GLP-1 Agonists, Intellectual Property, and the Hidden Dangers of Compound Drugs to American Consumers

Introduction

Obesity and diabetes impose massive costs on U.S. health, business, and productivity. About 38.4 million Americans (11.4%) have diabetes—8.7 million unknowingly—costing around $413 billion a year, or one in four healthcare dollars. Obesity affects 43.1% of adults, with a total economic burden of $1.4 trillion annually. Even airlines have felt the impact: heavier passengers added $275 million in extra fuel costs by 2000.

FDA-approved GLP-1 medicines have transformed treatment, backed by large clinical trials and strict oversight. Obesity rates may now be stabilizing, promising trillions in savings and healthier lives.

However, illicit compounded GLP-1 products are flooding the market—unregulated, misleadingly advertised, and often unsafe. These fakes endanger patients, weaken innovation, and erode already fragile trust in medicine (only 53% trust doctors; 57% trust pharmacists).

This primer outlines how GLP-1 compounding spread, the risks it poses, and what policymakers must do: intercept unsafe imports, enforce FDA sourcing standards, and protect patients and innovation.

Background

As demand for semaglutide surged, the FDA listed Wegovy (March 2022) and Ozempic (August 2022) as drugs in shortage, allowing compounding pharmacies to legally produce semaglutide under §503A and §503B of the Federal Food, Drug, and Cosmetic Act. This temporary exception—meant only for shortages—opened the door to large-scale compounding.

Even after the FDA declared the shortage resolved in February 2025, ending authorization for mass production by April 22, a gray market had already taken hold. A new cottage industry of compounded semaglutide thrived on weak oversight, lower prices, and lax manufacturing and marketing controls, drawing in millions of consumers.

The Threat of Compounded Drugs

Americans are injecting drugs with origins and safety that cannot be verified:

  • As of September 9, 2025, the FDA has received 1,424 reports of adverse events associated with compounded GLP-1 drugs, including reports of 329 hospitalizations and 23 deaths. The FDA warns that it is “likely that adverse events from compounded versions of GLP-1 drugs are underreported,” considering most compounding pharmacies are not required to report them.
  • As a recent Brookings Report notes, FDA-approved and meticulously tested semaglutide manufacturing uses one of two methods: either recombinant RNA methods or a chemical synthesis process called solid-state peptide synthesis. Compounded manufacturers generally pursue the synthesis option, yet they have no external reference for quality, leaving them fully responsible for determining product specifications. That is especially worrying for a complex peptide like semaglutide that nefarious black-market actors can easily exploit. It is easy and remains legal to produce a batch of compounding semaglutide salts that contain up to 15% impurities, which are not semaglutide (including toxic heavy metals and formaldehyde). 

Inconsistent Regulation and Deceptive Marketing

While legitimate pharmaceutical innovation is subject to rigorous regulation, compounders exploit loopholes with impunity:

  • Deceptive online advertising often overlooks side effects and overstates efficacy. One JAMA study found that nearly half of websites selling compounded GLP-1s made no mention of side effects, while 40% made efficacy claims not authorized in the FDA-approved medicines.
  • Compounded semaglutide products do not feature on the list of U.S Pharmacopeia monographs, which are the lists used to establish reasonable expectations around a drug’s strength and purity. Moreover, there is no requirement to comply with a drug master file containing the initial intellectual property behind the semaglutide compound for drug applications. As such, manufacturers can simply decide that checking their products for heavy metals or poisons is not necessary, even though a large part of the batch may contain such toxic substances.
  • State boards of pharmacy and the FDA have so far failed to enforce rules requiring API to come from FDA-registered manufacturers.

 

Recommendations

The U.S. government already has tools to stop this and must act with urgency. 

  • Bipartisan concerns are rightly mounting over illicit online drug sales, with lawmakers and state officials warning that copycat GLP-1 products are proliferating despite FDA warnings. Sen. Marsha Blackburn (R-Tenn.) and Tennessee AG Jonathan Skrmetti have urged the FTC to investigate shady websites that falsely claim FDA approval and use manipulative marketing to target vulnerable patients. Other members of Congress are likewise pressing federal agencies to clamp down on fake semaglutide and tirzepatide entering the U.S. supply chain.
  • As many as 38 state Attorneys General have already called on the FDA and federal partners, such as the Department of Homeland Security, to “intercept” copycat GLP-1s before they reach unsuspecting consumers.
  • FDA authority is clear. Key ingredients intended for compounding must come from FDA-registered manufacturers. Anything else is illegal. However, shady suppliers who are not registered with the FDA continue to flood the US market with mislabeled APIs.
  • The FDA can and should intercept high-risk shipments of illicit API at the border. Unfortunately, the FDA’s new “Green List” doesn’t require any examination, sampling, or testing of the API ultimately used in compounded drugs. Without forceful action, consumers will face the risks of a shadow market of deceptive online marketing and dangerous, fake products.The agency can exercise wide-enforcement latitude to restrict facilities that do not provide concrete proof of good manufacturing practices and that refuse to provide any documentation whatsoever from selling any semaglutide products. 
  • The FDA must establish a reference standard for product specifications in the form of U.S Pharmacopeia monographs and drug master files to continue to safeguard IP and innovation.
  • The FDA must establish rules requiring the compound to be identical to the reference list, ensuring consumer health and safety.

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Authors

Picture of Emil Panzaru

Emil Panzaru

Research Director

Picture of Fred Roeder

Fred Roeder

Managing Director

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