Hims? Hers? It’s Novo Nordisk’s Semaglutide Market Now

Between Feb. 19-26, shares for the telehealth company Hims & Hers Health, Inc. plummeted. The reason for the sudden drop in its stock price? An FDA announcement that semaglutide injection products, the GLP-1 medication in the blockbuster drugs Wegovy and Ozempic, are no longer in shortage.

---

During the three-year shortage period, Hims & Hers, along with many other companies, began selling a compounded version of the drug, capturing profits that would be typically foreclosed by competitor Novo Nordisk’s patents. Novo Nordisk, as the patent holder for semaglutide, would under normal conditions have a protected monopoly for the sale of its drug products. Essentially, Hims & Hers has found success because it has been able to sell semaglutide, but only because there is a shortage.

The loophole that allowed them to do so was Section 503 of the Food, Drugs & Cosmetics Act. Compounding pharmacies typically prepare personalized medications by mixing, altering, or combining ingredients to meet specific needs prescribed by a doctor, under Section 503A. The usual use case for this is if someone has an allergy and cannot take the FDA-approved formulation of a drug. Section 503B also allows compounding pharmacies to manufacture large batches of a drug for healthcare facilities.   

Companies are not allowed to use Section 503A to produce drugs that are “essentially copies of a commercially available drug product.” However, the FDA has interpreted “commercially available” to exclude drugs that are on the shortage list. Similarly, Section 503B does not allow for compounding of drugs that are “essentially a copy of one or more approved drugs” but the statute notes that this does not apply to drugs on “the drug shortage list in effect under Section 506E.” The 506E shortage list recognizes drugs that have low availability due to manufacturing or quality problems, delays or discontinuations. The list identifies these drugs for which the agency is working to reduce the impact of the shortage.

Notably, the FDA does not review or test compounded drugs. While the FDA has approved the underlying active compound, there is no safety review of the specific formulations created by compounding pharmacies. The FDA itself has warned of the dangers of this lack of review in the context of compounded semaglutide.

On Feb. 9, Fox aired a controversial Hims & Hers Super Bowl commercial called “Sick of the System” which reached the 127 million viewers of the game and led to a 650 percent increase in website traffic for the company. The advertisement shared statistics about obesity in America, criticized companies for creating drugs that could treat it but are priced out of reach, and then offered its own cheaper formulation. Only for two seconds, towards the end of the ad in small, white letters, does this text appear: “Prescription required. Compounded drug products are not FDA approved. The FDA does not evaluate compounded drug products for safety, effectiveness, or quality.”

The ad did not include verbal recognition of the fact its drugs are compounded or not FDA approved. Nor did the ad list any of the side effects or contraindications of the drug, as prescription drug companies are required to do by FDA regulation. The ad led to a 24 percent stock price boost for Hims & Hers in the week following the ad, it also introduced consumers to an market option that now will only be available for 60 days due to the shortage ending.

The end of shortage poses meaningful concerns for public health. Though compounded versions of semaglutide have come under fire for adulteration and dosing issues, these products also are significantly less expensive and more accessible than Ozempic or Wegovy.

Some online pharmacies offered compounded semaglutide at $50 per month. In comparison, without insurance coverage Wegovy, Novo Nordisk’s semaglutide product that has been approved for weight loss, has a list price of approximate $1,350 per month. Novo Nordisk has recently received praise because after the end of the shortage it announced that it is introducing a direct-to-consumer program that offers a monthly price of $499 for Wegovy if purchased without insurance. However, this price is still higher than that of compounded pharmacies.

While insurance coverage can ameliorate the cost for some, insurance companies have increased the requirements for individuals to receive prior authorization for these medications or are dropping coverage altogether. Additionally, semaglutide is often not covered for weight loss but only for the management of diabetes, despite Wegovy’s approval. Even individuals with prediabetes are not guaranteed insurance coverage. Approximately 14 states’ Medicaid programs cover any form of a GLP-1 drug to treat obesity. Because of Novo Nordisk’s patents, generic semaglutide products will not be able to enter the U.S. market until at least 2032 so price will continue to be an issue.

The Alliance for Pharmacy Compounding estimates “hundreds of thousands of patients” will have to transition from the compounded drug to branded version. Though compounding pharmacies do not receive normal drug approval from the FDA, they are different from and safer than counterfeit drugs, a market experts are concerned will explode if patients are no longer able to afford semaglutide.

Hims & Hers is poised for a sharp downturn in sales but may not be done yet. Though the company will not be able to produce copycats of Ozempic or Wegovy en masse, CEO Andrew Dudum has announced Hims & Hers will continue to offer access to personalized treatments, creating a niche market for patients who cannot tolerate the usual formulations of semaglutide. Additionally, the company may find a market among patients who cannot take the full dose of semaglutide, building upon the trend of “microdosing” the medications. Furthermore, the Outsourcing Facilities Association has sued the FDA, claiming the removal of semaglutide from the shortage list is arbitrary and capricious because there are still risks of supply shortages. If that lawsuit were to succeed, or if Novo Nordisk’s capacity to produce were to falter, the drugs may end up back on the shortage list. Until then, it’s Novo Nordisk’s market.

About the author

Rebekah Ninan (J.D. 2025) is a student fellow with the Petrie-Flom Center. Her research interests are focused on the intersection of health and the law. She is interested in mass torts, drug product liability, pharmaceutical antitrust, and the administrative law that affects health-related regulations promulgated by agencies.