Exhibit 10.30


 


	
   

  	
  U.S. Department of Justice

  
	
   

  	
   

  
	
   

  	
  Michael J. Sullivan

  
	
   

  	
  United States Attorney

  
	
   

  	
  District of Massachusetts

  
	
   

  	
   

  
	
  Main Reception: (617) 748-3100

  	
  John Joseph Moakley United States
  Courthouse

  
	
   

  	
  Suite 9200

  
	
   

  	
  1 Courthouse Way

  
	
   

  	
  Boston, Massachusetts 02210

  



 


May 16,
2008


 


By Mail and Fax

202-778-5281


 


Geoffrey Hobart, Esq.

Covington & Burling

1210 Pennsylvania Avenue, NW

Washington, DC 20004-3401


 


Re:                               United States v. Biovail Pharmaceutical, Inc.


 


Dear Mr. Hobart:


 


This letter sets
forth the Agreement between the United States Attorney for the District of
Massachusetts (“the U.S. Attorney”) and your client, Biovail Pharmaceuticals, Inc.
(“BPI” or “Defendant”), in the above-captioned case. The Agreement is as
follows:


 


1.                                       Plea


 


On a date no earlier
than July 31, 2008 and no later than September 15, 2008, Defendant
agrees to waive indictment and plead guilty pursuant to Fed R. Crim. P.
11(c)(1)(C) and 11(c)(1)(A) to the seven count Information attached
as Exhibit A. The Information charges that:


 


(1)                                  BPI violated 18 U.S.C. § 371 by conspiring with others to knowingly and
willfully make payments to induce another party to recommend purchasing or
ordering BPI’s drug Cardizem, L.A. in violation of 42 U.S.C. §
1320a-7b(b)(2)(B); and


 


(2)                                  BPI violated 42 U.S.C. § 1320a-7(b)(2)(B) by knowingly and
willfully making payments to induce another party to recommend purchasing or
ordering BPI’s drug Cardizem, L.A.


 


Defendant expressly
and unequivocally admits that it in fact knowingly, intentionally and willfully
committed the crimes charged in Counts One through Seven of the Information,
and is in fact guilty of those offenses. BPI agrees to waive venue, any
applicable statutes of limitations and any legal or procedural defects in the
Information.


 

















 


2.                                       Penalties


 


With respect to its
violation of 18 U.S.C. § 371 (Count One), BPI is subject to a maximum possible
fine of $500,000, twice the gross gain derived from the offense or twice the
gross loss, whichever is greatest. See 18 U.S.C.
§§ 3571(c) and (d). The loss from this offense is $12,357,550, and thus
the maximum possible fine on Count One is $24,715,100.


 


With respect to its
violations of 42 U.S.C. § 1320a-7b(b)(2) (Counts Two through Seven), for
each separate count, BPI is subject to a maximum possible fine of $500,000,
twice the gross gain derived from the offense or twice the gross loss,
whichever is greatest. See 18 U.S.C.
§§ 3571(c) and (d). For each of these counts, twice the gross gain or
gross loss is less than $500,000, and thus the maximum possible fine on each of
Counts Two through Seven is $500,000.


 


BPI may also be
sentenced to a term of probation of not less than one year and not more than
five years. See 18 U.S.C. § 3561(c)(1). BPI shall
also pay a mandatory special assessment of $400 per count of the Information, a
total of $2,800.


 


3.                                       Sentencing Guidelines


 


The parties agree to
jointly take the following positions at sentencing under the United States
Sentencing Guidelines:


 


a.                                       The parties agree
that the United States Sentencing Guideline Manual in effect as of November 1,
2002 should be used in determining Defendant’s sentence.


 


b.                                      The parties agree
that there is no basis for a departure or deviation under the factors set forth
in 18 U.S.C. § 3553(a) from the sentencing range established by the United
States Sentencing Guidelines.


 


c.                                       The parties agree
that the Counts involve substantively the same harm, and thus group under
U.S.S.G. § 3D1.2.


 


The U.S. Attorney’s
agreement that the disposition set forth below is appropriate in this case is
based, in part, on Defendant’s acceptance of responsibility for the offenses of
conviction in this case.


 


The U.S. Attorney
specifically may, at his sole option, be released from his commitments under
this Agreement, including, but not limited to, his agreement that paragraph 4
constitutes the appropriate disposition of this case, if at any time between
his execution of this Agreement and sentencing, Defendant:


 


(a)                                  Fails to admit a
complete factual basis for the plea;


 


(b)                                 Fails to
truthfully admit its conduct in the offenses of conviction;


 


(c)                                  Falsely denies,
or frivolously contests, relevant conduct for which Defendant is accountable
under U.S.S.G. § 1B1.3;


 


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(d)                                 Gives false or
misleading testimony in any proceeding relating to the criminal conduct charged
in this case and any relevant conduct for which Defendant is accountable under
U.S.S.G. § 1B1.3;


 


(e)                                  Engages in acts
which form a basis for finding that Defendant has obstructed or impeded the
administration of justice under U.S.S.G, § 3C1.1;


 


(f)                                    Attempts to
withdraw its plea.


 


Defendant expressly
understands that it may not withdraw its plea of guilty, unless the Court
rejects this Agreement under Fed. R. Crim. P. 11(c)(5).


 


4.                                       Agreed Disposition


 


The U.S. Attorney and
Defendant agree pursuant to Fed. R. Crim. P. 11(c)(1)(C) that the
appropriate disposition of this case is as follows and that this fine is within
the statutory maximums:


 


a.                                       A criminal fine
in the amount of twenty two million two hundred forty three thousand five
hundred ninety dollars ($22,243,590), as follows:


 


Defendant shall pay
this fine within five business days of the date of sentencing.


 


The parties agree
that the basis for this fine is as follows:


 


i.                                          The parties agree
that the base fine is $12,357,550, which is the amount of payments to
physicians and others paid by or on behalf of BPI through the PLACE program. See U.S.S.G. §§ 8C2.3, 8C2.4(b) and 2B4.1(c)(1)(A).


 


ii.                                       Pursuant to
U.S.S.G. § 8C2.5, the culpability score is seven (7) as determined as
follows:


 


(a)                                  Base culpability score is five (5) pursuant to U.S.S.G. § 8C2.5(a);


 


(b)                                 Add 3 points in that the unit of the organization within which the
offense was committed had 200 or more employees, and an individual within the
high level personnel of this unit participated in or condoned the offense;


 


(c)                                  Deduct one (1) point pursuant to U.S.S.G. § 8C2.5(g)(3).


 


iii.                                    Pursuant to
U.S.S.G. § 8C2.6, the appropriate multiplier range associated with a
culpability score of seven (7) is 1.4 to 2,8.


 


iv.                                   Thus, the
Guideline Fine Range is $17,300,570 to $34,601,140.


 


v.                                      The parties agree
that (1) disgorgement pursuant to U.S.S.G. §8C2.9 is not necessary, (2) there
is no basis for a downward departure or deviation 


 


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under the U.S.S.G.; (3) the proposed fines are within the statutory
maximums pursuant to 18 U.S.C. §§ 3571(c) and (d) because the gross
gain from Count One exceeded $10,000,000; and (4) a fine within the
guideline range will result in a reasonable sentence taking into consideration
all of the factors set forth in 18 U.S.C. §§3553(a), 3572.


