By Josh Nathan-Kazis

The Trump administration has shot down a halfhearted Biden administration effort to allow Medicare to start paying for weight loss drugs such as Eli Lilly's Zepbound and Novo Nordisk's Wegovy.

The move put even more pressure on Lilly shares, which had already been buffeted by tariff worries.

Lilly shares were down 2.9% Monday, and Novo's American depositary receipts were up 1.8%, as worries over tariffs unsettled the market. The S&P 500 was roughly flat after a series of dramatic swings.

The Centers for Medicare and Medicaid Services, newly under the direction of the former daytime television host Dr. Mehmet Oz, did away with the Biden-era proposal late Friday in a brief mention buried deep in a 400-page technical document.

The Biden-era plan -- which also had required Medicaid to cover the weight loss drugs -- would have had a dramatic impact on weight loss treatment practices in the U.S., potentially expanding eligibility for the cutting-edge GLP-1 drugs to millions more people.

The Biden administration announced the plan in November, arguing the law preventing Medicare from covering weight loss drugs "reflects an outdated medical understanding."

The proposal had little chance of succeeding, however, since it was announced only after then-President Joe Biden lost his bid for reelection , and it would be up to the Trump administration to put it in place.

At the time, Barron's reported it was highly unlikely the plan would ever actually go into effect.

Not only would the policy change cost tens of billions of dollars, but key Trump officials have been vocal skeptics of the widespread use of GLP-1 medicines, including Robert F. Kennedy Jr., the health secretary, and Dr. Marty Makary, the Food and Drug Administration commissioner.

"I have serious concerns about just giving out GLP-1s like candy," Makary said on a podcast interview in August.

The law creating Medicare's prescription drug program explicitly bars Medicare from paying for weight loss medicines. Medicaid plans are generally required to cover all FDA-approved drugs, but are allowed under the law to exclude weight-loss medicines.

Wall Street analysts expect sales of Lilly's Zepbound to hit $10.7 billion this year, but access for roughly 50 million older Americans whose prescription drug coverage is provided by Medicare remains limited.

The law that created the Medicare Part D prescription drug benefit in the early 2000s specifically blocks the program from paying for weight-loss drugs, under the theory that obesity is the result of lifestyle choices, and not a medical condition.

Medicare is allowed to pay for Zepbound for patients prescribed the drug to treat sleep apnea, and for Wegovy to reduce the risk of heart attack and stroke in certain patients. It can also pay for the versions of the medicines sold to treat Type 2 diabetes, Lilly's Mounjaro and Novo's Ozempic.

It still cannot pay for Zepbound and Wegovy as weight loss treatments, however.

In a report in October, the Congressional Budget Office said allowing Medicare to cover weight loss drugs would increase federal spending by $35 billion between 2026 and 2034. The Biden administration had estimated a slightly lower $24.8 billion price tag over 10 years.

Without the Biden administration's reinterpretation of the law, older patients and low-income patients on Medicare and Medicaid will continue to have limited options to access the drugs. The shortages that allowed telehealth storefronts to sell legal knockoff versions of Zepbound and Wegovy for low prices have now ended, leaving patients without insurance coverage to find ways to pay for the branded versions of the medicines.

Both Novo and Lilly have introduced lower-cost options for their drugs, and patients with no insurance coverage can get the lowest dose version of Zepbound for $350 a month, and any dose version of Wegovy for $500 a month.

That is still unaffordable for many patients.

"Medicare and Medicaid should cover GLP-1 drugs as medically needed," said Dr. Robert Steinbrook, director of the Health Research Group at the advocacy group Public Citizen, in a statement. "This decision takes us in the wrong direction, and continues to deny important medicines to many people who would benefit, based solely on their ability to pay for them."

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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April 07, 2025 13:43 ET (17:43 GMT)

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