*

Proposal expands coverage of drugs like Wegovy that treat

obesity as a condition on its own

*

Would expand access for more than 7 mln people with

Medicare,

Medicaid coverage

*

New rule needs incoming Trump admin's support to go into

effect

(Adds details on whether Trump administration will support the

rule in paragraphs 10-14 and on CBO cost estimate in paragraph

16)

By Andrea Shalal and Patrick Wingrove

WASHINGTON, Nov 26 (Reuters) - U.S. President Joe Biden

on Tuesday proposed expanding coverage of anti-obesity drugs,

like Novo Nordisk's Wegovy, for more than 7 million

people with Medicare and Medicaid health coverage, which could

cut out-of-pocket expenses for some by as much as 95%.

This would enable more Americans to afford new weight

loss medications in the GLP-1 class that have been shown to

reduce weight by as much as 20% on average and can help prevent

type 2 diabetes but cost as much as $1,000 a month without

insurance coverage. The drugs have also been shown in trials to

lower the risk of heart attacks and cardiovascular-related

death.

Current rules for the Medicare government health insurance

program cover the use of GLP-1 drugs such as Eli Lilly's ( LLY )

Mounjaro and Novo's Ozempic for conditions like

diabetes, but not the versions of those drugs like Wegovy that

have been approved to treat obesity as a condition on its own.

Medicaid programs, which are state-run, can cover the

drugs but many choose not to.

Lilly's shares were up 6.5%, while Novo's U.S.-listed shares

were up nearly 3% in morning trading.

The proposed regulation, which was posted on the Federal

Register by the Department of Health and Human Services on

Tuesday, would require Medicare to cover these drugs as a

treatment for obesity, expanding access for an estimated 3.4

million Americans with Medicare.

It would also expand access to the medications for

approximately 4 million adult Medicaid enrollees, according to

the White House.

The program would be effective starting in 2026 if

President-elect Donald Trump's incoming administration backs the

move; the rule's comment period is open until Jan. 27, after the

inauguration. Robert F. Kennedy Jr., Trump's choice for health

secretary, has said that America should tackle obesity through

healthy eating, not medicine.

Representatives of the Trump transition team were not

immediately available for comment.

Larry Levitt, executive vice president for health policy at

non-profit KFF, said it is an open question whether the incoming

Trump administration will follow through on the proposed

weight-loss drug requirement.

"RFK Jr. has expressed skepticism of these drugs, but

Dr. Oz has praised them," he said, referring to Trump's pick of

television personality and surgeon Dr. Mehmet Oz as

administrator of the Centers for Medicare and Medicaid Services

(CMS).

"Ultimately, this decision is likely to be made by the White

House, which may be hesitant to stand in the way of coverage

that will probably be very popular among many seniors," Levitt

said.

Craig Garthwaite, a professor at Northwestern's Kellogg

School of Management, said the Trump administration would be

stepping out of RFK's stated belief that more drugs will not

help.

"If they follow through with that as their policy position,

it wouldn't seem to be in line with making a big push to get

these products covered under Medicare," he said.

The CMS estimates coverage will cost the federal government

about $25 billion for Medicare and $11 billion for Medicaid over

a decade. States would pay around $4 billion for their share of

the Medicaid bill. The agency estimates total Medicare drug

spending over the period at $2.1 trillion.

The Congressional Budget Office in October estimated that

Medicare coverage of anti-obesity medicines would increase

federal spending on net by about $35 billion over eight years.

Total direct federal costs would increase from $1.6 billion in

2026 to $7.1 billion in 2034, it said.

Reuters reported earlier this month that intense demand

for anti-obesity drugs has triggered supply issues, with many

patients turning to cheaper compounded versions sold online.

Biden, a Democrat, has pushed hard to bring down the cost of

healthcare and prescription drugs, such as by capping the cost

of insulin at $35 for seniors receiving Medicare, and enacting a

$2,000 cap on out-of-pocket prescription drug costs for the same

group.

Biden's Inflation Reduction Act also required pharmaceutical

companies to negotiate drug prices with Medicare, which covers

66 million people. The first price cuts for 10 drugs, ranging

from 38% to 79% and starting in 2026, were announced in August.

Ozempic and Wegovy are expected to be included in the next

round of negotiations that will see new prices introduced in

2027.

During his first term in office, Trump had also sought to

lower drug prices, but the measure was later blocked by a

federal judge.