Off-BALANCE? Trump’s Obesity Drug Demo May Not Live Up To The Hype
What is the BALANCE Model?
On December 23, 2025, the Center for Medicare and Medicaid Innovation Center announced the BALANCE Model, a voluntary demonstration project to test CMS price negotiation of GLP-1s, like Wegovy and Zepbound, for Medicare and Medicaid and allow for Medicare Part D coverage of the drugs when prescribed for weight loss alone.
Why? Medicare is prohibited by statute from covering weight loss drugs. Coverage in Medicaid is optional and has been limited. While the price for Wegovy was recently negotiated under the Medicare Drug Price Negotiation Program (MDPNP) for patients with conditions currently covered by Medicare, the negotiated price remains significantly higher than what Novo Nordisk charges for the drug in other wealthy countries. Tirzepatide (Mounjaro, Zepbound) will be protected from Medicare price negotiation until 2030, because of the lengthy delay period prohibiting negotiation until at least 7 years after FDA approval.
The BALANCE Model Raises 3 Red Flags
On March 9, CMS released a request for applications for states and Medicare Part D plans. Despite the Trump Administration selling the BALANCE Model as a revolutionary step forward in improving access and lowering prices for GLP-1 drugs, our analysis of the RFA shows three ways the Model falls short:
- Weak deal on price = bad deal for taxpayers
- Weight-loss coverage is narrower than permitted by FDA drug labels
- Half-baked proposal that may never get off the ground
- Weak Price Point
In Medicare Part D, under BALANCE the monthly cost of the GLP-1 drugs is advertised to be a net price of $245. That’s only a $29 discount from the price CMS negotiated for Wegovy under the MDPNP. This price point may not provide enough cost savings to offset higher costs associated with expanded obesity coverage.
Moreover, the BALANCE demonstration would let CMS waive portions of the MDPNP under the Inflation Reduction Act, including in cases where a Part D plan must reimburse a pharmacy more than the maximum fair price negotiated under the MDPNP. This raises the possibility that CMS could be forced to pay more for a GLP-1 drug under BALANCE even if it gets a better deal on the drug via the MDPNP (for example, if the price for Wegovy is renegotiated).
Under the BALANCE Model, participating Part D plans lose the leverage to negotiate additional discounts that they ordinarily have, while simultaneously being required to expand coverage to more beneficiaries. Normally under Medicare Part D, plans can negotiate with drug companies over pricing by leveraging formulary placement and coverage criteria. This is especially true for drugs that are not amongst the six Medicare Part D protected classes and for which multiple, similarly effective treatment options exist.
Patients are said to pay a $50 copay after deductible under BALANCE. But the fine print indicates this only applies to plan participants that use enhanced plans ( 60% of Medicare Part D standalone population). Basic Part D plans (basic alternative and actuarially equivalent) will be allowed to charge patients up to $125/month and some plans can’t participate at all. The cost-sharing price points are not guaranteed in subsequent years.
Taxpayers must also bear additional costs of running the demonstration project and helping private Part D plans with extra risk corridor payments. CMS also plans to fully fund a 6-month “bridge” for BALANCE until Part D plans take over some of the burden in January 2027.
In Medicaid, the price point appears to be confidential making it difficult to evaluate the strength of the deal. If the price is $245 per month, as advertised, states may already be paying a similar amount through existing discounts and rebates for older GLP-1 drugs.
Medicaid plans are required to cover almost all the FDA-approved drugs of a participating manufacturer in the Medicaid Drug Rebate Program, but weight loss medications are part of a small class of drugs that can be excluded, so states vary in their coverage of these treatments solely for weight loss purposes. States use prior authorization and formulary preference to secure supplemental rebates from drug companies. But, as with Medicare Part D plans, states that participate in BALANCE lose leverage to negotiate supplemental rebates. The Model requires plans to adopt standard eligibility and coverage criteria, so they can’t disadvantage one Model drug over the other unless it relates to very specific FDA label differences, and any rebates a state gets must be extended to all states equally.
Already, states limit covering GLP-1s for weight loss because the combination of wider eligibility and high GLP-1 prices would result in exorbitant costs unsustainable to the program. It is far from clear whether BALANCE Model pricing will be low enough to enable states to participate without putting an unbearable burden on Medicaid budgets.
Moreover, in Medicaid, patients typically have no or extremely low copays. The request for application to states does not provide any information one way or the other as to whether patients will have a copay and whether it might be more than typically expected in Medicaid.
- Still-Narrow Coverage Will Continue to Exclude Millions
FDA has approved Wegovy and Zepbound GLP-1s for weight loss in adults with obesity. Wegovy is also approved for patients aged 12 years and older with obesity.
While FDA defines obesity as anyone with a BMI above 30 kg/m2, the BALANCE demo will only apply to adults with a BMI of 35 or higher, continuing to exclude from coverage millions of patients meeting the FDA definition of obese. Some adults with lower BMIs will qualify for the Model but they will need to meet other qualifying criteria in addition to obesity to participate.
- Half-Baked Proposal That May Never Get Off The Ground
The Model requires a “critical mass” of Part D plans, representing at least 80% of enrollment, to participate for CMS to move forward with implementation. It is not clear whether CMS will be able to achieve that level of participation to get this program underway given the potential cost to plans.
The Model offers a safe harbor from the federal anti-kickback statute so that manufacturers can financially support lifestyle programs to patients in the Model. This could be problematic long-term as it’s not clear if CMS could allow manufacturers to continue to fund these programs outside of a pilot project.
CMS also says it may annually revisit lifestyle support and shift responsibility to states and Medicare Advantage prescription drug plans under the Model. It is not clear that states and Medicare can afford this additional cost.
The parameters of these lifestyle support programs appear to still need to be negotiated with states and Part D plans. The timeline for working out key details, particularly for Medicaid where BALANCE is expected to begin in May 2026, seems quite compressed and it may not be feasible to achieve. In fact, the due date for states to apply to participate for the Model (July 31, 2026) suggests CMS knows BALANCE may commence in Medicaid in 2027, not this year, despite Trump Administration claims otherwise.
Conclusion
The BALANCE Model falls short in design, but expanding access to GLP-1s at costs that our health programs and patients can afford has the potential to improve the health of millions of Americans.
The Biden Administration previously proposed to no longer exclude medications for the treatment of obesity from coverage under Medicare Part D and to require Medicaid programs to cover these medications when used to treat obesity, but the proposal was rejected by the Trump Administration. While the Biden proposal would have done significantly more to expand coverage, it did nothing to restrain costs.
Meanwhile, this year, generics manufacturers are expected to begin selling GLP-1s in Canada for less than $100. By authorizing generic competition, the U.S. government could expand access while dramatically lowering costs.
Pairing expanded coverage with an improved Medicare Drug Price Negotiation program, which eliminates negotiation delay periods, limits negotiated prices based on prices available in other countries and provides Medicare-negotiated prices to people who get their insurance through their employer or the private market, would help increase access while better promoting affordability to Medicare and its beneficiaries, and patients throughout the country.