CEO of Lilly (LLY.US): Health Insurance Coverage for Weight Loss Medications will "Change the Game Rules" and the Launch of Oral New Drugs will Provide Crucial Support

Eli Lilly's CEO Dave Ricks said on Friday that the U.S. health insurance system is about to include weight loss drugs in its coverage, which will be a key driver for the launch of the company's experimental oral weight loss drug orforglipron that will receive significant market attention. Ricks, in an interview in the U.S., said that Eli Lilly expects that once this oral drug is launched, health insurance will simultaneously include it in the Medicare reimbursement system, which "will to some extent change the rules of the market." He explained that currently many patients still need to pay for Novo Nordisk A/S Sponsored ADR Class B's GLP-1 oral weight loss drug out of pocket. The drug was launched earlier this month, and although insurance coverage is not yet comprehensive, the market response has been strong. Ricks also noted that he observed that among early users of Novo Nordisk A/S Sponsored ADR Class B's oral weight loss drug Wegovy, almost all were patients trying GLP-1 drugs for the first time rather than those who had previously used injections of the same class, which means "the market coverage of the drug is expanding, reaching more patients, which is a positive signal." He added that Eli Lilly is confident in the market competitiveness of its own oral drug and is preparing for a full launch of the drug in the second quarter of this year. The timing of this launch will coincide with the implementation of the new U.S. health insurance policy - under the drug pricing agreement reached by Eli Lilly and Novo Nordisk A/S Sponsored ADR Class B with former U.S. President Trump in November last year, weight loss drugs will be reimbursed by the U.S. health insurance system for the first time later this year. Ricks said that in the second half of this year, insurance coverage will further reduce the prices of these oral drugs. Eligible insured patients will only need to pay $50 per month when using all approved GLP-1 injections and oral drugs (including those for diabetes and obesity treatment). "This policy will greatly open up market space, and the future market potential is worth looking forward to," Ricks said. The inclusion of weight loss drugs in insurance coverage has been a long-awaited move in the industry. Many experts in the medical and health fields believe that this will not only expand the market size of such drugs but also encourage more commercial insurance companies to follow suit and include them in their coverage. Ricks estimated that there are 20 to 30 million insured individuals in the U.S. health insurance system with obesity and related complications who could benefit from GLP-1 therapy, so the inclusion of insurance coverage will significantly expand the potential target population for these drugs. Ricks also admitted that as a result of the pricing agreement reached, Eli Lilly's related drugs will undergo a round of price reductions early this year. The agreement requires pharmaceutical companies to voluntarily lower drug prices, including offering existing drugs at the lowest overseas prices to Medicaid insured patients, while committing to a so-called "most favored nation pricing" principle for new drugs. However, Ricks said that the sales growth of Eli Lilly's drugs "will accelerate in the second half of the year." "We believe that the balance between pricing and sales growth is positive for the company, but the ultimate effect will still need time to be verified," he added, stating that the growth in drug sales will depend on the acceptance of these drugs by insured patients and the company's market share in this market. Ricks revealed that Eli Lilly will disclose the specific financial impact of this pricing agreement on the company's financial aspect when it releases its fourth quarter 2025 earnings report and 2026 performance guidance next week. The drug pricing agreement also includes a commitment: pharmaceutical companies will offer related drugs at discounted prices through the self-pay purchasing channel on the direct-to-consumer drug purchasing platform TrumpRx launched by former President Trump. The platform was originally planned to go live in January this year but is currently not operational. Ricks said that Eli Lilly is the first pharmaceutical company to sell weight loss drugs directly to patients through its own platform LillyDirect, and the TrumpRx platform will further expand this direct sales model to other categories of drugs in the pharmaceutical industry. "We fully support this," he said.