No contract or arrangement for services between a covered plan and a covered service provider, and no extension or renewal of such a contract or arrangement, is reasonable within the meaning of this paragraph unless the requirements of this subparagraph are met. For purposes of applying section 1106(a)(1)(C) of this title with respect to a transaction described under this subparagraph or subparagraph (C), a contract or arrangement for services between a covered plan and an entity providing services to the plan, including a health insurance issuer providing health insurance coverage in connection with the covered plan, in which such entity contracts, in connection with such plan, with a service provider for pharmacy benefit management services, shall be considered an indirect furnishing of goods, services, or facilities between the covered plan and the service provider for pharmacy benefit management services acting as the party in interest.

The term “covered plan” means a group health plan as defined in section 1191b(a) of this title and the terms “health insurance coverage” and “health insurance issuer” have the meanings given such terms in section 1191b(b) of this title.

Services (including brokerage services), for which the covered service provider, an affiliate, or a subcontractor reasonably expects to receive indirect compensation or direct compensation described in item (dd), provided to a covered plan with respect to selection of insurance products (including vision and dental), recordkeeping services, medical management vendor, benefits administration (including vision and dental), stop-loss insurance, pharmacy benefit management services, wellness services, transparency tools and vendors, group purchasing organization preferred vendor panels, disease management vendors and products, compliance services, employee assistance programs, or third party administration services.

Other services, for which the covered service provider, an affiliate, or a subcontractor reasonably expects to receive indirect compensation or direct compensation described in item (dd), including any of the following: plan design, insurance or insurance product selection (including vision and dental), recordkeeping, medical management, benefits administration selection (including vision and dental), stop-loss insurance, pharmacy benefit management services, wellness design and management services, transparency tools, group purchasing organization agreements and services, participation in and services from preferred vendor panels, disease management, compliance services, employee assistance programs, or third-party administration services, or consulting services related to any such services.

The term “affiliate”, with respect to a covered service provider, means an entity that directly or indirectly (through one or more intermediaries) controls, is controlled by, or is under common control with, such provider, or is an officer, director, or employee of, or partner in, such provider.

The term “compensation” means anything of monetary value, but does not include non-monetary compensation valued at $250 (or such amount as the Secretary may establish in regulations to account for inflation since December 27, 2020, as appropriate) or less, in the aggregate, during the term of the contract or arrangement.

The term “direct compensation” means compensation received directly from a covered plan.

The term “indirect compensation” means compensation received from any source other than the covered plan, the plan sponsor, the covered service provider, or an affiliate. Compensation received from a subcontractor is indirect compensation, unless it is received in connection with services performed under a contract or arrangement with a subcontractor.

The term “responsible plan fiduciary” means a fiduciary with authority to cause the covered plan to enter into, or extend or renew, the contract or arrangement.

The term “subcontractor” means any person or entity (or an affiliate of such person or entity) that is not an affiliate of the covered service provider and that, pursuant to a contract or arrangement with the covered service provider or an affiliate, reasonably expects to receive $1,000 (or such amount as the Secretary may establish in regulations to account for inflation since December 27, 2020, as appropriate) or more in compensation for performing one or more services described in item (bb) under a contract or arrangement with the covered plan.

For purposes of this subparagraph, a description of compensation or cost may be expressed as a monetary amount, formula, or a per capita charge for each enrollee or, if the compensation or cost cannot reasonably be expressed in such terms, by any other reasonable method, including a disclosure that additional compensation may be earned but may not be calculated at the time of contract if such a disclosure includes a description of the circumstances under which the additional compensation may be earned and a reasonable and good faith estimate if the covered service provider cannot otherwise readily describe compensation or cost and explains the methodology and assumptions used to prepare such estimate. Any such description shall contain sufficient information to permit evaluation of the reasonableness of the compensation or cost.

No person or entity is a “covered service provider” within the meaning of subclause (I)(bb) solely on the basis of providing services as an affiliate or a subcontractor that is performing one or more of the services described in subitem (AA) or (BB) of such subclause under the contract or arrangement with the covered plan.

A description of the services to be provided to the covered plan pursuant to the contract or arrangement.

