After the FDA decided to remove Eli Lilly's (LLY.US) Tirzepatide from the list of drug shortages, a lawsuit over the de-listing caused Hims & Hers Health (HIMS.US) to trade up 9.68% on Monday. The lawsuit caused the FDA to reconsider the de-listing.
On October 7, the Outsourcing Facilities Association, which represents compound pharmacies, filed a lawsuit in a federal court in Texas, claiming the FDA made "reckless and arbitrary" decisions in taking away consumers' access to Tirzepatide. The organization claimed Tirzepatide was still in short supply and asked the FDA to revoke its decision.
If a brand drug is deemed to be in shortage by the FDA, rules allow compound pharmacies to produce the still-patent drug. Earlier, Eli Lilly had resolved the shortage of Tirzepatide and notified the FDA, which now determined the supply issue was resolved and removed the drug from the list.
This means, according to FDA guidelines, compound pharmacies will no longer be allowed to produce and sell generic versions of these drugs. Patients who cannot afford the high cost of the original drugs may lose access to these weight-loss drugs.
On October 11, the FDA said it would not take regulatory action against compound pharmacies and facilities that produce their own versions of Tirzepatide until its review is complete.
The decision was good news for telemedicine companies like Hims & Hers Health, which can continue to offer compounded versions of weight-loss drugs. Hims & Hers Health's stock rose about 10% on Monday.