Josh Nathan-Kazis and Mackenzie Tatananni

As the ground crumbles beneath the telehealth companies that have been selling cheap, legal knockoffs of the GLP-1 weight-loss drugs, Eli Lilly pressed its advantage on Tuesday, cutting prices on a lower-cost version of Zepbound it sells to compete with the knockoffs.

The major shifts in the GLP-1 weight-loss drug landscape come days after the Food and Drug Administration said that Novo Nordisk's semaglutide, which the company sells under the brand names Ozempic and Wegovy, is no longer in shortage.

That means that compounders will mostly need to stop making and selling their legal knockoff semaglutide in the coming months, and could spell an end to the boom of telehealth storefronts offering cheap GLP-1 drugs for weight loss. Lilly's tirzepatide, the drug sold as Zepbound and Mounjaro, came off the FDA shortage list late last year.

On an investor call Monday night, the CEO of the telehealth company Hims & Hers Health -- which had seen its shares climb more than 350% from May 2024 when it started selling compounded semaglutide, and last week when the FDA announced the shortage was over -- acknowledged that the company will need to shift away from selling semaglutide injections.

Hims shares were down 21.6% Tuesday morning.

With Hims and its telehealth peers reeling, Lilly on Tuesday made a play for the customers who will soon be seeking alternatives to compounded GLP-1 drugs.

Lilly has for months sold a cheaper version of Zepbound delivered in vials, rather than in autoinjector pens, for patients paying with cash through Lilly's own in-house online pharmacy. The company said Tuesday it was lowering prices for the dosage levels it already offers through the site, and adding new dosage levels.

The company is now selling a 2.5 mg dose of Zepbound, the lowest available, at $349 per month, down from its prior LillyDirect price of $399 per month. A 5 mg dose is $499 per month, down from $549 per month.

There are also 7.5 mg and 10 mg dosage levels now available through LillyDirect.

The list price of Zepbound sold through normal drug channels, which comes in an autoinjector, is $1,086 per month.

The new prices are still higher than the prices under which compounded GLP-1 drugs are generally sold. Compounded tirzepatide is largely no longer available, but Hims is advertising compounded semaglutide for $165 per month, if patients pay for 12 months in advance.

Unlike the single-dose auto injector pens covered by insurance, self-paying patients must draw up the medication from the vials themselves before injecting.

The rise of the compounders has unsettled investors, raising questions about whether Lilly and Novo can meet the extraordinary expectations for their GLP-1 franchises. Now, with the compounders on their heels, Lilly is looking to grab their patients.

Shares of Lilly were up 1.8% to $897.21 in premarket trading. Peer stocks were mostly rising, with Johnson & Johnson and Bristol Myers Squibb each gaining 0.4%, and Merck rising 0.5%. Shares of Pfizer were down slightly at 0.2%.

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com and Mackenzie Tatananni at mackenzie.tatananni@barrons.com

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February 25, 2025 09:54 ET (14:54 GMT)

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