Buying a Med Spa? GLP-1 Compliance Can Kill the Deal

GLP-1 weight loss programs are everywhere right now, especially in the med spa space. For M&A lawyers and deal teams, that popularity comes with serious regulatory risk.

In this episode, Darshan breaks down why GLP-1 compliance has quietly become a dealbreaker in healthcare acquisitions. What used to be framed as an FDA issue is now actively being enforced by state attorneys general using consumer protection and deceptive trade practice laws.

You’ll hear how the end of the FDA shortage changed what compounding pharmacies are legally allowed to do, why “research grade” GLP-1 products are not a workaround, and how recent enforcement actions in Alabama and Connecticut are reshaping diligence expectations.

This episode walks through the red flags buyers must catch before signing, including opaque supply chains, misleading marketing claims, research washing, and misaligned informed consent. It also explains why missing these issues can lead to asset freezes, injunctions, multi-state investigations, and massive post-closing remediation costs.

If you advise on med spa transactions, private equity healthcare deals, or GLP-1-driven growth strategies, this conversation is essential listening.

For deeper diligence support on GLP-1 programs and healthcare transactions, reach out to the Kulkarni Law Firm.

Subscribe for more conversations at the intersection of M&A, FDA regulation, state enforcement, and healthcare compliance.

Transcript

Darshan 0:00

Today's episode it's aimed squarely at my friends in the MA space. So if you're a corporate lawyer, if you're evaluating a potential acquisition in the med spa space, especially one that claims to offer GLP1 programs, you want to sit down for this one. There are loads of these programs right now. If you're not looking for the right red flags, you're walking your client into a deal with more regulatory landmines and disclosed debt. Just as a reminder, if you want more content like this, be sure to subscribe to the podcast. If your client needs a deeper legal review, reach out now to the Cole Carney Law Firm. This is one area where guessing wrong is really, really expensive. So here's the setup. For almost two years, the demand for GLP1 drugs like semaglutide and tyrozepatide completely overwhelmed the supply chain. Patients couldn't get them, physicians were frustrated, and med spas and compounding pharmacies saw an opportunity. Some pivoted aggressively. We're talking on multi-billion dollar companies now, but the FDA has now resolved the shortage. Now, since these shortages are the only reason that compounding pharmacies were allowed to produce bulk semaglutide or tyrosipatide, in the first place, without the shortage, compounding is sharply limited. So let's make the law super clear. There are actually just like two types of pharmacies, right, in terms of compounding. They're the 503As, and these can compound patient-specific scripts. They can't do bulk semaglutide or typatide powders unless they meet certain particular criteria. So they cannot mass produce look-alike OZMP. Then you have 503B facilities. These produce in larger quantities, and they must comply with current good manufacturing practices or CGMP. What they cannot do is compound copies of commercially available drugs unless there's a shortage. Let's be clear. No one can use research grade API that's marked not for human consumption without having a real study in place and without taking appropriate steps. There is no magic loophole. And here's the twist. Large parts of the med spa world have never stopped. They just kept compounding. Others didn't even rely on compounding pharmacies. They just turned to online peptide suppliers that were selling powdered semaglutide and tyrazipatide that they sourced from overseas. This is where the Attorney General stepped in. Let's start with the latest case, the Alabama case. In November 2025, the Alabama Attorney General filed suit and they obtained a temporary restraining order, a TRO, against Aurora IV and wellness. Apparently, this clinic was injecting patients with research grade semi-glutide and tyroze hepatite. On the other hand, they were being advertised as pharmaceutical-grade weight loss strokes. The actual labels said not for human use. Now this is a new, and I've seen multiple clinics do a version of this like it's a secret workaround. Like the FDA rules don't matter. Let me be clear, this is not a secret workaround. The Attorney General reacted. They froze assets. They shut down operations overnight. They did not treat this as a medical board issue, but as a deceptive trade practice. So what does this mean for you, the MA lawyer? Because what Alabama just exposed is the kind of scheme you might accidentally acquire if your due diligence checklist is too superficial. I can already hear you saying, but Darshan, this isn't an FDA problem. Why are state attorney generals involved? The answer is simple. When states see patient harm, when they see mislabeled injections, when they see deceptive marketing, they don't wait for the FDA. They use consumer protection laws. These laws apply to every clinic in the state, regardless of whether the FDA takes action. That's why you can treat GLP1 compliance as a traditional FDA-only issue. It's a state attorney general issue as well. It's a deceptive trade practice issue. It is an MA deal breaker. If you're listening to this and you're thinking your client may be dealing with similar risks, this is a good moment to reach out to the Kilcarney Law Firm for helping buyers unwind these structures before they become liabilities.

