PeptideJournal
News14 min read

Peptide Compounding Industry After FDA Crackdown

- [What Happened: The Regulatory Shift in Plain English](#what-happened-the-regulatory-shift-in-plain-english) - [The GLP-1 Compounding Shutdown](#the-glp-1-compounding-shutdown) - [The Broader Peptide Ban: BPC-157, Ipamorelin, and Beyond](#the-broader-peptide-ban-bpc-157-ipamorelin-and-beyond) -

Table of Contents

What Happened: The Regulatory Shift in Plain English

For years, compounding pharmacies operated in a regulatory gray zone when it came to peptides. The FDA tolerated the practice — pharmacies could compound medications, including peptide formulations, for individual patients with valid prescriptions, even when those compounds weren't formally FDA-approved. That tolerance was baked into Sections 503A and 503B of the Federal Food, Drug, and Cosmetic Act, which carved out exemptions for traditional pharmacy compounding and outsourcing facilities, respectively.

Starting in January 2025, the FDA revised its interim policy on bulk drug substances, effectively closing loopholes that had allowed widespread peptide compounding. Under the new guidance, 503A pharmacies can compound substances that meet at least one of three criteria: the substance is the active ingredient in an FDA-approved drug, it has a U.S. Pharmacopeia (USP) monograph, or the FDA has placed it in "Category 1" (substances that raise no significant safety concerns). Peptides that lack USP monographs — which includes most therapeutic peptides used in compounding — cannot be compounded until the FDA completes its ongoing review.

The result was a sweeping contraction of what had become a multi-billion-dollar industry. Compounding pharmacies, telehealth platforms, and integrative medicine clinics that had built their businesses around peptide therapy faced an existential reckoning.

The GLP-1 Compounding Shutdown

The most high-profile part of the crackdown targeted compounded versions of semaglutide and tirzepatide — the blockbuster GLP-1 receptor agonists marketed as Ozempic, Wegovy, Mounjaro, and Zepbound.

How We Got Here

When these drugs hit the market and demand exploded beyond supply, the FDA placed them on the drug shortage list. That designation triggered a legal provision allowing compounding pharmacies to produce copies of the branded drugs during the shortage period. Hundreds of compounding pharmacies and outsourcing facilities rushed to fill the gap, selling compounded semaglutide and tirzepatide at a fraction of branded prices — often through telehealth platforms that made the drugs accessible to anyone with an internet connection and a credit card.

At peak, the compounded GLP-1 market may have served millions of patients. Companies like Hims & Hers Health built substantial revenue streams around compounded semaglutide prescriptions distributed through their telehealth platforms.

The Shortage Resolution

The shortages ended, and so did the compounding permission.

Tirzepatide: The FDA declared the tirzepatide shortage resolved on December 19, 2024. The enforcement discretion period for 503A pharmacies ended February 18, 2025. For 503B outsourcing facilities, the deadline was March 19, 2025.

Semaglutide: The FDA removed semaglutide from the shortage list on February 21, 2025. State-licensed pharmacies had until April 22, 2025 to stop compounding. Outsourcing facilities had until May 22, 2025.

After those dates, all compounded semaglutide and tirzepatide became illegal to produce and sell. Patients needed prescriptions for the branded products — at branded prices — from a licensed pharmacy.

The Broader Peptide Ban: BPC-157, Ipamorelin, and Beyond

The GLP-1 compounding shutdown attracted the most media attention, but the FDA's actions against non-GLP-1 peptides may have a longer-lasting impact on the compounding industry.

The FDA placed many widely-used therapeutic peptides on its "Category 2" list — a designation meaning the substances "raise significant safety risks" and are not eligible for compounding under Section 503A.

Key Peptides Affected

BPC-157 (Body Protection Compound-157), among the most popular compounded peptides for gut healing, tissue repair, and injury recovery, was classified as Category 2. The FDA cited "risk for immunogenicity, peptide-related impurities, and limited safety-related information." BPC-157 has never been approved for any human indication and lacks a USP monograph.