 


b.                                      Mandatory special
assessments totaling $2,800. Pursuant to 18 U.S.C. § 3013(a)(2)(B), to be
imposed as $400 per count.


 


c.                                       Restitution:
Because 42 U.S.C. §1320a-7b(b)(2)(B) prohibits remuneration to induce the
ordering or recommending, inter alia, of an item “for which payment may be made
in whole or in part under a Federal health care program,” the victims of the
crimes set forth in the Information attached as Exhibit A are the federal
health insurance programs. Restitution to the federal health insurance programs
will be addressed by a Civil Settlement Agreement to be entered into between
Defendant and the United States on or before July 31, 2008. To satisfy its
restitution obligations, Defendant agrees to pay or cause to be paid
$2,404,286, plus interest at the Medicare Trust Fund Rate from May 1, 2008
to the date of payment. Defendant acknowledges that any settlement and/or
release of civil liability must be approved by the Civil Division of the United
States Department of Justice and the Department of Health and Human Services,
Office of Inspector General.


 


5.                                       Payment of Mandatory Special Assessment


 


Defendant agrees to
pay the mandatory special assessment to the Clerk of the Court on or before the
date or sentencing.


 


6.                                       No Further Prosecution of Defendant


 


Other than the
charges set forth in the Information attached as Exhibit A, the Government
agrees not to bring any additional federal criminal non-tax charges against
Defendant with respect to the conduct covered by the Information. This
agreement is expressly contingent upon:


 


a.                                       the guilty plea
of Defendant to the information attached hereto as Exhibit A being
accepted by the Court and not withdrawn or otherwise challenged; and


 


b.                                      Defendant’s
performance of all of its obligations as set forth in this Agreement.


 


If Defendant’s guilty
plea is not accepted by the Court or is withdrawn for any reason, or if
Defendant should fail to perform any obligation under this Agreement, this
declination of prosecution shall be null and void.


 


The United States
expressly reserves the right to prosecute any individual, including but not
limited to former officers, directors, employees and agents of Biovail
Corporation and/or Biovail Pharmaceuticals, Inc. for the conduct set forth
in the attached Information.


 


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7.                                       Waiver of Rights to Appeal and to Bring Collateral Challenge


 


Defendant is aware
that it has the right to challenge its sentence and guilty plea on direct
appeal. Defendant is also aware that it may, in some circumstances, be able to
argue that its plea should be set aside, or its sentence set aside or reduced,
in a collateral challenge such as pursuant to a motion under 28 U.S.C. § 2255.


 


In consideration of
the concessions made by the U.S. Attorney in this Agreement, Defendant
knowingly and voluntarily waives its right to appeal or collaterally challenge:


 


(a)                                  Defendant’s
guilty plea and any other aspect of Defendant’s conviction, including, but not
limited to, any rulings on pretrial suppression motions or any other pretrial
dispositions of motions and issues; and


 


(b)                                 The imposition by
the District Court of the sentence agreed to by the parties, as set out in paragraph
4 and, even if the Court rejects one or more positions advocated by the parties
with regard to the application of the U.S. Sentencing Guidelines.


 


Defendant’s waiver of
rights to appeal and to bring collateral challenges shall not apply to appeals
or challenges based on new legal principles in First Circuit or Supreme Court
cases decided after the date of this Agreement which are held by the First
Circuit or Supreme Court to have retroactive effect.


 


This Agreement does
not affect the rights or obligations of the United States as set forth in l8
U.S.C. § 3742(b), and the U.S. Attorney therefore retains his appeal rights.


 


8.                                       Cooperation


 


(a)                                  Terms of
Cooperation


 


Defendant shall
cooperate completely and truthfully in any trial or other proceeding arising
out of any federal investigation of its current and former officers, agents,
employees or other persons or entities relating to the conduct set forth in the
Information. Defendant shall make reasonable efforts to facilitate access to,
and to encourage the cooperation of, its current and former officers, agents,
and employees for interviews sought by law enforcement agents, upon request and
reasonable notice. Defendant shall also take reasonable measures to encourage
its current and former officers, agents, and employees to testify truthfully
and completely before any grand jury, and at any trial or other hearing, at
which they are requested to do so by any government entity.


 


In addition,
Defendant shall furnish to law enforcement agents, upon request, all documents
and records in its possession, custody or control relating to the conduct that
is within the scope of any ongoing grand jury investigation, trial or other
criminal proceeding in the District of Massachusetts, and that are not covered
by the attorney-client privilege or work product doctrine.


 


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Provided, however,
notwithstanding any provision of this Agreement, that: (1) Defendant is
not required to request of its current or former officers, agents, or employees
that they forego seeking the advice of an attorney nor that they act contrary
to that advice; (2) Defendant is not required to take any action against
its officers, agents, or employees for following their attorney’s advice; and (3) Defendant
is not required to waive any privilege or claim of work product protection
except to the extent set forth in the succeeding paragraph.


 


Defendant
specifically agrees to continue to waive and/or waive any attorney-client
privilege and/or work product protections regarding the legality of the PLACE
program and/or the decision to enter into, implement and/or continue the PLACE
program as to any such advice or communications,


 


Defendant
acknowledges that it expressly and unequivocally admits that it knowingly,
intentionally and willfully committed the crime charged in the Information and
is in fact guilty of that offense. Defendant agrees that it will not make
statements inconsistent with this explicit admission of guilt to the crimes
charged in the Information,


 


9.                                       Probation Department Not Bound By Agreement


 


The sentencing
disposition agreed upon by the parties and their respective calculations under
the Sentencing Guidelines are not binding upon the United States Probation
Office.


 


10.                                 Fed. R. Crim. P. 11(c)(1)(C) Agreement


 


Defendant’s plea will
be tendered pursuant to Fed. R. Crim. P. 11(c)(1)(C). Defendant cannot withdraw
its plea of guilty unless the sentencing judge rejects this Agreement. If the
sentencing judge rejects this Agreement, this Agreement shall be null and void
at the option of either the United States or Defendant, with the exception of
paragraphs 12-13, which shall remain in effect.


 


11.                                 Civil and Administrative Liability


 


By entering into this
Agreement, the United States does not compromise any civil or administrative
liability, including but not limited to any False Claims Act or tax liability
which BPI may have incurred or may incur as a result of its conduct and its
plea of guilty to the attached Information.


 


12.                                 Waiver of Defenses


 


If this Plea
Agreement or Defendant’s guilty plea is not accepted by the Court for any
reason, or is later withdrawn or otherwise successfully challenged by Defendant
for any reason, Defendant hereby waives, and agrees it will not interpose any
defense to any charges brought against it which defenses Defendant might
otherwise have under any statute of limitations, the Speedy Trial Act, or the
United States Constitution with respect to preindictment delay, except that
Defendant may raise any such defense that Defendant may have for conduct
occurring before April 1, 2003, as further described in the parties
tolling agreement attached hereto as Exhibit B.


