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What you need to know
- Eli Lilly and Novo Nordisk shares rose Tuesday after the Biden administration proposed expanding coverage of the companies' weight-loss drugs in government-backed healthcare plans.
- This proposal recommends that drugs such as Ozempic or Mounjaro should be covered by Medicare and Medicaid to make them accessible to new millions of patients.
- White House stated that changes to the system could lower the cost of drugs.
Shares of Eli Lilly and Novo Nordisk rose on Tuesday, after Biden proposed that the government’s healthcare plans such as Medicare and Medicaid would cover the popular weight loss drugs produced by the two companies.
The current rules do not cover weight loss drugs. However, the proposed change would include drugs such as Ozempic or Mounjaro in the category of medications for treating obesity. This is because it could cause diabetes and heart diseases, both covered by rules.
Ozempic Mountain and Mounjaro to be made more accessible by a new classification
Changes to the classification could make these drugs accessible to millions more patients in the U.S. beginning 2026 and increase the costs of government health care programs. The Centers for Medicaid & Medicare Services (CMS), estimates the cost of the change over a 10 year period at $24.8 billion for Medicare, and $14.8 for Medicaid.
CMS stated that it proposed the change due to the increasing consensus on obesity as a chronic condition and health issues caused by obesity. New York Times Tuesday reported that medical professionals will have the opportunity to comment on the proposal.
White House stated that this rule may reduce drug costs, which are over $1000 for a monthly supply of drugs, by 95%. According to the Times, officials said that they expect the drug prices to drop over time due in part because more and better drugs will be available.
Eli Lilly shares were up close to 6% in intraday trading Tuesday following the news, while Novo Nordisk's U.S.-listed shares rose 2%.
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