Ipamorelin, a growth hormone releasing peptide widely prescribed in anti-aging and sports medicine protocols, received the same Category 2 designation.

CJC-1295, a growth hormone releasing hormone analog often prescribed in combination with ipamorelin, was similarly restricted. For background on this peptide, see our CJC-1295 research profile.

Thymosin Beta-4 (TB-500), used for wound healing and tissue repair, was also affected by the regulatory tightening.

The common thread: none of these peptides have FDA approval for any human indication, and none have the USP monographs that would provide an alternative legal basis for compounding.

Enforcement in Practice

The FDA backed its policy changes with real enforcement. The Department of Justice prosecuted Tailor Made Compounding LLC for distributing unapproved peptides including BPC-157. The company pleaded guilty and forfeited $1.79 million.

State attorneys general have entered the enforcement arena as well, using consumer protection law, unfair trade practice statutes, and public health authority to pursue compounding pharmacies and telehealth companies operating outside the new regulatory boundaries.

Industry Impact: Pharmacy Closures and Business Pivots

The regulatory shift has reshaped the compounding pharmacy industry.

Who Is Hurt

Smaller compounding pharmacies that built their businesses primarily around peptide therapies face the worst outcomes. Many of these operations lacked the scale, capital, or regulatory infrastructure to pivot toward FDA-compliant drug development pathways. For pharmacies where peptides represented a majority of revenue, the new rules are functionally a shutdown order.

Mid-sized 503B outsourcing facilities — which operated at larger scale and sold compounded drugs to healthcare facilities rather than individual patients — face a different version of the same problem. Their peptide production lines, which often required specialized equipment and cleanroom facilities, represent sunk costs that may never generate returns under the new regulatory framework.

Who Adapts

Larger, well-capitalized compounding operations are pivoting in several directions:

Specialty compounding. Some pharmacies are refocusing on compounding areas where the regulatory path is clearer — dermatological formulations, pain management compounds, bio-identical hormones, and veterinary compounding.

503B facility upgrades. Companies with the resources to invest are upgrading their facilities and quality systems toward full FDA compliance, positioning themselves as contract manufacturers for branded or generic peptide products.

Formal drug development. A small number of companies are pursuing the formal drug development pathway for popular compounded peptides — filing investigational new drug (IND) applications and seeking FDA approval through clinical trials. This path is expensive (potentially hundreds of millions of dollars) and slow (years), but it would create a legal, branded product.

The Telehealth Fallout

The compounding crackdown has hit the telehealth industry particularly hard, because telehealth companies were the primary distribution channel for compounded GLP-1 drugs.

Scale of the Problem

Hundreds of telehealth companies, concierge medical practices, and medical spas built businesses around compounded GLP-1 prescriptions. The model was straightforward: a patient completed an online assessment, a telehealth provider wrote a prescription, and a partnered compounding pharmacy filled and shipped the medication directly. The entire process often took 48 hours or less.

FDA Warning Letters

The FDA issued more than 50 warning letters to telehealth providers, targeting false and misleading marketing claims about compounded GLP-1 drugs. Hims & Hers Health drew particular scrutiny when the FDA took issue with marketing that implied its compounded products were equivalent to FDA-approved drugs — telling customers the products contained "the same active ingredient" as Ozempic and Wegovy.

When Hims & Hers announced plans to offer a compounded oral semaglutide pill, the FDA stated it would take "decisive steps" to prevent mass marketing of compounded GLP-1s as similar to branded products.

Business Model Disruption

The GLP-1 revenue stream was significant for several publicly traded telehealth companies. Hims & Hers, for example, saw its stock price fluctuate sharply around FDA enforcement announcements. The long-term impact depends on whether these companies can transition to prescribing branded GLP-1 medications — which requires different payer relationships, different pricing models, and different margins.

Patient Access: Who Gets Left Behind

The FDA frames the compounding crackdown as protecting public health. Critics argue it has created a significant access gap.

The Cost Problem

Branded semaglutide (Wegovy) carries a list price exceeding $1,300 per month. Branded tirzepatide (Zepbound) is similarly priced. Compounded versions often cost $150–$400 per month. For the millions of patients without insurance coverage for these medications — and many insurers still do not cover GLP-1 drugs for obesity — the price difference is the difference between treatment and no treatment.

