Eli Lilly & Co. v. Mochi Health Corp., 2026 WL 1076831,
No. 25-cv-03534-JSC (N.D. Cal. Apr. 20, 2026)
Eli
Lilly’s claims were previously dismissed, and Lilly tried again with claims
under California’s UCL, Lanham Act false advertising, and civil conspiracy.
Civil conspiracy failed but Lilly was allowed to proceed with the advertising
claims.
Lilly makes two FDA-approved weight-loss medications
containing tirzepatide. “Mochi Health is a telehealth company that connects
consumers with physicians who can prescribe weight-loss medications, including
compounded versions of tirzepatide.”
Lilly’s first UCL claim arose from Mochi Health’s alleged
corporate practice of medicine. It allegedly changed patient doses en masse
without consulting patients or receiving a clinical indication from a physician—several
times over the course of a year. The changes were allegedly based Mochi’s
developing business relationships with various pharmacies: whether compounded
medications included niacinamide, glycine, and pyridoxine depended on the pharmacy.
Lilly alleged that these additives were not meant to achieve a therapeutic
effect, but rather reflected Mochi’s financial considerations. Thus, Mochi allegedly
made medical decisions for patients based on profit motives rather than
clinical need. It also allegedly “steer[s] its patients to compounded products
over Lilly’s FDA-approved tirzepatide medicines” through its hiring of Mochi
physicians, its development of obesity treatment protocols, and training of
Mochi medical staff.
Lanham Act: Lilly alleged that Mochi misrepresented its compounded
tirzepatide medications as safe and effective based on studies conducted of
Lilly’s products; misrepresented its products as FDA-approved; and misrepresented
its tirzepatide drugs as “personalized.”
Along with lost sales, Lilly alleged reputational harm
because Mochi compared an inferior, compounded product to Lilly’s FDA-approved
medicine, causing consumers to conflate the higher incidence of adverse events
found in compounded medications with Lilly’s drugs. Lilly cited studies
indicating a higher risk of adverse events from utilizing compounded versions
of tirzepatide, such as “abdominal pain, diarrhea, nausea, suicidality, and
cholecystitis.”
Mochi once again challenged Article III standing. But this
time Lilly successfully alleged both sales diversion and reputational harm. “Coupled
with Mochi Health’s alleged unilateral ability to modify existing compounded
medication doses for customers, Lilly asserts Mochi Health exercises control
over the Mochi Medical practice to reduce patients’ ability to choose MOUNJARO®
or ZEPBOUND® over a compounded option.” Its ads about the safety and
personalization of compounded tirzepatide also plausibly steered consumers in
the market for weight-loss medication away from Lilly’s products.
As for reputational injury, Lilly connected its allegation
about higher side effects for compounded medications to research findings from
the National Consumers League that show consumer confusion about the difference
between compounded medications and FDA-approved medications, and conflation of
the two. “Combined, these allegations permit a reasonable inference of harm to
Lilly’s reputation through public perception that FDA-approved tirzepatide
medications have similar rates of adverse side effects compared to compounded
medications.”
Defendants argued that consumers of compounded tirzepatide were
different from consumers of MOUNJARO or ZEPBOUND, relying on statements Lilly
made in a separate case involving the FDA’s determination that there was no
longer a nation-wide “shortage” of tirzepatide-based drugs, where Lilly said
that “there were good reasons to think much of the market for compounded
tirzepatide would not translate to future demand for Lilly’s FDA-approved
products. Compounded products are often promoted for uses different from the
indications FDA has approved, including by affiliated telehealth providers, so
patients may be less likely to get a prescription from a physician for
FDA-approved medicine. There also might not be insurance coverage for those
off-label uses, and some compounded products use a different formulation than
Lilly’s products.”
This didn’t estop Lilly from alleging harm here. Lilly did
not make any claims about Mochi Health’s marketing and customer base. And its prior
statement that “much of the market for compounded tirzepatide” may not overlap was
consistent with its allegations in this case of some consumers being
diverted.
Even though they operated in different market strata and
Mochi doesn’t prescribe, manufacture, or sell the compounded tirzepatide
medications, Lilly still plausibly alleged that misleading advertisements about
the safety and personalization of Mochi’s medicines attracted customers in the
market for weight-loss medication that may have otherwise purchased a Lilly
medication and that Mochi patients were steered away from Lilly’s products. “It
is not necessary that Mochi Health personally profited from the diverted sales;
the relevant inquiry is whether Lilly has plausibly alleged it suffered an
economic injury caused by Mochi Health’s conduct. Accordingly, Lilly’s and
Mochi Health’s relative positions in the market are not dispositive of the
economic injury question here.”
Mochi further argued that the causal chain was interrupted
by the requirement that any consumer receive a valid prescription from a
treating physician before purchasing compounded tirzepatide. But a single
third-party’s actions do not necessarily upend traceability given the
requirement is “less demanding than proximate causation.” And Lilly alleged
that Mochi influenced the prescription process, including by changing the
formulation of compounded tirzepatide medications for all patients en masse
without advanced notice or a clinical indication. That was plausible
traceability.
As for redressability, Mochi argued that an injunction could
not force physicians—who are not parties to this case—to prescribe Lilly’s
products instead of a compounded drug. But damages are available, and any
equitable relief would redress Mochi’s alleged false advertising practices and
corporate intervention in the practice of medicine.
