Exhibit 10.31

 

CORPORATE INTEGRITY AGREEMENT

 

BETWEEN THE
OFFICE OF INSPECTOR GENERAL
OF THE
DEPARTMENT OF HEALTH AND HUMAN SERVICES
AND
BIOVAIL CORPORATION

 

I.             PREAMBLE

 

Biovail Corporation hereby enters into this Corporate Integrity Agreement (CIA)
with the Office of Inspector General (OIG) of the United States Department of
Health and Human Services (HHS) to promote compliance with the statutes,
regulations, and written directives of Medicare, Medicaid, and all other Federal
health care programs (as defined in 42 U.S.C. § 1320a-7b(f)) (Federal health
care program requirements) and with the statutes, regulations, and written
directives of the Food and Drug Administration (FDA requirements). This CIA
specifically applies to Biovail Corporation and all its corporate subsidiaries,
affiliates, and other related corporate entities, including but not limited to
BTA Pharmaceuticals, Inc. (collectively “Biovail”). Contemporaneously with this
CIA, Biovail Corporation is entering into a Settlement Agreement with the United
States.

 

II.            TERM AND SCOPE OF THE CIA

 

A.            The period of the compliance obligations assumed by Biovail under
this CIA shall be 5 years from the effective date of this CIA, unless otherwise
specified. The effective date shall be the date on which the final signatory of
this CIA executes this CIA (Effective Date). Each one-year period, beginning
with the one-year period following the Effective Date, shall be referred to as a
“Reporting Period.”

 

B.            Sections VII, IX, X, and XI shall expire no later than 120 days
after OIG’s receipt of: (1) Biovail’s final Annual Report; or (2) any additional
materials submitted by Biovail pursuant to OIG’s request, whichever is later.

 

C.            The scope of this CIA shall be governed by the following
definitions:

 

1.             “Covered Persons” includes:

 

a.             Except as otherwise provided below, all owners of Biovail (other
than shareholders who: (1) have an ownership interest of less than 5%; and
(2) acquired the ownership interest through public trading). The term “Covered
Persons” shall not include Eugene Melnyk provided that he does not directly
participate in the management and operation of Biovail;

 

b.             all officers, directors, and employees of Biovail (including, but
not limited to, BTA Pharmaceuticals, Inc. (BTA)) who are based in the United
States or have job responsibilities in the United States, except as carved out
below in this Section II.C.1; and

 

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c.             all contractors, subcontractors, agents, and other persons who
perform Government Pricing and Contracting Functions or Promotional and Product
Services Related Functions on behalf of Biovail, including but not limited to
sales representatives and other individuals who engage in Promotional and
Product Services Related Functions on behalf of Biovail or BTA under the terms
of an agreement (the “PSS Contract”) between BTA and Publicis Selling
Solutions, Inc. (PSS) in place as of the Effective Date of the CIA. The term
“Covered Persons” shall also apply to all contractors, subcontractors, agents
and other persons who may perform Government Pricing and Contracting Functions
or Promotional and Product Services Related Functions on behalf of Biovail or
BTA under any renewals of the PSS Contract or any new contract entered after the
Effective Date and relating to the Functions.

 

Notwithstanding the above, the term “Covered Persons” does not include:
(1) part-time or per diem employees, contractors, subcontractors, agents, and
other persons who are not reasonably expected to work more than 160 hours per
year, except that any such individuals shall become “Covered Persons” at the
point when they work more than 160 hours during the calendar year; or
(2) employees of Biovail who perform only manufacturing functions.

 

2.     “Relevant Covered Persons” includes all Covered Persons whose job
responsibilities relate to Government Pricing and Contracting Functions or
Promotional and Product Services Related Functions, as defined below in Sections
II.C.4 and 5, respectively. Relevant Covered Persons include employees of PSS
engaged in Promotional and Product Services Related Functions under the PSS
Contract and those Biovail and BTA employees who have responsibilities managing
or overseeing the PSS Contract and any subsequent contract, renewal, or
amendment to a contract relating to the provision of Promotional and Product
Services Related Functions or Government Pricing and Contracting Functions on
behalf of Biovail or BTA.

 

3.             “Government Reimbursed Products” refers to all Biovail products
that are sold in the United States by Biovail or by third-party contractors on
Biovail’s behalf and which are reimbursed by Federal health care programs.

 

4.             The term “Government Pricing and Contracting Functions” means the
collection, calculation, verification, or reporting of pricing and other
information for purposes of the Medicaid Drug Rebate Program (codified at 42
U.S.C. § 1396r-8, et seq.), the Medicare Program (codified at 42 U.S.C. §
1395-1395hhh), the 340B Drug Pricing Program (codified at 42 U.S.C. § 256(b)),
or any other government programs through which health care items or services may
be purchased or reimbursed, in whole or in part, by the federal government, and
the Veteran’s Administration pricing program (the “VA Programs”), as set forth
in the Federal Supply Schedule and the Veteran’s Healthcare Act of 1992. This
definition includes, but is not limited to, the calculation and reporting of
Average Sales Price (ASP), Average Manufacturer Price (AMP), Best Price (BP),
and all pricing and other information reported and used in connection with
reimbursement under the Federal health care programs described in this
paragraph.

 

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5.             The term “Promotional and Product Services Related Functions”
means the promotion, marketing, sales, or provision of information about, or
services relating to, Government Reimbursed Products in or for the United States
market.

 

6.             The term “Third Party Educational Activity” shall mean any
U.S.-based continuing medical education (CME), independent medical education
(IME), disease awareness, or other scientific, educational, or professional
program, meeting, or event sponsored by Biovail, including but not limited to,
sponsorship of symposia at medical conferences.

 

III.          CORPORATE INTEGRITY OBLIGATIONS

 

Biovail shall establish and maintain a Compliance Program that includes the
following elements:

 

A.            Chief Compliance Officer, Committee, and Board Responsibilities.

 

1.             Chief Compliance Officer. Biovail has appointed, and shall
maintain during the term of the CIA, an individual to serve as its Chief
Compliance Officer. To the extent necessary, within 90 days after the Effective
Date, Biovail shall modify the position description, scope of responsibility,
and authority of the Chief Compliance Officer such that the following
requirements are satisfied. The Chief Compliance Officer shall be primarily
responsible for ensuring the effective operation of Biovail’s compliance program
on an enterprise-wide basis. The Chief Compliance Officer shall be primarily
responsible for developing and implementing policies, procedures, and practices
designed to ensure compliance with the requirements set forth in this CIA and
with Federal health care program and FDA requirements. The Chief Compliance
Officer shall be a member of senior management of Biovail, shall make periodic
(at least quarterly) reports regarding compliance matters directly to the Risk
and Compliance Committee of the Board of Directors of Biovail. The Chief
Compliance Officer shall be authorized to report on such matters to the Risk and
Compliance Committee of the Board of Directors at any time. The Chief Compliance
Officer shall not be or be subordinate to the General Counsel or Chief Financial
Officer. The Chief Compliance Officer shall be responsible for monitoring the
day-to-day compliance activities engaged in by Biovail as well as for any
reporting obligations created under this CIA.

 

Biovail may appoint an individual to serve as Biovail’s U.S. Compliance Officer
for BTA and other U.S. operations of Biovail. Any such U.S. Compliance Officer
would be responsible for assisting the Chief Compliance Officer in implementing
policies, procedures, and practices within the U.S. designed to ensure
compliance with the requirements set forth in this CIA and with Federal health
care program and FDA requirements. Any U.S. Compliance Officer shall not be or
be subordinate to the General Counsel or Chief Financial Officer of Biovail.

 

Biovail shall report to OIG, in writing, any changes in the identity or position
description of the Chief Compliance Officer or the U.S. Compliance Officer, or
any actions or changes that would affect the Chief Compliance Officer’s or the
U.S. Compliance Officer’s ability to perform the duties necessary to meet the
obligations in this CIA, within 15 days after such a change.

 

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2.             Compliance Committee. Prior to the Effective Date, Biovail
established a U.S. Healthcare Compliance Policy Committee with responsibilities
relating to U.S. healthcare compliance. To the extent necessary, within 90 days
after the Effective Date, Biovail shall amend the duties, responsibilities, and
authorities of the U.S. Healthcare Compliance Policy Committee to meet the
requirements set forth below. The U.S. Healthcare Compliance Policy Committee
shall, at a minimum, include the Chief Compliance Officer and other members of
management necessary to meet the requirements of this CIA (e.g., executives of
relevant departments, such as regulatory, government contracting, human
resources, internal audit, operations, legal, medical affairs, and sales and
marketing or their designees). The Chief Compliance Officer shall chair the U.S.
Healthcare Compliance Policy Committee and the Committee shall support the Chief
Compliance Officer in fulfilling his/her responsibilities including with regard
to the CIA (e.g., shall assist in the analysis of the organization’s risk areas,
shall oversee monitoring of internal and external investigations, and shall
receive reports about internal and external audits).

 

Biovail shall report to OIG, in writing, any changes in the composition of the
U.S. Healthcare Compliance Policy Committee, or any actions or changes that
would affect the U.S. Healthcare Compliance Policy Committee’s ability to
perform the duties necessary to meet the obligations in this CIA, within 15 days
after such a change.

 

3.             Board of Directors Resolution. The Risk and Compliance Committee
of the Board of Directors of Biovail Corporation (Risk Committee) shall be
responsible for the review and oversight of matters related to compliance with
Federal health care program requirements, FDA requirements, and the obligations
of this CIA. The Risk Committee shall, at a minimum, be responsible for the
following:

 

a.             meeting at least quarterly to review and oversee Biovail’s
Compliance Program, including but not limited to the performance of the Chief
Compliance Officer and compliance department.

 

b.             for each Reporting Period (as defined in Section ILA) of the CIA,
adopting a resolution summarizing its review and oversight of Biovail’s
compliance with Federal health care program requirements, FDA requirements, and
the obligations of this CIA. Each individual member of the Risk Committee shall
sign a statement indicating that he or she agrees with the resolution.

 

At minimum, the resolution shall include the following language:

 

“The Risk and Compliance Committee of Biovail’s Board of Directors (Risk
Committee) has made a reasonable inquiry into the operations of Biovail’s
Compliance Program, including the performance of the Chief Compliance Officer
and the compliance department. Based on its inquiry, the Risk Committee has
concluded that, to the best of its knowledge, Biovail has implemented an
effective Compliance Program to meet the Federal health care program
requirements, FDA requirements, and the obligations of the CIA.”

 

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If the Risk Committee is unable to provide such a conclusion in the resolution,
the Risk Committee shall include in the resolution a written explanation of the
reasons why it is unable to provide the conclusion and the steps it is taking to
implement an effective Compliance Program at Biovail.

 

Biovail shall report to OIG, in writing, any changes in the composition of the
Risk Committee, or any actions or changes that would affect the Risk Committee’s
ability to perform the duties necessary to meet the obligations in this CIA,
within 15 days after such a change.

 

B.            Written Standards.

 

1.             Code of Conduct. Prior to the Effective Date, Biovail developed
and implemented a program to distribute a code of conduct (known as its
“Standards of Business Conduct”) to its employees, officers, and directors.
Within 120 days after the Effective Date, Biovail shall either amend its
Standards of Business Conduct to meet the requirements set forth below, or
Biovail shall develop, implement, and distribute to all Covered Persons a
written U.S. Healthcare Code of Conduct which meets the requirements set forth
below. (For purposes of this CIA, the revised Standards of Business Conduct or
the U.S. Healthcare Code, as applicable, shall be referred to as the “Code of
Conduct”.) Biovail shall make the promotion of, and adherence to, the Code of
Conduct an element in evaluating the performance of all employees who are
Covered Persons. The Code of Conduct shall, at a minimum, set forth:

 

a.             Biovail’s commitment to full compliance with all Federal health
care program and FDA requirements, including its commitment to market, sell,
promote, research, develop, provide information about, and advertise its
products in accordance with Federal health care program and FDA requirements;

 

b.             Biovail’s requirement that all of its Covered Persons shall be
expected to comply with all Federal health care program and FDA requirements and
with Biovail’s own Policies and Procedures as implemented pursuant to
Section III.C (including the requirements of this CIA);

 

c.             the requirement that all of Biovail’s Covered Persons shall be
expected to report to the Chief Compliance Officer, or other appropriate
individual designated by Biovail, suspected violations of any Federal health
care program or FDA requirements or of BiovaiI’s own Policies and Procedures;

 

d.             the possible consequences to both Biovail and Covered Persons of
failure to comply with Federal health care program and FDA requirements and with
Biovail’s own Policies and Procedures and the failure to report such
noncompliance; and

 

e.             the right of all individuals to use the Disclosure Program
described in Section III.E, and Biovail’s commitment to nonretaliation and to
maintain, as appropriate, confidentiality and anonymity with respect to such
disclosures.

 

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Within 150 days after the Effective Date, each Covered Person shall certify, in
writing, that he or she has received, read, understood, and shall abide by
Biovail’s Code of Conduct. New Covered Persons shall receive the Code of Conduct
and shall complete the required certification within 30 days after becoming a
Covered Person or within 150 days after the Effective Date, whichever is later.

 

Biovail shall periodically review the Code of Conduct to determine if revisions
are appropriate and shall make any necessary revisions based on such review. Any
revised Code of Conduct shall be distributed within 30 days after any revisions
are finalized and approved by Biovail’s Board or Directors or a committee
thereof. Each Covered Person shall certify, in writing, that he or she has
received, read, understood, and shall abide by the revised Code of Conduct
within 30 days after the distribution of the revised Code of Conduct.