 


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13.                                 Withdrawal of Plea By Defendant


 


Should Defendant move
to withdraw its guilty plea at any time, this Agreement shall be null and void
at the option of the U.S. Attorney, with the exception of this paragraph. In
this event, Defendant understands and agrees that the Government may pursue any
and all charges that might otherwise have been brought but for this Agreement,
and Defendant hereby waives, and agrees that it will not interpose, any defense
to any additional charges brought against it which might otherwise have under
any statute of limitations, the Speedy Trial Act, or the United States
Constitution with respect to pre-indictment delay, except any such defense that
Defendant may already have for conduct occurring before April 1, 2003.


 


14.                                 Breach of Agreement


 


If the U.S. Attorney
determines that Defendant has failed to comply with any provision of this
Agreement, or has committed any crime following its execution of this
Agreement, the U.S. Attorney may, at his sole option, be released from his
commitments under this Agreement in their entirety by notifying Defendant,
through counsel or otherwise, in writing. The U.S. Attorney may also pursue all
remedies available to him under the law, irrespective of whether he elects to
be released from his commitments under this Agreement. Further, the U.S. Attorney
may pursue any and all charges which have been, or are to be, dismissed
pursuant to this Agreement. Defendant recognizes that no such breach by it of
an obligation under this Agreement shall give rise to grounds for withdrawal of
its guilty plea. Defendant understands that, should it breach any provision of
this agreement, the U.S. Attorney will have the right to use against Defendant
before any grand jury, at any trial or hearing, or for sentencing purposes, any
statements which may be made by it, and any information, materials, documents
or objects which may be provided by it to the government subsequent to this
Agreement, without any limitation. In this regard, Defendant hereby waives any
defense to any charges which it might otherwise have under any statute of
limitations or the Speedy Trial Act.


 


15.                                 Who Is Bound By Agreement


 


This Agreement is
limited to the U.S. Attorney for the District of Massachusetts, and cannot and
does not bind the Attorney General of the United States or any other federal,
state or local prosecutive authorities.


 


16.                                 Corporate Authorization


 


Defendant shall
provide to the Government and the Court a copy of a resolution of the Board of
Directors of Biovail Pharmaceuticals, Inc. affirming that the Board of
Directors has authority to enter into the Plea Agreement and has (1) reviewed
the Information in this case and the proposed Plea Agreement; (2) consulted
with legal counsel in connection with the matter; (3) voted to enter into
the proposed Plea Agreement; (4) voted to authorize Biovail
Pharmaceuticals, Inc. to plead guilty to the charges specified in the Plea
Agreement and (5) voted to authorize the corporate officer identified
below to execute the Plea Agreement and all other documents necessary to carry
out the provisions of the Plea Agreement. A copy of the resolution is attached
as Exhibit C. Defendant agrees that either a duly authorized corporate
officer or a duly authorized attorney for Biovail Pharmaceuticals, Inc.,
at the discretion of the Court, shall appear 


 


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on
behalf of Biovail Pharmaceuticals, Inc. and enter the guilty plea and will
also appear for the imposition of sentence.


 


17.                                 Complete Agreement


 


This letter and the
attachments thereto (Exhibit A - the Information, Exhibit B - the
Tolling Agreement and Exhibit C - the Corporate Resolution) contains the
complete agreement between the parties to this Agreement relating to the
disposition of this criminal case. No promises, representations or agreements
have been made other than those set forth in this letter.  This Agreement supersedes prior
understandings, if any, of the parties, whether written or oral, other than
those set forth in the attachments hereto. This Agreement can be modified or
supplemented only in a written memorandum signed by the parties or on the
record in court.


 


If this letter
accurately reflects the Agreement between the U.S. Attorney and Defendant,
please have Defendant sign the Acknowledgment of Agreement below. Please also
sign below as Witness. Return the original of this letter to Assistant U.S.
Attorney Sara Bloom.


 


	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  MICHAEL J. SULLIVAN

  
	
   

  	
  United States Attorney

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DIANE C. FRENIERE

  
	
   

  	
   

  	
  DIANE C. FRENIERE, Chief

  
	
   

  	
   

  	
  White
  Collar Crime Section

  



 


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Acknowledgment
of Plea Agreement


 


The Board of
Directors has authorized me to execute this Plea Agreement on behalf of Biovail
Pharmaceuticals, Inc.  The Board has
read this Plea Agreement, the attached criminal Information, the tolling
agreement and the corporate authorization or has been advised of the contents
thereof and has discussed them fully with Biovail Pharmaceuticals, Inc.’s
attorney.  The Board acknowledges that
this letter fully sets forth Biovail Pharmaceuticals, Inc.’s agreement
with the Government.  The Board further
states that no additional promises or representations have been made to Biovail
Pharmaceuticals, Inc. by any officials of the United States in connection
with the disposition of this matter, other than those set forth in the Plea
Agreement.


 


 


	
  Dated: May 16, 2008

  	
  /s/ NANCY SELL

  
	
   

  	
  NANCY SELL

  
	
   

  	
  Title: President and Secretary

  
	
   

  	
  Biovail Pharmaceuticals, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
  Dated: 05/16/08

  	
  /s/ GEOFFREY HOBART

  
	
   

  	
  GEOFFREY HOBART, ESQ,

  
	
   

  	
  Covington & Burling, LLP.

  
	
   

  	
  Attorney
  for Biovail Pharmaceuticals, Inc.

  



 


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EXHIBIT
A


 














 


UNITED
STATES DISTRICT COURT

DISTRICT OF MASSACHUSETTS


 


	
  UNITED STATES OF AMERICA,

  	
  )

  	
  Criminal Number

  
	
   

  	
  )

  	
   

  
	
   

  	
  )

  	
   

  
	
  v.

  	
  )

  	
  VIOLATION:

  
	
   

  	
  )

  	
   

  
	
   

  	
  )

  	
  18 U.S.C. § 371 — Conspiracy to Offer and 

  
	
  BIOVAIL PHARMACEUTICALS, INC.

  	
  )

  	
  Pay Illegal Remunerations to Physicians

  
	
   

  	
  )

  	
   

  
	
   

  	
  )

  	
  42 U.S.C. § 1320a-7(b)(b)(2) — Offers of 

  
	
   

  	
  )

  	
  Remuneration to Physicians

  
	
  Defendants.

  	
  )

  	
   

  
	
   

  	
  )

  	
   

  
	
   

  	
  )

  	
   

  



 


INFORMATION


 


THE UNITED STATES
ATTORNEY CHARGES THAT:


 


PRELIMINARY
ALLEGATIONS


 


At all times material
hereto, unless otherwise alleged:


 


1.                                       Defendant BIOVAIL PHARMACEUTICAL, INC. (“BPI”),
a Delaware corporation, had corporate headquarters in Morrisville, North
Carolina.


 


The
Drug Cardizem, L.A.


 


2.                                       In January 2001,
BPI acquired the Cardizem line of drugs
from another company for $409.5 million dollars.


 


3.                                       Cardizem is the
brand name of a drug known as diltiazem, which is a heart medication used to
control high blood pressure.


 


4.                                       In or before
2003, the patent ran out on Cardizem, the then brand name version of diltiazem,
and the drug faced generic competition.


