100% pass-through of manufacturer revenue

it and its Plan have no right to, or legal interest in, any portion of the rebates, payments, discounts and/or other allowances provided by the PBM or such manufacturers

Recorded reference: Page 28

Published rationale. Exhibit 3 Section 5.2 on page 28 says rebate negotiation is conducted for the benefit of the Claim Administrator and not for the benefit of Employer or Covered Persons, that the Employer and its Plan have no right to or legal interest in any portion of the rebates, payments, discounts or allowances, and that the Employer consents to the Claim Administrator retaining all of them. In place of pass through the Employer gets a Rebate Credit paid from the Claim Administrator's own assets notwithstanding actual rebates, in an amount set in the missing ASO BPA, paid prospectively as a monthly billing credit and ending at termination (pages 28 and 47). Exhibit 7 Section 4 on pages 43 and 44 repeats that Prime or the Claim Administrator retains all right, title and interest in rebates and manufacturer administrative fees. The model requires one hundred percent of manufacturer revenue paid quarterly. This is the opposite, so bad.

Employer shall have no right, title or interest in Manufacturer Administrative Fees.

Recorded reference: Page 44

Published rationale. The contract fails to pass through one hundred percent of manufacturer revenue. On Page 28 and Page 44, the agreement specifies that the Employer receives only a negotiated Rebate Credit, while Prime and the administrator retain all right, title, and interest in actual rebates, discounts, allowances, and manufacturer administrative fees. On Page 28, GPO fees may be deducted before rebates reach the administrator. The model contract published by Mark Cuban and collaborators requires complete quarterly pass through of all manufacturer monies within 30 days, whereas this agreement retains significant manufacturer revenues.

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 provided by the PBM or such manufacturers to Claim Administrator

Recorded reference: Page 28

Published rationale. Page 28 says the PBM forwards collected rebates to the claim administrator, except interest and late fees, and purchasing organization fees may be deducted. The city receives only a negotiated rebate credit if one is provided, from the administrator's own assets regardless of actual manufacturer receipts. Pages 43 and 44 reiterate that Prime or the administrator retains actual rebate and manufacturer fee rights, with the city having no interest beyond applicable credits. Page 47 describes credits prospectively on monthly statements, ending at program or exhibit termination. This is not full manufacturer revenue pass-through within a fixed quarterly deadline. The omitted application and addendum conceal the credit amount, not the adverse allocation of actual receipts.

it and its Plan have no right to, or legal interest in, any portion of the rebates, payments, discounts and/or other allowances provided by the PBM or such manufacturers to Claim Administrator and consents to Claim Administrator’s retention of all such rebates, payments, discounts and/or other allowances.

Recorded reference: Page 28

Published rationale. Page 28 states that the Employer negotiated a specific Rebate Credit and that the Employer and the Plan have no right to, or legal interest in, any portion of the rebates, payments, discounts, or other allowances provided by the PBM or manufacturers, and that the Employer consents to retention of all of them. The credit is paid from Claim Administrator's own assets notwithstanding the actual amount of rebates. Page 47 says Rebate Credits are paid prospectively on the monthly billing statement and shall not continue after termination of the prescription drug program. Page 27 says neither the Employer nor covered persons are entitled to pharmacy payments, discounts, or allowances except as reflected in service charges. Manufacturer administrative fees and group purchasing organization fees sit outside the rebate definition on Page 49. The model contract requires one hundred percent of manufacturer revenue of every kind, paid quarterly within thirty days of quarter end, with only a closed list of excluded claims. This draft replaces that rule with a negotiated credit and a consent to retention. That is bad.

it and its Plan have no right to, or legal interest in, any portion of the rebates, payments, discounts and/or other allowances provided by the PBM or such manufacturers to Claim Administrator

Recorded reference: Page 28

Published rationale. The model term requires 100 percent of manufacturer revenue of every kind paid to the plan quarterly, with only a closed list of exclusions. This draft does the opposite at every layer. On page 28 the Employer acknowledges it negotiated only a specific Rebate Credit, paid from the Claim Administrator's own assets regardless of actual rebate collections, and consents to retention of everything else. On the same page the PBM keeps interest and late fees earned on rebates, and GPO fees are netted out before money reaches the Claim Administrator. On page 27, Prime keeps a portion of mail and specialty discounts, and page 44 confirms the Employer has no right, title or interest in manufacturer administrative fees. Even the retail pass-through that does exist on page 27 runs only from Prime to the Claim Administrator, not to the plan. Nothing close to full pass-through exists.