On 1 July 2026, Tarsus Pharmaceuticals' shares declined roughly 8% by midday after short‑seller firm Culper Research announced that it holds a short position and published a report questioning the company’s commercial practices. The report focuses on XDEMVY, the only marketed product – an eyedrop for demodex blepharitis – and alleges that its market growth has been driven by a Medicare copay‑reduction scheme funded through the Healthwell Foundation, a charitable entity launched in September 2023, one month after XDEMVY’s August 2023 launch. Culper contends that providing manufacturer‑funded copay assistance to Medicare patients violates the Anti‑Kickback Statute, a concern reinforced by a consulted healthcare attorney with three decades of experience who said Tarsus “harbors many of the attributes of the arrangements that have been prosecuted.”
Culper’s financial analysis shows Tarsus recorded charitable donations of $5.7 million in 2023, $31.2 million in 2024 and $78.5 million in 2025, figures that closely mirror Healthwell’s disclosed contributions of $5.1 million in 2023 and $30.0 million in 2024 according to IRS filings. A representative of Carepoint, one of Tarsus’s two largest specialty pharmacies, estimated that 50% of XDEMVY Medicare patients receive Healthwell grants, which Culper calculates translates to 91% of the foundation’s grants being directed to XDEMVY patients.
The report also highlights changes in Tarsus’s 10‑K disclosures: the 2024 filing listed “patient assistance donations” as part of SG&A expenses, while the 2025 filing renamed the line item to “patient support functions.”
Regarding market size, Culper disputes Tarsus’s claim that the addressable U.S. demodex blepharitis market comprises 25 million patients, a figure derived from the company’s Titan study that equated a 58% prevalence of collarettes among eye‑care patients with the disease itself. In a survey of 30 current XDEMVY prescribers, only 18% reported treating demodex blepharitis, contrasting sharply with the 58% figure used by Tarsus. Tarsus acknowledges that only 1.5 million U.S. patients have ever been diagnosed with the condition, and as of June 2026 the company has treated over 600,000 patients – roughly 40% of the diagnosed population.
Culper projects that XDEMVY’s peak revenue will be below $800 million in 2028, far short of Tarsus’s stated pathway to exceed $2 billion in sales. The report notes that in May 2025 Elanco sold the XDEMVY royalty rights to Blackstone for $295 million; Culper interprets this transaction as implying Blackstone’s valuation of the product’s peak revenue at $712 million to $1.3 billion.
The short‑seller’s findings also reference prior Department of Justice prosecutions of similar Medicare copay assistance arrangements, citing settlements of $360 million by Actelion (December 2018), $123 million by Jazz (April 2019) and $425 million by Teva (October 2024).