As part of my day job, I attend a lot of insurance conferences, including some in foreign venues. A frequent feature of these conferences is expert conjecture about areas of emerging liability risk. In recent years, one frequently discussed area of concern has been emerging liability issues arising from the use of GLP-1 drugs. Many readers will be familiar with the branded GLP-1 products such as Ozempic, for treatment of type 2 diabetes, and Wegovy, for weight loss treatment. There already are, in fact, growing numbers of product liability claims concerning GLP-1 drugs, as discussed below.  

I have long wondered whether D&O claims relating to GLP-1 drugs might also emerge. In an interesting development last week, plaintiff shareholders filed two separate GLP-1-related securities class action lawsuits against telehealth platform Hims & Hers Health, when the company’s share price plunged after Novo Nordisk, the manufacturer of Wegovy, pulled its agreement allowing Hims to distribute the drug on its platform. Although the allegations in the new lawsuits against Hims are arguably specific to Hims, the lawsuits nevertheless are securities suits relating to GLP-1 drugs. As discussed further below, I continue to believe that issues relating to GLP-1 drugs are a potential area of emerging D&O risk.  

Background About GLP-1 Drugs

Glucon-like peptide-1 receptor agonists (GLP-1) are medications that mimic the effects of natural hormones that help regulate blood sugar and appetite. One example of a GLP-1drug is semaglutide, a medication used for treatment of type 2 diabetes and long-term weight management. Novo Nordisk manufactures branded semaglutide as Ozempic for type 2 diabetes and Wegovy for weight loss. A variety of other manufacturers make GLP-1 drugs, sold under other brand names. Tests are underway about the possibility of using GLP-1 drugs to treat conditions other than just type 2 diabetes and weight management, such as, for example, cardiovascular diseases, Alzheimer’s, and Parkinson’s Disease.

GLP-1 drugs have been available for use in the United States for a number of years. Semaglutide, for example, has been available since 2017. GLP-1 drugs are now among one of the most common prescriptions in the U.S. According to one source, 6% of Americans (about 20 million people) are currently taking GLP-1 drugs. Usage of the drugs has grown quickly in recent years. In six years’ time, usage has increased 600%.

The popularity of the drugs for a time created supply issues. In August 2022, the FDA declared a shortage of semaglutide. The declaration of a shortage of a drug allows compounding pharmacies to make compounded versions of a drug. A compounded version of a drug is a customized medication created by combining, mixing, or altering ingredients to meet an individual patient’s specific needs. FDA rules also permit compounded pharmacies to produce and sell compounded versions of drugs when a patient requires a customized version due to an adverse reaction or intolerance to a brand-name drug (a process known as “personalization”), in addition to when there is a declared drug shortage.

In February 2025, the FDA announced that the shortages had been resolved and ordered all compounding pharmacies to cease production of compounded semaglutide. However, even after the FDA announced the end of the shortage, some compounding pharmacies could continue to produce compounded semaglutide under the personalization exception.

Background Regarding Hims and Semaglutide

In May 2024, Hims began providing access on its platform to compounded semaglutide. Following the FDA’s February 2025 announcement that the shortage of semaglutide had ended, Hims continued to offer and sell compounded semaglutide under the personalization exception. Hims’ offering of compounded weight-loss drugs quickly came to represent a significant part of the company’s business.

On April 29, 2025, Hims announced a long-term collaboration with Nova Nordisk allowing Hims to sell Wegovy on the Hims & Hers platform. Among other things, Hims represented in public statements that the ability to sell branded Wegovy would “complement our personalized semaglutide options” and that Novo Nordisk was “aligned philosophically with use of the compounding exception.”

On June 23, 2025, Novo Nordisk announced that it was terminating its collaboration with Hims. Among other things, Novo Nordisk accused Hims of breaking the law by continuing to sell compounded versions of semaglutide alongside Novo Nordisk’s branded products. Novo stated that “Hims & Hers … had failed to adhere to the law which prohibits mass sales of compounded drugs under the false guise of ‘personalization.’”  Hims & Hers share price declined over 30% on the news of the Novo Nordisk breakup.

The Lawsuits

On June 25, 2025, two plaintiff shareholders filed separate securities class action lawsuits against Hims and certain of its executives in the Northern District of California. Both plaintiffs purport to represent a class of investors who purchased Hims securities between April 29, 2025 and June 22, 2025. The two complaints can be found here and here.

The allegations in the two complaints are largely the same. Both allege that during the class period, the defendants misrepresented or failed to disclose that: “(a) The communication between Hims and Novo was insufficient to ensure that their partnership would provide long-term access to Wegovy for Hims users; (b) Novo had not agreed to Hims’ offerings of compounded semaglutide options; (c) Novo would be unwilling to offer Wegovy concurrently with compounded semaglutide drugs; (d) that, based on the foregoing, Defendants lacked a reasonable basis for their positive statements about their partnership with Novo and Hims users ability to access the weight loss drug Wegovy through the Hims platform.”

The complaints allege that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaints seek to recover damages on behalf of the plaintiff class.

