Eli Lilly signs tariff agreement tied to onshoring and most-favored-nation drug pricing

Eli Lilly signed a company-specific agreement with the Secretary of Commerce that exchanges tariff relief for commitments to onshore manufacturing and to most-favored-nation pharmaceutical pricing, according to a presidential proclamation on pharmaceutical imports. The agreement is dated February 23, 2026, and appears in Annex II of the proclamation, which is scheduled for publication in the Federal Register on April 9, 2026 ^[1].

The proclamation ratifies company-specific tariff agreements the Secretary entered into before it and delegates authority to sign similar agreements in the future ^[1]. Its baseline rate is a 100 percent ad valorem duty on imports of patented pharmaceuticals and associated active pharmaceutical ingredients ^[1]. Companies with onshoring plans approved by the Secretary pay 20 percent, a rate that rises to 100 percent on April 2, 2030 ^[1].

The lowest rate goes to companies that have both an approved onshoring plan and a most-favored-nation pricing agreement with the Secretary of Health and Human Services. Those companies pay zero until January 20, 2029 ^[1]. The proclamation also states it will impose no tariffs on imports from companies that have fully executed agreements, or that are negotiating agreements, with the two secretaries on MFN pricing and onshoring of production and research and development ^[1].

Other rates apply by country: 15 percent for products of Japan, the European Union, the Republic of Korea, and Switzerland and Liechtenstein jointly, and 10 percent for the United Kingdom, a rate that would fall to zero under a future US-UK agreement on pharmaceutical pricing ^[1]. Generics and biosimilars are not subject to the adjustment at this time, including purchases for the Strategic API Reserve ^[1]. The proclamation also sets a zero rate for orphan drugs, nuclear medicines, plasma-derived therapies, fertility treatments, cell and gene therapies, antibody drug conjugates and certain medical countermeasures, among other categories ^[1].

The findings behind the action describe heavy import reliance: as of 2025, about 53 percent of patented pharmaceutical products distributed domestically were produced outside the country, and only 15 percent of patented active ingredients used in the US market were made domestically, by volume ^[1]. The Secretary of Commerce found that this dependence threatens national security in the event of a supply chain disruption ^[1].

The text of the Lilly agreement itself has not been disclosed, including its duration, which products it covers and the size of the manufacturing commitments. The proclamation does not name individual drugs; product coverage is set through its annexes, and whether Lilly's GLP-1 drug tirzepatide, sold as Mounjaro and Zepbound, falls under the agreement has not been reported. Which other companies hold similar agreements has also not been disclosed, though the proclamation refers to company-specific agreements in the plural ^[1]. The proclamation does not state how the tariffs or the Lilly agreement would affect what patients pay at the pharmacy.

Why it matters for patients

The pricing commitments are aimed at what US payers and patients pay relative to prices elsewhere; the proclamation says such agreements make pharmaceuticals more accessible and affordable in the United States and strengthen the domestic manufacturing base ^[1]. Whether that translates into lower prices for any specific medicine has not been disclosed. Nothing in the proclamation changes insurance coverage rules or pharmacy counter prices directly, and it does not say how Lilly's agreement affects the list price or net price of tirzepatide.

Generic and biosimilar products are excluded from the tariff action for now, and the zero rate for orphan drugs, fertility treatments, plasma-derived therapies and cell and gene therapies means those categories are not affected at this time ^[1]. The supply chain concern cited in the findings — reliance on foreign production of patented medicines — is the stated reason for the policy, and the 2030 step-up to 100 percent sets a deadline for companies that have not moved production ^[1].

What happens next

• The proclamation is scheduled to be published in the Federal Register on April 9, 2026 ^[1].
• The Secretaries of Commerce and Health and Human Services must update the President on negotiations within 90 days of the proclamation ^[1].
• If an agreement is not entered into within 180 days of the proclamation, is not carried out, or is ineffective, the President may take other action to adjust imports ^[1].
• The 20 percent rate for companies with approved onshoring plans rises to 100 percent on April 2, 2030 ^[1].
• The zero rate for companies with both an approved onshoring plan and an MFN pricing agreement runs until January 20, 2029 ^[1].