By Mariam Sunny
April 22 (Reuters) - A delay in a Medicare pilot to cover obesity drugs due to health insurers' hesitation to participate in the program is unlikely to dent near-term demand for weight-loss treatments, analysts said.
The Centers for Medicare & Medicaid Services told Reuters on Wednesday it would delay the implementation of the Medicare Part D portion of the program called the Better Approaches to Lifestyle and Nutrition for Comprehensive hEalth (BALANCE) for 2027 to "allow data collection
that would support a more effective potential implementation".
The model was announced at the end of last year as a way for Medicare and state Medicaid plans to bypass a prohibition on covering weight-loss treatments.
The CMS said it would maintain coverage through a bridge program from July 1, 2026 to December 31, 2027, giving beneficiaries access to obesity medicines at prices negotiated under President Donald Trump's deal with Eli Lilly and Novo Nordisk.
The extension of the bridge program beyond its 2026 expiry eases uncertainty around reimbursement for weight-loss drugs and blunts any near-term impact on demand, but an indefinite delay clouds long-term visibility on permanent integration into Medicare prescription drug plans, analysts said.
In the longer term, "once this obesity benefit is established, we believe it will be practically and politically difficult to roll back as we look toward 2028 and beyond," J.P.Morgan analyst Chris Schott said.
CVS Health confirmed on Tuesday that it did not opt in to participate in the BALANCE program before the April 20 deadline, while UnitedHealth flagged "notable challenges and outstanding questions with the currently planned structure".
The model would allow CMS to negotiate guaranteed net prices and set standardized coverage terms, potentially capping out-of-pocket costs for GLP-1 weight-loss drugs.
CMS said it would move forward with the Medicaid portion of the BALANCE Model, with applications open to states through July 31, 2026.
While the delay is not ideal, extending the bridge program through 2027 is an acceptable workaround, Citi analyst Geoff Meacham said, adding that insurers' pushback has focused less on broad access to the treatments than on instability in Medicare Part D plans and uncertainty around utilization.
The delay would give health insurers time to observe real-world use of GLP-1 drugs without absorbing pricing risk and potentially encourage broader participation once the model goes live, Evercore analyst Elizabeth Anderson said.
(Reporting by Mariam Sunny in Bengaluru; Editing by Anil D'Silva)
