Eli Lilly & Co. said it plans to begin commercial sales of its Covid-19 monoclonal antibody treatment to states, hospitals and other healthcare providers this month, as the federal government’s supply of the drug is nearly depleted.

The move marks a shift away from the way Lilly’s drug and most other Covid-19 treatments and vaccines have been distributed in the U.S. It will likely be the first test of whether the vaccines and treatments would remain accessible if shifted to a commercial market.

Previously, Lilly sold all of its Covid-19 antibody doses for use in the U.S. via contracts with the federal government. The government has made doses available for free to patients and has overseen allocation to states and pharmacies.

But the government will exhaust its supply of Lilly’s Covid-19 antibody treatment, bebtelovimab, as early as the week of Aug. 22, a spokeswoman for the Indianapolis-based company said in a statement. Without new appropriations from Congress, the government lacks funds to purchase more doses from Lilly, she said.

To ensure broad access to bebtelovimab—which has held up against the more transmissible Omicron variant and its BA.5 subvariant—Lilly will make it commercially available for purchase by states, territories and hospitals through a sole distributor beginning the week of Aug. 15, the spokeswoman said.

“I don’t anticipate that this will in any way stimulate usage of the product,” Daniel Skovronsky, Lilly’s chief scientific and medical officer, said in an interview. “It’s more just about, how do we keep it available despite the U.S. government not being able to purchase it anymore. That’s why we’re switching to a different model here.”

The shift in distribution could raise financial barriers that keep uninsured patients from getting the drug. Lilly’s list price for bebtelovimab is $2,100 per dose. Previously, the drug’s cost wasn’t an issue for patients because the government was providing doses for free.

The Biden administration had used congressional pandemic rescue funds to cover Covid-19 vaccines and treatments for people without health coverage, but the initiative’s funding ran out in spring. Eight percent of Americans lacked health insurance as of 2022, according to a Department of Health and Human Services report released Tuesday.

Bebtelovimab is intended for use only when the antiviral treatments Paxlovid and Veklury are unavailable or aren’t clinically appropriate for a patient.

Photo: Eli Lilly and Company/Associated Press

Lilly and HHS are discussing ways to ensure uninsured, low-income people can get the drug, according to the company and a spokesman for the agency. Bebtelovimab is authorized to treat mild to moderate Covid-19 in nonhospitalized people age 12 and older who are at high risk for severe disease.

Bebtelovimab is typically given via intravenous injection by a medical provider to people who are immunocompromised, not fully vaccinated or otherwise at high risk for severe illness. It’s intended for use only when the antiviral treatments Paxlovid and Veklury are unavailable or aren’t clinically appropriate for a patient.

Lilly expects bebtelovimab to be covered under Medicare, a national health program for seniors and people with disabilities, and Medicaid, a federal-state health program for low-income people, which the company said should help many people get access at little or no cost.

HHS has worked with Lilly to make the product commercially available for purchase through a sole distributor, and the move will ensure there is no break in availability of bebtelovimab to different jurisdictions across the country and healthcare providers, the HHS spokesman said.

Equitable access to the monoclonal is a concern as the drug pivots to the commercial market and the number of serious Covid-19 cases and hospitalizations rise, according to a federal official.

The seven-day average of new hospital admissions for Covid-19 was 6,370 for the week ending July 29, up from 1,438 for the week ending April 4, according to the Centers for Disease Control and Prevention. Thirty-one percent of people age 50 or older, who tend to be at higher risk of severe illness, have received a second booster dose as recommended by federal regulators.

In June, Lilly agreed to supply an additional 150,000 doses of bebtelovimab to the U.S. government for about $275 million. That was expected to meet demand through late August.

Bebtelovimab, which was introduced in 2022, is the third Covid-19 antibody treatment introduced by Lilly. Two earlier ones proved to be ineffective against the Omicron variant.

Lilly booked $1.47 billion in global sales of Covid antibodies in the first quarter of 2022, following $2.24 billion in sales for full-year 2021.

With Congress deadlocked on new Covid-19 funding, other Covid-19 treatments and vaccines are expected to join bebtelovimab in the transition to the commercial market following a vaccine booster campaign now slated for as early as mid-September. The administration has been purchasing updated vaccines that would be available free to many people if they are authorized and recommended by federal regulators.

The Biden administration has continued to press for more money, however. The White House narrowed its request of $30 billion to $22.5 billion for programs such as replenishing vaccine supplies, personal protective equipment and antibody drugs. But congressional Republicans have said there hasn’t been a full enough accounting of how money was spent and that the administration should first use unspent relief funds provided to states.

The administration has repurposed about $10 billion earmarked for testing and other programs for the purchase of vaccines for the fall.

The administration earlier this summer redirected funds from other Covid-19 initiatives to purchase 150,000 more doses of bebtelovimab, which extended its supply through August and allowed for states and healthcare providers to prepare for ordering through the commercial market, the HHS spokesman said.

Write to Stephanie Armour at stephanie.armour@wsj.com and Peter Loftus at peter.loftus@wsj.com