Trump announces deals with Eli Lilly, Novo Nordisk to slash weight loss drug prices, offer some Medicare coverage

President Trump announced landmark deals with Eli Lilly and Novo Nordisk to significantly reduce prices for GLP-1 obesity drugs, including upcoming pills, for Medicare and Medicaid beneficiaries starting in 2026, and through a new direct-to-consumer website, TrumpRx.gov. This initiative marks the first time Medicare will cover obesity medications for eligible patients, with copays as low as $50 per month and starting doses of new pills priced at $145 per month, aiming to broaden market access and potentially influence private insurer coverage. The agreements, part of the administration's "most favored nation" policy, also commit the drugmakers to lower government pricing of $245 per month for other doses and future drugs, representing a major push to control U.S. drug costs.

Analysis

President Trump's administration announced landmark deals with Eli Lilly (LLY) and Novo Nordisk (NVO) to significantly reduce GLP-1 obesity drug prices for Medicare and Medicaid beneficiaries, effective 2026, and via the new TrumpRx.gov platform. This initiative marks Medicare's first-time coverage of obesity medications, with eligible patients facing copays as low as $50 per month and starting doses of new oral GLP-1s priced at $145 per month. The move is expected to broaden market access for these blockbuster treatments, potentially influencing private insurers to follow suit.

The agreements establish a $245 per month price for Medicare and opt-in Medicaid programs for covered GLP-1 indications, including obesity, while existing injections like Wegovy and Zepbound will be offered at $350/month on TrumpRx, trending to $245/month. These deals, part of the "most favored nation" policy, compel drugmakers to guarantee similar pricing on future medicines and provide lower prices to state Medicaid programs. Eli Lilly independently lowered prices on its LillyDirect platform, further emphasizing a shift towards direct-to-consumer discounted access.

While the price reductions are substantial from previous list prices of $1,000-$1,350 per month, the expanded Medicare coverage for approximately 10% of its 66 million beneficiaries (around 6.6 million people) could drive significant volume growth for LLY and NVO. This policy contrasts with the prior administration's rejected proposal due to cost concerns, yet health experts suggest long-term savings from reduced obesity-related complications. The inclusion of Novo Nordisk's semaglutide in upcoming IRA negotiations adds another layer of pricing pressure, though Lilly's tirzepatide is exempt until later.

Key Decisions for Investors

• Investors should assess the long-term volume growth potential for Eli Lilly (LLY) and Novo Nordisk (NVO) from expanded Medicare and Medicaid coverage, despite lower per-unit pricing, as this could significantly increase patient access and market penetration.
• Monitor the implementation of TrumpRx.gov and state Medicaid opt-in rates, as these will be critical indicators of the actual market expansion and revenue impact for GLP-1 manufacturers.
• Evaluate the implications of the "most favored nation" policy for future drug launches and pricing strategies across the pharmaceutical sector, considering the precedent set by these deals and potential for broader application.
• Consider the competitive landscape and potential for other pharmaceutical companies to enter similar pricing agreements or accelerate their own direct-to-consumer initiatives in response to this evolving market dynamic.