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4.2 Client acknowledges that it may be eligible for Rebate amounts under this Agreement only so long as
<br />Client, its affiliates, or its agents do not contract directly or indirectly with anyone else for discounts,
<br />utilization limits, Rebates or other financial incentives on pharmaceutical products or formulary
<br />programs for Prescription Drug Claims processed by ESI pursuant to the Agreement, without the prior
<br />written consent of ESI. In the event that Client negotiates or arranges with a pharmaceutical
<br />manufacturer for Rebates or similar discounts for any Covered Drugs hereunder, but without limiting
<br />ESI's right to other remedies, ESI may immediately withhold any Rebate amounts earned by, but not
<br />yet paid to, Client as necessary to prevent duplicative Rebates on Covered Drugs. To the extent Client
<br />knowingly negotiates and/or contracts for discounts or Rebates on claims for Covered Drugs without
<br />prior written approval of ESI, such activity will be deemed to be a material breach of this Agreement,
<br />entitling ESI to suspend payment of Rebate amounts hereunder and to renegotiate the terms and
<br />conditions of this Agreement.
<br />4.3 Under its Rebate program, ESI may implement ESI's Formulary management programs and controls,
<br />which may include, among other things, cost containment initiatives, and communications with
<br />Members, Participating Pharmacies, and/or physicians. ESI reserves the right to modify or replace
<br />such programs from time to time. Guaranteed Rebate amounts, if any, set forth herein, are conditioned
<br />on adherence to various Formulary management controls, benefit design requirements, claims volume,
<br />and other factors stated in the applicable pharmaceutical manufacturer agreements, as communicated
<br />by ESI to Client from time to time. If any government action, change in law or regulation, change in
<br />the interpretation of any law or regulation, or any action by a pharmaceutical manufacturer has an
<br />adverse effect on the availability of Rebates, then ESI and Administrator may make an adjustment to
<br />the Rebate terms and guaranteed Rebate amounts, if any, hereunder.
<br />4.4 Rebate Acknowledgment; No Representation; Rebate Limitations. Client acknowledges that
<br />Administrator is not making any representation, warranty or guaranty of any kind or nature, either
<br />express, implied or otherwise, regarding the amount of Rebates to be paid or remitted to Client
<br />pursuant to this Agreement, except as specifically set forth in writing herein. In addition, Client
<br />waives, releases and forever discharges ESI and Administrator from any Losses arising from a
<br />pharmaceutical company's (a) failure to pay Rebates; (b) breach of an agreement related to Rebates;
<br />or (c) negligence or misconduct. Client acknowledges that whether and to what extent pharmaceutical
<br />companies are willing to provide Rebates to Client may depend upon a variety of factors, including
<br />the content of the PDL, the Plan's design features, Client meeting criteria for Rebates, and the extent
<br />of participation in ESI's formulary management programs, as well as ESI/Administrator receiving
<br />sufficient information regarding each Claim for submission to pharmaceutical companies for Rebates.
<br />Client acknowledges and agrees that ESI may, but shall not be required to, initiate any collection action
<br />to collect any Rebates from a pharmaceutical company. In the event ESI does initiate collection action
<br />against a pharmaceutical company to collect Rebates, ESI may offset any reasonable costs, including
<br />reasonable attorneys' fees and expenses, arising from any such action. Notwithstanding any provision
<br />of this Agreement to the contrary, Administrator shall only be responsible for payment of Rebates to
<br />Client pursuant to the terms of this Agreement if such Rebates are actually received by Administrator
<br />during the Tenn of this Agreement. In no event shall Administrator be obligated to pay Rebates to
<br />Client until Administrator receives payment for the same Rebates from ESI. In the event Client
<br />terminates the Agreement outside the terms and conditions in the Agreement, Client forfeits the right
<br />to receive any Rebates received by Administrator on Client's behalf after the date of such termination.
<br />Client acknowledges that Administrator shall not be obligated to pay Client any Rebates described
<br />herein until this Agreement is signed by Client.
<br />5. Rebate amounts paid to Client pursuant to this Agreement are intended to be treated as "discounts" pursuant to
<br />the federal anti -kickback statute set forth at 42 U.S.C. §1320a -7b and implementing regulations. Client is obligated if
<br />requested by the Secretary of the United States Department of Health and Human Services, or as otherwise required by
<br />applicable law, to report the Rebate amounts and to provide a copy of this notice. ESI will refrain from doing anything
<br />that would impede Client from meeting any such obligation.
<br />NOT FOR DISTRIBUTION. THE INFORMATION CONTAINED HEREIN IS CONFIDENTIAL, PROPRIETARY AND
<br />CONSTITUTES TRADE SECRETS OF ESI AND RXBENEFITS
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