Document:

exv10w112

 

Exhibit
10.112

CIVIL, SETTLEMENT AGREEMENT 

I. PARTIES 

     This Settlement Agreement (“Agreement”) is entered into by and between the United States of
America, acting through the United States Department of Justice and the United States Attorney’s
Office for the Northern District of California, on behalf of the Office of Inspector General
(“OIG-HHS”) of the United States Department of Health and Human Services (“HHS”); the United States
Office of Personnel Management (“OPM”); the United States Department of Defense TRICARE Management
Activity (“TMA”); the United States Department of Defense, Defense Logistics Agency (“DLA”), on
behalf of the Defense Supply Center- Philadelphia (“DSCP”) (collectively “the United States”);
InterMune, Inc. (“InterMune”), a Delaware corporation with its principal place of business in
Brisbane, California; and Joan Gallagher (“Relator”) (hereafter referred to as “the Parties”),
through their authorized representatives.

II. PREAMBLE 

     As a preamble to this Agreement, the Parties agree to the following:

	 	A.	 	WHEREAS, at all relevant times, InterMune distributed, marketed and sold
pharmaceutical products in the United States, including a drug it sold under the trade
name Actimmune®;
	 
	 	B.	 	WHEREAS, on or about July 9, 2004, Relator Joan Gallagher filed a qui tam
action in the United States District Court for the Eastern District of Pennsylvania,
captioned United States of America ex rel. Joan Gallagher v. InterMune, Inc.,
Civil Action No. 04 CV 3249 (E.D. Pa.). On October 7, 2004, the qui tam action was
transferred to the United States District Court for the Northern District of California
(“Court”), now captioned United States of America ex rel. Joan Gallagher v.
InterMune, Inc., C 04-4323 MHP (N.D. Cal.)(the “Civil Action”);

 

 

	 	C.	 	WHEREAS InterMune has agreed to enter into a Deferred Prosecution Agreement
(“DPA”) with the United States Attorney for the Northern District of California. The
United States has filed an Information in the United States District Court for the
Northern District of California (the “Court”) charging InterMune with One Count of
doing an act, with intent to defraud or mislead, with respect to a drug while the drug
was held for sale after shipment in interstate commerce that results in the drug being
misbranded, in violation of Title 2 1, United States Code, Section 33 1(k) (the
“Information”);
	 
	 	D.	 	WHEREAS, the United States and InterMune will file with the Court the DPA,
which states that the Department of Justice will recommend to the Court that
prosecution of InterMune for the conduct charged in the Information be deferred for a
period of 2 years from the date the Court approves the DPA and that the Department of
Justice will seek dismissal with release of the Information thereafter if InterMune is
in compliance with all of its obligations under the DPA;
	 
	 	E.	 	WHEREAS, InterMune has entered into or will be entering into separate
settlement agreements (“Medicaid State Settlement Agreements”) with the states which
will be receiving settlement funds from InterMune pursuant to Paragraph 1(c) below for
the Covered Conduct described in Paragraph G below (hereinafter referred to as the
“Medicaid Participating States”);
	 
	 	F.	 	WHEREAS, the United States and the Medicaid Participating States allege that
InterMune caused to be submitted claims for payment for Actimmune to Medicaid Programs,
established pursuant to or in connection with Title XIX of the Social Security Act
(“Act”), 42 U.S.C. §§ 1396-1396y (the “Medicaid

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	 	 	 	Program”); and the United States further alleges that InterMune caused to be
submitted claims for payment of Actimmune to the Medicare Program, 42 U.S.C. §§
1395-1395hhh, TRICARE Program (formerly known as the Civilian Health and Medical
Program of the Uniformed Services (“CHAMPUS”)), 10 U.S.C. §§ l071-1110, which is
administered by the Department of Defense through TMA, and to the Federal Employees
Health Benefits Program (“FEHBP”), 5 U.S.C. §§ 8901-8914, and that InterMune caused
purchases of Actimmune by the Department of Veterans Affairs (“DVA”) and DSCP;
	 
	 	G.	 	WHEREAS, the United States contends that it has claims under the False Claims
Act, 31 U.S.C. §§ 3729-3733, and that it and the Medicaid Participating States
(hereinafter collectively referred to as the “Government”) have certain other civil
claims against InterMune for allegedly engaging in the following conduct with respect
to the marketing, promotion and sale of Actimmune:

          (i) The Government contends that between January 1, 2001 and June 30, 2003, InterMune
knowingly and willfully promoted the sale and use of Actimmune for the treatment of idiopathic
pulmonary fibrosis (“IPF”), a use for which Actimmune had not been approved by the United States
Food and Drug Administration (“FDA”), and knowingly caused the submission of claims to the
Government as described in subparagraph (v) below. Actimmune has only been approved by the FDA to
treat two rare diseases, chronic granulomatous disease and severe, malignant osteopetrosis;

          (ii) The Government contends that notwithstanding the fact that InterMune’s Phase 111 clinical
trial of Actimmune for the treatment of IPF failed to establish statistically significant benefits
on its primary endpoint or any of its secondary endpoints, including overall

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survival, certain former InterMune employees encouraged InterMune sales force personnel to
inform physicians that Actimmune demonstrated a survival benefit in mild to moderate IPF patient
populations, and certain former sales force personnel did so;

          (iii) The Government contends that InterMune’s promotion of Actimmune for IPF violated the
Food, Drug, and Cosmetic Act, 21 U.S.C. §§ 331(a) & (d);

          (iv) The Government contends that the use of Actimmune for IPF was not a “medically accepted
indication” pursuant to 42 U.S.C. § 1396r-8(k)(6);

          (v) The Government further contends that the conduct described in the foregoing subparagraphs
(i) through (iv) resulted in claims for Actimmune being submitted to the Medicaid, Medicare, FEHBP
and TRICARE Programs, and in DVA and DSCP purchasing Actimmune for dispensing to patients for an
unapproved indication, between January 1, 2001 and June 30, 2005, in violation of the False Claims
Act, 31 U.S.C. §§ 3729-3733.

     InterMune’s conduct as described in the Civil Action, the DPA and in Preamble Paragraph G of
this Agreement is hereafter referred to as the “Covered Conduct.”

	 	H.	 	WHEREAS, the United States also contends that it has certain administrative
claims against InterMune for engaging in the Covered Conduct, as specified in
Paragraphs 5-8 below;
	 
	 	I.	 	WHEREAS, the United States and the Relator have reached an agreement with
respect to the Relator’s claim of entitlement under 31 U.S.C. § 3730(d) to a share of
the proceeds of this Agreement;
	 
	 	J.	 	WHEREAS, the Relator and InterMune have reached an agreement with respect to
the Relator’s claim of entitlement under 31 U.S.C. § 3730(d) to attorneys’ fees and
costs;

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	 	K.	 	WHEREAS, this Agreement is neither an admission of facts or liability by
InterMune (with the exception of such admissions as InterMune makes in connection with
the DPA referenced in Paragraph C above and accepted by the Court) nor a concession by
the Government that its claims are not well founded; and
	 
	 	L.	 	WHEREAS, to avoid the delay, expense, inconvenience and uncertainty of
protracted litigation of these claims, the Parties mutually desire to reach a full and
final settlement as set forth in this Agreement.

III. TERMS AND CONDITIONS 

     NOW, THEREFORE, in reliance on the representations contained herein and in consideration of
the mutual promises, covenants, and obligations in this Agreement, and for good and valuable
consideration, receipt of which is hereby acknowledged, the Parties agree as follows:

     1. InterMune shall pay to the United States and the Medicaid Participating States,
collectively, the sum of thirty-six million, nine hundred forty-four thousand, forty-three dollars
($36,944,043), plus any interest that may have accrued between November 1, 2006 and the Effective
Date of this Agreement at a rate of 5% per annum (“Settlement Amount”). On the Effective Date of
this Agreement, as defined in paragraph 32 herein, this sum shall constitute a debt due and
immediately owing to the United States and the Participating States. InterMune shall discharge its
debt to the United States and the Medicaid Participating States under the following terns and
conditions:

          a. InterMune shall pay to the United States the principal sum of $30,249,229 (the “Federal
Settlement Amount”). InterMune shall pay the Federal Settlement Amount, plus

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interest accrued thereon at the rate of 5% per annum, in accordance with the payment schedule
attached hereto as Exhibit A (“Payment Schedule”). Within 10 days after the Effective Date of this
Agreement, InterMune shall pay the United States the initial fixed payment in the amount of
$4,093,925 (“Initial Payment”), plus any interest that may have accrued between November 1, 2006
and the Effective Date, and thereafter make principal payments with interest according to the
schedule in Exhibit A.

          b. All payments set forth in this Paragraph l(a) shall be made to the United States by
electronic funds transfer pursuant to written instructions provided by the Office of the United
States Attorney for the Northern District of California. The entire principal balance of the
Federal Settlement Amount or any portion thereof, plus any interest accrued on the principal as of
the date of any prepayment, may be prepaid without penalty.

          c. InterMune shall pay to the Medicaid Participating States the sum of $6,694,814 (“Medicaid
State Settlement Amount”). InterMune shall pay the Medicaid State Settlement Amount, plus interest
accrued thereon at the rate of 5% per annum, in accordance with the Payment Schedule found at
Exhibit A. Within 10 days after the Effective Date of this Agreement, InterMune shall set aside
$906,075, plus any interest that may have accrued between November 1, 2006 and the Effective Date,
into an interest-bearing account of its own choosing (“deposit account”) as agreed upon between
InterMune and the National Association of Medicaid Fraud Control Units Settlement Team (the “NAMFCU
Team”) and, upon reaching agreements with, and obtaining release from each of the Medicaid
Participating States and receipt of written payment instructions from the NAMFCU Team, shall pay
the State Settlement Amount plus any additional interest earned in the deposit account as directed
by each settling Medicaid Participating State. Upon reaching final agreements with, and obtaining
release from

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the Medicaid Participating States, InterMune shall thereafter make fixed pro rata payments
according to the schedule in Exhibit A and as directed by each settling Medicaid Participating
State. The entire principal balance of the Medicaid State Settlement Amount or any portion
thereof, plus any interest accrued on the principal as of the date of any prepayment, may be
prepaid without penalty.

          d. InterMune shall pay attorneys’ fees to the Relator in the amount of $40,000. This amount
shall be paid as an electronic funds transfer to the Relator’s attorney (to be allocated in
accordance with their instructions) no later than seven (7) business days after the stipulations of
dismissal are filed as set forth in Paragraph 13.

     2. If the Court does not accept the DPA as described in Preamble Paragraph D or refuses to
impose the agreed upon disposition for whatever reason, this Agreement shall be null and void at
the option of either the United States or InterMune. If either the United States or InterMune
exercises this option, which option shall be exercised by notifying all Parties, through counsel,
in writing within ten (10) business days of the Court’s decision, the Parties will not object to
the voiding of this Agreement and the Agreement will be deemed rescinded. If this Agreement is
rescinded, InterMune will not plead, argue or otherwise raise any defenses under the theories of
statute of limitations, laches, estoppel or similar theories, to any such civil or administrative
claims, actions or proceedings relating to the Covered Conduct which are brought by the United
States within 90 calendar days of notification to all other Parties of that rescission, except to
the extent such defenses were available before the Effective Date of this Agreement.

     3. Subject to the exceptions in Paragraphs 4, 5, 6, 7 and 8, in consideration of the
obligations of InterMune set forth in this Agreement, conditioned upon InterMune’s payment in full
of the Settlement Amount, subject to Paragraph 20 below (concerning bankruptcy

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proceedings commenced within 91 days of the Effective Date of this Agreement, as defined
below), and subject to the Court’s approval of the DPA described in Preamble Paragraph D, the
United States, on behalf of itself, and its officers, agents, agencies, and departments, as set
forth above, hereby fully and finally releases InterMune, its predecessors, subsidiaries, corporate
parents and affiliates, successors and assigns, and current or former officers, directors, and
employees, except as excluded in Paragraph 4, below, from any civil or administrative monetary
claim that the United States has against InterMune under the False Claims Act, 3 1 U.S.C. §§
3729-3733; the Program Fraud Civil Remedies Act, 31 U.S.C. §§ 3801-38 12; the Civil Monetary
Penalties Law, 42 U.S.C. § 1320a-7a; any statutory provision applicable to the federally-funded
programs in this Agreement for which the Civil Division, United States Department of Justice, has
actual and present authority to assert and compromise pursuant to 28 C.F.R. Part 0, Subpart I, §
0.45(d); and common law claims for fraud, payment by mistake, unjust enrichment or disgorgement for
the Covered Conduct.

