Biden's Plan Boosts Weight-Loss Drug Stocks Amid Rival Trial Disappointment

Shares of weight-loss drugmakers like Novo Nordisk and Eli Lilly surged after President Biden proposed expanding anti-obesity drug coverage under state health plans. The move could reduce out-of-pocket costs by up to 95% for millions. Meanwhile, a potential rival drug from Amgen underperformed in a trial.

Novo Nordisk and Eli Lilly, leaders in weight-loss drug manufacturing, saw their shares rise following a proposal by President Biden to expand coverage of anti-obesity drugs under state-run health plans. The proposal includes reducing out-of-pocket expenses for these medications drastically, benefiting millions of Americans under Medicare and Medicaid programs.

Although Novo Nordisk welcomes the initiative, expecting it to take effect in 2026, shares showed a modest increase by 1.5% during trading. Eli Lilly saw their stocks rise by over 3%. The proposed policy is seen as following the positive cardiovascular trial results of Novo's Wegovy drug, which demonstrated benefits beyond just weight loss.

Contrastingly, Amgen's shares dropped nearly 8% after its experimental drug MariTide's mid-stage trial results fell short of expectations, leading to less competitive pressure for Novo Nordisk and Eli Lilly. Currently, drugs like Lilly's Mounjaro and Novo's Ozempic and Wegovy are covered for certain conditions, excluding obesity as a standalone ailment.

(With inputs from agencies.)