Antitrust Challenge to GLP-1 Distribution Deals Falls Short in Federal Court

U.S. District Judge Micaela Alvarez in Texas dismissed the case brought by compounding pharmacy Strive Specialties Inc., according to Reuters, which reported the decision Aug. 6. The ruling centered in part on a fundamental requirement of U.S. antitrust litigation: identifying a plausible market in which competition has allegedly been harmed.

Strive’s theory focused on relationships between Lilly and Novo and telehealth companies that connect patients with physicians. The pharmacy contended that exclusive arrangements restricted doctors on those platforms from prescribing compounded GLP-1 medicines, limiting an avenue through which customized alternatives to branded treatments could reach patients, according to Reuters.

But the court found deficiencies in the way Strive characterized competition between the products.

According to Reuters’ account of the decision, Alvarez concluded that compounded GLP-1 medicines and commercially manufactured drugs could not simply be treated as interchangeable products for purposes of Strive’s proposed antitrust market. Compounded drugs can be prepared for patients with particular medical requirements that available commercial products do not meet.

That distinction undermined a central element of the pharmacy’s case. Antitrust plaintiffs generally must show harm to competition within a properly defined market rather than merely demonstrate that a business practice hurt an individual competitor.

The court also found Strive had not adequately established the type of competitive injury required to proceed with its claims, Reuters reported.

The decision arrives amid intense competition over obesity and diabetes treatments. Lilly markets tirzepatide as Zepbound for obesity and Mounjaro for diabetes, while Novo sells semaglutide under brands including Wegovy and Ozempic. Surging demand for GLP-1 therapies has made the category one of the pharmaceutical industry’s most closely watched markets.

Compounding pharmacies occupy a different part of that ecosystem. They can prepare customized medicines in circumstances permitted under federal law, creating a point of friction with manufacturers whose branded products have generated billions of dollars in sales.

Strive said after the ruling that it was disappointed and was evaluating its options, including a potential appeal, according to Reuters. The company also pointed to concerns that some state attorneys general have expressed regarding the manufacturers’ conduct.

Lilly welcomed the court’s decision and reiterated its objections to businesses engaged in mass compounding of tirzepatide, Reuters reported. Novo also said it was pleased with the dismissal.

The outcome doesn’t establish that exclusive pharmaceutical distribution or telehealth arrangements are insulated from antitrust scrutiny. Instead, the ruling illustrates the hurdles a challenger faces in establishing that branded and customized medicines compete within the same legally relevant market and that the challenged conduct harms competition itself.

Those questions are likely to remain significant as drugmakers, digital-health companies and compounding pharmacies compete over how patients obtain increasingly valuable obesity treatments.

The case is Strive Specialties Inc. v. Eli Lilly & Co. and Novo Nordisk A/S et al., in the U.S. District Court for the Western District of Texas.

Source: Reuters