Raphael Stevens

More stories

  • 113 Shares129 Views

    in Business

    NFL wants a cut of private equity investment profits

    The NFL informally told owners and private equity firms it wants to take a percentage of potential private equity profits on sales of ownership stakes if the league votes to allow the firms to own pieces of teams.
    It is unclear if the NFL’s decision will deter future private equity investment.
    The league voted Tuesday to allow private equity ownership of up to 10% of teams.

    Brock Purdy, #13 of the San Francisco 49ers, prepares to take a snap in the first quarter against the Kansas City Chiefs during Super Bowl LVIII at Allegiant Stadium in Las Vegas on Feb. 11, 2024.
    Michael Reaves | Getty Images

    The National Football League has informed owners and investment firms that it intends to take a percentage of private equity profits on any future sales of ownership stakes, according to people familiar with the matter.
    NFL owners voted Tuesday to allow private equity firms to take a maximum 10% stake in teams.

    The league has never allowed private equity investment before. Major League Baseball, the National Basketball Association and the National Hockey League already allow up to 30% of teams to be owned by investment firms, though the cap for individual funds is between 15% and 20%.
    No other league takes a percentage of the so-called carry — the percentage of a fund’s investment profits that managers typically receive as compensation — for all private equity firms. It was unclear heading into the owners’ meeting if the NFL plan would apply to all or only some firms, or what percentage of the profits the league wanted to take.
    The NFL has informally told investment firms that if they make a return on an investment, it wants a portion of the profits to be returned to the league.
    It was also unclear if the NFL’s plans to take a piece of profits would deter future investment from private equity. The initial approved firms include Ares Management, Sixth Street Partners and Arctos Partners, and a consortium of investors including Dynasty Equity, Blackstone, Carlyle Group, CVC Capital Partners and Ludis, a platform founded by investor and former NFL running back Curtis Martin.
    The NFL declined to comment.
    Over the past 20 years, the league’s total value has risen from $23.46 billion to $190 billion, a 710% gain, according to Sportico. The S&P 500 index has risen about 660% during the same time span.

    Don’t miss these insights from CNBC PRO More

  • 238 Shares99 Views

    in Finance

    Dollar General, Dollar Tree and Kroger customers pay over $90 million a year in cash-back fees, federal agency finds

    Dollar General, Dollar Tree and Kroger have charged customers who ask for cash back in recent years.
    Their cash-back fees amount to more than $90 million a year, Consumer Financial Protection Bureau reports.
    Such fees may disadvantage those in banking deserts, where they don’t have easy access to cash for free. Retailers say they offer a lifeline to such consumers, who may not otherwise be able to get cash.

    A Dollar General store in Germantown, New York, on Nov. 30, 2023.
    Angus Mordant/Bloomberg via Getty Images

    Three of the nation’s largest retailers — Dollar General, Dollar Tree and Kroger — charge fees to customers who ask for “cash back” at check-out, amounting to more than $90 million a year, according to the Consumer Financial Protection Bureau.
    Many retailers offer a cash-back option to consumers who pay for purchases with a debit or pre-paid card.

    But levying a fee for the service may be “exploiting” certain customers, especially those who live in so-called banking deserts without easy access to a bank branch or free cash withdrawals, according to a CFPB analysis issued Tuesday.
    That dynamic tends to disproportionately impact rural communities, lower earners and people of color, CFPB said.
    Not all retailers charge cash-back fees, which can range from $0.50 to upwards of $3 per transaction, according to the agency, which has cracked down on financial institutions in recent years for charging so-called “junk fees.”
    More from Personal Finance:The IRS method of ‘last resort’ to collect overdue taxesHow investors can prepare for lower interest ratesWhy remote work has staying power
    Five of the eight companies that the CFPB sampled offer cash back for free.