If applicable, a statement that the covered service provider, an affiliate, or a subcontractor will provide, or reasonably expects to provide, services pursuant to the contract or arrangement directly to the covered plan as a fiduciary (within the meaning of section 1002(21) of this title).

A description of all direct compensation, either in the aggregate or by service, that the covered service provider, an affiliate, or a subcontractor reasonably expects to receive in connection with the services described in subclause (I).

including compensation from a vendor to a brokerage firm based on a structure of incentives not solely related to the contract with the covered plan; and

not including compensation received by an employee from an employer on account of work performed by the employee.

A description of the arrangement between the payer and the covered service provider, an affiliate, or a subcontractor, as applicable, pursuant to which such indirect compensation is paid.

Identification of the services for which the indirect compensation will be received, if applicable.

Identification of the payer of the indirect compensation.

A description of any compensation that will be paid among the covered service provider, an affiliate, or a subcontractor, in connection with the services described in subclause (I) if such compensation is set on a transaction basis (such as commissions, finder’s fees, or other similar incentive compensation based on business placed or retained), including identification of the services for which such compensation will be paid and identification of the payers and recipients of such compensation (including the status of a payer or recipient as an affiliate or a subcontractor), regardless of whether such compensation also is disclosed pursuant to subclause (III) or (IV).

A description of any compensation that the covered service provider, an affiliate, or a subcontractor reasonably expects to receive in connection with termination of the contract or arrangement, and how any prepaid amounts will be calculated and refunded upon such termination.

A covered service provider shall disclose to a responsible plan fiduciary, in writing a description of the manner in which the compensation described in clause (iii), as applicable, will be received.

A covered service provider shall disclose the information required under clauses (iii) and (iv) to the responsible plan fiduciary not later than the date that is reasonably in advance of the date on which the contract or arrangement is entered into, and extended or renewed.

A covered service provider shall disclose any change to the information required under clause (iii) and (iv) as soon as practicable, but not later than 60 days from the date on which the covered service provider is informed of such change, unless such disclosure is precluded due to extraordinary circumstances beyond the covered service provider’s control, in which case the information shall be disclosed as soon as practicable.

Upon the written request of the responsible plan fiduciary or covered plan administrator, a covered service provider shall furnish any other information relating to the compensation received in connection with the contract or arrangement that is required for the covered plan to comply with the reporting and disclosure requirements under this chapter.

The covered service provider shall disclose the information required under clause (iii)(I) reasonably in advance of the date upon which such responsible plan fiduciary or covered plan administrator states that it is required to comply with the applicable reporting or disclosure requirement, unless such disclosure is precluded due to extraordinary circumstances beyond the covered service provider’s control, in which case the information shall be disclosed as soon as practicable.

No contract or arrangement will fail to be reasonable under this subparagraph solely because the covered service provider, acting in good faith and with reasonable diligence, makes an error or omission in disclosing the information required pursuant to clause (iii) (or a change to such information disclosed pursuant to clause (v)(II)) or clause (vi), provided that the covered service provider discloses the correct information to the responsible plan fiduciary as soon as practicable, but not later than 30 days from the date on which the covered service provider knows of such error or omission.

The responsible plan fiduciary did not know that the covered service provider failed or would fail to make required disclosures and reasonably believed that the covered service provider disclosed the information required to be disclosed.

The responsible plan fiduciary, upon discovering that the covered service provider failed to disclose the required information, requests in writing that the covered service provider furnish such information.

If the covered service provider fails to comply with a written request described in subclause (III) within 90 days of the request, the responsible plan fiduciary notifies the Secretary of the covered service provider’s failure, in accordance with subclauses (III) and (IV).

The responsible plan fiduciary did not know that the covered service provider failed or would fail to make required remittances and reasonably believed that the covered service provider remitted such required amounts.

The responsible plan fiduciary, upon discovering that the covered service provider failed to remit the required amounts, requests in writing that the covered service provider remit such amounts.

