The Trump administration decided against allowing Medicare to pay for obesity drugs, a move that would have given millions of Americans access to the medications but would’ve cost the government billions.
The highly anticipated decision sent shares of obesity drugmakers Eli Lilly & Co. and Novo Nordisk A/S lower.
Related: Eli Lilly denies affiliation with Hims & Hers
The Centers for Medicare and Medicaid Services had been weighing a Biden administration proposal that could have expanded coverage of the costly drugs by classifying obesity as a disease. In its announcement Friday, CMS said it may reconsider coverage of these drugs in the future.
Lilly’s shares dropped 2% at 4:42 p.m. in extended New York trading, while Novo’s American depositary receipts were down 1.9%.
Representatives for Lilly and Novo didn’t immediately respond to a request for comment.
In the waning days of Biden’s administration, CMS proposed a regulation that would have allowed Medicare to cover popular new weight-loss drugs like Lilly’s Zepbound and Novo’s Wegovy. The proposal would have reinterpreted a law that prohibits Medicare from covering weight-loss drugs. The rule wasn’t finalized before the Trump administration took office.
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While older adults can get the medications to treat other conditions like diabetes or cardiovascular disease, they aren’t covered for weight loss alone. Extending coverage for the medications through Medicare could cost $35 billion over nine years, a congressional analysis found.
Officials in the Trump administration diverge on the use of weight-loss drugs. Health and Human Services Secretary Robert F. Kennedy Jr. has said there’s no need for them if Americans eat right. Tech billionaire Elon Musk, who’s working with the Trump administration, has lost weight on GLP-1 drugs and supports their use.
Earlier this year, drugmakers had been optimistic about the Biden proposal, in part because of widespread public support. The Obesity Action Coalition and 80 organizations representing health-care providers, patients and caregivers sent a letter to Kennedy urging that CMS cover weight-loss drugs. The letter argued that since obesity is “a complex chronic disease,” it deserves coverage similar to other chronic diseases.
The Biden rule would have given an estimated 3.4 million older Americans on Medicare, and 4 million more adults in Medicaid programs for the poor, access to the wildly popular treatments, according to Biden White House estimates.
(Updates with new information throughout.)
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