Exhibit 10.2

 

CORPORATE INTEGRITY AGREEMENT

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

CEPHALON, INC.

 

I.              PREAMBLE

 

Cephalon, Inc. (Cephalon) 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).
Contemporaneously with this CIA, Cephalon is entering into a Settlement
Agreement with the United States. Cephalon will also enter into settlement
agreements with various States (Related State Settlement Agreements) and
Cephalon’s agreement to this CIA is a condition precedent to those agreements.

 

Prior to the Effective Date of this CIA (as defined below), Cephalon established
a voluntary compliance program (known as “Global Compliance” or “Global
Compliance Program”) applicable to all Cephalon employees including employees in
Worldwide Pharmaceutical Operations. Cephalon’s Global Compliance Program
includes an Executive Vice President, Chief Compliance Officer who reports
directly to the Audit Committee of the Board of Directors and to the CEO, and a
Compliance Committee. The Global Compliance Program also includes a Code of
Conduct applicable to all employees that is regularly reviewed and disseminated,
written policies and procedures that, as represented by Cephalon, promote high
ethical standards, educational and training initiatives that, as represented by
Cephalon, help to ensure compliance with applicable laws and regulations, a
Disclosure Program that allows for the confidential disclosure and investigation
of potential compliance violations and appropriate disciplinary procedures,
screening measures for Ineligible Persons, and regular internal auditing
procedures.

 

Cephalon shall continue its Compliance Program throughout the term of this CIA
and shall do so in accordance with the terms set forth below. Cephalon may
modify its

 

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Compliance Program as appropriate, but, at a minimum, Cephalon shall ensure that
during the term of this CIA, it shall comply with the obligations set forth
herein.

 

II.            TERM AND SCOPE OF THE CIA

 

A.    The period of the compliance obligations assumed by Cephalon under this
CIA shall be five 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 first day of the first calendar month
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) Cephalon’s final Annual Report; or (2) any additional
materials submitted by Cephalon 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. all owners who are natural persons (other than shareholders who: (1) have an
ownership interest of less than 5%; and (2) acquired the ownership interest
through public trading), officers, directors, and United States-based employees
of Cephalon; and

 

b. all contractors, subcontractors, agents, and other persons who perform
Promotional and Product Services Related Functions (as defined below in
Section II.C.4) on behalf of Cephalon.

 

Notwithstanding the above, this term does not include 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.

 

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2.               “Relevant Covered Persons” includes all Covered Persons whose
job responsibilities relate to Promotional and Product Services Related
Functions.

 

3.               “Government Reimbursed Products” refers to all Cephalon
products that are reimbursed by Federal health care programs. This term includes
products that are promoted by Cephalon for which it may not hold the New Drug
Application.

 

4.               The term “Promotional and Product Services Related Functions”
includes: (a) the promotion, marketing, and sale of Government Reimbursed
Products; and (b) the development or dissemination of materials or information
about, or the provision of services relating to, Government Reimbursed Products.

 

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

 

6.               The term “Third Party Personnel” shall mean personnel of the
entities with whom Cephalon has or may in the future enter into agreements to
co-promote a Government Reimbursed Product in the United States or engage in
joint promotional activities in the United States relating to such a product.
Cephalon has represented that: (1) the Third Party Personnel are employed by
other independent entities; (2) Cephalon does not control Third Party Personnel;
and (3) it would be commercially impracticable to compel the compliance of Third
Party Personnel with the requirements set forth in this CIA. Cephalon agrees to
promote compliance by Third Party Personnel with Federal health care program and
FDA requirements by complying with the provisions set forth below in Sections
III.B.2, V.A.3, and V.B.4 related to Third Party Personnel who meet the
definition of Covered Persons. Provided that Cephalon complies with the
requirements of Sections III.B.2, V.A.3, and V.B.4, Cephalon shall not be
required to fulfill the other CIA

 

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obligations that would otherwise apply to Third Party Personnel who meet the
definition of Covered Persons.

 

III.         CORPORATE INTEGRITY OBLIGATIONS

 

Cephalon shall establish and maintain a Compliance Program throughout the term
of this CIA that includes the following elements:

 

A. Compliance Responsibilities of Chief Compliance Officer, Compliance
Committee, the Board of Directors, and Management Certifications.

 

1.     Chief Compliance Officer. Prior to the Effective Date, Cephalon appointed
a Chief Compliance Officer, and Cephalon shall maintain a Chief Compliance
Officer during the term of the CIA. The Chief Compliance Officer shall be
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 requirements and FDA requirements. The Chief
Compliance Officer is and shall continue to be a member of executive management
of Cephalon, shall make periodic (at least quarterly) reports regarding
compliance matters directly to the Audit Committee of the Board of Directors of
Cephalon, and shall be authorized to report on such matters to 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 Cephalon as well as for any reporting obligations
created under this CIA.

 

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

 

2.     Compliance Committee. Prior to the Effective Date, Cephalon established a
Compliance Committee, and Cephalon shall maintain a Compliance Committee during
the term of this CIA. The Compliance Committee shall, at a minimum, include the
Chief Compliance Officer and other members of senior management necessary to
meet the requirements of this CIA (e.g., senior managers of relevant
departments, such as legal, medical affairs, sales, marketing, human resources,
and internal audit). The Chief Compliance Officer shall chair the Compliance
Committee and the Committee shall support the Chief Compliance Officer in
fulfilling his/her

 

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responsibilities (e.g., shall assist in the analysis of the organization’s risk
areas and shall receive reports on compliance-related monitoring, audits, and
investigations).

 

Cephalon shall report to OIG, in writing, any changes in the composition of the
Compliance Committee, or any actions or changes that would affect the Compliance
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. The Board of Directors (Board) or a Committee
of the Board, if applicable, 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 Board, or a Committee of
the Board, shall, at a minimum, be responsible for the following:

 

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

 

b.                for each Reporting Period of the CIA, adopting a resolution
(pursuant to the process outlined in the bylaws for adopting resolutions)
summarizing its review and oversight of Cephalon’s compliance with Federal
health care program requirements, FDA requirements, and the obligations of this
CIA. Each individual member of the Board or, if applicable, each member of the
Committee of the Board having responsibility for compliance, shall sign a
statement indicating that he or she agrees with the resolution.

 

At minimum, the resolution shall include the following language:

 

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

 

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If the Board (or the Board Committee) is unable to provide such a conclusion in
the resolution, the Board (or 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
Cephalon.

 

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

 

4.             Management Accountability and Certifications: Cephalon represents
that compliance is a component of each employee’s performance objectives. In
addition to the responsibilities set forth in this CIA for all Covered Persons,
certain Cephalon employees (“Certifying Employees”) are specifically expected to
monitor and oversee activities within their areas of authority and shall
annually certify in writing or electronically that the applicable area of
authority is compliant with Federal health care program requirements, FDA
requirements, and the obligations of this CIA. The Certifying Employees include,
at a minimum, the following: Chairman and Chief Executive Officer, Executive
Vice President of Worldwide Medical and Regulatory Operations, Executive Vice
President of Worldwide Pharmaceutical Operations, all business unit sales vice
presidents, all business unit marketing vice presidents, all business unit sales
directors, all business unit marketing directors, the Vice President of
Worldwide Medical Affairs, and all medical directors of communications and
medical science liaisons (MSLs).

 

For each Reporting Period, each Certifying Employee shall certify in writing or
electronically that:

 

“I have been trained on and understand the compliance requirements and
responsibilities as they relate to [department or functional area], an area
under my supervision. My job responsibilities include ensuring compliance with
regard to the            [insert name of the department or functional area.] To
the best of my knowledge, except as otherwise described herein,
the                [insert name of department or functional area] of Cephalon is
in compliance with all applicable Federal health care program requirements, FDA
requirements, and the obligations of the CIA.”

 

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B.  Written Standards.

 

1. Code of Conduct. Prior to the Effective Date, Cephalon developed,
implemented, and distributed a written Code of Conduct to all Covered Persons.
Cephalon currently requires all newly employed persons to certify in writing or
electronically that they have received, read, understood, and shall abide by
Cephalon’s Code of Conduct. Cephalon shall continue to make the promotion of,
and adherence to, the Code of Conduct an element in evaluating the performance
of all employees.

