Eli Lilly and Novo Nordisk Stocks Rise on Potential Medicare Coverage for Weight Loss Drugs

Eli Lilly and Novo Nordisk stocks rose 1.3% and 2%, respectively, after The Washington Post reported that Medicare and Medicaid programs are planning to experiment with covering weight loss drugs like Ozempic, Wegovy, Mounjaro, and Zepbound. The proposed experiment will begin in April 2026 for Medicaid and January 2027 for Medicare plans, and will allow state Medicaid programs and Medicare Part D insurance plans to voluntarily cover these medications for weight management purposes.

In a significant shift in policy, the Trump administration is planning to experiment with covering weight loss drugs under Medicare and Medicaid programs. The proposal, which aims to allow state Medicaid programs and Medicare Part D insurance plans to voluntarily cover GLP-1 drugs like Ozempic, Wegovy, Mounjaro, and Zepbound for weight management purposes, was reported by The Washington Post [1].

The proposed experiment is expected to begin in April 2026 for Medicaid and January 2027 for Medicare plans. It will be conducted through the Center for Medicare and Medicaid Innovation (CMMI), which tests new healthcare payment approaches aimed at reducing costs while improving care quality [2].

This initiative provides an alternative pathway for Medicare and Medicaid patients to access anti-obesity medications after the administration stated in April that neither program would cover GLP-1s for weight loss. The new plan effectively replaces a previous Biden administration proposal from last year that would have enabled the programs to cover these drugs for patients with obesity [1].

The stock prices of Eli Lilly and Novo Nordisk, the makers of Mounjaro and Zepbound, and Ozempic and Wegovy, respectively, reacted positively to the news. Eli Lilly's stock rose 1.3%, while Novo Nordisk's shares jumped 2% after the report was published [3].

GLP-1 drugs have gained significant attention for their effectiveness in weight management, with many private insurance plans already covering them for obesity treatment. However, concerns about their cost-effectiveness and potential for weight regain after stopping the drugs have been raised by some experts [1].

The experiment aims to improve the metabolic health of patients by covering GLP-1s and providing a healthy lifestyle support system. Participating Medicare plans and state Medicaid programs will need to provide patients with diet and exercise coaching, and participating Part D plans will have to offer the drugs to all eligible enrollees [1].

The Centers for Medicare & Medicaid Services (CMS) has not yet commented on the potential model or coverage. However, the proposal is not final and could go through a formal process where the administration solicits public feedback before finalizing it [1].

References:
[1] https://www.washingtonpost.com/health/2025/08/01/medicare-medicaid-weight-loss-drugs/
[2] https://www.investing.com/news/stock-market-news/eli-lilly-stock-rises-novo-nordisk-shares-jump-on-potential-medicare-coverage-4165844
[3] https://www.tradingview.com/news/reuters.com,2025:newsml_L4N3TT0W4:0-eli-lilly-rises-on-report-of-medicare-medicaid-coverage-for-weight-loss-drugs/