President Joe Biden’s proposal to expand Medicare and Medicaid coverage for anti-obesity drugs could reshape the American healthcare landscape while addressing a growing public health challenge.¹

If approved, the proposed policy would take effect in 2026 and provide coverage for GLP-1 receptor agonist medications that target obesity as a primary condition, rather than as a complication of other health issues. This policy shift would allow an estimated 7.4 million Americans to access these treatments at significantly reduced costs, with out-of-pocket expenses potentially dropping by as much as 95%. ²³

For pharmaceutical companies, the proposed change represents a major opportunity. Novo Nordisk and Eli Lilly, which produce GLP-1 drugs Wegovy, Ozempic, and Mounjaro, stand to gain as demand for these drugs is expected to grow tremendously under the plan. With federal programs poised to make these treatments more affordable and accessible, the policy could significantly boost revenues while solidifying the role of GLP-1 medications in obesity management.

The proposed expansion underscores a broader trend of integrating weight-loss drugs into the healthcare system, a development that could drive long-term growth for manufacturers.

Why This Policy Is a Game-Changer for Drugmakers

The Biden administration’s proposal to expand Medicare and Medicaid coverage for anti-obesity drugs addresses a significant unmet need in the U.S. healthcare system. Under current rules, GLP-1 receptor agonists—originally developed to treat diabetes—are only covered for patients with diabetes or related complications. This leaves millions of obese Americans without access to these medications, even though the drugs have demonstrated effectiveness in managing weight.⁴

With nearly 40% of U.S. adults classified as obese according to the Centers for Disease Control and Prevention, and with that number expected to rise to as high as 50% by 2030, the market potential for these treatments is vast.⁵ Expanding coverage to include obesity as a standalone condition could unlock a substantial and underserved patient population, giving drugmakers access to millions of new customers.

One of the most critical barriers to broader adoption of GLP-1 medications is their cost. Drugs like Wegovy, Ozempic, and Mounjaro can carry list prices of up to $1,350 per month, putting them out of reach for many Americans. Biden’s plan to reduce out-of-pocket costs for Medicare and Medicaid beneficiaries by as much as 95% would make these treatments far more accessible.⁶

By lowering the financial burden, the policy is likely to spur greater adoption of GLP-1 drugs, particularly among lower-income populations that have, to date, found these drugs difficult to afford. Increased affordability could also lead to more patients staying on these medications for extended periods, creating opportunities for repeat prescriptions.

Obesity is also a chronic condition that requires ongoing management, which could generate long-term revenue streams for drug manufacturers. Unlike short-term treatments, GLP-1 medications are designed for continuous use, potentially keeping patients on the drugs for years.⁷ The recurring nature of obesity care presents a unique opportunity for pharmaceutical companies to build steady, predictable revenue flows.

Winners in the Weight-Loss Drug Market

Novo Nordisk and Eli Lilly are poised to be the primary beneficiaries of expanding coverage for anti-obesity drugs. Novo Nordisk’s GLP-1 treatments, Wegovy and Ozempic, have already secured a commanding position in the weight-loss market, buoyed by strong demand and clinical trial data demonstrating cardiovascular and other health benefits. Eli Lilly, which markets Mounjaro for diabetes, was recently granted FDA approval for its Zepbound for treatment of obesity and chronic weight management, further bolstering its position.^⁸ Together, these companies dominate the sector, and the proposed policy could solidify their lead by opening the doors to millions of new patients.

Both firms are investing heavily in scaling up production to meet anticipated demand. Novo Nordisk has announced multi-billion-dollar plans to expand its manufacturing capacity, while Eli Lilly is similarly ramping up facilities for its GLP-1 production. These investments come as the Food and Drug Administration reports improvements in the supply chain for active ingredients like semaglutide and tirzepatide, easing previous shortages that had constrained growth.^⁹

With these bottlenecks resolved and policy changes on the horizon, Novo Nordisk and Eli Lilly are well-positioned to capitalize on an increasingly accessible weight-loss drug market. Their early leadership and manufacturing scale provide a competitive edge against new players, like Amgen, whose efforts to establish themselves in the field have so far fallen short.¹⁰

If implemented, this policy would address a significant unmet medical need amongst nearly half of all Americans and represent a transformative opportunity for drugmakers to accelerate demand for GLP-1 medications. By allowing coverage for non-diabetes-related weight loss management and by reducing out-of-pocket costs for treatments like Wegovy, Ozempic, and Mounjaro, the plan could make these therapies accessible to millions of Americans and allow Novo Nordisk and Eli Lilly to solidify their market leadership and define the future of obesity treatment in the United States.