If the covered service provider fails to comply with a written request described in subclause (III) within 90 days of the request, the responsible plan fiduciary notifies the Secretary of the covered service provider’s failure, in accordance with subclauses (III) and (IV).

the name of the covered plan;

the plan number used for the annual report on the covered plan;

the plan sponsor’s name, address, and employer identification number;

the name, address, and telephone number of the responsible plan fiduciary;

the name, address, phone number, and, if known, employer identification number of the covered service provider;

a description of the services provided to the covered plan;

a description of the information that the covered service provider failed to disclose;

the date on which such information was requested in writing from the covered service provider; and

a statement as to whether the covered service provider continues to provide services to the plan.

The covered service provider’s refusal to furnish the information requested by the written request described in subclause (I)(bb); or

90 days after the written request referred to in subclause (I)(cc) is made.

If the covered service provider fails to comply with the written request under subclause (I)(bb) within 90 days of such request, the responsible plan fiduciary shall determine whether to terminate or continue the contract or arrangement under

Nothing in this subparagraph shall be construed to supersede any provision of State law that governs disclosures by parties that provide the services described in this section, except to the extent that such law prevents the application of a requirement of this section.

A service provider for pharmacy benefit management services that is considered to indirectly furnish goods, services, or facilities to a covered plan, as described in clause (i)(I), is entitled to relief with respect to a violation of this section provided the conditions for receiving such relief are satisfied.

remits 100 percent of rebates, fees, alternative discounts, and other remuneration received from any applicable entity that are related to utilization of drugs or drug spending under such health plan or health insurance coverage, to the group health plan or, in the case of a health insurance issuer offering group health insurance coverage in connection with a group health plan, to the health insurance issuer offering group health insurance coverage on behalf of the plan; and

does not enter into any contract for pharmacy benefit management services on behalf of such a plan or coverage, with an applicable entity unless 100 percent of rebates, fees, alternative discounts, and other remuneration received under such contract that are related to the utilization of drugs or drug spending under such group health plan or health insurance coverage are remitted to the group health plan or, in the case of a health insurance issuer offering group health insurance coverage in connection with a group health plan, to the health insurance issuer on behalf of the plan by the entity providing pharmacy benefit management services.

Nothing in subclause (I) shall be construed to affect the term of a contract or arrangement, as in effect on the effective date (as described in such subclause), except that such subclause shall apply to any renewal or extension of such a contract or arrangement entered into on or after such effective date, as so described.

on a quarterly basis, to the group health plan or, in the case of a health insurance issuer offering group health insurance coverage in connection with a group health plan, to the group health insurance issuer on behalf of the plan, not later than 90 days after the end of each quarter; or

in the case of an underpayment in a remittance for a prior quarter, as soon as practicable, but not later than 90 days after notice of the underpayment is first given;

fully disclosed and enumerated to the group health plan or health insurance issuer; and

returned to the covered service provider for pharmacy benefit management services on behalf of the group health plan if any audit by a plan sponsor, issuer or a third party designated by a plan sponsor, indicates that the amounts received are in excess of correct amounts after such amounts have been paid to the group health plan, in the amount of such excess;

procedures for the remittance of rebates, fees, alternative discounts, and other remuneration under subclause (I)(aa);

any audit pursuant to this subparagraph; and

the timing, manner, and content of the disclosure of rebates, fees, alternative discounts, and other remuneration under subclause (I)(bb) as well as any other information the Secretary determines necessary for the responsible plan fiduciary to consider the reasonableness of the contract or arrangement (provided that such information does not include personally identifiable health information or protected health information subject to established individual privacy and nondiscrimination requirements under law); and

the records of such rebates, fees, alternative discounts, other remuneration, and disclosures, shall be available for audit by the plan (or the plan sponsor, issuer, or a third party designated by a plan sponsor on behalf of the plan), not less than once per plan year.

To ensure that an entity providing pharmacy benefit management services is able to meet the requirements of clause (ii)(I), a rebate aggregator (or other purchasing entity designed to aggregate rebates) and an applicable group purchasing organization shall remit such rebates to the entity providing pharmacy benefit management services not later than 45 days after the end of each quarter.

