GLP-1s for All: Biden And HHS Are Serving Up A Leaner America With The Latest Proposed Rule…And Much More

CMS Announcement Regarding GLP-1s Could Have Large Repercussions For Payers

On November 26th, the Centers for Medicare and Medicaid Services (CMS) and the Biden Administration announced a significant proposed policy change regarding Anti-Obesity Medications (AOMs), mandating their coverage under Medicare and Medicaid. This policy update was introduced as part of the comprehensive 714-page Contract Year 2026 Medicare Advantage and Part D Proposed Rule (CMS 4208-P). In this blog, we’ll look at the proposed rule in greater detail and explain the impact it will have on the industry, and payers in particular.

GLP-1 Coverage: What is potentially changing with proposed rule 4208-P?

Drugs indicated for the treatment of weight loss have been excluded from coverage since the inception of Part D. However, in the proposed rule, CMS indicates that the evolving medical opinion on the benefits of weight loss for managing chronic diseases, along with the emergence of new anti-obesity medications (AOMs) known as GLP-1s, is causing the agency to rethink this position. They are proposing that weight loss becomes a Medically Accepted Indication effective in 2026. This change would require Part D and Medicaid plans to cover GLP-1 medications, such as Wegovy and Zepbound, for beneficiaries with obesity who do not have other conditions like cardiovascular disease or sleep apnea.

Impact on Plans: What does this proposed rule mean for health plans and what can they expect?

This is a proposed rule and will be open for commentary until January 27, 2025. The incoming Trump administration will be at the helm to determine which components should be in the finalized version of the rule. We will have to wait and see how the newly appointed leaders of HHS and CMS approach Medicare Advantage in early 2025.

PSG believes there is a low likelihood that the Part D Coverage of AOMs will be included in the final rule. This may take multiple attempts to be implemented for several reasons:

1. The incoming administration has different perspectives on federal spending, the role and authority of federal agencies, and strategies to combat obesity in the U.S. For example, there are contrasting approaches between considering food as medicine and relying on pharmaceutical medications. It will take time for the new administration to assume office, and we will need to wait to see how health issues are addressed.
2. This proposed rule will need to undergo intense financial scrutiny. The rule estimates a financial impact of $24.8B over 10 years. PSG believes this estimate is too low given the current spending, prevalence of obesity in our aging population, and pipeline of new AOMs yet to come. We estimate that the current cost of covering weight loss drugs for a commercial plan would be more than $40 per member per month. Part D already spends $20B on GLP-1 drugs annually (based on ingredient cost) and has recently expanded coverage to GLP-1s indicated for lowering cardiovascular risk. As a class, PSG expects pricing pressure due to increased supply coming from the pipeline. Additionally, CMS is expected to negotiate a maximum fair price for Ozempic (2027) and Trulicity (2028).
3. Drug pricing and PBM reform remain a hot topic for congressional leaders. Senator Bernie Sanders was very critical of the Novo Nordisk CEO about why prices for Ozempic in the US are so much higher than in other countries like Canada or Germany. President-elect Trump was very focused on how much the US pays for drugs compared to the rest of the world in his first term. It is possible that the Trump administration may require a “most-favored-nations” or reference price for Medicare and Medicaid to adopt broad coverage of GLP-1s for weight loss.

As we continue to learn more, our experts are working hard to support and prepare our clients for various scenarios the Proposed Rule could bring.

Proposed Rule, Expanded: What else is included in Proposed Rule 4208-P?

Improving Access – Enhancing Rules on Coverage Criteria

CMS is proposing to restrain brand over generic positioning on Part D formularies, ensuring that all generics and/or biosimilars have equal or better placement. The rule would require that if a generic or biosimilar is marketed and available, Plan D sponsors must include it on the formulary at comparable or superior positioning than the brand or originator. Plans will not have to cover all available biosimilars if more than one is available. CMS intends to enforce this rule if finalized during the annual stage review process. This may influence how PBMs and Part D plans approach the Humira and Stelara biosimilars in 2026 and beyond.

Promoting Informed Choice

CMS is proposing several changes to enhance the member experience and selection of a plan. One change relates to provider directories on Medicare Plan Finder, requiring agents and brokers to discuss low-income subsidies with members. Another change is broadening and strengthening CMS’ review of marketing materials issued by plans. 

Promoting Transparency for Pharmacies and Protecting Beneficiaries from Disruptions

CMS is proposing that all network pharmacies be notified by their PBM no later than October 1^st of each year if they are not going to be included in the PBM’s retail pharmacy network. CMS is also proposing that PBMs give retail pharmacies “termination without cause” rights if they want to terminate during the plan year.  We don’t expect the term for convenience to remain, as this may instead promote disruption due to members not being able to change plans mid-year.

Updates to Medical Loss Ratio Reporting

CMS is proposing to establish clinical and quality improvement standards for provider incentives and bonus arrangements included in the MLR (medical loss ratio) numerator, prohibit administrative costs from being included in quality improvement activities in the MLR numerator, and establish new audit and appeals processes for MLR compliance. We expect several comments pushing back on the consequences of removal.

Inflation Reduction Act Codification (and some new wrinkles)

CMS is proposing to codify parts of the Inflation Reduction Act that they have already implemented. They have issued several pieces of guidance, including $35 cost-sharing for insulin, $0 cost-sharing for vaccines, and the Medicare Prescription Payment Plan. CMS is also proposing some new components to the Medicare Prescription Payment Plan that would allow real-time enrollment in the program, helping ensure members stay enrolled year over year.

Revisions to the Stars program for 2026

CMS is proposing adding a new Part D Star Measure: Initial Opioid Prescribing for Long Duration (IOP-LD) for 2026 and removing the “guardrails” that limit the increases in each star measure’s cut point year over year.

PSG has business, clinical, and regulatory experts who can help health plan pharmacy leaders navigate a rapidly evolving healthcare landscape. We are analyzing all components of the proposed rule, including revisions to the Medicare Prescription Payment Plan (M3P), to prepare our clients. Reach out if you’d like to speak with our experts about the proposed rule or any other managed care pharmacy issues.