Medicare coverage of obesity drugs could raise federal spending by $35B through 2034 – CBO

Medicare coverage of weight loss drugs, if authorized, would increase federal spending by about $35B from 2026 to 2034, according to the Congressional Budget Office’s analysis of an illustrative policy authorizing coverage in 2026.

CBO estimates total direct federal costs of covering anti-obesity medications would increase from $1.6B in 2026 to $7.1B in 2034. “Relative to the direct costs, total savings from beneficiaries’ improved health would be small – less than $50M in 2026 and rising to $1B in 2034.”

Over 12.5M Medicare beneficiaries would newly qualify for the weight loss drugs in 2026 under the illustrative policy. “In 2026, in CBO’s estimation, 29M beneficiaries would qualify for coverage under the illustrative policy.”

The policy’s federal costs to the Medicare program would probably be lower beyond 2034 as drug prices fall over time and savings from improved health will likely grow. “Nevertheless, the policy would still increase federal spending between 2026 and 2044.”

For now, Medicare does not cover weight loss drugs, but policymakers have introduced legislation that could eventually authorize coverage.

CBO noted that U.S. sales of GLP-1 medications approved for weight loss in Q2 totaled $2.7B, most of which were for Novo Nordisk’s (NVO) Wegovy and Lilly’s (NYSE:LLY) Zepbound.

Sales are expected to continue surging, and their prices will likely fall substantially starting in 2027 as a result of Medicare drug price negotiations, CBO added.