No spread pricing

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. Spread pricing is written into the agreement. Exhibit 7 Section 6(a) on page 44 has the Employer acknowledge, as part of negotiating the deal, that the Claim Administrator and/or Prime will keep all or a portion of the discounts and allowances negotiated with network pharmacies, while Prime reimburses those pharmacies under their separate Network Contract. Exhibit 3 Section 4.3 on page 27 says pharmacy discounts are passed through only to the Claim Administrator, not to the Employer, and that for mail and specialty Prime keeps a portion as its fee. Page 46 says the Employer pays the pricing in the missing BPA Addendum rather than what the pharmacy was paid, and the exhibit is titled a Guaranteed Traditional Aggregate Pricing Arrangement on page 43. The model requires the plan to pay exactly what the pharmacy is paid plus a disclosed administrative fee. This permits the retained difference in every 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, Section 6.a explicitly acknowledges that the Claim Administrator and Prime will keep all or a portion of the discounts and allowances negotiated with network participants. On Page 27, Section 4.3 notes that for mail and specialty programs, Prime may keep a portion of discounts negotiated with pharmacies. The contract does not require pass through pricing where the sponsor pays exactly what the pharmacy receives plus an administrative fee. By expressly allowing the retention of discounts and price differentials, the agreement permits spread pricing.

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. Page 44 affirmatively permits retention of some or all pharmacy-negotiated discounts and allowances while Prime reimburses network participants according to separate network contracts. Pages 14 and 27 make the employer's participating claim amount the amount mutually agreed with the administrator, not the exact pharmacy remittance plus a disclosed fee. Page 27 also makes a mail and specialty exception to amounts passed from Prime to the administrator. These clauses permit economic differences instead of prohibiting spread in every channel. The absent PBM Fee Schedule Addendum holds the actual employer rates and may contain aggregate guarantees, but no visible provision compels claim-by-claim equivalence between employer invoice and pharmacy payment.

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. Page 44 requires the Employer to acknowledge that, in negotiating the agreement and Exhibit 7, it has taken into account that Claim Administrator and Prime will keep all or a portion of the discounts and other allowances negotiated with the network participant. The Employer reimburses Claim Administrator at BPA Addendum pricing, Page 46. Prime reimburses pharmacies under the network contract, Page 44. Those are different prices, and the difference may be retained. Page 27 says retail discounts and allowances negotiated by Prime are passed through to Claim Administrator, not that the Employer pays the pharmacy price plus a disclosed administrative fee. On mail and specialty, Prime may keep a portion of the discount as its fee. The exhibit title on Page 43 is a guaranteed traditional aggregate pricing arrangement, which is an average guarantee rather than a pharmacy cost pass through. The model contract requires the plan to pay exactly what the pharmacy is paid, plus a disclosed administrative fee, with no retained difference in any channel. This draft permits the retained difference. That is bad. The addendum may state the Employer's rate. It is not needed to see that retention is authorized.

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. The model term requires the plan to pay exactly what the pharmacy is paid plus a disclosed administrative fee, with no retained difference in any channel. The draft permits spread. Page 44 has the Employer acknowledging that the Claim Administrator or Prime will keep all or a portion of the network discounts and allowances. Page 27 requires pass-through of pharmacy negotiated discounts from Prime to the Claim Administrator for retail, but expressly excepts mail and specialty, and the pass-through stops at the Claim Administrator rather than the plan. Page 28 states none of Prime's per claim administrative fees accrue to the Employer's benefit, and page 36 lets Host Blues use estimated or average pricing that can differ from what the provider is actually paid. The document does not eliminate spread pricing; it reserves the right to retain it, subject only to whatever the omitted BPA Addendum says.