     4. Notwithstanding any term of this Agreement, the United States specifically does not herein
release any person or entity from any of the following claims or liabilities: (a) any potential
criminal, civil or administrative claims arising under Title 26, U.S. Code (Internal Revenue Code);
(b) any criminal liability; (c) any potential liability to the United States (or any agencies
thereof) for any conduct other than the Covered Conduct; (d) any claims based upon obligations
created by this Agreement; (e) except as explicitly stated in Paragraphs 5, 6, 7 and 8 of this
Agreement, any administrative liability, including mandatory exclusion from Federal health care
programs; (f) any express or implied warranty claims or other claims for defective or deficient
products and services; (g) any claims for personal injury or property damage or for other
consequential damages arising from the Covered Conduct; (h) any claim based on a failure

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to deliver items or services due; or (i) any civil or administrative claims against
individuals, including current and former directors, officers, and employees of InterMune, its
predecessors, subsidiaries, and its corporate parent and affiliates, who, related to the Covered
Conduct, receive written notification that they are the target of a criminal investigation, are
criminally indicted or charged, or are convicted, or who enter into a criminal plea agreement.

     5. In consideration of the obligations of InterMune set forth in this Agreement and in the
Corporate Integrity Agreement (“CIA”), conditioned upon InterMune’s payment in full of the
Settlement Amount, and subject to Paragraph 20 below (concerning bankruptcy proceedings commenced
within 91 days of the effective date of this Agreement), the OIG-HHS agrees to release and refrain
from instituting, directing, or maintaining any administrative action seeking exclusion against
InterMune from Medicare, Medicaid or other Federal health care programs (as defined in 42 U.S.C. §
1320a-7b(f)) under 42 U.S.C. § 1320a-7a (Civil Monetary Penalties Law), or 42 U.S.C. §§
1320a-7(b)(7) (permissive exclusion for fraud, kickbacks, and other prohibited activities), for the
Covered Conduct except as reserved in Paragraph 4 above, and as reserved in this Paragraph. The
OIG-HHS expressly reserves all rights to comply with any statutory obligations to exclude InterMune
from the Medicare, Medicaid, or other Federal health care programs under 42 U.S.C. § 1320a-7(a)
(mandatory exclusion) based upon the Covered Conduct. Nothing in this Paragraph precludes the
OIG-HHS from taking action against entities or persons, or for conduct and practices, for which
claims have been reserved in Paragraph 4, above. InterMune will immediately begin implementing its
obligations under the CIA upon execution of this Agreement.

     6. In consideration of the obligations of InterMune set forth in this Agreement, conditioned
upon InterMune’s full payment of the Settlement Amount, and subject to Paragraph

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20 below (concerning bankruptcy proceedings commenced within 91 days of the effective date of
this Agreement or any payment under this Agreement), TMA agrees to release and refrain from
instituting, directing, or maintaining any administrative action seeking exclusion or suspension
from the TRICARE Program against InterMune and its predecessors, subsidiaries, corporate parents,
affiliates, successors and assigns, or its current directors, officers or employees under 32 C.F.R.
§ 199.9 for the Covered Conduct, except as reserved in Paragraph 4 above, and as reserved in this
Paragraph. TMA expressly reserves its authority to exclude InterMune under 32 C.F.R. § 199.9
(f)(l)(i)(A), (f)(l)(i)(B), and (f)(l)(iii), based upon the Covered Conduct. Nothing in this
Paragraph precludes TMA or the TRICARE Program from taking action against entities or persons, or
for conduct and practices, for which claims have been reserved in Paragraph 4, above.

     7. In consideration of the obligations of InterMune in this Agreement, conditioned upon
InterMune’s full payment of the Settlement Amount, and subject to Paragraph 20 below (concerning
bankruptcy proceedings commenced within 91 days of the Effective Date of this Agreement or any
payment under this Agreement), OPM agrees to release and refrain from instituting, directing, or
maintaining any administrative action seeking debarment from FEHBP against InterMune and its
predecessors, subsidiaries, corporate parents, affiliates, successors and assigns, or its current
directors, officers or employees under 5 U.S.C. § 8902a or 5 C.F.R. Part 970 for the Covered
Conduct, except as reserved in Paragraph 4, above. OPM expressly reserves all rights to comply
with any statutory obligations to debar InterMune from the FEHBP under 5 U.S.C. § 8902a(b)
(mandatory debarment) based upon the Covered Conduct. Nothing in this Paragraph precludes OPM from
taking action against entities or persons, or for conduct and practices, for which claims have been
reserved in Paragraph 4, above.

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     8. In consideration of the obligations of InterMune set forth in this Agreement, conditioned
upon InterMune’s full payment of the Settlement Amount, and subject to Paragraph 20 below
(concerning bankruptcy proceedings commenced within 91 days of the effective date of this Agreement
or any payment under this Agreement), DSCP/DLA agrees to defer to the OIG-HHS for any contractor
integrity issues arising from this settlement and the Covered Conduct. Nothing in this Paragraph
precludes DLA from taking action against entities or persons, or for conduct and practices, for
which claims have been reserved in Paragraph 4, above.

     9. Relator and her heirs, successors, attorneys, agents, and assigns agree not to object to
this Agreement and agree and confirm that settlement of this Civil Action, and the payment schedule
set forth in Exhibit A, is fair, adequate and reasonable under all the circumstances, agree not to
challenge this Agreement pursuant to 31 U.S.C. § 3730(c)(2)(B), and expressly waive the opportunity
for a hearing on any objection to this Agreement pursuant to 31 U.S.C. § 3730(c)(2)(B).

     10. Upon her receipt of the pro rata share of the Initial Payment, the Relator, individually,
and for her heirs, successors, agents and assigns, fully and finally releases, waives, and forever
discharges the United States, its agencies (including, but not limited to, the OIG-HHS, TMA, OPM,
DVA, and DLA), employees, servants, and agents from any claims arising from or relating to 31
U.S.C. § 3730 from any claims arising from the filing of the qui tam civil action, and from any
other claims for a share of the Federal Settlement Amount, and in full settlement of any claims
Relator may have under this Agreement. This Agreement does not resolve or in any manner affect any
claims the United States has or may have against the Relator

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arising under Title 26, U.S. Code (Internal Revenue Code), or any claims arising under this
Agreement.

     11. The United States agrees to pay the Relator $5,748,160 as her share of the proceeds
pursuant to 31 U.S.C. § 3730(d)(the “Relator’s Share”). The United States will pay the Relator her
pro rata share of each payment that InterMune pays the United States under the Payment Schedule set
forth in Exhibit A. The United States will pay the Relator her pro rata share within 21 days of
the United States’ receipt of each payment from InterMune. The Relator expressly understands and
agrees that the United States is only liable to the Relator for funds actually received or
collected by the United States.

     12. Conditioned upon InterMune’s full payment of the Settlement Amount, the Relator,
individually, and for her heirs, successors, agents and assigns, fully and finally releases,
waives, and forever discharges InterMune, its predecessors, subsidiaries, corporate parents and
affiliates, successors and assigns, and current or former officers, directors, and employees, from
any claims that the Relator has or may have that arises under or relates to any of the allegations
in the Civil Action and/or the Covered Conduct, including claims for attorney’s fees, expense and
costs pursuant to 31 U.S.C. § 3730(d). The Relator hereby represents and warrants that no other
individual is entitled to assert any matter released in this paragraph in or through the Relator’s
right.

     13. Upon execution of this Agreement by all parties, the United States will file a notice of
intervention in the qui tam action and advise the Court that the parties have reached a civil
settlement. Upon receipt of the full payments described in Paragraph l(a) and (c) above and in
Exhibit A, the United States and Relator shall promptly sign and file in the Civil Action a

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Joint Stipulation of Dismissal with prejudice of the Civil Action pursuant to the terms of the
Agreement.

     14. In consideration of the obligations of the United States set forth in this Agreement,
InterMune and its predecessors, subsidiaries, corporate parents and affiliates fully and finally
release the United States, its agencies (including, but not limited to, HHS, TMA, OPM and DVA),
employees, servants, and agents from any claims (including attorneys’ fees, costs, and expenses of
every kind and however denominated) which they have asserted, could have asserted, or may assert in
the future against the United States, its agencies, employees, servants, and agents, related to or
arising from the United States’ criminal and civil investigations of the Civil Action and the
Covered Conduct.

     15. In consideration of the obligations of the Relator set forth in this Agreement, InterMune,
and its predecessors, subsidiaries, corporate parents and affiliates, and all of their agents,
successors and assigns, hereby fully and finally release the Relator and her respective heirs,
successors, assigns, agents and attorneys from any claims they have asserted, could have asserted,
or may assert in the future against the Relator arising from the filing of the Civil Action and the
United States’ criminal and civil investigations of the Civil Action and the Covered Conduct.

     16. The Settlement Amount shall not be decreased as a result of the denial of claims for
payment now being withheld from payment by any Federal or State payer, related to the Covered
Conduct; and InterMune shall not resubmit to any Federal or State payer any previously denied
claims related to the Covered Conduct, and shall not appeal any such denials of claims.

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     17. InterMune agrees to the following:

          a. Unallowable Costs Defined: that all costs (as defined in the Federal Acquisition
Regulations (FAR) 48 C.F.R. § 31.205-47 and in Titles XVIII and XIX of the Social Security Act, 42
U.S.C. §§ 1395-1395hhh and 1396-1396y, and the regulations and official program directives
promulgated thereunder) incurred by or on behalf on InterMune, its present or former officers,
directors, employees, shareholders, and agents in connection with: (1) the matters covered by this
Agreement and the related DPA; (2) the United States’ civil and criminal investigation of the
matters covered by this Agreement; (3) InterMune’s investigation, defense, and any corrective
actions undertaken in direct response to the United States’ civil and criminal investigations in
connection with the matters covered by this Agreement (including attorneys’ fees); (4) the
negotiation and performance of this Agreement, the DPA, and the Medicaid State Settlement
Agreement, (5) the payments made to the United States or any State pursuant to this Agreement, the
DPA, or the Medicaid State Settlement Agreement and any payments that InterMune may make to
Relator; (6) the negotiation of, and the obligations undertaken pursuant to the CIA, including to
(i) retain an independent review organization to perform annual reviews as described in Section
III.D of the CIA; and (ii) prepare and submit reports to the OIG-HHS, are unallowable costs on
Government contracts with DVA, DLA and other agencies and under the Medicare Program, Medicaid
Program, TRICARE Program, and FEHBP. However, nothing in this Paragraph affects the status of
costs that are not allowable based on any other authority applicable to InterMune. (All costs
described or set forth in this Paragraph 17(a) are hereafter, “unallowable costs”).

          b. Future Treatment of Unallowable Costs: If applicable, these unallowable costs will
be separately estimated and accounted for by InterMune, and it will not charge such

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unallowable costs directly or indirectly to any contracts with the United States or any State
Medicaid Program, or seek payment for such unallowable costs through any cost report, cost
statement, information statement, or payment request submitted by them or any of their subsidiaries
to Medicare, Medicaid, TRICARE, FEHBP, DLA or DVA.

          c. Treatment of Unallowable Costs Previously Submitted for Payment: If applicable,
InterMune further agrees that within 90 days of the Effective Date of this Agreement, it will
identify to applicable Medicare and TRICARE fiscal intermediaries, carriers, and/or contractors,
and Medicaid, DLA, DVA, and FEHBP fiscal agents, any unallowable costs (as defined in this
Paragraph) included in payments previously sought from the United States, or any State Medicaid
Program, including, but not limited to, payments sought in any cost reports, cost statements,
information reports, or payment requests already submitted by InterMune or any of its subsidiaries,
and will request, and agree, that such cost reports, cost statements, information reports, or
payment requests, even if already settled, be adjusted to account for the effect of the inclusion
of the unallowable costs. InterMune agrees that the United States, at a minimum, will be entitled
to recoup from InterMune any overpayment plus applicable interest as a result of the inclusion of
such unallowable costs on previously-submitted cost reports, information reports, cost statements,
or requests for payment. Any payment due after the adjustments have been made shall be paid to the
United States pursuant to the direction of the Department of Justice, and/or the affected agencies.
The United States reserves its rights to disagree with any calculations submitted by InterMune or
any of its subsidiaries on the effect of inclusion of unallowable costs (as defined in this
Paragraph) on InterMune’s or any of its subsidiaries’ cost reports, cost statements, or information
reports. Nothing in this Agreement shall constitute a

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waiver of the rights of the United States to examine or reexamine the unallowable costs
described in this Paragraph.

