What you need to know
- Biden’s administration announced a policy change on Tuesday, which would cover prescription medications for obesity such as Ozempic or Wegovy in 2026.
- Medicare Part D does not cover weight-loss medications. The medications used for weight loss must also be prescribed to treat other conditions, like diabetes.
- The change in policy could help millions of Americans who are obese, but would cost the taxpayers around $40 billion over 10 years.
- Bipartisan legislation has been proposed to support Medicare’s coverage of drugs for weight loss. The argument is that the treatment of obesity would reduce costs associated with chronic illnesses.
- Robert F. Kennedy Jr. who has been nominated as the new head of the Department of Health and Human Services in the Trump Administration, said that diet changes are more effective than drugs at treating obesity.
Centers for Medicare and Medicaid Services proposes a new rule which would acknowledge obesity as chronic disease. Medicare and Medicaid could cover obesity-related medications, which would affect potentially millions of individuals. The law would go into effect in 2026. However, the likelihood that the new Trump administration would continue it is uncertain.
Obesity Drugs Covered by Medicare and Medicaid Today
Medicare and Medicaid only cover a limited number of obesity medications. Medicare Part D excludes medications that are used to treat obesity or weight loss. The only way it can cover these medications is if the prescriptions are for approved medical conditions like Type 2 Diabetes or Heart Disease.
Medicaid coverage is different in each state. Many states exclude drugs for weight loss unless it’s a medical problem.
The New Rule
Ozempic costs over $900 for a month. Investopedia found in its research that nine companies cover Ozempic as part of Medicare Part D, for a condition prescribed by a doctor. A year’s supply is on average $539. The consumers who are eligible already save around $10,000 annually.
Over two-thirds of adults are obese. Medicare beneficiaries had an obesity diagnosis in 2022 of 22%. Medical expenditures of more than 217 billion dollars are attributed to this condition, which is linked with chronic diseases such as diabetes and heart problems.
This new rule would benefit many Americans, but also cost them billions. CMS predicts that this rule would result in an increase of $24.8 billion for Part D, and $14.8 billion for Medicaid over a 10-year period.
The rule will only cover people who are obese. It does not include people who are overweight. Someone is overweight if their body mass index, or BMI, ranges from 25 to 29,9. If their BMI exceeds 30, they are considered obese. It is still necessary to have a second condition for people who are obese to receive coverage.
Investment Impact
The proposed rule boosted the shares of Eli Lilly, Novo Nordisk and other companies. Novo Nordisk produces Wegovy, Ozempic and Mounjaro while Eli Lilly makes weight-loss drugs Mounjaro or Zepbound.
The Survival of Rule Change is in Doubt
Robert F. Kennedy Jr., who is nominated to lead the Department of Health and Human Services under the new president, has said that Ozempic would not be included in the policy. Robert F. Kennedy Jr. has stated that Ozempic will not be implemented by the Department of Health and Human Services, which is under new President Trump’s leadership. “make America healthy again.”
Kennedy misled Fox News viewers in October when he claimed that the European Union investigated Ozempic over suicidal ideas. In an October interview on Fox News, Kennedy made misleading claims that the European Union is investigating Ozempic for suicidal ideation.
“If we spend about one-fifth of that giving good food, three meals a day, to every man, woman and child in our country, we could solve the obesity and diabetes epidemic overnight for a tiny fraction of the cost,” He said.
Bipartisan support has been given to a bill requiring Medicare Part D drugs that treat obesity to also cover weight management and treatment for obese people. This has not yet gone to vote either in the House of Representatives, or Senate.
Ozempic has been lauded by Dr. Mehmet Oz who Trump nominated as the new CMS director. “game changer,” On his show, he carried a cinderblock to illustrate how much patients can lose.
Sheila Lynch Afryl, senior legal analyst at Wolters Kluwer, says that Trump has said little about Ozempics, Medicare or Medicaid.
“His overarching principle seems to be saving money and reining in spending, so part of me would be surprised if he actually approved this,” She said
Lynch-Afryl stated that the new administration could immediately revoke the rule. Section 1557, the non-discrimination rules of the Affordable Health Care Act are a good example. The guidance on how to implement the section in relation to transgender protections has changed depending on which administration was in power.
“Every new administration rescinds rules that have been finalized,” Lynch-Afryl said. “And this rule isn’t even finalized, it’s just proposed.”
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