Contract teardowns

Published prices tell you what a hospital charges. Contracts tell you who keeps the difference. These are public-sector pharmacy-benefit and third-party administrator agreements read clause by clause — and compared against each other, because the fastest way to show a term is negotiable is to show another public body that negotiated it.

Clause comparison

Seven clauses decide where the money in a pharmacy-benefit contract ends up. Each cell names the language it came from, and links to the page of the contract it is on wherever we hold the document, so you can check us against the source.

Scroll the table sideways to compare sponsors.

Clause	Dallas	CalPERS benchmark	Georgia benchmark	New York benchmark	Florida benchmark
Rebate definition If manufacturer administration fees and GPO retention sit outside the defined term, value leaks upstream before any pass-through promise applies to it.	Vendor-favourable Excludes manufacturer administration fees and GPO-retained fees — value leaves before the definition applies. Prime business practice addendum, Rebates definition	Sponsor-protective All-remuneration style definition — manufacturer payments are captured whatever they are called and whoever receives them. CalPERS §U.3	Sponsor-protective Manufacturer Payments definition reaches administration fees and amounts retained by intermediaries. Georgia Manufacturer Payments definition	Sponsor-protective Governs "Pharma Revenue", not "rebates" — "formulary rebates; market share rebates; administrative fees; AWP caps; inflation protection program; or by any other name", and it reaches the contractor's Key Subcontractor and Affiliates. That is the drafting that defeats relabelling and offshore aggregators. Agreement C000753 §1.105, Pharma Revenue — p. 13	Sponsor-protective Defines Manufacturer Payments across eight enumerated sources including "rebates, regardless of how categorized", market share incentives, commissions, educational grants and fees for selling utilization data to a manufacturer. Relabelling has nowhere to go. Contract DMS 13/14-011 §1, Manufacturer Payments — p. 7
Rebate pass-through Whether the sponsor receives the rebates actually collected, or a fixed per-member credit paid from the vendor's own assets regardless of what was collected.	Vendor-favourable Fixed per-employee-per-month credit from the administrator's own assets; city agrees it has no legal interest in actual rebates. Credits end at termination. Executed ASO/BPA rebate credit provision	Sponsor-protective Greater of the guarantees or 100% of amounts actually collected. CalPERS rebate provisions	Not read Not yet read.	Sponsor-protective A Minimum Pharma Revenue Guarantee measured against that all-remuneration definition, with an annual rebate true-up file that must reconcile to the billing records. Federal subsidies may not be counted toward it. Agreement C000753 §1.105, §6.7.7(a) — p. 73	Sponsor-protective The Department receives the greater of 100 percent pass-through of actual Manufacturer Payments or the per-prescription guarantees — not one or the other at the vendor's election — and the vendor may not charge a rebate management fee against them. Contract DMS 13/14-011, Exhibit E rebate terms — p. 90
MAC control The maximum allowable cost list sets generic prices. A vendor-maintained list with no sponsor approval and no increase cap is a price the sponsor cannot see or contest.	Vendor-favourable List established and maintained by Prime. No sponsor approval, no increase cap. MAC List definition	Sponsor-protective Sponsor approval over the list, with a duty to reflect all-source discounts. CalPERS §§K–L	Not read Not yet read.	Mixed The list is still managed by the contractor, with no sponsor approval — the same weakness Dallas has. But it is defined as the maximum the Program is charged AND the pharmacy is paid, "on a pass-through basis", so the two numbers are the same one and generic spread has nowhere to hide. Agreement C000753 §1.76, §1.114 — p. 11	Mixed The MAC list is still the vendor's, amendable as often as weekly with no sponsor approval — the same weakness as Dallas and New York. What differs is that Pass Through Pricing requires the Department to be billed the same amount the retail pharmacy is paid, and says plainly that spread pricing will not be used at retail. The list still moves; the margin between the two prices does not. Contract DMS 13/14-011 §1, MAC and Pass Through Pricing — p. 8
Audit rights An audit right gated by the audited party's approval, situs, frequency and a fee is a right to be told no politely.	Vendor-favourable Once per 12 months, onsite at the GPO, auditor approved by the GPO, GPO's NDA, $15,000 fee to the city. Audit provisions	Not read Not yet read.	Not read Not yet read.	Sponsor-protective The contractor must produce source documents, books of account, pertinent contracts and key subcontracts, and all relevant computerised data in machine-readable form at the Department's discretion, plus access to its online claims processing system. The State Comptroller holds independent authority. No third-party approval of the auditor, no audit fee, no mandated situs. Agreement C000753 §14.5.3–14.5.9 — p. 115	Sponsor-protective Audits of any and all areas, by any representative the Department selects — no vendor approval of the auditor and no audit fee payable to the vendor, which is the toll Dallas pays. Reaches claims files, provider contracts and computer systems, and survives termination. The Department bears its own third-party auditor costs. Contract DMS 13/14-011 §4, Audits — p. 20
Exit terms If leaving early forfeits the guarantees earned to date, the sponsor cannot credibly threaten to leave — which is the only leverage it has mid-term.	Vendor-favourable Early termination, including under the city's own rights, voids discount and minimum rebate guarantees for that guarantee period. Guarantee period / termination provisions	Not read Not yet read.	Not read Not yet read.	Not read Not yet read.	Sponsor-protective Sixty days' written notice, terminable in whole or in part whenever the Department decides in its sole discretion that it is in its own best interest, and the vendor recovers no cancellation charges or lost profits. There is no forfeiture of banked rebates on the way out. Contract DMS 13/14-011 §2.1.3 — p. 11
Specialty designation Whoever decides which drugs are 'specialty' and which pharmacy dispenses them controls both the price basis and the channel.	Vendor-favourable "A pharmacy designated by Claim Administrator or PBM" — classification and channel at the vendor. Specialty pharmacy definition	Not read Not yet read.	Not read Not yet read.	Not read Not yet read.	Not read Not yet read.
Medical-benefit rebates Infusion and oncology drugs bill under the medical benefit. A pharmacy-only rebate deal leaves that side unaddressed — or, worse, waived alongside it.	Vendor-favourable Waived alongside pharmacy — the no-legal-interest language reaches rebates under the medical benefit too, which is where infusion and oncology value sits. Executed ASO/BPA rebate credit provision	Not read Not yet read.	Not read Not yet read.	Not read Not yet read.	Not read Not yet read.

Benchmark columns are here for their clause language. New York's was read from the executed contract itself, which the state publishes in full; CalPERS and Georgia are so far cited second-hand. Every clause we have not read says so.

Full teardowns

City of Dallas × Blue Cross and Blue Shield of Texas (HCSC) / Prime Therapeutics
Self-funded active-employee pharmacy benefit

The proposal promises the greater of the minimum rebate guarantees or 100% of all rebates collected. The executed agreement replaces that with a fixed per-employee-per-month credit and has the city agree it has no legal interest in any of the actual rebates — pharmacy or medical. The precedence clause makes the contract control over the proposal.