The Centers for Medicare and Medicaid Services (CMS) won’t go forward with a Biden-era proposal that would’ve required the government payers to cover GLP-1 drugs for obesity.
In an announcement on April 7, CMS listed Part D coverage of anti-obesity medications as one of several Biden administration proposals for the 2026 contract year to be scrapped. The agency didn’t give details on why it decided against GLP-1 coverage, but said it might revisit the issue later on.
While Medicare currently covers GLP-1s for certain diagnoses like diabetes and cardiovascular disease, the Biden administration proposed in November requiring GLP-1 coverage for obesity, which goes against federal statute. States are allowed to cover anti-obesity drugs through Medicaid, but only 13 states currently do so, according to KFF.
The opposition
Insurers have been largely against the proposal, arguing that covering GLP-1s would be costly.
America’s Health Insurance Plans (AHIP), the health insurance industry’s largest trade group, submitted comments to CMS in February saying the costs of covering the drugs could “place upward pressure on premiums and government costs.”
The Congressional Budget Office estimated in October 2024 that requiring Medicare to cover GLP-1s for obesity would add nearly $35 billion to federal spending by 2034. CMS estimated it would increase Medicaid spending by $15 billion over 10 years.
AHIP said in its comments that the actual costs “may far exceed CMS estimates.”
Mary Beth Donahue, CEO of the Better Medicare Alliance, a nonprofit advocacy group for Medicare Advantage, said in a statement that the group was “encouraged that the administration took a measured approach and declined to make major changes at this time.”
On the flip side
Some argue the up-front costs would be worth it.
Manuel Jurado, associate partner at consulting firm the Dedham Group, told Healthcare Brew in December that Medicare and Medicaid coverage of obesity medications could save costs down the road, as GLP-1s may also reduce the risk of obesity-related chronic illnesses.
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University of Southern California researchers estimated in a 2023 study that GLP-1 coverage would save Medicare up to $245 billion in 10 years if private insurers also covered the drugs.
Millicent Gorham, CEO of the Alliance for Women’s Health and Prevention, said in a statement that the coverage would have been “transformative” for people with obesity who rely on Medicare and Medicaid.
The American Medical Association also supports GLP-1 coverage, but in a January letter to CMS, CEO and EVP James Madara cautioned against increasing premiums.
The market’s reaction
Courtney Breen, a US biopharma senior research analyst at brokerage firm Bernstein, reportedly told Reuters CMS’s decision not to cover GLP-1s was “not surprising,” as the Trump administration is also considering imposing pharmaceutical tariffs.
After CMS finalized the rule on April 4, Eli Lilly and Novo Nordisk—the makers of Zepbound and Ozempic—saw their stocks drop 6.5% and 6.8%, respectively, by market close, according to Zacks Investment Research.
“Today, over 55 million Americans have insurance coverage for FDA-approved obesity medications—it is essential that seniors are in the same position,” Novo Nordisk spokesperson Jamie Bennett said in a statement sent to Healthcare Brew. “We cannot support a system where a patient loses insurance coverage for a chronic disease simply because they entered into Medicare.”
Eli Lilly spokesperson Jared Shapiro said in an emailed statement that the company is “disappointed” in the Part D rule “because it is not the best reading of the statute and impacts patient access to obesity treatments.”
“We will continue to work with the Trump administration and congressional leaders to ensure people living with obesity are covered by Medicare and Medicaid and are no longer left behind,” he said.
CMS spokesperson Catherine Howden told Healthcare Brew Medicare Part D and Medicaid coverage is "not appropriate at this time," but CMS may consider options in the future for anti-obesity medications.
Update 04/10/25: This story has been updated to include a comment from CMS.