STATE COMPLIANCE ADDENDUM FOR PLAN SPONSORS

This STATE COMPLIANCE ADDENDUM FOR PLAN SPONSORS (the "Addendum") is a part of the Agreement for PBM Services with Plan Sponsor by and between SMITH HEALTH, INC. ("Smith") and a Plan Sponsor (the "Agreement") and is expressly incorporated therein by reference. This Addendum shall be effective as of the Effective Date of the Agreement and may be modified at any time by Smith to conform to the requirements imposed by applicable state laws.

Capitalized terms used but not defined in this Addendum shall have the respective meanings given to them in the Agreement.

1. All States. Regardless of which State’s law is applicable to the administration of the Agreement:

A. For clarity, and without limitation, Smith does not:

(a) Collect premiums for, or on behalf of, Plans; (b) Contract with insurers or reinsurers to provide coverage to Plans; (c) Receive compensation for PBM Services provided under the Agreement that is contingent upon claims experience or upon the savings effected in the process of adjustment or settlement of claims; (d) Have any underwriting authority on behalf of Plans; (e) Except in the case of certain deposits, hold funds on behalf of Plans; (f) Advertise or promote on behalf of Plans; or (g) Carry stop-loss insurance.

B. The Parties agree that:

(a) Smith and Plan Sponsor shall both retain for the duration of the Agreement and five (5) years thereafter a copy of the Agreement. (b) Smith will maintain, for the period required by applicable state law, such books and records as are required by applicable state law and shall provide the government and the Plans with access to such books and records (the "Records") as is required by law. (c) To the extent required by applicable state law, Plan Sponsor, on behalf of Plan, shall have the right of continuing access to the Records, sufficient to permit the Plan to fulfill all of its obligations to Members, subject to any restrictions contained in the Agreement pertaining to proprietary rights of the Parties. (d) To the extent that State law vests ownership of the Records in the Plan or Plan Sponsor, they shall be owned by the Plan or Plan Sponsor, provided that should Plan or Plan Sponsor request the transfer of the Records, Plan or Plan Sponsor shall provide Smith with continuing access to the Records and Smith shall be allowed to create and retain a copy thereof, for its own use. (e) To the extent that it has agreed to distribute materials on behalf of the Plan, Smith will deliver promptly to Members any policies, certificates, booklets, termination notices, or other written communications delivered to Smith by Plan or Plan Sponsor for delivery to its policyholders. (f) Smith represents that it has in place any required fidelity bonds.

2. Connecticut

In accordance with Conn. Gen. Stat. Ann. §§ 38a-720 et seq., notwithstanding any other provision that may be contained in the Agreement to the contrary, if the administration of the Agreement is subject to Connecticut law:

(a) Smith will render an accounting detailing all transactions performed by Smith pertaining to the business underwritten by the Plan or the Plan Sponsor, on an annual basis. (b) To the extent that either Party seeks to terminate the Agreement, during the cure period, the Parties will meet at least once, by phone or in person, at a mutually agreeable time, in order to attempt to facilitate the cure of the breach. (c) Smith will issue a benefits identification card to each Member that includes disclosure of, and relationship among, Smith, Member and Plan or Plan Sponsor. Smith will also disclose to Plan or Plan Sponsor all charges, fees and commissions that Smith receives arising from services provided for Plan or Plan Sponsor.

3. California

In accordance with Cal. Ins. Code §§ 1759 et seq., notwithstanding any other provision that may be contained in the Agreement to the contrary, if the administration of the Agreement is subject to California law: Smith shall provide a written notice approved by the insurer, to insured individuals, advising them of the identity of and relationship among the administrator, the policy holder and the insurer.

