Eli Lilly And Co (NYSE:LLY) shares are trading higher Tuesday after the Biden-Harris Administration proposed a new rule to expand coverage of anti-obesity medications for Americans with Medicare and Medicaid.
What Happened: The government has proposed a new rule to expand access to medications for obesity. In a statement released Monday, the Biden-Harris Administration said Medicare coverage would reduce out-of-pocket costs for these prescription drugs by as much as 95% for some enrollees. Approximately 4 million Medicaid enrollees would also gain access to these medications.
"The President is proud of the fact that the Inflation Reduction Act allows Medicare to negotiate down the price of drugs, a tool that will help Medicare lower the cost of some of the most expensive medications in the program. That power to negotiate drug prices is critical because Americans pay two to three times more than people in other countries for their prescription drugs," the White House said in a statement.
The move is part of the Biden-Harris Administration's national strategy on Hunger, Nutrition and Health focused on ending hunger and reducing diet-related diseases such as obesity.
The anti-obesity drug market has expanded in recent years with FDA approval for a new class of drugs like Eli Lilly's Zepbound, which can cost close to $1,000 per month for those paying out-of-pocket.
One of the main parts of the Biden-Harris Administration's strategy involves recognizing the opportunity within Medicare and Medicaid to support access to nutritious foods, obesity counseling and other nutrition-related services.
"Obesity is a multi-faceted disease and we need to work on all levels from prevention to treatment to address this persistent challenge," the White House said.
Eli Lilly's Zepbound generated $1.26 billion in sales for the company in its most recent quarter. Eli Lilly said Mounjaro and Zepbound sales in the third quarter were negatively impacted by inventory decreases in the wholesaler channel.
LLY Price Action: Eli Lilly shares were up 3.58% at $782.00 at the time of publication Tuesday, according to Benzinga Pro.
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