LIFE ETF: Investing in Global Healthcare

Investing in ETFs can be one way to add cutting-edge healthcare to your portfolio.

Evolve Global Healthcare Enhanced Yield Fund (LIFE ETF) provides investors with exposure to twenty global blue-chip companies in the healthcare industry, with a covered call strategy that is actively managed to provide increased yield potential while helping mitigate risk. For more information about the Evolve Global Healthcare Enhanced Yield Fund or any of Evolve ETF’s lineup of exchange-traded funds, please visit our website or contact us.

ENDNOTES

1. “Drugs like Wegovy, Ozempic would be covered by Medicare, Medicaid under Biden proposal,” CBS News, November 27, 2024; https://www.cbsnews.com/news/wegovy-ozempic-medicare-medicaid-biden-proposal/
2. Lovelace Jr., B. & Bush, E., “Biden proposes weight loss drug coverage for people on Medicare and Medicaid,” NBC News, November 26, 2024; https://www.nbcnews.com/health/health-news/biden-proposes-requiring-medicare-medicaid-cover-weight-loss-drugs-rcna181756
3. Muller, M., “Biden Proposal to Cover Obesity Drugs Sets Up Quandary for Trump,” BNN Bloomberg, November 26, 2024; https://www.bnnbloomberg.ca/business/company-news/2024/11/26/biden-proposes-medicare-medicaid-coverage-of-obesity-drugs/
4. “FACT SHEET: Biden-⁠Harris Administration Takes Latest Step to Lower Prescription Drug Costs by Proposing Expanded Coverage of Anti-Obesity Medications for Americans with Medicare and Medicaid,” The White House, November 26, 2024; https://www.whitehouse.gov/briefing-room/statements-releases/2024/11/26/fact-sheet-biden-harris-administration-takes-latest-step-to-lower-prescription-drug-costs-by-proposing-expanded-coverage-of-anti-obesity-medications-for-americans-with-medicare-and-medicaid/
5. Pifer, R., “Biden administration proposes Medicare, Medicaid coverage of pricey weight loss drugs,” Biopharma Dive, November 26, 2024; https://www.biopharmadive.com/news/medicare-medicaid-obesity-drug-coverage-rule-biden/734060/
6. Luhby, T., “7.4 million Americans could gain Medicare or Medicaid coverage for anti-obesity drugs under Biden proposal,” CNN, November 26, 2024; https://www.cnn.com/2024/11/26/politics/anti-obesity-drugs-medicare-medicaid-biden/index.html
7. Lovelace Jr., B. & Bush, E., “Biden proposes weight loss drug coverage for people on Medicare and Medicaid,” NBC News, November 26, 2024; https://www.nbcnews.com/health/health-news/biden-proposes-requiring-medicare-medicaid-cover-weight-loss-drugs-rcna181756
8. “FDA Approves Lilly’s Zepbound™ (tirzepatide) for Chronic Weight Management, a Powerful New Option for the Treatment of Obesity or Overweight with Weight-Related Medical Problems,” Eli Lilly and Company, November 8, 2023; https://investor.lilly.com/news-releases/news-release-details/fda-approves-lillys-zepboundtm-tirzepatide-chronic-weight
9. Stadig, D., “The winners and losers of Biden’s plans to expand coverage of weight-loss drugs,” ING, November 28, 2024; https://think.ing.com/articles/winners-losers-bidens-plans-to-expand-coverage-weight-loss-drugs/
10. Burger, L. & Jacobsen, S., “Novo, Lilly shares rise as Biden proposes obesity care coverage,” Reuters, November 26, 2024; https://www.reuters.com/business/healthcare-pharmaceuticals/novo-nordisk-shares-rise-biden-proposes-obesity-care-coverage-2024-11-26/

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