Former White House health policy advisor Talento on Medicare PBMs: 'Why is Medicare using PBMs at all?'

Katy Talento, former health policy advisor at the White House, said on May 16 that Medicare should negotiate directly with pharmaceutical companies rather than rely on pharmacy benefit managers (PBMs).

"Why is Medicare using PBMs at all? Just negotiate with the Pharma companies directly. It can’t end up worse for patients or taxpayers than it already is," Talento said in a statement on X.

Talento’s comments reflect ongoing debate over whether direct negotiation by Medicare could improve outcomes for patients and taxpayers compared to the current PBM-mediated system.

The role of PBMs in the U.S. healthcare system has drawn increasing scrutiny due to their influence over drug pricing and access. KFF has noted that PBM practices affect federal spending, beneficiary premiums, pharmacy access, and out-of-pocket costs for older adults and disabled Americans.

PBMs sit between drug manufacturers, insurers, Medicare Part D plans, employers, pharmacies, and patients, shaping formularies, pharmacy networks, reimbursement terms, and rebate arrangements. This structure gives them significant control over which medicines are covered and what patients pay at the pharmacy counter. 

The Federal Trade Commission has found that the six largest PBMs manage nearly 95% of prescriptions filled in the United States, with three processing roughly 80% of prescription drug claims.

Drug manufacturer rebates in Medicare Part D can reduce plan premiums but do not necessarily lower what beneficiaries pay at the pharmacy counter. The U.S. Government Accountability Office has reported that rebate-driven formulary placement can create a gap between savings captured by plans and out-of-pocket costs faced by patients, particularly when cost sharing is based on list prices.

AllBetter Health lists Katy Talento as CEO and describes her as a licensed health benefits consultant, veteran health care reformer, epidemiologist, and former top health advisor at the White House Domestic Policy Council. The organization works with employers on health benefit strategies aimed at savings, more generous benefits, and improved employee experience.