    They include Albertsons, a grocer; the drugstore chains CVS and Walgreens; and discount retailers Target and Walmart. (Kroger proposed a $25 billion merger with Albertsons in 2022, but that deal is pending in court.)
    “Fees to get cash back are just one more nickel and dime that all starts to add up,” said Adam Rust, director of financial services at the Consumer Federation of America, an advocacy group.
    “It just makes it harder and harder to get by,” he said. “It’s thousands of little cuts at a time.”

    Luis Alvarez | Digitalvision | Getty Images

    A spokesperson for Dollar General said cash back can help save customers money relative to “alternative, non-retail options” like check cashing or ATM fees.
    “While not a financial institution, Dollar General provides cashback options at our more than 20,000 stores across the country as a service to customers who may not have convenient access to their primary financial institution,” the spokesperson said.
    Spokespeople for Kroger and Dollar Tree (which operates Family Dollar and Dollar Tree stores) didn’t respond to requests for comment from CNBC.
    Kroger, Dollar General and Dollar Tree were respectively the No. 4, 17 and 19 largest U.S. retailers by sales in 2023, according to the National Retail Federation, a trade group.

    Cash back is popular

    The practice of charging for cash back is relatively new, Rust explained.
    For example, in 2019, Kroger Co. rolled out a $0.50 fee on cash back of $100 or less and $3.50 for amounts between $100 and $300, according to CFPB.
    This applied across brands like Kroger, Fred Meyers, Ralph’s, QFC and Pick ‘N Save, among others.
    However, Kroger Co. began charging for cash back at its Harris Teeter brand in January 2024: $0.75 for amounts of $100 or less and $3 for larger amounts up to $200, CFPB said.

    Cash withdrawals from retail locations is the second most popular way to access cash, representing 17% of transactions over 2017-22, according to a CFPB analysis of the Diary and Survey of Consumer Payment Choice.
    ATMs were the most popular, at 61%.
    But there are some key differences between retail and ATM withdrawals, according to CFPB and consumer advocates.
    For instance, relatively low caps on cash-back amounts make it challenging to limit the impact of fees by spreading them over larger withdrawals, they said.
    The average retail cash withdrawal was $34 from 2017-22, while it was $126 at ATMs, CFPB said.

    Banking deserts are growing

    However, retailers may be the only reasonable way to get cash for consumers who live in banking deserts, experts say.
    More than 12 million people — about 3.8% of the U.S. population — lived in a banking desert in 2023, according to the Federal Reserve Bank of Philadelphia.
    That figure is up from 11.5 million, or 3.5% of the population, in 2019, it found.
    Generally speaking, a banking desert constitutes any geographic area without a local bank branch. Such people don’t live within 10 miles of a physical bank branch. The rise of digital banking, accelerated by the Covid-19 pandemic, has led many banks to close their brick-and-mortar store fronts, according to Lali Shaffer, a payments risk expert at the Federal Reserve Bank of Atlanta.
    These deserts “may hurt vulnerable populations” who are already less likely to have access to online and mobile banking, she wrote recently.

    Retailers blame banks

    Retail advocates say banks are to blame for cash-back fees.
    Merchants must pay fees to banks whenever customers swipe a debit card or credit card for purchases. Those fees might be 2% to 4% of a transaction, for example.
    Since cash-back totals are included in the total transaction price, merchants also pay fees to banks on any cash that consumers request.

    The “vast majority” of retailers don’t charge for cash back, and therefore take a financial loss to offer this service to customers for free, said Doug Kantor, general counsel at the National Association of Convenience Stores and a member of the Merchants Payments Coalition Executive Committee.
    “Banks have abandoned many of these communities and they’re gouging retailers just for taking people’s cards or giving people cash,” he said.
    But consumer advocates say this calculus overlooks the benefit that retailers get by offering cash back,
    “You’d think they’d see this as a free way to get customers: coming into [the] store because the bank branch isn’t there,” Rust said. “Instead they’re going ahead and charging another junk fee.” More

  • 150 Shares199 Views

    in Business

    Washington Commanders strike stadium naming rights deal with Northwest Federal Credit Union

    The Washington Commanders’ stadium will be named Northwest Stadium, per a new agreement with Northwest Federal Credit Union that runs through the 2030-31 season.
    The home of the Washington, D.C., NFL team has been without a naming rights partner since FedEx ended its deal with the Commanders in February, two years early. 
    The Commanders are looking to build a new stadium in either Washington, D.C., or Virginia.

