CMS to Expand Medicare Coverage for Weight-Loss Drugs Starting July 1, Restricting Access to Obese and Diabetic Patients

The Coverage Decision

The Centers for Medicare and Medicaid Services will finalize expanded Medicare coverage for GLP-1 weight-loss drugs on July 1, limiting reimbursement to beneficiaries with a body mass index of 30 or higher or a documented Type 2 diabetes diagnosis, according to three CMS officials familiar with the pending rule. The policy, set for publication in the Federal Register on May 13, marks the first time Medicare Part D will broadly cover obesity medications beyond patients with diabetes or cardiovascular disease, the officials said.

The draft rule, circulated internally at CMS on May 5, estimates the change will cost the program roughly $28 billion over its first five years. Beneficiaries must obtain prior authorization from their Medicare Advantage plan or Part D sponsor, and coverage will be contingent on annual in-person visits with a prescriber, two FDA officials who reviewed the document said. The medications affected include Novo Nordisk's Wegovy and Eli Lilly's Zepbound, both of which carry list prices above $1,000 per month.

A hospital administrator briefed on the rule said CMS will require plans to cover at least one GLP-1 product in each therapeutic category but will allow step therapy, meaning patients may first be required to try cheaper alternatives before insurers approve the brand-name drugs. The administrator, who attended a May 6 briefing at the Department of Health and Human Services headquarters at 200 Independence Avenue Southwest, said the policy was finalized after a March 24 Oval Office meeting between President Trump, HHS Secretary Robert F. Kennedy Jr., and CMS administrator officials.

Industry Reaction and Lobbying Pressure

Device makers and pharmaceutical lobbyists have spent months pressing CMS to broaden access while resisting cost-control measures, according to a lobbyist for device makers who has attended at least six meetings with CMS staff since February. The lobbyist said the final rule drops a proposal to cap coverage at patients with a BMI of 35 or higher, a threshold that would have excluded roughly 40 percent of Medicare beneficiaries classified as obese. In its place, CMS adopted the 30 BMI floor, matching the clinical threshold used in the Wegovy label approved by the FDA in 2021.

The Pharmaceutical Research and Manufacturers of America, the drug industry's largest trade group, is expected to issue a statement welcoming the expanded coverage while criticizing the prior-authorization requirements, the lobbyist said. The group argued in a March 17 letter to CMS that step therapy would delay treatment for seniors and increase administrative costs for physicians. Two congressional aides briefed on the plan said House Republicans expect to hold a May 14 hearing at the Rayburn House Office Building to examine the fiscal impact on the Medicare trust fund.

Investors reacted quickly to whispers of the decision. Shares of Novo Nordisk rose 3.2 percent in Copenhagen trading on May 7, while Eli Lilly gained 2.8 percent in New York. A former FDA official now advising a hedge fund focused on healthcare said the market move reflected growing confidence that CMS would not impose a national formulary limiting coverage to a single manufacturer. The former official, who spoke on condition of anonymity because of trading restrictions, said CMS actuaries had modeled scenarios ranging from $15 billion to $45 billion depending on which drugs were included.

What Happens Next

The White House plans to announce the policy on May 12, one day before the Federal Register filing, according to a senior HHS official involved in the rollout. The official said the announcement will frame the change as part of the administration's broader effort to reduce chronic disease, a priority Kennedy has emphasized since taking office in January. CMS will issue guidance to Part D plans on May 20, with a 60-day comment period before the July 1 effective date.

Democrats on Capitol Hill are likely to press CMS on whether the prior-authorization requirements will create barriers for rural beneficiaries, two Democratic congressional aides said. Senator Ron Wyden of Oregon, the ranking member on the Senate Finance Committee, has scheduled a May 15 briefing with CMS officials to review the cost estimates, according to a committee staffer. Republicans, meanwhile, are expected to highlight the $28 billion price tag and demand offsets from other health programs.

The next 72 hours will determine whether any major health insurers move to block the rule through litigation. A lobbyist for a large Medicare Advantage insurer said the industry is weighing a lawsuit challenging CMS's authority to mandate coverage of weight-loss drugs, arguing the Social Security Act does not authorize Medicare to cover medications used primarily for obesity. A Justice Department official with knowledge of the filing said the administration is prepared to defend the rule in court and has already drafted a brief citing the FDA's recognition of obesity as a chronic disease.