Affiliate pharmacy pricing at acquisition cost

Prime may keep as its fee a portion of the discounts and/or other allowances that it has negotiated with the mail-order and/or specialty pharmacy.

Recorded reference: Page 27

Published rationale. The agreement acknowledges affiliated dispensing channels and expressly permits margin on them. Page 28 says the mail order and specialty pharmacy will be operated through a third party which may be an affiliate of or partially owned by Prime, and page 46 says Specialty Drugs may be provided by Prime, an affiliate of Prime, or another Specialty Pharmacy under arrangement with Prime or the Claim Administrator. Page 27 states that for mail order and specialty Prime may keep as its fee a portion of the discounts it negotiated with those pharmacies, and that the pharmacy pass through to the Claim Administrator applies except for mail and specialty drugs. Pricing for these claims is whatever the missing BPA Addendum sets (page 46). The model prices affiliate claims at net acquisition cost plus a stated dispensing fee with no retained margin. This text permits retained margin in the affiliate channel, so bad.

Employer acknowledges that in negotiating the Agreement and this Exhibit, it has taken into consideration that Claim Administrator and/or Prime will keep all or a portion of the discounts and/or other allowances that Claims Administrator or its pharmacy benefits manager has negotiated with the Network Participant.

Recorded reference: Page 44

Published rationale. On Page 44 and Page 46, the agreement permits the Claim Administrator and Prime to retain discounts and allowances negotiated with network participants. It also establishes that specialty medications may be dispensed by Prime, an affiliate of Prime, or other specialty pharmacies, with pricing governed by an omitted BPA Addendum rather than net acquisition cost. The document contains no requirement that affiliate pharmacies invoice claims at actual acquisition cost plus a stated dispensing fee, nor does it prohibit retained margin or establish documentation defaults as the model contract requires.

For the administrative services that Prime provides as part of the mail order and specialty pharmacy program, Prime may keep as its fee a portion of the discounts and/or other allowances that it has negotiated with the mail-order and/or specialty pharmacy.

Recorded reference: Page 27

Published rationale. Page 27 explicitly allows Prime to keep a portion of mail and specialty pharmacy discounts or allowances and excepts those channels from the pharmacy-negotiated amounts passed to the administrator. Page 28 notes a specialty or mail operator may be affiliated with or partly owned by Prime. Page 46 says specialty pricing follows a separate schedule and such drugs may be supplied by Prime or an affiliate. The draft never ties related pharmacy reimbursement or employer invoices to documented net acquisition cost plus a stated dispensing fee, and it supplies no documentation default. The omitted addendum means the precise specialty prices cannot be calculated, but the retained discount permission and channel carveout conflict with the model's no-margin standard.

For the administrative services that Prime provides as part of the mail order and specialty pharmacy program, Prime may keep as its fee a portion of the discounts and/or other allowances that it has negotiated with the mail-order and/or specialty pharmacy.

Recorded reference: Page 27

Published rationale. Claims at related pharmacies are not priced at net acquisition cost. Page 28 says the mail order pharmacy and specialty pharmacy shall be operated through a third party, which may be an affiliate of or partly owned by Prime. Page 27 says Prime may keep, as its fee for mail and specialty administration, a portion of the discounts and other allowances negotiated with the mail order or specialty pharmacy. Page 46 says specialty drugs may be provided by Prime, an affiliate of Prime, or another specialty pharmacy, and that the Employer reimburses Claim Administrator at the pricing in the omitted BPA Addendum. There is no stated dispensing fee tied to acquisition cost, and no documentation default if records are not produced. The model contract requires related mail, specialty, and retail claims to be invoiced at net acquisition cost plus a stated dispensing fee, with no retained margin. This draft permits retained margin on the channels most likely to be related to Prime. Unseen addendum rates cannot cure that clause. That is bad.

Prime may keep as its fee a portion of the discounts and/or other allowances that it has negotiated with the mail-order and/or specialty pharmacy

Recorded reference: Page 27

Published rationale. The model term prices claims at PBM-owned or economically related pharmacies at net acquisition cost plus a stated dispensing fee with no retained margin. This draft permits retained margin in exactly those channels. Page 27 states Prime may keep a portion of the discounts and allowances it negotiates with the mail order and specialty pharmacy as its fee, page 28 says the mail order and specialty pharmacy may be operated through an affiliate of or entity partially owned by Prime, and page 46 confirms specialty drugs may be dispensed by Prime or a Prime affiliate at prices set in the omitted BPA Addendum. Because the Claim Administrator owns a significant portion of Prime's equity, margin retained by Prime is margin earned by an affiliate of the plan's own administrator. No acquisition cost pricing and no documentation default appear anywhere in the document.