Friday, February 20, 2026

We Already Have Generic GLP-1s. Why Don't Prices Reflect That? Answer: PBM Pricing Arbitrage.

The focus of this blog is the autoimmune form of diabetes known as Type 1 diabetes (T1D), which has exactly one FDA-approved treatment (insulin replacement therapy), and also has no proven way of prevention or inducing remission, hence I don't typically address Type 2 diabetes because it is not of personal interest to me. 

However, because insulin manufacturers have shifted their business focus away from insulin to GLP-1 inhibitors (which are not approved for T1D), it remains an area of tangential interest for me, which I have episodically covered at https://blog.sstrumello.com/2024/07/tevas-biosimilar-of-liraglutide-will-be.html, and also at https://blog.sstrumello.com/2024/12/fda-approves-second-generic-glp-1.html and perhaps most recently at https://blog.sstrumello.com/2025/08/diabetes-mine-innovation-project-study.html. 

The headline tells you much of the story. However, because of my deep knowledge of how the prescription drug market works (which many don't understand), I can explain beyond the headline, and provide readers with information which may be of interest. Like the fact that we already have a bunch of generic GLP-1s.

It's true: there are already quite a few legitimate, FDA-approved generics of the GLP-1 inhibitors; there are currently a number of them already being sold for treatment of Type 2 diabetes, and even more in the pipeline from other companies which will cause prices to drop further, and at least one of the generics now already has the FDA "label-extension" for the stand-alone indication of obesity. Simply stated, there is NO reason for "compounded" versions of GLP-1 inhibitors, and that's because we already have efficacious generic GLP-1s on the market, plus many (if not all) of the compounded products are unlikely to be effective.

GLP-1s are not new, and FDA-approved generics already exist

For people without any form of diabetes, the short story about GLP-1 drugs is that they first emerged as a treatment for the most common form of diabetes, specifically Type 2 diabetes, more than twenty years ago. Back on April 28, 2005, which was when the U.S. Food and Drug Administration approved the very first GLP-1 inhibitor. this class of drug has been safely used (and sold) since then, and all of the side-effects are already very well-established. Don't believe any of the hype about undiscovered adverse events; because there are none. 

For anyone who's blogged in the diabetes space for as long as I have, they may recall some of the early stories from patients who had fantastic results with the first-generation GLP-1 drugs. For example, the late David Mendosa, blogged extensively on his positive experiences with GLP-1s and how those assisted him in losing weight which he was unable to lose using any other diabetes drugs (see one of his posts from July 31, 2006 at https://mendosa.com/my_byetta.htm for some documentation of his experience). 

More than twenty years of experience

The first-ever GLP-1 inhibitor was originally a product sold under the trade name Byetta (exenatide) from a San Diego-based company known as Amylin Pharmaceuticals, Inc., which turned to big-pharma partner Eli Lilly & Company, Inc. to make and package the medicine in sufficient quantities to keep up with rapidly-rising demand for the product. Lilly did so because it earned the company money; and sales grew rapidly due to the Amylin partnership, which also helped to solidify Lilly's leadership in the diabetes treatment space.

Byetta, however, was approved only for the "indication" of Type 2 diabetes. About five years later, on January 25, 2010, rival Novo Nordisk introduced a newer GLP-1 inhibitor branded as Victoza (liraglutide). Liraglutide wasn't superior to Byetta, but because of legally-exempted rebate kickbacks which Novo Nordisk was paying to PBMs, its version became the "preferred" GLP-1 product for many covered patients. 

Both Byetta and Victoza had to be injected daily. However, both delivered not only adequate glycemic control, but unlike a vast majority of other Type 2 diabetes drugs, the GLP-1 class of drugs also had an atypical side-effect (compared op all other diabetes drugs sold at the time): most users also experienced impressive weight-loss over time. Most patients who used these drugs were able to lose weight, while also restoring themselves to HbA1c's which were considered close to being "within [target] range" or reasonably close. 

But the GLP-1s themselves were only FDA approved for the "indication" of Type 2 diabetes. Type 1 diabetes (T1D) is a condition which is etiologically unrelated, and is characterized by an absolute deficiency of insulin, as opposed to a relative deficiency of insulin which exists in Type 2 diabetes. Also, the only approved treatment for T1D is lifelong insulin replacement therapy. Novo Nordisk did try to get a T1D FDA "label-extension" for Victoza, except that the FDA denied the application, concluding that it simply did not work in T1D and there was insufficient evidence to approve it. I disclosed some of the reasons FDA denied GLP-1s for T1D in a post at https://blog.sstrumello.com/2025/08/diabetes-mine-innovation-project-study.html, but suffice to say, there really was no valid reason to approve it because it was not efficacious in T1D.

