Summary of Key Points
America’s largest healthcare program, Medicare, has introduced a 18-month voluntary reimbursement program called the Bridge Model, which allows eligible users to purchase GLP-1 weight loss injections (such as Eli Lilly’s Zepbound and Novo Nordisk’s Wegovy) at a low cost of $50 per month. This is a significant short-term boon for Eli Lilly and Novo Nordisk, with potential additional earnings of up to $12.6 billion. However, the program has numerous eligibility requirements, and there are doubts about its long-term sustainability, which could lead to a price war in the GLP-1 market.
What is the Bridge Model, and Who Can Participate?
Medicare originally had regulations prohibiting the reimbursement of weight loss drugs. To circumvent this, it created an “experimental” voluntary program through its innovative division, CMMI, effective from July 2026 to the end of 2027 (a total of 18 months).
Eligible participants fall into three categories:
1. People who are overweight (BMI ≥ 27) and have complications such as pre-diabetes or heart attacks;
2. Obese individuals (BMI ≥ 30) with conditions like heart failure or hypertension;
3. Severely obese individuals (BMI ≥ 35).
Eligible users must first obtain a prescription from a doctor, and they will pay $50 per month out of pocket, with the remaining cost covered in full by federal funds. Currently, there are approximately 3.8 to 4 million eligible participants.
Are Eli Lilly and Novo Nordisk Making a Fortune?
The GLP-1 products included in this program are exclusively from these two companies, making them the sole beneficiaries:
- If 75% of eligible users participate, they could earn $12.6 billion over 18 months (including the users’ out-of-pocket payments);
- Compared to their current annual revenue of over $10 billion per product, this program could generate an additional $1.5 to $4.5 billion for each company annually;
- This could help maintain the growth rate of their GLP-1 weight loss injections, which has already begun to slow down.
However, this is only a short-term benefit. If the program ends after 2028, revenue will decline significantly.
Are Users Likely to Participate?
Although the monthly cost of $50 may not seem high, there are several barriers:
1. Out-of-pocket expenses do not count towards the annual limit: Medicare users have an annual out-of-pocket cap of $2,100, and this $50 is not included, meaning additional financial pressure over the long term;
2. No subsidies for low-income users: Low-income individuals (LIS group) cannot afford the $50 due to a lack of subsidies in the program;
3. Difficult doctor approval process: Doctors must certify that the user meets the criteria, which some may find cumbersome and discourage participation.
Therefore, the 75% participation rate is likely the upper limit and will not increase further.
Will the Program Continue After 18 Months?
The fact that the program has been extended for 18 months is already a compromise. It was originally planned to be replaced by another program called BALANCE, but major insurance companies like CVS and UnitedHealth refused to participate, forcing the extension of Bridge until the end of 2027.
The future of the program is uncertain:
- Congressional budget constraints: After the midterms, control of Congress may change, and the new government might cut such costly expenditures (with a maximum expenditure of $10 billion over 18 months);
- Increasing cost control pressures: Private insurance companies are already limiting GLP-1 reimbursements (e.g., by restricting the number of treatments or eligible populations). As Medicare is a public program, cost controls will be even stricter. Even if the program continues, there will likely be more restrictions, leading to a decrease in the number of participants.
Long-Term Implications for the GLP-1 Market
Currently, private insurance companies are reducing their reimbursement for GLP-1 injections (with some completely stopping coverage). Medicare’s Bridge Program is the largest new source of revenue for these companies. If the program ends in 2028:
- Pharmaceutical companies will rely on self-paying users, who are sensitive to prices, leading to lower GLP-1 prices;
- Price wars will intensify, making it harder for newly launched GLP-1 products to sell.
In summary, this is a situation where pharmaceutical companies benefit significantly in the short term but face challenges of declining revenue and increased competition over prices in the long run.
In one sentence: This is a “short-term celebration, long-term concern” scenario—Eli Lilly and Novo Nordisk will reap the benefits for 18 months, but whether they can continue to do so depends on policy changes and market dynamics.