Mintz IRA Update — The Uncertain State of Affairs for GLP-1s

This article is part of the Mintz IRA Update – Fifth Edition. Explore the full series of IRA-related insights here.

GLP-1 receptor agonists (GLP-1s) such as semaglutide, and dual agonists like tirzepatide, are transforming obesity treatment and reshaping the US health care landscape. Originally developed to manage type 2 diabetes, these drugs are now being widely prescribed to treat obesity and to manage cardiovascular issues. But while demand has soared, federal and state health policies, supply constraints, and access issues are raising questions about patient access and how the health care system will manage the financial burden of these treatments.

Supply Challenges and the Role of Compounded Medications

Fueled by social media advertisements and celebrity endorsements, GLP-1s have rapidly shifted from primarily being used by diabetics to being sought by anyone looking to lose weight. Despite the increase in demand, many are unable to afford these medications. GLP-1s typically retail for anywhere between $900 and $1,300 per month and insurance coverage is inconsistent, especially for patients seeking treatment for obesity rather than diabetes. For Medicaid patients, the picture is even more complex: a patchwork of state-level policies governs access, and only a few states (like Connecticut and Michigan) have opted to cover GLP-1s for weight loss in their Medicaid programs.

Even for those with the financial means to obtain these medications, the surge in demand for GLP-1s has led to widespread shortages. To address this, in March 2022, the Food and Drug Administration (FDA) added GLP‑1s, specifically Wegovy and Ozempic, to its drug shortage list. This move permitted compounding pharmacies to produce compounded semaglutide formulations, expanding the public’s, especially uninsured patients’, access to cheaper alternatives to the brand versions. However, on February 21, 2025, the FDA announced that the shortages had been resolved and set a deadline of May 22, 2025 for compounding pharmacies to cease production of compounded semaglutide. While this may have been a win for the pharmaceutical manufacturers, it has left many patients struggling to access the product due to financial concerns.

Direct-to-Consumer Offerings Disrupt Traditional Models

As an alternative to the traditional approach of filling a prescription at a pharmacy, some pharmaceutical companies and health care providers have adopted direct-to-consumer (DTC) models to meet patient demand. Platforms like LillyDirect and Sesame’s Success by Sesame, for instance, offer telehealth consultations and home delivery of GLP-1s. Meanwhile, retailers such as Costco have partnered with Sesame to provide weight-loss programs, including access to GLP-1s, at a fraction of the manufacturers’ costs. As we discuss in this edition, the DTC model is part of a broader shift toward patient-centric care.

Simultaneously, telehealth startups, wellness clinics, med spas, and other non-traditional providers have begun offering GLP-1 injections, albeit sometimes through less-regulated routes, often involving compounded versions of the drugs. While this creates new revenue streams and increases patients’ access, it also invites scrutiny from medical boards and regulators concerned about credentialing, patient safety, and the increasingly blurred lines between medical care and wellness.

Medicare Hesitates on Coverage Expansion

Despite the rising demand for GLP-1s and the fact that more than 40% of the US adult population is obese, the Centers for Medicare & Medicaid Services (CMS) recently declined to finalize a Biden-era proposal that would have expanded Medicare and Medicaid coverage of anti-obesity medications. The decision, issued without explanation in CMS’s final rule in April 2025, leaves millions of Medicare patients without coverage for GLP-1s unless prescribed for conditions like diabetes or cardiovascular risk. Drug makers and patient advocates were quick to express disappointment. Eli Lilly, maker of Zepbound, said that it would “continue to work with the Trump Administration and congressional leaders” to pursue broader access; Novo Nordisk echoed the sentiment, calling on CMS to define obesity as a treatable chronic disease under Medicare.

Experts note that Medicare decisions often influence commercial insurance policies. If CMS were to recognize obesity as a treatable condition eligible for drug coverage, private insurers would likely follow. Without that endorsement, however, access will remain limited to those who can pay out-of-pocket or whose plans voluntarily offer coverage.

Market Outlook

In the short term, the market outlook remains strong for manufacturers of GLP-1s. The market is poised for continued growth, with pharmaceutical companies investing in new formulations, including oral formulations of the drugs and combination therapies. As analysts point out, manufacturers do not need Medicare coverage to hit short-term revenue targets. But in the longer term, the ability to serve a broader patient base — and fend off biosimilars — may depend on policy shifts, new clinical indications, delivery innovations (like oral formulations and fixed-dose combinations), and potential spillover of a steep Medicare discount following CMS’s selection of Novo Nordisk’s GLP-1 product for the second cycle of negotiations, with the MFP slated to go into effect in 2027.

Conclusion: A Defining Moment for GLP-1s and US Health Care

GLP-1 medications have shifted the paradigm for chronic disease management, but questions around affordability, access, and long-term coverage remain unresolved. The growth and outlook of GLP-1s as treatment for obesity will depend not only on manufacturer innovation, but on public health policy, affordability, and manufacturers’ infrastructure to scale to meet the moment.

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