Health Law Daily Wrap Up, ADVERTISING FOOD, DRUG & MEDICAL DEVICES)—N.D. Cal.: Eli Lilly prevails in pursuing most claims against telehealth company Fella Health over compounded weight loss drugs, (Apr 6, 2026)

By Wendy Biddle, J.D.

The pharmaceutical giant can proceed with false advertising and unfair competition claims based on "personalized treatment" representations.

The federal court in Oakland, California mostly denied a motion to dismiss filed by telehealth company Aios, Inc. (doing business as Fella Health and Delilah) in a lawsuit brought by pharmaceutical manufacturer Eli Lilly and Company. The court dismissed the corporate practice of medicine claim for lack of standing but allowed Eli Lilly to proceed with several claims related to alleged false advertising of compounded tirzepatide products (Eli Lilly and Co. v. Aios, Inc., No. 4:25-cv-03535-HSG (N.D. Cal. March 26, 2026)).

Eli Lilly manufactures two FDA-approved medications containing tirzepatide: MOUNJARO, approved for type-2 diabetes treatment, and ZEPBOUND, approved for chronic weight management and obstructive sleep apnea in certain adults. Both medications were developed over a decade and tested in 37 clinical trials. According to Eli Lilly, these are the only FDA-approved medicines containing tirzepatide in the United States, and the FDA has not approved any tirzepatide product in oral or compounded form.

Fella Health operates two telehealth platforms focusing on weight loss drugs, with Delilah marketed toward women and Fella Health marketed toward men. Through these platforms, Fella sells weight loss drugs including compounded tirzepatide to consumers. Eli Lilly alleged that Fella's founder and CEO, Richie Cartwright, who does not have a medical degree, exercises control over Fella Medical Group, which services Fella patients.

Eli Lilly's allegations. Eli Lilly's complaint centered on two primary theories. First, the company alleged that Fella engaged in the unlicensed corporate practice of medicine in violation of California's Medical Practice Act by allowing non-physicians to offer medical advice to customers. The complaint included screenshots of Reddit posts where Cartwright and Fella employees allegedly provided medical advice about dosing and titration schedules.

In one example cited by the court, Cartwright responded to a customer complaint about low dosage by offering to "escalate your titration speed" if the customer texted him directly. Other Fella employees allegedly provided similar advice through the r/FellaHealth subreddit, including detailed instructions on dosage adjustments and maintenance plans.

Eli Lilly also alleged that Fella changed patient prescriptions en masse in November 2024, switching patients from compounded tirzepatide without additives to formulations containing either l-arginine or glycine. According to the complaint, many patients learned of these prescription changes only when their medication arrived, not through communication with their doctors. Reddit posts from patients expressed surprise at the undisclosed changes.

Second, Eli Lilly alleged that Fella engaged in unfair and deceptive conduct through false advertising about its tirzepatide products. The complaint cited statements on Fella's websites claiming that oral tirzepatide helps regulate blood sugar levels and that users typically lose weight without the hassle of injections. However, Eli Lilly pointed to contradictory Reddit posts where Fella employees acknowledged that oral tirzepatide "can be fairly ineffective" and is "slightly less effective than subcutaneous" administration.

Eli Lilly further alleged that Fella falsely claimed its products were "science-backed" and cited weight loss statistics of 15% to 22.5% that were actually derived from Eli Lilly's clinical trials on injectable, non-compounded tirzepatide. According to the complaint, oral tirzepatide has never been studied in clinical trials.

Eli Lilly brought five claims against the defendants: corporate control of practice of medicine and prescription practices in violation of California’s Unfair Competition Law (UCL); unfair competition under the UCL; false advertising in violation of California’s False Advertising Law (FAL); false advertising under the Lanham Act (against Fella only); and civil conspiracy.

Standing. The court first addressed whether Eli Lilly had standing to bring its claims under the Lanham Act, UCL, and FAL.

