Becker Private Equity & Business Podcast
Semaglutide, Healthcare Transaction Laws, and Walgreens’ Take-Private Deal with Holly Buckley of McGuireWoods LLP 3-5-25
Wed, 05 Mar 2025
In this episode, Scott Becker welcomes back Holly Buckley, Chair of Healthcare at McGuireWoods LLP, to discuss key trends shaping healthcare and private equity.
Chapter 1: What is the focus of the conversation on semaglutide?
And so compounders cannot compound that drug. And so all of these alternatives to agovian Zetbound that have kind of proliferated on the market that are compounded are no longer able to be made. And the FDA has said it will not take action against those compounders. until April for state-licensed pharmacy or physician compounders or May 22nd for outsourcing facilities that are 503B facilities.
But after that point, the FDA may go after them if they are still compounding semaglutide. And so we're also likely to see an increase in cease and desist letters from manufacturers, such as Eli Lilly and Novo Nordisk, who make SCOBY and ZetBound they may well start to go after more of the compounders if they continue to compound.
Chapter 2: How does the FDA's announcement affect drug compounding?
Got it. So now I understand. So HIMS and HERS, which is remote telephonic prescribing for a lot of this stuff, that's why their stock tanked on this announcement because the loophole, the leeway they had to manufacture because there was a shortage, now gets eliminated and And now they're not allowed to keep on compounding and doing other things because there's no longer a designated shortage.
That's right. That's right. So because there was a shortage, the FDA kind of put the drug on a shortage list. It meant these compounders could do what they otherwise would not have been able to do. You're right. It was a leeway that they wouldn't normally have. And that leeway is now gone. And so it'll be interesting to see.
A lot of those companies are saying that they're going to pursue other opportunities. But there was kind of a huge market for them that it turned out, is pretty short-lived, right? A lot of them really proliferated in 2024 and now will likely have to do something different.
Spassing. Okay, that's the first story. And now I understand this better, why they had a direct impact on hims and hers and others. Thank you very much. Holly, what's the second story you're watching closely?
Chapter 3: What changes are happening with healthcare transaction laws?
Yeah, so this is a continuation of something we've talked about a number of other times, and it is this, I'll use the word proliferation again, proliferation of states that are passing healthcare transaction notice laws. And last time we chatted, we talked about California and they had the big veto of the 3129 bill last year. They've come back this year with a couple of different bills.
Chapter 4: What are the implications of new state healthcare laws?
And we chatted about that in some detail. But in addition, there are a number of other states that have come out with bills as well. So Indiana, which
which already has a bill that requires 90 days advance notice before certain healthcare transactions, has introduced a new bill which would amend the existing bill that would grant the AG approval of the transactions before it was just a notice requirement.
And that one is significantly more stringent in that the AG now can actually say no to transactions whereas before they were just kind of gathering information. New York is another one. The New York governor's 2526 budget proposal includes proposed changes that would expand the scope of the state's existing closure of material transactions law.
This would extend the pre-closing notice period from 30 to 60 days, require the New York Department of Health to conduct a preliminary review to assess whether a cost market impact review is needed. and could delay closing up to 180 days and require submission of annual reports detailing impact on cost, quality, access, health, equity, and competition.
So that's obviously a much more burdensome bill. If that is passed, it's expected to be approved by April 1st. And then Washington State also introduced a new bill, which is House Bill 1881, which would expand the scope of the state's existing healthcare material change notice requirements.
It would also extend the period from 60 to 90 days, would give the AG broad discretion over whether a specific transaction qualifies as material and requires submission and review by both the Washington Health Care Authority and Attorney General. So these laws are making deals certainly more difficult and costly. We're still not seeing deals necessarily be halted by these laws.
but it's definitely making the landscape more complicated, especially where you have companies transacting who do business in many, many states.
A hundred percent. And what a fascinating situation that you've got this going on. I mean, in addition to what was the federal government attack and healthcare transactions, I've got many states go to private equity transactions, healthcare transactions. What a mess and what a challenge. Holly, thank you for sharing that. So several states on that bandwagon. Thank you.
And then my final one, which I'm sure everyone has heard about, but I just think is interesting, is the, it sounds like very close and it may have been announced in the time I've been working this morning, the buyout of Walgreens, the take private, which would likely result in the company being split up into kind of the US retail, the kind of boots retail, which is kind of originated out of the UK, and then some other segments such as Village MD and other lines.
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