GLP-1s for the indication of "obesity" happened via an FDA "label-exension"

It later occurred to execs at Novo Nordisk that maybe its blockbuster GLP-1 could also work for patients who do not have diabetes, but they just want to lose weight. So, Novo Nordisk conducted clinical trials, and found that indeed, liraglutide did result in appreciable weight reduction among people who took it (even if they did NOT have any form of diabetes), so it applied for what's referred to as an FDA "label-extension" for the stand-alone "indication" of obesity. The history of weight-loss drugs has been one of repeated failure, so the advent of a treatment which actually worked was indeed a new development. And, on December 23, 2014, Novo Nordisk's liraglutide received FDA approval for the stand-alone indication of obesity, but it sold the obesity version of the drug under the trade name Saxenda.

Around the same time, Amylin Pharmaceuticals applied for regulatory approval for an "extended-release" version of the drug it had branded as Byetta, and on January 27, 2012, the FDA approved the extended-release version which Amylin Pharmaceuticals branded as Bydureon (exenatide extended-release for injectable suspension). By then, however, Amylin Pharmaceuticals and Eli Lilly & Company were having something of a partnership disagreement. 

The Amylin/Lilly partnership was harmed by Lilly's decision to partner with another drug firm known as Boehringer Ingelheim which was responsible for much of the R&D development of the drug Jardiance (empagliflozin), a small-molecule drug in the Sodium-Glucose Cotransporter-2 (SGLT2) inhibitor class of drug. Jardiance was proven to provide cardiovascular benefits, primarily by reducing the risk of CV death and hospitalization for heart failure in adults with heart failure, and also by reducing CV death in adults with Type 2 diabetes plus established CV disease; hence it was a big advancement in treating heart failure and CV disease risk in people with Type 2 diabetes, plus it became the first diabetes drug which also had a CV benefit to patients who used it. Since then, several other drugs in the same SGLT2 inhibitor drug class, including dapagliflozin (Farxiga), canagliflozin (Invokana), ertugliflozin (Steglatro), and bexagliflozin (Brenzavvy) all share similar CV benefits, and one of those, specifically Brenzavvy (bexagliflozin) sells for a remarkably affordable price compared to all the others in the same drug class, and that is sold via Mark Cuban Cost Plus Drug Company (see https://www.costplusdrugs.com/medications/brenzavvy-20mg/ for more on that).

As a result, a decade-long partnership between Amylin Pharmaceuticals and Eli Lilly unceremoniously ended (and rather unhappily) in November 2011, driven by intense litigation between the two companies, slowing Byetta sales, and conflicts-of-interest arising from Lilly's new alliance with Boehringer Ingelheim. For its part, in July 2012, Bristol-Myers Squibb announced it would acquire Amylin Pharmaceuticals for $5.3 billion. In April 2013, Bristol-Myers Squibb announced it was closing Amylin's San Diego HQ operations by the end of 2014, and would merge an Amylin manufacturing facility in West Chester, Ohio, plus combine all of Amylin's field-based sales personnel into Bristol-Myers Squibb's operations.

Of course, Lilly did not simply accept the end of the Amylin Pharmaceuticals partnership (which was a result of its signing a deal with a rival) by exiting the GLP-1 space, therefore in July 2013, Lilly applied for FDA approval of its own extended-release GLP-1 inhibitor product for Type 2 diabetes, which was subsequently cleared by regulators on September 18, 2014, and Lilly branded that product as Trulicity (dulaglutide). Of course, by then, Amylin's Bydureon product was already struggling not only with new competition from Lilly, but also from Novo Nordisk's kickback-driven sales of Victoza, which had established a commanding share of the new GLP-1 inhibitor market. 

Lilly was aware of rival Novo Nordisk's strategy with liraglutide, and how an FDA label-extension for obesity allowed that drug to be prescribed to virtually anyone. Rather than seeking a similar extension for its own Trulicity product, Lilly planned to launch a newer GLP-1 product, known generically as tirzepatide, under a new brand name. To compete effectively, Lilly aimed for dual FDA approvals for tirzepatide to cover both Type 2 diabetes and the standalone indication of obesity. The new, extended-release product was branded as Mounjaro (tirzepatide) which received FDA-approval for Type 2 diabetes on May 13, 2022, and about a year later, the same drug sold under the trade name Zepbound (tirzepatide) received a separate FDA approval for the "obesity" indication on November 8, 2023.