 

2.             Policies and Procedures. Within 120 days after the Effective
Date, Biovail shall implement written Policies and Procedures regarding the
operation of Biovail’s compliance program and its compliance with Federal health
care program and FDA requirements for activities occurring in or related to the
United States market. At a minimum, the Policies and Procedures shall address:

 

a.             the subjects relating to the Code of Conduct identified in
Section III.B.1;

 

b.             appropriate ways to conduct Government Pricing and Contracting
Functions in compliance with all applicable Federal healthcare program
requirements, including, but not limited to the Federal anti-kickback statute
(codified at 42 U.S.C. § 1320a-7b), and the False Claims Act (codified at 31
U.S.C. 3729-3733);

 

c.             compensation (including salaries and bonuses) for Relevant
Covered Persons. These Policies and Procedures shall be designed to ensure that
financial incentives do not inappropriately motivate such individuals to engage
in improper promotion, sales, marketing, pricing, or contracting for Biovail’s
products;

 

d.             disciplinary policies and procedures for violations of Biovail’s
Policies and Procedures, including policies relating to Federal health care
program and FDA requirements;

 

e.             appropriate ways to conduct Promotional and Product Services
Related Functions in compliance with all applicable Federal healthcare program
requirements, including, but not limited to the Federal anti-kickback statute
(codified at 42 U.S.C. § 1320a-7b), and the False Claims Act (codified at 31
U.S.C. 3729-3733);

 

f.             appropriate ways to conduct Promotional and Product Services
Related Functions in compliance with all applicable FDA requirements;

 

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g.             the materials and information that may be distributed by Biovail
sales representatives (including any contract sales agents) about Government
Reimbursed Products for use in the United States and the manner in which Biovail
sales representatives respond to requests for information about non-FDA approved
(or “off-label”) uses of the products;

 

h.             the materials and information that may be distributed by Biovail
representatives who are not field sales agents (e.g., through a medical services
or medical information department or otherwise); the mechanisms through, and
manner in which, Biovail receives and responds to requests for information about
off-label uses of Government Reimbursed Products; the form and content of
information disseminated in response to such requests; and the internal review
process for the information disseminated;

 

The Policies and Procedures shall include a requirement that Biovail develop a
database (the “Inquiries Database”) that includes the following items of
information for each request for information or inquiry about Government
Reimbursed Products (hereafter, “Inquiry”): 1) date of Inquiry; 2) form of
Inquiry (e.g., fax, phone, medical information request form); 3) name of the
requesting health care professional (HCP) or health care institution (HCI); 4)
nature and topic of request (including exact language of the Inquiry if made in
writing); 5) an evaluation of whether the Inquiry relates to information about
an off-label indication for the product; 6) nature/form of the response from
Biovail (including a record of the materials provided to the HCP or HCI in
response to the request); 7) the name of the field sales representative who
called on or interacted with the HCP or HCI; and 8) the status and findings of
any follow-up review conducted by Biovail in situations in which it appears that
the Inquiry may have related to improper off-label promotion;

 

i.              systems, processes, policies, and procedures relating to the
development of call plans for field sales representatives (including contract
sales agents) who promote, market, or sell Government Reimbursed Products in the
United States. The Policies and Procedures shall require that Biovail review the
call plans for its Government Reimbursed Products and the bases upon and
circumstances under which HCPs and HCIs belonging to specified medical
specialties or types of clinical practices are included in, or excluded from,
the call plans. The Policies and Procedures shall also require that Biovail
modify the call plans as necessary to ensure that Biovail is promoting its
products in a manner that complies with all applicable Federal health care
program and FDA requirements. Biovail’s call plan review shall occur at least
annually and shall also occur each time the FDA approves a new or additional
indication for a Government Reimbursed Product;

 

j.              systems, processes, policies, and procedures relating to the
development, implementation, and review of plans for the distribution of samples
of Government Reimbursed Products in the United States (U.S. Sample Distribution
Plans);

 

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k.             consultant or other fee-for-service arrangements entered into
with HCPs or HCIs related to the United States market for Government Reimbursed
Products (including, but not limited to, speaker programs, speaker training
programs, advisory boards, mentorships, preceptorships, or any other financial
relationship with an HCP or HCI) and all events and expenses relating to such
engagements or arrangements. These Policies and Procedures shall be designed to
ensure that the engagements, arrangements, and related events are used for
legitimate and lawful purposes in accordance with applicable Federal health care
program and FDA requirements. The policies shall include requirements about the
uses, content, and circumstances of such engagements, arrangements, and events;

 

l.              sponsorship or funding of grants (including educational grants)
or charitable contributions in the United States. These Policies and Procedures
shall be designed to ensure that Biovail’s sponsorship or funding complies with
all applicable Federal health care program requirements and FDA requirements;

 

m.           funding of, or participation in, any Third Party Educational
Activity as defined in Section II.C.6 above. These Policies and Procedures shall
be designed to ensure that Biovail’s sponsorship or funding of, or participation
in, such programs satisfies all applicable Federal health care program and FDA
requirements related to the sponsorship of any Educational or Informational
Activity;

 

n.             review of all promotional and other materials and information
intended to be disseminated outside Biovail in the United States by legal,
medical, and regulatory personnel in a manner designed to ensure that legal,
regulatory, and medical concerns are properly addressed during Biovail’s review
and approval process and are elevated when appropriate; and

 

o.             sponsorship or funding of U.S.-based research or related
activities (including clinical trials, market research, or authorship of
articles or other publications) by Biovail in a manner that is designed to
ensure that Biovail’s funding or sponsorship of, or participation in, such
activities complies with all applicable Federal health care program and FDA
requirements. In addition, such Policies and Procedures shall ensure that sales
and marketing activities are separate from research activities (e.g., clinical
trial enrollment).

 

Within 120 days after the Effective Date, the relevant portions of the Policies
and Procedures shall be distributed to all Covered Persons whose job functions
relate to those Policies and Procedures. Appropriate and knowledgeable staff
shall be available to explain the Policies and Procedures.

 

At least annually (and more frequently, if appropriate), Biovail shall assess
and update, as necessary, the Policies and Procedures. Within 30 days after the
effective date of any revisions, the relevant portions of any such revised
Policies and Procedures shall be distributed to all individuals whose job
functions relate to those Policies and Procedures.

 

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C.            Training and Education.

 

1.             General Training. Within 120 days after the Effective Date,
Biovail shall provide at least two hours of General Training to each Covered
Person. This training, at a minimum, shall explain Biovail’s:

 

a.             CIA requirements; and

 

b.             Biovail’s Compliance Program (including the Code of Conduct and
the Policies and Procedures as they pertain to general U.S. compliance issues
and CIA compliance issues).

 

To the extent that Biovail provided General Training to Covered Persons during
the 180 days immediately prior to the Effective Date that satisfied the
requirements set forth in Section III.C.1.b above, the OIG shall credit that
training for purposes of satisfying Biovail’s General Training obligations of
this Section III.C.1 for the first Reporting Period. Biovail may satisfy its
remaining General Training obligations for the Covered Persons who received the
training described in the preceding sentence by notifying them within 90 days
after the Effective Date in writing or in electronic format of the fact that
Biovail entered a CIA and providing an explanation of Biovail’s requirements and
obligations under the CIA.

 

New Covered Persons shall receive the General Training described above within 30
days after becoming a Covered Person or within 120 days after the Effective
Date, whichever is later. After receiving the initial General Training described
above, each Covered Person shall receive at least one hour of General Training
in each subsequent Reporting Period.

 

2.             Specific Training. Within 120 days after the Effective Date, each
Relevant Covered Person engaged in Government Contracting and Pricing Functions
shall receive at least four hours of Specific Training in addition to the
General Training required above. This Specific Training shall include, at a
minimum, a discussion of:

 

a.             all applicable Federal health care program requirements relating
to Government Pricing and Contracting Functions;

 

b.             all Biovail Policies and Procedures and other requirements
applicable to Government Pricing and Contracting Functions;

 

c.             the personal obligation of each individual involved in Government
Pricing and Contracting Functions to comply with all applicable Federal health
care program requirements and all other applicable legal requirements;

 

d.             the legal sanctions for violations of the applicable Federal
health care program requirements; and

 

e.             examples of proper and improper practices related to Government
Pricing and Contracting Functions.

 

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Within 120 days after the Effective Date, each Relevant Covered Person engaged
in Promotional and Product Services Related Functions (including BTA employees
who have responsibilities managing or overseeing the PSS Contract) shall receive
at least four hours of Specific Training in addition to the General Training
required above.

 

This Specific Training shall include, at a minimum, a discussion of:

 

f.             all applicable Federal health care program requirements relating
to Promotional and Product Services Related Functions;

 

g.             all applicable FDA requirements relating to Promotional and
Product Services Related Functions;

 

h.             all BiovaiI Policies and Procedures and other requirements
applicable to Promotional and Product Services Related Functions;

 

i.              the personal obligation of each individual involved in
Promotional and Product Services Related Functions to comply with all applicable
Federal health care program and FDA requirements and all other applicable legal
requirements;

 

j.              the legal sanctions for violations of the applicable Federal
health care program and FDA requirements; and

 

k.             examples of proper and improper practices relating to Promotional
and Product Services Related Functions.

 

To the extent that Biovail provided Specific Training to Relevant Covered
Persons during the 180 days immediately prior to the Effective Date that
satisfied the requirements set forth in this Section III.C.2 above, the OIG
shall credit that training for purposes of satisfying Biovail’s Specific
Training obligations of this Section III.C.2 for the first Reporting Period.

 

New Relevant Covered Persons shall receive Specific Training as set forth above
within 30 days after the beginning of their employment or becoming Relevant
Covered Persons, or within 120 days after the Effective Date, whichever is
later. A Biovail employee who has completed the Specific Training shall review a
new Relevant Covered Person’s work, to the extent that the work relates to
Government Pricing and Contracting Functions or Promotional and Product Services
Related Functions until such time as the new Relevant Covered Person completes
his or her Specific Training.

 

After receiving the initial Specific Training described in this Section, each
Relevant Covered Person shall receive at least three hours of Specific Training
in each subsequent Reporting Period as defined in Section II.A.

 

3.             Certification. Each individual who is required to attend training
shall certify, in writing, or in electronic form, if applicable, that he or she
has received the required training. The certification shall specify the type of
training received and the date received. The

 

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Chief Compliance Officer (or designee) shall retain the certifications, along
with all course materials. These shall be made available to OIG, upon request.

 

4.             Qualifications of Trainer. Persons providing the training shall
be knowledgeable about the subject area, including applicable Federal health
care program and FDA requirements.

 

5.             Update of Training. Biovail shall review the training annually,
and, where appropriate, update the training to reflect changes in Federal health
care program requirements, FDA requirements, any issues discovered during
internal audits or any IRO Review, and any other relevant information.

 

6.             Computer-based Training. Biovail may provide the training
required under this CIA through appropriate computer-based training approaches.
If Biovail chooses to provide computer-based training, it shall make available
appropriately qualified and knowledgeable staff or trainers to answer questions
or provide additional information to the individuals receiving such training.

 

D.            Review Procedures.

 

1.     General Description.

 

a.             Engagement of Independent Review Organization. Within 120 days
after the Effective Date, Biovail shall engage an entity (or entities), such as
an accounting, auditing, or consulting firm (hereinafter “Independent Review
Organization” or “IRO”), to perform reviews to assist Biovail in assessing and
evaluating its Government Pricing and Contracting Functions and its Promotional
and Product Services Related Functions. The applicable requirements relating to
the IRO are outlined in Appendix A to this CIA, which is incorporated by
reference.

 

Each IRO engaged by Biovail shall have expertise in applicable Federal health
care program and FDA requirements as may be appropriate to the Review for which
the IRO is retained. Each IRO shall assess, along with Biovail, whether it can
perform the engagement in a professionally independent and objective fashion, as
appropriate to the nature of the review, taking into account any other business
relationships or other engagements that may exist.

 

The IRO(s) shall conduct reviews that assess Biovail’s systems, processes,
policies, procedures, and practices relating to Government Pricing and
Contracting Functions and Promotional and Product Services Related Functions
(IRO Reviews).

 

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b.             Frequency and Brief Description of Reviews. As set forth more
fully in Appendix B, the IRO Reviews shall consist of two components - a Systems
Review and a Transactions Review. The Systems Review shall assess Biovail’s
systems, processes, policies, and procedures relating to the Medicaid Drug
Rebate Program and the reporting of ASP for purposes of the Medicare Program and
certain elements of Biovail’s Promotional and Product Services Related Functions
(Systems Review). As set forth in Appendix B, if there are no material changes
in Biovail’s relevant systems, processes, policies, and procedures, the Systems
Review shall be performed for the periods covering the first and fourth
Reporting Periods. If Biovail materially changes its relevant systems,
processes, policies, and procedures, the IRO shall perform a Systems Review for
the Reporting Period in which such changes were made in addition to conducting
the Systems Review for the first and fourth Reporting Periods. The Transactions
Review shall be performed annually and shall cover each of the five Reporting
Periods.

 

c.             Retention of Records. The IRO and Biovail shall retain and make
available to OIG, upon request, all work papers, supporting documentation,
correspondence, and draft reports (those exchanged between the IRO and Biovail)
related to the reviews.

 

2.             IRO Review Reports. The IRO(s) shall prepare a report (or
reports) based upon each Review performed. The information and content to be
included in each report is described in Appendix B, which is incorporated by
reference.

 

3.             Validation Review. In the event OIG has reason to believe that:
(a) any IRO Review fails to conform to the requirements of this CIA; or (b) the
IRO’s findings or Review results are inaccurate, OIG may, at its sole
discretion, conduct its own review to determine whether the applicable IRO
Review complied with the requirements of the CIA and/or the findings or Review
results are inaccurate (Validation Review). Biovail shall pay for the reasonable
cost of any such review performed by OIG or any of its designated agents. Any
Validation Review of Reports submitted as part of Biovail’s final Annual Report
shall be initiated no later than one year after Biovail’s final submission (as
described in Section II) is received by OIG.

