A legal dispute over a single amino acid could determine the period of exclusivity for retatropeptide, the timing of Medicare negotiations, and its future competitiveness.
Retartrude is an investigational triple agonist of the glucose-dependent insulinotropic peptide/glucagon-like peptide-1 (GLP-1)/glucagon receptor, administered once weekly. Although the U.S. Food and Drug Administration (FDA) has so far refused to classify it as a biologic, the company plans to submit a Biologics License Application (BLA) to the FDA in the first quarter of 2027. 1 Eli Lilly and the FDA have been litigating this matter in federal court since September 2024.
”We view retatrutide as a biologic,” Eli Lilly CEO Dave Ricks told analysts during a second-quarter earnings conference call in August.
The outcome of this trial will determine how long retatroptide can be sold without competition, when Medicare will be able to negotiate its price, and whether cheaper alternatives will appear on the market. Here are five things healthcare stakeholders should know about the importance of biologic drug classification.
According to the FDA’s regulatory definition, proteins (and therefore biologics) are polymers of α-amino acids consisting of a specific sequence of more than 40 amino acids. In its letter dated March 18, 2024, the FDA classified retatrutide as a drug and concluded that only the α-amino acids should be considered at this level; however, Eli Lilly argued that all amino acids in retatrutide, including non-α-amino acids, should be considered, bringing the number of amino acids in the molecule to 41.2. The FDA also rejected Eli Lilly’s alternative argument that retatrutide must at least “resemble a protein.”
On September 3, 2024, Eli Lilly filed suit in the U.S. District Court for the Southern District of Indiana, citing the Supreme Court’s decision in Loper Bright. This decision ended the judicial system’s deference to ambiguous interpretations of regulations. In September 2025, the court upheld the FDA’s position on the amino acid count, ruling that the relevant regulations required more than 40 alpha-amino acids. However, the court reversed the FDA’s determination that restatropin is not a protein and remanded the case to the FDA, noting that the FDA could still legally reach the same conclusion. Eli Lilly appealed.
Unlike the five-year period granted by a New Drug Application (NDA), a Biologics License Application (BLA) can grant a drug 12 years of market exclusivity, potentially generating billions of dollars in revenue for Eli Lilly. Exclusivity differs from patent protection but determines how long competitors cannot rely on the safety and efficacy data of the original drug.
This classification dispute also carries short-term risks. Eli Lilly stated that it has all the necessary data to submit a biologics license application (BLA) for the treatment of obesity, obstructive sleep apnea, and knee osteoarthritis pain, but the drug’s market launch could be delayed if the FDA does not approve the BLA.
Under the Inflation Reduction Act (IRA), drugs approved under a New Drug Application (NDA) are eligible for Medicare price negotiations seven years after approval, while for biologics, this period is 11 years. This means negotiated prices take effect approximately nine and thirteen years after approval, respectively. Eli Lilly began submitting its application for biologic designation for retatrutide in November 2023, just three months after the Centers for Disease Control and Prevention (CMS) announced the first batch of 10 drugs participating in negotiations.
The case of semaglutide highlights the importance of this issue. This drug, sold by Novo Nordisk under brand names such as Ozempic, Wegovy, and Rybelsus, was selected in the second round of price negotiations, with the Centers for Disease Control and Prevention (CMS) setting a price of $274 for a 30-day supply, 71% below the list price, beginning in January 2027. 6 As a biologic, retatroptide could avoid this pricing pressure for up to four years. However, this gap could narrow: a presidential executive order in April 2025 will eliminate the so-called “pill penalty” under the Insurance Regulatory Act (IRA), but any changes will require congressional action. 7
If retatrexate is approved, future competitors will be able to enter the market through a streamlined generic approval process. The FDA used the same process to approve the first generic version of liraglutide (Victoza; Novo Nordisk) in December 2024 , a month later than the first generic version of exenatide. As a biologic drug, competitors must go through the biosimilar approval process. Retatrexate may be more vulnerable to competition from lower-cost biosimilars than generic drugs, in part due to differences in patent disclosure rules. For payers, this means that the impact of subsequent products on health insurance reimbursements may become apparent later and grow more slowly, unlike previous-generation GLP-1 receptor agonists.
Currently, retatrutide cannot be legally released as a pharmaceutical product: it lacks a relevant United States Pharmacopeia (USP) or National Formulary (NFP) monograph, is not an ingredient in an approved drug product, and is not included on the FDA 503A or 503B lists of active pharmaceutical ingredients (APIs). Theoretically, as an approved drug, retatrutide could be approved for release as a pharmaceutical product in the event of a future shortage, similar to semaglutide and tirzepatide. However, biologics licensed under the Health Care Act are not exempt from product release exemptions; therefore, if retatrutide were classified as a biologic, its release would be permanently restricted. Eli Lilly has filed lawsuits against at least one pharmacy, an aesthetic clinic, and other vendors selling unapproved retatrutide.
Previous challenges to FDA drug classification decisions, including Teva Pharmaceuticals’ attempt to classify glatiramer acetate as a biologic, were decided under the “deference to Chevron” principle, which was overturned in Loper Bright. Courts now interpret the rules themselves, but as the retatreptide decision demonstrated, courts can still defer scientific questions to the FDA. Eli Lilly’s victory could open the door for developers of other peptide drugs to challenge drug classifications, and incretin drugs containing nearly 40 amino acids could face similar challenges in the future.
Three developments are worth paying attention to in the coming months: Eli Lilly’s appeal decision, the FDA’s reassessment of restatropin’s protein similarity, and the company’s planned submission in the first quarter of 2027. For payers planning their budgets for the next wave of obesity treatments, the final outcome will determine how long the market price of restatropin can be maintained.
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Post time: Oct-12-2026