 


5.                                       In the late 2002
and early 2003, BPI was preparing to introduce the
product Cardizem, L.A. (CLA) to the market. Cardizem, L.A. was BPI’s proprietary name for a new 24 hour time release, or
long acting (L.A.), formulation of the brand name drug Cardizem.


 

















 


6.                                       BPI began selling
Cardizem, L.A. on or about March 23, 2003. At that time, the generic
version of Cardizem cost about one third less than the new drug, Cardizem, L.A.


 


The
PLACE Program


 


7.                                       As part of their
promotion of Cardizem, L.A., beginning in March 2003, BPI
implemented a program known as the PLACE (Proving Long Acting Through
Experience) program.


 


8.                                       The PLACE program
paid physicians and other prescribers up to $1,000 for enrolling between 11-15
patients in the program, causing patients to fill prescriptions for Cardizem,
L.A. These included prescriptions that were paid for by Medicaid.


 


9.                                       The first phase
of the PLACE program required the prescribing medical professionals (e.g.
physicians, nurse practitioners, physician’s assistants) to enroll in the
program by signing a business reply card by which they agreed to participate,
and by completing a 2 page, 10 multiple choice questionnaire. This
questionnaire was not expected to take, and did not usually take, the
prescribing professional more than 10 minutes to complete.


 


10.                                 Under this
initial part of the program, the prescribing medical professionals were paid
$250 if they (a) signed the business reply card and thus agreed to
participate in the program and write Cardizem, L.A. prescriptions for their
patients, and (b) completed this brief questionnaire.


 


11.                                 A payment of $250
for 10 to 15 minutes of these medical professionals’ time exceeded the
reasonable fair market value of their time.


 


12.                                 In addition, if
the business reply card was signed and the questionnaire completed and
returned, an office manager or assistant received $50.00. In some cases, these
assistants simply put the materials in an envelope. In other cases, the
assistants did nothing at this stage.


 


13.                                 The payments of
$50 to these office assistants exceeded the reasonable fair market value of the
assistants’ actual time spent.


 


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14.                                 The second phase
of the PLACE program provided that if the medical prescriber returned the final
questionnaire, they would be paid, in addition to the initial $250 payment, as
follows:


 


(1)                                  an additional
$250 if they enrolled between 1 and 5 patients;


 


(2)                                  an additional
$500 if they enrolled between 6 and 10 patients; and


 


(3)                                  an additional $750
if they enrolled between 11 and 15 patients.


 


15.                                 These payments of
$250-$750 exceeded the reasonable fair market value of the medical prescribers’
time necessary to enroll these patients and complete the final questionnaire.


 


16.                                 In addition, if
the final questionnaire was returned, the office assistant also received an
additional $100.00. This payment also exceeded the fair market value of the
office assistants’ time necessary to complete the program.


 


17.                                 To enroll a
patient, the physician or other medicine prescriber was required to write a 30
day prescription for the patient and the patient had to fill the prescription. BPI provided a coupon or voucher, however, so that first
thirty days of the drug would be free.


 


18.                                 The physicians
and other medicine prescribers were told that in order to receive the payment
they also had to track the patients experience on Cardizem, L.A. for three
regularly scheduled visits. These visits were nothing more than the routine
visits and required no additional work for the prescriber.


 


19.                                 BPI did not design
or implement the PLACE program in a way calculated to provide new or meaningful
scientific data about whether Cardizem, L.A. worked better than other available
drugs.


 


20.                                 BPI employees
responsible for the PLACE program reported regularly on the number of
prescriptions generated by the PLACE program and congratulated those involved
for their success in using the PLACE program to generate prescriptions for
Cardizem, L.A.


 


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21.                                 BPI paid and caused
full payments to be made to medical prescribers and office assistants even if
the information provided in the final study questionnaire was incomplete and/or
not usable.


 


22.                                 According to the
final study report, nearly 64 percent of the final study questionnaires were
not complete or contained inconsistent data.


 


23.                                 The senior
management of BPI and BPI’s
parent company communicated to the sales force that a successful launch of
Cardizem, L.A. was critical to BPI’s success
and growth as a company, as well as to their own financial well-being. On February 28,
2003, a BPI parent company Vice President sent
an email to the sales force with respect to the launch of Cardizem, L.A that
stated:


 


We have to deliver growth to Wall Street and everyone
knows exactly what is expected from us. If we ever don’t deliver, my net worth
will shrink dramatically. I will suffer tremendously if this were to happen . .
.. We have made a huge upfront commitment and now we expect you (the reps) to
make a commitment in return.


 


24.                                 BPI and its parent
company management also congratulated the sales team on its success in using
the PLACE program to drive prescriptions for Cardizem, L.A.


 


25.                                 Thus, on or about
April 11, 2003, the BPI Product
Manager in charge of the PLACE program sent an email to all district sales
managers that stated:


 


Congratulations on doing an incredible job with the
PLACE Program. The prescription generation has been phenomenal — Currently, we
have 10,505RXs!!


 


26.                                 Similarly, on June 23,
2003, this BPI Product Manager sent another
email, including higher level sales and marketing managers, as follows:


 


To date, a total of 89,092 Rxs have been recorded for
Cardizem LA, as of June 6th 2003. Congratulations once again on all the
success the PLACE Program is having in driving prescriptions and market share!!


 


27.                                 In addition, on April 5,
2003, the CEO of BPI’s parent company responded to
a report of increasing Cardizem, L.A. prescriptions from the PLACE program with
the following:


 


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This is a GREAT start. Now, who would care to venture
a guess (don’t we call them forecasts?) on what conversion we can expect to
paying customers. I would really like to know what you think. Thanks and nice
work.


 


28.                                 Likewise, on April 8,
2003, the CEO of BPI’s parent company responded to
reports of 8356 faxed in prescription forms with “I have to tell you, I have
NEVER seen this type of response!! CONGRATS!!!”


 


29.                                 In preparing to
launch Cardizem, L.A., BPI also contracted
with R-Corp. to acquire a additional contracted sales representatives to
promote Cardizem, L.A. at the time of its launch. Under the agreement, R-Corp.
sales representatives were hired to help BPI sales
representatives promote Cardizem, L.A. at its launch.


 


30.                                 Prior to the
launch of Cardizem, L.A., R-Corp. representatives raised a concern about
whether the PLACE program complied with all laws, and specifically the
Anti-Kickback laws and indicated that R-Corp. was unwilling to proceed without
assurances that the program complied with the Anti-Kickback Act.


 


31.                                 On or about March 21,
2003, an attorney for R-Corp. spoke with counsel for BPI’s
parent company and informed the counsel for BPI’s
parent company about R-Corp.’s internal guidelines regarding the Anti-Kickback
Act, These included the following:


 


The purpose of the study cannot be to induce
physicians to prescribe the product...


 


The compensation cannot take into account the volume
or value of any referrals or business generated between the parties . . .


 


The recruitment of investigators needs to be aimed at
practitioners that are experts in the field or leading researchers.


 


Recruitment of investigators is not to be aimed at
high prescribers... Participation in the research and any payments cannot be made
contingent upon a practitioner prescribing a Reliant product.