     18. InterMune agrees that it will not seek payment for any of the health care billings covered
by this Agreement from any health care beneficiaries or their parents or sponsors. InterMune
waives any causes of action against these beneficiaries or their parents or sponsors based upon the
claims for payment covered by this Agreement.

     19. InterMune expressly warrants that it has reviewed its financial situation and that it is
currently solvent within the meaning of 11 U.S.C. §§ 547(b)(3) and 548(a)(l)(B)(ii)(I), and expects
to remain solvent following the payments to the United States hereunder. Further, the Parties
expressly warrant that, in evaluating whether to execute this Agreement, the Parties (a) have
intended that the mutual promises, covenants and obligations set forth herein constitute a
contemporaneous exchange for new value given to InterMune, within the meaning of 11 U.S.C. §
547(c)(l), and (b) have concluded that these mutual promises, covenants and obligations do, in
fact, constitute such a contemporaneous exchange.

     20. In the event InterMune or any other party commences, within 91 days of the Effective Date
of this Agreement (defined below), or of any payment made hereunder, any case, proceeding, or other
action under any law relating to bankruptcy, insolvency, reorganization or relief of debtors, (a)
seeking to have any order for relief of InterMune’s debts, or seeking to adjudicate InterMune as
bankrupt or insolvent, or (b) seeking appointment of a receiver, trustee, custodian or other
similar official for InterMune for all or any substantial part of its assets, InterMune agrees as
follows:

          a. InterMune’s obligations under this Agreement may not be avoided pursuant to 11 U.S.C. § 547
or 548, and InterMune will not argue or otherwise take the position

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in any such case, proceeding or action that: (i) InterMune’s obligations under this Agreement
may be avoided under 11 U.S.C. § 547 or 548; (ii) InterMune was insolvent at the time this
Agreement was entered into, or became insolvent as a result of the payment made to the United
States hereunder; or (iii) the mutual promises, covenants and obligations set forth in this
Agreement do not constitute a contemporaneous exchange for new value given to InterMune;

          b. In the event that InterMune’s obligations hereunder are avoided for any reason, including,
but not limited to, the exercise of a trustee’s avoidance powers under the Bankruptcy Code, the
United States, at its sole option, may rescind the releases in this Agreement, and bring any civil
and/or administrative claim, action or proceeding against InterMune for the claims that would
otherwise be covered by the releases provided in this Agreement. If the United States chooses to
do so, InterMune agrees that, for purposes only of any case, action, or proceeding referenced in
the first clause of this Paragraph, (i) any such claims, actions or proceedings brought by the
United States (including any proceedings to exclude InterMune from participation in Medicare,
Medicaid, or other Federal Health Care programs) are not subject to an “automatic stay” pursuant to
11 U.S.C. Section 362(a) as a result of the action, case or proceeding described in the first
clause of this Paragraph, and that InterMune will not argue or otherwise contend that the United
States’ claims, actions or proceedings are subject to an automatic stay; (ii) that InterMune will
not plead, argue or otherwise raise any defenses under the theories of statute of limitations,
laches, estoppel or similar theories, to any such civil or administrative claims, actions or
proceedings which are brought by the United States within 30 calendar days of written notification
to InterMune that the releases herein have been rescinded pursuant to this Paragraph, except to the
extent such defenses were available before the Effective Data of this Agreement; and (iii) the
United States

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and the Participating States have valid claims against InterMune in at least the aggregate
amount of the Settlement Amount and they may pursue their claims, inter alia, in the case, action
or proceeding referenced in the first clause of this Paragraph, as well as in any other case,
action, or proceeding; and

          c. InterMune acknowledges that its agreement in this Paragraph is provided in exchange for
valuable consideration provided in this Agreement.

     21. In the event that InterMune fails to pay any and all of the payments owed pursuant to this
Agreement within 30 calendar days of the due date (“Default”), any dismissals as to InterMune
shall, at the United States’ option, be null and void, and the Settlement Amount referenced in
Paragraph 1 above, less any payments already made, shall become immediately due and payable and
shall bear interest at the Medicare interest rate (per 42 C.F.R. part 405.378) as of the date of
Default until payment of the Settlement Amount is made in full.

     Furthermore, in the event of a breach of the payment provisions as described in the preceding
paragraph, the United States may at its option: 1) rescind its releases; 2) offset the remaining
unpaid balance of the Settlement Amount from any amounts due and owing to InterMune by any
department, agency, or agent of the United States at the time of Default; 3) reinstitute an action
or actions against InterMune in this Court; and 4) InterMune agrees not to contest any draw,
offset, or collection action undertaken by the United States pursuant to this Paragraph, either
administratively or in any court.

     In the event of a Default of any payment under this Agreement, InterMune agrees to pay the
United States all reasonable costs of collection and enforcement of this Agreement, including
attorneys’ fees and expenses. In the event the United States reinstitutes an action under this
Paragraph, InterMune expressly agrees not to plead, argue, or otherwise raise any defense under

-18-

 

the theories of statute of limitations, laches, estoppel, or similar theories, to any civil or
administrative claims, which: (a) are filed by the United States within 30 calendar days of written
notification to InterMune that this Agreement has been made a nullity, and (b) relates to the
Covered Conduct, except to the extent these defenses were available on September 4, 2006.

     22. In the event of Default as defined in Paragraph 21 above, OIG-HHS may exclude InterMune
from participating in all Federal health care programs until InterMune pays the Settlement Amount
and reasonable costs as set forth in Paragraphs 1 and 21 above. OIG- HHS will provide written
notice of any such exclusion to InterMune. InterMune waives any further notice of the exclusion
under 42 U.S.C. § 1320a-7(b)(7), and agrees not to contest such exclusion either administratively
or in any state or federal court. Reinstatement to program participation is not automatic. If at
the end of the period of exclusion InterMune wishes to apply for reinstatement, InterMune must
submit a written request for reinstatement to the OIG in accordance with the provisions of 42
C.F.R. §§ 1001.3001-.3005. InterMune will not be reinstated unless and until the OIG approves such
request for reinstatement.

     23. InterMune has provided financial statements to the United States and the United States has
relied on the accuracy and completeness of these financial statements in reaching this Agreement.
If the United States learns that the historical financial statements contained in InterMune SEC
filings made between May 2005, and the Effective Date, either (a) failed to disclose a material
non-contingent asset or assets in which InterMune had an interest (a “Material Nondisclosure”); or
(b) contained any other knowing, material misrepresentation or omission regarding the financial
condition of InterMune (a “Knowing Material Misrepresentation”), the United States may at its
option pursue relief under this Paragraph 23 as follows: (a) the United States shall provide
InterMune with written notice of the nature of the Material Nondisclosure or

-19-

 

Knowing Material Misrepresentation; (b) within ten (10) calendar days of the date of the
written notice, InterMune shall provide the United States, in writing, with any explanation it may
have regarding the Material Nondisclosure or Knowing Material Misrepresentation referenced in the
written notice; (c) if unsatisfied with InterMune’s explanation, as determined in its sole and
absolute discretion, the United States may file an action seeking relief under this Paragraph 23 in
which action the United States shall bear the burden of establishing by a preponderance of the
evidence the Material Nondisclosure or Knowing Material Misrepresentation; (d) if the court finds a
Material Nondisclosure or Knowing Material Misrepresentation, then - (i) the Settlement
Amount shall be increased by one hundred percent (100%) of the amount of the Material Nondisclosure
or Knowing Material Misrepresentation; (ii) the remaining unpaid principal portion of the
Settlement Amount (including the increase specified in subparagraph (d)(i) above) shall become
accelerated and immediately due and payable, with interest at a simple rate of 5% from the
Effective Date of this Agreement to the date of the court finding, and at the Medicare interest
rate (per 42 C.F.R. part 405.378) from the date of the court finding until the date of payment;
(iii) the United States may offset the remaining unpaid balance of the Settlement Amount (inclusive
of interest and the increase specified in subparagraph (d)(i) above) from any amounts due and owing
to InterMune by any department, agency, or agent of the United States; and (iv) InterMune shall
immediately pay the United States all reasonable costs incurred in the action seeking relief under
this Paragraph 23, including attorney’s fees and expenses.

     24. If, after the Effective Date of this agreement and before the company has made all
payments required pursuant to Paragraph 1 of this Agreement, the company obtains a cumulative total
of more than $150,000,000.00 in cash financing from (1) license fees and milestone payments paid to
the company pursuant to partnering agreements, (2) external debt financing,

-20-

 

and/or (3) external equity financing, the company shall notify the United States and apply
twenty percent (20%) of the excess over $150,000,000.00 (“excess cash amount”) to make advance
payments against the Settlement Amount. The company shall make the advance payment(s) first by
paying the outstanding principal owed (plus any interest accrued on that principal through the
advance payment date) in 2011 and shall continue to make such advance payments in reverse
chronological order until the excess cash amount is reduced to zero. The payment schedule
referenced in Exhibit A shall remain in effect until the balance of the Settlement Amount is paid
off. Cash financing, for purposes of this paragraph, is limited to the sources enumerated in the
first sentence of this paragraph and shall expressly exclude any increase in operating revenues
after the Effective Date or reimbursement of research or development expenses from a partner.
Advance payments made by the company pursuant to this paragraph shall not exceed $10,000,000.00 in
any single calendar year. Further, in the event InterMune is sold (either through an asset sale or
an equity sale) or merged into another non-affiliated entity, then all remaining payments owed
pursuant to the Settlement Agreement, are accelerated and become immediately due and payable.

     In addition to notifying the United States when it has obtained more than $150,000,000 in cash
financing, InterMune will be required to provide the United States with notice within ten days of
each financing arrangement or agreement (agreement) it obtains after the Effective Date of the
settlement after the cumulative financing described in the preceding paragraph totals $150,000,000,
along with a copy of each such financing agreement. InterMune further agrees that it shall pay the
U.S. all amounts required under this provision within 10 days following receipt of external
financing which causes a prepayment under this paragraph. Amounts that are due under this
paragraph and not paid when due will be considered amounts in Default. Default

-21-

 

amounts are subject to the Default provisions (except that Default will be effective
immediately and not within 30 days of the due date) contained in this Settlement Agreement as
specified in paragraph 21, including the Default rate of interest at the Medicare interest rate
(per 42 C.F.R. part 405.378) beginning as of the date of Default until payment of the Settlement
Amount is made in full.

     25. InterMune waives and will not assert any defenses it may have to any criminal prosecution
or administrative action relating to the Covered Conduct that may be based in whole or in part on a
contention that, under the Double Jeopardy Clause in the Fifth Amendment of the Constitution, or
under the Excessive Fines Clause in the Eighth Amendment of the Constitution, this Agreement bars a
remedy sought in such criminal prosecution or administrative action.

     26. The Parties each represent that this Agreement is freely and voluntarily entered into
without any degree of duress or compulsion whatsoever.

     27. Except as otherwise stated herein, this Agreement is intended to be for the benefit of the
Parties only, and by this instrument the Parties do not release any claims against any other person
or entity.

     28. Nothing in any provision of this Agreement constitutes an agreement by the United States,
InterMune or the Relator concerning the characterization of the Settlement Amount or the relator’s
share for purposes of the Internal Revenue Laws, Title 26 of the United States Code.

