Trump unveils deal to expand coverage and lower costs on obesity drugs Wegovy and Zepbound

President Trump announced a deal with Eli Lilly and Novo Nordisk to expand coverage and reduce costs for their popular GLP-1 obesity drugs, Zepbound and Wegovy. The agreement will extend Medicare coverage for obesity starting next year, introduce phased-in lower prices for uninsured patients, and set a $149 monthly cost for approved new pill versions, with average prices on the TrumpRx program starting around $350 and dropping to $245 over two years. This initiative aims to address the current high cost of approximately $500 per month for these lucrative treatments, which have seen Lilly's Zepbound sales triple to over $9 billion this year, by making them more accessible to a broader patient population.

Analysis

President Trump announced a deal with Eli Lilly (LLY) and Novo Nordisk (NVO) to expand Medicare coverage for GLP-1 obesity drugs, Zepbound and Wegovy, starting next year. This initiative directly addresses the high cost of these popular treatments, which average around $500 per month, by phasing in lower prices for uninsured patients and setting a $149 monthly cost for approved pill versions. The expansion of Medicare coverage for obesity is a significant market development, previously excluded.

The GLP-1 market has shown robust growth, with Eli Lilly reporting Zepbound sales tripling to over $9 billion this year, underscoring strong demand. While the deal reduces patient costs, expanded Medicare coverage and the TrumpRx program's lower prices (starting at $350, dropping to $245) could significantly broaden the addressable market for LLY and NVO. This volume increase may offset per-unit revenue reductions, potentially sustaining overall sales growth.

This move aligns with the administration's broader effort to curb drug prices and address cost-of-living concerns, particularly after recent elections highlighted economic issues. The deal contrasts with a prior Biden proposal, emphasizing current administration's focus on price concessions. Previous agreements with Pfizer (PFE) and AstraZeneca (AZN) for Medicaid cost reductions indicate sustained regulatory pressure on pharmaceutical pricing across the sector.

Key Decisions for Investors

• Monitor the actual implementation and uptake rates of GLP-1 drugs under the new Medicare coverage and TrumpRx program, as increased volume could mitigate per-unit price reductions for LLY and NVO.
• Evaluate the long-term impact of sustained government pressure on drug pricing, as evidenced by this deal and prior agreements with PFE and AZN, on pharmaceutical sector margins and R&D investment.
• Assess the competitive landscape for GLP-1s, particularly the approval and market penetration of new, lower-cost pill versions, which could alter market share dynamics for existing players.