WASHINGTON, D.C.: The Centers for Medicare & Medicaid Services (CMS) says it will not go ahead with a plan from the Biden administration to have Medicare pay for weight-loss drugs like Novo Nordisk's Wegovy.

After the news, U.S.-listed shares of Novo dropped by 1.4 percent in after-hours trading. Shares of Eli Lilly, which makes a similar drug called Zepbound, fell 3.1 percent.

The plan would have made it easier for Americans to afford new GLP-1 drugs, which can help people lose up to 20 percent of their weight and lower the risk of type 2 diabetes. These drugs can cost up to $1,000 a month without insurance.

Currently, Medicare covers GLP-1 drugs such as Mounjaro (from Lilly) and Ozempic (from Novo) only for diabetes, not for weight loss.

Courtney Breen, an analyst at Bernstein, said she wasn't surprised by the decision. She noted that with trade talks about drug pricing ongoing, now may not be the right time for the government to make concessions.

Eli Lilly said it was disappointed and will continue working with the Trump administration and Congress to make sure people with obesity are included in Medicare and Medicaid coverage.

A spokesperson for Novo Nordisk stated that the news was "limited," but the company hopes the Trump administration will soon officially recognize obesity as a serious condition. They said that Medicare rules should align with current medical science.

U.S. Health Secretary Robert F. Kennedy Jr. has previously stated that the country should focus on healthy eating rather than medicine to combat obesity.

CMS also stated that it would not move forward with two other proposals: one to require Medicare providers to review their policies through a fairness and equity lens, and another to establish rules for the use of artificial intelligence tools, as concerns exist that these tools could be misused to deny or delay care.