Lipid-based formulations (LBFs) are a special type of solubilized formulation that comprise a relatively large concentration of (water-immiscible) lipid. LBFs are an especially attractive option for the formulation of compounds with high lipophilicity and relatively low melting point. The primary mechanism by which LBFs improve API absorption is the alteration of the composition and colloidal character of the gastrointestinal environment. The advantage of including a lipid in a formulation (versus for instance a formulation that only contains water-miscible excipients such as cosolvents and surfactants) is that lipids disperse on contact with the aqueous fluids of the gastrointestinal tract into a coarse or finely divided emulsion. This dispersed lipid phase has the ability to sequester lipophilic APIs, which dramatically reduces the risk of precipitation of the API in a less soluble form.

On entry into the small intestine, the presence of lipid triggers the physiological mechanisms responsible for digestion of dietary lipids (secretion of bile salts, phospholipids, cholesterol and lipases), leading to digestion of the lipid emulsion droplets into finer colloidal structures from which absorption may occur.

Additional mechanisms by which LBFs may improve oral bioavailability are the interaction with enterocyte-based transport and metabolic processes as well as the promotion of uptake in the lymphatic circulation which can reduce first-pass metabolism.