    Washington Commanders fans celebrate after NFL team owners unanimously approved Josh Harris’ purchase of the team from Daniel Snyder, at The Bullpen’s “Burgundy and Sold” party on July 20, 2023.
    Julia Nikhinson | The Washington Post | Getty Images

    The home of the Washington Commanders just got a new name.
    The team’s stadium will be renamed Northwest Stadium, per a new agreement with Northwest Federal Credit Union that runs through the 2030-31 season, according to a person familiar with the matter. The deal is worth an average annual value in the low $8 million range, according to the person.

    The home of the Washington, D.C., NFL team has been without a naming rights partner since FedEx ended its deal with the Commanders in February, two years early. The shipping giant had a deal with the football team that ran from 1999 through the 2025 season.
    “As we continue to work toward our goal of building the Commanders into an elite franchise that consistently competes for championships, we are excited to welcome our team and fans to Northwest Stadium and look forward to creating incredible memories together on the field and in the communities we serve,” said Washington Commanders Managing Partner Josh Harris in a statement.
    The new agreement with the Northwest Federal Credit Union adds to an existing stadium sponsorship deal that came in at around $2 million per year, according to the person familiar with the matter. That deal did not include naming rights.
    The expanded partnership includes Northwest branding across the stadium, including a new stadium logo. Northwest will also serve as the team’s jersey patch partner for off-season and in-season practices. The partnership will also extend new benefits to Commanders fans who are members of Northwest Federal Credit Union, including discounts on tickets and merchandise.
    Last year, Northwest Federal Credit Union became the Commanders’ official credit union partner.

    The Commanders are looking to build a new stadium in either Washington, D.C., or Virginia. Should the team move into a new stadium before the 2030-31 season ends, the Commanders have the right under the new agreement to seek a new naming rights partner for the new stadium, the person familiar with the matter said. The credit union does not have the rights to the new stadium or right of first refusal for those rights, the person added.
    The Los Angeles Rams currently have the most valuable stadium naming rights deal in the NFL. That deal, with SoFi, is for $625 million over 20 years, according to a person familiar with that agreement. SoFi Stadium is also home to the NFL’s Chargers, but Rams owner Stanley Kroenke owns the stadium, so the Rams collect 85% of stadium sponsorship revenue.

    Don’t miss these insights from CNBC PRO More

  • 100 Shares129 Views

    in Finance

    Vast government debts are riskier than they appear

    At the annual gathering of central bankers in Jackson Hole, Wyoming, attendees enjoy R&R: research and recreation. The latter usually involves a pleasant hike by the lake, but last year a rainstorm soaked the assembled economists. When they returned on August 23rd a remarkably accurate weather forecast helped them dodge a shower and enjoy some sun. This was apt. A year ago inflation was still too high and investors were placing bets that interest rates would have to stay “higher for longer”, the economic equivalent of a drenching. This year inflation looks all but subdued and central bankers—whose optimistic prognostications have also come to pass—have started cutting interest rates. More

  • 138 Shares139 Views

    in Business

    Home prices hit record high in June on S&P Case-Shiller Index

    Prices nationally were 5.4% higher than June 2023.
    New York saw the highest annual gain among the top 20 cities, with prices increasing 9% in June, followed by San Diego and Las Vegas with annual increases of 8.7% and 8.5%, respectively.
    Portland, Oregon saw just a 0.8% annual increase in June, the smallest gain of the top cities.

    A recent CreditNews Research study ranked the slowest-selling metro areas in the U.S.
    The Good Brigade | Digitalvision | Getty Images

    Even as mortgage interest rates were rising, home prices reached the highest level ever on the S&P CoreLogic Case-Shiller U.S. National Home Price Index.
    On a three-month running average ended in June, prices nationally were 5.4% higher than they were in June 2023, according to data released Tuesday. Despite being a record high for the index, the annual gain was smaller than May’s 5.9% reading.

