Medicaid Coverage of Obesity GLP-1s May Shift From Diabetes Version

Nine states that began covering obesity-labeled glucagon-like peptide-1 receptor agonists (GLP-1 RAs) through Medicaid between 2021 and 2024 saw a significant increase in prescriptions for those products, but total GLP-1 RA use across both the obesity and diabetes indications grew by less than that increase alone, according to a study published September 25 in JAMA Health Forum.¹

The gap suggests some Medicaid patients may be substituting one label for the other rather than simply adding new users. The pattern was strongest in states that paired obesity coverage with prior authorization rules stricter than the FDA label.¹

How the Study Measured Substitution

Researchers from the University of Pennsylvania used Medicaid State Drug Utilization Data to compare 9 states that added coverage of obesity-labeled GLP-1 RAs—liraglutide (Saxenda), semaglutide (Wegovy), and tirzepatide (Zepbound)—against 36 states that did not cover them during the study period. Using a synthetic difference-in-differences design intended to account for states' differing baseline utilization trends, the authors modeled quarterly prescriptions per 1000 Medicaid beneficiaries from 2021 through 2024.¹

Coverage of obesity-labeled GLP-1 RAs was associated with 6.48 additional prescriptions per 1000 beneficiaries (95% CI, 4.00-8.96; P < .001) compared with control states. Total GLP-1 RA prescriptions across both indications rose by only 4.17 per 1000 beneficiaries (95% CI, −0.33 to 8.67; P = .07), and diabetes-labeled prescriptions fell by 2.16 per 1000 beneficiaries (95% CI, −5.27 to 0.96; P = .17)—neither reached statistical significance independently.¹

The authors noted that diabetes-labeled use continued climbing in every state regardless of obesity coverage. The negative estimate reflects slower relative growth, not an absolute decline.¹

Prior Authorization Sharpens the Effect

The substitution signal became clearer once the authors separated states by prior authorization restrictiveness. In states with no prior authorization or requirements matching the FDA label—California, Pennsylvania, and Minnesota—the decline in diabetes-labeled prescriptions was not statistically significant.¹

In states with prior authorization stricter than the FDA label—Michigan, Massachusetts, Mississippi, New Hampshire, and Virginia—diabetes-labeled prescriptions fell by 3.02 per 1000 beneficiaries (95% CI, −5.69 to −0.36; P = .03), even as the obesity-labeled increase remained comparable in size to the less-restrictive group.¹

The authors proposed that stricter prior authorization may direct obesity-labeled therapy toward patients who otherwise would have received a diabetes-labeled version—those with comorbid obesity and diabetes or with obesity severe enough to carry an elevated risk of progressing to diabetes—producing more crossover between the 2 labels than in states where obesity coverage reaches a broader, lower-risk population. The authors cautioned that their ecological, state-level design cannot directly confirm individual patients switching products.¹

A Budget Debate Already Under Way

The Medicaid findings surface amid a broader reckoning over GLP-1 affordability. Fewer than one-third of state Medicaid programs cover GLP-1 RAs for obesity, compared with universal coverage for the diabetes indication, because federal law treats the obesity indication as a discretionary Medicaid benefit rather than a mandatory one.¹

A separate commentary on an Institute for Clinical and Economic Review (ICER) evidence report, published in the Journal of Managed Care & Specialty Pharmacy, found that as of 2025, just 13 state Medicaid programs and roughly 1 in 5 employer-based plans covered GLP-1 RAs for obesity, even though ICER's own cost-effectiveness ratios—$66,355 per quality-adjusted life-year for injectable semaglutide, $75,456 for oral semaglutide, and $57,779 for tirzepatide—fell within a conventional value range. The same commentary warned that treating just 1% of eligible patients with semaglutide or tirzepatide would exceed ICER's $880 million annual budget impact threshold, which it said is already being crossed nationally.²

That commentary recommended pairing GLP-1 coverage with lifestyle management support, using targeted prior authorization instead of arbitrary duration limits, and exploring alternative payment models such as value-based contracts. Because obesity-labeled and diabetes-labeled versions can substitute for one another, tightening prior authorization on one label may shift utilization—and cost—toward the other rather than eliminating it.^1,2

Pharmacy's Role as Coverage Tightens

The uncertainty around coverage is already shaping how patients seek GLP-1 access outside traditional channels. Pharmacy educators at the Massachusetts College of Pharmacy and Health Sciences said cost and coverage gaps have pushed some patients toward compounded versions of semaglutide, tirzepatide, and liraglutide, particularly during recent shortages of FDA-approved products.³

"Many patients have been concerned about coverage and access, leading them to seek alternative pathways to get GLP products," said Spencer Casella, PharmD, RPh, assistant professor of pharmacy practice at MCPHS, in an interview with Drug Topics.³

Hailey Choi, PharmD, BCACP, CDCES, associate professor of pharmacy practice at MCPHS, said patients "are also asking more questions about where their medication comes from, whether the pharmacy is legitimate, how to measure the correct dose, and whether the medication was shipped and stored appropriately."³

For pharmacists processing Medicaid claims, the JAMA Health Forum findings suggest that a diabetes diagnosis on a patient's chart does not necessarily mean a diabetes-labeled GLP-1 RA is being used for glycemic control alone, particularly in states with tight prior authorization for the obesity indication.¹

As more states weigh coverage changes against ICER's budget impact warnings, the study's authors recommend that payers evaluate cost and utilization projections across the full GLP-1 RA class rather than the obesity-labeled products in isolation.^1,2

REFERENCES

1. Khanna R, Wang MC, Venkataramani AS. GLP-1 Receptor Agonist Coverage for Obesity in Medicaid and Total GLP-1 Receptor Agonist Utilization. JAMA Health Forum. 2026;7(9):e263353. doi:10.1001/jamahealthforum.2026.3353

2. Gallagher A. ICER report finds GLP-1s are cost-effective but warns of budget strain. Drug Topics. July 21, 2026. Accessed September 25, 2026. https://www.drugtopics.com/view/icer-report-finds-glp-1s-are-cost-effective-but-warns-of-budget-strain

3. Nowosielski B, Choi H, Murry J, Casella S. Pharmacists' look at the future of GLP-1 compounding. Drug Topics. August 20, 2026. Accessed September 25, 2026. https://www.drugtopics.com/view/pharmacists-look-at-the-future-of-glp-1-compounding