Foundayo Approval Shows How Medicare Handles Weight-Loss Drugs

The Food and Drug Administration approved Eli Lilly's Foundayo (orforglipron) on April 1, a once-daily tablet that acts on the GLP-1 receptor, for use with a reduced-calorie diet and more physical activity in adults with obesity, or adults with overweight and at least one weight-related condition. FDA said in its announcement that the decision came 50 days after filing under the Commissioner's National Priority Voucher pilot, the fifth approval under the program and the first for a new molecular entity.

Lilly said Foundayo would be available as early as April 6 through its LillyDirect service, at $149 a month for the lowest dose for people paying out of pocket, and that Medicare Part D beneficiaries may be able to buy it for as low as $50 a month as soon as July, Healio reported. That second figure depends on a Medicare program that did not exist a few months earlier, because Medicare drug coverage has long excluded weight-loss drugs.

Why Part D leaves weight loss out

The exclusion is written into the statute. The definition of a covered Part D drug in 42 U.S.C. 1395w-102 says the term "does not include drugs or classes of drugs, or their medical uses, which may be excluded from coverage or otherwise restricted" under the Medicaid drug rebate law, with exceptions for smoking cessation agents, certain barbiturates and benzodiazepines. That Medicaid law, 42 U.S.C. 1396r-8, lists among the drugs states may exclude "Agents when used for anorexia, weight loss, or weight gain."

The exclusion turns on the medical use, not the molecule. CMS lists the same GLP-1 products for both currently covered indications, such as type 2 diabetes, and weight management. Its BALANCE model page states the result plainly: "currently Medicare and Medicaid generally do not cover these drugs for the weight loss indication."

The workaround: a model and a bridge

As of late March, CMS's BALANCE model page described the agency's approach. Under the voluntary model, run by the CMS Innovation Center, CMS negotiates pricing and coverage terms with GLP-1 manufacturers on behalf of state Medicaid agencies and Part D plans. States could join from May 2026 and Part D plans from January 2027, with testing ending in December 2031. Eligible products must show average weight reduction of at least 9.5% in a randomized trial at an approved dose. CMS listed the tablet formulation of orforglipron as eligible "if approved by the FDA."

To cover the gap before Part D plans join, CMS said it would start a separate GLP-1 payment demonstration in July 2026. It would operate outside the Part D benefit's coverage and payment flow, so Part D plans would not carry the risk, and eligible beneficiaries would pay $50 a month. CMS said it would release more details on the demonstration's design in early 2026.

Coverage would not be automatic. The page says patients would be subject to criteria set in the negotiations, including prior authorization requirements, and that "this model will not guarantee coverage for any individual." The criteria it listed require a provider to confirm a qualifying condition or ongoing lifestyle modification together with body mass index thresholds, starting at a BMI of 35 or higher, or lower thresholds with certain conditions such as moderate or severe obstructive sleep apnea.

FDA's label for Foundayo carries a boxed warning for thyroid C-cell tumors, and the agency said the drug should not be used with another GLP-1 receptor agonist.