    The index’s 10-city composite rose 7.4% annually, down from 7.8% in the previous month. The 20-city composite was 6.5% higher year over year, down from a 6.9% increase in May.
    “While both housing and inflation have slowed, the gap between the two is larger than historical norms, with our National Index averaging 2.8% more than the Consumer Price Index,” noted Brian Luke, head of commodities, real and digital assets at S&P Dow Jones Indices, in a release. “That is a full percentage point above the 50-year average. Before accounting for inflation, home prices have risen over 1,100% since 1974, but have slightly more than doubled (111%) after accounting for inflation.”
    New York saw the highest annual gain among the 20 cities, with prices climbing 9% in June, followed by San Diego and Las Vegas with annual increases of 8.7% and 8.5%, respectively. Portland, Oregon, saw just a 0.8% annual rise in June, the smallest gain of the top cities.
    Since housing affordability has been a major talking point in this election cycle, this month’s report also broke out home values by price tier, dividing each city’s market into three tiers. Looking just at large markets over the past five years, it found that 75% of the markets covered show low-price tiers rising faster than the overall market.
    “For example, the lower tier of the Atlanta market has risen 18% faster than the middle- and higher-tiered homes,” Luke wrote in the release.

    “New York’s low tier has the largest five-year outperformance, rising nearly 20% above the overall New York region,” he continued. “New York also has the largest divergence between low- and high-tier prices. Conversely, San Diego has seen the largest appreciation in higher-tier homes over the past five years.”
    Prices in the overall San Diego market are up 72% in the past five years, but the high tier is up 79% versus 63% for the lower tier.
    The increase in prices came even as mortgage rates rose sharply from April through June, which is the period averaged on the index. Usually when rates rise, prices cool.
    The average rate on the 30-year fixed started April just below 7% and then shot up to 7.5% by the end of the month, according to Mortgage News Daily. Rates stayed over 7% before falling back under that level in July. The 30-year fixed is now right around 6.5%.
    “Mortgage rates have fallen since June, but there is evidence that even the decline in rates has not been enough to bring buyers back into the market,” said Lisa Sturtevant, chief economist at Bright MLS. “Some buyers are waiting for home prices — and not just interest rates — to come down,”
    While home prices should ease month to month going into the fall, due to seasonal factors and more inventory on the market, they are unlikely to drop significantly, and are expected to still be higher than they were last fall.

    Don’t miss these insights from CNBC PRO More

  • 163 Shares169 Views

    in Finance

    Buy now, pay later firm Klarna swings to first-half profit ahead of IPO

    Klarna said it made an adjusted operating profit of 673 million Swedish krona ($66.1 million) in the six months through June 2024, up from a loss of 456 million krona in the same period a year ago.
    The company said it was focused on “sustainable, profitable growth and leveraging AI to lower costs.”
    After leaning into AI, Klarna said its average revenue per employee increased 73% year-over-year, to 7 million Swedish krona.

    “Buy-now, pay-later” firm Klarna aims to return to profit by summer 2023.
    Jakub Porzycki | NurPhoto | Getty Images

    Klarna said it posted a profit in the first half of the year, swinging into the black from a loss last year as the buy now, pay later pioneer edges closer toward its hotly anticipated stock market debut.
    In results published Tuesday, Klarna said that it made an adjusted operating profit of 673 million Swedish krona ($66.1 million) in the six months through June 2024, up from a loss of 456 million krona in the same period a year ago. Revenue, meanwhile, grew 27% year-on-year to 13.3 billion krona.

