CMS decision halts expansion of Medicare coverage for anti-obesity drugs

USA – The US Centers for Medicare & Medicaid Services (CMS) has decided not to proceed with the Biden administration’s proposal to expand Medicare coverage for anti-obesity drugs like Novo Nordisk’s Wegovy (semaglutide) and Eli Lilly’s Zepbound (tirzepatide).

This move halts plans to broaden access to these treatments under Medicare. The decision, published in the Federal Register on April 4, 2025, marks a significant setback for proponents of expanded access to these treatments and comes as regulatory uncertainty continues to ripple through the healthcare landscape.

Originally introduced in November 2024, the proposed rule aimed to extend Medicare and Medicaid coverage to include glucagon-like peptide 1 receptor agonists (GLP-1RAs) prescribed for weight loss, not just for type 2 diabetes.

The Biden administration had estimated that the change could have allowed an additional 3.4 million adults to gain access to these drugs—a potentially transformative shift given that the National Institutes of Health (NIH) classifies about 42% of US adults as obese.

However, under current policy, Medicare covers drugs like Novo Nordisk’s Ozempic and Eli Lilly’s Mounjaro solely when prescribed for diabetes management.

The decision to halt the expansion of coverage is significant for several reasons. For one, it underscores a cautious approach amid concerns about the high cost of these medications.

With anti-obesity drugs sometimes carrying price tags exceeding several hundred dollars per dose, there are widespread worries about the fiscal implications for Medicare, Medicaid, and ultimately, taxpayers.

Opposition from payer groups, including the Alliance of Community Health Plans (ACHP), has been vocal.

ACHP CEO Ceci Connolly argued that expanding coverage without comprehensive long-term efficacy and safety studies, coupled with thorough economic analysis, would impose enormous financial burdens on consumers, employers, and the government.

The CMS ruling has had immediate market repercussions as well. Both Eli Lilly and Novo Nordisk, which had previously endorsed the proposed expansion, saw declines in their stock prices following the announcement—Eli Lilly by 3.8% and Novo Nordisk by 2.7% in premarket trading.

While these stock movements may partly reflect the CMS decision, they could also be influenced by broader market dynamics, including global stock trends linked to recent tariff announcements by the Trump administration.

The debate over anti-obesity drug coverage comes at a time when public health and fiscal concerns intersect.

Although the Trump administration has championed initiatives under the “Make America Healthy Again” banner, emphasizing efforts to combat the nation’s rising obesity rates, US Secretary of Health and Human Services Robert F. Kennedy Jr has expressed reservations about an over-reliance on pharmaceutical solutions.

During his January 2025 confirmation hearing, he remarked that while GLP-1RAs are “miracle drugs,” they should not be the front-line intervention for certain populations, such as young children.

This decision also unfolds amid a broader context of regulatory and budgetary challenges for US health agencies.

The White House recently announced plans to cut around 10,000 employees from HHS departments, including the FDA, CDC, and NIH, further intensifying the uncertainties that ripple through healthcare policymaking.