purposes. Nonetheless, to the extent a compounding facility purchases semaglutide base from an FDA-registered facility, there appears no doubt that compounds may replicate semaglutide drugs so long as those drugs are listed by the FDA as “currently in shortage.”

II. State Boards of Pharmacy Have Interpreted the FD&C Act to Require Semaglutide in the Same “Form” as FDA-Approved Drugs, But that Is Not What the Statute Requires

At least three state boards of pharmacy, North Carolina, West Virginia and Mississippi, have issued statements to the effect that semaglutide compounding does not meet the requirements of the FD&C Act, and California has banned shipments by out-of-state pharmacies that are not licensed in the State, purportedly because:

“Ozempic and Wegovy contain semaglutide base. Hence, only the base is a component of an FDA-approved drug. No salt form of semaglutide is contained in an FDA-approved drug.”

We respectfully submit that these state boards have misinterpreted federal law in at least two ways. First, the boards’ interpretation conflicts with the intent behind the FD&C Act, which is designed to prohibit not just copies, but products that are “essentially” copies as well. The statute itself is silent on what constitutes “essentially copies of a commercially available drug product,” but the FDA has interpretated the term broadly. According to FDA guidance: “The limitations in section 503A(b)(1)(D) apply to the compounding of drug products that are essentially copies of a commercially available drug product—not only to drugs that are exact copies or even to drugs that are nearly identical. This is to ensure that compounders do not evade the limits in this section by making relatively small changes to a compounded drug product and then offering the drug to the general public without regard to whether a prescribing practitioner has determined that the change produces for the patient a significant difference.”

In other words, under this broad interpretation, the statute would appear to deem subcutaneous semaglutide injectable drugs “essentially” copies irrespective whether one product was formulated with semaglutide base and the other with semaglutide salt. To be clear, semaglutide salts have not been proven to be therapeutically equivalent to the semaglutide peptide, but that is not the standard that applies. Had Congress or the FDA sought to limit the definition of “essentially” copies to equivalents, it could have done so. The fact that the FDA defined “copies” much more broadly strongly suggests that the state boards’ narrow interpretation based on the form of the API, i.e., base vs. salt, lacks support in the FD&C Act.

Second, the state boards’ interpretation also conflicts with the plain language of the statute. Specifically, the FD&C Act permits compounded copies with “drug substances that are components of drugs approved by the Secretary.” 503(b)(1)(A). In other words, the statute does not require compounders to use APIs in the same form as those used in the FDA-approved version of the drug. And while state boards have taken the position that semaglutide salts are not “components” of FDA-approved drugs because those drugs contain semaglutide base, the statute extends more broadly to “drug substances that are components,” not only to the components themselves. Hence, it would appear that semaglutide—in whatever form—is a “drug substance” that is a component of FDA-approved semaglutide drugs.

III. The FDA Has Not Issued Guidance Supporting the State Boards’ Interpretation

Compounded medications are not FDA-approved; they are created from ingredients by pharmacies or physicians following rigorous protocols for patient-specific therapies. Similarly, patent holders, like Novo Nordisk, do not hold a patent on the ingredients contained in an FDA-approved therapy, only the FDA-approved medication itself. Therefore, much of the controversy over semaglutide appears to revolve around the source and integrity of the ingredients used in the compounding process. For example, the state boards of pharmacy reiterate that “some ‘wholesalers’ offer ‘research use only’ products, and products produced by establishments which are not registered with the FDA. These products may not be used for compounding in any circumstance.”

It is against this backdrop that the FDA issued an April 27, 2023, letter to the National Association Boards of Pharmacy (NABP), stating that the API in Wegovy and Ozempic is “semaglutide in its base form. We are aware that in some cases compounders may be using salt forms of semaglutide, including semaglutide sodium and semaglutide acetate. We are not aware of any basis for compounding a drug using these semaglutide salts that would meet federal law requirements that limit the type of active ingredients that can be used in compounding.” The FDA’s subsequent, May 31, 2023, bulletin also mirrors the language used in its NABP letter. Notably, contrary to the guidance issued by the state boards of pharmacy, the FDA never took the position that medications cannot be compounded using salt forms of semaglutide. To the contrary, the FDA expressed that it was not “aware” whether semaglutide salts would meet federal law requirements applicable to such ingredients.

That much is clear. Under federal law, compounding pharmacies must use pharmaceutical grade product, accompanied by a valid certificate of analysis, that is sourced from an establishment registered with the FDA under Section 510 of the FD&C Act. Of course, the FDA would not be “aware” whether a compounder was complying with those requirements. Accordingly, the FDA’s guidance only adds to confusion in this area, and appears to be at odds with the interpretations of state boards of pharmacy. Although it appears clear that the FD&C Act is a federal law that trumps inconsistent state standards, such legal jargon provides no help to practitioners who are attempting to meet compelling health needs and rising levels of obesity in this country. On this final point, it bears note that a Phase III clinical trial recently found that 50mg oral semaglutide tablets achieved superior weight loss in adults with obesity compared with placebo. The study, sponsored by Novo Nordisk, also found that once-daily oral semaglutide was well-tolerated, with mild to moderate gastrointestinal adverse reactions.

IV. Practical Guidance & Take-Aways

Given the lack of clear federal guidance and uniform state regulation, compounders are well-advised to seek advice from experienced healthcare counsel, as there are a number of steps that may reduce enforcement risk. For example, compounders should be attentive to their marketing and branding around compounded semaglutide drugs, as regulators are particular attentive to potentially misleading consumer claims. In addition, attention should be given to the laws applicable to interstate compounding, or scenarios in which the pharmacy and patient are located in different states. By way of further example, documentation of supplier due-diligence and other compliance efforts is often critical to blunt accusations of bad faith or recklessness. Here at the Health Law Alliance, our experienced healthcare defense attorneys have represented pharmacies and physician compounders in connection with federal and state enforcement actions and regulatory scrutiny. Our firm’s mission is simple: use unmatched experience and insight to defend our clients against insurance conglomerates, the federal government, and state agencies. We used to work for them. Now let us fight for you. Contact us today for a consultation. We can help.