Why Eli Lilly Was Such a Healthy Stock Today

Most investors are aware of the vast sales potential for effective new weight loss treatments known as GLP-1 drugs, and their market is still relatively young. On Tuesday, the Congressional Budget Office (CBO) put a number on some of that market’s potential. Because that figure was high, the weight loss drug manufacturer Eli Lilly (LLY 1.70%) saw its share price rise nearly 2% in response. This compares well with the just under 1% gain of S&P 500 index during the session.

Potentially $35 billion

The CBO report was titled “How would the federal budget affect Medicare authorization to cover anti-obesity drugs?” One of its major findings is that if the government’s health insurance program covered weight-loss drugs like Eli Lilly’s Zepbound starting in January 2026, it would add a total of $35 billion in federal spending from that year to 2034 .

Currently, there are few Food and Drug Administration (FDA)-approved GLP-1 treatments for obesity, giving Zepbound an early-mover advantage.

While additional drugs in the same class are sure to gain FDA approval in the coming years, Eli Lilly is well positioned in this segment. Given its immense resources, it should be able to maintain a significant market share.

Robust application

If the government decides to authorize Medicare coverage of obesity drugs, it would certainly give the health care market a boost, although the impact may be less dramatic than some might imagine. Demand for such treatments in the US is already skyrocketing; it is safe to say that many eligible patients will use GLP-1 treatments with or without assistance from their insurance provider.