Pharma Giants and PBM Power Shifts: How CVS' Preference for Wegovy Impacts Lilly and the Obesity Market

The pharmaceutical industry's obesity drug sector is witnessing a seismic shift in power dynamics, driven by the growing influence of pharmacy benefit managers (PBMs). At the center of this transformation is CVS Health's decision to exclude Eli Lilly's Zepbound (tirzepatide) from its formulary in favor of Novo Nordisk's Wegovy (semaglutide). This move, while seemingly tactical, underscores a broader strategic battle between pharma giants and PBMs, reshaping market access, investment risks, and competitive positioning.

The PBM Leverage: Formulary Decisions as Strategic Weapons

CVS Health's formulary change, effective July 1, 2025, removed Zepbound from its preferred tier, redirecting patients to Wegovy. According to a Reuters report, this decision prompted Eli Lilly to terminate its drug plan with CVS for employees, opting instead for a privately held PBM, Rightway. The immediate consequence was a 9.6% patient switch from Zepbound to other GLP-1 medications, with 82.8% of those transitioning to Wegovy, as Truveta Research found in its analysis of the CVS GLP-1 formulary change. While this represents a 16-fold increase in switching compared to earlier in the year, Zepbound's third-quarter 2025 sales still surged to $3.6 billion, reflecting a 185% year-over-year growth, according to FiercePharma.

This resilience highlights the dual-edged nature of PBM influence: while formulary exclusions can disrupt patient access, they rarely dismantle a drug's market dominance if the manufacturer compensates with direct-to-consumer strategies. Lilly's LillyDirect channel, for instance, has proven critical in maintaining sales momentum despite PBM barriers, as FiercePharma noted.

Strategic Responses: Innovation vs. Market Access

The divergent strategies of Eli Lilly and Novo Nordisk reveal the sector's competitive undercurrents. Lilly has doubled down on clinical innovation, securing FDA approval for Zepbound as a treatment for obstructive sleep apnea in obese patients, according to a GuruFocus report. This expansion of therapeutic indications strengthens its value proposition, mitigating PBM-driven access challenges. Meanwhile, Novo Nordisk, despite its formulary advantage with Wegovy, faces headwinds from a failed phase III trial of its experimental drug CagriSema, which underperformed weight-loss expectations, as the same GuruFocus report noted. This duality-Lilly's innovation-driven growth versus Novo's reliance on formulary dominance-creates asymmetric risks for investors.

CVS Health's financial performance further complicates the landscape. With a 47% surge in adjusted earnings per share and $103 billion in Q3 2025 revenue, the PBM's clout is bolstered by its ability to leverage cost-containment strategies, as Truveta Research found. For pharma companies, this means navigating a PBM ecosystem increasingly adept at balancing patient outcomes with financial constraints.

Investment Risks: Navigating PBM-Driven Volatility

The obesity drug market's investment risks are now inextricably tied to PBM formulary decisions. A study by Truveta Research notes that while PBMs often position GLP-1 drugs as "preferred therapies," real-world adherence rates lag far behind clinical trial results. For example, Prime Therapeutics data shows only 1 in 6 patients remain adherent to GLP-1 medications after two years, compared to 85% in trials, as the Managed Healthcare Executive-reported study found. This discrepancy raises questions about the long-term sustainability of revenue growth for drugs like Wegovy and Zepbound.

Moreover, the high cost of obesity medications-Wegovy's list price exceeds $1,300 per month-creates a precarious equilibrium. Employers and insurers, who control coverage decisions, must weigh upfront costs against potential savings from improved health outcomes. However, as of 2025, conclusive data on cost-offsetting benefits remains elusive, as the Managed Healthcare Executive study found. This uncertainty amplifies investment risk, particularly for companies reliant on PBM formulary inclusion.

The Path Forward: Adaptability as a Survival Trait

For pharma giants, the lesson is clear: PBM influence is no longer a peripheral concern but a core strategic variable. Eli Lilly's pivot to direct-to-consumer sales and expanded indications exemplifies this adaptability. Novo Nordisk, meanwhile, must navigate both PBM pressures and clinical setbacks, with plans to optimize CagriSema's dosage in 2025, according to the GuruFocus report.

Investors, in turn, must scrutinize companies' ability to diversify revenue streams and innovate beyond formulary dependencies. The obesity drug sector's future will belong to firms that can harmonize clinical excellence with PBM realities-a balance that, as 2025 unfolds, appears increasingly precarious.