A third-party administrator of a group health plan, a health insurance issuer offering group health insurance coverage, or a covered service provider for pharmacy benefit management services under such health plan or health insurance coverage shall make rebate contracts with rebate aggregators or drug manufacturers available for audit by such plan, subject to reasonable restrictions (as determined by the Secretary) on confidentiality to prevent re-disclosure of such contracts or use of such information in audits for purposes unrelated to this section.

Audits carried out under clauses (ii)(III) and (iv) shall be performed by an auditor selected by the responsible plan fiduciary. Payment for such auditors shall not be made, whether directly or indirectly, by the entity providing pharmacy benefit management services.

prohibit reasonable payments to entities offering pharmacy benefit management services for bona fide services using a fee structure not described in this subparagraph, provided that such fees are transparent and quantifiable to group health plans and health insurance issuers;

require a third-party administrator of a group health plan or covered service provider for pharmacy benefit management services under such health plan or health insurance coverage to remit bona fide service fees to the group health plan;

limit the ability of a group health plan or health insurance issuer to pass through rebates, fees, alternative discounts, and other remuneration to the participant or beneficiary;

modify the requirements for the creation, receipt, maintenance, or transmission of protected health information under the privacy regulations promulgated under the Health Insurance Portability and Accountability Act of 1996 in part 160 and subparts A and E of part 164 of title 45, Code of Federal Regulations (or successor regulations); or

limit any requirement under subparagraph (A) or (B).

the terms “applicable entity” and “applicable group purchasing organization” have the meanings given such terms in section 1185o(e) of this title;

the terms “covered plan”, “covered service provider”, and “responsible plan fiduciary” have the meanings given such terms in subparagraph (B); and

the terms “group health insurance coverage”, “health insurance coverage”, and “health insurance issuer” have the meanings given such terms in section 1191b of this title.

the provision of the investment advice to the participant or beneficiary of the plan with respect to a security or other property available as an investment under the plan,

the acquisition, holding, or sale of a security or other property available as an investment under the plan pursuant to the investment advice, or

the direct or indirect receipt of fees or other compensation by the fiduciary adviser or an affiliate thereof (or any employee, agent, or registered representative of the fiduciary adviser or affiliate) in connection with the provision of the advice or in connection with an acquisition, holding, or sale of a security or other property available as an investment under the plan pursuant to the investment advice; and

the transaction involves a block trade,

at the time of the transaction, the interest of the plan (together with the interests of any other plans maintained by the same plan sponsor), does not exceed 10 percent of the aggregate size of the block trade,

the terms of the transaction, including the price, are at least as favorable to the plan as an arm’s length 3 transaction, and

the compensation associated with the purchase and sale is not greater than the compensation associated with an arm’s length ³ transaction with an unrelated party.

the applicable Federal regulating entity, or

such foreign regulatory entity as the Secretary may determine by regulation,

the transaction is effected pursuant to rules designed to match purchases and sales at the best price available through the execution system in accordance with applicable rules of the Securities and Exchange Commission or other relevant governmental authority, or

neither the execution system nor the parties to the transaction take into account the identity of the parties in the execution of trades,

the price of the security prevailing on a national securities exchange which is registered under section 6 of the Securities Exchange Act of 1934 [15 U.S.C. 78f], taking into account factors such as the size of the transaction and marketability of the security, or

if the security is not traded on such a national securities exchange, a price not less favorable to the plan than the offering price for the security as established by the current bid and asked prices quoted by persons independent of the issuer and of the party in interest, taking into account factors such as the size of the transaction and marketability of the security, and

in the case of an asset other than a security for which there is a generally recognized market, the fair market value of the asset as determined in good faith by a fiduciary or fiduciaries in accordance with regulations prescribed by the Secretary.

The term “security” has the meaning given such term by section 475(c)(2) of title 26 (without regard to subparagraph (F)(iii) and the last sentence thereof).

The term “commodity” has the meaning given such term by section 475(e)(2) of title 26 (without regard to subparagraph (D)(iii) thereof).

to undo the transaction to the extent possible and in any case to make good to the plan or affected account any losses resulting from the transaction, and

to restore to the plan or affected account any profits made through the use of assets of the plan.

A shareholder-employee.

A participant or beneficiary of an individual retirement plan (as defined in section 7701(a)(37) of title 26).