 

Prior to initiating a Validation Review, OIG shall notify Biovail of its intent
to do so and provide a written explanation of why OIG believes such a review is
necessary. To resolve any concerns raised by OIG, Biovail may request a meeting
with OIG to: (a) discuss the results of any Review submissions or findings;
(b) present any additional information to clarify the results of the applicable
Review or to correct the inaccuracy of the Review; and/or (c) propose
alternatives to the proposed Validation Review. Biovail agrees to provide any
additional information as may be requested by OIG under this Section III.E.3 in
an expedited manner. OIG will attempt in good faith to resolve any Review issues
with Biovail prior to conducting a Validation Review.

 

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However, the final determination as to whether or not to proceed with a
Validation Review shall be made at the sole discretion of OIG.

 

4.             Independence and Objectivity Certification. The IRO shall include
in its report(s) to Biovail a certification or sworn affidavit that it has
evaluated its professional independence and objectivity, as appropriate to the
nature of the engagement, with regard to the IRO Review and that it has
concluded that it is, in fact, independent and objective.

 

E.            Disclosure Program.

 

To the extent not already accomplished, within 90 days after the Effective Date,
Biovail shall establish a Disclosure Program that includes a mechanism (e.g., a
toll-free compliance telephone line) to enable individuals to disclose, to the
Chief Compliance Officer or some other person who is not in the disclosing
individual’s chain of command, any identified issues or questions associated
with Biovail’s policies, conduct, practices, or procedures with respect to a
Federal health care program or FDA requirement believed by the individual to be
a potential violation of criminal, civil, or administrative law. Biovail shall
appropriately publicize the existence of the disclosure mechanism (e.g., via
periodic e-mails to employees or by posting the information in prominent common
areas).

 

The Disclosure Program shall emphasize a nonretribution, nonretaliation policy,
and shall include a reporting mechanism for anonymous communications for which
appropriate confidentiality shall be maintained. Upon receipt of a disclosure,
the Chief Compliance Officer (or designee) shall gather all relevant information
from the disclosing individual. The Chief Compliance Officer (or designee) shall
make a preliminary, good faith inquiry into the allegations set forth in every
disclosure to ensure that he or she has obtained all of the information
necessary to determine whether a further review should be conducted. For any
disclosure that is sufficiently specific so that it reasonably: (1) permits a
determination of the appropriateness of the alleged improper practice; and
(2) provides an opportunity for taking corrective action, BiovaiI shall conduct
an internal review of the allegations set forth in the disclosure and ensure
that proper follow-up is conducted.

 

The Chief Compliance Officer (or designee) shall maintain a disclosure log,
which shall include a record and summary of each disclosure received (whether
anonymous or not), the status of the respective internal reviews, and any
corrective action taken in response to the internal reviews. The disclosure log
shall be made available to OIG upon request.

 

F.             Ineligible Persons.

 

1.     Definitions. For purposes of this CIA:

 

a.             an “Ineligible Person” shall include an individual or entity who:

 

i.              is currently excluded, debarred, suspended, or otherwise
ineligible to participate in the Federal health care programs or in Federal
procurement or nonprocurement programs; or

 

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ii.             has been convicted of a criminal offense that falls within the
scope of 42 U.S.C. § 1320a-7(a), but has not yet been excluded, debarred,
suspended, or otherwise declared ineligible.

 

b.             “Exclusion Lists” include:

 

i.              the HHS/OIG List of Excluded Individuals/Entities (available
through the Internet at http://www.oig.hhs.gov); and

 

ii.             the General Services Administration’s List of Parties Excluded
from Federal Programs (available through the Internet at http://www.epls.gov).

 

2.             Screening Requirements. Biovail shall ensure that all prospective
and current Covered Persons are not Ineligible Persons, by implementing the
following screening requirements.

 

a.             Biovail shall screen all prospective and current Covered Persons
against the Exclusion Lists prior to engaging their services and, as part of the
hiring or contracting process, shall require such Covered Persons to disclose
whether they are Ineligible Persons.

 

b.             Biovail shall screen all Covered Persons against the Exclusion
Lists within 90 days after the Effective Date and on an annual basis thereafter.

 

c.             Biovail shall implement a policy requiring all Covered Persons to
disclose immediately any debarment, exclusion, suspension, or other event that
makes that person an Ineligible Person.

 

Nothing in this Section affects the responsibility of (or liability for) Biovail
to refrain from billing Federal health care programs for items or services
furnished, ordered, or prescribed by an Ineligible Person. Biovail understands
that items or services furnished by excluded persons are not payable by Federal
health care programs and that Biovail may be liable for overpayments and/or
criminal, civil, and administrative sanctions for employing or contracting with
an excluded person regardless of whether Biovail meets the requirements of
Section III.F.

 

3.             Removal Requirement. If Biovail has actual notice that a Covered
Person has become an Ineligible Person, Biovail shall remove such Covered Person
from responsibility for, or involvement with, Biovail’s business operations
related to the Federal health care programs and shall remove such Covered Person
from any position for which the Covered Person’s compensation or the items or
services furnished, ordered, or prescribed by the Covered Person are paid in
whole or part, directly or indirectly, by Federal health care programs or
otherwise with Federal funds at least until such time as the Covered Person is
reinstated into participation in the Federal health care programs.

 

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4.             Pending Charges and Proposed Exclusions. If Biovail has actual
notice that a Covered Person is charged with a criminal offense that falls
within the scope of 42 U.S.C. §§ 1320a-7(a), 1320a-7(b)(1)-(3), or is proposed
for exclusion during the Covered Person’s employment or contract term or during
the term of a physician’s or other practitioner’s medical staff privileges,
Biovail shall take all appropriate actions to ensure that the responsibilities
of that Covered Person have not and shall not adversely affect the quality of
care rendered to any beneficiary, patient, or resident, or any claims submitted
to any Federal health care program.

 

G.            Notification of Government Investigation or Legal Proceedings.

 

Within 30 days after discovery, Biovail shall notify 0IG, in writing, of any
ongoing investigation or legal proceeding known to Biovail conducted or brought
by any U.S. based governmental entity or its agents involving an allegation that
Biovail has committed a crime or has engaged in fraudulent activities. This
notification shall include a description of the allegation, the identity of the
investigating or prosecuting agency, and the status of such investigation or
legal proceeding. BiovaiI shall also provide written notice to OIG within 30
days after the resolution of the matter, and shall provide OIG with a
description of the findings and/or results of the investigation or proceedings,
if any.

 

H.            Reporting.

 

1.             Reportable Events.

 

a.     Definition of Reportable Event. For purposes of this CIA, a “Reportable
Event” means anything that involves:

 

i.              a matter that a reasonable person would consider a probable
violation of criminal, civil, or administrative laws applicable to any Federal
health care program and/or applicable to any FDA requirements relating to the
promotion of products for which penalties or exclusion may be authorized; or

 

ii.             the filing of a bankruptcy petition by Biovail.

 

A Reportable Event may be the result of an isolated event or a series of
occurrences.

 

b.             Reporting of Reportable Events. If Biovail determines (after a
reasonable opportunity to conduct an appropriate review or investigation of the
allegations) through any means that there is a Reportable Event, Biovail shall
notify OIG, in writing, within 30 days after making the determination that the
Reportable Event exists. The report to OIG shall include the following
information:

 

i.              a complete description of the Reportable Event, including the
relevant facts, persons involved, and legal and Federal health care program
authorities and/or FDA authorities implicated;

 

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ii.             a description of Biovail’s actions taken to correct the
Reportable Event; and

 

iii.            any further steps Biovail plans to take to address the
Reportable Event and prevent it from recurring.

 

iv.            If the Reportable Event involves the filing of a bankruptcy
petition, the report to the OIG shall include documentation of the filing and a
description of any Federal health care program and/or FDA authorities
implicated.

 

2.             Biovail shall not be required to report as a Reportable Event any
matter previously disclosed under Section III.G above.

 

I.             Notification of Communications with FDA.

 

Within 30 days after the date of any written report, correspondence, or
communication between Biovail and the FDA that materially discusses Biovail’s or
a Covered Person’s actual or potential unlawful or improper promotion of any
products (including any improper dissemination of information about off-label
indications), Biovail shall provide a copy of the report, correspondence, or
communication to the OIG. Biovail shall also provide written notice to the OIG
within 30 days after the resolution of any such disclosed off-label matter, and
shall provide the OIG with a description of the findings and/or results of the
matter, if any.

 

J.             Reporting of Physician Payment

 

1.             Posting of Payment Information

 

By April 30, 2010, Biovail shall post in a prominent position on its website an
easily accessible and readily searchable listing of all U.S.-based physicians,
U.S.-based Physician Related Entities (as defined below in Section III.J.2), or
U.S.-based Product Decision-Makers (as defined below in Section III.J.2) who or
which received any Payments (as defined below in Section III.J.2.) directly or
indirectly from Biovail during the first three months of 2010.

 

After the initial posting, 30 days after the end of each subsequent calendar
quarter, Biovail shall also post on its website a listing of updated information
about all Payments provided during the applicable calendar year during the
preceding quarter(s). No later than January 31, 2011, and each calendar year
thereafter during the term of the CIA, Biovail shall also post on its website a
report of the cumulative value of Payments provided to each U.S.-based
physician, U.S.-based Related Entity, and/or U.S.-based Product Decision Makers
during the preceding calendar year. The quarterly and annual reports shall be
easily accessible and readily searchable.

 

Each listing shall include a complete list of all individual U.S.-based
physicians, U.S.-based Related Entities and/or U.S.-based Product
Decision-Makers to whom or to which

 

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Biovail directly or indirectly made Payments in the preceding calendar quarter
or year (as applicable). Each listing shall be arranged alphabetically according
to the physicians’ last name, the name of the Related Entity, or the name of the
Product Decision-Maker. The Payment amounts in the lists shall be reported in
$5,000 increments (e.g., $0 - $5,000; $5,001- $10,000; etc.) For each entry, the
listing shall include the following information: i) physician’s or Product
Decision-Maker’s full name; ii) name of Related Entity (if applicable); iii)
city and state of the physician’s practice, the Related Entity, or the Product
Decision-Maker (as applicable); iii) the purpose of the Payment; and iii) the
aggregate value of the Payment(s) in the preceding quarter(s) or year (as
applicable).

 

2.             Definitions and Miscellaneous Provisions

 

Biovail shall continue to make each annual listing and the most recent quarterly
listing of Payment information available on its website at least throughout the
term of this CIA. Biovail shall retain and make available to OIG, upon request,
all work papers, supporting documentation, correspondence, and records related
to all applicable Payments and to the annual and quarterly listings of Payments.
Nothing in this Section III.J affects the responsibility of Biovail to comply
with (or liability for noncompliance with) all applicable Federal health care
program requirements and state laws as they relate to all applicable Payments
made to U.S.-based physicians, U.S.-based Related Entities, or U.S.-based
Product Decision-Makers.

 

If the proposed Physician Payments Sunshine Act of 2009 or similar legislation
is enacted, the OIG shall determine whether the purposes of this Section III.J
are reasonably satisfied by Biovail’s compliance with such legislation. In such
case, and in its sole discretion, the OIG may agree to modify or terminate
provisions of Section III.J as appropriate.

 

For purposes of this Section III.J, the term “Payments” is defined to include
all payments or transfers of value (whether in cash or in kind) made to
U.S.-based physicians, U.S.-based Related Entities, and/or U.S.-based Product
Decision-Makers. The term Payments includes, for example, payments or
compensation for services rendered, grants, fees (including data service fees,
and formulary placement fees), honoraria, and payments relating to research or
education. The term Payments also includes food, entertainment, gifts, trips or
travel, product(s)/item(s) provided for less than fair market value; or other
economic benefit. The term Payments does not include: i) samples of drug
products that meet the definition set forth in 21 C.F.R. § 203.3(i), or ii)
discounts, rebates, or other pricing terms.

 

For purposes of this Section III.J, the term “U.S.-based Related Entity” is
defined to be any entity by or in which any U.S.-based physician receiving
Payments is employed, has tenure, or has an ownership interest.

 

For purposes of this Section III.J, the term “U.S.-based Product Decision-Maker”
is defined to be any individual or entity in a position to arrange for or
recommend the purchasing, prescribing, ordering, or furnishing of any Government
Reimbursed Product in the U.S. market, including with regard to the placement of
any Government Reimbursed Product on a formulary or other preferred drug list.

 

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3.             If Biovail does not make any Payments to U.S.-based physicians,
U.S.-based Related Entities, or U.S.-based Product Decision-Makers during a
Reporting Period, Biovail shall not be required to post Payment information as
set forth in Section III.J.1 for that Reporting Period. Instead, the Chief
Compliance Officer shall certify that Biovail made no such Payments during the
applicable Reporting Period. Biovail shall include such certification(s) in the
applicable Annual Report(s).

 

K.            Review of Records Reflecting the Content of Detailing Sessions.

 

For each Reporting Period, Biovail shall obtain non-Biovail records (e.g.,
Verbatims or similar records) generated by an independent entity (Survey Entity)
reflecting the purported content and subject matter of detailing interactions
between sales representatives and U.S.-based HCPs for up to three Covered
Products (as defined below in this Section III.K.) For each Covered Product,
Biovail shall contract with a Survey Entity to conduct inquiries into the
content and subject matter of the detailing interactions in the United States.
The OIG shall select and notify the Survey Entity of a one week period within
every other quarter in the Reporting Period for which the surveys shall be
conducted, beginning in the second full quarter after the Effective Date. For
each Covered Product, Biovail shall obtain records reflecting the purported
content and subject matter of detailing sessions during the identified week in
all regions across the United States.

 

Prior to start of the second Reporting Period and every Reporting Period
thereafter, based on information provided by Biovail and other information known
to it, and after consultation with Biovail, the OIG shall select up to three
Government Reimbursed Products to be the basis for the review outlined in this
Section III.K and shall notify Biovail of its selection. The identified products
shall be known as the “Covered Products.” The parties have already identified
the Covered Products for the first Reporting Period.