    On a net income basis, Klarna reported a 333 million Swedish krona loss. However, Klarna cites adjusted operating income as its primary metric for profitability as it better reflects “underlying business activity.”
    Klarna is one of the biggest players in the so-called buy now, pay later sector. Alongside peers PayPal, Block’s Afterpay, and Affirm, these companies give consumers the option to pay for purchases via interest-free monthly installments, with merchants covering the cost of service via transaction fees.
    Sebastian Siemiatkowski, Klarna’s CEO and co-founder, said the company saw strong revenue growth in the U.S. in particular, where sales jumped 38% thanks to a ramp-up in merchant onboarding.

    “Klarna’s massive global network continues to expand rapidly, with millions of new consumers joining and 68k new merchant partners,” Siemiatkowski said in a statement Tuesday.

    Using AI to cut costs

    The company achieved its adjusted operating profit “by focusing on sustainable, profitable growth and leveraging AI to lower costs,” he added.

    Klarna has been one of the forerunners in the corporate world when it comes to touting the benefits of using AI to increase productivity and cut operating costs.
    On Tuesday, the company said that its average revenue per employee over the previous twelve months increased 73% year-over-year, to 7 million Swedish krona.
    It comes as Klarna tries to pitch itself as a primary banking provider for clients as it approaches a much-anticipated initial public offering.
    The firm earlier this month launched its own checking account-like product, called Klarna balance, in a bid to persuade consumers to move more of their financial lives onto its app.

    The move highlighted how Klarna is looking to diversify beyond its core buy now, pay later product, for which it is primarily known.
    Klarna has yet to set a fixed timeline for the stock market listing, which is widely expected to be held in the U.S.
    However, in an interview with CNBC’s “Closing Bell” in February, Siemiatkowski said an IPO this year was “not impossible.”
    “We still have a few steps and work ahead of ourselves,” he said. “But we’re keen on becoming a public company.”
    Separately, Klarna earlier this year offloaded its proprietary checkout technology business, which allows merchants to offer online payments, to a consortium of investors led by Kamjar Hajabdolahi, CEO and founding partner of Swedish venture capital firm BLQ Invest.
    The move, which Klarna called a “strategic” step, effectively removed competition for rival online checkout services including Stripe, Adyen, Block, and Checkout.com. More

  • 138 Shares169 Views

    in Finance

    Xpeng releases mass-market EV with basic driver-assist for less than $20,000

    The basic version of the Mona M03 electric coupe starts at 119,800 yuan ($16,812), with a driving range of 515 kilometers (320 miles) and some parking assist features.
    A version of the Mona M03 with the more advanced “Max” driver assist features and a driving range of 580 kilometers will sell for 155,800 yuan.
    In comparison, Tesla’s cheapest car — the Model 3 — costs 231,900 yuan in China, after a price cut in April.

    Chinese electric car company Xpeng displays its mass-market Mona M03 coupe inside a headquarters’ showroom in Guangzhou, China, on Aug. 26, 2024.
    CNBC | Evelyn Cheng

    BEIJING — Chinese electric car company Xpeng on Tuesday announced that its mass-market brand Mona will start selling some models for less than $17,000.
    The basic version of the Mona M03 electric coupe will be listed at 119,800 yuan ($16,812), with a driving range of 515 kilometers (320 miles) and some parking assist features.

    A version of the Mona M03 with the more advanced “Max” driver assist features and a driving range of 580 kilometers will sell for 155,800 yuan.
    In comparison, Tesla’s cheapest car — the Model 3 — costs 231,900 yuan in China, after a price cut in April.
    Xpeng CEO He Xiaopeng did not specify a launch date for the standard version of the car in his presentation on Tuesday. The company told investors last week on an earnings call that mass deliveries would begin shortly after Tuesday’s announcement.
    Presales of the Mona M03 began on Aug. 8.

    The Mona M03 standard driver-assist supports parking, including parallel parking. The company says it uses a range of automatic sensors, cameras and light detection and ranging sensors.

