Lilly and Novo widen compounding fight as court lets 503B ad claim proceed

Eli Lilly and Novo Nordisk have filed 10 cases in the past year against compounding pharmacies and telehealth companies at the National Advertising Division, a self-regulatory advertising body run by BBB National Programs, as they try to curb marketing of compounded copies of their GLP-1 drugs ^[1]. A separate federal ruling has opened another route: on Aug. 6, 2026, a court in South Carolina allowed a drugmaker's false-advertising claims over a compounder's statements that it complied with Section 503B of federal drug law to move forward ^[2].

An ad forum that moves in months

The NAD has existed since 1971 and settles advertising disputes outside court ^[1]. The process is voluntary, and the burden falls on the advertiser to show a reasonable basis for its claim; an attorney reviews the case and drafts a decision ^[1]. Advertisers can appeal to a board of academics and brand representatives, and the NAD can refer a case to the FDA, the Federal Trade Commission or state attorneys general, or report an ad to social media platforms ^[1].

Novo Nordisk said it has filed 130 federal lawsuits and five NAD challenges, calling the NAD "an important forum to bring complaints against companies making false and misleading claims about unapproved compounded drugs" ^[1]. Lilly, which said it has filed dozens of federal lawsuits and at least five NAD cases, called the NAD "an independent authority whose mission is to build consumer trust in advertising" ^[1].

Recent outcomes: Lilly challenged Noom's "A Smaller Dose. A Smarter Start" tagline for its compounded GLP-1s, and the NAD found the company lacked adequate support; Noom disagreed but agreed to drop or modify the claim ^[1]. Novo's case led Willow Health Services to permanently discontinue certain safety and efficacy claims for its compounded semaglutide, after the NAD referred the matter to the FTC and state attorneys general when Willow did not say whether it would comply ^[1].

Lilly's tirzepatide franchise reached $40 billion in sales, and Novo's products generated $35 billion last year ^[1]. At least a million patients have used compounded copies ^[1].

The 503B theory

Section 503B lets registered outsourcing facilities ship compounded sterile drugs without patient-specific prescriptions and exempts them from new-drug approval and some labeling and supply-chain rules, but they must meet 11 statutory conditions ^[2]. One condition limits the use of bulk drug substances unless the government identifies a clinical need or the compounded drug appears on the shortage list ^[2].

In Pacira BioSciences v. Nephron Sterile Compounding Center, the court found that listing a product among "503B Products" was false as a matter of law: "no other conclusion can be drawn from its designation as a '503B Product'" ^[2]. A survey found a net 14.8% of respondents believed a related product was 503B-compliant, which the court said would ordinarily support a finding that an ad misled consumers; disputes about the survey go to a jury ^[2]. Claims about an earlier product were barred by laches after the plaintiff waited more than four years to sue ^[2]. The court also held that the bulk-drug-substance provision is "clear on its face," so compliance claims can be treated as statements of fact rather than opinion ^[2].

Why it matters for patients

Compounded semaglutide and tirzepatide have not gone through FDA new-drug approval; Lilly's tirzepatide and Novo's semaglutide are the FDA-cleared versions ^[1]. Under the Lanham Act theory, a statement that a compounded product is "503B compliant" is a marketing claim a competitor can challenge in court, and a product listed under a "503B Products" heading can be found false as a matter of law ^[2]. That is a narrower question than whether the compounded drug itself is lawful, which the ruling did not resolve ^[2].

NAD decisions carry no legal authority and participation is voluntary, so a challenge being filed does not mean a product was recalled or that regulators have acted ^[1]. Referrals, however, can reach the FTC, state attorneys general or social platforms ^[1]. The FDA has sent more than 100 warning letters about misbranded compounded drug claims, though people quoted in the report said the warnings have been narrow and focused on what sites should not say ^[1]. Whether a given compounded product is safe or effective for a given patient is not addressed by any of these proceedings.

What happens next

No trial date or hearing schedule appears in the Aug. 6 ruling ^[2]. The outcome of the Willow referral to the FTC and state attorneys general has not been reported ^[1]. Neither manufacturer has disclosed filing a Lanham Act case on the 503B compliance theory.