4. Florida

In accordance with Fla. Stat. Ann. § 627.64741, notwithstanding any other provision that may be contained in the Agreement to the contrary, if the administration of the Agreement is subject to Florida law the Parties will comply with all applicable provisions of such law, and in particular, Smith agrees that:

(a) The maximum allowable cost pricing information will be updated at least every seven (7) calendar days. (b) A process will be maintained that will, in a timely manner, eliminate drugs from maximum allowable cost lists or modify drug prices to remain consistent with changes in pricing data used in formulating maximum allowable cost prices and product availability. (c) Smith will not limit a pharmacist’s ability to disclose whether the cost-sharing obligation exceeds the retail price for a covered prescription drug, and the availability of a more affordable alternative drug, pursuant to Fla. Stat. Ann. § 465.0244. (d) Smith will not require an insured to make a payment for a prescription drug at the point of sale in an amount that exceeds the lesser of: (i) the applicable cost-sharing amount; or (ii) the retail price of the drug in the absence of prescription drug coverage.

In accordance with Fla. Stat. Ann. § 626.8825(2) and for an Agreement that was executed, amended, adjusted, or renewed on or after July 1, 2023 for PBM services on or after January 1, 2024, notwithstanding any other provision that may be contained in the Agreement to the contrary, if the administration of the Agreement is subject to Florida law the Parties will comply with all provisions of such law to the extent applicable, which law’s provisions include:

(a) The pharmacy benefit manager (PBM) shall use a pass-through pricing model; (b) PBM shall not engage, directly or indirectly, in the practice of spread pricing; (c) Funds received in relation to PBM’s services to a pharmacy benefits plan or program will be used or distributed only pursuant to the terms of the Agreement or as otherwise required by applicable law. (d) PBM will pass 100 percent of all prescription drug manufacturer rebates, including nonresident prescription drug manufacturer rebates, received to the pharmacy benefits plan or program, if the contractual arrangement delegates the negotiation of rebates to PBM, for the sole purpose of offsetting defined cost sharing and reducing premiums of beneficiaries. Any excess rebate revenue will be used for the sole purpose of offsetting copayments and deductibles of beneficiaries. (e) Network adequacy requirements will meet or exceed Medicare Part D program standards for convenient access to the network pharmacies set forth in 42 C.F.R. § 423.120(a)(1) and that:

• (a) Do not limit a network to solely include affiliated pharmacies;
• (b) PBM will offer to contract with licensed pharmacies physically located on the physical site of providers that are:
  • (i) Within the Plan Sponsor’s plan or program geographic service area and that have been specifically designated as essential providers by the Agency for Health Care Administration pursuant to § 409.975(1)(a);
  • (ii) Designated as cancer centers of excellence under § 381.925, regardless of the Plan Sponsor’s plan or program geographic service areas;
  • (iii) Organ transplant hospitals, regardless of the Plan Sponsor’s plan or program geographic service area;
  • (iv) Hospitals licensed as specialty children’s hospitals defined in § 395.002;
  • (v) Regional perinatal intensive care centers as defined in § 383.16(2), regardless of the Plan Sponsor’s plan or program geographic service area.

Such provider contracts will be solely for the administration or dispensing of covered prescription drugs, including biological products, which are administered through infusions, intravenously injected, or inhaled during a surgical procedure or are covered parenteral drugs, as part of onsite outpatient care.

(c) Do not require a covered person to receive a prescription drug by United States mail, common carrier, local courier, third-party company, or delivery service, or pharmacy direct delivery unless the prescription drug cannot be acquired at any retail pharmacy in PBM’s network for the beneficiary’s pharmacy benefits plan or program. (For clarity, PBM is not prohibited from operating mail order or delivery programs on an opt-in basis at the sole discretion of a beneficiary, provided that the beneficiary is not penalized through the imposition of any additional retail cost-sharing obligations or a lower allowed-quantity limit for choosing not to select the mail order or delivery programs.)

(d) For the in-person administration of covered prescription drugs, prohibit requiring a beneficiary to receive pharmacist services from an affiliated pharmacy or an affiliated health care provider; and

(e) Prohibit offering or implementing pharmacy networks that require or provide a promotional item or an incentive, defined as anything other than a reduced cost-sharing amount or enhanced quantity limit allowed under the benefit design for a covered drug, to a beneficiary to use an affiliated pharmacy or an affiliated health care provider for the in-person administration of covered prescription drugs; or advertising, marketing, or promoting an affiliated pharmacy to beneficiaries.

(f) PBM will not condition participation in one pharmacy network on participation in another pharmacy network or penalize a pharmacy for exercising its prerogative not to participate in a specific pharmacy network.