Medicare Weight Loss Drug Coverage: Legislative and Regulatory Paths

Medicare currently prohibits coverage for weight loss medications used strictly for obesity, limiting reimbursement to cases where drugs are prescribed for related conditions like diabetes. Lawmakers, notably Senator Bill Cassidy, have reintroduced the Treat and Reduce Obesity Act (TROA) to lift this 20-year-old ban and expand coverage to weight management drugs, though cost concerns have impeded previous versions. The Congressional Budget Office projects Medicare costs to rise by $35 billion from 2026-2034 if anti-obesity drug coverage is expanded, despite potential health savings.

Adherence challenges also factor into cost effectiveness; studies show over half of patients discontinue GLP-1 drugs like semaglutide within two months. Even if TROA passes, implementation would be delayed by at least two years post-legislation. Separately, a federal regulatory approach is emerging: a Center for Medicare and Medicaid Innovation demonstration project may enable voluntary coverage of obesity drugs by state Medicaid programs and Medicare Part D plans starting in 2026 and 2027 respectively.

This initiative aligns with upcoming Medicare price negotiations for drugs like Wegovy and Ozempic under the Inflation Reduction Act, potentially lowering net costs and improving access. However, specifics on plan participation and incentives remain undefined. Private payers and Medicaid programs may also reconsider coverage as drug persistence improves, supported by recent data indicating increased patient adherence.

Insurers could benefit from targeted reimbursement models focused on high-risk groups to enhance cost-effectiveness, as blanket coverage is unlikely to yield savings at current drug prices. Tailored access strategies could reduce financial burdens and motivate legislative support.

Overall, Medicare's future coverage of weight loss drugs depends on legislative changes, regulatory pilots, and emerging data on drug adherence, balancing clinical benefits against significant cost and implementation challenges.