Obesity Drugmakers Rally on White House Medicare Deal Reports
Eli Lilly and Novo Nordisk shares climb amid expectations of a landmark agreement to expand Medicare and Medicaid access for blockbuster weight-loss drugs.
Shares of major obesity drug manufacturers surged Tuesday following reports that the White House is nearing a landmark deal with Eli Lilly and Novo Nordisk to expand Medicare and Medicaid coverage for their wildly popular GLP-1 treatments.
Eli Lilly (LLY), maker of Zepbound, saw its stock rise 1.15% to close at $906.86 in Tuesday trading. The potential agreement could unlock a vast new market for these blockbuster drugs, which have historically been excluded from federal insurance coverage for weight loss alone.
The deal, which could be announced as early as this week, would represent a significant policy shift. According to reports from multiple news outlets, the agreement would involve the drugmakers offering their treatments at substantially reduced prices in exchange for access to government health plans. One potential price point mentioned is as low as $149 per month for the lowest doses of drugs like Zepbound and Novo Nordisk's Wegovy.
For decades, a federal statute has prevented Medicare from covering medications specifically for weight loss. The reported deal appears to navigate this barrier by focusing on coverage for obese individuals who are at high risk of other serious health conditions. If finalized, it would open the door for millions of seniors and low-income Americans to access these transformative therapies.
The Washington Post reported that the policy would be implemented through a pilot program, with Medicaid coverage potentially starting in April 2026 and Medicare plan coverage following in January 2027.
This development marks a reversal of a previous administration stance. Earlier this year, a proposal to mandate coverage for anti-obesity medications was rejected as being "not appropriate at this time." The high list prices of GLP-1 drugs, often exceeding $1,000 per month, have been a major sticking point for both government and private insurers.
The potential for a government-negotiated price reduction is a critical component of the deal, addressing bipartisan concerns over the budgetary impact of covering these drugs for a large population. For Eli Lilly and Novo Nordisk, the trade-off is clear: lower prices in exchange for a massive increase in volume and access to a previously untapped market segment.
Eli Lilly, with a market capitalization now exceeding $800 billion, has seen its valuation soar on the unprecedented demand for its GLP-1 drugs for both diabetes and weight loss. Analysts at BMO Capital Markets recently reiterated an outperform rating, citing the company's strong execution while awaiting clarity on the very Medicare and Medicaid access this deal would provide.
As investors and healthcare providers await an official announcement, the negotiations signal a pivotal moment for the pharmaceutical industry and U.S. healthcare policy, potentially reshaping the treatment landscape for obesity and its related chronic diseases.