 

The Code of Conduct sets forth and shall continue to set forth, at a minimum,
the following:

 

a.      Cephalon’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 program requirements and FDA requirements;

 

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

 

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

 

d.      the possible consequences to both Cephalon and Covered Persons of
failure to comply with Federal health care program and FDA requirements and with
Cephalon’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 Cephalon’s commitment to nonretaliation and to

 

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maintain, as appropriate, confidentiality and anonymity with respect to such
disclosures.

 

To the extent not already accomplished, within 120 days after the Effective
Date, the Code of Conduct shall be distributed to each Covered Person and each
Covered Person shall certify, in writing or electronically, that he or she has
received, read, understood, and shall abide by Cephalon’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
120 days after the Effective Date, whichever is later.

 

Cephalon 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. Each Covered Person shall certify, in writing or electronically,
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.   Third Party Personnel. Within 90 days after the Effective Date, and
annually thereafter by the anniversary of the Effective Date, Cephalon shall
send a letter to each entity employing Third Party Personnel. The letter shall
outline Cephalon’s obligations under the CIA and its commitment to full
compliance with all Federal health care program and FDA requirements. The letter
shall include a description of Cephalon’s Compliance Program. Cephalon shall
attach a copy of its Code of Conduct to the letter and shall request the entity
employing Third Party Personnel to either: (a) make a copy of Cephalon’s Code of
Conduct and a description of Cephalon’s Compliance Program available to its
Third Party Personnel; or (b) represent to Cephalon that it has and enforces a
substantially comparable code of conduct and compliance program for its Third
Party Personnel.

 

3.   Policies and Procedures. Prior to the Effective Date, Cephalon implemented
written Policies and Procedures regarding the operation of the Compliance
Program and Cephalon’s compliance with Federal health care program and FDA
requirements (Policies and Procedures). To the extent not already accomplished,
within 120 days after the Effective Date, Cephalon shall ensure that the
Policies and Procedures address or shall continue to address:

 

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

 

b.              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);

 

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

 

d.              the mechanisms through, and manner in which, Cephalon receives
and responds to requests for information about non-FDA approved (or “off-label”)
uses of Cephalon’s products; the form and content of information disseminated by
Cephalon in response to such requests; and the internal review process for the
information disseminated.

 

The Policies and Procedures shall include a requirement that Cephalon develop a
database to track requests for information about Cephalon’s products that are
made to Cephalon’s Medical Services (MS) department. This database shall be
referred to as the “Inquiries Database.” The Inquiries Database shall include
the following items of information for each unique inquiry (Inquiry) received
for information about Cephalon’s products: 1) date of Inquiry; 2) form of
Inquiry (e.g., fax, phone, etc.); 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)
nature/form of the response from Cephalon (including a record of the materials
provided to the HCP or HCI in response to the request); and 6) the name of the
Cephalon representative who called on or interacted with the HCP or HCI. Any
response from Medical Services to an HCP or HCI shall identify whether the
information provided addresses an indication that is part of the approved

 

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product label. The status and findings of any follow-up review conducted by
Cephalon in situations in which it appears that the Inquiry may have related to
improper off-label promotion shall be maintained by Global Compliance and the
information shall be included in the Inquiry Reports further discussed in
Section III.A.2 of Appendix B;

 

e.               development of call plans for field sales representatives who
promote Government Reimbursed Products. For each product, the Policies and
Procedures shall require that Cephalon review the call plans for the product and
the bases upon which specified physician specialties and institutional provider
types are included in, or excluded from, the call plans. The Policies and
Procedures shall also require that Cephalon modify the call plans as necessary
to ensure that Cephalon is promoting its products in a manner that complies with
all applicable Federal health care program and FDA requirements. The call plan
reviews shall occur at least annually and shall also occur each time the FDA
approves a new or additional indication for a Government Reimbursed Product;

 

f.                 consultant or other fee-for-service arrangements entered into
with HCPs or HCIs (including, but not limited to, speaker programs, speaker
training programs, advisory boards, 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
arrangements and related events are used for legitimate and lawful purposes in
accordance with applicable Federal health care program and FDA requirements. The
Policies and Procedures shall include requirements about the content and
circumstances of such arrangements and events;

 

g.              programs to educate field representatives, including
preceptorships. These Policies and Procedures shall be designed to ensure that
the programs are used for legitimate and lawful purposes in accordance with
applicable Federal health care

 

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program and FDA requirements. The Policies shall include requirements about the
content and circumstances of such arrangements and events;

 

h.              sponsorship or funding of grants (including educational grants)
or charitable contributions. These Policies and Procedures shall be designed to
ensure that Cephalon’s funding and/or sponsorship complies with all applicable
Federal health care program and FDA requirements;

 

i.                  funding of, or participation in, any Third Party Educational
Activity. These Policies and Procedures shall be designed to ensure that
Cephalon’s funding and/or sponsorship of such programs satisfies all applicable
Federal health care program and FDA requirements.

 

The Policies and Procedures shall require that: 1) Cephalon disclose its
financial support of the Third Party Educational Activity and any financial
relationships with faculty, speakers, or organizers at such Activity; 2) as a
condition of funding, the third party shall agree to disclose Cephalon’s
financial support of the Third Party Educational Activity and any financial
relationships that Cephalon might have with faculty, speakers, or organizers at
such Activity; 3) any faculty, speakers, or organizers at the Third Party
Educational Activity disclose any financial relationship with Cephalon; 4) the
Third Party Educational Activity have an educational focus; 5) the content,
organization, and operation of the Third Party Educational Activity be
independent of Cephalon control; 6) Cephalon support only Third Party
Educational Activity that is non-promotional in tone/nature; and 7) Cephalon’s
support of a Third Party Educational Activity shall be contingent on the
provider’s commitment to provide information at the Educational Activity that is
fair, balanced, accurate and not misleading;

 

j.                  review of promotional materials by appropriate qualified
personnel (such as regulatory, medical, and/or legal personnel),

 

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and the review of other materials and information intended to be disseminated
outside Cephalon in a manner designed to ensure that legal, regulatory, and
medical concerns are properly addressed during Cephalon’s review and approval
process and are elevated when appropriate. The Policies and Procedures shall be
designed to ensure that such materials and information, when finally approved,
comply with all applicable Federal health care program and FDA requirements;

 

k.               sponsorship or funding of research or related activities. These
Policies and Procedures shall be designed to ensure that Cephalon’s funding
and/or sponsorship complies with all applicable Federal health care program and
FDA requirements;

 

l.                  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, and marketing of Cephalon’s products;

 

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

 

To the extent not already accomplished, within 120 days after the Effective
Date, the relevant portions of the Policies and Procedures shall be made
available to all individuals 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), Cephalon 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 made available to all individuals whose job
functions relate to those Policies and Procedures.

 

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C.            Training and Education.

 

Cephalon represents that it provides training to its employees on a regular
basis concerning a variety of topics. The training required by this CIA need not
be separate and distinct from the regular training provided by Cephalon, but
instead may be integrated fully into such regular training so long as the
training covers the areas specified below.

 

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

 

a.   CIA requirements; and

 

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

 

To the extent that Cephalon 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 Cephalon’s General Training obligations of
Section III.C.1 for the first Reporting Period. Cephalon 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
Cephalon entered a CIA and providing an explanation of Cephalon’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 shall receive at least three hours of Specific Training in
addition to the General Training required above.

 

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This Specific Training shall include a discussion of:

 

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

 

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

 

c.               all Cephalon policies, procedures, and other requirements
applicable to Promotional and Product Services Related Functions;

 

d.              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;

 

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

 

f.                 examples of proper and improper practices related to
Promotional and Product Services Related Functions.

 

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

 

New Relevant Covered Persons shall receive this training 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 Cephalon
employee who has completed the Specific Training shall review a new Relevant
Covered Person’s work, to the extent that the work relates to Promotional and
Product Services Related Functions, until such time as the new Relevant Covered
Person completes his or her Specific Training.

 

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

 

3.     Certification. Each individual who is required to attend training shall
certify, in writing or electronically, that he or she has received the required
training. The certification shall specify the type of training received and the
date received. The 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 of the training, including applicable
Federal health care program and FDA requirements. The training and education
required under this Section III.C may be provided by supervisory employees,
knowledgeable staff, Cephalon trainers, and/or outside consultant trainers
selected by Cephalon or may be satisfied by relevant, accredited continuing
education programs provided they cover topics outlined above in Section III.C.2.

 

5.     Update of Training. Cephalon 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 any
internal audits or any IRO Review, and any other relevant information.

