Antitrust Law Daily Wrap Up, ANTITRUST—W.D. Tex.: Lack of facial interchangeability between compounded and branded GLP-1s dooms complaint against Lilly, Novo, (Aug 7, 2026)

By Justin Marcus Smith, J.D.

At bottom, the decision to use compounded GLP-1s is “not driven by ordinary consumer preference.”

A GLP-1 compounder failed to state plausible antitrust claims against branded GLP-1 manufacturers Eli Lilly & Co. (Lilly) and Novo Nordisk (Novo) entities, held the federal district court in San Antonio, Texas. Lilly and Novo critiques of the compounder’s proposed out-of-network cash submarket for GLP-1s were largely off-point because the compounder could not plausibly allege interchangeability of compounded and branded GLP-1s. As the compounder acknowledged, physicians’ assessments of medical need and regulation, not consumer choice, are what mostly drive compounded GLP-1 prescriptions. In addition, the court construed allegations about market harm to be mainly about harm to the compounder. Alleged harms otherwise depended on a legally infirm theory of competition between non-interchangeable products. The court dismissed the compounder’s claims with prejudice (Strive Specialties Inc. v. Eli Lilly & Co., No. 5:26-cv-00155-MA (W.D. Tex. Aug. 3, 2026)).

Background. Strive Specialties Inc. (Strive), a state-licensed GLP-1 compounder, brought an antitrust action against Eli Lilly & Co. (Lilly), and two Novo Nordisk entities, Novo Nordisk A/S, and Novo Nordisk Inc. (collectively, Novo). Strive claimed unlawful restraint of trade and agreement not to use the goods of a competitor. Strive also brought a claim of market monopolization against Lilly. Lilly makes Byetta for treating type-2 diabetes and the GLP-1 drugs Mounjaro for type-2 diabetes and Zepbound for weight loss. Novo makes Ozempic for treating type-2 diabetes and Wegovy for weight loss.

GLP-1 medications are in high demand with telehealth services issuing a significant portion of prescriptions. Compounding pharmacies like Strive have scaled-up to meet demand through the telehealth services. During FDA -designated shortages, compounders may produce drugs that are “essentially copies” of approved products until the FDA determines that manufacturers can meet demand.

Strive said the need for tailored or personalized compounded GLP-1 drugs remained high even after the FDA removed the Lilly and Novo branded GLP-1 medications from the national shortage list. At that point, Strive alleged Lilly and Novo began using their market power to foreclose compounders by limiting access to telehealth distribution channels by starting their own direct-to-patient services and by entering into “partnerships” with telehealth providers. Strive said the partnering agreements were based on the understanding that the telehealth providers would stop working with compounders, even if a physician prescribed a compound. Strive contended these putative exclusive-dealing arrangements significantly and unlawfully restricted access to compounded GLP-1 drugs.

Strive also alleged other “anticompetitive” behaviors, including letters sent to doctors demanding they cease unlawful participation in distribution of GLP-1 compounds, and statements that compounds are “never safe to use” or prone to diversion and adulteration, among other allegations.

Strive filed its complaint in January 2026 and amended its complaint in April. The court found it had 28 U.S.C. § 1331 jurisdiction insofar as Strive brought the action under Sections 1 and 2 of the Sherman Act and Section 3 of the Clayton Act.

Lilly and Novo moved to dismiss under Fed. R. Civ. P. 12(b)(6) in late April. Lilly also moved to dismiss under R. 12(b)(1), but it only challenged antitrust standing, so the court evaluated dismissal only under R. 12(b)(6). Lilly also filed a motion to stay while the dismissal motions were pending. The court granted a stay in June.

Relevant markets. Strive alleged, and Lilly and Novo did not contest, that the relevant geographic market was the entire United States. Strive proposed two potential product markets: (1) the entire national market for GLP-1 medications used to treat obesity and chronic weight management; and (2) a national submarket for GLP-1 medications such that out-of-network patients pay cash for compounded GLP-1s to treat obesity and chronic weight management.

Strive alleged other weight loss products are not reasonable substitutes, and are not viewed as reasonable substitutes for GLP-1 drugs, because GLP-1s have dual metabolic control and appetite regulation functions, thus supporting relative inelasticity of demand and premium pricing. Strive alleged that GLP-1s are difficult to get in-network due to prior authorization requirements and body mass index thresholds relative to the out-of-network cash market.

Lilly and Novo did not challenge Strive’s first proposed market. They focused their arguments on the proposed cash-pay submarket. They said the cash submarket was underinclusive because it “gerrymandered” the broader GLP-1 market solely by payment method. They also said the cash submarket was overinclusive because it conflated compounded GLP-1s with branded versions, which they argued were not reasonably interchangeable.

No interchangeability. The court held Strive did not and could not plausibly allege interchangeability of compounded GLP-1s with the branded versions. As Strive acknowledged, physician determinations about the suitability of a compound are ultimately about a branded medication being incapable of meeting a patient’s specific medical needs. The vagaries of prescription were too particularized for interchangeability.

The court said it did not need to consider the Lilly and Novo submarket critiques. The consumer perspective, not the market participant perspective, defines an antitrust market. From the consumer perspective, payment method and payment out-of-pocket are material, and some consumers may not even have insurance. The court said it also did not need to consider overinclusiveness because Strive failed to allege a plausible market due to the lack of interchangeability.

The court additionally noted that the submarket pleading did not allege that compounded GLP-1 drugs are meaningful substitutes for branded GLP-1s. Strive only made conclusory assertions about less costly compounds exerting competitive pressure. The court analyzed that the decision to use compounded GLP-1s is “not driven by ordinary consumer preference.” Strive failed to allege plausible interchangeability or cross-elasticity of demand between compounded products and branded GLP-1 medications. Strive therefore failed to allege a plausible, legally cognizable product market to bring its antitrust claims.

Antitrust injury. The courts separately concluded that Strive failed to allege cognizable antitrust injury. Strive alleged harm to competition through foreclosure; exclusion of compounding pharmacies; increasing barriers to entry; reduced access and patient choice; and increased patient costs. However, the court construed that Strive had largely alleged harm to its own ability to compete, not to competition itself.

The court said it found the claim about reduced patient or prescriber choice unpersuasive because medical necessity and regulatory constraints, not consumer preference, were the main drivers of compounding. Strive’s remaining allegations of higher prices, smear campaigns, and so forth, depended on the “implausible theory of competition between non-interchangeable products” already discussed.

The Case is No. 5:26-cv-00155-MA.

Judge: Alvarez, M.

Attorneys: David R. Montpas (Prichard Oliver Monptas, LLP) for Strive Specialties, Inc. Elyse M. Greenwald (Latham & Watkins LLP) for Eli Lilly & Co.

Companies: Strive Specialties, Inc.; Eli Lilly & Co.

Cases: Antitrust TexasNews