 

Biovail shall review the records obtained from the Survey Entity and shall
identify any instances in which the records appear to indicate that Covered
Persons may have discussed and/or disseminated information about off-label uses
of the Covered Products. Biovail shall make findings based on its review
(Off-Label Findings) and shall take any responsive action it deems necessary. If
necessary for purposes of its review, Biovail shall endeavor to gather
additional factual information about the circumstances relating to any Off-Label
Findings. As part of each Annual Report, Biovail shall provide the OIG with
copies of the underlying records of the detailing interactions, a copy of
Biovail’s Off-Label Findings, and a description of the action(s), if any,
Biovail took in response to the Off-Label Findings.

 

IV.          CHANGES TO BUSINESS UNITS OR LOCATIONS

 

A.            Change or Closure of Unit or Location. In the event that, after
the Effective Date, Biovail changes locations or closes a business unit or
location engaged in Government Pricing or Contracting Functions or Promotional
and Product Services Related Functions, Biovail shall notify OIG of this fact as
soon as possible, but no later than within 30 days after the date of change or
closure of the location.

 

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B.            Purchase or Establishment of New Unit or Location. In the event
that, after the Effective Date, Biovail purchases or establishes a new business
unit or location engaged in Government Pricing or Contracting Functions or
Promotional and Product Services Related Functions, Biovail shall notify OIG no
later than the date the purchase or establishment is publicly disclosed or the
operation of the new business unit or location. This notification shall include
the address of the new business unit or location, phone number, fax number,
Federal health care program provider and/or supplier number, and the name and
address of the contractor that issued each number (if applicable). Each new
business unit or location and all Covered Persons at each new business unit or
location shall be subject to the applicable requirements of this CIA. In the
event that Biovail purchases or merges with an entity in a transaction that will
result in the addition of a significant number of new Covered Persons, Biovail
shall consult with OIG regarding a plan and timeline for implementing the CIA
requirements with respect to those new Covered Persons. The OIG shall determine,
in its sole discretion, whether to grant time extensions for the implementation
of the applicable CIA requirements with respect to new business units or
locations and new Covered Persons at such locations.

 

C.            Sale of Unit or Location. In the event that, after the Effective
Date, Biovail proposes to sell any or all of its business units or locations
that are subject to this CIA, Biovail shall notify OIG of the proposed sale no
later than the date the sale is publicly disclosed. This notification shall
include a description of the business unit or location to be sold, a brief
description of the terms of the sale, and the name and contact information of
the prospective purchaser. This CIA shall be binding on the purchaser of such
business unit or location, unless otherwise determined and agreed to in writing
by the OIG.

 

V.            IMPLEMENTATION AND ANNUAL REPORTS

 

A.            Implementation Report. Within 150 days after the Effective Date,
Biovail shall submit a written report to OIG summarizing the status of its
implementation of the requirements of this CIA (Implementation Report). The
Implementation Report shall, at a minimum, include:

 

1.             the name, address, phone number, and position description of the
Chief Compliance Officer required by Section III.A, and a summary of other
noncompliance job responsibilities the Chief Compliance Officer may have;

 

2.             the names and positions of the members of the U.S. Healthcare
Compliance Policy Committee required by Section III.A;

 

3.             a copy of Biovail’s Code of Conduct required by Section III.B.1;

 

4.             a copy of all Policies and Procedures required by
Section III.B.2;

 

5.             the number of individuals required to complete the Code of
Conduct certification required by Section III.B.1, the percentage of individuals
who have completed such certification, and an explanation of any exceptions (the
documentation supporting this information shall be available to OIG, upon
request);

 

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6.             the following information regarding each type of training
required by Section III.C:

 

a.             a description of such training, including a summary of the topics
covered, the length of sessions, and a schedule of training sessions; and

 

b.             the number of individuals required to be trained, percentage of
individuals actually trained, and an explanation of any exceptions.

 

A copy of all training materials and the documentation supporting this
information shall be available to OIG, upon request.

 

7.             the following information regarding the IRO(s): (a) identity,
address, and phone number; (b) a copy of the engagement letter; and (c) a
summary and description of any and all current and prior engagements and
agreements between Biovail and the IRO;

 

8.             a certification from the IRO regarding its professional
independence and objectivity with respect to Biovail;

 

9.             a description of the Disclosure Program required by
Section III.E;

 

10.          a description of the process by which Biovail fulfills the
requirements of Section III.F regarding Ineligible Persons;

 

11.          the name, title, and responsibilities of any person who is
determined to be an Ineligible Person under Section III.F; the actions taken in
response to the screening and removal obligations set forth in Section III.F;
and the actions taken in response to the screening and removal obligations set
forth in Section III.F;

 

12.          a list of all of Biovail’s locations (including locations and
mailing addresses); the corresponding name under which each location is doing
business; the corresponding phone numbers and fax numbers; each location’s
Federal health care provider or supplier number(s) (if applicable), and the name
and address of each Federal health care program contractor to which Biovail
currently submits claims (if applicable);

 

13.          a description of Biovail’s corporate structure, including
identification of any parent and sister companies, subsidiaries, and their
respective lines of business; and

 

14.          the certifications required by Section V.C.

 

B.            Annual Reports. Biovail shall submit to OIG annually a report with
respect to the status of, and findings regarding, Biovail’s compliance
activities for each of the five Reporting Periods (Annual Report).

 

Each Annual Report shall include, at a minimum:

 

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1.             any change in the identity, position description, or other
noncompliance job responsibilities of the Chief Compliance Officer and any
change in the membership of the U.S. Healthcare Compliance Policy Committee
described in Section III.A;

 

2.             a summary of any significant changes or amendments to the
Policies and Procedures required by Section III.B and the reasons for such
changes (e.g., change in applicable Federal health care program or FDA
requirements);

 

3.             the number of individuals required to complete the Code of
Conduct certification required by Section III.B.1, the percentage of individuals
who have completed such certification, and an explanation of any exceptions (the
documentation supporting this information shall be available to OIG, upon
request);

 

4.             the following information regarding each type of training
required by Section III.C:

 

a.             a description of such training, including a summary of the topics
covered, the length of sessions, and a schedule of training sessions; and

 

b.             the number of individuals required to be trained, percentage of
individuals actually trained, and an explanation of any exceptions.

 

A copy of all training materials and the documentation supporting this
information shall be available to OIG, upon request.

 

5.             a complete copy of all reports prepared pursuant to
Section III.D, along with a copy of the IRO’s engagement letter (if applicable);

 

6.             Biovail’s response and corrective action plan(s) related to any
issues raised by the reports prepared pursuant to Section III.D;

 

7.             a summary and description of any and all current and prior
engagements and agreements between Biovail and the IRO, if different from what
was submitted as part of the Implementation Report;

 

8.             a certification from the IRO regarding its professional
independence and objectivity with respect to Biovail;

 

9.             a summary of the disclosures in the disclosure log required by
Section III.E that relate to Federal health care programs or FDA requirements;

 

10.          any changes to the process by which Biovail fulfills the
requirements of Section III.F regarding Ineligible Persons;

 

11.          the name, title, and responsibilities of any person who is
determined to be an Ineligible Person under Section III.F; the actions taken by
Biovail in response to the screening

 

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and removal obligations set forth in Section III.F; and the actions by Biovail
in response to the screening and removal obligations set forth in Section III.F;

 

12.          a summary describing any ongoing investigation or legal proceeding
required to have been reported pursuant to Section III.G. The summary shall
include a description of the allegation, the identity of the investigating or
prosecuting agency, and the status of such investigation or legal proceeding;

 

13.          a summary of Reportable Events (as defined in Section III.H)
identified during the Reporting Period and the status of any corrective and
preventative action relating to all such Reportable Events;

 

14.          a summary describing any communications with the FDA required to
have been reported pursuant to Section III.I. This summary shall include a
description of the matter and the status of the matter;

 

15.          a copy of all information required by Section III.K;

 

16.          a list and description of all Government Reimbursed Products
promoted by Biovail in the United States (either directly or through the use of
a contract sales force) and the FDA-approved uses of the products;

 

17.          a description of all changes to the most recently provided list of
Biovail’s locations (including addresses) as required by Section V.A.12; the
corresponding name under which each location is doing business; the
corresponding phone numbers and fax numbers; each location’s Federal health care
program provider number or supplier number(s) (if applicable); and the name and
address of each Federal health care program contractor to which Biovail
currently submits claims (if applicable); and

 

18.          the certifications required by Section V.C.

 

The first Annual Report shall be received by OIG no later than 90 days after the
end of the first Reporting Period. Subsequent Annual Reports shall be received
by OIG no later than the anniversary date of the due date of the first Annual
Report.

 

C.            Certifications. The Implementation Report and Annual Reports shall
include a certification by the Chief Compliance Officer that:

 

1.             to the best of his or her knowledge, except as otherwise
described in the applicable report, Biovail is in compliance with all of the
requirements of this CIA;

 

2.             he or she has reviewed the Report and has made reasonable inquiry
regarding its content and believes that the information in the Report is
accurate and truthful;

 

3.             to the best of his or her knowledge, Biovail has complied with
its obligations under the Settlement Agreement: (a) not to resubmit to any
Federal health care program payors any previously denied claims related to the
Covered Conduct addressed in the

 

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Settlement Agreement, and not to appeal any such denials of claims; (b) not to
charge to or otherwise seek payment from federal or state payors for unallowable
costs (as defined in the Settlement Agreement); and (c) to identify and adjust
any past charges or claims for unallowable costs;

 

4.             Biovail’s: 1) Policies and Procedures as referenced in
Section III.B.2 above; 2) templates for standardized contracts and other similar
documents; and 3) the training materials used for purposes of Section III.C all
have been reviewed by competent legal counsel and have been found to be in
compliance with all applicable Federal health care program and FDA requirements.
In addition, any Biovail promotional materials containing claims or information
about Government Reimbursed Products and other materials and information
intended to be disseminated outside Biovail in the United States have been
reviewed by competent regulatory, medical and/or legal personnel in accordance
with applicable Policies and Procedures to ensure that legal, medical, and
regulatory concerns have been addressed and elevated when required, and that the
materials and information when finally approved are in compliance with all
applicable Federal health care program and FDA requirements. If the applicable
legal requirements have not changed, after the initial review of the documents
listed above, only material changes to the documents must be reviewed by
competent regulatory, medical and/or legal personnel. The certification shall
include a description of the document(s) reviewed and approximately when the
review was completed. The documentation supporting this certification shall be
available to OIG, upon request; and

 

5.             Biovail posted information about Payments on its website as
required by in Section III.J, or, if applicable, Biovail made no Payments (as
defined in Section III.J) during the Reporting Period to any U.S.-based
physician, U.S.-based Related Entity, or U.S.-based Product Decision-Maker.

 

D.            Designation of Information. Biovail shall clearly identify any
portions of its submissions that it believes are trade secrets, or information
that is commercial or financial and privileged or confidential, and therefore
potentially exempt from disclosure under the Freedom of Information Act (FOIA),
5 U.S.C. § 552. Biovail shall refrain from identifying any information as exempt
from disclosure if that information does not meet the criteria for exemption
from disclosure under FOIA.

 

VI.          NOTIFICATIONS ANT) SUBMISSION OF REPORTS

 

Unless otherwise stated in writing after the Effective Date, all notifications
and reports required under this CIA shall be submitted to the following
entities:

 

OIG:

 

Administrative and Civil Remedies Branch
Office of Counsel to the Inspector General
Office of Inspector General
U.S. Department of Health and Human Services
Cohen Building, Room 5527

 

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330 Independence Avenue, S.W.
Washington, DC 20201
Telephone: 202.619.2078
Facsimile: 202.205.0604

 

Biovail:

 

Seana Carson
Chief Compliance Officer
Biovail Corporation
7150 Mississauga Rd.
Mississauga, Ontario
L5N 8M5
Phone: 905.286.3373
Fax: 905.286.3201

 

Unless otherwise specified, all notifications and reports required by this CIA
may be made by certified mail, overnight mail, hand delivery, or other means,
provided that there is proof that such notification was received. For purposes
of this requirement, internal facsimile confirmation sheets do not constitute
proof of receipt. Upon request by OIG, Biovail may be required to provide OIG
with an electronic copy of each notification or report required by this CIA in
searchable portable document format (pdf), either instead of or in addition to,
a paper copy.

 

VII.         OIG INSPECTION, AUDIT, AND REVIEW RIGHTS

 

In addition to any other rights OIG may have by statute, regulation, or
contract, OIG or its duly authorized representative(s) may examine or request
copies of Biovail’s books, records, and other documents and supporting materials
and/or conduct on-site reviews of any of Biovail’s U.S. locations for the
purpose of verifying and evaluating: (a) Biovail’s compliance with the terms of
this CIA; and (b) Biovail’s compliance with the requirements of the Federal
health care programs in which it participates and with all applicable FDA
requirements. The documentation described above shall be made available by
Biovail to OIG or its duly authorized representative(s) at all reasonable times
for inspection, audit, or reproduction. Furthermore, for purposes of this
provision, OIG or its duly authorized representative(s) may interview any of
BiovaiI’s employees, contractors, or agents who consent to be interviewed at the
individual’s place of business during normal business hours or at such other
place and time as may be mutually agreed upon between the individual and OIG.
Biovail shall assist OIG or its duly authorized representative(s) in contacting
and arranging interviews with such individuals upon OIG’s request. Biovail’s
employees may elect to be interviewed with or without a representative of
Biovail present.

 

VIII.       DOCUMENT AND RECORD RETENTION

 

Biovail shall maintain for inspection all documents and records relating to
reimbursement from the Federal health care programs, or to compliance with this
CIA, for six years (or longer if otherwise required by law) from the Effective
Date.

