The Biden administration released a proposed rule allowing Medicare prescription drug plans to cover medicines for obesity, the future of which has been left to the in-coming Trump Administration. America has one of the highest rates of obesity in the world. While reforms to the food production system and recommendations that encourage healthier eating and more exercise are essential to make America healthier, there is general agreement that both prevention and treatment of obesity are vital public health priorities. While there are legitimate concerns about potential overuse and how to pay for medicines for obesity, coverage is complementary to these efforts. Affordable coverage for obesity medicines is possible with anticipated price reductions resulting from market competition, lower cost strategies to prevent weight regain, and reductions in spending on unnecessary, often harmful, care.
Commercial insurance coverage of obesity medicines has been limited by the concern about the large number of treatment-eligible individuals, extraordinary consumer demand, high drug prices, and the anticipation of paying for lifelong maintenance therapy to prevent weight regain. The Congressional Budget Office (CBO) estimated that authorizing coverage of medicines to treat obesity for Medicare beneficiaries would raise federal spending by about $35 billion from 2026 to 2034.
While much attention has been paid to the cost of Medicare coverage, providing obesity medicine access would improve patient outcomes, reduce healthcare disparities, and enhance Medicare spending efficiency. Given these benefits, executing this proposed rule would be a big win for the second Trump administration. It would build on policies implemented during the first Trump administration that boosted access and affordability to essential medical services.
The current ban on Medicare coverage of obesity medicines was written into law before the availability of multiple safe and highly effective FDA-approved medications. Despite strong bi-partisan and bicameral Congressional support of legislation that would permit Medicare coverage, it is currently stalled, largely driven by the CBO cost estimate. But, in the proposed rule, the Executive Branch acknowledged that the Federal government could cover obesity medicines without Congressional approval.
Although coverage will cause a spike in spending, that doesn’t mean every person who wants an obesity medicine will get one. Costs will not skyrocket indefinitely for several reasons. First, Medicare plans can demand big discounts for preferred placement of obesity medicines on their formulary. The obesity treatment class is becoming more competitive; prices of semaglutide and tirzepatide are already discounted by 50% or more. Second, CBO expects semaglutide to be selected for the next round of the IRA’s Medicare drug price negotiation program effective in 2027. In fact, CBO projected that the cost to Medicare of coverage would decrease between 2026 and 2027 because of IRA provisions, even though more people used the medicines. Last, health plans will likely use utilization management strategies, such as requiring a certain severity of obesity, presence of co-morbid conditions, a demonstrated effort with diet and exercise, and/or trials of less expensive drugs (also referred as a step edit or fail first). Plans will also apply consumer cost-sharing when the prescription is filled, potentially dampening consumer demand.
Budget impact models presume many people prescribed the highest-cost obesity medications will require the full dose to prevent weight regain, but that isn’t necessarily the case. Many clinicians (including AMF, a co-author of this article) recommend alternative weight maintenance treatment protocols - that would shift people from the full dose of more expensive medicines to lower-cost interventions (e.g., behavioral therapy, lower/less frequent dosing, lower-cost medications, nutrition support/food is medicine). Given that most of the estimated cost is attributed to the weight maintenance phase, Medicare should strongly consider implementing a real-world data demonstration project to assess the significant potential clinical and economic impact of such an approach.
Just about everyone agrees that 17% of the US gross domestic product spent on medical care is too much, particularly since our health and life expectancy is poor relative to other countries. We need to spend smarter. Although Medicare coverage of obesity medicines that are demonstrated to improve individual and population health would require substantial upfront investment, the Medicare program could offset these costs by implementing policies that reduce the use of services that have no demonstrated clinical benefit - that account for hundreds of billions of dollars a year. Elon Musk posted recently on X: “Massive waste in healthcare spending”. Savings incurred from spending less on unnecessary and potentially harmful low-value care could be reallocated to higher-value care.
While it will take time to fully realize some of the health benefits and cost offsets from reductions in obesity-related conditions (e.g., diabetes, heart disease, sleep apnea, cancer) and see the beneficial impact of these drugs on other non-obesity-related conditions (e.g., alcohol and other substance abuse), expanding access for these highly effective obesity medicines to Medicare beneficiaries and paying for them by competitive price reductions, judicious use, and reducing the billions of taxpayer dollars spent in the US annually on unnecessary care, can help make Americans Healthier (again) and not break the federal bank.
A. Mark Fendrick, MD, is a general internist and professor of medicine and public health at the University of Michigan, where he directs the Center for Value-Based Insurance Design.
Kirsten Axelsen is a non-resident fellow at the American Enterprise Institute and a consultant to life sciences companies.
