FarmaKeio’s lawsuit against the FDA is a challenge to the agency’s decision to declare the tirzepatide shortage over, a determination that stripped compounding pharmacies of their legal authority to produce copies of Eli Lilly’s Mounjaro and Zepbound. Filed in October 2024 in the Northern District of Texas alongside the Outsourcing Facilities Association, the case lost at the preliminary injunction stage, lost again on summary judgment in May 2025, and is now on appeal before the Fifth Circuit, with oral arguments tentatively set for March 30, 2026.
What the Lawsuit Challenges
The suit, filed October 7, 2024, targets the FDA and then-Commissioner Robert Califf. It was assigned to Judge Mark T. Pittman as No. 4:24-cv-00953.1CourtListener. Outsourcing Facilities Association v. United States Food and Drug Administration FarmaKeio and the OFA brought their claims under the Administrative Procedure Act, arguing the FDA’s decision to remove tirzepatide from the drug shortage list was arbitrary and capricious, rested on incomplete data, and should have gone through formal notice-and-comment rulemaking instead of an informal process.2Alliance for Pharmacy Compounding. Breaking: FDA Allows Renewed Compounding of Tirzepatide Copies for Now
Shortage status is the whole ballgame for compounders. Under the Federal Food, Drug, and Cosmetic Act, pharmacies registered under Sections 503A and 503B cannot produce drugs that are “essentially a copy” of commercially available FDA-approved products. The exception opens when a drug is on the FDA’s official shortage list. While tirzepatide sat on that list, compounders could legally sell their own versions of Mounjaro and Zepbound. When the shortage ended, their legal cover ended with it.3Justia. Outsourcing Facilities Association v. United States Food and Drug Administration
How the District Court Case Unfolded
On October 11, 2024, the court granted the FDA’s request to stay the proceedings and remand the matter to the agency for reconsideration. During that pause, the court indicated no enforcement action would be taken against the plaintiffs, and the FDA separately issued a letter stating it did not intend to take enforcement action against tirzepatide compounders for the time being.3Justia. Outsourcing Facilities Association v. United States Food and Drug Administration4National Community Pharmacists Association. Now FDA Won’t Take Action Against Compounders Compounding Tirzepatide
On December 19, 2024, the FDA reaffirmed that Eli Lilly’s supply was meeting or exceeding market demand and formally removed tirzepatide from the shortage list a second time. The court reopened the case on January 14, 2025.3Justia. Outsourcing Facilities Association v. United States Food and Drug Administration
Eli Lilly Joins the Case
Eli Lilly moved to intervene on January 1, 2025, arguing the FDA, with its broad policy responsibilities, could not adequately represent Lilly’s commercial interests. Lilly went further than the agency itself, taking the position that the law does not permit compounders to manufacture copies of commercially available drugs at all, regardless of shortage status.5BioSpace. Lilly Asks to Join GLP-1 Compounding Lawsuit The court granted intervention.
Preliminary Injunction Denied
On March 5, 2025, Judge Pittman denied FarmaKeio and the OFA’s motion for a preliminary injunction. The plaintiffs had asked the court to block enforcement of the shortage resolution against them and to preserve their ability to compound tirzepatide during the litigation. The court refused both.3Justia. Outsourcing Facilities Association v. United States Food and Drug Administration
Judge Pittman went straight at the plaintiffs’ central legal theory. He concluded the delisting decision was an informal adjudication, not a substantive rule, so it did not require notice-and-comment procedures. The statute directs the FDA to keep the shortage list “up-to-date,” and the court reasoned that forcing formal rulemaking would produce stale information and defeat what Congress intended. The delisting was a factual finding about supply and demand, not new policy.3Justia. Outsourcing Facilities Association v. United States Food and Drug Administration
With the injunction denied, the FDA’s enforcement discretion deadlines took effect. Section 503A pharmacies had to stop compounding tirzepatide immediately. Section 503B outsourcing facilities had until March 19, 2025.6FDA. FDA Clarifies Policies for Compounders as National GLP-1 Supply Begins to Stabilize
Summary Judgment for the FDA
The court set an expedited summary judgment schedule after the injunction ruling. On May 7, 2025, Judge Pittman granted summary judgment to the FDA and Eli Lilly, rejecting the plaintiffs’ arguments that the delisting was arbitrary and capricious or that the FDA should have solicited public comments. Final judgment was entered on May 13, 2025.7Courthouse News Service. OFA v. FDA Appellants Brief
The Fifth Circuit Appeal
FarmaKeio and the OFA appealed to the Fifth Circuit, where the case is docketed as No. 25-10600. Their appellate brief renews the two arguments Judge Pittman rejected: that the FDA’s delisting was a legislative rule requiring notice and comment, and that the determination lacked substantial evidence and a reasoned explanation.7Courthouse News Service. OFA v. FDA Appellants Brief Eli Lilly, appearing as intervenor-appellee, argued in its December 2025 response brief that the district court’s decision was “plainly correct.”8Courthouse News Service. OFA v. FDA Appellees Brief
The Fifth Circuit tentatively scheduled oral arguments for March 30, 2026.9Mealey’s. Oral Arguments Date Set in Case Over FDA’s Removal of Tirzepatide From Shortage List As of mid-2026, the appeal remains pending.
