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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Biden proposes Medicare, Medicaid coverage of obesity drugs

President Joe Biden speaks during a “Friendsgiving” dinner with service members and their families on Monday at the Coast Guard Sector New York in Staten Island, New York.  (Saul Loeb/AFP/Getty Images North America/TNS)
By Madison Muller Bloomberg News Bloomberg News

WASHINGTON – The Biden administration is proposing a rule that would require the U.S. government to cover weight-loss drugs, potentially expanding access for millions of Americans with obesity and creating a huge new medical bill for President-elect Donald Trump.

The Medicare insurance program now pays for drugs like Novo Nordisk A/S’s Ozempic and Eli Lilly & Co.’s Mounjaro for people with health conditions such as diabetes. The new rule would give an estimated 3.4 million older Americans on Medicare, and 4 million more adults in Medicaid programs for the poor, access to weight-loss treatment, according to the White House.

The plan would slash out-of-pocket costs by as much as 95% for the drugs that can carry a price tag of $1,000 a month, according to a White House official. The thinking is that the cost would be offset by the reduced incidence of diabetes, heart conditions and other illnesses tied to obesity.

The proposal still needs to go through a formal rulemaking process that will take months, meaning it would need to be endorsed by Trump to take effect. The rule isn’t expected to be finalized until April, according to Bloomberg Intelligence senior analyst Duane Wright.

Medicare, which provides coverage to about 52 million older Americans, currently doesn’t pay for drugs like Wegovy and Zepbound for obesity. Just 13 state Medicaid programs cover the the blockbuster weight-loss medications.

Coverage for obesity would increase Medicare costs by $25 billion over 10 years, while adding $11 billion in federal Medicaid costs and $4 billion in state costs, a spokesperson for the Centers for Medicare and Medicaid Services said. The Trump administration has made reducing government spending a key objective.

The proposal is a victory for drugmakers Novo and Lilly, which are just emerging from shortages that have curtailed access to the brand-name medicines for the past two years. The booming market for obesity shots is expected to hit $130 billion by 2030, and both companies have been racing to convince insurers that the drugs are worth paying for.

Covering obesity medicines under Medicare and Medicaid “is an important step forward for patients,” Novo said in a statement. If left untreated, obesity can contribute to diseases such as type 2 diabetes, heart disease, high blood pressure and high cholesterol, the company said. Lilly said in a statement that it looks forward to “working with the White House, CMS, and the new administration to ensure fair access” to weight-loss drugs.

Novo shares rose as much as 4.9% in Copenhagen, and year-to-date the stock is up about 9%. Lilly rose as much as 4.4% in New York, and it’s now up 34% for the year. Both stocks were also bolstered by a major setback for a competing weight-loss shot being developed by Amgen Inc.

Trump’s pick to lead the Department of Health and Human Services, Robert F. Kennedy Jr., said last month that delivering healthy food to the American public could “solve the obesity and diabetes crisis” for a fraction of the cost of covering GLP-1 drugs.

Patients and doctors have been advocating for wider access to the drugs, and efforts to remove restrictions on Medicare coverage have been picking up momentum in Congress.

Covering the drugs at their current prices won’t be cheap. However, a Congressional Budget Office analysis released last month suggested that semaglutide, the active ingredient in Novo’s Wegovy, Ozempic and Rybelsus, will be included in government price negotiations under the Inflation Reduction Act in 2025, which could help lower costs.