An employer or association of employees which establishes such an individual retirement plan under section 408(c) of such title.

provides that any fees (including any commission or other compensation) received by the fiduciary adviser for investment advice or with respect to the sale, holding, or acquisition of any security or other property for purposes of investment of plan assets do not vary depending on the basis of any investment option selected, or

uses a computer model under an investment advice program meeting the requirements of paragraph (3) in connection with the provision of investment advice by a fiduciary adviser to a participant or beneficiary, and

applies generally accepted investment theories that take into account the historic returns of different asset classes over defined periods of time,

utilizes relevant information about the participant, which may include age, life expectancy, retirement age, risk tolerance, other assets or sources of income, and preferences as to certain types of investments,

utilizes prescribed objective criteria to provide asset allocation portfolios comprised of investment options available under the plan,

operates in a manner that is not biased in favor of investments offered by the fiduciary adviser or a person with a material affiliation or contractual relationship with the fiduciary adviser, and

takes into account all investment options under the plan in specifying how a participant’s account balance should be invested and is not inappropriately weighted with respect to any investment option.

which meets such requirements as the Secretary may provide, and

does not bear any material affiliation or contractual relationship with any investment adviser or a related person thereof (or any employee, agent, or registered representative of the investment adviser or related person).

the only investment advice provided under the program is the advice generated by the computer model described in subparagraph (B), and

any transaction described in subsection (b)(14)(A)(ii) occurs solely at the direction of the participant or beneficiary.

of the role of any party that has a material affiliation or contractual relationship with the fiduciary adviser in the development of the investment advice program and in the selection of investment options available under the plan,

of the past performance and historical rates of return of the investment options available under the plan,

of all fees or other compensation relating to the advice that the fiduciary adviser or any affiliate thereof is to receive (including compensation provided by any third party) in connection with the provision of the advice or in connection with the sale, acquisition, or holding of the security or other property,

of any material affiliation or contractual relationship of the fiduciary adviser or affiliates thereof in the security or other property,

 4 the manner, and under what circumstances, any participant or beneficiary information provided under the arrangement will be used or disclosed,

of the types of services provided by the fiduciary adviser in connection with the provision of investment advice by the fiduciary adviser,

that the adviser is acting as a fiduciary of the plan in connection with the provision of the advice, and

that a recipient of the advice may separately arrange for the provision of advice by another adviser, that could have no material affiliation with and receive no fees or other compensation in connection with the security or other property, and

maintains the information described in subparagraph (A) in accurate form and in the manner described in paragraph (8),

provides, without charge, accurate information to the recipient of the advice no less frequently than annually,

provides, without charge, accurate information to the recipient of the advice upon request of the recipient, and

provides, without charge, accurate information to the recipient of the advice concerning any material change to the information required to be provided to the recipient of the advice at a time reasonably contemporaneous to the change in information.

the advice is provided by a fiduciary adviser pursuant to an eligible investment advice arrangement between the plan sponsor or other fiduciary and the fiduciary adviser for the provision by the fiduciary adviser of investment advice referred to in such section,

the terms of the eligible investment advice arrangement require compliance by the fiduciary adviser with the requirements of this subsection, and

the terms of the eligible investment advice arrangement include a written acknowledgment by the fiduciary adviser that the fiduciary adviser is a fiduciary of the plan with respect to the provision of the advice.

registered as an investment adviser under the Investment Advisers Act of 1940 (15 U.S.C. 80b–1 et seq.) or under the laws of the State in which the fiduciary maintains its principal office and place of business,

a bank or similar financial institution referred to in subsection (b)(4) or a savings association (as defined in section 1813(b)(1) of title 12), but only if the advice is provided through a trust department of the bank or similar financial institution or savings association which is subject to periodic examination and review by Federal or State banking authorities,

an insurance company qualified to do business under the laws of a State,

a person registered as a broker or dealer under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.),

an affiliate of a person described in any of clauses (i) through (iv), or

an employee, agent, or registered representative of a person described in clauses (i) through (v) who satisfies the requirements of applicable insurance, banking, and securities laws relating to the provision of the advice.