compounding pharmacies lose a round with Lilly on personalized medicine and GLP-1 comparison claims

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.