Obesity companies strike deal with the Trump administration increasing visibility for the accelerating obesity market

On 6 November, Eli Lilly and Novo Nordisk announced an agreement with the US administration regarding anti-obesity and type 2 diabetes medicines. While the companies agreed to lower prices, they also gained increased access to the Medicare and Medicaid populations, which is expected to offset price erosion. In our view, the deal will increase visibility for both companies, but equal prices in multiple categories will lead to a continued shift in market share from Novo to Lilly, given the stronger profile of Lilly's drugs.

Medicare/Medicaid

From April 2026, a pilot programme will see Zepbound (tirzepatide, Eli Lilly), the oral drug candidate orforglipron (assuming approval, also Eli Lilly), Wegovy and Ozempic (semaglutide, Novo Nordisk) priced at USD 245 for eligible Medicare and Medicaid patients, with a USD 50 co-pay. This is the amount that patients will have to pay for these drugs out of pocket. This part of the deal will expand access for 40 million patients. Patients must have a BMI above 35, above 30 with comorbidities such as uncontrolled high blood pressure, kidney disease or heart failure, or above 27 with prediabetes to be eligible. This covers about 80% of the on-label population for these drugs. Despite the pricing concessions, gaining access to this substantial patient population will benefit both Novo and Lilly.

Direct-to-consumer

In cash or direct-to-consumer settings (including platforms such as Lilly Direct, NovoCare and TrumpRx), the first dose of Zepbound will cost USD 299, increasing to USD 449 for subsequent doses. For orforglipron, the prices are USD 149 and USD 399, respectively. For Zepbound, this equates to a modest USD 50 discount on the current price. Novo Nordisk will offer Wegovy and Ozempic at USD 350 (a more substantial discount than the current price of USD 499), while the price of oral semaglutide will be USD 149, which is on a par with orforglipron. Furthermore, Eli Lilly has committed to making additional drugs available through the direct-to-consumer channel at a discount of 50–60% off the current list price. It is unclear exactly which patients will use the cash channel going forward. While the cash channel has been an important driver of access and reimbursement so far, it is expected to lose patients who are now covered by Medicare and Medicaid. It is likely that the main audience will be working-age individuals whose plans either do not cover these medicines or require too many administrative hurdles, which could represent a significant population.

Additional benefits

As part of the deal, companies receive a three-year exemption from pharmaceutical tariffs and a Commissioner’s National Priority Voucher issued by the FDA. This means a one- to two-month review time for drug applications and a faster route to market for Lilly’s orforglipron and a new formulation of Novo’s semaglutide. While both companies are expected to use the voucher for their oral anti-obesity candidates, this has not been confirmed. The voucher could disproportionately benefit Lilly's orforglipron, as it is perceived to have a superior profile to oral semaglutide. Although injectables are likely to remain central to the obesity market, oral medications are expected to play an important role, offering a more convenient and cost-effective alternative to a large number of patients.

Novo vs. Lilly

Although Lilly provided a more detailed and positive communication following the deal, Novo’s press release indicated a negative impact on sales growth of less than 10% next year. This announcement comes shortly after Novo made the third cut to their revenue guidance this year, having lost out to Pfizer in a bidding process to acquire fellow obesity company Metsera. Based on prescription trends, Eli Lilly has continued to take market share from Novo in the obesity market this year. Lilly’s dominance is also reflected in share price performance, with Eli Lilly up 18.6% year-to-date and Novo down 53.1%.

Overall, the deal provides stability for both companies in the government channel, along with increased volumes to offset price erosion.

However, the deal could also strengthen Lilly’s dominant position in the obesity market. Since the drugs from both companies will be priced at parity, and since Lilly’s tirzepatide is perceived as a better drug than Novo’s semaglutide, Lilly could benefit more from the expanded access. In the direct-to-consumer channel, Novo has apparently agreed to larger price cuts, which leaves Lilly in a better relative position. Regarding the Commissioner’s voucher, although expectations have recently decreased, Lilly is still expected to benefit more from earlier orforglipron approval, as new semaglutide formulations are considered less disruptive. Regarding the oral drugs, orforglipron and oral semaglutide will be priced the same. Since oral semaglutide (a peptide) is more complex and costly to manufacture than orforglipron (a small molecule), the latter is expected to generate higher margins.

Outlook

In summary, obesity is potentially set to become the largest therapeutic area ever. Price concessions in exchange for broader patient access have always been part of that path. While this will benefit both companies in the long term, the deal seems to consolidate Lilly’s dominant market position and facilitate the adoption of oral anti-obesity medicines, which will drive growth in this market.

Summary table of prices

	Medicare/Medicaid	Direct-to-consumer
Zepbound (LLY)	USD 245 list price USD 50 co-pay	USD 299/449 (current: USD 299/499)
Orforglipron (LLY)	USD 50 co-pay	USD 149/399
Wegovy (NOVO)	USD 245 list price USD 50 co-pay	USD 350 (current: USD 499)
Ozempic (NOVO)	USD 245 list price USD 50 co-pay	USD 350 (current: USD 499)
Oral Wegovy (NOVO)		USD 149

Summary of company impact and positioning

	Eli Lilly	Novo Nordisk	LLY	NVO
Medicare/ Medicaid	-Positive impact: Access to a 40 million obese population -Despite lower prices, this extends the market for both companies but due to their superior product and already leading market share, Lilly will likely benefit more		↑↑	↑
Direct-to-Consumer	-Negative impact on price decreases -Lilly managed to negotiate smaller discounts	-Negative impact on price decreases -Novo had to give larger discounts but could gain more from compounder switching	↓	↓
Commercial	-Likely negative impact if lower prices in government/cash channels spread to commercial segment		↓	↓
Oral medicines	-Positive impact: with equal prices Lilly will be able to gain more share among orals	-Negative impact: with equal prices they will likely be distant second behind orforglipron	↑	↓

Source: Company press releases, The White House, Equity research reports