 

6.     Computer-based Training. Cephalon may provide the training required under
this CIA through appropriate computer-based training approaches. If Cephalon
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. In
addition, if Cephalon chooses to provide computer-based General or Specific
Training, all applicable requirements to provide a number of “hours” of training
in this Section III.C may be met with respect to computer-based training by
providing the required number of “normative” hours as that term is used in the
computer-based training industry.

 

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D. Review Procedures.

 

1. General Description.

 

a.   Engagement of Independent Review Organization. Within 90 days after the
Effective Date, Cephalon 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 Cephalon in assessing and
evaluating 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 Cephalon 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 Cephalon, 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 Cephalon’s systems, processes,
policies, procedures, and practices relating to Promotional and Product Services
Related Functions (Promotional and Product Services Reviews).

 

b.   Frequency and Brief Description of Reviews. As set forth more fully in
Appendix B, the Promotional and Product Services Review shall consist of two
components - a Systems Review and a Transactions Review. The Systems Review
shall assess Cephalon’s systems, processes, policies, and procedures relating to
Promotional and Product Services Related Functions. If there are no material
changes in Cephalon’s systems, processes, policies, and procedures relating to
Promotional and Product Services Related Functions, the Promotional and Product
Services Systems Review shall be performed for the periods covering the first
and fourth Reporting Periods. If Cephalon materially changes its systems,
processes,

 

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policies, and procedures relating to Promotional and Product Services Related
Functions, 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 Promotional and Product Services Transactions Review shall be performed
annually and shall cover each of the five Reporting Periods. The IRO(s) shall
perform all components of each annual Transaction Review. As set forth more
fully in Appendix B, the Transactions Review shall include several components,
including a review relating to Inquiries included in Cephalon’s Inquiries
Database, a review of Cephalon’s Call Plan Assessments, and a review of a
records relating to a sample of the Payments that are reported by Cephalon
pursuant to Section III.M below. In addition, beginning with the second
Reporting Period, each Transactions Review shall also include a review of up to
three additional areas or practices of Cephalon identified by the OIG in its
discretion (hereafter “Additional Items”).

 

For purposes of identifying the Additional Items to be included in the
Transactions Review for a particular Reporting Period, the OIG will consult with
Cephalon and may consider internal audit work conducted or planned by Cephalon,
Cephalon’s product portfolio, the nature and scope of Cephalon’s promotional
practices and arrangements with HCPs, and other information known to it. As set
forth more fully in Section III.D of Appendix B, Cephalon may propose to the OIG
that its internal audit(s) be partially substituted for one or more of the
Additional Items that would otherwise be reviewed by the IRO as part of the
Transactions Review. The OIG retains sole discretion over whether, and in what
manner, to allow Cephalon’ s internal audit work to be substituted for a portion
of the Additional Items review conducted by the IRO.

 

The OIG shall notify Cephalon of the nature and scope of the IRO review for each
of the Additional Items no later than 90 days prior to the end of the second
through fifth Reporting Periods. Prior to

 

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undertaking the review of the Additional Items, the IRO and/or Cephalon shall
submit an audit work plan to the OIG for approval and the IRO shall conduct the
review of the Additional Items based on a work plan approved by the OIG.

 

c. Retention of Records. The IRO and Cephalon shall retain and make available to
OIG, upon request, all work papers, supporting documentation, correspondence,
and draft reports (those exchanged between the IRO and Cephalon) 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 the
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). Cephalon 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 Cephalon’s final Annual Report shall be
initiated no later than one year after Cephalon’s final submission (as described
in Section II) is received by OIG.

 

Prior to initiating a Validation Review, OIG shall notify Cephalon 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, Cephalon 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. Cephalon agrees to provide any
additional information as may be requested by OIG under this Section III.D.3 in
an expedited manner. OIG will attempt in good faith to resolve any Review issues
with Cephalon prior to conducting a Validation Review. However, the final
determination as to whether or not to proceed with a Validation Review shall be
made at the sole discretion of OIG.

 

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4. Independence and Objectivity Certification. The IRO shall include in its
report(s) to Cephalon 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 applicable Review and that it has concluded
that it is, in fact, independent and objective.

 

E. Disclosure Program.

 

Cephalon represents that it has a disclosure program designed to facilitate
communications relating to compliance with Federal health care program and FDA
requirements and Cephalon’s policies (the “Disclosure Program”). During the term
of the CIA, Cephalon shall maintain a Disclosure Program that includes a
mechanism (a toll- free compliance telephone line) to enable individuals to
disclose, to the Compliance Officer or some other person who is not in the
disclosing individual’s chain of command, any identified issues or questions
associated with Cephalon’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. Cephalon shall continue to 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 nonretaliation policy, and shall
include a reporting mechanism for anonymous communications for which appropriate
confidentiality shall be maintained. Disclosures made by individuals residing
outside the United States shall be in accordance with applicable laws, including
the European Union Data Protection Directive. Upon receipt of a disclosure, the
Compliance Officer (or designee) shall gather all relevant information from the
disclosing individual. The 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, Cephalon shall conduct
an internal review of the allegations set forth in the disclosure and ensure
that proper follow-up is conducted.

 

The Compliance Officer (or designee) shall maintain a disclosure log, which
shall include a record and summary of each disclosure received (whether
anonymous or not),

 

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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

 

ii.     has been convicted of a criminal offense that falls within the ambit 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).

 

c. “Screened Persons” include: prospective and current owners of Cephalon (other
than shareholders who: (1) have an ownership interest of less than 5%; and
(2) acquired the ownership interest through public trading); and prospective and
current officers, directors, employees, and contractors and agents of Cephalon.
For purposes of employees residing outside the United States, “Screened Persons”
shall be limited to Covered Persons.

 

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2. Screening Requirements. Cephalon shall ensure that all Screened Persons are
not Ineligible Persons, by implementing the following screening requirements.

 

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

 

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

 

c.     Cephalon shall implement a policy requiring all Screened 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)
Cephalon to refrain (if applicable) from billing Federal health care programs
for items or services furnished, ordered, or prescribed by an Ineligible Person.
Cephalon understands that items or services furnished by excluded persons are
not payable by Federal health care programs and that Cephalon may be liable for
overpayments (if applicable) and/or criminal, civil, and administrative
sanctions for employing or contracting with an excluded person regardless of
whether Cephalon meets the requirements of Section III.F.

 

3. Removal Requirement. If Cephalon has actual notice that a Screened Person has
become an Ineligible Person, Cephalon shall remove such Screened Person from
responsibility for, or involvement with, Cephalon’s business operations related
to the Federal health care programs and shall remove such Screened Person from
any position for which the Screened Person’s compensation or the items or
services furnished, ordered, or prescribed by the Screened 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 Screened Person is
reinstated into participation in the Federal health care programs.

 

4. Pending Charges and Proposed Exclusions. If Cephalon has actual notice that a
Screened Person is charged with a criminal offense that falls within the

 

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ambit of 42 U.S.C. §§ 1320a-7(a), 1320a-7(b)(1)-(3), or is proposed for
exclusion during the Screened Person’s employment or contract term, Cephalon
shall take all appropriate actions to ensure that the responsibilities of that
Screened Person have not and shall not adversely affect the accuracy of any
claims submitted to any Federal health care program.

 

G.             Notification of Government Investigation or Legal Proceedings.

 

Within 30 days after discovery by senior management at U.S. corporate
headquarters, Cephalon shall notify OIG, in writing, of any ongoing
investigation or legal proceeding known to Cephalon conducted or brought by a
governmental entity or its agents involving an allegation that Cephalon 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.
Cephalon 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
Cephalon products for which penalties or exclusion may be authorized; or

 

ii.   the filing of a bankruptcy petition by Cephalon.

 

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

 

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b. Reporting of Reportable Events. If Cephalon determines (after a reasonable
opportunity to conduct an appropriate review or investigation of the
allegations) through any means that there is a Reportable Event, Cephalon 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 and/or FDA
authorities implicated;

 

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

 

iii.    any further steps Cephalon 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 authorities and/or FDA authorities implicated.

 

v.     Cephalon 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 Cephalon and the FDA that materially discusses Cephalon’s
or a Covered Person’s actual or potential unlawful or improper promotion of
Cephalon’s products (including any improper dissemination of information about
off-label indications), Cephalon shall provide a copy of the report,
correspondence, or communication to the OIG. Cephalon 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.