     29. Except as expressly provided in this Agreement, each party to this Agreement will bear its
own legal and other costs incurred in connection with this matter, including the preparation and
performance of this Agreement.

-22-

 

     30. This Agreement is governed by the laws of the United States. The Parties agree that the
United States District Court for the Northern District of California shall retain jurisdiction over
this Agreement until all the terms and conditions have been completely satisfied. The Parties
agree that the exclusive jurisdiction and venue for any dispute arising between and among the
Parties under this Agreement will be the United States District Court for the Northern District of
California, including any dispute regarding Relator’s share of the settlement, except that disputes
arising under the CIA shall be resolved through the dispute resolution provisions set forth in the
CIA.

     31. The undersigned InterMune signatories represent and warrant that they are authorized by
their Board of Directors to execute this Agreement. The undersigned signatory or signatories for
the Relator represents and warrants that he is authorized to execute this Agreement on behalf of
the Relator. The undersigned United States signatories represent that they are signing this
Agreement in their official capacities and they are authorized to execute this Agreement on behalf
of the United States through their respective agencies and departments, and, in the case of the
OIG-HHS and TMA, on behalf of their respective Departments.

     32. This Agreement is effective on the later of (1) the date of signature of the last
signatory to the Agreement, or (2) the date the Court approves the DPA as described in Preamble
Paragraph D (the “Effective Date”). Facsimiles of signatures shall constitute acceptable binding
signatures for purposes of this Agreement.

     33. This Agreement shall be binding on all successors, transferees, heirs and assigns of the
Parties.

     34. This Agreement and Exhibit A attached hereto, together with the CIA, and the DPA described
in Preamble Paragraphs C and D, constitute the complete agreement between the

-23-

 

Parties with regard to the Covered Conduct. This Agreement may not be amended except by
written consent of all the Parties, except that only InterMune and OIG-HHS must agree in writing to
a modification of the CIA, without the consent of any other party to this Agreement or the DPA.

     35. InterMune and the Relator hereby consent to the United States’ disclosure of this
Agreement, and information about this Agreement, to the public.

     36. This Agreement may be executed in counterparts, each of which shall constitute an original
and all of which shall constitute one and the same Agreement.

-24-

 

UNITED STATES OF AMERICA

	 	 	 	 	 
	By:
	 	/s/ ALEX G. TSE 	 	 
	 

	 	 

ALEX G. TSE
	 	 Dated:
	 

	 	Assistant United States Attorney	 	 
	 

	 	United States Attorney’s Office	 	 
	 

	 	Northern District of Columbia	 	 
	 
	 	 	 	 
	By:
	 	/s/ ANDY J. MAO 	 	 
	 

	 	 

ANDY J. MAO
	 	 Dated:
	 

	 	Trial Attorney	 	 
	 

	 	Commercial Litigation Branch	 	 
	 

	 	Civil Division	 	 
	 

	 	United States Department of Justice	 	 
	 
	 	 	 	 
	By:
	 	/s/ GREGORY E. DEMSKE 	 	 
	 

	 	 

GREGORY E. DEMSKE
	 	 Dated:
	 

	 	Assistant Inspector General for Legal Affairs	 	 
	 

	 	Office of Counsel to the Inspector General	 	 
	 

	 	Office of Inspector General	 	 
	 

	 	U.S. Department of Health and Human Services	 	 
	 
	 	 	 	 
	By:
	 	/s/ LAUREL C. GILLESPIE 	 	 
	 

	 	 

LAUREL C. GILLESPIE
	 	 Dated:
	 

	 	Deputy General Counsel	 	 
	 

	 	TRICARE Management Activity	 	 
	 

	 	United States Department of Defense	 	 

-25-

 

	 	 	 	 	 
	By:
	 	/s/ KATHLEEN McGETTIGAN
 	 	 
	 

	 	 

KATHLEEN McGETTIGAN
	 	 Dated:
	 

	 	Deputy Associate Director	 	 
	 

	 	Center for Retirement & Insurance Services	 	 
	 

	 	    United States Office of Personnel Management	 	 
	 
	 	 	 	 
	By:
	 	/s/ J. DAVID COPE 	 	 
	 

	 	 

J. DAVID COPE
	 	 Dated:
	 

	 	Assistant Inspector General for Legal Affairs \	 	 
	 

	 	United States Office of Personnel Management	 	 

-26-

 

	 	 	 	 	 
	By:
	 	/s/ LAUREL C. GILLESPIE 	 	 
	 

	 	 

LAUREL C. GILLESPIE
	 	 Dated:
	 

	 	Deputy General Counsel	 	 
	 

	 	TRICARE Management Activity	 	 
	 

	 	United States Department of Defense	 	 
	 
	 	 	 	 
	By:
	 	/s/ SUSAN CHADICK 	 	 
	 

	 	 

SUSAN CHADICK
	 	 Dated:
	 

	 	Deputy General Counsel	 	 
	 

	 	Defense Logistics Agency	 	 

-27-

 

INTERMUNE, INC.

	 	 	 	 	 
	By:
	 	/s/ ROBIN STEELE 	 	 
	 

	 	 

Robin Steele, General Counsel
	 	 Dated:
	 

	 	InterMune, Inc.	 	 
	 
	 	 	 	 
	By:
	 	/s/ ETHAN M. POSNER 	 	 
	 

	 	 

ETHAN M. POSNER
	 	 Dated:
	 

	 	Covington & Burling LLP	 	 

-28-

 

RELATOR

	 	 	 	 	 
	By:
	 	/s/ JOAN GALLAGHER 	 	 
	 

	 	 

JOAN GALLAGHER
	 	 Dated:
	 
	 	 	 	 
	By:
	 	/s/ JOHN A. BERANBAUM 	 	 
	 

	 	 

JOHN A. BERANBAUM
	 	 Dated:
	 

	 	Beranbaum Menken Ben-Asher & Biermann LLP	 	 

-29-

 

EXHIBIT A: PAYMENT SCHEDULE

TOTAL PAYMENT

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Year	 	Payment	 	Interest at 5%	 	Principal	 	Balance
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	36,944,043.50	 
	11/1/2006
	 	 	5,000,000.00	 	 	 	—	 	 	 	5,000,000.00	 	 	 	31,944,043.50	 
	11/1/2007
	 	 	5,000,000.00	 	 	 	1,597,202.18	 	 	 	3,402,797.83	 	 	 	28,541,245.68	 
	11/3/2008
	 	 	6,500,000.00	 	 	 	1,427,062.28	 	 	 	5,072,937.72	 	 	 	23,468,307.96	 
	11/2/2009
	 	 	7,000,000.00	 	 	 	1,173,415.40	 	 	 	5,826,584.60	 	 	 	17,641,723.36	 
	11/1/2010
	 	 	9,000,000.00	 	 	 	882,086.17	 	 	 	8,117,913.83	 	 	 	9,523,809.52	 
	11/1/2011
	 	 	10,000,000.00	 	 	 	476,190.48	 	 	 	9,523,809.52	 	 	 	0.00	 
	Total
	 	 	42,500,000.00	 	 	 	 	 	 	 	36,944,043.50	 	 	 	 	 

PAYMENT TO THE UNITED STATES

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Year	 	Payment	 	Interest at 5%	 	Principal	 	Balance
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	30,249,228.50	 
	11/1/2006
	 	 	4,093,924.98	 	 	 	—	 	 	 	4,093,924.98	 	 	 	26,155,303.52	 
	11/1/2007
	 	 	4,093,924.98	 	 	$	1,307,765	 	 	 	2,786,159.80	 	 	 	23,369,143.72	 
	11/3/2008
	 	 	5,322,102.47	 	 	$	1,168,457	 	 	 	4,153,645.29	 	 	 	19,215,498.43	 
	11/2/2009
	 	 	5,731,494.97	 	 	$	960,775	 	 	 	4,770,720.05	 	 	 	14,444,778.38	 
	11/1/2010
	 	 	7,369,064.96	 	 	$	722,239	 	 	 	6,646,826.04	 	 	 	7,797,952.34	 
	11/1/2011
	 	 	8,187,849.96	 	 	$	389,898	 	 	 	7,797,952.34	 	 	 	0.00	 
	Total
	 	 	34,798,362.32	 	 	 	4,549,133.82	 	 	 	30,249,228.50	 	 	 	 	 

PAYMENT TO THE MEDICAID PARTICIPATING STATES

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Year	 	Payment	 	Interest at 5%	 	Principal	 	Balance
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	6,694,815.00	 
	11/1/2006
	 	 	906,075.02	 	 	 	—	 	 	 	906,075.02	 	 	 	5,788,739.98	 
	11/1/2007
	 	 	906,075.02	 	 	$	289,437	 	 	 	616,638.02	 	 	 	5,172,101.96	 
	11/3/2008
	 	 	1,177,897.53	 	 	$	258,605	 	 	 	919,292.43	 	 	 	4,252,809.53	 
	11/2/2009
	 	 	1,268,505.03	 	 	$	212,640	 	 	 	1,055,864.55	 	 	 	3,196,944.97	 
	11/1/2010
	 	 	1,630,935.04	 	 	$	159,847	 	 	 	1,471,087.79	 	 	 	1,725,857.18	 
	11/1/2011
	 	 	1,812,150.04	 	 	$	86,293	 	 	 	1,725,857.18	 	 	 	0.00	 
	Total
	 	 	7,701,637.68	 	 	 	1,006,822.68	 	 	 	6,694,815.00	 	 	 	 	 

-30-exv10w113

 

Exhibit 10.113

Corporate Integrity Agreement

between the

Office of Inspector General

of the

Department of Health and Human Services

and

InterMune, Inc.

I. Preamble

     InterMune, Inc. (InterMune) 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 the statutes, regulations and written directives of
the Food and Drug Administration (FDA requirements). Contemporaneously with this CIA, InterMune is
entering into a Settlement Agreement with the United States. InterMune will also enter into
settlement agreements with various States, and InterMune’s agreement to this CIA is a condition
precedent to those agreements.

     Prior to the investigation of InterMune by the United States, InterMune established a
comprehensive voluntary compliance program (Compliance Program), which includes a corporate
Compliance Officer and Compliance’ Committee, a Code of Conduct for all employees, written policies
and procedures, educational and training initiatives, review and disciplinary procedures, a
confidential disclosure program, and internal review procedures designed, as represented by
InterMune, to promote compliance with applicable laws and the promotion of high ethical standards.

     InterMune shall continue the operation of the Compliance Program in accordance with the terms
set forth below for the term of this CIA. InterMune may modify its Compliance Program as
appropriate, but, at a minimum, InterMune shall ensure that during the term of this CIA, it shall
comply with the integrity obligations enumerated in this CIA.

II. Term and Scope of the CIA

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

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

1

 

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 employees of
InterMune; and

b. all contractors, subcontractors, agents, and other persons who perform
sales, marketing, promotional, pricing, government contract, and research
and development activities (except preclinical researchers and clinical
investigators) on behalf of InterMune.

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.

          2. “Relevant Covered Persons” includes all Covered Persons of InterMune whose job
responsibilities relate to the provision of information about or services relating to InterMune’s
products; distribution of Actimmune or other InterMune products; research and development (except
preclinical researchers and clinical investigators); or the sales, marketing, or promotion of
‘InterMune’s products (hereafter collectively referred to as “Product Services Related Functions.”)
This includes, but is not limited to, Medical Science Liaisons, and any individuals who work in
the following areas: Clinical Affairs, Medical Affairs, Regulatory, Legal Affairs, Corporate
Compliance, Corporate Administration, and Commercial Operations.1

          3. “Third Party Personnel” shall mean personnel of the entities with whom InterMune has or
may, in the future, enter agreements to distribute and purchase its products, joint venture
agreements and/or other agreements to co-market its products. InterMune has represented that: 1)
Third Party Personnel are employed by other independent entities; 2) InterMune 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. However, InterMune agrees to
use its best efforts to promote compliance by Third Party Personnel with Federal health care
program and FDA requirements as set forth below in Sections III.B and V.

          4. An “Educational or Informational Activity” shall mean any continuing medical education
(CME), disease awareness, or other scientific, educational or professional program, meeting, or
event, including, but not limited to, sponsorship of booths or activities at medical conferences or
symposia.

