Reuters
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The U.S. Food and Drug Administration said Thursday that there is no longer a shortage of Eli Lilly’s (LLY.N) blockbuster weight-loss and diabetes drugs after the agency reassessed its supply.

The finding effectively prevents widespread sales of cheaper copies of the drugs that many patients use, but the FDA said it would not take action against the pharmacies that make the drugs within 60 to 90 days of the decision.

The pharmacies that make drugs were not given notice when the FDA first declared in October that there was no longer a shortage of the drugs, before announcing days later that it would reconsider its decision.

U.S. regulations allow pharmacies to copy brand-name drugs that are in short supply.

A Lilly spokesman said anyone marketing or selling unapproved versions of tirzepatide, the chemical name for the weight-loss drug Zepbound and the diabetes drug Mounjaro, must now stop and begin transitioning patients to FDA-approved medications .

The Alliance for Pharmacy Compounding, which represents compounding pharmacists and technicians, said the announcement was not unexpected but “not necessarily the end of the story.”

“I am simply not convinced that the data on which the FDA is relying in this doubling of its decision to resolve shortages is complete enough to say that the shortage is truly over,” said Scott Brunner, CEO of Alliance.

The FDA added that Novo Nordisk’s (NOVOb.CO) rival weight-loss drug Wegovy is still in short supply, even though all doses are listed as available.

The alliance sent survey results to the FDA last month that showed hundreds of thousands of patients were taking compounded versions of semaglutide, the chemical name for Wegovy, and said the agency should consider its role in alleviating the obesity drug supply crisis .

Telehealth company Hims & Hers Health (HIMS.N), which offers compounded versions of Wegovy, declined to comment. Its shares, which have nearly tripled in value this year, traded 10% lower at $24.74.

Shares of Eli Lilly are up 30% so far this year, trading about 1% lower at $758.90. Shares of Danish drugmaker Novo Nordisk (NOVOb.CO) have risen 10.6% this year and traded 3.5% lower on Thursday.

Bernstein analyst Courtney Breen said the FDA’s decision suggests that the end of the “compounder spree” is near but that it will have only a modest impact on the drug’s prescription volumes in 2025.

Another industry group representing major pharmaceuticals sued the FDA in October over its decision to remove tirzepatide from the list of drugs facing shortages.

The Outsourcing Facilities Association claimed the FDA made its decision based on Lilly’s claims that it could meet demand for the drugs without giving the public an opportunity to comment. She said the drug remains in short supply.

The lawsuit was shelved days later after the FDA agreed to reconsider the decision, allowing sales of compounded versions to continue in the meantime.

Insurers generally cover Lilly and Novo diabetes medications, but many do not cover weight loss costs. This has resulted in many patients having to pay for the compounded versions out of pocket.

Lilly began sending cease-and-desist letters in August to telehealth companies, wellness centers and medical spas that sell compounded versions of Zepbound and Mounjaro. The company has also filed lawsuits against sellers who falsely claimed to be selling FDA-approved versions of the drug.