Novo Nordisk and Eli Lilly have both launched cash-pay discount programs, and retailers like Costco and Walmart have arranged comparable deals. But even discounted branded prices remain significantly higher than compounded alternatives were.

Beyond GLP-1s: The Loss of Non-Approved Peptides

For peptides like BPC-157, there is no branded alternative to transition to. These peptides have never been through the FDA approval process. Patients who were using compounded BPC-157 for conditions like IBS, tendon injuries, or chronic inflammation now have no legal pharmaceutical source.

Some have turned to overseas suppliers or "research chemical" websites. Legal experts warn that these sources carry both health and legal risks — products may be contaminated, mislabeled, or underdosed, and the "research use only" labels that these sellers use do not provide legal protection if the products are clearly intended for human use.

The Practitioner Perspective

Physicians who used peptide therapies in clinical practice report real frustration. Practitioners describe BPC-157, for example, as an important tool for patients who had exhausted other options. For IBS sufferers, chronic injury patients, and others with limited treatment alternatives, the FDA's action eliminated options that were providing tangible benefits in practice.

The FDA's counterargument is that these benefits were never demonstrated through controlled clinical trials and that the safety profiles of these compounds — including risks of immunogenicity and impurities from inconsistent manufacturing — were inadequately characterized.

The compounding industry has not accepted the new regulatory reality quietly.

Outsourcing Facilities Association Lawsuit

The Outsourcing Facilities Association (OFA) sued the FDA over its shortage resolution determinations for both tirzepatide and semaglutide, arguing the decisions were "reckless and arbitrary." The OFA contended that the FDA prematurely declared the shortages resolved while supply remained insufficient to meet patient demand.

Federal courts ultimately denied the challenges, but the litigation raised important questions about how the FDA defines and resolves drug shortages — questions that could affect future compounding rights during shortage periods.

Constitutional Arguments

Legal commentators have raised broader constitutional and statutory arguments against the FDA's peptide actions. Critics contend that the FDA is over-applying its authority under 503A/503B, potentially constraining the practice of medicine and pharmacy beyond what the statutes authorize. Whether these arguments will gain traction in future litigation remains to be seen.

Eli Lilly's Offensive

The enforcement effort isn't just regulatory — it is also commercial. Eli Lilly's CEO stated the company was pursuing legal tools against compounders, and Lilly sent cease-and-desist letters to telehealth companies, wellness centers, and medical spas to stop promoting compounded versions of Zepbound and Mounjaro. The convergence of FDA enforcement and branded manufacturer litigation creates a two-front legal war against remaining compounders.

The SAFE Drugs Act of 2025

Congress has moved to codify and expand the regulatory crackdown through legislation.

The SAFE Drugs Act of 2025 would:

  • Expand FDA oversight of compounding pharmacies and outsourcing facilities, with particular focus on GLP-1 drugs
  • Impose new limits on compounding "copies" of FDA-approved drugs
  • Require enhanced FDA reporting from compounding operations
  • Mandate inspections for large-scale outsourcing facilities
  • Increase oversight of telehealth distribution models that facilitate compounded drug sales

If enacted, the legislation would formalize many of the enforcement approaches the FDA has already been pursuing and extend regulatory reach to telehealth companies that have operated in a regulatory gap between pharmaceutical and medical practice law.

For the compounding industry, legal analysts describe 2026 as a "compliance inflection point" — the year when the combination of FDA enforcement actions, state attorney general investigations, branded manufacturer litigation, and potential federal legislation transforms the industry's operating environment permanently.

What Is Still Available Through Compounding

Despite the crackdown, compounding pharmacies can still legally produce certain peptide formulations.

Patient-specific compounding remains legal when a prescriber determines that a patient has a medical need that cannot be met by commercially available products. Examples include a patient who is allergic to an inactive ingredient in the branded product, or a patient who requires a non-standard dose or concentration not commercially manufactured.