 


[Emphasis in original]


 


The
Medicaid Program


 


32.                                 Title XIX of the
Social Security Act, 42 U.S.C. §§ 1396 et seq.,
established a program to enable the states to furnish medical assistance to
certain categories of persons whose 


 


5

















 


income and resources were insufficient to meet
the costs of necessary medical services. Commonly called Medicaid, the program
was administered by the states, but was funded jointly by the federal and state
governments.


 


33.                                 To participate in
the Medicaid program, a state was required to develop a plan that was approved
by the Secretary of Health and Human Services as meeting federal requirements.
The state paid qualified providers for furnishing necessary services covered by
the state plan to individuals who were eligible for medical assistance. The
federal government contributed a portion of the costs that each participating
state incurred in purchasing items and services from qualified providers on
behalf of eligible persons. The state bore the remainder of the costs. At all
times relevant hereto, Massachusetts was among the states that had Medicaid
programs receiving federal funding.


 


34.                                 Medicaid
programs, including that in Massachusetts, were “federal health care programs”
within the meaning of 18 U.S.C. § 24, in that they were public plans affecting
commerce under which medical benefits, items and services were provided to
individuals under the plans.


 


35.                                 The federal
government contributed to the costs of prescription drugs for persons who were
Medicaid beneficiaries, including but not limited to persons receiving
prescriptions for blood pressure treatment, such as Cardizem, L.A.


 


36.                                 As discussed in
this Information, prescribers D, E, G, R, S and W were each medical providers
in Massachusetts who provided care and treatment for Medicaid-eligible patients
for high blood pressure. Each of these prescribers prescribed Cardizem, L.A.
for one or more patients who were Medicaid program beneficiaries in 2003. At
all times relevant to this Information, the Medicaid program in Massachusetts
reimbursed the Cardizem, L.A. prescriptions for the physicians’ Medicaid
eligible patients.


 


37.                                 At all times
relevant to this Information, federal law provided that it was illegal to
knowingly and willfully offer or pay any remuneration (including any kickback,
bribe or rebate) directly or indirectly, overtly or covertly, in cash or in
kind to any person to 


 


6

















 


induce such person to order, or arrange for or recommend purchasing,
any item for which payment may be made in whole or in part under a Federal
health care program.


 


38.                                 BPI employees knew
that Cardizem, L.A. prescriptions, including those induced through the PLACE
program, would include prescriptions for Medicaid patients.


 


39.                                 In 2003, Medicaid
paid in excess of $3 million in reimbursement for prescriptions for Cardizem,
L.A. nationwide.


 


7

















 


COUNT
ONE

(CONSPIRACY -18 U.S.C. § 371)


 


The
Conspiracy


 


40.                                 The allegations
set forth in Paragraphs 1- 39 are herein realleged and incorporated by
reference.


 


41.                                 Commencing on or
before August 2002, and continuing thereafter until in or about at least December 2003,
the exact dates being unknown to the Grand Jury, in the District of
Massachusetts and elsewhere, defendants


 


BIOVAIL
PHARMACEUTICALS INC.,


 


and
others known and unknown to the Grand Jury, did knowingly and willfully
combine, conspire, and agree to commit an offense against the United States, to
wit, 42 U.S.C. § 1320a-7b(b)(2)(A), by knowingly and willfully offering and
paying remuneration, directly and indirectly, overtly and covertly, in cash and
in kind, to physicians to induce them to prescribe Cardizem, L.A. for
individuals, including Medicaid patients, for which payments were made in whole
and in part under Medicaid and other Federal health care insurance programs.


 


Purpose
of the Conspiracy


 


42.                                 The purpose of
the conspiracy was to target medical prescribers who were potential high
prescribers of Cardizem, L.A. and to offer them payments and to pay them to
induce them to prescribe Cardizem, L.A. for their patients, including their
Medicaid patients.


 


Manner
and Means of the Conspiracy


 


It was part of the
conspiracy that :


 


43.                                 From March 2003
through at least December 2003, BPI implemented
the PLACE program to induce medical prescribers to prescribe Cardizem, L.A. for
their patients.


 


8

















 


44.                                 From March 2003
through at least December 2003, BPI presented
the PLACE program to medical prescribers and others as a scientific study of
the performance of Cardizem, L.A., when the program was actually designed to
induce prescribers to prescribe the product for their patients by paying
prescribers up to $ 1,000.


 


45.                                 From November 2002
through at least on or about March 2003, BPI
confirmed their objectives for the Cardizem, L.A. program to include the
following:


 


(1)                                  Accelerate uptake
among high prescribing PCPs;


 


(2)                                  Engage physicians
in evaluation of Cardizem [L.A.]; and


 


(3)                                  Provide sales
reps with an opportunity to reinforce/build relationships with key prescribers.


 


46.                                 From March 2003
through at least December 2003, BPI paid the
participants in the PLACE program more than the fair market value of their time
in order to induce them to try Cardizem, L.A. on their patients.


 


47.                                 From in or about October 2002
through on or about February 2003, BPI increased
the payments to the physicians from the originally proposed honorarium of $100
(or a medically relevant item) to $300, then $500 and then $1,000 per
prescriber.


 


48.                                 In furtherance of
the conspiracy, BPI paid the physicians up to
$1,000 for their participation, without seeking attorney
advice regarding the legality of the payments, even though BPI was advised by Q-Corp., the company helping BPI to help design and implement the PLACE program, that BPI would have to consult its own attorneys as to the
appropriateness and permissibility of increasing the payment to such a high
honorarium.


 


49.                                 From in or about March 2003
through at least July 2003, BPI created
25,000 PLACE kits and targeted approximately 17,000 prescribers for
participation in the program and provided these target lists to their sales
representatives.


 


50.                                 From in or about March 2003
through at least July 2003, BPI targeted
prescribers based upon their projected potential and likelihood of prescribing
Cardizem, L.A.


 


9














 


51.                                 From in or about March 2003
through at least May 2003, BPI falsely
assured other participants, and specifically representatives of R-Corp., that
the PLACE program had been reviewed by attorneys for compliance with the
Anti-Kickback statutes as well as other laws, when in fact no such review had
been done.


 


52.                                 In or about March 2003,
a Vice President of BPI’s parent
company dismissed R-Corp’s concern about compliance with the Anti-Kickback Act
as whining, indicated he did not really care what R-Corp had to say about it,
and insisted that the program had to proceed to meet BPI’s
objectives.


 


53.                                 In or about March 2003,
this Vice President, when questioned further about how to deal with the
objections concerning the program’s potential lack of compliance with the
Anti-Kickback Act, caused the program to go forward, concluding: “This is a
formality anyway. The program has to proceed.”


 


54.                                 On or about April 10,
2003, BPI and a Vice President of its parent
corporation signed a letter to R-Corp. in which BPI
confirmed to R-Corp. the following:


 


You have indicated, and assured us, that Biovail and
[Q-Corp.] have carefully reviewed the program from
an anti-kickback perspective . . .  and
firmly believe that the program does not present an unreasonable
risk of enforcement action. Further, you have indicated that the program has
been reviewed by expert counsel well versed in these regulatory and enforcement
matters and that counsel has confirmed your position. It is on the basis of
your assurances, therefore, that we have agreed to enter an agreement directly
with [Q-Corp]. to implement the Project.


