Biden Proposes Covering Obesity Drugs In Medicare And Medicaid

Last week, the Biden administration proposed that the federal government insurance program for the elderly and disabled, Medicare, cover obesity drugs. Coverage of weight loss products in Medicare has been prohibited by law for more than two decades. The proposed new rule issued by the Centers for Medicare and Medicaid Services would rescind the statutory regulation. The administration’s proposal would also expand coverage of obesity medications in Medicaid, the insurance program for people with limited income and resources. Medicaid is jointly run by the federal government and 50 state agencies. Currently, such products are only covered in a small number of states.

Given what CMS calls a growing consensus among experts that obesity is a chronic disease associated with a large number of health risks ranging from diabetes to cancer, the agency says in its proposal that weight loss medicines should no longer be excluded from coverage under the outpatient prescription drug program called Medicare Part D for the treatment of obese patients defined as having a body mass index over 30. In addition, CMS states that Medicaid programs should be required to cover weight loss drugs for patients diagnosed with obesity. The proposal’s inclusion criteria for coverage deviate from the label approved by the Food and Drug Administration for medications such as Wegovy and Zepbound, in that only those who are obese would get covered, and not those who are overweight, with a BMI under 30. CMS estimates that 7.4 million Medicare and Medicaid beneficiaries would be newly eligible for the medicines.

After a 60-day period during which public comments may be issued and subsequently reviewed by CMS, the rule would then have to be finalized by the incoming Trump administration before being implemented in 2026. It is far from certain, however, that the new administration will maintain the rule change or revoke it.

On one hand, the nominee for CMS administrator, Mehmet Oz, has voiced support for the use of the latest wave of weight loss drugs, including Ozempic, Wegovy and Zepbound. By contrast, the person who may be in charge of the Department of Health and Human Services and Oz’s boss, Robert F. Kennedy Jr., has been a vocal critic of obesity drugs.

And at the same time, there is the problem of how much the rule change would cost the government, but also impact Medicare beneficiary Part D premiums which would likely go up as payers that contract with Medicare try to offset some of the increased cost burden.

CMS estimates that expansion of coverage would cost $25 billion for Medicare and $11 billion for Medicaid over a ten year span. States would have to pay $4 billion for their share of the Medicaid bill. The cost figure for Medicare is lower than a recent number posted by the Congressional Budget Office, and one published by researchers in the peer-reviewed journal Health Affairs. This may reflect an increasingly competitive market for weight loss medications which is leading to lower net prices over time.

At present, monthly list prices for Wegovy and Zepbound are well over $1,000, though payers are able to negotiate significantly lower net prices on behalf of employers and health plans that do offer coverage of weight loss products to their enrollees. The problem is, however, that the majority of employers and insurers in the commercial sector do not reimburse these medicines. And in the public sector the situation is worse. Currently, Medicare may only cover one drug that is indicated for weight loss, Wegovy, but only for overweight and obese people at severe risk of cardiovascular events such as a heart attack or stroke.

It’s unclear how the proposal would interact with an already existing bill in Congress, the Treat and Reduce Obesity Act, that has been (re)introduced multiple times since 2012 but is currently stuck in limbo. This Act would lift the prohibition on coverage of weight loss drugs in Medicare. But thus far, the main stumbling block to passage has been the rise in expenditures associated with implementation of the proposed law.

In a highly uncertain political environment, it’s anyone’s guess as to whether the TROA bill will eventually pass or the Biden administration rule change will survive decisions made by the incoming Trump administration.