US plans to test Medicare, Medicaid coverage for weight-loss drugs, Washington Post reports

(Reuters) -The Trump administration is considering a five-year pilot program to cover weight-loss drugs under Medicare and Medicaid, the Washington Post reported on Friday, citing documents from the Centers for Medicare and Medicaid Services.

The documents outline plans that would allow the government insurance programs to cover Novo Nordisk's Wegovy and Ozempic, and Eli Lilly's Zepbound and Mounjaro for weight loss, the newspaper reported.

The drugs, which have been shown to reduce body weight by 15% to 20% in trials, can cost $5,000 to $7,000 per year, that raises questions about the long-term affordability for states and the federal government.

The move would be a shift in federal policy after the administration earlier this year rejected a Biden-era proposal to cover weight loss drugs.

"It does feel like a big shift in view, at least on the Medicare side," said Ryan MacDonald, analyst at Needham, noting that previous government efforts had prioritized cost containment and limited coverage.

According to the Washington Post, 13 states currently cover the drugs for Medicaid patients, while Medicare prohibits coverage of the drugs used solely for weight loss, but allows for treating indications they are approved for like sleep apnea and heart disease.

The proposed CMS initiative would expand the coverage efforts, with a Medicaid pilot beginning in April 2026 and a Medicare pilot in January 2027.

A Novo spokesperson declined to comment on the pilot but said "comprehensive coverage through government and commercial insurance plans is critical to affordable healthcare and treatment options."

The Centers for Medicare & Medicaid Services, however, said it does not comment on potential models or coverage.

More than 70 million people are covered by Medicaid, the state and federal government program for low income people, and about 65 million people are enrolled in the government's Medicare program, which covers people aged 65 and older or who have disabilities.

Shares of Lilly, one of the key players in the market, were up over 2% in early trading, while U.S.-listed Novo shares were up 1.7%.

Bernstein analyst Courtney Breen viewed the development as a positive for Lilly, and expects the company to benefit significantly once its experimental oral weight-loss drug is launched in the market. The Washington Post reported that the drug, if approved by regulators, would be included in the pilot.

In contrast, telehealth platform Hims & Hers Health was down 6%. Analysts said broader public coverage of branded GLP-1 drugs could reduce demand for compounded alternatives offered by the company.

Lilly did not immediately respond to a Reuters request for comment.

(Reporting by Mrinalika Roy, Surbhi Misra and Kamal Choudhury in Bengaluru; Editing by Sharon Singleton and Shinjini Ganguli)