 

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

 

Cephalon shall implement a Message Recall Monitoring Program designed to
identify, for each Reporting Period, potential-off-label promotional activities
by Cephalon’s field sales force through the analysis of studies generated by an
independent entity (Survey Entity) reflecting physician recall of the marketing
messages delivered by Cephalon’s sales force (Message Recall Studies) for up to
three Covered Products (as defined below). Cephalon shall obtain Message Recall
Studies for each Reporting Period. In order to satisfy its obligations under
this Section III.J, Cephalon may propose that it obtain an alternative type of
survey record

 

(e.g. verbatims or similar records) rather than Message Recall Studies. The OIG
will consider Cephalon’s proposal, and after considering Cephalon’s proposal
shall, in its discretion, identify the type of survey records to be obtained.

 

For each Reporting Period and for each Covered Product, Cephalon shall contract
with the Survey Entity to conduct Message Recall Studies. The OIG shall select
and notify the Survey Entity of a one week period within every other quarter of
the Reporting Period for which the Message Recall Studies shall be conducted
beginning in the second full quarter after the Effective Date. For each Covered
Product, Cephalon shall obtain Message Recall Studies covering the identified
week in all regions across the United States.

 

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

 

Cephalon 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. Cephalon 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, Cephalon shall endeavor to gather
additional factual information about the circumstances relating to any Off-Label
Findings. As part of each Annual Report,

 

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Cephalon shall provide the OIG with copies of the underlying records of the
detailing interactions, a copy of Cephalon’s Off-Label Findings, and a
description of the action(s), if any, Cephalon took in response to the Off-Label
Findings.

 

K.            Field Force Monitoring and Review Efforts.

 

To the extent not already accomplished, within 120 days after the Effective
Date, Cephalon shall establish a Field Force Monitoring Program (FFMP) to
evaluate and monitor field sales force representatives’ interactions with HCPs.
The FFMP shall be a formalized process designed to directly observe the
appropriateness of field sales force representative’s interactions with HCPs and
to identify potential off-label promotional activities.

 

Under this program, Cephalon compliance personnel, or appropriately trained
designees who are not from marketing or the field sales organizations and who
are not within three levels of the field sales force representative’s reporting
structure, shall conduct direct field observations (Observations) of field sales
force representatives to assess whether the messages delivered and materials
distributed to HCPs are consistent with Cephalon’s Policies and Procedures.
These Observations shall be full day ride-alongs with field sales
representatives, and each Observation shall consist of directly observing all
meetings between a sales representative and HCPs during the workday. The
Observations shall be scheduled throughout the year, randomly selected by
Cephalon compliance personnel, include each therapeutic area and actively
promoted product, and be conducted across the United States. At the completion
of each Observation, Cephalon compliance personnel or the designee shall prepare
a report which includes:

 

 

1)

the identity of the sales representative;

 

2)

the identity of the Cephalon compliance professional;

 

3)

the date and duration of the Observation;

 

4)

the product(s) promoted during the Observation;

 

5)

an overall assessment of compliance with Cephalon policy; and

 

6)

the identification of any potential off-label promotional activity by the field
sales representative.

 

Cephalon compliance personnel shall conduct at least 30 full-day Observations
during each Reporting Period. The number of inspections conducted for each
therapeutic

 

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area and product shall be proportional in number to the size of each therapeutic
area and product, and shall be conducted across the United States.

 

In the event that a compliance issue, including potential off-label promotion,
is identified during any Observation, Cephalon shall investigate the incident
consistent with established Policies and Procedures for the handling of
investigations. As part of the formal investigation procedures, findings shall
be made and all necessary and appropriate responsive action (including
disciplinary action) and corrective action shall be taken. The Compliance
Officer shall disclose Reportable Events pursuant to Section III.H above, if
applicable. Any compliance issues identified during an Observation and any
corrective action shall be recorded in the files of Global Compliance.

 

Cephalon shall include a summary of the FFMP and the results of the FFMP as part
of each Annual Report. As part of each Annual Report, Cephalon also shall
provide the OIG with copies of the Observation report for any instances in which
it was determined that improper promotion occurred and a description of the
action(s) that Cephalon took as a result of such determinations. Cephalon shall
make the Observation reports for all other Observations available to the OIG
upon request.

 

L.             Notice to Health Care Providers and Entities.

 

Within 90 days after the Effective Date, Cephalon shall send, by postage prepaid
first class mail, Certificate of Mailing requested, an exact copy of the notice
attached hereto as Attachment A, showing the date of the mailing, to any health
care provider or entity that Cephalon currently details. This mailing shall
notify each health care provider and entity of the terms of the global
settlement with the United States, including an explanation of the conduct to
which Cephalon pled guilty and the conduct resolved by the civil settlement. The
mailing shall also notify each health care provider or entity that they may
report any questionable conduct by Cephalon representatives to a compliance
telephone number or e-mail address established by Cephalon or to the FDA.

 

The Chief Compliance Officer (or a designee) shall maintain a log of all calls
and messages received by Cephalon in response to the notice. The log shall
include a record and summary of each call and message received (whether
anonymous or not), the status of the call or message, and any corrective action
taken in response to the call or message. The disclosure log shall be made
available to OIG upon request. As part of the

 

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Implementation Report and each Annual Report, Cephalon shall provide to the OIG
a summary of the calls and messages received.

 

M.           Reporting of Physician Payments.

 

1.     Phase I Reporting

 

By January 31, 2010, Cephalon shall post in a prominent position on its website
an easily accessible and readily searchable listing of all physicians who
received any Phase I Payments (as defined below in Section III.M.3) directly or
indirectly from Cephalon during Calendar Year 2009 and the aggregate value of
such payments in the calendar year.

 

After the initial posting, 30 days after the end of each subsequent calendar
quarter until March 2011, Cephalon shall also post on its website a listing of
updated information about all Phase I Payments provided during the applicable
calendar year during the preceding quarter(s). The quarterly listing shall be
easily accessible and readily searchable.

 

Each listing shall include a complete list of all individual physicians to whom
Cephalon directly or indirectly made Phase I Payments in the preceding calendar
year. Each listing shall be arranged alphabetically according to the physicians’
last name. The Payment amounts in the lists shall be reported in $10,000
increments (e.g., $0 - $10,000; $10,001- $20,000; etc.) For each physician, the
applicable listing shall include the following information: i) full name; ii)
city and state of the physician’s practice; and iii) the aggregate value of the
payment(s) in the preceding quarter(s) or year (as applicable). The reporting
described in this Section III.M.1 shall be referred to hereafter as “Phase I
Reporting.”

 

2.     Phase II Reporting

 

No later than March 31, 2011 and during the remaining term of the CIA, Cephalon
shall post in a prominent position on its website an easily accessible and
readily searchable listing of physicians and Related Entities (as defined in
Section III.M.3) who received any Payments directly or indirectly from Cephalon
and the aggregate value of such Payments in the preceding Calendar Year. After
the initial posting, 30 days after the end of each subsequent calendar quarter
Cephalon shall also post on its website a listing

 

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of updated information about all Payments provided during the applicable
calendar year during the preceding quarter(s). The quarterly listing shall be
easily accessible and readily searchable.

 

Each listing shall include a complete list of all individual physicians and
Related Entities to whom Cephalon directly or indirectly made Payments in the
preceding calendar year. Each listing shall be arranged alphabetically according
to the physicians’ last name and the name of the Related Entity. The Payment
amounts in the lists shall be reported in $10,000 increments (e.g., $0 -
$10,000; $10,001- $20,000; etc.) For each physician and Related Entity, the
applicable listing shall include the following information: i) full name; ii)
city and state of the physician’s practice; iii) name, city, and state in which
the Related Entity is located; and iv) aggregate value of the Payment(s) in the
preceding quarter(s) or year (as applicable). The reporting described in this
Section III.M.2 shall be referred to hereafter as “Phase II Reporting.”

 

3.     Miscellaneous Provisions

 

Cephalon shall continue to make each annual listing and the most recent
quarterly listing of both Phase I Reporting and Phase II Reporting available on
its website at least throughout the term of this CIA. Cephalon 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.M affects the
responsibility of Cephalon 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 physicians or Related Entities.

 

If the proposed Physician Payments Sunshine Act of 2008 or similar legislation
is enacted, the OIG shall determine whether the purposes of this Section III.M
are reasonably satisfied by Cephalon’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.M as appropriate.