UCL claim: Lilly plausibly alleged that it was injured as a
result of the allegedly unlawful corporate practice of medicine. The California
Medical Practice Act is violated if a “non-physician exercises ‘control or
discretion’ over a medical practice.” And that was sufficiently alleged.
Lanham Act: Statutory standing was present both through
sales diversion and reputational damage.
Indeed, Mochi Health allegedly
deployed search-engine optimization to show Mochi Health’s compounded
tirzepatide medication advertisements to consumers searching for Lilly
products. Moreover, Mochi Health directly compares its own compounded
medications to Lilly’s products in social media advertising. These allegations
permit a reasonable inference that any alleged misrepresentations by Mochi
Health put Lilly at a competitive disadvantage in the market—either by losing
customers or suffering damage to its reputation. So, Lilly’s allegations permit
a reasonable inference that any misrepresentation by Mochi Health proximately
caused its injuries.
Reputational injury doesn’t require direct competition, and
diverted sales also counted even without a supposed 1:1 relationship of lost
sales. Lexmark found the 1:1 relationship important because “Lexmark’s
anticompetitive actions primarily targeted remanufacturers, not [plaintiff]
Static Control.” Here, Mochi allegedly operates in the weight-loss market by
advertising directly to those consumers. “The relevant allegations here permit
a plausible inference that any false or misleading statements issued by Mochi
Health injured Lilly because they targeted the same segment of the market from
which Lilly stood to profit.”
What about the intervening cause of a doctor’s prescription?
Not intervening enough to defeat proximate cause. Eli
Lilly & Co. v. Willow Health Servs., Inc., No. 2:25-CV-03570-AB-MAR,
2025 WL 2631620, at *6 (C.D. Cal. Aug. 29, 2025), found the prescriber’s
conduct to defeat proximate cause. The court here disagreed. First, Lilly here
alleged direct interference with patient prescriptions. “Second, drawing
inferences in Lilly’s favor, that a medication requires a prescription does not
prevent a consumer from relying on advertising to request one product over
another from their physician. Since both products at issue contain tirzepatide,
it is a reasonable inference that a consumer would have some basis for asking
her physician to prescribe a specific medication.”
Falsity: Mochi allegedly misled consumers by (1) citing to
Lilly’s clinical trials to support its claims and (2) advertising that
“tirzepatide is a safe medication that has been approved by FDA.” The court
agreed that these were plausibly misleading, accepting Lilly’s allegation that “the
FDA does not approve an active pharmaceutical ingredient for treatment of
patients, but rather approves specific formulations of that ingredient that
have been subjected to rigorous study.” Mochi cited the Lilly studies to tout “tirzepatide,”
then connected that to “compounded tirzepatide,” and didn’t mention the
difference between compounded and FDA-approved formulations, but instead
suggested the medicines were interchangeable.
Mochi argued that was a mere lack of substantiation theory.
While some
district courts have agreed, the court reasoned that it was plausible that
Mochi’s statements misled consumers into believing that the Lilly studies
actually considered compounded medication. “The issue is not whether Mochi
Health had a basis for its statements, but rather, whether Mochi Health
misrepresented the contents of the studies.” That’s a workable theory.
Likewise, Mochi’s statements could be reasonably understood
to indicate that compounded tirzepatide medications are FDA-approved:
“Tirzepatide is a safe medication that has been approved by the FDA” followed by
a representation that Mochi’s compounded medication is “safe,” citing only the
Lilly studies and the FDA approval of Lilly’s drugs.
“Personalized” medicine claims: Mochi offered “much more
accessible alternatives to brand-name medications that are customized to the
medical needs of the patient” and claimed that “[c]ompounded medications are
custom-prepared to meet an individual patient’s specific needs.” But Lilly
alleged that’s not what happened. If Mochi changes the formulation and dosage
of its compounded medication en masse based on its business relationships with
pharmacies, not medical indication, that would directly contradict the ad
claims. Mochi’s interpretation that all it advertised was “customized” or
“personalized” care plans was meritless.
Nor did the court apply FDCA preclusion. The “personalized”
theory didn’t conflict with the FDCA’s regulatory scheme. Mochi argued that the
FDCA allows compounding; that compounded medications are “personalized” by
definition; and that Lilly’s theory contradicts a permissible practice of
creating “batches of compounded medications for subsequent dispensing.” But Lilly’s
falsity theory was about advertising that Mochi “personalized” medications but
then did not tailor changes in dosage or formulation of the compounded drug to
individual patients’ medical needs. “Whether Mochi Health or Aequita Pharmacy
prepared the medication in “batches” is ultimately beside the point: the
falsity derives from Lilly’s allegations that Mochi Health changed the
formulation of patients’ medications based on business interests and evolving
relationships with certain pharmacies rather than patient needs. Defendants
have not identified any FDCA provision or FDA policy directly in conflict with
this misrepresentation theory.”
What about safety claims: better left to the FDA? The court
won’t have to determine the scientific validity of citing the Lilly studies to
support safety claims about compounded medications. It would only have to
determine whether Mochi misled consumers into believing that the Lilly studies tested
the effects of compounded tirzepatide medications. “This misrepresentation
theory presents a binary question of whether the studies considered any
compounded tirzepatide formulation.” Nor would resolving the claim about misrepresentation
of FDA approval impinge on the FDA’s policy choices. Defendants could renew
their preclusion argument if discovery warranted it.
Posts
