U.S. Initiatives to Reduce Costs of GLP-1 Obesity Drugs Affect Medicare and Medicaid Coverage in 2026

In November 2025, agreements were announced between the U.S. administration and pharmaceutical companies Eli Lilly and Novo Nordisk to reduce the prices of GLP-1 drugs, specifically tirzepatide and semaglutide, used to treat obesity and type 2 diabetes. This initiative marks the first significant federal-level effort to improve access to these expensive, chronic disease treatments. The agreements primarily affect Medicare and Medicaid beneficiaries starting in 2026, with coverage anticipated for Medicare recipients with obesity by mid-2026. \n\nThese changes come amid concerns that many private insurers plan to discontinue coverage of these medications in early 2026, potentially causing access issues for patients currently benefiting from the therapies. Patients without coverage face out-of-pocket costs of around $500 monthly, which restricts access predominantly to wealthier demographics. \n\nMedicare recipients eligible for coverage are expected to pay approximately $50 monthly copays for injectable and oral formulations used for obesity and diabetes. Other patients, including Medicaid recipients and those purchasing through a newly launched portal, TrumpRx.gov, will encounter starting oral GLP-1 prices near $149 monthly and injectable starter doses at about $350, decreasing to $245 over two years. \n\nA critical issue is that these discounted prices apply mainly to starter doses, which clinical trials indicate may not deliver the weight loss efficacy achieved at higher doses. Robust weight loss and related reductions in cardiovascular and diabetes risks require patients to maintain higher doses of these medications. \n\nThe cost reductions do not fully address affordability challenges for lower socioeconomic groups, who experience the highest rates of moderate to severe obesity. The $350 monthly cost remains a significant barrier for Medicaid recipients, and the lowered pricing for oral drugs, which have lower efficacy, may not sufficiently benefit this population. \n\nThe Medicare coverage is limited by eligibility criteria focusing on patients with BMI over 27 who also have prediabetes or cardiovascular disease, or a BMI over 30 with specific comorbidities. This excludes many in the BMI range of 27 to 35 who could benefit clinically, based on studies supporting metabolic and cardiovascular improvements in this group. \n\nHealth and Human Services Secretary Robert F. Kennedy Jr. described GLP-1s as the largest drug class in the country, though the current pricing and coverage approach primarily benefits higher-income patients while leaving access for lower-income populations constrained. \n\nWhile the initiative commits to improved affordability, it does not fully resolve the disparities in access or cover all effective dosing regimens required for substantial clinical benefits. The policy change represents an initial step in addressing the chronic obesity treatment gap but leaves significant work to broaden coverage and reduce costs across patient groups and dosing levels. \n\nThe broader insurance market impact includes potential shifts in private insurer coverage policies and the need for payers and providers to understand emerging access frameworks for GLP-1 therapies. These developments emphasize the ongoing tension between drug pricing, clinical efficacy, patient access, and payer coverage within the chronic obesity and diabetes treatment landscape.