What Compounders Can Do Now
While the appeal is unresolved, the district court’s ruling controls, and the enforcement deadlines that took effect in March 2025 remain in place. Compounders cannot legally produce tirzepatide copies under the shortage exception.
A separate FDA action could further tighten the picture even if the Fifth Circuit rules against the agency on the shortage question. On April 30, 2026, the FDA proposed excluding semaglutide, tirzepatide, and liraglutide from the 503B bulks list, finding “no clinical need” for outsourcing facilities to compound these drugs from bulk substances. If finalized after the public comment period ending June 29, 2026, the proposal would close the last remaining pathway for large-scale compounding of these drugs absent a future shortage.10FDA. FDA Proposes to Exclude Semaglutide, Tirzepatide, and Liraglutide From 503B Bulks List
FarmaKeio’s Parallel Regulatory Troubles
The federal lawsuit is not FarmaKeio’s only front. The company has been dealing with FDA enforcement actions and state disciplinary proceedings that predate and run alongside the shortage-list litigation.
The FDA issued a warning letter to FarmaKeio Outsourcing LLC on July 29, 2021, citing violations from an October 2019 inspection: inadequate adverse event reporting procedures, production of drugs without approved FDA applications, misbranded products, and testosterone pellets compounded in eight strengths that potentially violated the “essentially a copy” restriction. The agency found the company’s earlier corrective responses inadequate.11FDA. FarmaKeio Outsourcing LLC Warning Letter
In March 2022, FDA investigators inspecting FarmaKeio Superior Custom Compounding in Richardson, Texas, documented what the agency described as “serious insanitary conditions” in sterile compounding, including inadequate sterilization equipment, insufficient disinfection, improper hazardous drug handling, failed smoke studies, and inadequate media fills. On March 31, 2022, the FDA issued a public safety alert warning against use of any unexpired sterile products from the facility, citing the risk of “serious and potentially life-threatening adverse health consequences including infections and sepsis.” The company initiated a voluntary recall on April 5, 2022, and a follow-up FDA warning letter came on November 18, 2022.12Authoritize. FDA North American Custom Laboratories LLC13American Pharmaceutical Review. FDA Says Not to Use Sterile Products From North American Custom Laboratories LLC
On October 17, 2024, the California Board of Pharmacy filed a formal accusation against FarmaKeio under Case No. 7870, alleging the company provided incomplete, edited, or false records to investigators, shipped 92 prescriptions for compounded hormonal pellets into California from an unlicensed facility, furnished patients with at least ten adulterated drug preparations between October 2020 and April 2022, and used bulk drug substances not permitted under Section 503A. The board sought license revocation and a five-year management ban on CEO Daniel DeNeui and several other officers.14California Board of Pharmacy. Accusation Case No. 7870 The case resulted in a decision effective October 15, 2025: the nonresident pharmacy license was revoked, the revocation stayed, and the license placed on three years of probation.15California Board of Pharmacy. Disciplinary Actions October Through December 2025
In June 2025, the Iowa Board of Pharmacy issued a notice of hearing and statement of charges against FarmaKeio, alleging violations of the federal Food, Drug and Cosmetics Act. The board did not publicly disclose the specific violations or their timing. A disciplinary hearing was scheduled for July 18, 2025.16Des Moines Register. Iowa Board Files Charges Against Mail-Order Pharmacy FarmaKeio17Iowa Capital Dispatch. Iowa Board Files Charges Against Mail-Order Pharmacy Cited by FDA and California Board