 


You have agreed to indemnify and hold R-Corp. . .
harmless from any losses . . . arising from or relating to the Project
including any losses relating to any governmental or enforcement actions
relating to the same.


 


55.                                 On or about April 10,
2003, BPI executed this letter to persuade
R-Corp. to go forward with the PLACE program, even though BPI
had not obtained any review of the PLACE program’s compliance with the Anti-Kickback
Act, much less an expert counsel review of the PLACE program from an
anti-kickback perspective.


 


56.                                 From in or about March 2003
through in or about July 2003, BPI made the
false representation that they had a legal advice as to the lawfulness of the
PLACE program 


 


10

















 


from an anti-kickback perspective in order to
persuade R-Corp. to proceed with the program.


 


57.                                 From in or about April 2003
through at least December 2003, BPI caused
health insurers, including federal health care programs such as Medicaid, to
pay for Cardizem, L.A. prescriptions generated by the PLACE program.


 


Overt
Acts


 


58.                                 In furtherance of
the conspiracy, and to effect its objects, BPI and other
co-conspirators known and unknown to the Grand Jury, committed numerous overt
acts, including, but not omitted to, the following:


 


59.                                 On various dates
between March 2003 and in or about July 2003, BPI
enrolled and caused to be enrolled approximately 15,000 prescribers in the
PLACE program, including the six prescribers identified in the chart below.


 


60.                                 On various dates
between March 2003 and in or about September 2003, BPI caused approximately 5,000 prescribers, including the
prescribers identified in the chart below, to be paid $250 for filling out the
initial questionnaire.


 


61.                                 On or about the
dates set forth below and thereafter, BPI caused
approximately 10,000 prescribers, including the prescribers identified in the
chart below, to be paid and additional $750 for enrolling 11-15 patients.


 


62.                                 In 2003, each of
the prescribers identified in the chart below prescribed Cardizem, L.A. for
patients for whom the prescriptions were reimbursed by Medicaid:


 


	
  Prescriber

  	
   

  	
  Enrollment Date

  On or About

  	
   

  	
  $750 Payment Date

  On or About

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Prescriber D 

  Dartmouth MA

  	
   

  	
  May 6, 2003

  	
   

  	
  November 5, 2003

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Prescriber E 

  Braintree, MA

  	
   

  	
  April 9, 2003

  	
   

  	
  November 5, 2003

  



 


11

















 


	
  Prescriber
  G

  Bridgewater, MA

  	
   

  	
  June 2,
  2003

  	
   

  	
  November 5,
  2003

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Prescriber R

  Springfield, MA

  	
   

  	
  April 28, 2003

  	
   

  	
  November 5, 2003

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Prescriber S

  Agawam, MA

  	
   

  	
  April 29, 2003

  	
   

  	
  November 5, 2003

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Prescriber W

  Long Meadow, MA

  	
   

  	
  April 14, 2003

  	
   

  	
  November 5, 2003

  



 


All
in violation of Title 18, United States Code, Section 371.


 


12

















 


COUNTS
TWO - SEVEN

(OFFER OF REMUNERATION TO PHYSICIANS)

(42 U.S.C. § 1320a-7(b)(2)(A))


 


63.                                 Paragraphs 1-62
are realleged and incorporated as if fully set forth herein.


 


64.                                 From on or about March 21,
2003 through January 1, 2005, in the District of Massachusetts and
elsewhere, defendant


 


BIOVAIL
PHARMACEUTICALS, INC.,


 


did
knowingly and willfully cause to be offered remuneration, directly and
indirectly, overtly and covertly, in cash and in kind, to the physicians and
other medical prescribers listed below to induce those prescribing medical
professionals to prescribe Cardizem, L.A. for their patients, including their
Medicaid patients, for which payments for prescriptions beyond the first month
of free drug, would be made in whole and in part under state Medicaid programs,
as follows:


 


	
  Count

  	
   

  	
  Date of Offer

  	
   

  	
  Medical Prescriber

  
	
   

  	
   

  	
  (On or About)

  	
   

  	
   

  
	
  2

  	
   

  	
  May 6, 2003

  	
   

  	
  Medical Prescriber D

  
	
  3

  	
   

  	
  April 9, 2003

  	
   

  	
  Medical Prescriber E

  
	
  4

  	
   

  	
  June 2, 2003

  	
   

  	
  Medical Prescriber G

  
	
  5

  	
   

  	
  April 28, 2003

  	
   

  	
  Medical Prescriber R

  
	
  6

  	
   

  	
  April 29, 2003

  	
   

  	
  Medical Prescriber S

  
	
  7

  	
   

  	
  April 14, 2003

  	
   

  	
  Medical Prescriber W

  



 


All in violation of
Title 42, United States Code, Section 1320a-7b(b)(2)(A).


 


13

















 


	
   

  	
  MICHAEL
  J. SULLIVAN

  
	
   

  	
  UNITED
  STATES ATTORNEY

  
	
   

  	
  DISTRICT
  OF MASSACHUSETTS

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  SARA BLOOM

  
	
   

  	
   

  	
  SARA
  MIRON BLOOM

  
	
   

  	
   

  	
  ASSISTANT
  UNITES STATES ATTORNEY

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  5/16/08

  	
   

  	
   

  
					



 


14

















 


EXHIBIT B


 














 


	
   

  	
  U.S. Department of Justice

  
	
   

  	
   

  
	
   

  	
  United States Attorney

  
	
   

  	
  District of Massachusetts

  
	
   

  	
   

  
	
  Main Reception: (617) 748-3100

  	
  United States Courthouse,
  Suite 9200

  
	
   

  	
  1 Courthouse Way

  
	
   

  	
  Boston, Massachusetts 02210

  



 


April 2,
2008


 


By TELEFAX

202-778-5281


 


Geoffrey Hobart, Esq.

Covington & Burling

1210 Pennsylvania Avenue, NW

Washington, DC 20004-3401


 


Re:          Biovail: Tolling Agreement on Statute of Limitations


 


Dear Mr. Hobart:


 


This letter confirms
and sets forth an agreement between the Office of the United States Attorney
for the District of Massachusetts and your clients, Biovail Corporation,
Biovail Pharmaceuticals, Inc. and ail parents, subsidiaries, successors
and assigns (hereinafter “Biovail”). The terms of the agreement arc as follows:


 


1.             As you are aware, this Office is
presently conducting a joint criminal and civil investigation of your client,
Biovail, and its officers, employees and agents. That conduct includes, without
limitation, allegations that Biovail and certain of its officers, employees and
agents, may have violated various federal criminal statutes, including but not
limited to 18 U.S.C. §371 (conspiracy to defraud the United States), 18 U.S.C.
§ 1341 and 1343 (mail and wire fraud), 342 U.S.C. § 1320(a)-7(b) (criminal
penalties for acts involving the Medicare and State health care programs),
certain civil statutes including but not limited to 31 U.S.C. § 3729 (civil
False Claims Act); and certain administrative statutes such as 42 U.S.C. §
1320a-7 (exclusion) and 42 U.S.C. § 1320a-7a (civil monetary penalties), in
connection with Biovail’s activities in connection with the distribution, sale,
marketing, approval, and promotion of the drug Cardizem, L.A.


