Biden Administration Announces Inclusion of Weight Loss Drugs in Medicare, Stocks Surge!

The Biden administration on Tuesday formally announced a new rule aimed at making weight-loss drugs covered by Medicare and Medicaid for the benefit of obese patients. The publication of the proposal heralds easier access to weight-loss drugs such as Wegovy, Ozempic and Mounjaro.

Shares of drug developers Eli Lilly (LLY) and Novo Nordisk (NOVO) were up 1.5% and 1.8% respectively before the bell on the news. Currently, Medicare and Medicaid mainly cover drugs used to treat conditions such as diabetes, while weight-loss drugs are not covered. White House officials say the implementation of the new rules will significantly reduce out-of-pocket costs for patients, as these weight-loss drugs often cost more than $1,000 a month.

Notably, the study also found significant racial disparities in access to weight loss medications. According to health analytics firm PurpleLab, 85 percent of prescriptions for semaglutide - the active ingredient in Wegovy and Ozempic - were filled by white patients in 2023. High drug costs are a major barrier to access to weight loss drugs for low - and middle-income people.

Expanding Medicare and Medicaid coverage for weight-loss drugs would help narrow that disparity. Dr. Raul DeMatia, a weight-loss medicine specialist in Norman, Okla., noted that Medicare and Medicaid populations tend to be the most at risk and without access to anti-obesity drugs.

Obesity has become a major public health problem in the United States, affecting more than 40 percent of adults. According to the Centers for Disease Control and Prevention (CDC), obesity is classified as a chronic disease that increases the risk of heart disease, diabetes, stroke, breathing problems, and certain cancers. The White House said the new rules, if implemented, would provide access to weight-loss drugs for 3.4 million Medicare beneficiaries and 4 million Medicaid participants.

It's worth mentioning that weight loss drugs like Wegovy contain a semiglutide component, a compound that mimics glucagon-like peptide-1 (GLP-1), which regulates blood sugar, metabolism, and appetite. Pharmaceutical companies are actively working on more GLP-1-based treatments and exploring its broad health benefits in reducing alcohol intake and treating sleep apnea, among others.