Medicare Declines Coverage Expansion for Obesity Drugs Like Wegovy and Zepbound

The Centers for Medicare & Medicaid Services (CMS) announced it will not proceed with a Biden administration proposal to expand Medicare coverage to include weight-loss drugs such as Novo Nordisk’s Wegovy and Eli Lilly’s Zepbound. This decision led to a 1.4% drop in Novo Nordisk (NYSE:NVO) shares and a 3.1% dip in Eli Lilly (NYSE:LLY) shares in after-hours trading.

The proposed expansion aimed to make GLP-1 class medications more accessible. These drugs, including Ozempic and Mounjaro, are already covered by Medicare for diabetes but not for obesity treatment, despite showing potential to help patients lose up to 20% of their body weight and reduce the risk of type 2 diabetes. Without insurance, these medications can cost around $1,000 per month.

Analyst Courtney Breen of Bernstein called the decision “not surprising,” citing ongoing pharmaceutical pricing negotiations as a likely factor. Eli Lilly expressed disappointment, stating it would continue working with the Trump Administration and Congress to ensure people with obesity are included in Medicare and Medicaid coverage.

Novo Nordisk echoed the sentiment, emphasizing the importance of aligning CMS regulations with modern science and recognizing obesity as a chronic disease. The company hopes the Trump Administration will soon finalize a definition for obesity.

Health Secretary Robert F. Kennedy Jr. has previously stated that addressing obesity should focus more on healthy diets than pharmaceuticals.

CMS also declined two additional proposals: one mandating that Medicare providers assess policies through a health equity lens, and another introducing safeguards against misuse of AI tools in healthcare decisions.

The agency's decisions have sparked ongoing debate about how the U.S. healthcare system addresses chronic diseases like obesity.