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September 16, 2026

Lilly v. Kennedy: Whether Retatrutide Is a Drug or a Biologic Goes to the Seventh Circuit

Eli Lilly asked the FDA to classify retatrutide, its investigational obesity molecule, as a biological product. The FDA said no, and a federal district court largely agreed. Lilly has appealed, and the U.S. Court of Appeals for the Seventh Circuit calendared oral argument for September 24, 2026. The dispute comes down to a counting question: which amino acids count toward the regulatory line between a peptide drug and a protein.

What is decided and what is not. The district court ruled in 2025, and its holdings are described below as holdings. Everything said about the appeal is a party’s argument: the Seventh Circuit had not ruled as of the date above, and briefs establish nothing on their own. No outcome is predicted here.

The case

Eli Lilly & Co. v. Kennedy, No. 1:24-cv-01503 (S.D. Ind.), on appeal as No. 26-1301 (7th Cir.). The defendants are the Secretary of Health and Human Services, HHS, the FDA Commissioner and the FDA, all sued in their official capacities under the Administrative Procedure Act.

According to the district court’s summary of the record, Lilly submitted a request for designation on November 9, 2023, asking the FDA to classify retatrutide as a biological product, and filed a superseding request on January 29, 2024. On March 18, 2024, the FDA issued a letter of designation classifying retatrutide as a drug rather than a biological product. Lilly sued on September 3, 2024.

The line is in a regulation, and it counts amino acids

The Public Health Service Act includes a “protein” among the things that are biological products (42 U.S.C. § 262(i)(1)), but does not define the word. The 40-amino-acid threshold comes from the FDA’s regulation, not the statute. 21 C.F.R. § 600.3(h)(6) defines a protein as “any alpha amino acid polymer with a specific, defined sequence that is greater than 40 amino acids in size,” and says that where two or more chains are associated as they occur in nature, size is based on “the total number of amino acids in those chains.”

Lilly’s request described retatrutide as containing 41 amino acids cumulatively: a backbone of 39 alpha amino acids, plus a second, attached chain of one gamma-glutamate and one 8-amino-3,6-dioxaoctanoic acid (ADO). Lilly argued that every amino acid counts toward the threshold, alpha or not. The FDA counted only alpha amino acids and concluded that retatrutide contains at most 40 alpha amino acids and one non-alpha amino acid. On that count it is not “greater than 40,” so it is not a protein.

The FDA also concluded that retatrutide is not “analogous” to a protein, the statute’s other route to biological-product status, because it lacks what the agency called the “fundamental defining property” of having more than 40 alpha amino acids.

What the district court held

Judge Tanya Walton Pratt ruled on cross-motions for summary judgment on September 30, 2025, issued an amended order on October 3, 2025 “to clarify what the Court has decided,” and entered final judgment on December 16, 2025. The result was split.

  • On “protein,” the FDA won. The court held that the regulation “unambiguously requires that proteins contain at least forty-one alpha amino acids,” so the FDA did not violate its own regulation in refusing to designate retatrutide as a protein.
  • On “analogous product,” Lilly won, but only partly. The court held that the FDA’s “bright line” approach “flouts the statutory text and sidesteps congressional intent,” because requiring an analogous product to meet every element of the protein definition reads “analogous product” out of the statute. It found that reasoning arbitrary and capricious and, in the amended order, vacated “that portion of the agency’s decision” and remanded it to the FDA. The final judgment “VACATES the agency’s designation decision and REMANDS to the agency for further proceedings on Plaintiff’s ‘analogous’ products claim.”
  • The court did not order the FDA to classify retatrutide as a biologic. It said there is a “meaningful possibility that the agency could lawfully reach the same conclusion” if it decides that more than 40 alpha amino acids is the defining feature of an analogous product.

What each side argues on appeal

Lilly filed its notice of appeal on February 12, 2026. The appeals docket lists Lilly as the only appellant; the government defendants are the appellees.

