Eli Lilly, Novo Nordisk Shares Climb Premarket As Biden Administration Mulls Medicare, Medicaid Covering For Obesity Drugs: Retail Unmoved
By Stocktwits Inc | First Published Nov 26, 2024, 6:36 PM ISThe new proposal would expand access to medications for obesity, and help an estimated 3.4 million Americans with Medicare.
Shares of Eli Lilly & Co. ($LLY) and Novo Nordisk A/S ($NVO) climbed in Tuesday’s premarket trading after the Biden administration announced a proposal to provide Medicare and Medicaid coverage for obesity drugs.
In a statement released early Tuesday, the White House said, "The proposed rule would be implemented at the same time as a comprehensive agenda to lower the costs of drugs, including the drug price negotiation program and increased market competition."
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An analysis by the Department of Health and Human Services (HHS) found that obesity drug pricing in the international market is much lower than in the U.S., the White House release said.
"It’s unacceptable that Americans – especially those without insurance coverage for these drugs — are forced to pay so much more for life-saving medications," it added.
Currently, anti-obesity medications are given Medicare and Medicaid coverage only for certain conditions like diabetes.
"Today’s new proposal would expand access to these innovative medications for obesity, which is widely recognized as a disease, and help an estimated 3.4 million Americans with Medicare," the release said.
The Biden administration expects the coverage to reduce out-of-pocket costs of these prescription drugs by as much as 95% for some enrollees. It sees about 4 million adult Medicaid enrollees to gain new access to these medications.
The new proposal will override the previous legislation passed 20 years ago, prohibiting Medicare coverage for weight-loss drugs.
The proposal has to be endorsed by the incoming Trump administration to become a law. The proposition looks like a tall order as President-elect Donald Trump has nominated Robert Kennedy Jr., who is very vocal with his opposition to these medications, to lead HHS.
Novo Nordisk and Lilly are leaders in the weight-loss drug category, with their Wegovy and Zepbound, respectively. Both are injectable formulation of drugs belonging to a class of medications called GLP-1 agonists. These work by reducing the appetite, slowing the release of food from the stomach and increasing the feeling of fullness after eating.
Novo Nordisk’s Wegovy sales jumped 79% year-over-year in the third quarter to $2.5 billion and Lilly’s Zepbound sales came in at $1.26 billion.
On Stocktwits, retail sentiment toward both Novo Nordisk and Lilly remained stuck at "neutral."
In premarket trading, as of 7:48 a.m. ET, Novo Nordisk shares climbed 2.62% to $107.30, and Lilly jumped 4.90% to $792.
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