Talk about sticker shock.
New Mexico’s Medicaid program in 2025 spent $38.7 million on Ozempic, one drug in a class of medications used to treat Type 2 diabetes, obesity and other conditions, according to analysis presented Tuesday to the Legislative Health and Human Services Committee. That’s up more than 34% since just the year before, and more than double from 2023.
It’s one example in a broader trend of rising prescription drug costs that have increased costs for the state’s Medicaid program — which insures about 2 in 5 New Mexicans — and driven up premiums on the private insurance market. Per-enrollee spending in private insurance, Medicare and Medicaid are expected to increase 5% per year between 2025 and 2034, said RubyAnn Esquibel, principal analyst for the Legislative Finance Committee.
“This is still just a projection, but that’s a substantial projection,” she said. “We’re talking higher than a lot of the different inflationary factors.”
All of those rising costs come as federal Medicaid spending is set to shrink. The 2025 federal reconciliation bill, a massive Republican tax and spending bill signed into law last year, will slash taxes and discretionary spending through 2034, with cuts to Medicaid among its central cost-saving efforts.
While those cuts are expected to reduce the number of New Mexicans on Medicaid — by about 88,000 members, according to estimates from the state Health Care Authority — the cost of the program is nonetheless expected to increase, Esquibel said.
When it comes to weight loss drugs, the rising costs pose a tricky policy question: Will spending big now on obesity treatments save the state money in the long run, given that people who are obese are more likely to develop other chronic conditions, like high blood pressure, heart disease and Type 2 diabetes?
Sen. Rex Wilson, a Republican of Ancho, requested that kind of data during the meeting.
“If we can get people to through this tool to reduce their obesity, are the payoffs in other health issues considerable?” he asked.
But there’s no clear answer yet, said Harry Rommel, a fiscal analyst for the Legislative Health and Human Services Committee.
“We’re at the very beginning of a multiyear, multigenerational experiment with the GLP-1s,” he said. “I don’t believe they’ve been on the market long enough to really calculate a true return on investment. … In terms of reduced hospital costs, reduced emergency visits, reduced costs for other diabetes medications, I don’t think anyone has really got that data together yet.”
The New Mexico Medicaid program spent about $600 million on prescription drugs in 2021. By 2025, that figure neared $1 billion, according to figures Rommel presented.
Glucagon-like peptide-1 receptor agonists — often called GLP-1 drugs — are among the driving forces of the increase in costs.
In New Mexico, Medicaid covers Ozempic, a GLP-1, when the drug is used to treat Type 2 diabetes, obstructive sleep apnea and a handful of other conditions. Though its name has become synonymous with weight loss medication, Ozempic has only been approved by the U.S. Food and Drug Administration as a treatment for Type 2 diabetes.
Nonetheless, it was among the top 10 Medicaid drugs in the state for 2024 and 2025, representing a cost of $67.5 million over those two years.
“This is what we’re seeing in terms of the trend: We’ve gone from basically nothing in 2019 to $38.9 million spent [in 2025],” Rommel said.
The state Medicaid program does cover some weight loss medications to treat obesity alone, according to the New Mexico Health Care Authority, which administers Medicaid in the state. In most cases, however, patients must have a body mass index — or a height-to-weight ratio — over 40 to be approved for the drug.
Rates of obesity have been on the rise in New Mexico for the past decade, increasing from 26% in 2013 to 35% in 2023 consistent with nationwide trends, according to data from the state Department of Health.
However, obesity doesn’t affect everyone in New Mexico equally. Rates are higher among the state’s Native American and Hispanic residents, in rural communities and for households making less than $25,000 per year, state Health Department data shows. The income-based disparity in obesity rates has led some advocates to call for the state’s Medicaid program to broaden its coverage of weight-loss drugs as treatment for the condition.
But there’s no telling — yet — what expanded use of weight loss drugs might mean in terms of cost savings to the state, said Rep. Liz Thomson, an Albuquerque Democrat.
“That’s been one of my frustrations since I came into the Legislature,” said Thomson, who has held her seat for much of the last decade. “We propose bills. We get a [fiscal impact report] that says what it costs — but there’s no way to say what it’s going to save.”
Margaret O’Hara reports on issues affecting healthy communities in New Mexico. Her work is funded by a grant from Anchorum Health Foundation. Anchorum will not have any role in editorial decisions. The New Mexican and its Public Service Journalism Fund retain full editorial control. Philanthropically funded stories by The New Mexican are made available to all readers without a paywall.