 

For purposes of this Section III.M, the term “Payments” is defined to include
all payments or transfers of value (whether in cash or in kind) made to
physicians and/or to Related Entities. The term Payments includes, for example,
payments or compensation for services rendered, grants, fees, honoraria, and
payments relating to research or education. The term Payments also includes
food, entertainment, gifts, trips or travel,

 

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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.M, the term “Phase I Payments” is defined as
those Payments made in connection with physicians serving as speakers,
participating in speaker training, or serving as consultants (including for
advisory boards, or preceptorships.)

 

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

 

IV.           CHANGES TO BUSINESS UNITS OR LOCATIONS

 

A.     Change or Closure of Unit or Location. In the event that, after the
Effective Date, Cephalon changes locations or closes a business unit or location
related to Promotional and Product Services Related Functions, Cephalon 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.

 

B.      Purchase or Establishment of New Unit or Location. In the event that,
after the Effective Date, Cephalon purchases or establishes a new business unit
or location related to Promotional and Product Services Related Functions,
Cephalon shall notify OIG no later than the date the purchase or establishment
is publicly disclosed. This notification shall include the address of the new
business unit or location, phone number, fax number, Federal health care program
provider or supplier number (if applicable), 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.

 

C.      Sale of Unit or Location. In the event that, after the Effective Date,
Cephalon proposes to sell any or all of its business units or locations related
to the Promotional and Product Services-Related Functions that are subject to
this CIA, Cephalon 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

 

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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, Cephalon
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. 1, and a summary of other
noncompliance job responsibilities the Compliance Officer may have;

 

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

 

3.       (a) a copy of the letter (including all attachments) required by
Sections II.C.6 and III.B.2 sent to each party employing Third Party Personnel;
(b) a list of all such existing agreements; and (c) a description of the
entities’ response to Cephalon’s letter;

 

4.       the names and positions of the Certifying Employees required by
Section III.A.4;

 

5.       a copy of Cephalon’s Code of Conduct required by Section III.B.1;

 

6.       to the extent not already provided to the OIG, a copy of all Policies
and Procedures required by Section III.B.3;

 

7.       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);

 

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

 

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

 

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;

 

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

 

10.     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
Cephalon and the IRO;

 

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

 

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

 

13.     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;

 

14.     a list of all of Cephalon’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 program provider or supplier number(s) (if applicable), and the name and
address of each Federal health care program contractor to which Cephalon
currently submits claims (if applicable);

 

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

 

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16.     a certification by the Chief Compliance Officer that the notice required
by Section III.L was mailed to each health care provider and entity, the number
of health care providers and entities that received a copy of the notice, a
sample copy of the notice required by Section III.L, and a summary of the calls
and messages received in response to the notice; and

 

17.     the certifications required by Section V.C.

 

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

 

Each Annual Report shall include, at a minimum:

 

1.       an explanation of 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 Compliance Committee or Certifying Employees
described in Sections III.A.1, 2 or 4;

 

2.       a summary of any significant changes or amendments to the Policies and
Procedures required by Section III.B.3 and the reasons for such changes (e.g.,
change in applicable 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.       (a) a copy of the letter (including all attachments) required by
Sections II.C.6 and III.B.2 sent to each entity employing Third Party Personnel;
(b) a list of all such existing agreements; and (c) a description of the
entities’ response to Cephalon’s letter;

 

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

 

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

 

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.

 

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

 

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

 

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

 

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

 

10.     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;

 

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

 

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

 

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

 

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14.     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;

 

15.     a summary describing any communication 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;

 

16.     all information required by Section III.J;

 

17.     all information required by Section III.K;

 

18.     a summary of the calls and messages received in response to the notice
required by Section III.L and the disposition of those calls and messages;

 

19.     a description of all changes to the most recently provided list of
Cephalon’s locations (including addresses) as required by Section V.A. 14; 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 or supplier number(s) (if applicable), and the name and address
of each Federal health care program contractor to which Cephalon currently
submits claims (if applicable);

 

20.     a certification from the Chief Compliance Officer that information
regarding payments has been posted on Cephalon’s website as required
Section III.M; and

 

21.     the certifications required by Section V.C.

 

The first Annual Report shall be received by OIG no later than 60 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 following certifications shall be included in the
Implementation Report and Annual Reports:

 

1.  Certifying Employees: In each Annual Report, Cephalon shall include the
certifications of Certifying Employees as required by Section III.A.4.

 

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2.  Chief Compliance Officer: In each Implementation Report and Annual Report,
Cephalon shall include the following individual certification by the Chief
Compliance Officer:

 

a.   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;

 

b.   to the best of his or her knowledge, except as otherwise described in the
applicable report, Cephalon is in compliance with Federal health care program
and FDA requirements and the obligations of the CIA;

 

c.   to the best of his or her knowledge, Cephalon 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 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;

 

d.   Cephalon’s: 1) Policies and Procedures as referenced in Section III.B.3
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,
Cephalon’s promotional materials containing claims or information about
Government Reimbursed Products and other materials and information intended to
be disseminated outside Cephalon 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

 

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review was completed. The documentation supporting this certification shall be
available to OIG, upon request; and

 

e. Cephalon’s call plans for Government Reimbursed Products were reviewed at
least once during the Reporting Period (consistent with Section III.B.3.e) and,
for each product the call plans were found to be consistent with Cephalon’s
policy objectives as referenced above in Section III.B.3.e.

 

D.  Designation of Information. Cephalon 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. Cephalon 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 AND 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

 

 

330 Independence Avenue, S.W.

 

 

Washington, DC 20201

 

 

Telephone: (202) 619-2078

 

 

Facsimile: (202) 205-0604

 

 

 

CEPHALON:

 

Executive Vice President, Chief Compliance Officer

 

 

Cephalon, Inc.

 

 

40 Moores Road

 

 

Frazer, PA 19355

 

 

Phone: (610) 727-6280

 

 

Facsimile: (610) 727-6001

 

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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, Cephalon 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 Cephalon’s books, records, and other documents and supporting
materials and/or conduct on-site reviews of any of Cephalon’s locations for the
purpose of verifying and evaluating: (a) Cephalon’s compliance with the terms of
this CIA; and (b) Cephalon’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
Cephalon 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
Cephalon’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.
Cephalon shall assist OIG or its duly authorized representative(s) in contacting
and arranging interviews with such individuals upon OIG’s request. Cephalon’s
employees may elect to be interviewed with or without a representative of
Cephalon present.

 

VIII.       DOCUMENT AND RECORD RETENTION

 

Cephalon 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 Cephalon prior to any release by OIG of
information submitted by Cephalon pursuant to its obligations under this CIA and
identified upon submission by Cephalon as trade secrets, or information that is
commercial or financial and privileged or confidential, under the FOIA rules.
With respect to such releases, Cephalon shall have the rights set forth at 45
C.F.R. § 5.65(d).

 

X.        BREACH AND DEFAULT PROVISIONS

 

Cephalon 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, Cephalon 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 Cephalon fails to establish,
implement, or accomplish any of the following obligations as described in
Section III:

 

a.   a Compliance Officer;

 

b.   a Compliance Committee;

 

c.   the Board resolution;

 

d.   a written Code of Conduct;

 

e.   written Policies and Procedures;

 

f.    the training of Covered Persons;

 

g.   a Disclosure Program as required by Section III.E;

 

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h. Ineligible Persons screening and removal requirements;

 

i.   notification of Government investigations or legal proceedings;

 

j.   notification of communications with FDA regarding off-label matters;

 

k.  Message Recall Studies (or alternative information permitted by
Section III.J);

 

l.   a program for FFMP;

 

m. notification to any health care providers or entities as required by
Section III.L; or

 

n. posting of any Payments as required by Section III.M.

 

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 Cephalon fails to engage
an IRO, as required in Section III.D and Appendices A-B.

 

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 Cephalon fails to submit
the Implementation Report or the 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 Cephalon fails to submit
the annual IRO Review Report(s) in accordance with the requirements of Sections
III.D and V.B.6 and Appendix B.

 

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

 

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6.   A Stipulated Penalty of $5,000 for each false certification submitted by or
on behalf of Cephalon 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 Cephalon fails to comply fully
and adequately with any obligation of this CIA. OIG shall provide notice to
Cephalon, stating the specific grounds for its determination that Cephalon has
failed to comply fully and adequately with the CIA obligation(s) at issue and
steps Cephalon shall take to comply with the CIA. (This Stipulated Penalty shall
begin to accrue 10 days after Cephalon 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. Cephalon 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 Cephalon 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 Cephalon 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.