503B outsourcing facilities can compound drugs that are currently in shortage or on FDA-approved lists of bulk drug substances. The key constraint is that the active ingredient must be either an FDA-approved drug substance, listed in the USP, or in the FDA's Category 1 list.

Peptides with USP monographs or FDA-approved counterparts can still be compounded. This includes substances like oxytocin, vasopressin, and certain other peptide hormones with long regulatory histories.

What cannot be compounded: BPC-157, ipamorelin, CJC-1295, AOD-9604, and other peptides classified as Category 2 or lacking the necessary regulatory credentials. Also, semaglutide and tirzepatide are no longer eligible for compounding since the shortage resolutions took effect. For a full timeline of regulatory changes, see our comprehensive regulatory guide.

The Future of Peptide Compounding

The compounding industry's future depends on several converging forces.

Formal FDA review of remaining peptides. The FDA is conducting ongoing reviews of bulk drug substances under its nomination process. Some peptides currently in regulatory limbo may eventually receive Category 1 designations — allowing compounding to resume — while others may be permanently blocked. The timeline for these reviews is measured in years, not months.

Drug development pathways for popular peptides. If companies invest in formal FDA approval for peptides like BPC-157, compounding for those substances could become moot — replaced by approved, branded products. Several early-stage efforts are underway, though none is close to filing for approval.

Political dynamics. Before the 2024 election, Robert F. Kennedy Jr. posted publicly about ending the "FDA's war" on peptides, stem cells, and other therapies. The political salience of patient access to compounded medications — particularly GLP-1 drugs — may influence future regulatory direction, though no concrete policy reversals have materialized as of early 2026.

International compounding. Some providers are exploring relationships with international pharmacies in jurisdictions with different regulatory frameworks. These arrangements carry their own legal and quality risks and are unlikely to replace domestic compounding at scale.

The most probable near-term outcome: a smaller, more regulated, and more specialized compounding industry that focuses on genuinely patient-specific formulations rather than the mass production of unapproved peptide therapies that characterized the industry's recent peak. For ongoing coverage, see our analysis of the GLP-1 compounding ban.

FAQ

Can I still get compounded semaglutide or tirzepatide?

No. As of May 22, 2025, all compounding of semaglutide and tirzepatide ended after the FDA declared both drug shortages resolved. Patients who were receiving compounded versions need to transition to branded products (Ozempic, Wegovy, Mounjaro, or Zepbound) through a licensed pharmacy. Limited exceptions may exist for patient-specific compounding in cases where a documented medical need cannot be met by the approved product.

Is BPC-157 illegal?

BPC-157 is classified as an FDA Category 2 bulk drug substance, meaning compounding pharmacies cannot legally produce it for human use. It has never been FDA-approved for any indication. Selling or distributing BPC-157 for human use constitutes distributing an adulterated and misbranded unapproved drug. "Research use only" products sold online exist in a legal gray area that offers minimal protection to either sellers or buyers.

Why did the FDA crack down on peptide compounding?

The FDA cites patient safety concerns — specifically, risks from immunogenicity, peptide-related impurities, and insufficient safety data for many compounded peptides. For GLP-1 drugs specifically, the end of drug shortages removed the legal basis for compounding copies of approved medications. Critics argue the crackdown prioritizes pharmaceutical company market protection over patient access.

What happens to patients who relied on compounded peptides?

For GLP-1 drugs, patients can transition to branded products, though at significantly higher cost. For non-GLP-1 peptides like BPC-157 and ipamorelin that have no FDA-approved equivalent, there is currently no legal pharmaceutical source. Patients are advised to work with their healthcare providers to identify alternative treatment approaches.

Will the FDA ever allow peptide compounding again?

Some peptides may receive Category 1 designations through the FDA's ongoing review process, which would restore compounding eligibility. However, the timeline is uncertain and the FDA has not indicated which peptides (if any) might receive favorable determinations. For GLP-1 drugs, compounding could resume only if another drug shortage is declared — an increasingly unlikely scenario as manufacturers expand production capacity.

What is the SAFE Drugs Act?

