Lilly's weight-loss drug removed from FDA's shortage list

(Reuters) -The U.S. Food and Drug Administration removed Eli Lilly's blockbuster weight-loss and diabetes drugs from its shortage list late on Wednesday, likely piling pressure on firms selling cheaper versions known as compounded drugs.

Diabetes treatment Mounjaro has been on the health regulator's shortage list since late 2022, while weight-loss drug Zepbound was added in April as demand far outstripped supply.

The limited supply for Lilly's drugs, as well as rivals from Novo Nordisk, had led to a boom in demand for compounded medicines, or custom-made treatments created by combining, mixing, or altering drug ingredients.

Federal regulations allow compounded versions to be sold to meet demand if a drug is in shortage. Outside of a shortage, compounders cannot make the drugs "regularly or in inordinate amounts."

"This essentially precludes compounded tirzepatide from being produced commercially," BMO Capital Markets analyst Evan Seigerman said in a research note, referring to the chemical name for Lilly's drugs.

Novo Nordisk's treatments still appeared on the FDA's shortage list on Thursday.

Lilly has started selling vials of the lowest dose of Zepbound in U.S. through its direct-to-consumer website to improve availability and combat the rise in popularity of compounded versions.

BMO's Seigerman had earlier said that if the additional supply in vials gets Lilly's drugs removed from the shortage list, it would allow the drugmaker to more easily sue those selling compounded versions of Zepbound.

Shares of Hims & Hers Health, which offers compounded versions of Novo's treatments, fell 7% to $17.62 in premarket trading.

Lilly is investing billions of dollars to boost production amid surging demand for Mounjaro and Zepbound. Novo, which makes rival drugs Ozempic and Wegovy, is also ramping up supply to meet unprecedented demand.

(Reporting by Mariam Sunny and Bhanvi Satija in Bengaluru; Editing by Shailesh Kuber and Sriraj Kalluvila)