 


2.             In the course of our discussions,
this Office has expressed its intention to afford you and your client the
further opportunity to provide information to this Office which you deem
relevant to matters relating to that investigation. In response, you have
advised us that you intend to provide certain information to this Office, and
that you wish such information be considered prior to a prosecution decision
concerning potential criminal charges resulting from that investigation. You
have requested further time to prepare any materials and gather information for
presentation to this Office, and to consider and evaluate further information
as may be provided by this Office. As a result, this Office and your client
have agreed, as more fully set 


 

















 


forth
below, to toll the applicable statutes of limitations for the offenses
described in paragraph one for the time period April 2, 2008 through October 30,
2008 for that conduct described in paragraph one.


 


3.             This Office and your client
Biovail, hereby agree that your client will not at any time interpose a statute
of limitations defense or any constitutional claim based upon pre-indictment
delay to any indictment or count thereof, or to any civil complaint or count
thereof, or to any administrative action, which charges or alleges that your
client committed any federal offense or violation related to the conduct
described in paragraph one, that includes the time period April 2, 2008 to
October 30, 2008 in the calculation of the limitations period. Nothing
herein shall affect, or be construed as any waiver of, any applicable statute
of limitations defenses that Biovail may have with respect to the time period
prior to and including April 1, 2008, and your client expressly reserves
its right to raise any such defense, any provisions of this agreement
notwithstanding, except to the extent that your client has waived certain
statute of limitation defenses in any waiver agreement(s) with other
United States Attorney’s Offices or the Department of Justice, which agreement(s) remain
in effect.


 


4.             Your client, Biovail, enters into
this agreement knowingly and voluntarily. Biovail acknowledges that the statute
of limitations and United States Constitution regarding prejudicial
pre-indictment delay confers benefits on it, and it is not required to waive
those benefits, and that Biovail is doing so after consulting with you because
Biovail believes it is in its best interest to do so. Biovail also acknowledges
its understanding that it may be charged with the foregoing criminal offenses
and civil and administrative violations and/or any other offenses or violations
at any time prior to and including October 30, 2008.  Biovail further acknowledges its
understanding that it may be charged with any offenses or violations not
specifically described above, at any time during the relevant statute of
limitations period.


 


5.             This agreement relates only to the
allegations described in paragraph one above and any charges or claims based on
those allegations. This writing contains the entire agreement between this
Office and your client concerning the statute of limitations with respect to
these matters and can be modified or supplemented only by means of a writing
signed by this Office and your client.


 


If your client is
willing to enter into this agreement on the terms set forth above, Biovail
should indicate the same by signing on the spaces provided below.


 


	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  MICHAEL J. SULLIVAN

  
	
   

  	
  United States Attorney

  
	
   

  	
   

  
	
   

  	
  /s/ SARA BLOOM

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sara Miron Bloom

  
	
   

  	
   

  	
  Sara M. Bloom

  
	
   

  	
   

  	
  Assistant
  U.S. Attorney

  



 


2

















 


	
  /s/
  GEOFFREY HOBART

  	
   

  	
  Dated:
  5/14/08

  
	
  Geoffrey
  Hobart

  	
   

  	
   

  
	
  Covington &
  Burling

  	
   

  	
   

  
	
  Attorney
  for Biovail Corporation and Biovail Pharmaceuticals, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ WILLIAM WELLS

  	
   

  	
  Dated: 5/14/08

  
	
  William
  Wells

  	
   

  	
   

  
	
  Chief
  Executive Officer

  	
   

  	
   

  
	
  Biovail
  Corporation

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/
  WENDY KELLY

  	
   

  	
  Dated:

  
	
  Wendy
  Kelly

  	
   

  	
   

  
	
  Director
  and Authorized Representative

  	
   

  	
   

  
	
  Biovail
  Pharmaceuticals, Inc.

  	
   

  	
   

  



 


3

















 


EXHIBIT
C


 

















 


May 16,
2008


 


UNANIMOUS
WRITTEN CONSENT OF

THE DIRECTORS OF

BIOVAIL PHARMACEUTICALS, INC.


 


THE UNDERSIGNED,
being the sole director of Biovail Pharmaceuticals, Inc., a Delaware
corporation (the “Corporation”), does hereby give her written consent in
accordance with Section 141(f) of the General Corporation Law of the
State of Delaware, in lieu of action in a meeting of the board of directors of
the Corporation, to the adoption of the following resolutions:


 


WHEREAS, the United
States Attorney for the District of Massachusetts has been conducting an
investigation into the Corporation’s conduct alleging that the Corporation
offered remuneration to physicians to recommend the purchase one of the
Corporation’s drug products (the “Investigation”):


 


WHEREAS, the
Corporation’s legal counsel has been negotiating a resolution of the Investigation;
and


 


WHEREAS, the
Corporation’s legal counsel has reported to the board the terms and conditions
of a proposed resolution of the Investigation;


 


NOW, THEREFORE, IT
IS:


 


RESOLVED, that the
Corporation is hereby authorized to enter into the Plea Agreement dated May 16,
2008, between the United States Attorney for the District of Massachusetts and
the Corporation (the “Agreement”);


 


FURTHER RESOLVED,
that Nancy Sell, President & Secretary, is hereby authorized and
directed in the name and on behalf of the Corporation to take all actions and
deliver any agreements, certificates and documents and instruments with respect
to or contemplated by the Agreement and matters set forth above, including,
without limitation, the payment of all amounts, fees, costs and other expenses
necessary or appropriate to effectuate the purpose and intent of the foregoing
resolutions and to effectuate and implement the settlements contemplated
hereby;


 


FURTHER RESOLVED,
that any actions taken by the officers of the Corporation prior to the adoption
of these resolutions that are within the authority conferred hereby are hereby
fully ratified, confirmed and approved as the act and deed of the Corporation;
and


 


FURTHER RESOLVED,
that this Written Consent be filed with the minutes of the Board of Directors
of the Corporation.


 

















 


IN WITNESS WHEREOF, the
undersigned has set her hand as of the day and year first written above.


 


	
   

  	
  /s/ NANCY SELL

  
	
   

  	
  Nancy
  Sell

  



 


2

















 


	
   

  	
  U.S. Department of Justice

  
	
   

  	
   

  
	
   

  	
  Michael J. Sullivan

  
	
   

  	
  United States Attorney

  
	
   

  	
  District of Massachusetts

  
	
   

  	
   

  
	
  Main Reception: (617) 748-3100

  	
  John Joseph Moakley United States
  Courthouse

  
	
   

  	
  1 Courthouse Way

  
	
   

  	
  Suite 9200

  
	
   

  	
  Boston, Massachusetts 02210

  



 


May 16,
2008


 


By Mail and Fax

202-778-5281


 


Geoffrey Hobart, Esq.

