This marks a shift in federal policy after the administration earlier this year rejected a Biden-era proposal to cover weight loss drugs.
GLP-1 drugs have become a focal point in the battle against obesity, a chronic condition affecting millions of Americans.
Originally developed for type 2 diabetes, these drugs have gained popularity for their ability to reduce body weight by suppressing appetite and slowing digestion.
Market leaders Novo Nordisk with its drugs Ozempic and Wegovy, and Eli Lilly with Mounjaro and Zepbound, dominate this fast-growing category, which analysts predict could generate over US$150 billion in annual revenue by 2030.
However, their hefty price tags, ranging from US$5,000 to US$7,000 a year, have sparked debate over their affordability and long-term coverage.
Under the proposed plan, state Medicaid programs and Medicare Part D plans could voluntarily offer coverage for GLP-1 drugs starting in April 2026 for Medicaid and January 2027 for Medicare, the report said.
More than 70 million people are covered by Medicaid, and about 65 million people are enrolled in the government’s Medicare programme, as per government data.
Coverage under these government programmes could increase sales volumes for both Lilly and Novo.
Shares of Lilly, one of the key players in the market, rose nearly 2% premarket following the news.
Both Lilly and Novo are investing heavily to meet growing demand for weight loss drugs, with Novo Nordisk committing US$4.1 billion to expand its US manufacturing capacity.
The Centers for Medicare & Medicaid Services, Lilly and Novo did not immediately respond to a Reuters request for comment.