Biden administration proposes expanded obesity drug coverage under Medicare, Medicaid

The Biden administration proposed on Tuesday a new rule that could significantly expand coverage of anti-obesity medications for Americans under Medicare and Medicaid.

Currently, these government health insurance programs cover the use of anti-obesity drugs for certain conditions like diabetes. The proposed regulation would expand access to these advanced medications for obesity, bringing coverage to an estimated 3.4M Americans with Medicare.

The Biden administration has previously negotiated lower prices for the first 10 Medicare Part D drugs under the Inflation Reduction Act.

Officials have said these negotiations will save $6B in 2026 as the lower prices take effect. President-elect Donald Trump has previously said he plans to repeal the Inflation Reduction Act, at least partially.

The latest push to expand coverage of anti-obesity drugs will likely impact major players in the sector, including market leaders Novo Nordisk (NVO) and Eli Lilly (LLY), as well as Hims & Hers Health (HIMS), Viking Therapeutics (VKTX) and Amgen (AMGN). It could also affect insurers such as UnitedHealth (UNH), Humana (HUM), Centene (CNC), CVS (CVS) and others.