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If you’ve been following the headlines over the past week, you could be forgiven for thinking that compounded drugs suddenly burst onto the scene with the Hims–Novo Nordisk skirmish. In reality, compounding has been part of U.S. pharmacy practice for generations. What’s new is not compounding itself, but its dramatic collision with blockbuster economics, tele-health scale, and the commercial expectations associated withweight-loss medications like semaglutide.
For those of us who work in commercial strategy, insights, analytics, or brand leadership, this is a moment to pause. It’s a moment to understand the rules of the system we all operate in. Compounding touches access, regulation, pricing, and intellectual property all at once; and that combination has real consequences for how markets function.
This essay is meant to provide context. Not advocacy. Not legal advice. Just the operating facts that matter as this dust up unfolds in real time.
At its core, compounding is the practice of modifying a medication to meet a specific clinical need when no FDA-approved product fits. Common examples include customized thyroid and hormone therapies, liquid/suspension formulations of antibiotics or anti-epileptics for pediatric or geriatric patients, topical dermatologic compounds with adjusted concentrations, and patient-specific allergy immunotherapy. Historically, compounding has addressed gaps in formulation, tolerability, or dosing; it has not served as a substitute for widely available branded drugs.
Compounded drugs are not generics. They are not biosimilars. And they are not FDA-approved finished products.
The active pharmaceutical ingredient (API) must be sourced from an FDA-registered manufacturer, but the final compounded product is not reviewed by the FDA for safety, efficacy, or manufacturing quality. Oversight of compounding pharmacies primarily sits with state boards of pharmacy, with additional federal guardrails depending on the type of compounding entity involved.
This distinction -- API regulation versus finished-product approval -- is the crux of much of today’s confusion.
Compounding exists because Congress explicitly carved out space for it in the Federal Food, Drug, and Cosmetic Act. But that space is narrower than many of today's headlines would make us think.
Broadly speaking, compounding is permitted under two specific conditions:
What compounding is not intended to support is large-scale, proactive substitution for FDA- approved drugs when those drugs are readily available. That line, between patient-specific need and de facto mass manufacturing, is where enforcement, litigation, and controversy tend to aggregate.
When shortages end, the legal footing changes. When a drug was never in shortage to begin with, the footing is thinner still.
GLP-1s didn’t invent compounding risk, but they amplified it dramatically.
Extended shortages of injectable semaglutide and tirzepatide left many patients without reliable access to therapy. Compounding pharmacies filled that void, often becoming the only option available. Regulators, confronting the trade-offs between access and oversight, chose to exercise restraint rather than intervene aggressively.
But scale matters. Telehealth platforms (e.g., Hims & Hers) have demonstrated the ability to acquire patients by the millions. Their marketing efforts can reach far beyond the traditional physician-pharmacy relationship. And price signaling, especially aggressive price signaling, can turn a clinical workaround into a major commercial challenge overnight.
The moment compounded GLP-1s were framed as cheaper, broadly available alternatives rather than temporary bridges, the issue stopped being about access and started being about substitution.
The recent Hims announcement crossed several lines at once.
First, the oral Wegovy pill was never in shortage. Second, Novo Nordisk holds an active patent on semaglutide that explicitly covers oral formulations. Third, the product was marketed at a steep discount and positioned as an alternative, not a stopgap.
From a regulatory and IP standpoint, that combination is combustible.
Whether one views Novo’s response as patient protection or market defense, the escalation was predictable. When compounding moves upstream -- from individualized preparation to national promotion -- it invites scrutiny not just from the FDA, but from patent law, DOJ referrals, and HHS attention.
This is not unique to GLP-1s. It’s simply more visible because the stakes are so high.
For those with longer memories, this dynamic is not new.
Years ago, branded Makena, FDA-approved to reduce the risk of preterm birth, faced sustained pressure from compounded versions of hydroxyprogesterone caproate. Even with FDA approval in hand, the brand struggled against lower-cost compounded alternatives that clinicians had previously relied upon for years. Several of my colleagues and I actually worked on Makena, so we know this first-hand.
That experience foreshadowed today’s tensions: when a compounded product pre-exists a branded approval, commercial adoption is not guaranteed -- even with regulatory endorsement. Conversely, when compounding follows approval, enforcement becomes more aggressive, but not necessarily cleaner.
The takeaway for commercial teams then -- and now -- is that compounding can shape demand in ways that traditional forecasting models often underestimate.
There are several implications worth enunciating.
First, compounding is not a fringe issue. It can materially impact uptake, persistence, and pricing dynamics, particularly in high-demand therapeutic areas.
Second, enforcement is episodic, not binary. The absence of immediate regulatory action does not imply long-term permissibility. Conversely, crackdowns often lag market behavior.
Third, messaging matters. How a compounded product is described, priced, and promoted can be as important as its formulation. “Personalization” is not a magic word if the underlying practice looks like mass substitution.
Fourth, I&A teams should monitor compounding activity with the same rigor they apply to payer policy or channel mix. It influences patient behavior, physician perception, and competitive response, even when it sits outside the traditional branded marketplace.
It’s tempting to frame the current moment as Big Pharma versus upstart disruptors, or access versus innovation. That framing is emotionally satisfying and analytically useless.
Compounding exists because the drug system requires flexibility. Patents exist because innovation requires protection. Both can be true at the same time.
What we are watching now is not the end of compounding, nor the collapse of IP law. It is a recalibration -- driven by scale, visibility, and commercial ambition -- of where compounding fits in a market dominated by $10B franchises.
For those of us who make decisions based on data rather than discourse, the obligation is clear: understand the rules, model the risks, and avoid confusing short-term noise with long-term structure.
The headlines will keep coming. The fundamentals haven’t changed nearly as much as the volume suggests.