 

			
	1	 	If there are future changes in the organizational
structure of InterMune, individuals who undertake the functions of the specific
groups enumerated in the preceding sentence shall be considered Relevant
Covered Persons.

2

 

III. Corporate Integrity Obligations

     To the extent not already accomplished, InterMune shall maintain a Compliance Program
throughout the term of this CIA that includes the following elements:

     A. Compliance Officer and Committee.

          1. Compliance Officer. InterMune presently has a Compliance Officer with responsibility for
administering InterMune’s Compliance Program. InterMune shall continue to employ an individual to
serve as its Compliance Officer during the term of the CIA. The 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 Compliance Officer shall be a member of senior management
of InterMune, shall make periodic (at least quarterly) reports regarding compliance matters
directly to the Board of Directors of InterMune, and shall be authorized to report on such matters
to the Board of Directors at any time. The Compliance Officer shall also have the option of
reporting any matter directly to the CEO. The Compliance Officer shall not be or be subordinate to
the General Counsel or Chief Financial Officer. The Compliance Officer shall be responsible for
monitoring the day-to-day compliance activities engaged in by InterMune as well as for any
reporting obligations created under this CIA.

     InterMune shall report to OIG, in writing, any changes in the identity or position description
of the Compliance Officer, or any actions or changes that would affect the 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, InterMune established a Compliance
Committee, and InterMune .shall maintain the Compliance Committee during the term of this CIA. The
Compliance Committee shall, at a minimum, include the Compliance Officer and other members of
senior management necessary to meet the requirements of this CIA (e.g., senior executives
of relevant departments, such as Clinical Affairs, Medical Affairs, Regulatory, Legal Affairs,
Corporate Compliance, Corporate Administration, and Commercial Operations.) The Compliance Officer
shall chair the Compliance Committee. The Compliance Committee shall support the Compliance
Officer in fulfilling his/her responsibilities (e.g., shall assist in the analysis of the
organization’s risk areas and shall oversee monitoring of internal and external audits and
investigations).

     InterMune 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.

     B. Written Standards.

          1. Code of Conduct. Prior to the Effective Date, InterMune established a written Code of
Conduct applicable to all Covered Persons. InterMune 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 shall, at a minimum, set forth:

3

 

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

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

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

d. the possible consequences to both InterMune and Covered Persons of
failure to comply with Federal health care program and FDA requirements and
with InterMune’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 InterMune’s commitment to nonretaliation and to maintain,
as appropriate, confidentiality and anonymity with respect to such
disclosures.

     To the extent not already accomplished, within 90 days after the Effective Date, each Covered
Person shall certify, in writing, that he or she has received, read, understood, and shall abide by
InterMune’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 90
days after the Effective Date, whichever is later.

     Within 90 days after the Effective Date, and annually thereafter by the anniversary of the
Effective Date, InterMune shall send a letter to all entities which employ Third Party Personnel.
The letter shall outline InterMune’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 InterMune’s Compliance Program. InterMune shall attach a copy of its Code of
Conduct to the letter and shall ask that the other entity either: (a) make a copy of InterMune’s
Code of Conduct and the description of InterMune’s Compliance Program available to all relevant
personnel within its organization; or (b) represent to InterMune that it has and enforces a
substantially comparable Code of Conduct and Compliance Program for relevant persons within its
organization.

     InterMune 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

4

 

Person shall certify,-in writing, that he or she has received, read, understood, and shall
abide by the revised Code of Conduct within 30 days after the distribution of the revised Code of
Conduct.

     Distribution may include publishing the Code of Conduct on InterMune’s intranet or other
internal web site available to all employees. If InterMune uses such an electronic method of
distribution, it must notify the individuals receiving the Code of Conduct that the Code of Conduct
will be distributed in such a manner and InterMune must monitor the distribution to ensure that all
appropriate individuals received the Code of Conduct.

          2. Policies and Procedures. To the extent not already accomplished, within 90 days after the
Effective Date, InterMune shall implement written Policies and Procedures regarding the operation
of InterMune’s Compliance Program and its compliance with Federal health care program and FDA
requirements. At a minimum, the Policies and Procedures shall address:

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

b. selling, marketing, and promoting InterMune products in compliance with
all applicable Federal health care program requirements, including, but not
limited to, the Federal anti-kickback statute, codified at 42 U.S.C. §
1320a-7b(b);

c. selling, marketing, promoting, advertising, and disseminating information
about InterMune’s products: in compliance with all applicable FDA
requirements, including procedures governing the response to requests for
information about off-label uses;

d. compensation (including salaries and bonuses) for Covered Persons that
are designed to ensure that financial incentives do not inappropriately
motivate sales and marketing personnel to engage in the improper promotion,
sales, and marketing of InterMune’s products;

e. employee discipline for violations of InterMune’s Policies and
Procedures, including those policies relating to Federal health care program
and FDA requirements;

f. appropriate mechanisms by which Medical Affairs receives and responds to
requests for information about off-label uses of InterMune’s products,
including but not limited to, the following: the form and content of
information disseminated by Medical Affairs in response to such requests;
and the internal review process for the information disseminated.

The Policies and Procedures shall include a requirement that InterMune
develop a database (the Medical Affairs Inquiries Database) that includes
the following items of information for each unique inquiry (Inquiry)
received for information about InterMune’s products: 1) date of Inquiry;

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2) form of Inquiry (e.g., fax, phone, etc.); 3) name of the
requesting health care professional (HCP); 4) nature and topic of request
(including exact language of the Inquiry if made in writing); 5) an
evaluation of whether the Inquiry relates to information about an off-label
indication for the product; 6) nature/form of the response from InterMune
(including a record of the materials provided to the HCP in response to the
request); 7) the name of the InterMune representative who called on or
interacted with the HCP; and 8) the status and findings of any follow-up
review conducted by InterMune in situations in which it appears that the
Inquiry may have related to improper off-label promotion;

g. speaker programs, advisory board programs, focus group programs, and all
other consultant arrangements. These policies shall be designed to ensure
that the consultant arrangements and related events are used for legitimate
and lawful purposes in accordance with applicable Federal health care
program and FDA requirements. The policies shall include requirements about
the uses, content, and circumstances of such arrangements and events;

h. funding of, or participation in, any Educational or Informational
Activity as defined in Section II.C.4 above (e.g., third party
educational grants or sponsorship for CME or other third-party educational
programs or events). These Policies and Procedures shall be designed to
ensure that InterMune’s funding and/or sponsorship of such programs
satisfies all applicable Federal health care program and FDA requirements
related to the sponsorship of any Educational or Informational Activity.

The Policies and Procedures shall require: 1) the disclosure of InterMune’s
financial support of the Educational or Informational Activity and any
financial relationships with faculty, speakers, or organizers at such
Educational or Informational Activity; 2) that the Educational or
Informational Activity have an educational focus; 3) that the Educational
or Informational Activity be independent; 4) that the Educational or
Informational Activity be non-promotional in tone/nature; and 5) that the
information provided at the Educational or Informational Activity be fair,
balanced, accurate and not misleading;

i. funding of charitable grants or sponsorships in a manner that is designed
to ensure that InterMune’s funding complies with all applicable Federal
health care program requirements and FDA requirements; and

j. sponsorship or funding of research activities (including clinical trials,
market research, or authorship of articles or other publications) by
InterMune in a manner that is designed to ensure that InterMune’s funding or
sponsorship of such activities complies with all applicable Federal health
care program and FDA requirements. In addition, such Policies and

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Procedures shall ensure that sales and marketing activities are separate
from clinical trial enrollment.

     To the extent not already accomplished, within 90 days after the Effective Date, the relevant
portions of the Policies and Procedures shall be distributed 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), InterMune shall assess and update, as
necessary, the Policies and Procedures. Within 30 days after the effective date of any revisions,
the relevant portions of any such revised Policies and Procedures shall be distributed to all
individuals whose job functions relate to those Policies and Procedures.

     Distribution may include publishing such Policies and Procedures on InterMune’s intranet or
other internal web site available to all employees. If InterMune uses such an electronic method of
distribution, it must notify the individuals receiving the Policies and Procedures that the
Policies and Procedures will be distributed in such a manner and InterMune must monitor the
distribution to ensure that all appropriate individuals received the Policies and Procedures.
Appropriate and knowledgeable staff shall be available to explain the Policies and Procedures.

     C. Training and Education.

          1. General Training. Within 90 days after the Effective Date, InterMune shall provide at
least two hours of General Training to each Covered Person. This training, at a minimum, shall
explain InterMune’s:

a. CIA requirements;

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

c. in general, the proper methods of promoting, marketing, selling,
conducting research (including clinical trials), and disseminating
information about InterMune’s products in accordance with Federal health
care program and FDA requirements.

     To the extent that General Training provided to Covered Persons during the 90 days immediately
prior to the execution of this CIA satisfies the requirements of Sections III.C.1.b-c, above, the-
OIG shall credit the training toward the training requirements set forth in this Section III.C.1
for the first Reporting Period. InterMune may satisfy its remaining General Training obligation
for those Covered Persons who received training as described above by notifying the Covered Persons
of the fact that InterMune entered a CIA and notifying them of InterMune’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 90 days after the Effective Date, whichever is later.

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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 90 days after the Effective Date, each Relevant Covered Person
shall receive at least four hours of Specific Training in addition to the General Training required
above. This Specific Training shall include a discussion of:

a. all Federal health care program requirements relevant to the proper
methods for selling, marketing, promoting, and providing information about
InterMune’s products, including, but not limited to, the requirements of the
Federal anti-kickback statute; the Civil Monetary Penalties Law; the civil
False Claims Act; and the Medicaid Drug Rebate statute;

b. all applicable FDA requirements relevant to promotion, marketing,
research (including clinical trials), and dissemination of information about
InterMune’s products including but not limited to, the requirements of the
Federal Food, Drug, and Cosmetic Act and FDA regulations;

c. the personal obligation of each Relevant Covered Person involved in
Product Services Related Functions to comply with all applicable legal
requirements;

d. the legal sanctions for violations of the Federal health care program
requirements or FDA requirements relating to Product Services Related
Functions; and

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

     New Relevant Covered Persons shall receive this training within 30 days after the beginning of
their employment or becoming Relevant Covered Persons, or within 90 days after the Effective Date,
whichever is later. An InterMune employee who has completed the Specific Training shall review a
new Relevant Covered Person’s work, to the extent that the work relates to Product Services Related
Functions, until such time as the new Relevant Covered Person completes his or her Specific
Training.

     To the extent that Specific Training provided to Relevant Covered Persons during the 90 days
immediately prior to the execution of this CIA satisfies the requirements of this Section III.C.2,
the OIG shall credit the training toward the Specific Training requirements for the first Reporting
Period.

     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 receive training shall certify, in
writing, or in electronic form, if applicable, that he or she has received the required training.
The certification shall specify the type of training received and the date received. The

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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(s) of their training, including the applicable Federal health care program and FDA
requirements.

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

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

     D. Review Procedures.

          1. General Description.

a. Engagement of Independent Review Organization. Within 90 days after the
Effective Date, InterMune shall engage an entity (or entities), such as an
accounting, auditing, or consulting firm (hereinafter “Independent Review
Organization” or “IRO”), to perform a Promotional and Product Services
Engagement. Each IRO engaged by InterMune shall have expertise in Federal
health care program and FDA requirements applicable to the Promotional and
Product Services Engagement. Each IRO shall assess, along with InterMune,
whether it can perform the IRO review in a professionally independent and/or
objective fashion, as appropriate to the nature of the engagement, taking
into account any other business relationships or other engagements that may
exist. The applicable requirements relating to the IRO are outlined in
Appendix A to this CIA, which is incorporated by reference.

b. Description and Frequency of Reviews. The Promotional and Product
Services Engagement shall consist of two components — a systems review (the
Promotional and Product Services Systems Review) and a transactions review
(Promotional and Product Services Transactions Review), as described more
fully in Appendix B to this CIA, which is incorporated by reference.

The Promotional and Product Services Transactions Review shall be performed
annually and shall cover each of the Reporting Periods. The IRO(s) shall
perform all components of each of these annual Reviews.