 

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IX.          DISCLOSURES

 

Consistent with HHS’s FOIA procedures, set forth in 45 C.F.R. Part 5, OIG shall
make a reasonable effort to notify Biovail prior to any release by OIG of
information submitted by Biovail pursuant to its obligations under this CIA and
identified upon submission by Biovail as trade secrets, or information that is
commercial or financial and privileged or confidential, under the FOIA rules.
With respect to such releases, Biovail shall have the rights set forth at 45
C.F.R. § 5.65(d).

 

X.            BREACH AND DEFAULT PROVISIONS

 

Biovail is expected to fully and timely comply with all of its CIA obligations.

 

A.            Stipulated Penalties for Failure to Comply with Certain
Obligations. As a contractual remedy, Biovail and OIG hereby agree that failure
to comply with certain obligations as set forth in this CIA may lead to the
imposition of the following monetary penalties (hereinafter referred to as
“Stipulated Penalties”) in accordance with the following provisions.

 

1.             A Stipulated Penalty of $2,500 (which shall begin to accrue on
the day after the date the obligation became due) for each day Biovail fails to
establish and implement any of the following obligations as described in
Section III:

 

a.             a Chief Compliance Officer;

 

b.             a U.S. Healthcare Compliance Policy Committee;

 

c.             the Risk and Compliance Committee of the Board of Director’s
resolution;

 

d.             a written Code of Conduct;

 

e.             written Policies and Procedures;

 

f.             the training of Covered Persons and Relevant Covered Persons;

 

g.             a Disclosure Program;

 

h.             Ineligible Persons screening and removal requirements; L
notification of Government investigations or legal proceedings;

 

i.              notification of Government investigations of legal proceedings;

 

j.              notification of communications with the FDA as specified in
Section III.I;

 

k.             posting of Payment information as required by Section III.J; and

 

l.              a review of records reflecting the content of detailing sessions
as required by Section III.K.

 

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2.             A Stipulated Penalty of $2,500 (which shall begin to accrue on
the day after the date the obligation became due) for each day Biovail fails to
engage an IRO, as required in Section III.D and Appendix A.

 

3.             A Stipulated Penalty of $2,500 (which shall begin to accrue on
the day after the date the obligation became due) for each day Biovail fails to
submit the Implementation Report or any Annual Reports to OIG in accordance with
the requirements of Section V by the deadlines for submission.

 

4.             A Stipulated Penalty of $2,500 (which shall begin to accrue on
the day after the date the obligation became due) for each day Biovail fails to
submit the annual IRO Review Report(s) in accordance with the requirements of
Section III.D and Appendix B.

 

5.             A Stipulated Penalty of $1,500 for each day Biovail fails to
grant access as required in Section VII. (This Stipulated Penalty shall begin to
accrue on the date Biovail fails to grant access.)

 

6.             A Stipulated Penalty of $5,000 for each false certification
submitted by or on behalf of Biovail as part of its Implementation Report,
Annual Report, additional documentation to a report (as requested by the OIG),
or otherwise required by this CIA.

 

7.             A Stipulated Penalty of $1,000 for each day Biovail fails to
comply fully and adequately with any obligation of this CIA. OIG shall provide
notice to Biovail stating the specific grounds for its determination that
Biovail has failed to comply fully and adequately with the CIA obligation(s) at
issue and steps Biovail shall take to comply with the CIA. (This Stipulated
Penalty shall begin to accrue 10 days after Biovail receives this notice from
OIG of the failure to comply.) A Stipulated Penalty as described in this
Subsection shall not be demanded for any violation for which OIG has sought a
Stipulated Penalty under Subsections 1-6 of this Section.

 

B.            Timely Written Requests for Extensions. Biovail may, in advance of
the due date, submit a timely written request for an extension of time to
perform any act or file any notification or report required by this CIA.
Notwithstanding any other provision in this Section, if OIG grants the timely
written request with respect to an act, notification, or report, Stipulated
Penalties for failure to perform the act or file the notification or report
shall not begin to accrue until one day after Biovail fails to meet the revised
deadline set by OIG. Notwithstanding any other provision in this Section, if OIG
denies such a timely written request, Stipulated Penalties for failure to
perform the act or file the notification or report shall not begin to accrue
until three business days after Biovail receives OIG’s written denial of such
request or the original due date, whichever is later. A “timely written request”
is defined as a request in writing received by OIG at least five business days
prior to the date by which any act is due to be performed or any notification or
report is due to be filed.

 

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C.            Payment of Stipulated Penalties.

 

1.             Demand Letter. Upon a finding that Biovail has failed to comply
with any of the obligations described in Section X.A and after determining that
Stipulated Penalties are appropriate, OIG shall notify Biovail of: (a) Biovail’s
failure to comply; and (b) OIG’s exercise of its contractual right to demand
payment of the Stipulated Penalties (this notification is referred to as the
“Demand Letter”).

 

2.             Response to Demand Letter. Within 10 days after the receipt of
the Demand Letter, Biovail shall either: (a) cure the breach to OIG’s
satisfaction and pay the applicable Stipulated Penalties or (b) request a
hearing before an HHS administrative law judge (ALJ) to dispute OIG’s
determination of noncompliance, pursuant to the agreed upon provisions set forth
below in Section X.E. In the event Biovail elects to request an ALJ hearing, the
Stipulated Penalties shall continue to accrue until Biovail cures, to OIG’s
satisfaction, the alleged breach in dispute. Failure to respond to the Demand
Letter in one of these two manners within the allowed time period shall be
considered a material breach of this CIA and shall be grounds for exclusion
under Section X.D.

 

3.             Form of Payment. Payment of the Stipulated Penalties shall be
made by electronic funds transfer to an account specified by OIG in the Demand
Letter.

 

4.             Independence from Material Breach Determination. Except as set
forth in Section X.D.1.c, these provisions for payment of Stipulated Penalties
shall not affect or otherwise set a standard for OIG’s decision that Biovail has
materially breached this CIA, which decision shall be made at OIG’s discretion
and shall be governed by the provisions in Section X.D, below.

 

D.            Exclusion for Material Breach of this CIA.

 

1.             Definition of Material Breach. A material breach of this CIA
means:

 

a.             a failure by Biovail to report a Reportable Event and take
corrective action as required in Section III.H;

 

b.             a repeated or flagrant violation of the obligations under this
CIA, including, but not limited to, the obligations addressed in Section X.A;

 

c.             a failure to respond to a Demand Letter concerning the payment of
Stipulated Penalties in accordance with Section X.C;

 

d.             a failure to engage and use an IRO in accordance with
Section III,D; or

 

e.             a failure of the Risk and Compliance Committee of the Board to
issue a resolution in accordance with Section III.A.3.

 

2.             Notice of Material Breach and Intent to Exclude. The parties
agree that a material breach of this CIA by Biovail constitutes an independent
basis for Biovail’s exclusion from participation in the Federal health care
programs. Upon a determination by OIG that Biovail has materially breached this
CIA and that exclusion is the appropriate remedy, OIG shall

 

27

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notify Biovail of: (a) Biovail’s material breach; and (b) OIG’s intent to
exercise its contractual right to impose exclusion (this notification is
hereinafter referred to as the “Notice of Material Breach and Intent to
Exclude”).

 

3.             Opportunity to Cure. Biovail shall have 30 days from the date of
receipt of the Notice of Material Breach and Intent to Exclude to demonstrate to
OIG’s satisfaction that:

 

a.             Biovail is in compliance with the obligations of the CIA cited by
OIG as being the basis for the material breach;

 

b.             the alleged material breach has been cured; or

 

c.             the alleged material breach cannot be cured within the 30-day
period, but that: (i) Biovail has begun to take action to cure the material
breach; (ii) Biovail is pursuing such action with due diligence; and
(iii) Biovail has provided to OIG a reasonable timetable for curing the material
breach.

 

4.             Exclusion Letter. If, at the conclusion of the 30-day period,
Biovail fails to satisfy the requirements of Section X.D.3, OIG may exclude
Biovail from participation in the Federal health care programs. OIG shall notify
Biovail in writing of its determination to exclude Biovail (this letter shall be
referred to hereinafter as the “Exclusion Letter”). Subject to the Dispute
Resolution provisions in Section X.E, below, the exclusion shall go into effect
30 days after the date of Biovail’s receipt of the Exclusion Letter. The
exclusion shall have national effect and shall also apply to all other Federal
procurement and nonprocurement programs. Reinstatement to program participation
is not automatic. After the end of the period of exclusion, Biovail may apply
for reinstatement by submitting a written request for reinstatement in
accordance with the provisions at 42 C.F.R. §§ 1001.3001-.3004.

 

E.            Dispute Resolution

 

1.             Review Rights. Upon OIG’s delivery to Biovail of its Demand
Letter or of its Exclusion Letter, and as an agreed-upon contractual remedy for
the resolution of disputes arising under this CIA, Biovail shall be afforded
certain review rights comparable to the ones that are provided in 42 U.S.C. §
1320a-7(f) and 42 C.F.R. Part 1005 as if they applied to the Stipulated
Penalties or exclusion sought pursuant to this CIA. Specifically, OIG’s
determination to demand payment of Stipulated Penalties or to seek exclusion
shall be subject to review by an HHS ALJ and, in the event of an appeal, the HHS
Departmental Appeals Board (DAB), in a manner consistent with the provisions in
42 C.F.R. § 1005.2-100521. Notwithstanding the language in 42 C.F.R. §
1005.2(c), the request for a hearing involving Stipulated Penalties shall be
made within 10 days after receipt of the Demand Letter and the request for a
hearing involving exclusion shall be made within 25 days after receipt of the
Exclusion Letter.

 

2.             Stipulated Penalties Review. Notwithstanding any provision of
Title 42 of the United States Code or Title 42 of the Code of Federal
Regulations, the only issues in a proceeding for Stipulated Penalties under this
CIA shall be: (a) whether Biovail was in full and timely compliance with the
obligations of this CIA for which OIG demands payment; and (b) the

 

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period of noncompliance. Biovail shall have the burden of proving its full and
timely compliance and the steps taken to cure the noncompliance, if any. OIG
shall not have the right to appeal to the DAB an adverse ALJ decision related to
Stipulated Penalties. If the ALJ agrees with OIG with regard to a finding of a
breach of this CIA and orders Biovail to pay Stipulated Penalties, such
Stipulated Penalties shall become due and payable 20 days after the ALJ issues
such a decision unless Biovail requests review of the ALJ decision by the DAB.
If the All decision is properly appealed to the DAB and the DAB upholds the
determination of OIG, the Stipulated Penalties shall become due and payable 20
days after the DAB issues its decision.

 

3.             Exclusion Review. Notwithstanding any provision of Title 42 of
the United States Code or Title 42 of the Code of Federal Regulations, the only
issues in a proceeding for exclusion based on a material breach of this CIA
shall be:

 

a.             whether Biovail was in material breach of this CIA;

 

b.             whether such breach was continuing on the date of the Exclusion
Letter; and

 

c.             whether the alleged material breach could not have been cured
within the 30-day period, but that: (i) Biovail had begun to take action to cure
the material breach within that period; (ii) Biovail has pursued and is pursuing
such action with due diligence; and (iii) Biovail provided to GIG within that
period a reasonable timetable for curing the material breach and Biovail has
followed the timetable.

 

For purposes of the exclusion herein, exclusion shall take effect only after an
ALJ decision favorable to OIG, or, if the ALJ rules for Biovail, only after a
DAB decision in favor of OIG. Biovail’s election of its contractual right to
appeal to the DAB shall not abrogate OIG’s authority to exclude Biovail upon the
issuance of an ALJ’s decision in favor of OIG. If the ALJ sustains the
determination of OIG and determines that exclusion is authorized, such exclusion
shall take effect 20 days after the ALJ issues such a decision, notwithstanding
that Biovail may request review of the All decision by the DAB. If the DAB finds
in favor of OIG after an ALJ decision adverse to OIG, the exclusion shall take
effect 20 days after the DAB decision. Biovail shall waive its right to any
notice of such an exclusion if a decision upholding the exclusion is rendered by
the ALJ or DAB. If the DAB finds in favor of Biovail, Biovail shall be
reinstated effective on the date of the original exclusion.

 

4.             Finality of Decision. The review by an ALJ or DAB provided for
above shall not be considered to be an appeal right arising under any statutes
or regulations. Consequently, the parties to this CIA agree that the DAB’s
decision (or the ALJ s decision if not appealed) shall be considered final for
all purposes under this CIA.

 

XI.          EFFECTIVE AND BINDING AGREEMENT

 

Biovail and OIG agree as follows:

 

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A.            This CIA shall be binding on the successors, assigns, and
transferees of Biovail;

 

B.            This CIA shall become final and binding on the date the final
signature is obtained on the CIA;

 

C.            This CIA constitutes the complete agreement between the parties
and may not be amended except by written consent of the parties to this CIA;

 

D.            The undersigned Biovail signatories represent and warrant that
they are authorized to execute this CIA. The undersigned OIG signatory
represents that he is signing this CIA in his official capacity and that he is
authorized to execute this CIA.

 

E.            This CIA may be executed in counterparts, each of which
constitutes an original and all of which constitute one and the same CIA.
Facsimiles of signatures shall constitute acceptable, binding signatures for
purposes of this CIA.

 

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ON BEHALF OF BIOVAIL CORPORATION

 

/s/ Jennifer Tindale

 

September 11, 2009

Jennifer Tindale

 

DATE

Vice President, Associate General Counsel

 

 

Biovail Corporation

 

 

 

 

 

/s/ Geoffrey E. Hobart

 

9/11/09

Geoffrey E. Hobart

 

DATE

Covington & Burling LLP

 

 

Counsel for Biovail Corporation

 

 

 

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ON BEHALF OF THE OFFICE OF INSPECTOR GENERAL
OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES

 

 

 

 

/s/ Gregory E. Demske

 

9/11/09

 

 

 

GREGORY E. DEMSKE

 

DATE

Assistant Inspector General for Legal Affairs

 

 

Office of Inspector General

 

 

U.S. Department of Health and Human Services

 

 

 

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APPENDIX A

 

INDEPENDENT REVIEW ORGANIZATION

 

This Appendix contains the requirements relating to the Independent Review
Organization (IRO) required by Section III.D of the CIA.

