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discharges ESI and Administrator from any Losses arising from a pharmaceutical company's (a) failure to pay Rebates; (b) breach of an agreement related to Rebates; or (c) negligence or misconduct. Client acknowledges that whether and to what extent pharmaceutical companies are willing to provide Rebates to Client may depend upon a variety of factors, including the content of the PDL, the Plan's design features, Client meeting criteria for Rebates, and the extent of participation in ESI's formulary management programs, as well as ESI/Administrator receiving sufficient information regarding each Claim for submission to pharmaceutical companies for Rebates. Client acknowledges and agrees that ESI may, but shall not be required to, initiate any collection action to collect any Rebates from a pharmaceutical company. In the event ESI does initiate collection action against a pharmaceutical company to collect Rebates, ESI may offset any reasonable costs, including reasonable attorneys' fees and expenses, arising from any such action. Notwithstanding any provision of this Agreement to the contrary, Administrator shall only be responsible for payment of Rebates to Client pursuant to the terms of this Agreement if such Rebates are actually received by Administrator during the Term of this Agreement. In no event shall Administrator be obligated to pay Rebates to Client until Administrator receives payment for the same Rebates from ESI. In the event Client terminates the Agreement outside the terms and conditions in the Agreement, Client forfeits the right to receive any Rebates received by Administrator on Client's behalf after the date of such termination. Client acknowledges that Administrator shall not be obligated to pay Client any Rebates described herein until this Agreement is signed by Client. 5. Rebate amounts paid to Client pursuant to this Agreement are intended to be treated as "discounts" pursuant to the federal anti -kickback statute set forth at 42 U.S.C. § 1320a -7b and implementing regulations. Client is obligated if requested by the Secretary of the United States Department of Health and Human Services, or as otherwise required by applicable law, to report the Rebate amounts and to provide a copy of this notice. ESI will refrain from doing anything that would impede Client from meeting any such obligation. E. ESI'S INFLATION PROTECTION PROGRAM 1. IP Pro¢ram. The Inflation Protection Program ("ESI IP Program"). Subject to the terms and conditions set forth in Section 2 below, under the ESI IP Program Administrator will pay to Client $2.00 per Formulary Brand Drug claim ("Client Inflation Payment"). Subject to the terms and conditions set forth herein, under the ESI IP Program, Administrator will pay Client the Client Inflation Payment within approximately one hundred and eighty (180) days following the end of each calendar quarter for utilization occurring during such calendar quarter. All non -Formulary claims and Generic Drug claims shall be excluded. 2. Terms and Conditions of ESI's IP Program. 2.1 Exclusions. The following claims will be excluded from all calculations related to ESI's IP Program: • Medicare claims, Medicaid claims and any other government health care program claims • OTCs, member submitted claims, subrogation claims, compounds, Generic Drugs, claims submitted by Client -owned, in-house, or on-site pharmacies, 340B claims, claims submitted through a 100% Member cost -share program, biosimilars, drugs where the quantity or packaging has been changed by the manufacturer from the prior year, and drugs for which there was no utilization in the calendar year prior to the calendar year for which the Client Inflation Payment is being determined.