Lilly v. FDA: Two Stories Collide to Make this GLP-1 Case a Tale of Our Time
I recently learned of Eli Lilly & Co.’s (“Lilly”) recent lawsuit against FDA from Nicole DeFeudis, who interviewed me for her Endpoints News story about the case. Lilly’s lawsuit, filed in September 2024 in the Southern District of Indiana (note: Lilly is headquartered in Indianapolis), challenges FDA’s decision to regulate Lilly’s trial product “retatrutide” as a drug rather than a biologic, which Lilly claims violated federal law and FDA’s own rules. Thank you, Nicole, for the heads up.
Lilly v. FDA is a story for our time because it showcases two modern phenomena colliding into one federal court lawsuit, the outcome of which could forecast decades of future jurisprudence. With the rapid growth of GLP-1 drugs in the United States as the backdrop, the case sheds light on the complex set of laws and regulations which allow copies onto the market in spite of otherwise robust patent protections. Lilly v. FDA also presents a tantalizing legal theory made far more powerful by the recent Supreme Court decision disposing of Chevron deference (discussed below) and requiring courts to engage in de novo analyses of even the most technical issues presented to them by private companies and their regulators.
Can Lilly immunize retatrutide from compounded copies? Will the district court second guess – much less overturn – FDA’s decision to regulate this GLP-1 as a drug? Although perhaps a bit technical at first blush, these are unbelievably important questions, and how they are answered could have widespread impacts throughout U.S. law and society. The GLP-1 issue on its own is massive – with $126bn in sales (and a 30% CAGR) forecast for 2029. But if this case moves forward, it would reflect a new normal brought on by the demise of Chevron, with no issue regulated by the federal government too technical for litigation. In that case, the consequences become even greater and will be felt across all the entire economy. I unpack these and some other issues below.
Story 1: The GLP-1 phenomenon – and whether Pharma can stave off compounded copies.
In a recent JDSupra article, I explained what GLP-1 drugs are, how they are regulated, how they ended up on FDA’s “drug shortage” list, and the legal significance of being on that list. To reiterate, due to their explosive rise in popularity, GLP-1s outgrew their manufacturing capacity, so FDA placed many of them on its list of drug shortages. This was a significant step because, once a drug appears on FDA’s shortage list, compound pharmacies and outsourcing facilities can make “copies” of the shortage drugs without violating FDA rules and in spite of pharmaceutical companies’ patent protections. In this “shortage” environment, practitioners and telehealth companies could offer less expensive compounded copies to patients, which undercut the branded versions of the drugs while Lilly, Novo Nordisk and others made substantial investments into their manufacturing capacities.
More recently, FDA announced the resolution of the shortage of Lilly’s blockbuster GLP-1, tirzepatide (brand names, Mounjaro® and Zepbound®), as well as stoppage dates for compound pharmacies and outsourcing facilities making compounded copies of tirzepatide for patients. This change in status will allow Lilly to retake its legal monopoly over tirzepatide, remove cheaper compounded copies from the market, and increase prices for patients. While this may be a favorable result for Lilly, its lawsuit against FDA is a sign that it never wants to go through a similar exercise again.
At issue in Lilly v. FDA is Lilly’s study product retatrutide – which from a lay perspective looks like nothing more than the latest GLP-1 submitted to FDA for approval. While all previous GLP-1s have been approved by FDA as drugs, in its lawsuit Lilly alleges that FDA exceeded its authority, violated its own regulations, and abused its discretion when FDA refused to regulate retatrutide as a biological product over Lilly’s objections.
According to Lilly – both in its request for designation (“RFD”) to FDA and its lawsuit – retatrutide is a “biological product” pursuant to 42 U.S.C. § 262(i)(1) because it is a “protein” or product “analogous” to a protein. More specifically, Lilly argues that retatrutide is a protein pursuant to FDA’s 21 CFR § 600.3(h)(6) which defines “protein” as “any alpha amino acid polymer with a specific, defined sequence that is greater than 40 amino acids in size.” According to Lilly, retatrutide is a protein because it has a specific, defined sequence of 41 amino acids, i.e. “40 alpha amino acids and one other, non-alpha amino acid.” Complaint, at ¶ 5. However, for its part, FDA rejected Lilly’s RFD because it determined that the statute and regulation require proteins to contain a sequence of more than 40 alpha amino acids, whereas retatrutide only has a sequence of 40, and that Lilly should not receive credit for the one (1) non-alpha amino acid in its sequence.
The resulting dispute between Lilly and FDA – i.e. whether retatrutide is a biological product or drug – is important not only for Lilly, but for the future of the GLP-1 industry. As Lilly explains in its complaint, the difference between biologic and drug regulation will have “substantial ramifications for Lilly at nearly every stage of retatrutide’s development, licensure, and marketing.” Complaint, at ¶ 87. Among those “substantial ramifications” is that “biological products are ineligible for exemptions for compounded drugs under the FDCA.” Id. On at least this one point, FDA and Lilly agree. As FDA has explained in an FAQ:
Can biologics be compounded?