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If there are no material changes in InterMune’s systems, processes,
policies, and practices relating to Product Services Related Functions, the
IRO shall perform the Promotional and Product Services Systems Review for
two Reporting Periods to be selected by the OIG. As set forth in Appendix
B, if InterMune materially changes its systems, processes, policies, and
practices relating to Product Services Related Functions, then 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 two Reporting Periods selected by the OIG.

The OIG will select the Reporting Periods in which the Systems Reviews
shall be conducted based, in part, on information provided by InterMune
about the size of InterMune, the nature of the functions undertaken by
InterMune employees e.g. sales and marketing activities, research
activities, etc.), the number of products that InterMune is actively
marketing, and other aspects of InterMune’s business. InterMune shall
report such information to the OIG 90 days prior to the end of each
Reporting Period. The OIG shall review the information submitted and shall
notify InterMune at least 30 days prior to the end of each Reporting Period
whether InterMune shall be required to retain an IRO to conduct a Systems
Review in the next upcoming Reporting Period. The OIG will not require a
Systems Review in the first Reporting Period.

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

          2. Review Reports. The IRO shall prepare a report based upon each Promotional and
Product Services Transaction Review and Promotional and Product Services Systems Review performed.
Information to be included in each Report is described in Appendix B.

          3. Validation Review. In the event OIG has reason to believe that: (a) any of
InterMune’s IRO Reviews 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 Review in question complied with the requirements of the CIA and/or the
findings or Review results are inaccurate (Validation Review). InterMune 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 InterMune’s final Annual Report must be initiated
no later than one year after InterMune’s final submission (as described in Section II) is received
by OIG.

     Prior to initiating a Validation Review, OIG shall notify InterMune 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, InterMune may request a meeting with OIG to: (a) discuss the

10

 

results of any Review submissions or findings; (b) present any additional information to
clarify the results of the Review in question or to correct the inaccuracy of the Review; and/or
(c) propose alternatives to the proposed Validation Review. InterMune agrees to provide any
additional information as may be requested by OIG under this Section in an expedited manner. OIG
will attempt in good faith to resolve any IRO Review issues with InterMune 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.

          4. Independence/Objectivity Certification. The IRO shall include in its report(s) to
InterMune a certification or sworn affidavit that it has evaluated its professional independence
and/or 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/or objective.

     E. Disclosure Program.

     Prior to the Effective Date, InterMune established a disclosure program designed to facilitate
communications relating to compliance with Federal health care program and FDA requirements and
with InterMune’s policies (Disclosure Program). During the term of this CIA, InterMune shall
continue to maintain a Disclosure Program that includes a mechanism e.g., the toll-free
Code of Conduct Ethics Helpline) 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 InterMune’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. InterMune shall appropriately publicize the
existence of the disclosure mechanism (e.g., via periodic e-mails to employees or by
posting the information in prominent common areas).

     The Disclosure Program shall continue to emphasize a nonretribution, nonretaliation policy,
and shall continue to include a reporting mechanism for anonymous communications for which
appropriate confidentiality shall be maintained. 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,
InterMune 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 continue to maintain a disclosure log, which shall
include a record and summary of each disclosure received (whether anonymous or not), the status of
the respective internal reviews, and any corrective action taken in response to the internal
reviews. The disclosure log shall be made available to OIG upon request.

     F. Ineligible Persons.

          1. Definitions. For purposes of this CIA:

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	 	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 (other than
shareholders who: (1) have an ownership interest of less than 5%; and (2)
acquired the ownership interest through public trading), officers,
directors, employees, contractors, and agents of InterMune.

          2. Screening Requirements. InterMune has a policy to not hire or engage as a Covered Person
any Ineligible Person, and it shall maintain that policy during the term of the CIA. InterMune
shall continue to ensure that all Screened Persons are not Ineligible Persons, by implementing the
following screening requirements.

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

c. InterMune 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) InterMune to refrain
(if applicable) from billing Federal health care programs for items or services furnished, ordered,
or prescribed by an Ineligible Person. InterMune understands that items or services furnished by
excluded persons are not payable by Federal health care programs and that InterMune may be liable
for overpayments and/or criminal, civil and administrative sanctions for employing or

12

 

contracting with an excluded person regardless of whether InterMune meets the requirements of
Section III.F.

          3. Removal Requirement. If InterMune has actual notice that a Screened Person has become an
Ineligible Person, InterMune shall remove such Screened Person from responsibility for, or
involvement with, InterMune’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 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 InterMune has actual notice that a Screened
Person is charged with a criminal offense that falls within the 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, InterMune 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, InterMune shall notify OIG, in writing, of any ongoing
investigation or legal proceeding known to InterMune conducted or brought by a governmental entity
or its agents involving an allegation that InterMune has committed a crime or has engaged in
fraudulent activities in the United States. 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. InterMune 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. Notification of Reportable Event.

          1. Definition of Reportable Event. For purposes of this CIA; a “Reportable Event” means
anything that involves 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 prescription drugs for which
penalties or exclusion may be authorized. A Reportable Event may be the result of an isolated
event or a series of occurrences.

          2. Reporting of Reportable Events. Current policies of InterMune require reporting of
violations of its current policies. If InterMune determines (after a reasonable opportunity to
conduct an appropriate review or investigation of the allegations) through any means that there is
a Reportable Event, InterMune 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:

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a. 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;

b. a description of InterMune’s actions taken to correct the Reportable
Event; and

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

     I. Notification of Communications with FDA.

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

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

     InterMune has represented that, as of the Effective Date, it does not currently have employees
or agents engaged in the direct promotion of any product. If, in the future, InterMune
reestablishes a sales force for the direct promotion of Actimmune or any other product, InterMune
agrees to obtain non-InterMune records (e.g., Verbatims or similar records) generated by an
independent entity (Survey Entity) reflecting the purported content and subject matter of detailing
interactions between sales representatives and HCPs for up to three InterMune products. In order
to satisfy its obligations under this Section III.J, InterMune may propose that it obtain an
alternative type of survey record (e.g., message recall studies) rather than the records of the
detailing sessions. The OIG will consider InterMune’s proposal, and, after considering InterMune’s
proposal, shall, in its discretion, identify the type of survey records to be obtained.

     Prior to the re-establishment of any sales force, InterMune shall notify the OIG of this
development and provide specific information about the sales staff and InterMune’s products to the
OIG. After reviewing the information provided by InterMune and engaging in a dialogue with
InterMune about the issue, the OIG shall provide more specific information to InterMune about the
requirements of this Section III.J. The OIG shall have the discretion to establish the specific
requirements of this Section III.J consistent with the provisions set forth herein. However, in
general terms, this Section III.J will require InterMune to contract with a Survey Entity to
conduct inquiries into the content and subject matter of the detailing interactions (or alternate
types of inquiries as proposed by InterMune) between InterMune sales personnel and HCPs for each
Reporting Period in which InterMune has such a sales force. For each product designated by the OIG
(Covered Product), InterMune shall obtain records reflecting the purported content and subject
matter of detailing sessions (or alternate types of records) in all regions across the United
States.

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     InterMune shall review the records obtained 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. InterMune 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, InterMune shall endeavor to gather additional factual information about the
circumstances relating to any Off-Label Findings. As part of each Annual Report, InterMune shall
provide the OIG with copies of the underlying records of the detailing interactions, a copy of
InterMune’s Off-Label Findings, and a description of the action(s), if any, InterMune took in
response to the Off-Label Findings.

IV. New Business Units or Locations

     In the event that, after the Effective Date, InterMune changes locations or sells, closes,
purchases, or establishes a new business unit or location, InterMune shall notify OIG of this fact
as soon as possible, but no later than within 30 days after the date of change of location, sale,
closure, purchase, or establishment. This notification shall include the address of the new
business unit or location, phone number, fax number, any Federal health care program provider
identification number and/or supplier number, and any corresponding contractor’s name and address
that has issued each Federal health care program provider number. Each new business unit or
location shall be subject to all the requirements of this CIA.

V. Implementation and Annual Reports

     A. Implementation Report. Within 120 days after the Effective Date, InterMune 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. a copy of the letter (including all attachments) required by Section III.B sent to each
entity which employs Third Party Personnel; ii) a list of all existing distribution, purchase,
joint venture and/or co-marketing agreements; and iii) a description of the entities’ response to
InterMune’s letter;

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

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

          4. a copy of InterMune’s Code of Conduct required by Section III.B.1;

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

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

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

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

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.

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

          9. the following information regarding the IRO(s): (a) identity, address, and phone number;
(b) a copy of the engagement letter; (c) a summary and description of any and all current and prior
engagements and agreements between InterMune and the IRO; and (d) the proposed start and completion
dates of each Review;

          10. a certification from the IRO regarding its professional independence and/or objectivity
with respect to InterMune;

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

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

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

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

          15. the certifications required by Section V.C.

     B. Annual Reports. InterMune shall submit to OIG annually a report with respect to
the status of, and findings regarding, InterMune’s compliance activities for each of the 5
Reporting Periods (Annual Report).

Each Annual Report shall include, at a minimum:

          1. a copy of the letter (including all attachments) required by Section III.B sent to each
entity which employs Third Party Personnel; ii) a list of all existing distribution,

16

 

purchase, joint venture and/or co-marketing agreements; and iii) a description of the
entities’ response to InterMune’s letter to the OIG;

          2. any change in the identity, position description, or other noncompliance job
responsibilities of the Compliance Officer and any change in the membership of the Compliance
Committee described in Section III.A;

          3. a summary of any significant changes or amendments to the Policies and Procedures required
by Section III.B and the reasons for such changes (e,&., change in contractor policy) and copies of
any compliance-related Policies and Procedures;

          4. 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);

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

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

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. InterMune’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 InterMune 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/or objectivity
with respect to InterMune;

          10. a summary of all internal reviews, audits, or analyses related to Product Services Related
Functions (including, at a minimum, the objective of the review, audit, or analysis; the protocol
or methodology for the review, audit, or analysis; and the results of the review, audit, or
analysis) and any corrective action plans developed in response to such reviews, audits, or
analyses;

17

 

          11. 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;

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

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

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

          15. a summary describing any ongoing communication with the FDA required to have been reported
pursuant to Section III.I. The summary shall include a description of the matter, and the status
of such matter;

          16. a copy of all information required by Section III.J;

          17. a list and description of all actively promoted InterMune products; and information about
the estimated relative usage (e.g., the percentage) of those products for off-label purposes;

          18. 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;

          19. a description of all changes to the most recently provided list of InterMune’s locations
(including addresses) as required by Section V.A.13; the corresponding name under which each
location is doing business; the corresponding phone numbers and fax numbers; each location’s
Federal health care program provider number(s), and/or supplier number(s); and the name and address
of each Federal healthcare program contractor to which InterMune currently submits claims (if
applicable); and

          20. 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 Implementation Report and Annual Reports shall include a
certification by the Compliance Officer that:

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

18

 

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

          3. if applicable, InterMune 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; and

          4. InterMune’s: 1) Policies and Procedures as referenced in Section III.B.2 above; 2)
templates for standardized contracts and other similar documents; 3) training materials used for
purposes of Section III.C, above; and 4) promotional or educational materials containing claims or
information about InterMune’s products have been reviewed by competent legal counsel and have been
found to be in compliance with the requirements of the Federal anti-kickback statute, the
Prescription Drug Marketing Act, and other applicable laws. 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 legal counsel. The certification shall include a
description of the document(s) reviewed and approximately when’ the review was completed. The
documentation supporting this certification shall be available to OIG, upon request.

     D. Designation of Information. InterMune 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. InterMune 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
	 
	 	 
	InterMune

	 	Malcolm McKay
	 

	 	Compliance Officer
	 

	 	InterMune, Inc.

19

 

	 	 	 
	 

	 	3280 Bayshore Blvd.
	 

	 	Brisbane, CA 94005
	 

	 	Telephone: 415.466.2284
	 

	 	Facsimile: 415.466.2384
	 
	 	 
	With a copy to:

	 	Robin Steele
	 

	 	Senior Vice President
	 

	 	General Counsel and Corporate Secretary
	 

	 	InterMune, Inc.
	 

