Eli Lilly lawsuit against weight-loss drug seller gets another shave

The pharma giant claims Mochi Health and its pharmaceutical supplier conspired to sell altered, compounded versions of popular weight-loss drugs like Zepbound and Mounjaro in a way that misled consumers and amounted to unfair competition.SAN FRANCISCO (CN) — A federal judge Tuesday further trimmed a lawsuit brought by Eli Lilly and Co. against Mochi Health, a telehealth company that sells compounded versions of tirzepatide drugs Zepbound and Mounjaro, and its pharmaceutical supplier.U.S. District Judge Jacqueline Scott Corley partially granted Mochi Health’s motion to dismiss Lilly’s second amended complaint, while dismissing claims against Aequita and Mochi Health under the Lanham Act. She advanced claims against Aequita Pharmacy and its parent company, Aequita Corporation, under California’s Unfair Competition Law.“Here, Lilly has plausibly alleged the Aequita defendants participated in a conspiracy to violate the UCL through the corporate practice of medicine. However, Lilly has failed to plausibly allege either the Mochi medical defendants or the Aequita defendants were involved in a conspiracy to violate the Lanham Act,” the Joe Biden appointee wrote.In its second amended complaint, Lilly claims Mochi Health hires the physicians working at its medical entities, known as Mochi Medical, advertises for them and provides “diagnostic protocols” related to obesity medicine. Moreover, according to Lilly, Mochi Health has unilaterally altered existing compounded medication doses for its customers for business reasons rather than medical ones.The corporate practice of medicine, where business entities without a medical license and motivated by making profits rather than doctors decide on medical care, is prohibited in California.Lily further claimed Aequita’s corporate entities — who are controlled by Abraham Chaibi, the husband of Mochi Health CEO Myra Ahmad — had a financial incentive to continue Mochi Health’s unlawful practices, accusing Aequita Pharmacy of having “turned a blind eye” to the identical prescriptions it was compounding and complying with Ahmad’s directions to cut costs.Compounded versions of popular weight loss drugs don’t require approval from the Food and Drug Administration and, according to large drugmakers, are not as rigorously tested as FDA-approved drugs for safety, efficacy and quality.Corley found Lilly provided enough evidence to reasonably infer Aequita knew of the scheme to violate the state’s unfair competition law — noting Ahmad had “significant control” over Aequita’s procedures and methods for filling prescriptions — and had “significant financial motivation” to participate in the conspiracy.She also found Lilly plausibly claimed Aequita followed the directives of Ahmad to fill prescriptions and implement certain practices to maximize profits, advancing Mochi Health’s corporate practice of medicine.“Given the allegations regarding Mochi Health’s influence on pharmacy practices, the close relationship between Ms. Ahmad and Mr. Chaibi, and the shared financial benefit across the defendant entities, it is also reasonable to infer the Aequita defendants knew of the conspiracy’s aim,” Corley wrote.However, she found Lilly failed on its claim that Mochi Health and Aequita conspired to commit false advertising under the Lanham Act, writing that Lilly’s assertion that Mochi Health and Mochi Medical colluded to increase revenue of their tirzepatide drug is not enough to claim false advertising.“In short, Lilly has not alleged facts that plausibly support an inference the Mochi Medical defendants’ conduct advanced the aim of the conspiracy; namely, to falsely advertise the compounded medication,” she wrote.Similarly, Corley found Lilly needed to show how Aequita advanced the claimed false advertising scheme beyond just selling the compounded drug.“False advertising is the proper object of the conspiracy, and Lilly similarly fails to allege facts showing the Aequita Defendants committed any act in furtherance of that aim,” she wrote.An Eli Lilly spokesperson touted the ruling’s silver lining.“The vourt’s decision confirms that Lilly can proceed on all three of its claims — including that Mochi engaged in a civil conspiracy to violate state law restrictions on the corporate practice of medicine," the spokesperson said. “This decision follows numerous other rulings Lilly has obtained in federal courts against the practices of telehealth companies, medspas, and mass compounders, including more than a dozen permanent injunctions. Patients deserve real medicine they can trust, and we will continue to take action against those who put patients at risk.”Representatives for the defendants did not respond to a request for comment by press time.Corley granted Mochi Health’s motion to dismiss the lawsuit last year, finding Lilly had failed to articulate how it was harmed by the rival seller of weight-loss drugs. Then, in April, she partially granted Mochi Health’s second attempt to get the lawsuit thrown out, axing Lilly’s claims under the Lanham Act while greenlighting state unfair competition claims.She said in Tuesday’s order that Lanham Act claims against the defendants would be dismissed without leave to amend unless the pharma giant discovers facts that support a conspiracy under the statute.Subscribe to our free newslettersOur weekly newsletter Closing Arguments offers the latest about ongoing trials, major litigation and rulings in courthouses around the U.S. and the world, while the monthly Under the Lights dishes the legal dirt from Hollywood, sports, Big Tech and the arts.Additional Reads