No. Biological products are not eligible for the exemptions for compounded drugs under sections 503A and 503B of the FD&C Act. Federal law does not provide a legal pathway for marketing biologics that have been prepared outside the scope of an approved biologics license application.
The strategy behind Lilly’s case against FDA becomes clear: to ensure that compound pharmacies and outsourcing facilities do not compound its GLP-1 products in the future, it must pivot from tirzepatide (a drug) to retatrutide (which it argues is a biological product). If Lilly is successful, expect all future GLP-1s to follow suit.
Story 2: Chevron deference is dead, and dissenting SCOTUS justices caution about this case.
The second major story here relates to the 2024 demise of Chevron deference – the legal doctrine federal courts relied on for decades to “defer” to “permissible” agency interpretations of statutes even when they disagreed. See Chevron v. Nat’l Resources Defense Council Inc., 467 U.S. 837 (1984). Under Chevron, courts could (and probably would) have simply “deferred” to FDA’s decision that retatrutide was a drug, and not a biologic, simply because its interpretation was “permissible.” But since Chevron has been overturned, the court must conduct a de novo review of the issue – and the result could be much different.
The demise of Chevron plays a significant role in Lilly v. FDA, and Lilly says as much in its complaint. See Complaint, at ¶ 2 (“But under the Supreme Court’s recent Loper Bright decision, determining what falls within the statutory definition of ‘biological product’ is an interpretative question that courts, rather than the agency, must ultimately resolve.”) Indeed, in Loper Bright v. Raimondo, 144 S.Ct. 2244 (2024), the Supreme Court rejected the “deference” framework previously required by Chevron, and ruled that courts – not agencies – must determine the “best reading” of the applicable statute. As explained by SCOTUS, “[i]n the business of statutory interpretation, if it is not the best, it is not permissible.”
Thus, prior to Loper Bright, Lilly would not have bothered to file suit. Chevron was a powerful judicial doctrine, with even greater deference owed in cases involving complex scientific issues, which the regulatory status of retatrutide unquestionably does. As a prominent example, in Teva Pharma. USA v. FDA, 514 F.Supp. 3d 66, 102 (D.D.C. 2020) (“Teva v. FDA”), Teva raised the same issue regarding Copaxone®, a glatiramer acetate product intended to treat multiple sclerosis. In that case, Teva – just like Lilly – argued that Copaxone® was a biological product because it was a protein, but the district court rejected its position on summary judgment based on Chevron. As the court described it, Chevron was “highly deferential,” with “particular deference…given by the court to an agency with regard to scientific matters within its area of technical expertise.” Id. (internal citations omitted).
Moreover, Lilly v. FDA is exactly the type of case Justices Kagan, Sotomayor and Jackson cautioned about in their dissent in Loper Bright. There, they explained that Chevron was the right rule, and that judicial deference had “become part of the warp and woof of modern government, supporting regulatory efforts of all kinds—to name a few, keeping air and water clean, food and drugs safe, and financial markets honest.” Loper Bright, 144 S.Ct., at 2294. As the dissenting justices further explained, “[s]ome interpretive issues arising in the regulatory context involve scientific or technical subject matter. Agencies have expertise in those areas; courts do not. Some demand a detailed understanding of complex and interdependent regulatory programs. Agencies know those programs inside-out; again, courts do not.” Id. To support their position, the dissenting justices specifically cited Teva v. FDA as a “concrete” example of a case better suited to be resolved by an agency than a court, because it involved the question of when an alpha amino acid polymer qualifies as a “protein” and whether it must have a specific, defined sequence of amino acids. Id., at 2296.
In spite of that dissent, here we are: the District Court for the Southern District of Indiana must now conduct a de novo review to decide who has the “best reading” of the statute, Lilly or FDA. How the court will rule is beyond the scope of this article – but the Sixth Circuit’s recent decision to overturn the FCC’s “net neutrality” rule could be predictive. See, In re MCP No. 185, 2025 WL 16388 (6th Cir. Jan. 2, 2025) (“MCP”). As the Sixth Circuit explained: “[U]nlike past challenges that the D.C. Circuit considered under Chevron, we no longer afford deference to the FCC’s reading of the statute. Instead, our task is to determine ‘the best reading of the statute’ in the first instance.” Id., at *1 (emphasis added). To determine that “best reading,” the Sixth Circuit employed “the traditional tools of statutory construction” and engaged in a deep, thoughtful, multi-dimensional analysis of the law. It deferred to neither party, and ultimately ruled against FCC. The same could happen here.
Conclusion
As Chevron fades and Loper Bright ushers in a new era of judicial empowerment, private companies find themselves on a level playing field with their federal regulators for the first time in decades. For Lilly, this is a perfectly timed pivot, which could allow it to permanently change how its GLP-1s are regulated. This confluence of circumstances is truly a story of our time.