	 	3280 Bayshore Blvd.
	 

	 	Brisbane, CA 94005
	 

	 	Telephone: 415.466.2264
	 

	 	Facsimile: 415.508.0006

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.

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 InterMune’s books, records, and
other documents and supporting materials and/or conduct on-site reviews of any of InterMune’s
locations for the purpose of verifying and evaluating: (a) InterMune’s compliance with the terms of
this CIA; and (b) InterMune’s compliance with the requirements of the Federal health care programs
in which it participates and with applicable FDA requirements. The documentation described above
shall be made available by InterMune 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 InterMune’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. InterMune shall assist OIG or its duly authorized representative(s) in
contacting and arranging interviews with such individuals upon OIG’s request. InterMune’s
employees may elect to be interviewed with or without a representative of InterMune present.

VIII. Document and Record Retention

     InterMune shall maintain for inspection all documents and records relating to reimbursement
from the Federal health care programs, or to compliance with this CIA, for 6 years (or longer if
otherwise required by law) from the Effective Date.

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 InterMune prior to any release by OIG of information submitted by

20

 

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

X. Breach And Default Provisions

     InterMune is expected to fully and timely comply with all of its CIA obligations. A breach of
this CIA does not constitute a breach of the Settlement Agreement or the Deferred Prosecution
Agreement between InterMune and the United States executed simultaneously herewith. Similarly, a
breach of this CIA does not constitute a breach of the settlement agreements with individual States
referenced in the preamble. Any breach of the terms of those agreements does not constitute a
breach of this CIA, except to the extent that such a breach independently also constitutes a breach
of this CIA. Section X of this CIA specifies all of the remedies available to the OIG if InterMune
fails to satisfy its obligations under this CIA. The remedies available to the OIG under this
Section X do not preempt or limit any actions that the United States or any individual States may
take against InterMune under any separate appropriate authorities.

     A. Stipulated Penalties for Failure to Comply with Certain Obligations. As a
contractual remedy, InterMune 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 InterMune fails to establish and implement any of the following
obligations as described in Section III:

a. a Compliance Officer;

b. a Compliance Committee;

c. a written Code of Conduct;

d. written Policies and Procedures;

e. the training of Covered Persons;

f. a Disclosure Program;

g. Ineligible Persons screening and removal requirements;

h. Notification of Government investigations or legal proceedings;

i. notification of communications regarding off-label related matters; and

21

 

j. a review of records reflecting the content of detailing sessions.

          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 InterMune fails to engage an IRO, as required in Section III.D
and Appendices A and 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 InterMune 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 InterMune fails to submit the annual Report associated with any
of the Reviews in accordance with the requirements of Section III.D and Appendix B.

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

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

22

 

          1. Demand Letter. Upon a finding that InterMune 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 InterMune of: (a) InterMune’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,
InterMune shall either: (a) cure the breach to OIG’s satisfaction and pay the applicable Stipulated
Penalties; or (b) request a hearing before an HHS administrative law judge (ALJ) to dispute OIG’s
determination of noncompliance, pursuant to the agreed upon provisions set forth below in Section
X.E. In the event InterMune elects to request an ALJ hearing, the Stipulated Penalties shall
continue to accrue until InterMune 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 certified or
cashier’s check, payable to: “Secretary of the Department of Health and Human Services,” and
submitted to OIG at the address set forth in Section VI.

          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 InterMune has materially breached this CIA, which decision shall be made at
OIG’s discretion and shall be governed by the provisions in Section XD, 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 InterMune 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; or

d. a failure to engage and use an IRO in accordance with Section III.D and
Appendices A-B.

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

23

 

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. InterMune 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. InterMune 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) InterMune has begun to take action to cure the material breach;
(ii) InterMune is pursuing such action with due diligence; and (iii)
InterMune has provided to OIG a reasonable timetable for curing the material
breach.

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

     E. Dispute Resolution

          1. Review Rights. Upon OIG’s delivery to InterMune 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, InterMune 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. § 1005.2-1005.21. 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 InterMune was in full and timely
compliance with the obligations of this CIA for which OIG demands payment; and

24

 

(b) the period of noncompliance. InterMune 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 InterMune to pay
Stipulated Penalties, such Stipulated Penalties shall become due and payable 20 days after the ALJ
issues such a decision unless InterMune 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 InterMune was in material breach of this CIA;

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

c. whether the alleged material breach could not have been cured within the
30-day period, but that: (i) InterMune had begun to take action to cure the
material breach within that period; (ii) InterMune has pursued and is
pursuing such’ action with due diligence; and (iii) InterMune provided to
OIG within that period a reasonable timetable for curing the material breach
and InterMune 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 InterMune, only after a DAB decision in favor of OIG.
InterMune’s election of its contractual right to appeal to the DAB shall not abrogate OIG’s
authority to exclude InterMune 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
InterMune may request review of the ALJ decision by the DAB. If the DAB finds in favor of OIG
after an AU decision adverse to OIG, the exclusion shall take effect 20 days after the DAB
decision. InterMune 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 InterMune,
InterMune 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

     Consistent with the provisions in the Settlement Agreement pursuant to which this CIA is
entered, InterMune and OIG agree as follows:

25

 

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

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

     C. Any modifications to this CIA shall be made with the prior written consent of the parties
to this CIA;

     D. The undersigned InterMune 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.

On Behalf of Intermune, Inc.

	 	 	 
	/s/ ROBIN STEELE 	 	 
	 

	 	 
	Robin Steele

	 	Date
	Senior Vice President and General Counsel
	 	 
	InterMune, Inc.
	 	 
	 
	 	 
	/s/ MALCOLM MCKAY 	 	 
	 

	 	 
	Malcolm McKay

	 	Date
	Compliance Officer
	 	 
	InterMune, Inc.
	 	 
	 
	 	 
	/s/ ETHAN POSNER 	 	 
	 

	 	 
	Ethan Posner, Esq.

	 	Date
	Counsel for InterMune, Inc.
	 	 

26

 

On Behalf of the Office of Inspector

General of the Department of Health and Human Services

	 	 	 
	/s/ GREGORY E. DEMSKE 	 	 
	 

	 	 
	Gregory E. Demske

	 	Date
	Assistant Inspector General for Legal Affairs

Office of Inspector General

U.S. Department of Health and Human Services
	 	 

27

 

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.

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

     If InterMune 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, InterMune shall submit the information
identified in Section V.A.9 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 InterMune ‘if the
IRO is unacceptable. Absent notification from OIG that the IRO is unacceptable, InterMune may
continue to engage the IRO.

B. IRO Qualifications.

The IRO shall:

	 	1.	 	assign individuals to conduct the Promotional and Product Services Engagement
who have expertise in the Federal health care program and FDA requirements applicable
to sales, marketing, research, and promotion of pharmaceutical products. The assigned
individuals shall also be knowledgeable about the general requirements of the Federal
health care program(s) under which InterMune products are reimbursed;

          1. assign individuals to design and select the Promotional and Product Services Engagement
samples who are knowledgeable about the appropriate statistical sampling techniques; and

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

C. IRO Responsibilities.

The IRO shall:

          1. perform each Promotional and Product Services Engagement in accordance with the specific
requirements of the CIA, including Appendix B to the CIA;

          2. follow all applicable Federal health care program and FDA requirements in making
assessments in Promotional and Product Services Engagement;

1

 

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

          4. prepare timely, clear, well-written reports that include all the information required by
Appendices A and B.

D. IRO Independence/Objectivity.

The IRO must perform the Promotional and Product Services Engagement in a professionally
independent and/or 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
InterMune.

E. IRO Removal/Termination.

	 	1.	 	Provider. If InterMune terminates its IRO during the course of the engagement,
InterMune must submit a notice explaining its reasons to OIG no later than 30 days
after termination. InterMune 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 InterMune to
engage a new IRO in accordance with Paragraph A of this Appendix.
	 
	 	 	 	Prior to requiring InterMune to engage a new IRO, OIG shall notify InterMune 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, InterMune may request a meeting with
OIG to discuss any aspect of the IRO’s qualifications, independence or performance of
its responsibilities and to present additional information regarding these matters.
InterMune 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 InterMune prior to requiring InterMune to terminate
the IRO. However, the final determination as to whether or not to require InterMune to
engage a new IRO shall be made at the sole discretion of OIG.

2

 

Appendix B to CIA for InterMune, Inc.

Promotional and Product Services Engagement

I. IRO Engagement, General Description

As specified more fully below, InterMune shall retain an Independent Review Organization(s) (IRO)
to perform engagements to assist InterMune in assessing and evaluating its systems, processes,
policies, and procedures related to sales, marketing, promotion, and product services activities
(Promotional and Product Services Engagement). The Promotional and Product Services Engagement
shall consist of two components — a systems review (the Promotional and Product Services Systems
Review) and a transactions review (the Promotional and Product Services Transactions Review), as
described more fully below. InterMune may engage, at its discretion, a single entity to perform
both components of the Promotional and Product Services Engagement, provided that the entity has
the necessary expertise and capabilities to perform both.

     As set forth below and in the CIA, InterMune shall engage an IRO to conduct the Promotional
and Product Services Transactions Review for each year of the CIA. If there are no material
changes in InterMune’s systems, processes, policies, and practices relating to Product Services
Related Functions, the IRO shall perform the Promotional and Product Services Systems Review for
two Reporting Periods to be selected by the OIG. The OIG will not require a Systems Review in the
first Reporting Period.

     If InterMune materially changes its systems, processes, policies, and practices relating to
Product Services Related Functions, then 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 two Reporting Periods selected by the OIG. 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 practices previously reported did not materially
change; and 3) a review of the systems, processes, policies, and practices that materially changed.

II. Promotional and Product Services Systems Review

A. Description of Reviewed Policies and Practices

     The Promotional and Product Services Systems Review shall be a review of InterMune’s systems,
processes, policies, and procedures (including the controls on those systems, processes, policies,
and procedures) relating to Product Services Related Functions. For at least two Reporting
Periods, the IRO shall review InterMune’s systems, processes, policies, and procedures associated
with the following (hereafter “Reviewed Policies and Practices”):

1. InterMune’s systems, policies, processes, and procedures applicable to the manner in
which InterMune representatives (including sales personnel and/or Medical Science
Liaisons (MSLs)) handle requests or inquiries relating to information about off-label
uses of InterMune products, and the manner in which InterMune disseminates materials
relating to off-label uses of products. This review includes:

1

 

(i) the manner in which field personnel and/or Medical Affairs receive and
respond to requests for information about off-label uses;

(ii) the form and content of information disseminated by Medical Affairs;

(iii) InterMune’s internal review process for the information disseminated
by Medical Affairs;

(iv) InterMune’s systems, processes, and procedures (including its Medical
Affairs Inquiries Database) to track requests for information about
off-label uses of products and responses to those requests;

(v) the manner in which InterMune collects and supports information reported
in its Medical Affairs Inquiries Database;

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

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

2. InterMune’s policies and procedures applicable to the manner and circumstances under
which Medical Affairs personnel (including MSLs) participate in meetings or events with
physicians, pharmacists, or other health care professionals (HCPs) (either alone or with
members of the sales force) and the role of the Medical Affairs personnel at such
meetings or events;

3. InterMune’s systems, policies, processes, and procedures relating to the retention of
HCPs as consultants (e.g.., including as members of advisory boards, focus groups, or
clinical research project teams) or speakers. This shall include a review of:

(i) the criteria used to determine whether, how many, and under what
circumstances (including the venue for the performance of any services)
InterMune will enter contracts for such consulting or speaking arrangements;

(ii) the processes and criteria used to identify and select HCPs with whom
InterMune enters consultant, speaker, or other contractual arrangements,
including the role played by sales representatives in the process. This
includes a review of InterMune’s internal review and approval process for
such contracts, and the circumstances under which there may be exceptions to
the process;

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(iii) InterMune’s tracking or monitoring of services provided or the work
performed by the consultants or speakers (including the receipt of the
consultants’ work product, if any);

(iv) InterMune’s policies and procedures related to circumstances, if any,
under which the recipient or the recipient’s agent is required to disclose
the existence of the consulting or speaking arrangement in place between
InterMune and the HCP;