The 2024 advent of FDA-approved generic GLP-1 inhibitors

Of course, since then, generic versions of both exenatide (Byetta), as well as liraglutide (Victoza for Type 2 diabetes, as well as Saxenda for obesity) have since won regulatory approvals. Below is a list of different press releases on each of the generics' FDA approvals or subsequent "label extensions":


Generics of liraglutide are forecast to be big because they can easily attain an FDA "label-extension" for the stand-alone indication of "obesity"

Nevertheless, Novo Nordisk's liraglutide (Victoza/Saxenda) remains quite popular because it can be prescribed for both the Type 2 diabetes indication, as well as for the obesity indication. And the first generic of that particular GLP-1 drug was Teva's copy, which received approval for Type 2 diabetes on June 24, 2024. 

Teva's press release said something interesting: Teva was careful to refer to the approval as an "Authorized Generic of Victoza" and the reason for that terminology was simple: Teva planned to sell its own copies of Novo's Victoza/Saxenda (and Novo Nordisk knew it was capable of doing so), and the companies ended up in court, but Novo Nordisk was unsuccessful in winning any of its patent infringement lawsuits against Teva. So, Novo tried a slightly different approach: allow it make the original product which Teva could merchandise, and simply call it a "generic". Teva agreed, but was clear with Novo that it was not seeking, nor did it NEED, Novo Nordisk's help, and Teva was more than prepared to start selling its own generic copies. Instead, Novo offered Teva a price on liraglutide which was cheap enough that Teva really could not refuse, plus it helped Novo Nordisk to get rid of its existing inventory of the older drug, thereby helping both companies in the process. 

A flood of generic weight-loss drugs is coming, yet almost no one knows they exist. We know, thanks to FDA research, that the more generics which are approved for a given drug, prices on those generics tends to fall even more.

As I write this, Teva's copy of Victoza is the only generic copy which has subsequently received the FDA label-extension for the "obesity" indication (becoming a copy of Saxenda in the process)...but we can expect a whole bunch more to eventually attain those label-extensions for obesity before very long. We know it because they're in pipelines of publicly-traded companies which reveal their drug development pipelines in their SEC filings. The FDA label-extensions for the obesity indication typically occurs about a year following the Type 2 diabetes indication approval. And the Type 2 indications have been on the market since the latter part of 2024.

While the media talk nonstop about the newest obesity drugs, the reality is the old ones have already gone generic. And more generics are pending approvals at this very moment.

Since then, we've seen several copies of liraglutide gain FDA approval, including from Hikma Pharmaceuticals and Meitheal Pharmaceuticals. Biocon Biologics has one pending approval, so does Sandoz (with collaboration partner Gan & Lee), Amphastar Pharmaceuticals/ANP, plus Lannett Co./HEC. And, remember Amylin Pharmaceutical's successful Byetta (exenatide) product? Well, Amneal Pharmaceuticals now sells a copy of that too, though it lacks a label-extension for the indication of obesity. The prices of the generics are hardly bargains right now.

But one of the reasons the obesity drugs are selling like hotcakes is not because everyone who uses the drugs meets the clinical definition of "obese", but thanks to sketchy "telehealth" providers who prescribe the drugs without so much as an examination (see https://www.statnews.com/2024/10/17/telehealth-online-compounded-glp1-prescriptions-medical-groups/ for more details) by phone or online, almost anyone can get a prescription. Just call or chat, and an e-script is sent instantly to the pharmacy or drug company's in-house drug fulfillment center (such as LillyDirect), all while the prescriber is still on the phone or online. In other words, Novo Nordisk and Lilly rely on questionable telehealth companies to get around the need for a doctor to declare someone is clinically obese. Most big telehealth prescribers consist of a small number of largely unseen clinician networks (including doctors licensed to practice medicine in the U.S., but they may be based offshore in places such as India or the Philippines, plus many domestic nurse practitioners who want the predictable hours that working for telehealth providers provide, and they also have the ability to prescribe most drugs (with the exception of controlled-substances) that handle mass prescriptions at scale.

In June 2025, sensing that telehealth prescribers were driving the GLP-1 prescription bonanza for weight-loss drugs, a telehealth company known as 9amHealth and Mark Cuban Cost Plus Drug Company PBC partnered to provide employers with a more cost-efficient obesity management solution (see the press release at https://www.prnewswire.com/news-releases/mark-cuban-cost-plus-drug-company-pbc-and-9amhealth-join-forces-to-expand-access-to-affordable-obesity-care-302482628.html for details). The Mark Cuban-9amHealth collaboration integrates low-cost generic medications, transparently-priced GLP-1 inhibitors into a comprehensive clinical program for treating weight and related chronic conditions. As I write this, Mark Cuban's price for liraglutide prescribed for Type 2 diabetes is $118.33 for 1 Box (2 x 3ml Prefilled Pens), while the cost for liraglutide prescribed for obesity is $590.75 for 1 Box (5 x 3ml Prefilled Pens), although the cost is still slightly less than Novo Nordisk's Wegovy or Eli Lilly's Zepbound. 

