Pharmaceutical companies that raise the cost of certain drugs risk losing protections that guarantee Medicare coverage, part of a Trump administration proposal to give insurers leverage to negotiate lower prices.

The U.S. Centers for Medicare and Medicaid Services on Nov. 26 proposed exceptions to six protected classes of treatments for illnesses including HIV, depression and cancer. If a drug falls into the category, privately covered Medicare plans have to cover it -- giving drug manufacturers significant power to charge what...