 

A.                                   IRO Engagement.

 

Biovail shall engage an IRO that possesses the qualifications set forth in
Paragraph B, below, to perform the responsibilities in Paragraph C, below. The
IRO shall conduct its review in a professionally independent and objective
fashion, as set forth in Paragraph D.  Within 30 days after OIG receives written
notice of the identity of the selected IRO, OIG will notify Biovail if the IRO
is unacceptable. Absent notification from OIG that the IRO is unacceptable,
Biovail may continue to engage the IRO.

 

If Biovail engages a new IRO during the term of the CIA, this IRO shall also
meet the requirements of this Appendix. If a new IRO is engaged, Biovail shall
submit the information identified in Section V.A.7 of the CIA to OIG within 30
days of engagement of the IRO. Within 30 days after OIG receives written notice
of the identity of the selected IRO, OIG will notify Biovail if the IRO is
unacceptable. Absent notification from OIG that the IRO is unacceptable, Biovail
may continue to engage the IRO.

 

B.                                     IRO Qualifications.

 

The IRO shall:

 

1.             assign individuals to conduct the IRO Review(s) who have
expertise in all applicable Federal health care program and FDA requirements
related to the Reviews. The individuals shall also be knowledgeable about the
general requirements of the Federal health care program(s) under which Biovail
products are reimbursed;

 

2.             assign individuals to design and select the Transaction Review
sample(s) who are knowledgeable about the appropriate statistical sampling
techniques; and

 

3.             have sufficient staff and resources to conduct the reviews
required by the CIA on a timely basis.

 

C.                                     IRO Responsibilities.

 

The IRO shall:

 

1.             perform each IRO Review in accordance with the specific
requirements of the CIA;

 

2.             follow all applicable Federal health care program and FDA
requirements in making assessments in the IRO Reviews;

 

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3.             if in doubt of the application of a particular Federal health
care program or FDA requirement, policy, or regulation, request clarification
from the appropriate authority (e.g., CMS or FDA);

 

4.             respond to all OIG inquires in a prompt, objective, and factual
manner; and

 

5.             prepare timely, clear, well-written reports that include all the
information required by Appendix B to the CIA.

 

D.                                    IRO Independence and Objectivity.

 

The IRO must perform the IRO Reviews in a professionally independent and
objective fashion, as appropriate to the nature of the engagement, taking into
account any other business relationships or engagements that may exist between
the IRO and Biovail.

 

E.                                      IRO Removal/Termination.

 

1.             Provider. If Biovail terminates its IRO during the course of the
engagement, Biovail must submit a notice explaining its reasons to OIG no later
than 30 days after termination. Biovail must engage a new IRO in accordance with
Paragraph A of this Appendix.

 

2.             OIG Removal of IRO. In the event OIG has reason to believe that
the IRO does not possess the qualifications described in Paragraph B, is not
independent and/or objective as set forth in Paragraph D, or has failed to carry
out its responsibilities as described in Paragraph C, OIG may, at its sole
discretion, require Biovail to engage a new IRO in accordance with Paragraph A
of this Appendix.

 

Prior to requiring Biovail to engage a new IRO, OIG shall notify Biovail of its
intent to do so and provide a written explanation of why OIG believes such a
step is necessary. To resolve any concerns raised by OIG, Biovail may request a
meeting with OIG to discuss any aspect of the IRO’s qualifications, independence
or performance of its responsibilities and to present additional information
regarding these matters. Biovail shall provide any additional information as may
be requested by OIG under this Paragraph in an expedited manner. OIG will
attempt in good faith to resolve any differences regarding the IRO with Biovail
prior to requiring Biovail to terminate the IRO.  However, the final
determination as to whether or not to require Biovail to engage a new IRO shall
be made at the sole discretion of OIG.

 

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APPENDIX B TO CIA

 

IRO SYSTEM AND TRANSACTION REVIEWS

 

I.                                         IRO System and Transaction Reviews —
General Description

 

As specified more fully below, Biovail shall retain an Independent Review
Organization (IRO) to perform reviews to assist Biovail in assessing and
evaluating its systems, processes, policies, procedures, and practices related
to Government Pricing and Contracting Functions (as defined in Section II.C.3 of
the CIA) and to Promotional and Product Services Related Functions (as defined
in Section II.C.5 of the CIA). To the extent that the CIA requires a review of
transactions or activities, the IRO shall review transactions and activities
that occur subsequent to the Effective Date of the CIA.

 

The IRO shall perform two types of engagements. First, the IRO shall perform
two-part system reviews of: 1) Biovail’s systems, processes, policies, and
procedures relating to the calculation and reporting of AMP, BP, and ASP for
purposes of the Medicaid Drug Rebate program and the Medicare program,
respectively; and 2) Biovail’s systems, processes, policies, and procedures
relating to certain elements of its Promotional and Product Services Related
Functions. Collectively, these reviews shall be known as the “Systems Review”.
Second, the IRO shall perform Transactions Reviews as described more fully below
in Section III. Biovail may engage, at its discretion, a single IRO to perform
the Systems Reviews and the Transactions Reviews provided that the entity has
the necessary expertise and capabilities to perform both.

 

If, during the term of the CIA, there are no material changes in Biovail’s
Government Pricing and Contracting related systems, processes, policies, and
procedures related to AMP, BP, or ASP or in Biovail’s Promotional and Product
Services Related Functions related to the items identified in Section II.B
below, the IRO shall perform a Systems Review for the first and fourth Reporting
Periods, If, during the term of the CIA, Biovail materially changes its
Government Pricing and Contracting related systems, processes, policies, and
procedures related to AMP, BP, or ASP, or its Promotional and Product Services
Related Functions as they relate to the items set forth in Section II.B, the IRO
shall perform a Systems Review for the Reporting Period in which such changes
were made in addition to conducting the Systems Review for the first and fourth
Reporting Periods.

 

Any additional Systems Review(s) shall consist of: 1) an identification of the
material changes; 2) an assessment of whether the systems, processes, policies,
and procedures already reported on did not materially change; and 3) an update
on the systems, processes, policies, and procedures that materially changed.

 

The IRO shall conduct the Transactions Review for each Reporting Period of the
CIA.

 

II.                                     Systems Review

 

A.                                   Systems Review - Part 1 (relating to AMP,
BP, and ASP)

 

The IRO shall review Biovail’s systems, processes, policies, and procedures
(including the controls on the systems, processes, policies, and procedures)
associated with the tracking,

 

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gathering, and accounting for all relevant data for purposes of calculating and
reporting AMP, BP, and ASP to CMS. More specifically, the IRO shall review the
following for Biovail’s Government Reimbursed Products as defined in
Section II.C.3 of the CIA:

 

a)                                      The systems, processes, policies, and
procedures used to determine which Biovail customers are included or excluded
for purposes of calculating AMP, BP, and ASP;

 

b)                                     The systems, policies, processes, and
procedures used to determine whether and which particular transactions (e.g.,
discounts, rebates) are included in or excluded from AMP, BP, and ASP
determinations;

 

c)                                      A review of Biovail’s methodology for
applying transactions to the AMP, BP, and ASP determinations;

 

d)                                     A review of Biovail’s methodology for
estimating any prices, discounts, or other amounts used in determining AMP, BP,
and ASP;

 

e)                                      The flow of data and information by
which price, contract terms, and transactions with Biovail customers are
accumulated from the source systems and entered and tracked in Biovail’s
information systems for purposes of determining AMP, BP, and ASP;

 

f)                                        A review of any Biovail inquiries to
CMS regarding AMP, BP, and ASP determinations and reporting requirements,
including requests for interpretation or guidance, and any responses to those
inquiries; and

 

g)                                     The controls and processes in place to
examine and address system reports that require critical evaluation (such as
reports of variations, exceptions, or outliers). This shall include a review of
the bases upon which variations, exceptions, and outliers are identified and the
follow-up actions undertaken to identify the cause of any variations.

 

B.                                     Systems Review - Part 2 (Relating to
Promotional and Product Services Related Functions)

 

The IRO shall review Biovail’s systems, processes, policies, and procedures
(including the controls on those systems, processes, policies, and procedures)
relating to the following Promotional and Product Services Related Functions
(known as “Reviewed Policies and Procedures”):

 

1.             Biovail’s systems, policies, processes, and procedures applicable
to the manner in which Biovail representatives (including employee sales
representatives, contract sales agents, and/or headquarters personnel (such as
medical services personnel)) handle requests for information or inquiries about
the uses of Government Reimbursed Products in the United States

 

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(including the off-label uses of the products) and the dissemination of
materials relating to off-label uses of such products in the United States. This
review includes:

 

a)                                      the manner in which U.S.-based field
sales representatives and headquarters personnel (including medical services
personnel) with responsibility for the U.S. market receive and respond to
requests for information about off-label uses of Government Reimbursed Products;

 

b)                                     the form and content of product-related
information disseminated by Biovail or its agents to U.S.-based HCPs or
U.S.-based HCIs;

 

c)                                      Biovail’s internal review and approval
process for the material and information disseminated by U.S.-based field sales
representatives and headquarters personnel with responsibilities for the U.S.
market;

 

d)                                     Biovail’s systems, processes, and
procedures (including its Inquiries Database) to track requests from U.S.-based
physicians and other persons for information about the uses of products in the
U.S. and responses to those requests;

 

e)                                      the manner in which Biovail collects and
supports data reported in its Inquiries Database related to the U.S. market;

 

f)                                        the processes and procedures by which
the Chief Compliance Officer (and other appropriate individuals within Biovail)
identify situations in which it appears that off-label promotion may have
occurred in the United States; and

 

g)                                     Biovail’s processes and procedures for
investigating, documenting, resolving, and taking appropriate disciplinary
action for potential situations involving off-label promotion in the United
States;

 

2.             Biovail’s systems, policies, processes, and procedures relating
to the retention of U.S.-based HCPs or U.S.-based HCIs as consultants or under
fee-for-service arrangements (e.g, including as members of advisory boards,
focus groups, or clinical research project teams, or as speakers or preceptors.)
This review shall include a review of:

 

a)                                      the criteria used to determine whether,
how many, and under what circumstances (including the venue for the performance
of any services) Biovail will enter such arrangements and the business rationale
for entering such arrangements for the U.S. market;

 

b)                                     the processes and criteria used to
identify and select U.S.-based HCPs and U.S.-based HCIs with whom Biovail enters
arrangements, including the role played by U.S.-based field sales
representatives in the process (if any). This includes a review of Biovail’s
internal review and approval

 

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process for such arrangements, and the circumstances under which there may be
exceptions to the process;

 

c)                                      Biovail’s tracking or monitoring of the
services provided or the work performed under such arrangements (including the
receipt of the work product received from the U.S.-based HCPs or U.S.-based
HCIs, if any);

 

d)                                     Biovail’s policies and procedures related
to any requirement that the U.S.-based HCPs or U.S.-based HCIs (or their agents)
disclose the existence of their arrangements with Biovail and any financial
relationship the HCP or HCI has with Biovail;

 

e)                                      the uses made of work product received
from the U.S.-based HCPs or U.S.-based HCIs, if any;

 

f)                                        Biovail’s processes for establishing
the amounts paid to U.S.-based HCPs or U.S.-based HCIs under such arrangements
and the reasons or justifications for any differentials in the amounts paid to
different HCPs and HCIs;

 

g)                                     the criteria used to determine under what
circumstances entertainment, travel, lodging, meals, and/or other items or
reimbursements are provided to the U.S.-based HCPs or U.S.-based HCIs in
connection with the arrangements, and Biovail’s processes for establishing the
amounts paid or reimbursed for such items;

 

h)                                     whether and in what manner Biovail tracks
or monitors the prescribing habits or product use of individuals or entities
with whom it enters consulting or fee-for-service arrangements, if any; and

 

i)                                         the budget funding source within
Biovail (e.g, department or division) for the consulting or fee-for-service
arrangements;

 

3.             Biovail’s systems, policies, processes, and procedures relating
to funding or sponsorship of any Third Party Educational Activity (as defined in
Section II.C.6 of the CIA) in the United States. This review shall include a
review of the following items:

 

a)                                      the processes and procedures used to
approve the funding or sponsorship of the Third Party Educational Activity;

 

b)                                     the criteria used to determine whether
and under what circumstances the funding or sponsorship will be provided;

 

c)                                      the processes and criteria used to
select recipients of the funding or sponsorships, including the role played by
field sales representatives in the processes (if any), and the circumstances
under which there may be exceptions to the processes;

 

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d)                                     Biovail’s policies and procedures
relating to any requirement that the recipient of the funding or sponsorship (or
the recipient’s agent) disclose BiovaiI’s funding or sponsorship and any
financial relationship Biovail may have with the recipient;

 

e)                                      Biovail’s policies or procedures for
determining and memorializing the amounts paid to recipients of the funding or
sponsorship and the purpose or justifications for the amounts paid;

 

f)                                        Biovail’s policies and procedures
relating to the independence of any programs funded or sponsored by Biovail;

 

g)                                     Biovail’s policies and procedures
relating to the content and nature (e.g, promotional, non-promotional) of any
programs sponsored through the funding or sponsorships;

 

h)                                     whether and in what manner Biovail tracks
or monitors the prescribing habits or product use of individuals or entities
receiving the funding or sponsorship, if any; and

 

i)                                         the budget funding source within
Biovail (e.g, department or division) from which the funding or sponsorships are
provided;

 

4.             Biovail’s systems, policies, processes, and procedures relating
to funding or sponsorship of, or participation in, research agreements, grants,
and/or research collaborations (including clinical trials and independent
research) in the United States (collectively “U.S. Research Activities”). This
review shall include a review of the following items:

