Healthy Returns: Medicare, Medicaid will reportedly pilot covering obesity drugs – a potential win for drugmakers

CNBC

a day ago

For once, the Trump administration may be giving some drugmakers a reason to celebrate.
The Trump administration is planning to experiment with covering costly weight loss drugs under Medicare and Medicaid, the Washington Post reported on Friday. That plan could expand access to millions of Americans with obesity who can't currently afford Novo Nordisk's Wegovy and Eli Lilly's Zepbound, blockbuster GLP-1 drugs that cost around $1,000 per month before insurance.
In a statement to CNBC about the plan, the Department of Health and Human Services said all drug coverages undergo a "cost-benefit review." The Centers for Medicare and Medicaid Services "does not comment on potential models or coverage," the department added.
The reported plan – if it ultimately takes effect – would be a huge win for Eli Lilly, Novo Nordisk and many Americans.
Spotty insurance coverage of obesity drugs remains the biggest barrier to access for patients – and it's choking broader uptake and revenue growth for the two pharmaceutical giants. Many health plans, including Medicare, cover GLP-1s for treatment of diabetes, but not obesity. Medicaid coverage of obesity drugs is limited and varies by state, according to health policy research organization KFF.
But it's important to remember that this plan isn't exactly new.
In November, the Biden administration proposed having Medicare and Medicaid cover obesity treatments, which would have extended access to roughly 3.4 million Medicare beneficiaries and about 4 million Medicaid recipients. The proposal was controversial at the time, as it would cost taxpayers as much as $35 billion over the next decade, a congressional analysis found.
The Trump administration dropped that proposal in April, but said it could reconsider coverage of those drugs in the future.
Let's get into what the newest reported iteration of the plan looks like.
Under the Trump administration's reported pilot plan, state Medicaid programs and Medicare Part D plans would be able to voluntarily choose to cover Ozempic, Wegovy, Mounjaro and Zepbound for patients for "weight management" purposes. That's according to several Centers for Medicare and Medicaid Services documents obtained by the Post.
The plan is expected to start in April 2026 for Medicaid and January 2027 for Medicare plans, the Post reported.
It's unclear how exactly the plan will play out, Jared Holz, Mizuho health care equity strategist, said in a note to clients on Friday. Holz said he expects the government to put some coverage parameters in place related to factors like age, body weight, body mass index and other comorbidities, or coexisting chronic health conditions.
He also said the pricing of the drugs will be a "major consideration." Holz said he expects the government to pay less than the current list prices of drugs. But having that coverage would expand access and could help drive higher sales volumes, he noted.
Another factor to consider is how much the government is willing to crack down on so-called compounding pharmacies, which are allowed in rare cases to sell cheaper, unapproved versions of GLP-1s. The pharmaceutical industry fiercely opposes those knock-off GLP-1s, as their safety and efficacy aren't vetted by regulators and they are, in some cases, illegally sold at scale.
Holz said the industry's complaints to the government about compounded GLP-1s have so far "not been met with a widespread shut-down."
But overall, Holz said the Trump administration's reported willingness to consider covering obesity drugs is "a slight positive as far as industry sentiment."
It's definitely a breath of fresh air for Eli Lilly, Novo Nordisk and other drugmakers – including Amgen, Roche, AstraZeneca and Pfizer – that are hoping to bring their own obesity drugs to market.
The last six months have been anything but smooth for the broader industry: The Trump administration has ratcheted up calls for drugmakers to lower U.S. drug prices, overhauled federal health agencies and could impose sweeping tariffs on pharmaceuticals imported into the country any day now.
We'll keep watching to see whether this plan gets implemented, so stay tuned for our coverage!
Feel free to send any tips, suggestions, story ideas and data to Annika at [e-mail].
After reporting its second straight earnings miss and guidance cut, UnitedHealth Group completed its executive sweep by replacing CFO John Rex. Executives on the earnings call admitted to mis-execution in Medicare Advantage and pledged to get back to profitability and win back investor trust.
Nearly two years ago it was CVS Health under pressure, after profits in the company's Aetna health insurance division were torpedoed by low Medicare Advantage Star quality ratings.
This week, CVS beat and raised its outlook on the strength of its MA program. CEO David Joyner, now one year into the job, told me he feels good about the turnaround at Aetna and its Medicare business. On top of that, the company saw market share gains in its stores, thanks in part to winning over Rite Aid customers.
Humana, similarly, has seen progress on its turnaround, but CFO Celeste Mellet told me that all insurers are grappling with pricing plans for next year amid high medical costs. One big cost driver right now, Mellet told CNBC, is oncology drugs, as some expensive therapies are now being used in combination.
The next moment of truth for the Medicare Advantage players will come over the next six weeks – when they'll learn the fate of their Star ratings for 2026 plans.
Long-time health-care executive Dr. Marc Harrison has stepped down as CEO of General Catalyst's Health Assurance Transformation Company, or HATCo, and has moved into a strategic advisor role, CNBC has confirmed.
The venture capital firm brought in Harrison and announced the formation of HATCo in 2023. In a release at the time, General Catalyst said the company would work closely with health system partners, and that it would eventually acquire and operate its own health system.
Months later, HATCo announced its plans to buy Summa Health, a nonprofit integrated health system in northeast Ohio. Under its new structure, Summa would become a for-profit organization, and General Catalyst said it would introduce new tech-enabled solutions that aim to make care more accessible and affordable.
Buying a health system is an unprecedented move in the venture industry, and the deal wasn't well received by some members of the Ohio community. Hundreds signed a petition urging Summa to remain a nonprofit and to halt negotiations with HATCo.
Ohio Attorney General Dave Yost conditionally approved the deal in June, though he outlined a number of "enforceable commitments" as part of the agreement. HATCo will have to notify the Attorney General of transactions that could trigger antitrust concerns for 10 years after the deal closes, for instance.
Harrison went to medical school in the late 1980s and has spent most of his career within health systems, most recently as CEO of Intermountain Healthcare. General Catalyst told CNBC that Harrison will continue to provide the firm's CEO, Hemant Taneja, with clinical insights and will remain connected to its ecosystem in his new role.
"It became increasingly clear to both Marc and to us that Marc's role would best be accomplished as a strategic advisor to Hemant Taneja as we bring that ambition and vision to life," a General Catalyst spokesperson said.
Daryl Tol, the head of General Catalyst's Health Assurance Ecosystem, was promoted to president of HATCo, the spokesperson said. He will spearhead the firm's day-to-day- work with Summa Health leadership.
General Catalyst has also appointed Kate Walsh, the former Massachusetts Secretary of Health and Human Services, to HATCo's board. In addition, she will serve as the chair of the board at Summa Health once the transaction closes.
"We are grateful for Marc's leadership and collaboration as co-founder and CEO to help get us to this point in the evolution of HATCo, and we look forward to leveraging his invaluable perspective as we continue to progress," the spokesperson said.