Discussion

When I saw the news reports that the share price of Hims had plunged on the news of the company’s breakup with Novo, I surmised that we would quickly see securities class action lawsuits filed, particularly given the magnitude of the share price decline. It turned out I was right, these lawsuits quickly followed the price drop. In that respect, I suppose, this lawsuit follows familiar securities litigation patterns. In addition, the allegations in the complaint – based on a share price decline after news of the loss of a key supply contract – are arguably conventional as well.

What makes this case interesting to me is not the transactions involved, but rather the fact that the complaint involves or relates to GLP-1 drugs. As I said at the outset, in recent years I have been concerned about the possibility of D&O claims relating to GLP-1 drugs. This case may in many ways be a conventional securities lawsuit, involving disagreements concerning a supply contract. But the new lawsuits are, to me at least, important as an example of a lawsuit involving or relating to GLP-1 drugs. There are reasons why I concerned there could be many more to come.

Although I am going to discuss below the reasons I think there could be more GLP-1 D&O lawsuits in the future, I want to emphasize that I have no reason as a general matter to question the safety or efficacy of GLP-1 drugs. These drugs are used safely by people around the world every day, as they have been for years now. The drugs effectively treat serious health conditions, and that is the reason for the drugs’ popularity.

That said, it is well known that there may be side effects for some persons using GLP-1 drugs. Common side effects include nausea, diarrhea, and heartburn. Less common but more serious side effects can include pancreatitis, gall bladder or kidney issues, hair loss, and even facial changes. Emerging concerns include mental health effects and addiction-like behavior.

There is another concern. Maintaining weight loss through GLP-1 drugs requires continued use of the medication. Those who cease using the drug often regain most of their lost weight and may also experience worsened blood pressure and inflammation levels. Users have huge incentives to keep using the drugs. However, because these drugs have only been around for a few years, there are still unknowns about continued, long-term use. While unsubstantiated, concerns have been raised about cancer risks, bone health, and nutrition deficiencies.

There has in fact already been a significant amount of litigation brought by or on behalf of GLP-1 drug users. According to one source, as of March 2025, there were over 1,500 lawsuits pending in the U.S. involving claims concerning GLP-1 drug use. This litigation includes the multi-district litigation in the Eastern District of Pennsylvania (MDL 3094) involving GLP-1 drug users alleging gastrointestinal issues. Other allegations in GLP-1-related product liability actions include vision loss and failure to warn.

As I noted at the top of this post, there is concern in the insurance industry that GLP-1 litigation could become an areas of serious product liability litigation. (Some might say it already has.) All of this raises the question for me whether the GLP-1 drug litigation could unfold as, for example, opioids or PFAS litigation did. That is, first there were hundreds or thousands of product liability or other tort claims, and then there were D&O claims relating to the underlying concerns. Certainly that is the way things unfolded with opioids and it does seem to be the way things are unfolding with PFAS, as well.

I want to emphasize there is more here than just a concern that sooner or later everything becomes a D&O lawsuit (although that is certainly a part of my concern as well). My concern about possible GPL-1 drug-related D&O claims has more to do with the fact that use of GLP-1 drugs has grown quickly, to truly impressive levels in a very short time span, but that problems and issues are emerging more slowly and perhaps even more troublingly over time. As I alluded to above, there could be longer term issues that may only become apparent over a number of years. These circumstances arguably lend themselves to the kind of fraud by hindsight allegations that are part of plaintiffs’ lawyers’ standard repertoire in securities litigation.

Although, as I noted above, the new lawsuits against Hims & Hers are more about problems in a supply contract than about the drugs, the fact that GLP-1 drugs were involved is an important part of the suits’ allegations. The sheer magnitude of the stock price drop after Hims lost access to Wegovy highlights the fact that for many companies, GLP-1 drugs are a very big deal.  Problems relating to GLP-1 drugs could be a big deal, resulting in the kinds of huge stock price swings that can attract the unwanted attention of the plaintiffs’ securities lawyers.

There is another aspect of the new lawsuits against Hims that is worth emphasizing. I suspect that for many observers thinking about the possibility of GLP-1 drug-related cases, the first and most obvious place to look for potential liability exposures is with the drug manufacturers. And there may be indeed be D&O claims exposures for the manufacturers. But the defendant in these two new lawsuits is not one of the drug manufacturers, it is a drug distributor. Future potential GLP-1 drug D&O claims liability could in fact be widespread, as turned out to be the case in the opioid litigation, where lawsuits started with the manufacturers, but soon spread to distributors, retailers, and many others.

There is every chance here that I could prove to be completely wrong about GLP-1 drug-related D&O claims. It may well be that there will not be anything close to a trend of GLP-1 drug-related D&O claims. But I will say this, at least for now. Even if the new lawsuits against Hims are more about problems in a supply contract than they are about GLP-1 drugs, GLP-1 drugs are definitely involved. As I noted above, there wouldn’t be lawsuits if there hadn’t been a huge stock price drop, and there was a huge stock price drop because of the importance of GLP-1 drugs.

I will admit that this case was not necessarily the kind of thing I was thinking about as I speculated about whether or not there will be GLP-1 drug-related D&O claims. Nevertheless, and If nothing else, the initiation of these lawsuits provided me a context within which to discuss my concerns about possible GLP-1 D&O claims. The lawsuits also provide a starting point from which to watch for further evidence that a trend is developing.

Of course, there may or may not be a trend of GLP-1 drug D&O claims. Either way, I will be watching.