 

C.    Payment of Stipulated Penalties.

 

1.   Demand Letter. Upon a finding that Cephalon 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 Cephalon of:
(a) Cephalon’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, Cephalon shall either: (a) cure the breach to OIG’s satisfaction and pay

 

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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 Cephalon elects to request an ALJ hearing, the Stipulated Penalties shall
continue to accrue until Cephalon 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 the 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 Cephalon 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 Cephalon 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 Board to issue a resolution in accordance with
Section III.A.3.

 

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2. Notice of Material Breach and Intent to Exclude. The parties agree that a
material breach of this CIA by Cephalon constitutes an independent basis for
Cephalon’s exclusion from participation in the Federal health care programs.
Upon a determination by OIG that Cephalon has materially breached this CIA and
that exclusion is the appropriate remedy, OIG shall notify Cephalon of:
(a) Cephalon’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. Cephalon 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.   Cephalon 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) Cephalon has begun to take action to cure the material breach;
(ii) Cephalon is pursuing such action with due diligence; and (iii) Cephalon has
provided to OIG a reasonable timetable for curing the material breach.

 

4. Exclusion Letter. If, at the conclusion of the 30-day period, Cephalon fails
to satisfy the requirements of Section X.D.3, OIG may exclude Cephalon from
participation in the Federal health care programs. OIG shall notify Cephalon in
writing of its determination to exclude Cephalon (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 Cephalon’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, Cephalon may apply for
reinstatement by submitting a written request for reinstatement in accordance
with the provisions at 42 C.F.R. §§ 1001.3001-.3004.

 

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E. Dispute Resolution.

 

1.   Review Rights. Upon OIG’s delivery to Cephalon 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, Cephalon 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. § 1005.2-1005.2 1. 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 Cephalon was in full and timely compliance with the obligations of
this CIA for which OIG demands payment; and (b) the period of noncompliance.
Cephalon 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 Cephalon to pay Stipulated Penalties, such Stipulated Penalties shall
become due and payable 20 days after the ALJ issues such a decision unless
Cephalon requests review of the ALJ decision by the DAB. If the ALJ 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 Cephalon was in material breach of this CIA;

 

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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) Cephalon had begun to take action to cure the
material breach within that period; (ii) Cephalon has pursued and is pursuing
such action with due diligence; and (iii) Cephalon provided to OIG within that
period a reasonable timetable for curing the material breach and Cephalon 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 Cephalon, only after a
DAB decision in favor of OIG. Cephalon’s election of its contractual right to
appeal to the DAB shall not abrogate OIG’s authority to exclude Cephalon 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 Cephalon may request review of the ALJ 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. Cephalon 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 Cephalon, Cephalon
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

 

Cephalon and OIG agree as follows:

 

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

 

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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 Cephalon 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; and

 

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.

 

45

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ON BEHALF OF CEPHALON, INC.

 

 

/s/ Frank Baldino

 

September 29, 2008

Frank Baldino

 

Date

Chief Executive Officer

 

 

Cephalon Inc.

 

 

 

 

/s/ Valli Baldassano

 

September 29, 2008

Valli Baldassano

 

Date

Cephalon Chief Compliance Officer

 

 

 

 

/s/ Eric W. Sitarchuk

 

September 29, 2008

Eric W. Sitarchuk

 

Date

Counsel for Cephalon, Inc.

 

 

 

 

/s/ Megan L. Traversari

 

September 29, 2008

Megan L. Traversari

 

Date

Counsel for Cephalon, Inc.

 

 

 

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ON BEHALF OF THE OFFICE OF INSPECTOR GENERAL

OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES

 

 

/s/ Gregory E. Demske

 

September 29, 2008

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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Attachment A

 

Dear Healthcare Provider:

 

As you may be aware Cephalon, Inc. recently entered into a global civil,
criminal, and administrative settlement with the United States and individual
states in connection with its promotion of three Cephalon products. This letter
provides you with additional information about the settlement, explains
Cephalon’s commitments going forward, and provides you with access to
information about those commitments. In general terms, the Government alleged
that Cephalon unlawfully promoted three drugs (Actiq, Gabitril, and Provigil)
for uses not approved by the Food & Drug Administration (FDA). To resolve these
matters, Cephalon pled guilty to a misdemeanor criminal violation and agreed to
pay a total of $425 million to the Federal Government and state Medicaid
programs. In addition, Cephalon paid $6,150,000 in a companion settlement with
the Connecticut Attorney General related to unfair trade practice laws.
Additional information about the settlements may be found at the following
websites [include a link to the USAO, Cephalon (www.cephalon.com), and Attorney
General of Connecticut’s websites.]

 

As part of the federal settlement, Cephalon also entered a five-year corporate
integrity agreement with the Office of Inspector General of the U.S. Department
of Health and Human Services. The corporate integrity agreement is available at
http://oig.hhs.gov/fraud/cia/index.html. Under this agreement, Cephalon agreed
to undertake certain obligations designed to promote compliance with Federal
health care program and FDA requirements. We also agreed to notify healthcare
providers about the settlement and inform them that they can report any
questionable practices by Cephalon’s representatives to Cephalon’s Compliance
Department or the FDA.

 

Please call or email Cephalon at 1-866-900-7167 or questions@cephalon.com if you
have questions about the settlement referenced above or to report any instances
in which you believe that a Cephalon representative inappropriately promoted a
product or engaged in other questionable conduct. Alternatively, you may report
any such instances to the FDA’s Division of Drug Marketing, Advertising, and
Communications at 301-796- 1200. You should direct medical questions or concerns
about the products to Cephalon’s Medical Information department.

 

We appreciate your time and attention. We are dedicated to ensuring that we
bring you the scientific and medical information you need to make well-informed
decisions about whether Cephalon products are right for your patients.

 

Sincerely,

 

Chief Executive Officer
Cephalon, Inc.

 

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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.

 

Cephalon 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 the 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 Cephalon if the IRO
is unacceptable. Absent notification from OIG that the IRO is unacceptable,
Cephalon may continue to engage the IRO.

 

If Cephalon 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, Cephalon shall
submit the information identified in Section V.A.10 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 Cephalon if the IRO is
unacceptable. Absent notification from OIG that the IRO is unacceptable,
Cephalon may continue to engage the IRO.

 

B.              IRO Qualifications.

 

The IRO shall:

 

1.  assign individuals to conduct the Promotional and Product Services Review
who have expertise in all applicable Federal health care program and FDA
requirements relating to Promotional and Product Services Related Functions. The
assigned individuals shall also be knowledgeable about the general requirements
of the Federal health care program(s) under which Cephalon products are
reimbursed;

 

2.  assign individuals to design and select the samples for the Transaction
Reviews who are knowledgeable about appropriate statistical sampling techniques;
and

 

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

 

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C.            IRO Responsibilities.

 

The IRO shall:

 

1.  perform each Promotional and Product Services 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 each Promotional and Product Services Review;

 

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 each Promotional and Product Services Review 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 Cephalon.

 

E.             IRO Removal/Termination.

 

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

 

Prior to requiring Cephalon to engage a new IRO, OIG shall notify Cephalon 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, Cephalon may request a
meeting with OIG to discuss any aspect of the IRO’s qualifications, independence
or performance of its

 

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responsibilities and to present additional information regarding these matters.
Cephalon 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 Cephalon prior to requiring
Cephalon to terminate the IRO. However, the final determination as to whether or
not to require Cephalon to engage a new IRO shall be made at the sole discretion
of OIG.

 

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Appendix B to CIA for Cephalon, Inc.
Promotional and Product Services Review

 

I.              Promotional and Product Services Review, General Description

 

As specified more fully below, Cephalon shall retain an Independent Review
Organization (IRO) to perform reviews to assist Cephalon in assessing and
evaluating its systems, processes, policies, procedures, and practices related
to Cephalon’s Promotional and Product Services Related Functions (Promotional
and Product Services Review). The Promotional and Product Services Review shall
consist of two components - a systems review (the “Promotional and Product
Services Systems Review” or “Systems Review”), and a transactions review (the
“Promotional and Product Services Transactions Review” or “Transactions Review”)
as described more fully below. Cephalon may engage, at its discretion, a single
IRO to perform both components of the Promotional and Product Services Review
provided that the entity has the necessary expertise and capabilities to perform
both.

