GPO and purchasing entity pass-through

rebates collected by PBM and paid to Claim Administrator will be net of any fee the group purchasing organization may retain for its role in securing rebates.

Recorded reference: Page 28

Published rationale. The agreement anticipates a group purchasing organization and lets its take stay outside the plan. Exhibit 3 Section 5.2 on page 28 says the PBM may contract with manufacturers through a group purchasing organization and that rebates paid to the Claim Administrator will be net of any fee the GPO retains. Exhibit 7 Section 4 on page 43 says Prime negotiates directly or through a group purchasing organization, and the rebate definition on page 49 excludes fees retained by a GPO. The Manufacturer Administration Fee definition on page 48 likewise covers fees received directly or through a GPO, and page 44 says the Employer has no right, title or interest in those fees. Even the rebates that survive the GPO deduction go to the Claim Administrator, not the plan. The model requires purchase discounts, volume credits and supplier payments received by any related purchasing entity to flow to the plan on disclosed drivers. This text does the opposite, so bad.

PBM may contract with pharmaceutical manufacturers through a group purchasing organization and, in such case, rebates collected by PBM and paid to Claim Administrator will be net of any fee the group purchasing organization may retain for its role in securing rebates.

Recorded reference: Page 28

Published rationale. On Page 28, Section 5.2 explicitly permits the PBM to contract with manufacturers through a group purchasing organization and states that rebates paid to the Claim Administrator will be net of any fee retained by the GPO. Page 43 confirms this arrangement, while Page 49 excludes GPO retained fees from the definition of Rebates. None of the GPO discounts, supplier fees, or volume credits are passed through to the Employer, directly contradicting the model contract published by Mark Cuban and collaborators.

PBM may contract with pharmaceutical manufacturers through a group purchasing organization and, in such case, rebates collected by PBM and paid to Claim Administrator will be net of any fee the group purchasing organization may retain for its role in securing rebates.

Recorded reference: Page 28

Published rationale. Page 28 explicitly allows an intermediary purchasing organization's fee to be taken before collected rebates reach the administrator. Page 49 excludes such fees and manufacturer administration fees from the rebate definition. Pages 43 and 44 place manufacturer contracting and related revenue in Prime's or the administrator's own economic interest and deny the employer interest in actual manufacturer payments. No disclosed allocation drivers or duty to remit purchasing entity discounts, volume credits or supplier payments appears on pages 28, 43 through 49, or in the general financial terms. This is an affirmative GPO leakage permission, not merely a silent gap. The missing addendum would show any promised rebate credit, but not overturn the visible retention rights.

rebates collected by PBM and paid to Claim Administrator will be net of any fee the group purchasing organization may retain for its role in securing rebates.

Recorded reference: Page 28

Published rationale. Page 28 says the PBM may contract with manufacturers through a group purchasing organization and that rebates collected and paid to Claim Administrator are net of any fee the organization retains for securing rebates. Page 49 repeats the exclusion. Rebates do not include fees retained by a group purchasing organization. Page 43 says Prime negotiates directly or through a group purchasing organization, on its own behalf, and the Employer has no right, title, or interest in rebates or in manufacturer administrative fees. Even the rebates that reach Claim Administrator do not flow to the Employer. The Employer gets only the separate Rebate Credit described on Page 28, paid from Claim Administrator's own assets. No allocation driver is disclosed. The model contract requires purchase discounts, volume credits, and supplier payments received by the PBM or any related purchasing entity, including an offshore group purchasing organization, to flow to the plan on disclosed drivers. This draft lets the purchasing entity keep its fee and lets Claim Administrator keep the rest. That is the opposite of pass through. The verdict is bad.

rebates collected by PBM and paid to Claim Administrator will be net of any fee the group purchasing organization may retain for its role in securing rebates

Recorded reference: Page 28

Published rationale. The model term requires purchase discounts, volume credits and supplier payments received by the PBM or any related purchasing entity, including offshore GPOs, to flow to the plan on disclosed allocation drivers. This draft builds the opposite into both the operative text and the definitions. Page 28 provides that when Prime contracts through a group purchasing organization, rebates are paid to the Claim Administrator net of whatever fee the GPO retains, with no cap and no disclosure of the amount. Page 44 states Prime may retain manufacturer administrative fees or pass them along in whole or in part at its discretion, and the definition of Rebates on page 49 expressly excludes fees retained by a group purchasing organization. GPO revenue is therefore carved out of pass-through by design rather than routed to the plan.