April 8, 2025
By Jack Hoadley
The Trump Administration announced on April 4, 2025, that it would not broaden coverage of anti-obesity drugs in Medicare. They did not rule out reconsidering this possibility in the future, however, and others have offered policy proposals for expanding coverage of these drugs. These proposals are included in the compendium of policy options maintained by Georgetown University’s Medicare Policy Initiative (MPI). We recently updated the compendium, which includes options for making legislative or administrative changes to either Medicare Advantage (MA) or Medicare Part D’s prescription drug benefit, to incorporate new proposals that have surfaced since its December launch. This post highlights the various proposals to expand the Part D program’s coverage criteria to include anti-obesity drugs that are currently excluded from the benefit.
GLP-1 Drugs
Drugs in the glucagon-like-peptide-1 (GLP-1) receptor agonists class were first approved as treatments for type-2 diabetes in 2017. In 2021, a GLP-1 drug was approved for chronic weight management. In 2024, the first GLP-1 drug received approval as a treatment for cardiovascular issues for patients who are obese or overweight. There is additional research showing promising outcomes for other health conditions ranging from dementia to substance abuse cravings, but also concerns about serious side effects such as kidney, pancreas and gastrointestinal problems. Today these drugs are taken by 12 percent of American adults. The list price for a month’s supply of the major GLP-1 drugs was $936 to $1,349 without use of insurance coverage, rebates, or coupons.
Total Medicare spending on these drugs soared from $57 million in 2018 to $5.7 billion in 2022. This growth is especially remarkable given that currently Part D only covers GLP-1 drugs as treatments for diabetes or cardiovascular disease, not for weight loss alone. As of 2023, when Medicare coverage was limited to beneficiaries with a diagnosis of diabetes, about 2.1 million beneficiaries (about 4 percent of all beneficiaries) were having their GLP-1 drugs covered under Part D.
Part D Coverage Options for Anti-Obesity Drugs
When Part D was created under the Medicare Modernization Act of 2003, the law barred coverage for the class of drugs aimed at weight gain or weight loss. This exclusion, modeled after a similar exclusion in Medicaid, reflected the idea that few drugs available at the time for treatment of weight gain or weight loss were safe or effective, thus establishing the exclusion as a means to protect patient safety. The science around GLP-1 drugs has changed the conversation on anti-obesity drugs. As a result, the Biden Administration included a provision in the proposed rule for the 2026 benefit year that proposed to “reinterpret the statutory exclusion of agents when used for weight loss such that it would not apply to drugs when used to treat beneficiaries with obesity.” The proposed reinterpretation would also apply to Medicaid as well as Medicare. On April 4, 2025, the Trump Administration chose not to make this proposal final, thus leaving GLP-1 covered by Medicare only if the beneficiary is prescribed the drug for a diagnosis of diabetes, cardiovascular diseases, or some other eligible diagnosis.
Our compendium includes several other proposals for expanded coverage of weight-loss drugs. Whereas the Biden Administration proposed rule would have allowed an obesity diagnosis as a new coverage criterion, these bills would more broadly remove the current statutory restriction on weight-loss drugs. Companion bills in the 118th Congress, introduced by Rep. Brad Wenstrup (R-OH) and Sen. Thomas Carper (D-DE), would have eliminated the statutory restriction on coverage of weight-loss drugs altogether. The Wenstrup bill was marked up by the House Committee on Ways and Means in June 2024, where it was amended to cover weight-loss drugs only for beneficiaries who had coverage for the drugs from a non-Medicare plan in the year before enrolling in Medicare. The latter represented a substantially lower-cost option that might offer a step in the direction of covering GLP-1 drugs at a much lower cost for the taxpayer. The compendium also includes a proposal from scholars at the USC Schaeffer Center to add weight-loss drugs to the list of covered drugs in Part D.
Cost and Policy Considerations for Expanding Coverage
The added indication of cardiovascular disease combined with obesity or overweight for GLP-1 drugs allowed an estimated 3.6 million Medicare beneficiaries to become eligible to have their drugs covered, though as many as half of them could already be eligible based on a diabetes diagnosis. Expanding coverage to all beneficiaries who are obese or overweight could make as many as 13.7 million beneficiaries (one-fourth of all beneficiaries) eligible for Part D coverage of GLP-1 drugs.
The addition of more potential drug users makes Medicare program costs a major consideration for these proposals. As shown in our compendium, the Congressional Budget Office (CBO) has analyzed an illustrative policy to add weight-loss medications to the list of Part D-covered drugs. It estimated that net federal spending would increase by $35.5 billion from 2026 to 2034. Spending on anti-obesity medicines would total $38.8 billion but would be offset by $3.4 billion in other lower medical spending. CBO assumed that prices for GLP-1 anti-obesity medications would be subject to government negotiation. In fact, Ozempic, Rybelsus, and Wegovy were placed on the list for the second round of price negotiations with the new prices effective in 2027. Cost considerations, however, are complex. The authors of the USC Schaeffer Center proposal make a case for substantially greater medical spending offsets, estimating $176 billion to $245 billion in medical cost offsets over 10 years (though they do not include the cost of paying for weight-loss drugs).
Our compendium also highlights the impact of these policy options on various stakeholders. Inclusion of GLP-1 drugs would place significant cost burdens on Part D plans. As a result, we estimate that Part D enrollees would see higher plan premiums to cover the cost of expanded drug coverage under any of the proposals. Beneficiaries who take GLP-1 drugs would see differing effects depending on whether they were previously prescribed a drug and whether they paid for it out of pocket without Medicare coverage. Manufacturers of GLP-1 drugs should see higher revenues if there is greater take-up of their drugs. The impact of policy changes on the revenues of Part D plan sponsors and actors in the drug supply chain will depend on demand for the drugs, their degree of therapeutic competition, and degree of competition within each supply-chain industry.
Policymakers thus have several options if they want to broaden coverage of anti-obesity drugs. They will need to consider both the cost impact of expanded coverage, the potential for greater access to these drugs, and secondary effects on MA plans, pharmaceutical manufacturers, and other stakeholders.
The Compendium as a Tool for Exploring Policy Ideas
This policy topic—approaches for providing Medicare coverage of anti-obesity medicines—demonstrates how analysts can use the Medicare Policy Initiative’s compendium to explore ideas for addressing timely and critical policy issues. The compendium includes a wide variety of topics, from technical reforms to the MA risk adjustment system to proposals that aim to better inform beneficiaries as they choose between traditional Medicare and private-plan options to potential changes in Part D that could affect drug pricing. We encourage you to delve into the compendium’s broad range of topics in your work, and we welcome your questions, comments, and suggestions for future updates.