    The Max version of driver assist includes features such as automatically backing up a car to a designated position in a dead-end street with the push of a button. Xpeng also plans for it to support the remote control of entering and exiting a narrow parking spot.
    That Max version is set to begin deliveries after the Lunar New Year holiday in 2025, CEO He said. The Chinese holiday runs from late January to early February next year.
    Xpeng’s driver-assist technology is widely considered one of the best currently available in China. Tesla’s version, marketed as “full self-driving,” isn’t fully accessible in China, although it is widely expected to be released in the coming months.
    The Xpeng CEO’s presentation on Tuesday also commemorated the 10th anniversary of Xpeng’s founding. Chinese smartphone company Xiaomi’s founder Lei Jun was among those in attendance
    CEO He said the brand name Mona stands for “Made of new AI.” He emphasized that over the next decade, Xpeng would focus on developing artificial intelligence for cars.
    The company also said Tuesday that it plans to reveal its second-generation humanoid robot in October. It also revealed its own chip, but did not specify what nanometer process — or level of production technology — is used in its manufacturing.
    Premium Chinese electric car startup Nio in late July said it had finished designing a five nanometer automotive-grade chip, the NX9031. The company had teased the chip in December, and plans to use it in its high-end ET9 sedan, set for delivery in 2025.

    Collaboration with Didi

    Xpeng built Mona using tech it acquired from ride-hailing company Didi in August 2023.
    Wu Zhefeng, a Mona project manager, told reporters Monday that the basic version of driver-assist technology in the M03 comes from Didi, while the more advanced version was made by Xpeng.
    Since the battery is the priciest component of an electric car, he said Xpeng was able to bring the cost down for Mona thanks in part to efforts to boost energy efficiency. The coupe uses BYD’s popular “blade battery,” Wu said.
    He said the brand is focused on young people, two or three years after graduation.
    Nearly half of similar cars available in China within this price range are used for ride-hailing, according to Wu. While electric car companies such as BYD have worked with Didi to promote their cars among drivers on the ride-hailing platform, he said Mona would remain focused on consumer drivers.
    BYD, which has quickly become a giant in China’s electric car industry, sells cars across a range of prices and models, including many hybrid-powered versions. Consumers in China have increasingly preferred hybrids to battery-only cars as anxiety persists over how far they can drive on a single charge.
    Geely-owned electric car company Zeekr announced earlier this month that it would launch its first hybrid car next year.
    Other Chinese companies have launched cars this year in direct competition with Tesla.
    Nio, which has focused on premium electric cars, in May announced a lower-priced brand Onvo. Its first car, the L60 SUV, is set to begin deliveries in September. The L60 starts at 219,900 yuan (US$30,439) versus the Model Y’s 249,900 yuan (US$34,617), according to prices shared in May. 
    Chinese smartphone company Xiaomi, meanwhile, in March released its first electric car, the SU7 sedan for 215,900 yuan.
    — CNBC’s Sonia Heng contributed to this report. More

  • 225 Shares129 Views

    in Business

    Eli Lilly releases new form of weight loss drug Zepbound for half the price to boost access, supply

    Eli Lilly released a new form of its weight loss drug Zepbound for roughly half its usual monthly list price to increase access for patients without insurance coverage for the highly popular injection.
    The move also aims to expand the U.S. supply of Zepbound amid soaring demand and ensure patients are safely accessing the treatment as cheaper copycat versions of the drug gain traction. 
    The company is now offering 2.5-milligram and 5-milligram single-dose vials of Zepbound for $399 per month and $549 per month, respectively, through its direct-to-consumer website.

    Eli Lilly on Tuesday released a new form of its weight loss drug Zepbound for roughly half its usual monthly list price to reach millions of patients without insurance coverage for the popular injection, such as those with Medicare. 
    The move also aims to expand the supply of Zepbound in the U.S. as demand skyrockets, and to ensure eligible patients are safely accessing the real treatment as cheaper copycat versions gain traction. 