Covington & Burling

1210 Pennsylvania Avenue, NW

Washington, DC 20004-3401


 


Re:          Side Letter Agreement with Biovail
Corporation


 


Dear Mr. Hobart:


 


This letter (“Side
Letter Agreement”) will confirm that, in exchange for full performance of the
Plea Agreement entered into by and among the United States Attorney for the
District of Massachusetts (“U.S. Attorney”) and your client, Biovail
Pharmaceuticals Inc. (“BPI”), a copy of which Plea Agreement is attached hereto
as Exhibit One, and in exchange for certain other promises made herein
between and among the U.S. Attorney and your client, Biovail Corporation
(collectively, Biovail Corporation and BPI as “Biovail”), the U.S. Attorney and
Biovail Corporation hereby agree as follows:


 


a.                                       No Criminal
Prosecution of Biovail Corporation


 


The U.S. Attorney
hereby declines prosecution of Biovail Corporation for conduct by or
attributable to Biovail Corporation that:


 


(1)                                  falls within the scope of the Information to which BPI is pleading
guilty;


 


(2)                                  was a subject of the grand jury investigation by the U.S. Attorney in
Massachusetts including allegations that Biovail directly or indirectly offered
or paid remuneration, in the form of payments through a program known as the
PLACE program, to customers including but not limited to physicians to induce
these individuals to recommend, prescribe and/or purchase Biovail’s drug
Cardizem, L.A.;


 


The U.S. Attorney
does not decline criminal prosecution of Biovail Corporation or any of Biovail’s
related entities for any other conduct beyond that set forth above.


 

















 


This Side Letter
Agreement is not intended to and does not affect the criminal liability of any
individual.


 


It is understood
among the parties to this Side Letter Agreement that the U.S. Attorney’s
promise not to prosecute Biovail Corporation is dependent upon and subject to (a) BPI’s
Fulfilling its material obligations in the Plea Agreement, (b) BPI and
Biovail Corporation entering into a Civil Settlement Agreement acceptable to the
Department of Justice prior to July 31, 2008, and (e) Biovail
Corporation entering into a Corporate Integrity Agreement acceptable to the
Office of Inspector General of the United States Department of Health and Human
Services by no later than September 30, 2008. If any of these conditions
are not met, Biovail Corporation agrees to waive any defenses regarding
pre-indictment delay, statute of limitations, or Speedy Trial Act with respect
to any and all criminal charges that could have been timely brought or pursued
as of April 1, 2008.


 


b.                                      Cooperation of
Biovail Corporation


 


Biovail shall
cooperate completely and truthfully in any trial or other proceeding arising
out of any ongoing federal grand jury investigation of its current and former
officers, agents, and employees. Biovail shall make reasonable efforts to
facilitate access to, and to encourage the cooperation of, its current and
former officers, agents, and employees for interviews sought by law enforcement
agents, upon request and reasonable notice. Biovail shall also take reasonable
measures to encourage its current and former officers, agents, and employees to
testify truthfully and completely before any grand jury, and at any trial or
other hearing, at which they are requested to do so by any government entity.


 


In addition, Biovail
shall furnish to law enforcement agents, upon request, all documents and
records in its possession, custody or control relating to the conduct that is
within the scope of any ongoing grand jury investigation, trial or other
criminal proceeding in the District of Massachusetts, and that are not covered
by the attorney-client privilege or work product doctrine.


 


Provided, however,
notwithstanding any provision of this Agreement, that: (1) Biovail is not
required to request of its current or former officers, agents, or employees
that they forego seeking the advice of an attorney nor that they act contrary
to that advice; (2) Biovail is not required to take any action against its
officers, agents, or employees for following their attorney’s advice; and (3) Biovail
is not required to waive any privilege or claim of work product protection
except to the extent set forth in the succeeding paragraph.


 


Biovail specifically
agrees to continue to waive and/or waive any attorney-client privilege and/or
work product protections regarding the legality of the PLACE program and/or the
decision to enter into, implement and/or continue the PLACE program as to any
such advice or communications.


 


Biovail Corporation
acknowledges that BPI expressly and unequivocally admits that it knowingly,
intentionally and willfully committed the crime charged in the Information and
is in fact guilty of that offense. Biovail Corporation agrees that it will not
make statements inconsistent with this explicit admission of guilt by BPI to
the crime charged in the Information.


 


2

















 


c.                                       Who Is Bound By
Agreement


 


This Agreement is
limited to the U.S. Attorney for the District of Massachusetts, and cannot and
does not bind the Attorney General of the United States or any other federal,
state or local prosecutive authorities.


 


d.                                      Complete
Agreement


 


This Side Letter
Agreement and the Plea Agreement with BPI and its attachments are the complete
and only agreements between the parties. No promises, agreements or conditions
have been entered into other than those set forth or referred to in the
above-identified documents. This agreement supersedes prior understandings, if
any, of the parties, whether written or oral. This agreement cannot be modified
other than in a written memorandum signed by the parties or on the record in
court.


 


If this letter accurately
reflects the agreement entered into between the U.S. Attorney and Biovail
Corporation and its Board of Directors has authorized you to enter into this
agreement, please sign below and return the original of this letter to
Assistant U.S. Attorney Sara Miron Bloom.


 


	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
  MICHAEL J. SULLIVAN

  
	
   

  	
  United States Attorney

  
	
   

  	
   

  
	
   

  	
  /s/ DIANE C. FRENIERE

  
	
   

  	
  DIANE FRENIERE, Chief

  
	
   

  	
  White Collar Section

  
	
   

  	
  District of Massachusetts

  
	
   

  	
   

  
	
   

  	
  /s/ SARA BLOOM

  
	
   

  	
  SARA MIRON BLOOM

  
	
   

  	
  Assistant U.S. Attorney

  
	
   

  	
  District of Massachusetts

  



 


3

















 


NON-PROSECUTION
AGREEMENT WITH BIOVAIL CORP.


 


ACKNOWLEDGMENT
OF AGREEMENT


 


The Board of
Directors of Biovail Corp. has been generally advised of the Plea Agreement
with Biovail Pharmaceuticals, Inc., and the criminal Information charging
Biovail Pharmaceuticals, Inc. and has discussed this matter with
counsel.  I acknowledge that this Side
Letter Agreement accurately reflects the agreement entered into between the
United States Attorney’s Office for the District or Massachusetts and Biovail
Corp., and I am duly authorized to enter into this agreement on behalf of
Biovail Corp.  Biovail Corp. expects to
enter into a civil settlement agreement with the United States Attorney’s
Office for the District of Massachusetts, the Department of Justice and the
Department of Health and Human Services, Office of Inspector General.  I further acknowledge that no additional
promises or representations have been made to Biovail Corp. by the United
States Attorney’s Office for the District of Massachusetts in connection with
the disposition of this matter other than as set forth in this Side Letter
Agreement.


 


	
   

  	
  /s/ WENDY KELLEY

  	
   

  
	
   

  	
  Wendy Kelley

  
	
   

  	
  Senior Vice President, General Counsel and Corporate
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  Dated:

  	
  5/16/08

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ GEOFFREY E. HOBART

  
	
   

  	
  Geoffrey E. Hobart

  
	
   

  	
  Covington & Burling LLP

  
	
   

  	
  Counsel for Biovail Corp.

  
	
   

  	
   

  	
   

  
	
   

  	
  Dated:

  	
  5/16/08