 

a)                                      the processes and procedures used to
approve the funding or sponsorship of, or participation in, U.S. Research
Activities;

 

b)                                     the criteria used to determine whether
and under what circumstances Biovail will fund or otherwise participate in U.S.
Research Activities;

 

c)                                      the processes and criteria used to
select recipients of the funding for the U.S. Research Activities, including the
role played by field sales representatives in the processes (if any), and the
circumstances under which there may be exceptions to the processes;

 

d)                                     Biovail’s policies and procedures
relating to any requirement that the recipient of the funding or participant in
the U. S. Research Activities disclose Biovail’s funding and any financial
relationship Biovail may have with the recipient;

 

e)                                      Biovail’s policies or procedures for
determining and memorializing the amounts paid in connection with the U.S.
Research Activities and the purpose or justifications for the amounts paid;

 

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f)                                        Biovail’s policies and procedures
relating to the independence of the U.S. Research Activities funded by Biovail;

 

g)                                     whether and in what manner BiovaiI tracks
or monitors the prescribing habits or product use of individuals or entities
receiving the funding or otherwise participating in the U.S. Research
Activities, if any; and

 

h)                                     the budget funding source within Biovail
(e.g, department or division) for the U.S. Research Activities;

 

5.             BiovaiI’s systems, polices, processes, and procedures relating to
compensation arrangements (including salaries and bonuses) for Covered Persons
(including contract sales agents), with regard to whether the systems, policies,
processes, and procedures are designed to ensure that financial incentives do
not motivate such individuals to engage in improper promotion, sales, or
marketing of Government Reimbursed Products. This shall include a review of the
bases upon which compensation is determined and the extent to which compensation
is based on product performance;

 

6.             Biovail’s systems, processes, policies, and procedures relating
to the development and review of call plans for Biovail’s field sales
representatives (including contract sales agents) and other personnel related to
the promotion, marketing, or sale of Government Reimbursed Products in the
United States. This shall include a review of the extent to which U.S.-based
HCPs and U.S.-based HCIs belonging to specified medical specialties or types of
clinical practice are included in, or excluded from, the call lists based on
their expected utilization of the products for FDA-approved uses or
non-FDA-approved uses of the Government Reimbursed Products; and

 

7.             Biovail’s systems, processes, policies, and procedures relating
to the development, implementation, and review of U.S. Sample Distribution
Plans. This shall include a review of the bases upon, and circumstances under,
which U.S.-based HCPs and U.S.-based HCIs belonging to specified medical
specialties or types of clinical practice may receive samples of Government
Reimbursed Products from Biovail (including, separately, from Biovail sales
representatives (including contract sales agents) and from BiovaiI’s
headquarters personnel.)

 

C.                                     Systems Review Report

 

For each Reporting Period for which a Systems Review is performed hereunder, the
IRO shall prepare a report based upon the Systems Review. This report may be
(but is not required to be) combined with the report for the Transactions Review
described in Section III below, and shall include the following:

 

(Relating to Systems Review — Part I)

 

1.             A description of the systems, processes, policies, and procedures
in place to track, gather, and account for price terms, contract terms, and
transactions with Biovail customers that are relevant to the calculation and
reporting of AMP, BP, and ASP, including, but not limited to:

 

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a)                                      The computer or other relevant systems
(including the source systems and any other information systems, as applicable)
used to track data for and to calculate and report AMP, BP, and ASP;

 

b)                                     The information input into Biovail’s
relevant computer or other systems used to calculate AMP, BP, and ASP;

 

c)                                      The system logic or decisional rationale
used to determine which customers are included or excluded for purposes of
calculating AMP, BP, and ASP;

 

d)                                     The system logic or decisional rationale
used to determine whether contract terms, discounts, rebates and all other
relevant transactions with Biovail customers are included or excluded when
calculating AMP, BP, and ASP;

 

e)                                      The system logic or decisional rationale
used to determine whether and in what manner estimates of prices, discounts and
other amounts are made for purposes of determining AMP, BP, and ASP; and

 

f)                                        Biovail’s policies and procedures in
examining system reports for variations that require critical evaluation,
including the basis on which variations, exceptions, or outliers are identified,
and the follow-up actions taken in response.

 

2.             A description of the documentation, information, and systems
reviewed, and the personnel interviewed, if any, including a description of the
following:

 

a)                                      Biovail’s inquiries to CMS regarding the
calculation of AMP, BP or ASP and any responses to those inquiries;

 

b)                                     Biovail’s systems and practices for
reporting AMP, BP, and ASP to CMS as required by the Medicaid Drug Rebate
program and the Medicare Program; and

 

c)                                      Biovail’s systems and practices for
reporting any adjustments to AMP, BP, or ASP or additional information relating
to the submissions.

 

3.             Observations, findings, and recommendations for any improvements
to Biovail’s systems, processes, policies, and procedures, including any changes
recommended in order to improve compliance with the requirements of the Medicaid
Drug Rebate and/or Medicare Program(s).

 

(Relating to the Reviewed Policies and Procedures)

 

For each of the Reviewed Policies and Procedures identified in Section II.B
above, the report shall include the following items:

 

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4.             A description of the documentation (including policies) reviewed
and any personnel interviewed;

 

5.             A detailed description of Biovail’s systems, policies, processes,
and procedures relating to the items identified in Sections II.B.1-7 above,
including a general description of Biovail’s control and accountability systems
(e.g, documentation and approval requirements, tracking mechanisms) and written
policies regarding the Reviewed Policies and Procedures;

 

6.             A description of the manner in which the control and
accountability systems and the written policies relating to the items identified
in Sections II.B. l-7 above are made known or disseminated within Biovail and to
any contractors (as applicable);

 

7.             A detailed description of any system used to track and respond to
requests for information about Government Reimbursed Products including through
the Inquiries Database;

 

8.             A description of Biovail’s systems, policies, processes, and
procedures for tracking any expenditures associated with the Reviewed Policies
and Procedures referenced in Sections II.B.2-4, above;

 

9.             A general description of Biovail’s disciplinary measures
applicable for a failure to comply with its policies and procedures relating to
Promotional and Product Services Related Functions;

 

10.           A detailed description of Biovail’s compensation system (including
salaries and bonuses) for Covered Persons, including a description of the bases
upon which compensation is determined and the extent to which compensation is
based on product performance. To the extent that Biovail may establish
compensation differently for individual products, the IRO shall report
separately on each such type of compensation arrangement;

 

11.           Findings and supporting rationale regarding any weaknesses in
Biovail’s systems, processes, policies, and procedures relating to the Reviewed
Policies and Procedures, if any; and

 

12.           Recommendations to improve any of the systems, policies,
processes, or procedures relating to the Reviewed Policies and Procedures, if
any.

 

III.                                 Transactions Review

 

The Transactions Review shall include a review of the following: (1) records
relating to a sample of the Payments that are reported by Biovail pursuant to
Section III.J of the CIA; (2) Biovail’s call plans related to the promotion,
marketing, or sale of Government Reimbursed Products in the U.S. and Biovail’s
call plan review process for Government Reimbursed Products; (3) U.S. Sampling
Events as defined below in Section III.C; and (4) Inquiries reflected in
Biovail’s Inquiries Database. The IRO shall report on all aspects of its reviews
in the Transactions Review Reports.

 

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A.                                   IRO Review of Payment Listings

 

1.             Information Contained in U.S.-based Physician Payment Listings

 

As set forth in Section III.J of the CIA, Biovail shall post quarterly and
annual listings of U.S.-based physicians, U.S.-based Related Entities and
U.S.-based Product Decision-Makers who received Payments, as defined in the CIA,
directly or indirectly from Biovail. For purposes of the Transaction Review,
each annual listing shall be referred to as the “Payment Listing” or “Listing.”
For each entry, the Listing shall include the following information: i)
physician’s or Product Decision-Maker’s full name; ii) name of Related Entity
(if applicable); iii) city and state of the physician’s practice, the Related
Entity (as applicable), or the Product Decision-Maker; iii) the purpose of the
Payment; and iii) the aggregate value of the Payment(s) in the preceding
quarter(s) or year.

 

For purposes of the Transaction Review, the term “Control Documents” shall
include all documents or electronic records associated with each Payment
reflected in the Payment Listing for the sampled U.S.-based physician,
U.S.-based Related Entity, and/or U.S.-based Product Decision-Maker. For
example, the term, “Control Documents” includes, but is not limited to,
documents relating to the nature, purpose, and amount of all Payments reflected
in the Listing; contracts relating to the Payment(s) reflected in the Listing;
documents relating to the occurrence of Payment(s) reflected in the Listing;
documents reflecting any work product generated or service provided in
connection with the Payment(s); documents submitted in connection with requests
for approval for the Payment(s); and business rationale or justification forms
relating to the Payment(s).

 

2.             Selection of Sample for Review

 

For each Reporting Period, the OIG shall have the discretion to identify up to
75 U.S.-based physicians, U.S.-based Related Entities, and/or U.S.-based Product
Decision-Makers from the applicable Listing that will be subject to the IRO
review described below. Biovail may submit a written request to the OIG that the
sample size should be less than 75 and the OIG shall decide, in its sole
discretion, whether to grant the request. If the OIG elects to exercise its
discretion to select the individuals or entities to be included in the review,
it shall notify the IRO of the 75 identified U.S.-based physicians, U.S.-based
Related Entities, and/or U.S.-based Product Decision-Makers subject to the IRO
review. If the OIG elects not to exercise its discretion as described above, the
IRO shall randomly select up to 75 (or such smaller number if approved by the
OIG) U.S.-based physicians, U.S.-based Related Entities, and/or U.S.-based
Product Decision-Makers to be included in the review. For each selected
U.S.-based physician, U.S.-based Related Entity, and/or U.S.-based Product
Decision-Maker, the IRO shall review the entry in the Listing and the Control
Documents relating to Payments reflected in Listing identified by the IRO as
necessary and sufficient to validate the Payment information in the Listing.

 

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3.             IRO Review of Control Documents for Selected Physicians and/or
Related Entities

 

For each physician, Related-Entity, and/or Product Decision-Maker selected as
part of the sample, the IRO shall review the Control Documents identified by the
IRO as necessary and sufficient to validate each Payment reflected in the
Listing to evaluate the following:

 

a)                                      Whether Control Documents are available
relating to each Payment reflected in the Listing for the sampled physician,
Related Entity and/or Product Decision-Maker;

 

b)                                     Whether the Control Documents were
completed and archived in accordance with the requirements set forth in
Biovail’s policies;

 

c)                                      Whether the aggregate value of the
Payment(s) as reflected in the Listing for the sampled physician, Related
Entity, and/or Product Decision-Maker is consistent with the value of the
Payments(s) reflected in the Control Documents; and

 

d)                                     Whether the Control Documents reflect
that Biovail’s policies were followed in connection with Payment(s) reflected in
the Listing (e.g, all required written approvals for the activity were obtained
in accordance with Biovail’s policies.)

 

4.             Identification of Material Errors and Additional Review

 

A Material Error is defined as any of the following:

 

a)                                      A situation in which all required
Control Documents relating to Payments reflected in the Listing for the sampled
physician, Related Entity and/or Product Decision-Maker do not exist and:

 

i.                                          no corrective action was initiated
prior to the selection of the sampled physicians, Related Entities, and/or
Product Decision-Maker; or

 

ii.                                       the IRO cannot confirm that Biovail
otherwise followed its policies and procedures relating to the entry in the
Listing for the sampled physician, Related Entity, and/or Product
Decision-Maker, including its policies and procedures relating to any
Payment(s) reflected in the Listing; or

 

b)                                     Information or data is omitted from key
fields in the Control Documents that prevents the IRO from assessing compliance
with Biovail’s policies and procedures, and the IRO cannot obtain this
information or data from reviewing other Control Documents.

 

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If a Control Document does not exist, but Biovail has initiated corrective
action prior to the selection of the sampled physicians, Related Entities,
and/or Product Decision-Maker, or if a Control Document does not exist but the
IRO can determine that Biovail otherwise followed its policies and procedures
with regard to each entry in the Listing for a sampled physician, Related
Entity, and/or Product Decision-Maker, the IRO shall consider such a situation
to be an exception (rather than a Material Error) and the IRO shall report the
situation as such. Similarly, the IRO shall note as exceptions any Control
Documents for which non-material information or data is omitted.

 

If the IRO identifies any Material Errors, the IRO shall conduct such Additional
Review of the underlying Payment associated with the erroneous Control Documents
as may be necessary to determine the root cause of the Material Errors. For
example, the IRO may need to review additional documentation and/or conduct
interviews with appropriate personnel to identify the root cause of the Material
Error(s) discovered.

 

B.                                     IRO Review of Biovail’s Call Plans and
Call Plan Review Process

 

The IRO shall conduct a review and assessment of Biovail’s review of call plans
for Government Reimbursed Products (including call plans used by contract sales
agents) as set forth in Section III.B.2.i of the CIA. Biovail shall provide the
IRO with: i) a list of Government Reimbursed Products promoted, marketed, or
sold by Biovail in the United States, including through any contract sales
force, during the Reporting Period; ii) information about the FDA-approved uses
for each such Government Reimbursed Product; and iii) the call plans for each
such Government Reimbursed Product. Biovail shall also provide the IRO with
information about the reviews of call plans that Biovail conducted during the
Reporting Period consistent with Section III.B.2.i of the CIA and any
modifications to the call plans made as a result of Biovail’s reviews.

 

For each call plan, the IRO shall select a sample of up to 75 of the U.S.-based
HCPs and U.S.-based HCIs included on the call plan. Biovail may submit a written
request to the OIG that the sample size should be less than 75 and the OIG shall
decide, in its sole discretion, whether to grant the request. For each call
plan, the IRO shall compare the sampled U.S.-based HCPs and U.S.-based HCIs
against the criteria (e.g., medical specialty or practice area) used by Biovail
in conducting its review and/or modification of the call plan in order to
determine whether Biovail followed its criteria and Policies and Procedures in
reviewing and modifying the call plan.

