Health tech giant Eli Lilly (LLY) just told the market what actually matters for its obesity pill launch.

Medicare is coming in at the door, day one.

Medicare coverage for obesity drugs should begin immediately when Lilly launches its experimental oral GLP-1, orforglipron, expected in the second quarter.

That timing lines up with Medicare’s first-ever decision to cover obesity medicines later this year.

Early in January Novo Nordisk launched the first obesity pill in the US.

There is also major early demand for Novo Nordisk’s new GLP-1 pill. Many patients are paying cash because coverage is thin, yet uptake is strong.

More important, those users are mostly new to GLP-1s rather than switching from injections. That matters because it means pills are not cannibalizing the market. They are expanding it.

Lilly expects prices to move lower in the second half of the year as Medicare coverage and pricing agreements kick in.

Under deals reached with the Trump administration last November, Medicare patients could pay about $50 per month for approved injectable and oral GLP-1 drugs. Lilly says it will give full financial details when it reports earnings and issues 2026 guidance next week.

The disruption behind the news: Obesity treatment was blocked by cost, needles, and coverage. Medicare helps remove all three.

Obesity treatment has been bottlenecked by three things.

Price, needles, and reimbursement.

Medicare coverage attacks all three at once.

Start with the numbers that actually matter. Estimates show 20 million to 30 million Medicare beneficiaries could qualify for GLP-1 treatment.

Even if only 10 percent of that group adopts over the next few years, that is 2 million to 3 million patients. At roughly $600 per year per patient at the Medicare price point, you are looking at a $1.2 billion to $1.8 billion annual revenue lane before commercial insurance or cash pay even enters the picture.

Injections scare people off. Pills do not. 2026 is the year where obesity pills will reshape the GLP-1 market.

Novo Nordisk’s early data shows pills pull in first-time users, not defectors. That means Lilly’s orforglipron is not competing just against Wegovy or Zepbound. It is competing against doing nothing.

Medicare coverage changes employer behavior too. Once Medicare sets a national price anchor, private insurers follow. They may lag by a year, but they follow. That compresses pricing power while massively expanding volume. Lilly is clearly choosing volume.

There is also a supply-side disruption. Pills are cheaper to manufacture, easier to ship, and simpler to scale globally than injectables. Over time, that cost curve favors oral GLP-1s. If efficacy stays close enough, pills win on logistics alone.

For competitors, this is pressure. Novo Nordisk still leads, but the market is no longer just about injectable dominance. Smaller biotechs betting on premium pricing or slow physician adoption are now running uphill.

What to watch next

First, watch Medicare enrollment speed.

If adoption ramps in the first two quarters post-launch, expectations for the entire obesity drug market will reset upward.

Second, watch gross margin commentary.

Lower prices will hit per-unit economics, but investors should focus on volume growth per quarter. Flat margins with accelerating volume is a win here.

Third, watch whether commercial insurers preemptively move coverage decisions forward.

If they do, the pill market pulls demand from 2027 into 2026.

Finally, watch consumer behavior. If pills normalize long-term obesity treatment the way statins normalized cholesterol management, this category stops being episodic and becomes permanent.

This is not about a single drug or company. Medicare has made obesity treatment foundational to the system. From that point on, the market no longer resets the way drug markets usually do. Eli Lilly (LLY) has a Disruption Score of 5. Click here to learn how we calculate the Disruption Score.  

Eli Lilly is also part of the Disruption Aristocrats, our quarterly list of the world’s top disruptive stocks.