By Andrea Shalal

WASHINGTON (Reuters) - U.S. President Joe Biden will propose expanding coverage of anti-obesity drugs for millions on Medicare and Medicaid, which could cut out-of-pocket expenses for some by as much as 95%, a White House official said on Tuesday.

This would enable more Americans to afford new weight loss medications that can help prevent type 2 diabetes and lower the risk of death and heart attacks by up to 20%, but cost as much as $1,000 a month without insurance coverage.

Current rules for the Medicare and Medicaid government health insurance programs cover the use of drugs such as Mounjaro, Ozempic and Wegovy for certain conditions like diabetes, but not for obesity as a condition on its own.

A new proposed regulation, to be published by the Department of Health and Human Services later 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 ensure access to the medications for approximately 4 million adult Medicaid enrollees, the White House official 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.

Healthcare and drug industry groups have filed at least eight lawsuits to block the program, arguing it is unconstitutional and gives too much power to federal regulators.

During his first term in office, President-elect Donald Trump also sought to lower drug prices in a last-minute rule pushed out by his administration in 2020, but the measure was later blocked by a federal judge.