Full disclosure of compensation and conflicts

Claim Administrator hereby informs Employer and all Covered Persons that it owns a significant portion of the equity of Prime

Recorded reference: Page 28

Published rationale. The agreement contains real disclosure language. Exhibit 3 Sections 4 and 5 on pages 27 and 28 disclose that the Claim Administrator owns a significant portion of Prime, that it receives rebates, payments, discounts and allowances from pharmacies and manufacturers, that Prime charges administrative fees to pharmacies and manufacturers, and that manufacturer administrative fees are capped at 5.5 percent of WAC with a promise to advise if that changes. Exhibit 7 Section 1 on page 43 repeats the ownership and fee categories, and Section 6.2 on page 12 offers an annual list of affiliated providers and vendors on request. What is missing is everything the model term requires beyond categories: no dollar amounts, no quarterly or annual accounting of what was received on this plan's claims, no disclosure of broker or consultant payments, and no officer certification. Disclosure of existence without amounts or certification is partial.

Employer acknowledges that it has negotiated for the specific Rebate Credit included as part of this Agreement and that it and its Plan have no right to, or legal interest in, any portion of the rebates, payments, discounts and/or other allowances

Recorded reference: Page 28

Published rationale. On Page 28, the agreement discloses that the administrator owns a significant equity stake in Prime Therapeutics and that both entities receive rebates, manufacturer administrative fees, discounts, and other allowances. However, rather than providing transparent accounting and quarterly officer certifications, the text states that the Plan has no legal interest in those revenue streams and consents to the administrator retaining them. On Page 44, the employer is similarly reminded that it has no interest in manufacturer administrative fees. The disclosure merely acknowledges extensive economic conflicts without protecting the sponsor.

Currently, none of these fees will be passed on to Employer as expenses, or accrue to the benefit of Employer, unless otherwise specifically set forth in the Agreement.

Recorded reference: Page 28

Published rationale. Pages 27 and 28 describe pharmacy payments, Prime administrative fees from pharmacies and manufacturers, and amounts from third parties, but the quoted provision says those fees generally do not benefit the city. Page 44 states a disclosed maximum manufacturer administrative fee and says the administrator will notify the employer if that maximum changes. Page 12 offers an ownership-interest list on request at most annually, not a complete economic-conflicts exhibit. These are selected descriptions, not full disclosure of all direct and indirect compensation, related entities, broker payments, and plan-level allocations. No quarterly or annual named officer certification appears in the agreement or Exhibit 7. The omitted fee addendum may supply rates, but cannot cure the affirmative retention and limited disclosure structure visible here.

As of the Effective Date, the maximum that a PBM has disclosed to Claim Administrator that the PBM will receive from any pharmaceutical manufacturer for manufacturer administrative fees is five and a half percent (5.5%) of the Wholesale Acquisition Cost

Recorded reference: Page 28

Published rationale. The draft discloses some conflicts and does not require an officer to certify that everything was disclosed and remitted. Page 12 says Claim Administrator or its affiliates may own providers or vendors and will provide a list once per calendar year if asked. Page 27 discloses that Prime may keep a portion of mail and specialty discounts as its fee, and that a portion of Prime's fees is tied to performance standards. Page 28 discloses a manufacturer administrative fee maximum of five and a half percent of wholesale acquisition cost and says Claim Administrator will advise the Employer if that maximum changes. The same page says the Employer has no legal interest in actual rebates and consents to retention, with only a Rebate Credit from Claim Administrator's own assets. The credit amount is placed in the omitted ASO Benefit Program Application. No named officer certifies quarterly or annually, and broker payments are not disclosed. The model contract requires full compensation and conflict disclosure plus officer certification and remittance. Several streams are named. Amounts, certification, and remittance are not. That is partial.

the maximum that a PBM has disclosed to Claim Administrator that the PBM will receive from any pharmaceutical manufacturer for manufacturer administrative fees is five and a half percent (5.5%) of the Wholesale Acquisition Cost

Recorded reference: Page 28

Published rationale. The draft contains more disclosure than many PBM contracts: page 28 caps disclosed manufacturer administrative fees at five and a half percent of WAC with a duty to advise the Employer if that maximum changes, pages 27 and 28 describe Prime's per claim fees, the rebate flow, and the equity stake the Claim Administrator holds in Prime, page 12 requires a once per year list of owned providers on request, and page 36 discloses that Host Blues may retain payments and allowances. But the model term requires disclosure of all direct and indirect compensation, affiliate ownership touching plan claims, and payments to consultants, certified by a named officer quarterly and annually. There is no certification mechanism anywhere, and the same disclosures that reveal the money also reserve the right to keep it. Disclosure without certification and paired with express retention is materially weaker than the model.