Trump administration withdraws Medicare coverage proposal for GLP-1-based obesity treatments
Novo Nordisk fell -1.4%, Eli Lilly -3.1% in after-hours trading
Medicare currently only covers GLP-1 drugs for diabetes, not for obesity
Without insurance, monthly out-of-pocket cost is ~$1,000
Both companies plan to resume negotiations with the administration
Opinion
The U.S. government’s move to scale back coverage signals near-term headwinds for obesity drug makers and highlights how shifting political and policy dynamics can pose risks even for high-growth sectors like healthcare.
Core Sell Point
The policy reversal has dampened expectations for insurance expansion in the obesity drug market, triggering short-term downside pressure across the pharma sector.
The Trump administration has officially scrapped a proposal introduced under President Biden to expand Medicare coverage for GLP-1-based weight-loss drugs. On Apr 5 (local time), the Centers for Medicare & Medicaid Services (CMS) announced it would not move forward with the plan to extend coverage for these treatments, which have demonstrated up to 20% weight reduction and a preventive effect on type 2 diabetes. The decision is believed to reflect concerns over the high cost of such drugs, which can reach $1,000 per month without insurance coverage.
Following the announcement, shares of companies involved in obesity drug development fell. Novo Nordisk, maker of Wegovy, dropped 1.4% in after-hours trading, while Eli Lilly, which produces Zepbound, declined 3.1%. Currently, Medicare covers GLP-1 drugs approved for diabetes, but not those approved solely for obesity treatment.
Analysts viewed the decision as a manageable but clear policy risk. Courtney Breen of Bernstein noted that “with pharmaceutical tariff negotiations underway, it’s politically difficult to offer tangible benefits right now.” Both Eli Lilly and Novo Nordisk expressed disappointment and stated their intention to continue working with the Trump administration to revisit the issue and secure broader coverage.
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