Eli Lilly stock rises, Novo Nordisk shares jump on potential Medicare coverage

Investing.com -- Eli Lilly (NYSE: LLY) stock rose 1.3% and Novo Nordisk (NYSE: NVO) shares jumped 2% Friday morning after The Washington Post reported that Medicare and Medicaid programs are planning to experiment with covering weight loss drugs.

According to documents obtained by the newspaper, the Trump administration is developing a five-year experiment that would allow state Medicaid programs and Medicare Part D insurance plans to voluntarily cover GLP-1 drugs like Ozempic, Wegovy, Mounjaro, and Zepbound for weight management purposes.

This marks a significant shift in policy, as Medicare currently covers these medications primarily for patients with Type 2 diabetes, not obesity. The experiment signals the administration may be open to broader coverage of these drugs through government insurance programs.

The proposed experiment is expected to begin in April 2026 for Medicaid and January 2027 for Medicare plans. It will be conducted through the Center for Medicare and Medicaid Innovation (CMMI), which tests new healthcare payment approaches aimed at reducing costs while improving care quality.

This initiative provides an alternative pathway for Medicare and Medicaid patients to access anti-obesity medications after the administration stated in April that neither program would cover GLP-1s for weight loss. The new plan effectively replaces a previous Biden administration proposal from last year that would have enabled the programs to cover these drugs for patients with obesity.

GLP-1 drugs have gained significant attention for their effectiveness in weight management, with many private insurance plans already covering them for obesity treatment.

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