MW Weight-loss drugs may be coming to Medicare, Medicaid under experimental program

By Jessica Hall

Costly GLP-1 drugs such as Ozempic, Wegovy, Mounjaro and Zepbound could be covered under the new plan

A move to offer costly weight-loss drugs for obese Americans on Medicare and Medicaid may be in the works, but such a program may run into problems with voluntary participation and expense concerns.

Under a five-year experiment being weighed by the Centers for Medicare and Medicaid, state Medicaid programs and Medicare Part D insurance plans would be able to choose to cover voluntarily GLP-1 drugs such as Ozempic (DK:NOVO.B), Wegovy, Mounjaro (LLY) and Zepbound for patients for "weight management" purposes, according to a report published on Friday by the Washington Post.

The program, which would be conducted by the Center for Medicare and Medicaid Innovation, is expected to start in April 2026 for Medicaid and January 2027 for Medicare plans, the report said. The Center for Medicare and Medicaid Innovation, or CMS Innovation Center, works to find new ways to pay for and deliver healthcare, with the goals of lowering costs and improving care.

CMS did not comment on the specifics of the report, but said in an emailed statement that "all drug coverages undergo a cost-benefit review. CMS does not comment on potential models or coverage."

Last year, then-President Biden proposed having weight-loss drugs covered by Medicare and Medicaid to help tackle the public-health crisis of obesity. The Trump administration, however, said in April that the programs would not cover GLP-1s for weight loss. Instead, this new potential plan would be a five-year program that would allow insurance plans to voluntarily cover the expensive drugs.

"They are quite different routes," said Matthew Fiedler, senior fellow at the Center on Health Policy at the Brookings Institution. "Without an incentive, it's not clear how a voluntary model would work."

State Medicaid programs already are allowed to offer GLP-1 drugs for weight loss, but only 13 state programs currently do so. Meanwhile, Medicare currently covers GLP-1 drugs for people with a diagnosis of diabetes or cardiovascular disease and who have obesity or who are overweight, but not for the treatment of obesity itself.

If the door was opened for insurers to voluntarily offer the drugs for weight loss, it would be difficult to see why companies would do so due to the high cost and expected explosive demand, analysts said. About 42% of American adults are obese, according to the Centers for Disease Control and Prevention. That translates to roughly 100 million obese adults.

"If you were the only plan in the market offering these drugs - you'd be a magnet for people wanting them. It's difficult to see the way they could handle the cost of that volume. If they are allowed to opt out, it would make good financial sense to do so," Fiedler said.

Federal Medicaid funds are expected to be cut drastically as a result of the Republican megabill known as the One Big Beautiful Bill, which was signed into law last month. The Congressional Budget Office $(CBO.AU)$ estimated that the bill would reduce Medicaid spending by about $911 billion over a decade.

"States will be feeling a lot of financial pressure. A voluntary approach may be less likely to produce broad participation," Fiedler said.

Juliette Cubanski, deputy director of the program on Medicare policy at KFF, said demand for the drugs is apparent, but what is less clear is the ability to pay for them.

"It's unclear how the program would work. There are very real cost concerns," Cubanski said. "It's not clear what mechanisms will be in place to avoid or mitigate these cost concerns. And what impact will it have on premiums?"

The Trump administration is currently negotiating prices for 15 drugs, including the weight-loss drug semaglutide that's in Ozempic and Wegovy, for Medicare patients starting in 2027. Those negotiations could have an impact on the costs and the rollout of the five-year program being considered by CMS, Cubanski said.

The GLP-1 drugs can cost $1,000 or more a month without insurance coverage, although Novo Nordisk and Eli Lilly are selling their drugs directly to U.S. consumers at a cash price of $499 a month.

The non-partisan Congressional Budget Office estimated that coverage of anti-obesity medications by Medicare would increase federal spending by about $35 billion from 2026 to 2034.

While the trial program under the Trump administration would last for only five years, there would still be costs that would only be partially offset by the savings from improved health outcomes of the patients, Cubanski said.

It's also not clear whether the program will be approved at all. Trump officials have been mixed in their support of weight-loss drugs. Robert F. Kennedy Jr., head of the the Department of Health and Human Services, has opposed such drugs, preferring diet and exercise to tackle obesity. Meanwhile, Mehmet Oz, head of CMS, has been a supporter of the drugs.

-Jessica Hall

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

(END) Dow Jones Newswires

August 01, 2025 16:13 ET (20:13 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.