For the Lanham Act claim, the court applied the framework from Lexmark International, Inc. v. Static Control Components, Inc., which requires a plaintiff to allege injury to a commercial interest in reputation or sales within the zone of interests, and economic or reputational injury flowing directly from consumer deception. The court found that Eli Lilly adequately alleged both types of injury. Regarding injury to reputation, the complaint alleged that when consumers fail to achieve desired results from Fella's products, they may conclude that tirzepatide is ineffective generally, particularly given Fella's reliance on Eli Lilly's clinical studies. For injury to sales, the court noted allegations that Fella tells patients injections are a "hassle" to steer them away from Eli Lilly's tested medicines, and cited a Reddit screenshot showing a customer who switched from "zepbound" to Fella's product.

The court rejected Fella's argument that the parties operate primarily in different markets, noting that both sell tirzepatide-containing weight loss products to the same consumer base. The court also found that Eli Lilly adequately alleged the classic Lanham Act scenario where one competitor directly injures another by making false statements inducing customers to switch.

For the UCL and FAL claims, the court reached different conclusions depending on which claim was at issue. The court held that Eli Lilly lacked standing for its first UCL claim based on the corporate practice of medicine because it failed to adequately allege a causal connection between the defendants' alleged lack of authorization to practice medicine and Eli Lilly's loss of money or property. However, the court found standing for Eli Lilly's second UCL claim for unfair competition and its FAL claim, which were predicated on deceptive marketing practices that allegedly lured consumers away from FDA-approved treatments.

False advertising claim. The court then addressed whether Eli Lilly adequately stated claims for false advertising under the Lanham Act and FAL. The court first determined that Fella's statements qualified as commercial advertising, finding that Reddit responses by Fella's founder and employees touted the company's success with statistics, referred to specific products, and reflected an economic motivation.

However, the court limited which statements could support Eli Lilly's false advertising claims. The court held that under Ninth Circuit precedent, a private plaintiff may not sustain false advertising claims based solely on lack of substantiation but must particularly allege the falsity of challenged statements. The court found that nearly all of Eli Lilly's allegations amounted to claims that Fella's statements lacked substantiation rather than that they were affirmatively false.

For example, regarding Fella's claims about patients losing 15-22.5% of their body weight, the court held these were insufficiently pled as false statements because Eli Lilly merely alleged the statistics were based on Eli Lilly's clinical trials rather than Fella's own data. The court noted that Eli Lilly did not allege Fella made any representation regarding the specific basis for its weight loss claims, nor did it allege contrary facts showing different results.

Similarly, the court rejected claims that statements about "cutting-edge research" and "rigorous, in-house testing" were false merely because oral tirzepatide has never been studied in clinical trials, finding this insufficient to show the statements were affirmatively false rather than unsubstantiated.

The court found only one category of statements sufficiently pled as literally false: Fella's promotion of "personalized treatment plans tailored to your unique biology and needs." Given the allegations about mass prescription changes made for business reasons rather than individual patient needs, the court found these personalization claims plausibly false at the pleading stage.

Fraudulent business acts and civil conspiracy claims. The court found that Eli Lilly adequately pled a claim for fraudulent business acts under the UCL for similar reasons as the false advertising claim. The company alleged that Fella engaged in conduct where members of the public were likely to be deceived, which is sufficient for the claim.

The court also denied dismissal of the civil conspiracy claim, finding that Eli Lilly need not base the claim upon another tort. Under California law, a conspiracy based on an agreement to engage in unlawful conduct is sufficient.

The court therefore allowed Eli Lilly to proceed with its UCL claim for unfair competition, its false advertising claims under the UCL and Lanham Act (limited to statements regarding personalized treatment), and its civil conspiracy claim. The court dismissed the UCL claim based on corporate practice of medicine for lack of standing and granted leave to amend.

The case is No. 4:25-cv-03535-HSG.

Judge: Gilliam Jr., H.

Attorneys: David Ian Horowitz (Kirkland Ellis LLP) for Eli Lilly and Co. Katy E. Koski (Foley & Lardner LLP) for AIOS, Inc. Companies: Eli Lilly and Co.; AIOS, Inc.

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