(v) the uses made of work product received from consultants or speakers, if
any;

(vi) InterMune’s processes for establishing the amounts paid to HCPs and the
reasons or justifications for any differentials in the amounts paid to
different HCPs;

(vii) the criteria used to determine under what circumstances entertainment,
recreation, travel, lodging, meals and/or other items or reimbursements are
provided to consultants or speakers, and InterMune’s processes for
establishing the amounts reimbursed or the type of entertainment or
recreation provided;

(viii) whether and in what manner InterMune tracks or monitors the
prescribing habits or product use of individuals or entities with whom it
enters consulting, speakers, or other contractual arrangements, if any; and

(ix) the budget funding source within InterMune (e.g., department or
division) for the consulting or contractual arrangement;

4. InterMune’s systems, policies, processes, and procedures relating to funding or
sponsorship of any Educational or Informational Activity. This review shall include a
review of the following items:

(i) the processes and procedures used to approve the funding or sponsorship
of an Educational or Informational Activity;

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

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

(iv) InterMune’s policies and procedures related to circumstances, if any,
under which the recipient or the recipient’s agent is required to disclose
InterMune’s funding or sponsorship and any financial relationship InterMune
may have with the recipients;

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

(vi) InterMune’s policies and procedures relating to the independence of any
programs funded through the funding or sponsorship;

(vii) InterMune’s policies and procedures relating to the content and
promotional nature of any programs sponsored through the funding or
sponsorships;

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

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

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

(i) the processes and procedures used by InterMune to approve funding for
Research Activities;

(ii) the criteria used to determine whether, and under what circumstances,
InterMune will fund or otherwise participate in the Research Activities;

(iii) the processes and criteria used to select the recipients of funding
for Research Activities, including the role played by any InterMune field
personnel in the processes (if any), sand the circumstances under which
there may be exceptions to the processes;

(iv) InterMune’s policies and procedures for requiring the recipient of the
funding to disclose InterMune’s participation in or funding of Research
Activities and any financial relationship InterMune may have with the
recipient;

(v) InterMune’s policies or procedures for determining and memorializing the
amounts paid to participants in the Research Activities and the purpose or
justifications for the amounts paid;

(vi) InterMune’s policies and procedures relating to the independence of the
Research Activities funded by InterMune;

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(vii) whether and in what manner InterMune tracks or monitors the
prescribing habits or product use of individuals or entities receiving
funding or otherwise participating in the Research Activities, if any; and

(viii) the budget funding source within InterMune (e.g., department or
division) for the Research Activity;

6. InterMune’s systems, policies, processes, and procedures relating to the provision of
any gifts, meals, receptions, travel, entertainment or other items of value (collectively
`Expenses” ),to HCPs. This shall include a review of:

(i) the criteria used to determine whether, how many, and under what
circumstances (including the venue for the performance of any services)
InterMune will reimburse for Expenses of HCPs;

(ii) the processes and criteria used to identify and select HCPs to whom
InterMune provides reimbursement of Expenses. This includes a review of
InterMune’s internal review and approval process for such Expenses, the
circumstances under which there may be exceptions to the processes, and the
role played by sales representatives in the process;

(iii) InterMune’s tracking or monitoring of services provided, or the work
performed by the HCPs in exchange for the Expenses, if any;

(iv) the uses made of work product received from HCPs receiving Expenses
from InterMune, if any;

(v) InterMune’s processes for establishing the amounts paid to HCPs and the
reasons or justifications for any differentials in the amounts paid to
different HCPs;

(vi) whether and in what, manner InterMune tracks or monitors the
prescribing habits or product use of HCPs who receive Expenses from
InterMune, if any; and

(vii) the budget funding source within InterMune (e.g., department or
division) for the Expenses;

7. InterMune’s systems, policies, processes, and procedures relating to charitable
contributions by InterMune. This review shall include a review of the following items:

(i) the processes and procedures used to approve charitable contributions;

(ii) the criteria used to determine whether and under what circumstances the
charitable contributions will be provided;

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(iii) the processes and criteria used to select and approve recipients of
the charitable contributions, including the role played by field personnel
in the processes (if any), and the circumstances under which there may be
exceptions to the processes;

(iv) InterMune’s policies and procedures related to circumstances, if any,
under which the recipient or the recipient’s agent is required to disclose
InterMune’s charitable contribution and any financial relationship InterMune
may have with the recipients;

(v) InterMune’s policies or procedures for determining and memorializing the
amounts paid to recipients of the charitable contribution and the purpose or
justifications for the amounts paid;

(vi) InterMune’s policies and procedures relating to the independence of any
programs funded through the charitable contribution;

(vii) InterMune’s policies and procedures relating to the content and
promotional nature of any programs sponsored through the charitable
contributions;

(viii) whether and in what manner InterMune tracks or monitors the
prescribing habits or product use of individuals or entities receiving the
charitable contribution, if any; and

(ix) the budget funding source within InterMune (e.g., department or
division) from which the charitable contributions are provided;

8. InterMune’s systems, policies, processes, and procedures relating to internal reviews
conducted by: (i) InterMune’s Medical Review Committee; and (ii) InterMune’s Promotional
Review Committee;

9. InterMune’s systems, policies, processes, and procedures for tracking expenditures
(individual and aggregate) associated with the Reviewed Policies and Practices;

10. InterMune’s policies, processes, and procedures relating to the disciplinary actions
that InterMune may impose in the event a Covered Person violates a InterMune policy or
procedure;

11. InterMune’s systems, polices, processes and procedures for compensating (including
with salaries and bonuses) non-Overtime Eligible employees, with regard to whether the
systems, policies, processes, and procedures are designed to ensure that financial
incentives do not inappropriately motivate sales and marketing personnel to engage in the
improper promotion, sales, and marketing of InterMune’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

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12. InterMune’s systems, processes, policies, and procedures relating to the development
of call plans for InterMune’s sales staff. This shall include a review of the basis upon
which specialties are included or excluded from the call plan based upon their potential
on-label and off-label utilization of InterMune products promoted by the sales staff.

B. Promotional and Product Services Systems Review Report

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

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

     b) a detailed description of InterMune’s systems, policies, processes, and practices with
regard to the items identified in Sections IIA.1-12 above, including a general description of
InterMune’s control and accountability systems (e.g., documentation and approval requirements,
tracking mechanisms) and written policies regarding the Reviewed Policies and Practices;

     c) 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.1-12 above are made known or
disseminated within InterMune;

     d) a detailed description of any system used to track and respond to requests for information
about InterMune’s products that come to Medical Affairs;

     e) a description of InterMune’s systems, policies, processes, and procedures for tracking
expenditures associated with the Reviewed Policies and Practices or other promotional activities;

     f) a general description of the disciplinary measures InterMune has established for failure to
comply with its systems, processes, policies and procedures relating to the Reviewed Policies and
Practices;

     g) a detailed description of InterMune’s compensation system (including salaries and bonuses)
for non-Overtime Eligible employees, 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 InterMune may establish compensation differently for individual products, the IRO shall report
separately on each such type of compensation arrangement;

     h) findings and supporting rationale regarding any weaknesses in InterMune’s systems,
processes, policies, and practices relating to the Reviewed Policies and Practices, if any; and

     i) recommendations to improve any of the systems, policies, processes, or practices relating
to the Reviewed Policies and Practices, if any.

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Prior to the IRO’s submission of the report to the OIG, InterMune shall be provided with a copy of
the report and an opportunity to respond to each comment made by the IRO. Provided it does not
delay the timely filing of the Annual Reports, any responses by InterMune may be included in the
IRO report submitted to the OIG. Otherwise, any responses by InterMune to the IRO’s findings may
be submitted separately to the OIG following the Annual Report submission.

III. Promotional and Product Services Transactions Review

The IRO shall conduct a Promotional and Product Services Transactions Review for each of the
Reporting Periods. As described below, the Transactions Review shall include reviews of a sample
of Inquiries reflected in the Medical Affairs Inquiries Database.

A. Promotional and Product Services Transactions Review

          1. Review of Inquiries Made to Medical Affairs Group

     InterMune has in place a policy addressing the discussion and dissemination of information
about non-FDA approved uses of products (off-label information). This policy provides, among other
things, that Covered Persons may not directly or indirectly solicit, encourage, or promote
unapproved uses of a product to HCPs. InterMune also has established a Medical Affairs unit to
respond to requests for information about off label uses of InterMune products.

     a) Information To Be Included in Medical Affairs Inquiries Database

     InterMune shall document and record all inquiries that Medical Affairs receives from HCPs
regarding Actimmune or other InterMune products in a database (Medical Affairs Inquiries Database).
Medical Affairs shall record in the Medical Affairs Inquiries Database the following information
about each unique inquiry (Inquiry) received for information about InterMune’s products: 1) date of
inquiry; 2) form of inquiry (e.g., fax, phone, etc.); 3) name of requesting HCP; 4) nature and
topic of request (including exact language of the inquiry if made in writing); 5) an evaluation of
whether the inquiry relates to information about an off-label indication for the product; 6)
nature/form of the response from InterMune (including a record of the materials provided to the HCP
in response to the request); 7) the name of the InterMune representative who called on or
interacted with the HCP; and 8) the status and findings of any follow-up review conducted by
InterMune in situations in which improper off-label promotion is suspected.

     b) Internal Review of Medical Affairs Inquiries Database

     On a semi-annual basis, the Compliance Officer or other appropriate personnel shall review the
Medical Affairs Inquiries Database and related information, as appropriate, and shall generate a
report summarizing the items of information outlined in Section III.A.1.a above for each Inquiry
handled by Medical Affairs during the preceding two, quarters (the Medical Affairs Inquiry Report).
On a semi-annual basis, the Compliance Officer shall review the Medical Affairs 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, in consultation
with other appropriate InterMune personnel, suspects that

8

 

improper off-label promotion may have occurred in connection with one or more Inquiries, the
Compliance Officer shall undertake a follow-up review of the Inquiry (Off-Label Review), make
findings based on his/her Off-Label Review, and take any responsive action (including disciplinary
action) deemed necessary and appropriate.

     c) IRO Review

     As part of the Promotional and Product Services Transactions Review, the IRO shall evaluate
InterMune’s processes relating to its Medical Affairs Inquiries Database. Specifically, the IRO
shall select a random sample of 50 Inquiries from among the Inquiries reflected in the Medical
Affairs Inquiries Database for each Reporting Period. One half of the Inquiries reviewed by the
IRO shall be Inquiries for which InterMune conducted an Off-Label Review, and the other half shall
be Inquiries for which InterMune did not conduct an Off-Label Review.

For each Inquiry reviewed, the IRO shall determine:

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

(ii) for each Inquiry for which the Compliance Officer 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 as a result of the Off-Label Review; and
any follow-up actions taken by InterMune based on the Compliance Officer’s
findings.

B. 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. Each Report shall include the following:

          1. Elements to Be Included:

a. Promotional and Product Services Transactions Review Objectives: A clear
statement of the objectives intended to be achieved by the Review;

b. Engagement Protocol: A detailed narrative description of the procedures
performed and a description of the universe of Inquiries from which samples
were selected; and

c. Sources of Data: A full description of documentation (and/or other
information) relied upon by the IRO when performing the Promotional and
Product Services Transactions Review.

          2. Results to Be Included:

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

a. a description of each type of sample unit reviewed, including the number
of each type of sample reviewed (i, e., 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
contained in the Medical Affairs Inquiry Database about the Inquiry;

c. for each Inquiry sample unit, the IRO shall state its findings and
supporting rationale, as to whether: (i) each item of information listed in
Section III.A.1.a is reflected in the Medical Affairs Inquiries Database for
each reviewed Inquiry; and (ii) for each Inquiry for which the Compliance
Officer 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 as a result
of the Off-Label Review; and any follow-up actions taken by InterMune as a
result of the Compliance Officer’s findings;

d. the findings and supporting rationale regarding any weaknesses in
InterMune’s systems, processes, policies, and practices relating to the
Inquiries, if any; and

e. recommendations for improvement in InterMune’s systems, processes,
policies, and practices relating to the Inquiries, if any.

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