 

The IRO shall note any instances in which it appears that the sampled U.S.-based
HCPs and U.S.-based HCIs on a particular call plan are inconsistent with
Biovail’s criteria relating to the call plan and/or Biovail’s Policies and
Procedures. The IRO shall also note any instances in which it appears that
Biovail failed to follow its criteria or Policies and Procedures.

 

C.                                     IRO Review of the Distribution of Samples
of Biovail’s Government Reimbursed Products

 

The IRO shall conduct a review and assessment of the distribution of samples of
Government Reimbursed Products to U.S.-based HCPs and U.S.-based HCIs. Biovail
shall

 

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provide the IRO with: i) a list of Government Reimbursed Products for which
Biovail distributed samples in the United States during the Reporting Period
(either directly or through a contract sales force); ii) information about the
FDA-approved uses for each such sampled Government Reimbursed Product; and iii)
information about Biovail’s policies and procedures relating to the distribution
of samples of each such Government Reimbursed Product, including Biovail’s U.S.
Sample Distribution Plan, if any, showing which type of samples may be
distributed to U.S.-based HCPs and U.S.-based HCIs of particular medical
specialties or types of clinical practices. Biovail shall also provide the IRO
with information about: (1) the reviews of Sample Distribution Plans that
Biovail conducted during the Reporting Period; and (2) any modifications to the
Sample Distribution Plans made or corrective actions that may be taken as a
result of Biovail’s reviews, including investigating, documenting, resolving,
and taking disciplinary action.

 

For each Government Reimbursed Product for which Biovail distributed samples in
the United States during the Reporting Period, the IRO shall randomly select a
sample of up to 75 separate instances in which Biovail provided samples of the
product to U.S.-based HCPs or U.S.-based HCIs either through a sales
representative or direct shipment. Biovail may submit a written request to the
OIG that the sample size should be less than 75 and the OIG shall decide, in its
sole discretion, whether to grant the request. Each such instance shall be known
as a “U.S. Sampling Event.”

 

For each U.S. Sampling Event, the IRO shall review all documents and information
relating to the distribution of the sample to the U.S.-based HCP or U.S.-based
HCI, including the sample card, direct shipment request form and/or the
electronic call record. The reviewed materials shall include information about
the following: I) the quantity, dosage, and form of the Government Reimbursed
Product provided to the HCP or HCI; 2) the identity and type of medical
specialty or clinical practice of the HCP or HCI; 3) the identity of the field
sales representative who accepted the sample request form or provided the sample
to the HCP or HCI; 4) the manner and mechanism through which the sample was
requested (e.g., sample card or direct shipment request form); and 5) the manner
and mechanism through which the request was fulfilled (e.g., sales
representative distribution or direct shipment.)

 

For each U.S. Sampling Event, the IRO shall evaluate whether the sample was
provided to a U.S.-based HCP or U.S.-based HCI whose medical specialty or
clinical practice is consistent with the uses of the product approved by the FDA
and whether the sample was distributed by a Biovail representative in a manner
consistent with Biovail’s Sample Distribution Plan for the product(s), if any.
To the extent that a sample was provided to an HCP or HCI by a Biovail
representative other than a sales representative, the IRO shall contact the HCP
or HCI by letter. The letter shall request that the HCP or HCI: 1) verify that
he/she/it received the quantity and type of samples identified by the IRO as the
U.S. Sampling Event; 2) verify that he/she/it requested the samples provided
during the U.S. Sampling Event; 3) explain or confirm its type of medical
specialty or clinical practice; and 4) identify the basis for requesting the
sample (e.g, conversations with a Biovail sales representative, conversation
with a representative of Biovail’s medical services department, independent
research or knowledge of the HCP or HCI, etc.)

 

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For each U.S. Sampling Event, the IRO shall compare the medical specialty and
type of clinical practice of the HCPs and HCIs that received the sample with
uses of the product approved by the FDA. The IRO shall note any instances in
which it appears that the medical specialty or clinical practice of the HCPs or
HCIs that received a sample during a U.S. Sampling Event were not consistent
with the uses of the product approved by the FDA. For each such situation, the
IRO shall note the process followed by Biovail in determining that it was
appropriate to provide a sample to such HCP or HCI and the basis for such
determination. For each U.S. Sampling Event, the IRO shall also note any
instances in which it appears that Biovail failed to follow its Sample
Distribution Plan, if any, and sample policies and procedures for the
product(s) provided and, if so, whether Biovail already had taken corrective
action, including investigating, documenting, resolving, and taking disciplinary
action, if appropriate.

 

D.                                    Review of Inquiries Reflected in Inquiries
Database

 

1.             Description of Inquiries Database

 

As set forth in Section III.C.3.h of the CIA, Biovail, either directly or
through a vendor, shall establish a database (hereafter, “Inquiries database”)
to track information relating to requests for information or inquiries about
Government Reimbursed Products (hereafter “Inquiries”). Specifically, Biovail
shall document and record all Inquiries regarding its Government Reimbursed
Products in the Inquiries Database. Biovail shall record in the Inquiries
Database the following information for each Inquiry received: 1) date of
Inquiry; 2) form of Inquiry (e.g, fax, phone, medical information request form);
3) name of requesting HCP or HCI; 4) nature and topic of request (including
exact language of the Inquiry if made in writing); 5) an evaluation of whether
the Inquiry relates to information about an off-label indication for the
Government Reimbursed Product; 6) nature/form of the response from Biovail
(including a record of any materials provided in response to the request); 7)
the name of the U.S.-based field sales representative who called upon or
interacted with the HCP or HCI, if known; and 8) the status and findings of any
follow-up review conducted by Biovail in situations in which it appears that the
Inquiry may have related to improper off-label promotion in the U.S..

 

2.             Internal Review of the Inquiries Database

 

On a semi-annual basis, Biovail’s Chief Compliance Office or designee shall
review the Inquiries Database and related information, as appropriate, and shall
generate a report summarizing the items of information outlined in
Section III.D.1 above for each Inquiry received during the preceding two
quarters (“Inquiries Database Report”). The Chief Compliance Office or designee
shall review the Inquiries Database Reports to assess whether the information
contained in the report suggests that improper off-label promotion may have
occurred in the U.S. in connection with any Inquiry(ies). If the Chief
Compliance Office or designee, in consultation with other appropriate Biovail
personnel, suspects that improper off-label promotion may have occurred in
connection with any Inquiry, the Chief Compliance Office or designee shall
undertake a follow-up review of the Inquiry (hereafter “Off-Label Review”), make
specific findings based on the Off-Label Review, and take all appropriate
corrective action (including disciplinary action of the Covered Person and
reporting of the conduct, including disclosing Reportable Events pursuant to
Section III.I of the CIA, if applicable).

 

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3.             IRO Review of Inquiries Reflected in Inquiries Database

 

The IRO shall select and review a random sample of up to 60 Inquiries from among
the Inquiries reflected in the Inquiries Database for each Reporting Period.
Forty-five of the Inquiries reviewed by the IRO shall be Inquiries for which
Biovail conducted an Off- Label Review, and the other 15 shall be Inquiries for
which Biovail did not conduct an Off-Label Review. Biovail may submit a written
request to the OIG that the sample size should be less than 60 and the OIG shall
decide, in its sole discretion, whether to grant the request. If Biovail
conducted an Off-Label Review on fewer than 45 Inquiries, additional Inquiries
may be selected for which an Off-Label Review was not conducted to reach a total
of 60 Inquiries or such other number of inquiries as approved by OIG. For each
Inquiry reviewed, the IRO shall determine:

 

a)                                      Whether each item of information listed
above in Section III.D.1 is reflected in the Inquiries Database for each
reviewed Inquiry; and

 

b)                                     For each Inquiry for which the Chief
Compliance Office or designee conducted an Off-Label Review, the basis for
suspecting that improper off-label promotion may have occurred; the steps
undertaken as part of the Off-Label Review; the findings of the Chief Compliance
Office or designee as a result of the Off-Label Review; and any follow-up
actions taken by Biovail based on the Off-Label Review findings.

 

E.                                      Transactions Review Report

 

For each Reporting Period, the IRO shall prepare a report based on its
Transactions Review. The report shall include the following:

 

1.             General Elements to Be Included in Report

 

a)                                      Review Objectives: A clear statement of
the objectives intended to be achieved by each part of the review;

 

b)                                     Review Protocol: A detailed narrative
description of the procedures performed and a description of the sampling unit
and universe utilized in performing the procedures for each sample reviewed; and

 

c)                                      Sources of Data: A full description of
documentation and other information, if applicable, relied upon by the IRO in
performing the Transactions Review.

 

2.             Results to be Included in Report

 

The following results shall be included in each Transactions Report:

 

(Relating to the Payment Listing Reviews)

 

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a)                                      a description of the entries in the
Payment Listing for each physician, Related Entity, and/or Product
Decision-Maker sampled and a description of Control Documents reviewed in
connection with each selected individual or entity;

 

b)                                     for each sampled physician, Related
Entity, or Product Decision-Maker, findings and supporting rationale as to
whether: (i) all required Control Documents exist; (ii) each Control Document
was completed in accordance with all of the requirements set forth in the
applicable Biovail policy; (iii) the aggregate value of the Payment(s) as
reflected in the Listing for the sampled individual or entity is consistent with
the value of the Payment(s) reflected in the Control Documents; (iv) each
Control Document reflects that Biovail’s policies were followed in connection
with the underlying activity reflected in the document (e.g., all required
approvals were obtained); and (v) any disciplinary action was undertaken in
those instances in which Biovail policies were not followed;

 

c)                                      for each sampled physician, Related
Entity, or Product Decision-Maker unit reviewed, an identification and
description of all exceptions discovered. The report shall also describe those
instances in which corrective action was initiated prior to the selection of the
sampled individuals or entities, including a description of the circumstances
requiring corrective action and the nature of the corrective action;

 

d)                                     if any Material Errors are discovered in
any sample unit reviewed, a description of the error, the Additional Review
procedures performed and a statement of findings as to the root cause(s) of the
Material Error;

 

(Relating to the Call Plan Reviews)

 

e)                                      a list of the Government Reimbursed
Products promoted by Biovail, directly or indirectly, during the Reporting
Period and a summary of the FDA-approved uses for such products;

 

f)                                        for each promoted Government
Reimbursed Product: i) a description of the criteria used by Biovail in
developing or reviewing the call plans and for including or excluding specified
types of HCPs or HCIs from the call plans; ii) a description of the review
conducted by Biovail of the call plans and an indication of whether Biovail
reviewed the call plans as required by Section III.B.2.i of the CIA; iii) a
description of all instances for each call plan in which it appears that the
HCPs and HCIs included on the call plan are inconsistent with Biovail’s criteria
relating to the call plan and/or Biovail’s Policies and Procedures; and iv) a
description of all instances in which it appears that Biovail failed to follow
its criteria or Policies and Procedures relating to call plans or the review of
the call plans;

 

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g)                                     findings and supporting rationale
regarding any weaknesses in Biovail’s systems, processes, policies, procedures,
and practices relating to its call plans or the review of the call plans, if
any;

 

h)                                     recommendations, if any, for changes in
Biovail’s systems, processes, policies, procedures, and practices that would
correct or address any weaknesses or deficiencies uncovered during the
Transactions Review with respect to call plans or the review of the call plans;

 

(Relating to the Sampling Event Reviews)

 

i)                                         for each Government Reimbursed
Product for which Biovail directly or indirectly distributed samples in the
United States during the Reporting Period: i) a description of the U.S. Sample
Distribution Plan (including whether sales representatives may provide samples
of the product and, if so, to HCPs or HCIs of which medical specialty or type of
clinical practice a sales representative may provide samples); ii) a detailed
description of any instances identified during the IRO review in which it
appears that the medical specialty or clinical practice of the HCPs or HCIs that
received a sample during a Sampling Event were not consistent with the uses of
the product approved by the FDA. This description shall explain the process
followed by Biovail in determining that it was appropriate to provide a sample
to such HCP or HCI and the basis for such determination; and iii) a detailed
description of any instances in which it appears that Biovail failed to follow
its Sample Distribution Plan for the product(s) provided during the Sampling
Event;

 

j)                                         findings and supporting rationale
regarding any weaknesses in Biovail’s systems, processes, policies, procedures,
and practices relating to the distribution of samples of Government Reimbursed
Products, if any;

 

k)                                      recommendations, if any, for changes in
Biovail’s systems, processes, policies, procedures, and practices that would
correct or address any weaknesses or deficiencies uncovered during the
Transactions Review with respect to the distribution of samples;

 

(Relating to the Review of Inquiries)

 

l)                                         in connection with the review of
Inquiries, a description of each type of sample unit reviewed, including the
number of each type of sample units reviewed (e.g, the number of Inquiries) and
an identification of the types of documents and information reviewed for the
Inquiries;

 

m)                                   for each Inquiry sample unit, the IRO shall
summarize the information about the Inquiry contained in the Inquiries Database;

 

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n)                                     for each Inquiry sample unit, findings
and supporting rationale as to whether: (i) each item of information listed in
Section III.D.1 is reflected in the Inquiries Database; and (ii) for each
Inquiry for which an Off-Label Review was conducted, the basis for suspecting
that improper off-label promotion may have occurred; the steps undertaken as
part of the Off-Label Review; the findings of Biovail’s Chief Compliance Office
as a result of the Off-Label Review; and any follow-up actions taken by Biovail
as a result of Chief Compliance Officer findings; and

 

o)                                     findings and supporting rationale
regarding any weaknesses in Biovail’s systems, processes, policies, procedures,
and practices relating to the Inquiries and the Inquiries Database, if any; and

 

p)                                     recommendations for improvement in
Biovail’s systems, processes, policies, procedures, and practices relating to
the Inquiries and the Inquiries Database, if any.

 

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