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US President Joe Biden has proposed a huge expansion of government coverage of weight-loss drugs to include obese patients who do not have separate health conditions.
The move, which would have to be approved by Donald Trump’s incoming administration, would make Novo Nordisk’s Wegovy and Eli Lilly’s Zepbound available at a reduced price to people covered by the state-backed Medicare and Medicaid insurance programmes.
Expanding coverage could cost tens of billions of dollars. The number of additional potentially eligible patients under Medicare, which provides coverage for over-65s, is 3.4mn. A further 4mn Americans could be eligible under Medicaid, which applies to people with limited income and resources.
Novo Nordisk shares were up 1.2 per cent in early afternoon trading in Europe. Eli Lilly shares climbed 0.9 per cent in pre-market dealings ahead of the New York open.
At present, the insurance schemes only cover the drugs, known as GLP-1s, when a patient has another condition, such as diabetes or cardiovascular disease, due to a law restricting Medicare coverage of weight-loss drugs. Novo Nordisk’s Ozempic treatment, which is the version of Wegovy for treating diabetes, is already included.
But the Biden administration said it had found a workaround by proposing a new rule for the state-backed schemes that designates obesity as a disease.
The rule change is part of an annual update for Medicare plans that would take effect in 2026. It would need to be finalised after Trump takes office on January 20.
The last-gasp move comes after Biden’s White House ushered in price negotiations for the most costly drugs covered by Medicare and a $35-a-month cap on out-of-pocket costs for diabetic patients using insulin.
Extending coverage of anti-obesity medications is likely to prove popular with voters as it would help reduce the $1,000-plus monthly list price of the drugs.
However, the move conflicts with the Trump team’s push, led by billionaire Elon Musk and former biotech executive Vivek Ramaswamy, to cut federal spending.
It also comes after a series of court rulings that slapped down the Biden administration for exceeding its powers on issues ranging from the environment to student loans.
If the policy were to take effect, it would reduce out-of-pocket costs for eligible patients by 95 per cent.
Mehmet Oz, the TV doctor who Trump nominated to run the Centers for Medicare and Medicaid Services, has previously praised Novo Nordisk’s GLP-1 drug Ozempic.
But Robert F Kennedy Jr, Trump’s pick to run the US health department, attacked the Danish drugmaker on Fox News recently, saying the company was “counting on selling it to Americans because we’re so stupid and so addicted to drugs”.
A Congressional Budget Office report published in October concluded that covering weight-loss drugs for Medicare patients would cost the federal government $35bn between 2026 and 2034.
It said that the cost savings from improving other health outcomes would not offset the cost of the treatments.
Medicaid covers weight-loss drugs for obesity alone in 14 states, including California, Michigan and Virginia, according to the AXIACI Obesity Coverage Nexus.
Novo Nordisk and Eli Lilly, the leading weight-loss drugmakers, have been lobbying hard to expand Medicare and private insurance coverage of weight-loss drugs.
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