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Darshan 4:16

Now let's talk Connecticut. In May 2025, the state issued a statewide warning letter to weight loss clinics and med spas. They made three key points. Number one, compounding GLP1s is no longer lawful in bulk form now that the shortages have ended. Number two, marketing generic Ozempic, marketing semiglutide pills, or marketing vitamin-enhanced GLP1 shots, they may violate C UTPA. This is consistent with what Lily and Novo have been saying, and it is proof of likely prosecution by state, federal, and private actors. And number three, claims about GLP1 programs must match products' actual regulatory status. And if you're thinking, well, that's just a letter, Connecticut quickly followed suit with action. A few months later, it settled with a company selling bootleg GLP1 products that they marketed as research grade, but sold directly to consumers without prescriptions. These consumers were reconstituting the powder at home like it was some kind of lab. There were no sterility controls, there was no dosing oversight, there was nothing. And Connecticut shut that down. As an MA regulatory lawyer, let me tell you what this means. If you see a med spa advertising GLP1 products but their supply chain is opaque or undocumented, you're probably looking at a future enforcement target, or at least one that might be one. Now, let's consider that if Alabama and Connecticut were isolated, this would be one thing. But more than 40 state attorneys generals signed a formal letter to the FDA and they urged stronger action. They urged it against counterfeit GLP1s, overseas raw powder imports, online research peptide sellers, contaminated compounded formulations, and unregulated telemedicine and weight loss programs. 40 states do not coordinate unless the problem is real, large, and visible. This letter is the biggest red flag your deal team will ever get if the target is a med spa. Think about sourcing. Are they getting GLP ones from compounding pharmacies that operate in legal gray zones? And are those really even legal gray zones? Are they buying raw powder? Is it labeling itself as a research site without IRB oversight? Is it using research pharmacies? Is it marketing GLP1 programs that do not match the underlying regulatory status? If any of this is true, you may have a problem on your hands. If you're listening, follow our page on LinkedIn. The landscape around GLP1 compliance is changing daily. So what are things you should do as an MA lawyer as part of your due diligence? Number one, find out how exactly is the product being injected. Is it FD approved? Is it properly compounded? Is it research grade? Is the answer clear? Where is the target sourcing the drug? Are they asking for invoices? Are they asking for vendor qualification files? Are you getting certificates of analysis? If the seller's hesitating, that's a problem. Does the website say FD approved, pharmaceutical grade, generic or Zempic when the sourcing says otherwise? Remember, that's exactly what Alvaro prosecuted. Are patients being told exactly what they're receiving? Are informed consent documents aligned with the regulatory status? Look for these red flags. You want to look at temperature logs, chain of custody logs, staff training, SOPs, adverse events. Med spas are improvising these steps. Research sites should not be improvising these steps. Look for research washing. If a med spa calls itself a clinical research site without IRB approval, literally run. Not just metaphorically, literally. Here's the bottom line. GLP1 enforcement is no longer emerging. It is here. It is active. It is directly relevant to MA diligence. For a buyer, missing these issues can mean success or liability, immediate injunctions, reputational damage, multi-state investigations, and catastrophic remediation costs. It is far cheaper to identify and address these risks during diligence than after signing. So if you are evaluating a med spa acquisition, bring someone who understands this space. Someone who lives at the intersection of FDA, state AG enforcement, clinical research, and advertising law. And that's what we do at the Kolkani Law Firm. If your team needs help reviewing these target GLP1 programs, reach out. We've guided multiple deal teams through these traps before. And you can protect your clients and close safer, smarter deals. Call, click, click or email.