Health Law Daily Wrap Up, ADVERTISING (FOOD, DRUG & MEDICAL DEVICES)—N.D. Cal.: Weight-loss drug company lacked standing to pursue advertising claims against seller of compounded version, (Oct 28, 2025)

By Elizabeth C. Pope, J.D.

Under federal law, pharmacists may create a compounded medication that mixes or alters the ingredients of an FDA-approved drug to create a medication tailored to the needs of an individual patient.

A large drug company that makes a weight loss drug lacked standing to pursue in federal court its claims that a company’s advertisement and sales of a compounded version of the drug violated the Lanham Act and California’s False Advertising Law, according to a federal trial court in California. The drug company claimed it would suffer reputational harm from comparisons to the compounded version, but in its complaint, it failed to allege any facts supporting its claim (Eli Lilly and Company v. Mochi Health Corp., No. 25-cv-03534-JSC (N.D. Cal. Oct. 24, 2025)).

Weight loss medication. Eli Lilly and Company, a drug manufacturer, makes and sells two FDA-approved weight loss drugs: Mounjaro and Zepbound. The active ingredient in both drugs is tirzepatide. Mochi Health is a telehealth company that connects consumers with physicians who can prescribe a compounded version of tirzepatide. (Under federal law, pharmacists may create a compounded medication that mixes or alters the ingredients of an FDA-approved drug to create a medication that, while not subject to the same regulations as FDA-approved medications, may be tailored to the needs of an individual patient.)

Eli Lilly filed suit in federal trial court, alleging, among other things, false advertising in violation of California’s Unfair Competition Law (Ca. Bus. & Prof. Code §17200, et seq.) and the Lanham Act (15 U.S.C. §1125(a)(1)(B)). In its complaint Eli Lilly asserted that Mochi had caused reputational harm to the drug company. Mochi countered with a motion to dismiss for failure to state a claim.

Reputational harm not demonstrated. Although Mochi did not raise the issue of standing in its response, the court did so, and concluded that because Lilly failed to establish it had Article III standing to bring its complaint, the court lacked subject matter jurisdiction. To maintain standing to sue in federal court, a plaintiff must establish that he has suffered “an injury in fact that is concrete, particularized, and actual or imminent.” While the court acknowledged that it is possible to demonstrate a violation under the Lanham Act by showing reputational harm, in this instance Eli Lilly failed to allege a factual basis to support its conclusion that its reputation had been damaged by comparison to an inferior product. First, Lilly failed to allege that any consumers of Mochi’s compounded version failed to achieve their desired weight loss goals. Second, Lilly failed to show that any consumers of the compounded version were harmed such that they might draw unwarranted conclusions about the safety of Lilly’s products.

The ”base” of Lilly’s complaint, the court observed, appeared to be its belief that the mere fact a medication is compounded makes it an inferior version of an FDA-approved product with the same active ingredient. The court rejected that view, noting that because compounded medications are permitted under federal law, their mere existence does not by itself support an allegation of reputational harm to the manufacturer of the compound’s active ingredient.

The court dismissed the claim for lack of subject matter jurisdiction but did so without prejudice, giving Lilly the opportunity to amend its complaint.

The case is No. 25-cv-03534-JSC.

Judge: Corley, J.

Attorneys: David Ian Horowitz (Kirkland Ellis LLP) for Eli Lilly and Co. Joseph Ronald LaMagna (Hooper, Lundy & Bookman, P.C.) for Mochi Health Corp.

Companies Eli Lilly and Co. Mochi Health Corp.

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