 

If there are no material changes in Cephalon’s systems, processes, policies, and
procedures relating to Promotional and Product Services Related Functions, the
IRO shall perform the Promotional and Product Services Systems Review for the
first and fourth Reporting Periods. If Cephalon materially changes its systems,
processes, policies, and procedures relating to Promotional and Product Services
Related Functions, the IRO shall perform a Promotional and Product Services
Systems Review for the Reporting Period(s) in which such changes were made in
addition to conducting the Review for the first and fourth Reporting Periods.
The additional Systems Review(s) shall consist of: 1) an identification of the
material changes; 2) an assessment of whether other systems, processes,
policies, and procedures previously reported did not materially change; and 3) a
review of the systems, processes, policies, and procedures that materially
changed. The IRO shall conduct the Promotional and Product Services Transactions
Review for each Reporting Period of the CIA.

 

II.            Promotional and Product Services Systems Review

 

A.            Description of Reviewed Policies and Procedures

 

The Promotional and Product Services Systems Review shall be a review of
Cephalon’s systems, processes, policies, and procedures (including the controls
on those systems, processes, policies, and procedures) relating to certain
Promotional and Product Services Related Functions. Where practical, Cephalon
personnel may compile documentation, schedule and organize interviews, and
undertake other efforts to assist the IRO in performing the Systems Review. The
IRO is not

 

1

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required to undertake a de novo review of the information gathered or activities
undertaken by Cephalon pursuant to the preceding sentence.

 

Specifically, the IRO shall review Cephalon’s systems, processes, policies, and
procedures associated with the following (hereafter “Reviewed Policies and
Procedures”):

 

1)             Cephalon’s systems, policies, processes, and procedures
applicable to the manner in which Cephalon representatives (including sales
representatives and/or Medical Services department personnel) handle requests or
inquiries relating to information about the uses of Cephalon products (including
non-FDA-approved (i.e., off-label) uses) and the dissemination of materials
relating to off-label uses of products. This review includes:

 

a)                                      the manner in which Cephalon sales
representatives and marketing personnel handle requests for information about
off-label uses of Cephalon products (i.e., by referring all such requests to
Medical Services department personnel at Cephalon);

 

b)                                     the manner in which Medical Services
department personnel, including those at Cephalon’s headquarters, handle and
respond to requests for information about off-label uses of Cephalon products
(including tracking the requests and using pre-approved materials for purposes
of responding to the request);

 

c)                                      the form and content of information and
materials related to Cephalon’s products disseminated to physicians,
pharmacists, or other health care professionals (collectively “HCPs”) or health
care institutions (HCIs) by Cephalon;

 

d)                                     Cephalon’s systems, processes, and
procedures (including the Inquiries Database) to track requests for information
about off-label uses of products and responses to those requests;

 

e)                                      the manner in which Cephalon collects
and supports information reported in any systems used to track and respond to
requests for product information, including its Inquiries Database;

 

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

 

2

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

 

2)             Cephalon’s policies and procedures applicable to the manner and
circumstances under which its Medical Services department personnel (including
any medical science liaisons (MSLs)) participate in meetings or events with HCPs
or HCIs (either alone or with sales representatives) and the role of the medical
personnel at such meetings or events;

 

3)             Cephalon’s systems, policies, processes, and procedures relating
to Cephalon’s internal review and approval of information and materials related
to Cephalon’s products disseminated to HCPs or HCIs by Cephalon;

 

4)             Cephalon’s systems, polices, processes and procedures relating to
incentive compensation for Covered Persons who are sales representatives, with
regard to whether the systems, policies, processes, and procedures are designed
to ensure that financial incentives do not inappropriately motivate such
individuals to engage in the improper promotion, sales, and marketing of
Cephalon’s 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; and

 

5)             Cephalon’s systems, processes, policies, and procedures relating
to the development and review of call plans for Cephalon’s products. This shall
include a review of the bases upon which HCPs and HCIs belonging to specified
medical specialties are included in, or excluded from, the call plans based on
expected utilization of Cephalon products for FDA-approved uses or
non-FDA-approved uses.

 

B. Promotional and Product Services Systems Review Report

 

The IRO shall prepare a report based upon each Systems Review. For each of the
Reviewed Policies and Procedures identified in Section II.A above, the report
shall include the following items:

 

1)             a description of the documentation (including policies) reviewed
and any personnel interviewed;

 

3

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

 

3)                                      a description of the manner in which the
control and accountability systems and the written policies relating to the
items identified in Sections II.A.1-5 above are made known or disseminated
within Cephalon;

 

4)                                      a detailed description of any
system(s) used to track and respond to requests for information about Cephalon’s
products (including the Inquiries Database);

 

5)                                      a detailed description of Cephalon’s
incentive compensation system for Covered Persons who are sales representatives,
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 Cephalon may establish compensation differently for individual products,
the IRO shall report separately on each such type of compensation arrangement;

 

6)                                      findings and supporting rationale
regarding any weaknesses in Cephalon’s systems, processes, policies, and
procedures relating to the Reviewed Policies and Procedures, if any; and

 

7)                                      recommendations to improve any of the
systems, policies, processes, or procedures relating to the Reviewed Policies
and Procedures, if any.

 

III.                                 Promotional and Product Services
Transaction Review

 

As described more fully below in Sections III.A-D, the Promotional and Product
Services Transactions Review shall include: (1) a review of a sample of
Inquiries reflected in the Inquiries Database; (2) a review of Cephalon’s call
plans and Cephalon’s call plan review process; (3) a review of records relating
to a sample of the Payments that are reported by Cephalon pursuant to
Section III.M of the CIA; and (4) a review of up to three additional items
identified by the OIG in accordance with Section III.D.1.b of the CIA (hereafter
“Additional Items”.) The

 

4

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IRO shall report on all aspects of its reviews in the Promotional and Product
Services Transactions Review Reports.

 

A.                                   Review of Inquiries and Inquiries Database

 

1)                                      Description of Inquiries Database

 

As set forth in Section III.B.3.d of the CIA, Cephalon shall establish a
database to track information relating to requests for information received by
Cephalon about its products (hereafter “Inquiries”). Specifically, Cephalon
shall document and record all Inquiries received from HCPs or HCIs regarding
Cephalon’s products in a database (the “Inquiries Database”). Cephalon 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)
nature/form of the response from Cephalon (including a record of any materials
provided in response to the request); and 6) the name of the Cephalon
representative who called upon or interacted with the HCP or HCI. Any response
from Medical Services to an HCP or HCI shall identify whether the information
provided addresses an indication that is part of an approved product label. The
status and findings of any follow-up review conducted by Cephalon in situations
in which improper off-label promotion is suspected shall be maintained by Global
Compliance.

 

2)                                 Internal Review of Inquiries Database

 

On a semi-annual basis, the Compliance Officer or other appropriate personnel
shall review the Inquiries Database and related information, as appropriate, and
shall generate a report summarizing the items of information outlined in
Section III.A. 1 above for each Inquiry received during the preceding two
quarters (“Inquiry Report”). The Compliance Officer or other appropriate
personnel shall review the Inquiry Reports to assess whether the information
contained in the report suggests that improper off-label promotion may have
occurred in connection with any Inquiry(ies). If the Compliance Officer or other
appropriate personnel, in consultation with other appropriate Cephalon
personnel, suspects that improper off-label promotion may have occurred in
connection with any Inquiry, the Compliance Officer or other appropriate
personnel shall

 

5

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undertake a follow-up review of the Inquiry (Off-Label Review), make specific
findings based on his/her Off-Label Review, and take all appropriate responsive
action (including disciplinary action of the Covered Person and reporting of the
conduct, including disclosing Reportable Events pursuant to Section III.H of the
CIA, if applicable).

 

3)                                      IRO Review of Inquiries Reflected in
Inquiries Database

 

The IRO shall select and review a random sample of 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
Cephalon conducted an Off-Label Review, and the other 15 shall be Inquiries for
which Cephalon did not conduct an Off-Label Review. For each Inquiry reviewed,
the IRO shall determine:

 

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

 

b)             For each Inquiry for which the Compliance Officer or other
appropriate personnel 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 Compliance Officer or other
appropriate personnel as a result of the Off-Label Review; and any follow-up
actions taken by Cephalon based on the Off-Label Review findings.

