The End of the Compounded GLP-1 Market: What It Means for Prior Authorization and Access
- Mary McKee
- Feb 25
- 4 min read
The FDA recently declared the shortage of semaglutide officially over, effectively spelling the end of the compounded GLP-1 market. For the past two years, compounding pharmacies filled a critical gap in supply as demand for GLP-1 drugs like Wegovy and Ozempic soared. Now, as the FDA requires compounders to stop distributing semaglutide injections by April or May, a wave of patients will flood the traditional prescription market—bringing major implications for prior authorization (PA) and insurance coverage.
How Big Is the Compounded GLP-1 Market?
The compounded GLP-1 market has been massive, fueled by insurance restrictions and supply shortages. Industry estimates suggest that between 10% and 20% of GLP-1 prescriptions have been filled with compounded versions—potentially impacting hundreds of thousands of patients.
According to IQVIA, total U.S. GLP-1 prescription volume grew by 300% between 2020 and 2023, with 5 million prescriptions filled per month in 2023.
Data from Bloomberg Intelligence suggests that the total GLP-1 market could exceed $100 billion by 2030, with compounded alternatives generating over $1 billion in annual sales before the FDA’s recent decision.
A 2023 study in JAMA found that 68% of GLP-1 patients had at least one prior authorization denial before securing approval.
With the FDA cracking down, these patients must now transition to FDA-approved semaglutide products—many of which require strict prior authorization approvals.
The Prior Authorization Challenge: What Changes?
One of the biggest barriers to GLP-1 access has been prior authorization requirements imposed by insurance providers. Many health plans limit coverage to diabetes patients and require documented medical necessity for obesity-related prescriptions.
With compounded semaglutide disappearing, demand for insurance-covered, brand-name GLP-1 prescriptions will surge—but prior authorization policies will likely tighten rather than loosen. Expect to see:
A Wave of PA Requests & Denials: As thousands of patients transition from compounded to FDA-approved semaglutide, insurers may enforce stricter eligibility criteria and increase denials.
Longer Wait Times & Administrative Burdens: More paperwork, step therapy hurdles, and appeals will create bottlenecks for patients and providers.
Increased Out-of-Pocket Costs: Patients who previously paid cash for compounded semaglutide may struggle to get coverage and face high retail costs if denied.
Strain on Providers: Physicians and pharmacists will experience higher PA workloads as they attempt to secure insurance approvals for patients transitioning from compounded versions.
The true impact will hit in Q2 2025, when the final compounded products exit the market, forcing all patients into the brand-name prescription pipeline.
Industry Insights: What Experts Are Saying
The healthcare industry is keenly aware of the impact this shift will have on patients and providers.
🔹 Dr. Robert Gabbay, Chief Scientific & Medical Officer at the American Diabetes Association (ADA), recently commented:"The demand for GLP-1 medications is at an all-time high, but access remains a critical issue. If insurers don’t adapt to these new market conditions, we could see more patients unable to obtain life-changing medications, leading to worsening health outcomes." (Source: American Diabetes Association)
🔹 A report from Evercore ISI predicts that prior authorization hurdles will increase as more patients attempt to transition from compounded to brand-name GLP-1s:"Insurers will likely tighten requirements in the short term, leading to an increase in PA denials before coverage policies evolve to meet demand." (Source: Evercore ISI)
🔹 Pharmacy benefit managers (PBMs) are also weighing in, with some already updating their GLP-1 coverage policies.CVS Caremark stated in a recent policy update:"We are actively reviewing obesity-related GLP-1 coverage as part of our long-term formulary strategy. Patients who previously used compounded versions may require additional clinical documentation to ensure appropriate use." (Source: CVS Caremark)
Hypothetical Case Study: The Insurance Roadblock for GLP-1 Access
Imagine a patient, Lisa, who has been using compounded semaglutide for the past six months after being unable to obtain a covered prescription through her insurance. With the FDA’s new ruling, she must switch to an FDA-approved GLP-1 medication—but encounters a roadblock when her insurance requires multiple documentation steps, step therapy trials, and an extensive appeals process.
Her doctor submits the first prior authorization request, which is denied due to missing proof of previous weight-loss interventions. After submitting dietitian records, BMI tracking, and metabolic health data, the second appeal is also denied because Lisa does not have diabetes, only obesity.
After weeks of waiting and several back-and-forth exchanges between her provider’s office and her insurance company, Lisa is finally approved—but her coverage is limited to only six months, requiring another PA renewal process to continue treatment.
Stories like Lisa’s highlight the systemic challenges patients face in accessing GLP-1 medications and the burdens placed on healthcare providers handling PA requests.
How Some Solutions Are Helping the Prior Authorization Bottleneck
With hundreds of thousands of prior authorization requests about to flood insurance systems, technology-driven solutions will be critical in reducing delays and denials.
AI-Driven PA Solutions in Action
Several AI-powered prior authorization platforms are already helping providers streamline approvals and reduce administrative burdens:
Surescripts Real-Time Prescription Benefit (RTPB): Helps providers check coverage requirements in seconds before prescribing, reducing surprise denials.
CoverMyMeds: Automates prior authorization submissions, reducing manual paperwork and processing time by up to 90%.
Arrive Health: Uses AI to suggest the most cost-effective medication options, ensuring that providers choose prescriptions with the highest chance of immediate approval.
Optum PA Automation: Leverages machine learning to analyze insurer approval patterns, guiding physicians on what documentation is required upfront to avoid rejections.
Need Help Navigating the GLP-1 Wave? Coordination Health Can Help.
Navigating the complexities of GLP-1 coverage, prior authorization, and e-prescribing challenges requires expertise in pharmacy technology, AI-driven automation, and payer strategy.
Coordination Health specializes in helping healthtech companies, pharmacy technology providers, and healthcare organizations build solutions that reduce PA burdens, streamline prescription workflows, and improve patient access to life-changing medications like GLP-1s.
Interested in optimizing your prior authorization workflow?
Need to find the right solutions for pharmacy tech?
Want to integrate smarter e-prescribing tools?
Let’s connect. Coordination Health can help your company stay ahead of the wave.
📩 Get in touch today to discuss how we can help you navigate this evolving market.
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