    The company is now offering 2.5-milligram and 5-milligram single-dose vials of Zepbound for $399 per month and $549 per month, respectively, through its direct-to-consumer website. Patients typically start treatment with a 2.5-milligram dose, gradually increase the amount and later take so-called maintenance doses to keep the weight off.
    The list prices of Zepbound and other popular weight loss drugs, such as Novo Nordisk’s Wegovy, are around $1,000 per month before insurance and other rebates. Those treatments are part of a blockbuster class of medications called GLP-1s, which mimic certain gut hormones to tamp down a person’s appetite and regulate blood sugar. 
    Patients need to use a syringe and needle to draw up the medicine from a single-dose vial — the version of Zepbound Eli Lilly is releasing Tuesday — and inject themselves. That differs from single-dose autoinjector pens, the currently available form of all Zepbound doses, which patients can directly inject under their skin with the click of a button.
    Eli Lilly has said the vials will create additional supply capacity because they are easier to manufacture than autoinjector pens.
    The lower price points will benefit patients who are willing to pay for Zepbound themselves and are enrolled in Medicare or employer-sponsored health plans that do not currently cover obesity treatments, said Patrik Jonsson, president of Eli Lilly diabetes and obesity, in an interview. 

    He noted that Medicare beneficiaries are also not eligible for Eli Lilly’s savings card programs for Zepbound. One program allows people with insurance coverage for Zepbound to pay as little as $25 out of pocket, while another allows those whose insurance does not cover the drug to pay as low as $550.
    Having patients directly pay for single-dose vials of Zepbound also “enables a transparent price by removing third-party supply chain entities,” the company added in a release. 
    There “will be no markups, and we believe that’s super important … that consumers have this predictability in terms of pricing,” Jonsson said. 

    An Eli Lilly & Co. Zepbound injection pen arranged in the Brooklyn borough of New York on March 28, 2024.
    Shelby Knowles | Bloomberg | Getty Images

    Patients with a valid prescription can purchase the single-dose vials from a new “self-pay pharmacy” section on the company’s direct-to-consumer site, LillyDirect. Eli Lilly is partnering with a third-party digital pharmacy, Gifthealth, which will process prescriptions electronically as well as package and send vials to eligible patients.
    People can also choose to purchase syringes and needles from Eli Lilly’s website and will have access to materials on how to correctly administer Zepbound from a vial. 
    LillyDirect, which launched in January, connects people with an independent telehealth company that can prescribe certain drugs if the patients are eligible. The site also offers a home-delivery option if the prescribed treatment is Eli Lilly’s, tapping a third-party online pharmacy to fill prescriptions and send them directly to patients. 
    Eli Lilly said in a release that distributing the vials through the site will ensure patients and health-care providers are receiving “genuine” Zepbound. It builds on the company’s efforts to “help protect the public from the dangers posed by the proliferation of counterfeit, fake, unsafe or untested knock-offs of Lilly’s medications,” according to the release.
    During shortages, the U.S. Food and Drug Administration allows compounding pharmacies to make versions of drugs that are essentially a copy of brand-name medicines. Compounded medications are custom-made alternatives to branded drugs designed to meet a specific patient’s needs. 
    But both Zepbound and Eli Lilly’s diabetes drug, Mounjaro, are under patent protection in the U.S. The company also does not supply the active ingredient of those two drugs, tirzepatide, to outside groups. 
    Eli Lilly has said that raises questions about what some compounding pharmacies and other clinics are selling and marketing to consumers. The company and its rival Novo Nordisk have both stepped in to address illicit versions of their weight loss and diabetes treatments, suing wellness clinics, medical spas and compounding pharmacies across the U.S. over the past year. 
    All doses of Zepbound are now listed as available on the FDA’s drug shortage database. Still, thousands of online platforms offering compounded versions of weight loss drugs from Novo Nordisk and Eli Lilly have cropped up over the past six months, according to Jonsson. 
    “We believe that the U.S. population is actually a target for … untested, unapproved, unregulated anti-obesity medications that we know is far from always containing the drug it’s supposed to,” he said. “This is also an opportunity to make sure that there is access to FDA-approved, quality-approved tirzepatide for consumers in need.”

    Don’t miss these insights from CNBC PRO More