CMS Proposes Five-Year Pilot to Cover GLP-1 Weight Loss Drugs

The U.S. Centers for Medicare and Medicaid Services (CMS) has proposed a five-year pilot program to cover the costs of GLP-1 weight loss drugs manufactured by Eli Lilly and Company (LLY) and Novo Nordisk (NVO). This initiative aims to address public concerns about the affordability of these popular medications, which are known for their dual benefits in treating diabetes and promoting weight loss.

The pilot program, set to begin in April 2026 for Medicaid and January 2027 for Medicare Part D, will allow state Medicaid programs and Medicare Part D plans to voluntarily include Novo Nordisk's Ozempic and Wegovy, as well as Eli Lilly's Mounjaro and Zepbound, in their coverage. This move is expected to significantly impact the market dynamics of GLP-1 drugs, which have been expanding their indications. For instance, the U.S. Food and Drug Administration (FDA) has approved Novo Nordisk's Wegovy for reducing cardiovascular disease risk, while Eli Lilly is exploring the potential of tirzepatide in treating sleep apnea and other conditions.

The CMS Innovation Center (CMMI) will oversee the implementation of this project. However, the proposal is still subject to final approval and may undergo further refinement through public consultation. While the intent is to lower drug prices, the limited scope and complexity of the program may affect its overall effectiveness.

The inclusion of these drugs in Medicare and Medicaid coverage is seen as a pivotal change in the market landscape. Despite the uncertainties, the expansion of coverage is anticipated to enhance accessibility and affordability for a broader population, potentially reshaping the competitive dynamics within the pharmaceutical industry.