But remember with every additional generic which is approved, prices will fall even further. The threshold is that with 2-4 generic entrants, prices fall to about ~50% of branded drug, and once there are 6+ generic entrants, prices fall to 10% or less of the branded drug.  The FDA conducts research to measure the impact of the Drug Competition Action Plan (DCAP), and uses those findings to identify "saturated" markets, in order to justify prioritizing its review of generic applications for more "uncontested" molecules where competition—and therefore patient savings—is currently lacking. 

A 2019 FDA (CDER) analysis examined the correlation between the number of generic entrants and market price, press release (found on the Internet Archive): https://web.archive.org/web/20221007032321/https://www.fda.gov/news-events/fda-brief/fda-brief-new-analysis-highlights-link-between-generic-drug-competition-and-lower-drug-prices/, while the Full Economic Study (PDF) remains accessible at https://www.fda.gov/media/133509/download if you want to see the data. Suffice to say, the data confirms that while the first generic offers a moderate discount, the entry of 6 or more rivals triggers a price collapse of 95% or more relative to the brand price. 

Currently, many employer-sponsored health plans don't cover drugs prescribed for obesity at all because they are so expensive; in fact, its usually only if the patient has a diagnosis code for Type 2 diabetes. The same is true for Medicare, generally, as there are very specific eligibility rules that must be met in order to receive Medicare coverage of obesity drugs, typically involving concurrent heart disease (such as the patient has already suffered a heart-attack). 

But vanity has nevertheless pushed a prescription boom for the GLP-1 drug class, but so far, for the heavily-rebated branded drugs, plus there are PBM "formulary exclusions" for all other brands (including any and all generic medicines) which seemingly defies logic. This is referred to by the Pharmacy Benefit Manager (PBM) industry as Patient "Price Arbitrage", which is a standard business procedure for the PBM industry. It occurs when a Pharmacy Benefit Manager (PBM) charges an insurance plan (and/or a covered patient) a higher price for a drug than they actually pay the pharmacy to dispense it, thereby pocketing the difference (the "spread") as profit. This is what's known as "spread pricing" and it's become a major problem, especially on what should be cheap generic drugs. 

According to 2022 research from the University of Southern California's (USC) Schaeffer Center for Health Policy & Economics, when USC conducted a first-of-its-kind study to see how often this happens, they learned that patients overpaid for their prescriptions about 23% of the time (see https://kffhealthnews.org/news/paying-cash-for-prescriptions-could-save-you-money-23-of-the-time-analysis-shows/ for more), and this occurred frequently on what should ordinarily be considered "inexpensive" generic medicines. 

However, patients have started to figure this out, which explains why in 2020, the giant coupon-generating app GoodRx revealed in its "Payer Mix" that three out of four consumers who actually used the GoodRx app already had commercial, Medicare, or Medicaid insurance. This means that someone—the consumer, their employer, and/or the government—paid insurance premiums for a pharmacy benefit managed by a PBM. Yet it was still worthwhile for people to bypass their own health plan's out-of-pocket costs and PBM network rates in favor of a different PBM's rates...such arbitrage creates potent conflicts between PBM's and their employer healthcare plan sponsor clients (catch my previous coverage of that at https://blog.sstrumello.com/2022/07/turning-pbm-arbitrage-on-its-head.html; suffice to say it is a stunning indictment of the corrupt PBM business model, and the FTC has sued them over unlawful business practices. 

Put simply, the existence of generics (even in "hot" drug categories like GLP-1 inhibitors) alone does not necessarily guarantee lower prices. When PBM formulary design, rebates, and utilization channels favor high-list-price brands so the PBM can collect multimillion dollar rebates, the market irrationally behaves as if competition does not exist. PBM pricing "arbitrage" is at the heart of today’s GLP-1 market: while the FTC has sued over that (and Express Scripts has agreed to settle), there remains a major loophole in the proposed settlement agreement which I intend to ask the FTC to reconsider before accepting the settlement agreement.

However, patients seeking GLP-1s at lower prices should base their decisions on where they can get these overpriced medicines at the lowest sustainable cost. Less costly generics are available, but they are often excluded from preferred drug formularies. Sometimes. Or sometimes, entities like Mark Cuban which is known to reduce its prices when it can get a lower price, may be able to help. But the Latin saying "caveat emptor" (let the buyer beware) remains the rule of the day when it comes to GLP-1s (and most other drug categories). Just beware that generic GLP-1s for the indication of obesity are now just starting to emerge. 

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at Friday, February 20, 2026

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