Medicare expands coverage for weight loss drugs

The Centers for Medicare and Medicaid Services (CMS) has permitted Medicare Part D drug-benefit plans to cover anti-obesity drugs when used for heart-related ailments, multiple news outlets reported Thursday.

Medicare, the federal health plan for seniors and people with disabilities, covers new obesity drugs only for type 2 diabetes and not for weight loss alone.

The new CMS guidance can boost the prospects of Novo Nordisk (NVO) (OTCPK:NONOF), as the FDA recently approved a label expansion for its popular weight loss therapy, semaglutide, to reduce the risk of major cardiovascular events such as heart attack and stroke.

A potential beneficiary could be Eli Lilly (NYSE:LLY), whose rival weight loss therapy, Zepbound, is currently under investigation for cardiovascular indications, including heart failure.

CMS said it communicated its decision to healthcare plans that administer Medicare Part D on Thursday, The Wall Street Journal reported.

Leading managed care players in the Medicare market include UnitedHealth (UNH), Humana (HUM), CVS Health (CVS), Clover Health (CLOV), and Alignment Healthcare (ALHC).

The news comes a day after the Congressional Budget Office highlighted the budgetary impact of a future decision to allow Medicare coverage for new anti-obesity drugs.