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The US Department of Health and Human Services just proposed a new rule that would enable Medicare and Medicaid to cover these wonder drugs, which can retail for up to $1,000 per month without insurance.
Shares of the pharmaceutical companies that produce these drugs, including Novo Nordisk and Eli Lilly & Co., surged today.
Why? The logic is simple: More coverage of weight-loss drugs will inevitably lead to wider adoption, and therefore more profits for these companies.
What’s not so simple? Actually getting the rule passed.
RFK vs. Dept. of Health
There’s a few key reasons why the proposal is unlikely to see the light of day, according to Raymond James analyst Chris Meekins.
For one, the president-elect's nomination to lead the Dept. of Health, Robert F. Kennedy Jr., is an outspoken opponent of these weight-loss drugs. He could thwart the proposed rule change expanding coverage if affirmed.
The rule could also face legal challenges and increase spending for Medicaid and Medicare, which might be hard to drum up support for.
Whether or not coverage is expanded, these drugs are cash cows for pharma companies. And pharma giants are already throwing resources at researching, developing, and rolling out cheaper, more effective versions of these GLP-1 medications.
Keep in mind: An industry of off-brand weight-loss drugs has sprung up, as companies like Hims & Hers Health offer off-brand Ozempic copycat drugs that they promise produce similar results for a fraction of the price, even sans full FDA approval.—LB