House Democratic leaders want to empower Medicare to directly negotiate prices on 250 drugs, according to a document circulating among lobbyists and congressional offices.

The document, first obtained by Bloomberg Government, outlines the plan that House Speaker Nancy Pelosi (D-Calif.) has been working on for months.

Negotiation with the Department of Health and Human Services would be required for those drugs that are the most expensive to Medicare and lack competition from at least two other generic drugs, biologics, or biosimilars, and would include insulin.

The plan would also cap the prices of the drugs at 1.2 times...