The SAFE Drugs Act of 2025 is proposed federal legislation that would expand FDA oversight of compounding pharmacies and telehealth companies, impose new limits on compounding copies of approved drugs, and require enhanced reporting and inspections. As of early 2026, the bill is still under legislative consideration and has not been enacted.

The Bottom Line

The FDA's crackdown on peptide compounding has fundamentally reshaped an industry that served millions of patients. The GLP-1 compounding shutdown — driven by the resolution of semaglutide and tirzepatide shortages — eliminated the most lucrative segment of the compounding market virtually overnight. The broader restrictions on peptides like BPC-157 and ipamorelin have closed off access to therapies that, while never FDA-approved, were in active clinical use by thousands of practitioners.

The competing narratives are both valid. The FDA is right that unapproved peptides carry real risks from inconsistent manufacturing, unknown long-term safety profiles, and the absence of controlled efficacy data. Practitioners and patients are right that cutting off access to therapies that were providing real-world benefits — without offering alternatives — creates genuine harm.

What emerges from this collision is an industry in transition: smaller, more regulated, more specialized, and less accessible. Whether that trade-off serves public health depends on how quickly the formal drug development process catches up to the clinical demand that the compounding industry was meeting — imperfectly, but meeting nonetheless.

References

  1. Regulatory status of peptide compounding in 2025. Frier Levitt. https://www.frierlevitt.com/articles/regulatory-status-of-peptide-compounding-in-2025/

  2. Deep dive: Regulatory status of popular compounded peptides. Holt Law. https://djholtlaw.com/deep-dive-regulatory-status-of-popular-compounded-peptides/

  3. FDA releases guidance for compounding pharmacies. NCPA (2025). https://ncpa.org/newsroom/qam/2025/01/13/fda-releases-guidance-compounding-pharmacies

  4. FDA's overreach on compounded peptides. SafeHG. https://www.safehg.com/fdas-overreach-on-compounded-peptides-legal-battles-and-how-clinics-can-push-back/

  5. Congress introduces SAFE Drugs Act of 2025. Dykema. https://www.dykema.com/news-insights/congress-introduces-safe-drugs-act-of-2025-expanding-fda-oversight-of-compounded-glp-1-drugs-and-telehealth-providers.html

  6. FDA ends semaglutide shortage listing. Pharmacy Times. https://www.pharmacytimes.com/view/fda-ends-semaglutide-shortage-listing-contributing-to-ongoing-legal-challenges

  7. FDA affirms tirzepatide shortage resolved. Pharmacy Times. https://www.pharmacytimes.com/view/fda-affirms-tirzepatide-shortage-resolved-sets-transition-period-for-compounding

  8. GLP-1 weight loss drug enforcement in 2025. Stevens & Lee. https://www.stevenslee.com/health-law-observer-blog/glp-1-weight-loss-drug-enforcement-in-2025-state-attorneys-general-step-into-a-growing-regulatory-gap/

  9. FDA semaglutide shortage resolution: Legal implications. Sheppard Health Law. https://www.sheppardhealthlaw.com/2025/03/articles/fda/fdas-semaglutide-shortage-resolution-legal-implications-and-risks-for-compounding-pharmacies/

  10. Hims & Hers federal scrutiny and impact on telehealth compounding. STAT News (2026). https://www.statnews.com/2026/02/11/hims-federal-scrutiny-impact-on-telehealth-compounding-pharmacies/

  11. FDA GLP-1 compounding crackdown and telehealth. Telehealth.org. https://telehealth.org/news/fda-glp-1-compounding-crackdown-what-telehealth-clinicians-need-to-know/

  12. Regulatory alert: Legal status of BPC-157 in compounding. Holt Law. https://djholtlaw.com/regulatory-alert-the-legal-status-of-bpc-157-in-compounding-and-clinical-practice/

  13. GLP-1 drugs: FDA removes semaglutide from drug shortage list. Foley & Lardner (2025). https://www.foley.com/insights/publications/2025/02/glp-1-drugs-fda-removes-semaglutide-from-drug-shortage-list/