By Amina Niasse

NEW YORK (Reuters) – Most U.S. states do not currently cover highly sought after weight-loss drugs from Novo Nordisk (NYSE:NVO) and Eli Lilly (NYSE:LLY) in their Medicaid health programs for low income people, citing cost as a key factor, according to a survey conducted by health research firm KFF.

The survey of the 50 states and the District of Columbia found that just 12 Medicaid programs covered the drugs to treat obesity as of July 2024 with some limits on use.

Half of the states without coverage said they are considering adding them or evaluating their coverage, it said.

The drugs from a class known as GLP-1 agonists were initially developed to treat type 2 diabetes but also promote weight loss by suppressing hunger. Novo’s Wegovy and Lilly’s Zepbound list for around $1,000 per month, though most people pay less through health insurance or other drug company discounts.

Coverage of the drugs by commercial plans is also limited. The Medicare program for people aged 65 and older has said that GLP-1 drugs may be covered for diabetes and cardiovascular disease after studies revealed heart benefits.

The survey found that state Medicaid programs expect their health plan spending to increase by 7% in fiscal 2025, slowing from the 19% increase this year as membership decreases. The fiscal year ends for most states in the survey on June 30.

The lower spending increase from a year ago follows termination of a policy requiring insurers to keep members enrolled during the COVID-19 pandemic and the expiration of some federal funding.

Medicaid costs are paid by states and by the U.S. federal government. Total spending on Medicaid rose 5.5% in fiscal 2024 and is expected to increase 3.9% in fiscal 2025.

Medicaid membership re-determinations have decreased enrollment from a peak of 94 million in April of 2023. There were some 71 million on its rolls ahead of the pandemic. As of August, four states were still re-determining Medicaid eligibility.

State Medicaid programs expect memberships to decline by around 4.4% in 2025 from a 7.5% decrease in 2024, KFF said.

Increased costs of providers, managed care, medical benefits and prescription drugs were key drivers of spending, according to the survey findings.

Three quarters of the states are exploring at least one new or expanded initiative to contain prescription drug costs in 2024 or 2025, KFF found.