 

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

 

The IRO shall conduct a review and assessment of Cephalon’s review of its call
plans for Government Reimbursed Products as set forth in Section III.B.3.e of
the CIA. Cephalon shall provide the IRO with: i) a list of products promoted by
Cephalon during the Reporting Period; ii) information about the FDA-approved
uses for each Cephalon product; and iii) the call plans for each product.
Cephalon shall also provide the IRO with information about the reviews of call
plans that Cephalon conducted during the Reporting Period and any modifications
to the call plans made as a result of Cephalon’s reviews.

 

For each call plan, the IRO shall select a sample of 50 of the HCPs and HCIs
included on the call plan. For each call plan, the IRO shall compare the

 

6

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sampled HCPs and HCIs against the criteria (e.g., medical specialty or practice
area) used by Cephalon in conducting its review and/or modification of the call
plan in order to determine whether Cephalon 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 HCPs and
HCIs on a particular call plan are inconsistent with Cephalon’s criteria
relating to the call plan and/or Cephalon’s Policies and Procedures. The IRO
shall also note any instances in which it appears that Cephalon failed to follow
its criteria or Policies and Procedures.

 

C.                                     IRO Review of Physician Payment Listings

 

1.                                       Information Contained in Physician
Payment Listings

 

As set forth in Section III.M of the CIA, Cephalon shall post quarterly and
annual listings of physicians and Related Entities who received Payments, as
defined in the CIA, directly or indirectly from Cephalon. For purposes of the
IRO review as set forth in this Section III.C, each annual listing shall be
referred to as the “Physician Payment Listing” or “Listing.” For each physician
and Related Entity, each Physician Payment Listing shall include the following
information: i) full name; ii) city and state of the physician; iii) name, city,
and state of the Related Entity (if applicable); and iv) the aggregate value of
the Payment(s) in the preceding year.

 

For purposes of this IRO review, the term “Control Documents” shall include all
documents or electronic records associated with each Payment reflected in the
Physician Payments Listing for the sampled physician and/or Related Entity. 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 in connection with the
Payment(s); documents submitted by sales representatives or headquarters
personnel to request 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 50
physicians or Related Entities from the applicable Physician Payment Listing
that will be subject to the IRO review described below. If the OIG elects to
exercise this discretion, it shall notify the IRO of the 50 physicians and/or
Related Entities

 

7

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subject to the IRO review. If the OIG elects not to exercise its discretion as
described above, the IRO shall randomly select 50 physicians and/or Related
Entities to be included in the review. For each selected physician and/or
Related Entity, the IRO shall review the entry in the Physician Payment 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.

 

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

 

For each physician and/or Related Entity 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
and/or Related Entity;

 

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

 

c)                                      Whether the aggregate value of the
Payment(s) as reflected in the Listing for the sampled Physician is consistent
with the value of the Payments(s) reflected in the Control Documents; and

 

d)                                     Whether the Control Documents reflect
that Cephalon’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 Cephalon’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 and/or Related
Entity do not exist and:

 

8

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

 

ii.               the IRO cannot confirm that Cephalon otherwise followed its
policies and procedures relating to the entry in the Listing for the sampled
physician or Related Entity, 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 Cephalon’s
policies and procedures, and the IRO cannot obtain this information or data from
reviewing other Control Documents.

 

If a Control Document does not exist, but Cephalon has initiated corrective
action prior to the selection of the sampled physicians and/or Related Entities,
or if a Control Document does not exist but the IRO can determine that Cephalon
otherwise followed its policies and procedures with regard to each entry in the
Listing for a sampled physician or Related Entity, 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.

 

D.                                    IRO Review of Additional Items

 

As set forth in Section III.D.1.b of the CIA and beginning with the second
Reporting Period, the OIG at its discretion may identify up to three additional
items for the IRO to review (hereafter “Additional Items”.) No later than 90
days prior to the end of the second through fifth Reporting Periods, the OIG
shall notify Cephalon of the nature and scope of the IRO review to be conducted
for each of the Additional Items. Prior to undertaking the review of the
Additional Items, the IRO and/or Cephalon shall submit an audit work plan to the
OIG for approval and the IRO shall conduct the review of the Additional Items
based on a work plan approved by the OIG. The IRO shall include information
about its review of each

 

9

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Additional Item in the Transactions Review Report (including a description of
the review conducted for each Additional Item; the IRO’s findings based on its
review for each Additional Item; and the IRO’s recommendations for any changes
in Cephalon’s systems, processes, policies, and procedures based on its review
of each Additional Item.)

 

Cephalon may propose to the OIG that its internal audit(s) be partially
substituted for one or more of the Additional Items that would otherwise be
reviewed by the IRO for the applicable Reporting Period. The OIG retains sole
discretion over whether, and in what manner, to allow Cephalon’s internal audit
work to be substituted for a portion of the Additional Items review conducted by
the IRO.

 

In making its decision, the OIG agrees to consider, among other factors, the
nature and scope of Cephalon’s planned internal audit work, the results of the
Transactions Review(s) during prior Reporting Period(s), and Cephalon’s
demonstrated audit capabilities to perform the proposed audit work internally.
If the OIG denies Cephalon’s request to permit its internal audit work to be
substituted for a portion of the IRO’s review of Additional Items in a given
Reporting Period, Cephalon shall engage the IRO to perform the Review as
outlined in this Section III.

 

If the OIG agrees to permit certain of Cephalon’s internal audit work for a
given Reporting Period to be substituted for a portion of Additional Items
review, such internal work would be subject to verification by the IRO
(Verification Review). In such an instance, the OIG would provide additional
details about the scope of the Verification Review to be conducted by the IRO.
However, for purposes of any Verification Review, the IRO shall review of at
least 20% of the sampling units reviewed by Cephalon in its internal audits.

 

E.                                      Promotional and Product Services
Transactions Review Report

 

For each Reporting Period, the IRO shall prepare a report based on its
Promotional and Product Services 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

 

10

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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 Promotional and Product Services Transactions Review.

 

2)                                      Results to be Included in Report

 

The following results shall be included in each Promotional and Product Services
Review Report:

 

(Relating to the Review of Inquiries)

 

a)                                      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;

 

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

 

c)                                      for each Inquiry sample unit, findings
and supporting rationale as to whether: (i) each item of information listed in
Section III.A. 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 the Compliance Officer as a result
of the Off-Label Review; and any follow-up actions taken by Cephalon as a result
of the Compliance Officer’s findings;

 

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

 

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e)                                      recommendations for improvement in
Cephalon’s systems, processes, policies, procedures, and practices relating to
the Inquiries and the Inquiries Database, if any;

 

(Relating to the Call Plan Reviews)

 

f)                                        a list of the products promoted by
Cephalon during the Reporting Period and a summary of the FDA-approved uses for
such products;

 

g)                                     for each Cephalon product: i) a
description of the criteria used by Cephalon 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 Cephalon of the call
plans and an indication of whether Cephalon reviewed the call plans as required
by Section III.B.3.e 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 Cephalon’s criteria relating to the call plan and/or
Cephalon’s Policies and Procedures; and iv) a description of all instances in
which it appears that Cephalon failed to follow its criteria or Policies and
Procedures relating to call plans or the review of the call plans;

 

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

 

i)                                         recommendations, if any, for changes
in Cephalon’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 Physician Payment Listing Reviews)

 

j)                                         a description of the entries in the
Physician Payment Listing for each physician or Related Entity sampled and a
description of Control Documents reviewed in connection with each selected
physician or Related Entity;

 

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k)                                      for each sampled physician or Related
Entity, 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 Cephalon policy;
(iii) the aggregate value of the Payment(s) as reflected in the Listing for the
sampled physician or entity is consistent with the value of the
Payment(s) reflected in the Control Documents; (iv) each Control Document
reflects that Cephalon’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 Cephalon policies were not followed;

 

l)                                         for each sampled physician or Related
Entity 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 physicians or Related
Entities, including a description of the circumstances requiring corrective
action and the nature of the corrective action;

 

m)                                   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 Review of Additional Items)

 

n)                                     for each Additional Item reviewed, a
description of the review conducted;

 

o)                                     for each Additional Item reviewed, the
IRO’s findings based on its review;

 

p)                                     for each Additional Item reviewed, the
findings and supporting rationale regarding any weaknesses in Cephalon’s
systems, processes, policies, procedures, and practices relating to the
Additional Item, if any; and

 

q)                                     for each Additional Item reviewed,
recommendations, if any, for changes in Cephalon’s systems, processes, policies,
and

 

13

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procedures that would correct or address any weaknesses or deficiencies
uncovered during the review.

 

14

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