The U.S. Agency for Medicare and Medicaid (CMS) has officially announced that it is abandoning a proposal from the Biden Administration that would have expanded health insurance coverage for drugs intended to treat obesity, including drugs from the GLP-1 class such as Wegovy (Semaglutide) and Zepbound (Tirzepatide).
This initiative, introduced in late 2024, was intended to allow GLP-1 receptor agonists to be covered by Medicare and Medicaid funds, and when used, prescribed for weight management, not just as part of treatment for Type 2 Diabetes. According to estimates from the administration at the same time, such a decision would have provided access to these therapies for about 3.4 million more American adults. However, the plan did not receive final support and approval, despite data from the National Institutes of Health (NIH) that as many as 42% of the adult population in the US are considered obese.
Under the current regulatory framework, the US Medicare program reimburses GLP-1 therapies, including Ozempic (Semaglutide) and Mounjaro (Tirzepatide), only when indicated for the treatment of Type 2 Diabetes, and their use for weight reduction is not considered a basis for coverage. Although specific states provide access to obesity medications through Medicaid, this practice remains the exception.
The final package of Medicare Advantage and Part D rules for 2026, passed by President Donald Trump’s administration, left out any earlier proposals that would have expanded coverage for obesity therapy. CMS made it clear on that occasion that it did not plan to adopt the weight loss drug provisions from the previous draft. The decision was formally published in the Federal Register on April 4, 2025.
Such developments have a negative impact on the manufacturers of these therapies, primarily Eli Lilly and Novo Nordisk, which supported the planned expansion of reimbursement. After the announcement of the decision, the market reacted with a drop in share prices – in premarket trading on April 7, Eli Lilly’s shares fell 3.8%, while Novo Nordisk’s shares fell 2.7%. However, the decline can also be seen in the broader context of global market trends, as the financial markets were under pressure following the Trump administration’s announcement.
Resistance to the proposed regulation has also come from health insurers. Alliance of Community Health Plans (ACHP) executive director Ceci Connolly noted in an April 4 statement that CMS’s decision was justified and well thought out.
According to her, although obesity therapies represent significant progress and motivate many patients, their extremely high cost could have severe consequences for the health care system, taxpayers, and employers. Connolly emphasized that ACHP was the first national payer organization to publicly warn that expanding coverage for these drugs would be irresponsible without additional evidence of their long-term safety, clinical effectiveness, and cost-effectiveness.
Although the administration of Donald Trump previously emphasized the fight against the obesity epidemic as one of the very top of health policy, there are reservations about relying exclusively on pharmacological solutions. The US Secretary of Health and Human Services, Robert F. Kennedy Jr., repeatedly pointed out the need for caution when it comes to treating obesity primarily with drugs, without a wider, rapid approach.
On the occasion of confirmation of his office in January 2025, Robert F. Kennedy Jr indicated that GLP-1 drugs are a significant therapeutic advance, but warned that their use as a first treatment option, especially in children, should not become the standard. As he emphasized, despite the standard. As he observed, despite their effectiveness, current practice increasingly involves early pharmacological intervention, which raises serious ethical questions.
At the same time, the economic and public health consequences of obesity remain enormous. According to a scientific study published in the Journal Nature Nutrition & Diabetes at the end of 2024, the total costs associated with obesity for the leading industrial sectors in the USA in 2023 exceeded 347 billion dollars, which highlights the scale of this problem.
The latest developments take place in the context of growing regulatory instability of growing regulatory instability in the US health care system. The White House recently announced plans to significantly cut the number of employees at the Department of Health and Human Services, inducing crucial institutions such as the FDA, the CDC, and the National Institutes of Health. These steps complicate the adoption and implementation of health policies at a time when the need for clear and long-term strategies is greater than ever.
This analysis comes from an article originally published by Pharmaceutical Technology, a media brand owned by GlobalData.
