In February, the FDA removed semaglutide from the drug shortage list. People weren’t always sure how to take the drugs, so “they just went for it,” he says. “This drug is probably being compounded,” he remembers thinking.
These drugs are typically sold back into the supply chain by corrupt wholesalers. According to FreightWatch International, which advises on supply-chain security, prescription drugs account for 15% of annual cargo theft (Eban, 2011). Similar findings were found in the recent Premier survey, which identified an average mark-up of 650% from the contract price, with higher mark-ups for some critical care drugs, oncology drugs, and anesthetics (Cherici et al., 2011). Pricing of Gray Market Products“Once, the gray market vendor increased the price of a 25-count box of electrolytes from $200 to $325 in a period of 4 hours because he informed me, ‘That’s what the market will bear.’ My contract price for the same electrolytes is $17.” Only one respondent reported that he had not purchased medications from the gray market because he had not encountered a need. Numerous respondents reported feeling pressured by physicians and hospital administrators to purchase medications from the gray market.
- Many drugs become ineffective or harmful if they haven’t been stored in the right environment and at precise temperatures.
- Browsing on Reddit, she discovered links to Telegram and a trove of detailed instructions from experienced users for buying weight-loss drug ingredients from China.
- But none of these drugs are approved yet.
- Some people refer to them as S$ma or T!
- Even though Ozempic, Mounjaro and Wegovy are off the shortages list, pharmacies have reported difficulty obtaining enough of these drugs to meet demand, Davis says.
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"(My patients) are grasping at straws and willing to attempt to purchase these medications from any accessible source, including illegal internet providers. I service a small community with only six stop lights. Access to care here is a very real concern." Lindsey Landers, an advanced practice nurse in Kentucky, stopped prescribing compounded GLP-1s from a licensed pharmacy after an August 2025 cease and desist from a drug manufacturer. "There is no regulation. There is no enforcement, and there is no safety verification for these products." "I started in the spring," she explains of the drugs she prepares in her own kitchen. Then, she stumbled upon videos of TikTokers saying these expensive drugs could be made cheaply at home. Janoshik’s CEO, Peter Magic, is a former amateur weight-lifter.
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Together, the compounding pharmacies may account for up to 30% of the semaglutide sold in the U.S., Mikhael said, although he cautions that is a “wild ballpark figure” since no one, including the FDA, is tracking sales in the industry. But everyone with knowledge of the industry, including the compounders themselves, worry that a single batch of a poorly made drug could kill or maim people and destroy confidence in their business. To date, according to FDA spokespeople, reports of side effects from taking compounded versions haven’t raised major alarms. It ran ads for the drugs during NBA playoff games. Even small chemical variations of known drugs can drastically change how they are processed in the body.
The result reflects how the trend of depending on such drugs influences their demand, their pricing. Among these, the ones that come have injectable versions of GLP-1-based drugs that are most common. This is one of the reasons that has led to the ever-evolving growth of the anti-obesity drugs. Big pharmaceutical companies like Johnson & Johnson and Pfizer signed lucrative contracts with governments around the world to provide COVID-19 vaccines under the condition that the prices and contract terms were kept confidential. The majority are low-profit generics, but big name drugs are also affected. And he found something else – the gray market.
As part of my reporting for this story, I joined multiple peptide groups online. That’s because vendors say these peptides are for research use only or not for human consumption. That industry trade organization has developed an online tool for this task and has suggested questions consumers can ask when choosing a compounding pharmacy. But the medications aren’t without side effects.
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All of the samples were advertised as 99% pure semaglutide. They did deliver the product, albeit in a dubious form with inconsistent dosages. Ozempic was in shortage when they conducted the study, and even doctors were struggling to get hold of the real drug via official means.
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(According to a Hunterbrook Media report, Hims & Hers’ semaglutide supplier has faced legal scrutiny.) While the companies can’t keep up with demand, they heatedly dispute the right of compounders to make and sell copies. They are also showing promise against heart, kidney, and liver diseases and are being tested against conditions as diverse as Alzheimer’s disease and drug addiction. But this isn’t an illegal black market, though it has shades of gray. The FDA, too, has cautioned about the potential danger of the compounds, and leading obesity medicine groups starkly warn patients against their use. Novo Nordisk and Lilly lump the compounders together with internet cowboys and unregulated medical spas peddling bogus semaglutide, and have high-powered legal teams trying to stop them.
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The companies also report patent infringement, but compounders, pointing to the FDA loophole for drugs in shortage, appear to have defeated that argument for now. Novo Nordisk and Lilly, in lawsuits each company has filed against competitors, say their own testing has found bacteria and other impurities in products made by compounding pharmacies. It’s important to distinguish compounded semaglutide from unregulated powders sold as “generic Ozempic” and the like, which may be contaminated or counterfeit, said FDA spokesperson Amanda Hils. He hasn’t seen any essential difference in patients using the branded and compounded forms, although “some people say the compounding is a little less effective,” Gupta said. Last July, Tabitha Ries, a single mother of six who works as a home health care aide in Garfield, Washington, found an online clinic that charged her $1,000 for three months of semaglutide along with counseling.
