Eli Lilly signs a company-specific Section 232 tariff agreement

Eli Lilly has signed a company-specific agreement with the U.S. Secretary of Commerce that is listed in Annex II of a presidential proclamation on pharmaceutical tariffs, dated April 2026. The agreement itself is dated February 23, 2026, and it is one of several deals in which drugmakers get tariff relief in exchange for commitments to bring manufacturing to the United States and to accept most-favored-nation pricing terms ^[1].

The underlying policy comes from a Section 232 national security investigation into pharmaceutical imports. The Secretary of Commerce found that about 53 percent of patented pharmaceutical products sold in the U.S. are made outside the country, and that only 15 percent of patented active pharmaceutical ingredients, by volume, are produced domestically for the U.S. market ^[1]. Based on those findings, the proclamation sets a general 100 percent tariff on imported patented pharmaceuticals and their ingredients, with lower rates for companies that agree to move production to the U.S. ^[1].

Companies with Commerce-approved onshoring plans get a 20 percent rate instead of 100 percent, a discount that is set to phase out and rise to 100 percent by April 2, 2030 ^[1]. Companies that go further and sign the kind of pricing and onshoring agreement referenced in Annex II can get a zero percent tariff rate on their patented drugs and ingredients, but only through January 20, 2029 ^[1]. The proclamation also carves out zero tariffs entirely for certain categories such as orphan drugs, cell and gene therapies, and antibody drug conjugates, regardless of company agreements ^[1].

The proclamation does not tariff generic drugs, biosimilars, or their ingredients at this time, including generic purchases for the government's Strategic API Reserve ^[1]. Separately, the document sets country-specific rates of 15 percent for the European Union, Japan, South Korea, and Switzerland/Liechtenstein, and 10 percent for the United Kingdom pending a final pricing deal ^[1].

Why it matters for patients

This tariff structure does not set drug prices directly, but it changes the financial pressures facing manufacturers like Eli Lilly, whose GLP-1 products include Mounjaro and Zepbound. The proclamation ties tariff relief to "most-favored-nation" pricing commitments, meaning companies that sign these deals are agreeing to some form of U.S. pricing alignment with what other wealthy countries pay, in exchange for lower tariffs ^[1]. The text of the Lilly agreement itself is not included in the sources, so it is not yet known what specific pricing or onshoring terms Lilly agreed to, or how directly they might affect list prices, insurance coverage, or supply of tirzepatide products in U.S. pharmacies.

The broader tariff regime also matters because so much of the patented drug supply chain runs through foreign manufacturing. With only 15 percent of patented API volume made domestically, according to the Secretary's findings, the proclamation frames tariffs and onshoring incentives as a way to reduce U.S. reliance on foreign production for medications, including biologics like GLP-1 drugs ^[1]. Whether this translates into higher, lower, or unchanged prices for patients depends on details not present in the available sources, including how any zero-tariff window through January 2029 affects list prices versus net prices paid by insurers.

What happens next

The Secretary of Commerce and the Secretary of Health and Human Services are directed to continue negotiating similar agreements with other companies and to report on their progress within 90 days of the proclamation's date ^[1]. The zero-tariff rate available to companies with both onshoring and MFN pricing agreements is set to expire January 20, 2029, and the 20 percent onshoring-based rate is scheduled to rise to 100 percent on April 2, 2030, unless the rules are changed before then ^[1]. The full text of Eli Lilly's specific commitments has not been made public in the sources reviewed for this story.