diff --git a/core/src/main/java/google/registry/model/domain/token/AllocationToken.java b/core/src/main/java/google/registry/model/domain/token/AllocationToken.java
index bc60dd0eb..abc8e6851 100644
--- a/core/src/main/java/google/registry/model/domain/token/AllocationToken.java
+++ b/core/src/main/java/google/registry/model/domain/token/AllocationToken.java
@@ -300,6 +300,9 @@ public class AllocationToken extends BackupGroupRoot implements Buildable {
           !getInstance().tokenType.equals(TokenType.PACKAGE)
               || getInstance().renewalPriceBehavior.equals(RenewalPriceBehavior.SPECIFIED),
           "Package tokens must have renewalPriceBehavior set to SPECIFIED");
+      checkArgument(
+          !getInstance().tokenType.equals(TokenType.PACKAGE) || !getInstance().discountPremiums,
+          "Package tokens cannot discount premium names");
       checkArgument(
           getInstance().domainName == null || TokenType.SINGLE_USE.equals(getInstance().tokenType),
           "Domain name can only be specified for SINGLE_USE tokens");
diff --git a/core/src/test/java/google/registry/model/domain/token/AllocationTokenTest.java b/core/src/test/java/google/registry/model/domain/token/AllocationTokenTest.java
index d89d89a7b..b863edd33 100644
--- a/core/src/test/java/google/registry/model/domain/token/AllocationTokenTest.java
+++ b/core/src/test/java/google/registry/model/domain/token/AllocationTokenTest.java
@@ -228,6 +228,18 @@ public class AllocationTokenTest extends EntityTestCase {
         .isEqualTo("Package tokens must have renewalPriceBehavior set to SPECIFIED");
   }
 
+  @Test
+  void testFail_packageTokenDiscountPremium() {
+    AllocationToken.Builder builder =
+        new AllocationToken.Builder()
+            .setToken("abc123")
+            .setTokenType(TokenType.PACKAGE)
+            .setRenewalPriceBehavior(RenewalPriceBehavior.SPECIFIED)
+            .setDiscountPremiums(true);
+    IllegalArgumentException thrown = assertThrows(IllegalArgumentException.class, builder::build);
+    assertThat(thrown).hasMessageThat().isEqualTo("Package tokens cannot discount premium names");
+  }
+
   @Test
   void testBuild_DomainNameWithLessThanTwoParts() {
     IllegalArgumentException thrown =