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The culprits behind the price gouging, they say, are so-called gray market vendors who exploit drug shortages by buying desperately needed medications from distributors or pharmacies and then selling them to hospitals or clinics at inflated prices. Cummings started the investigation by examining transactions of five drugs on the Food and Drug Administration's national shortage list that gray market companies aggressively marketed to hospitals and pharmacies at prices many times higher than those negotiated with authorized manufacturers and distributers. Ranking Member Cummings requested internal documents from five "gray market" companies to determine how they obtain shortage drugs, and how much they profit by selling them to hospitals, pharmacies, and health care providers. Food and Drug Administration (FDA).In addition, supply is impacted by lack of raw ingredients or substandard ingredients, just- in-time production, discontinuation of less lucrative products, and pay-to-delay sweetheart deals, under which companies, whose patent for a brand-name drug is about to run out, pay generics manufacturers not to produce a cheaper version.But one of the key reasons that the supply has become so unpredictable is that even the major pharmaceutical companies no longer manufacture their own brand-name drugs.For example in June, J&J had warned hospitals that no new patients could be started on Doxil, but claimed that old patients like Eardesohn would be given priority for the life-extending drug through a new program named C.A.R.E.S."There are some old users that are qualified, but haven't gotten Doxil," admits J&J spokesperson Monica Neufang. More than 13% of respondents also reported receiving solicitations, mostly weekly, from gray market vendors who wanted to purchase vital medications in short supply from the hospital, presumably to sell to other hospitals at steeply inflated prices.
There have been issues of counterfeit drugs in both the developing and developed worlds; and in no less a place like the United Kingdom just a couple of years ago, there was the fake Xanax debacle which remains a big scar till this day. Gray markets in pharmaceuticals remains a perpetual headache for stakeholders – The issues of drug abuse and addiction are not peculiar to just a few select countries; these are global problems faced by all countries of the world and incidentally, majority of these drugs are obtained from illegal black markets. “I dread it,” said David Wertheimer, an internist in Franklin Lakes, New Jersey, who prescribes compounded semaglutide to some patients. Smaller compounders may be able to produce their products for a reduced number of patients, said Scott Brunner, CEO of the Alliance for Pharmacy Compounding, which represents 503A compounders.
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What’s more, some of these companies had ventured beyond the mere trade in chemical precursors, extending their operations into teaching consumers how to synthesize fentanyl and other synthetic drugs. It is then laced into counterfeit pills or kept in powdered form, before being trafficked in considerable quantities north to the United States, where tens of thousands of people overdose on the drug per year. Given the delicate nature of the formulation and the specific shipping requirements for the drugs, consuming illegal versions can be dangerous to a person's health. But it's also one of the epicenters of the lucrative counterfeit drug trade, according to U.S. authorities who track counterfeit drugs.
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“They follow drug shortages lists very closely, and they will work to purchase products, sometimes from retail pharmacies, and then sell them at a markup,” Fox said. A 2012 report published by three congressional committees also highlighted how drugs can sometimes “leak” into gray market distribution networks. For smaller hospitals and clinics, however, with limited negotiating power and serving patients with lower income levels and less insurance coverage, even a modest increase in drug prices can have a significant impact.
Yet it involves more health concerns than medications offered through the legitimate supply chain. The FMD requires regulatory compliance regarding serialization of prescription drugs, compliance reporting, and unique identifier for product verification. Drug companies, on the other hand, lose profits when their products are disproportionally sold in countries where they make less profit. They then offer competitive pricing, and sell the drugs to pharmacists, who receive a set amount on each product from the NHS and keep the difference as profit. A recent report by EUIPO (European Union Intellectual Property Office) and Europol shows that counterfeit pharmaceuticals pose a growing threat to the EU, facilitated by a continuous expansion of unauthorized and unregulated online pharmacies. Diverting medications out of the legitimate supply chain is usually done because of price differences at the point of sale.
However, the pharmacies that fill these prescriptions are regulated and have some level of quality control. Not all off-brands of semaglutide are illegal or necessarily dangerous. Plus, at over $1,000 for a month's supply, it's a tough medication to afford even if you can access it.
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Consumers should be educated to have concerns regarding the authenticity of medications. In addition, each product should be scanned and validated upon being supplied to the public, for identification and verification of authenticity purposes. This situation is different when availability gaps exist for medications in high demand. After meeting these regulations, they offer the medications for resale.