Lilly, in its opening brief (April 1, 2026), argues three points. First, that retatrutide is a protein under the regulation’s own words: the size requirement counts the “total number of amino acids” and, unlike the earlier phrase “alpha amino acid polymer,” carries no “alpha” limit. Second, that the court should not have sent the case back to the agency. Lilly points to the provision under which a sponsor’s recommendation becomes the final designation if the FDA does not decide within 60 days (21 U.S.C. § 360bbb-2(c)). It argues that once the FDA’s decision was vacated, that provision required retatrutide to be designated a biological product. Third, that even if vacatur only restarted the clock, the FDA had still issued no decision more than three months after the remand. In its reply (June 5, 2026), Lilly put that figure at almost six months.

The FDA, in its brief (May 15, 2026), argues that the definition identifies alpha amino acids as the relevant kind at the outset, so repeating “alpha” would have been redundant. It argues that scientific sources treat alpha amino acids as the building blocks of proteins, and that non-alpha amino acids cannot form peptide bonds. On the 60-day point, it argues that Lilly’s theory “addresses what FDA should conclude in a remand decision that the agency has not yet issued” and is not properly before the court. It adds that the deadline provision covers a missed deadline, not a timely decision later vacated.

An amicus, the Outsourcing Facilities Association, a trade group for 503B outsourcing facilities, filed a brief supporting the FDA (May 19, 2026). It argues that biologic designation would give Lilly “(1) extended exclusivity; (2) a significant advantage over others attempting to develop and gain approval of competitors; (3) potential limits on compounding; (4) patent-litigation benefits; and (5) limited automatic substitution by pharmacists.”

Why the label matters, according to the filings

Both sides’ filings describe what the classification changes. Lilly’s complaint lists the differences: biological products licensed under a biologics license application get a longer period of statutory exclusivity than drugs approved under a new drug application. They become eligible for selection under the Inflation Reduction Act’s Drug Price Negotiation Program later (11 years after licensure, against 7 years after approval for drugs). And they are “ineligible for exemptions for compounded drugs” under 21 U.S.C. §§ 353a and 353b. The FDA’s brief likewise says sponsors of biologics “typically benefit from a substantially longer exclusivity period before follow-on products can enter the market.”

Read alongside Lilly’s August lawsuits

On August 12, 2026, Lilly filed six lawsuits against retatrutide sellers. Those complaints are allegations. Two of them, in the Eastern and Southern Districts of Texas, describe retatrutide as available only “as an investigational new drug.” The complaint against a compounding pharmacy says that “no drug containing retatrutide—whether compounded or not—may be sold to consumers,” and quotes the FDA as saying retatrutide “cannot be used in compounding under federal law.”

Compounding runs through both sets of filings, and in different tenses. The August complaints address the present: an unapproved, investigational molecule that the complaint says cannot lawfully be compounded or sold. In Lilly v. Kennedy, Lilly’s own complaint names ineligibility for the compounding exemptions as one consequence of the classification it is seeking. The trade group opposing it describes that consequence as “potential limits on compounding.” The two August complaints reviewed for this article do not mention the classification dispute. They describe the approval pathway generically, as a new drug application or a biologics license application.

What comes next

The Seventh Circuit’s calendar lists No. 26-1301 for oral argument on September 24, 2026, at 9:30 a.m. in the court’s main courtroom in Chicago, with 15 minutes per side. The panel is not named on the calendar in advance. Appellate decisions follow argument on no fixed timetable. Separately, the district court’s remand of the “analogous product” question leaves the FDA to decide that issue again. As of Lilly’s June reply, according to Lilly, it had not done so.

What this is, and isn’t

This is litigation reporting. The district court’s holdings are stated as holdings; everything about the appeal is a party’s or an amicus’s argument. Nothing here predicts how the Seventh Circuit will rule, and a regulatory classification is not a safety, efficacy or approval determination about retatrutide or any other compound. Nothing here is a dosing or usage recommendation. Retatrutide is investigational and is not approved for human use anywhere. This is not legal advice. This article will be updated as the docket moves.

Sources

This article is for informational and educational purposes only and does not constitute medical or legal advice. It describes pending federal litigation: the district court’s rulings are reported as rulings, the appeal has not been decided, and the arguments described are the parties’ positions, not findings. The August 2026 complaints referenced are unproven allegations. It makes no safety, efficacy, dosing, or approval claim about any compound. Retatrutide is an investigational compound that is not approved for human use in any jurisdiction. All research compounds referenced are for laboratory use only and are not for human consumption.