I. PRAMBLE - Office of Inspector Generaloig.hhs.gov/fraud/cia/agreements/cephalon.pdf · I. PRAMBLE Cephalon, me. ... Executive Vice President, ... Par Personnel who meet the definition

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CORPORATE INTEGRITY AGREEMENTBETWEN mE

OFFICE OF INSPECTOR GENERAL

OF THEDEPARTMENT OF HEALTH AND HUMAN SERVICES

AND

CEPHAON, INC.

I. PRAMBLE

Cephalon, me. (Cephalon) hereby enters into this Corporate mtegrity Agreement(CIA) with the Offce ofInspector General (OIG) of the United States Deparent ofHealth and Human Services (HHS) to promot~ 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(t)) (Federal health care program requirements) andwith the statutes, regulations, and written directives of the Food and Drug Admistration(FDA requirements). Contemporaneously with this CIA, Cephalon is entering into aSettlement Agreement with the United States. Cephalon wil also enter into settlementagreements with varous States (Related State Settlement Agreements) and Cephalon'sagreement to this CIA is a condition precedent to those agreements.

Prior to the Effective Date of this CIA (as defined below), Cephalon established avoluntar compliance program (lmown as "Global Compliance" or "Global Compliance

Program") applicable to all Cephalon employees including employees.in WorldwidePharaceutical Operations. Cephalon's Global Compliance Program includes anExecutive Vice President, Chief Compliance Offcer who reports directly to the AuditCommttee of the Board of Directors and to the CEO, and a Compliance Commttee. TheGlobal Compliance Progràm also includes a Code of Conduct applicable to all employeesthat is regularly reviewed and disseminated, written policies and procedures that, asrepresented by Cephalon, promote high ethical standards, educational and traininginitiatives that, as represented by Cephalon, help to ensure compliance with applicablelaws and regulations, a Disclosure Program that allows for the confidential disclosure andinvestigation of potential compliance violations and appropriate disciplinar procedures,screening measures for meligible Persons, and regular internal auditing procedures.

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

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

II. TERM AND SCOPE OF THE CIA

A. The period of the compliance obligations assumed by Cephalon under this CIAshall be five years from the effective date of ths CIA, unless.otherwise specified. Theeffective date shall be the date on which the final signatory of this CIA executes ths CIA(Effective Date). Each one-year period, beginnng with the one-year period following thefirst day of the first calendar month following the Effective Date, shall be referred to as a"Reporting Period."

B. Sections VII, IX, X, and XI shall expire no later than 120 days afer OIG'sreceipt of: (1) Cephalon's final Anual Report; or (2) any additional materials submittedby Cephalon pursuant to OIG's request, whichever is later.

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

I. "Covered Persons" includes:

a. all owners who are natural persons (other than shareholders who:

(1) have an ownership interest ofless than 5%; and (2) acquired theownership interest through public trading), officers, directors, andUnited States-based employees of Cephalon; and

b. all contractors, subcontractors, agents, and other persons whoperorm Promotional and Product Services Related Functions (asdefined below in Section II.CA) on behalf of Cephalon.

Notwithstanding the above, this term does not include par-time or per diememployees, contractors, subcontractors, agents, and other persons who arenot reasonably expected to work more than 160 hours per year, except thatany such individuals shall become "Covered Persons" at the point whenthey work more than 160 hours durng the calendar year.

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2. ''Relevant Covered Persons" includes all Covered Persons whose jobresponsibilties relate to Promotional and Product Services RelatedFunctions.

3. "Governent Reimbursed Products" refers to all Cephalon products thatare reimbursed by Federal health care programs. This term includesproducts that are promoted by Cephalon for which it may not hold theNew Drug Application.

4. The ter "Promotional and Product Services Related Functions"

includes: (a) the promotion, marketing, and sale of GovernentReimbursed Products; and (b) the development or dissemination ofmaterials or information about, or the provision of services relating to,Governent Reimbursed Products.

5. The term ''Tird Par Educational Activity" shall mean any continuing

medical education (CME), independent medical education (!ME),disease awareness, or other scientific, educational, or professionalprogram, meeting, or event sponsored by Cephalon, including but notlimited to, sponsorship of symposia at medical conferences.

~. The term "Third Par Personnel" shall mean personnel of the entitieswith whom Cephalon has or may in the future enter into agreements toco-promote a Governent Reimbursed Product in the United States orengage in joint promotional activities in the United States relatig to

such a product. Cephalon has represented that: (1) the Third ParP~rsonnel are employed by other independent entities; (2) Cephalondoes not control Third Par Personnel; and (3) it would be

commercially impracticable to compel the compliance of Third ParPersonnel with the requirements set forth in this CIA. Cephalon agreesto promote compliance by Third Par Personnel with Federal healthcare program and FDA requirements by complying with the provisionsset fort below in Sections m.B.2, V.A.3, and V.BA related to ThirdPar Personnel who meet the definition of Covered Persans. Providedthat Cephalon complies with the requiements of Sections III.B.2,V.A.3, and V.BA, Cephalon shall not be required to fulfll the other CIA


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obligations that would otherwise apply to Third Par Personnel whomeet the defintion of Covered Persons.

III. CORPORATE INTEGRITY OBLIGATIONS

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

A. Comoliance Responsibilties of Chief Comoliance Offcer. ComplianceCommittee. the Board of Directors. and Management Certifications.

1. Chief Compliance Offcer. Prior to the Effective Date, Cephalonappointed a Chief Compliance Offcer, and Ceplialon shall maitain a Chief ComplianceOffcer during the term of the CIA. The Chief Compliance Offcer shall be responsiblefor developing and implementing policies, pr()cedures, and practices designed to ensuecompliance with the requirements set forth in this CIA and with Federal health careprogram requirements and FDA requirements. The Chief Compliance Offcer is and shallcontinue to be a member of executive management of Cephalon, shall make periodic (atleast quarerly) reports regarding compliance matters diectly to the Audit Committee ofthe Board of Directors of Cephalon, and shall be authoried to report on such matters tothe Board of Directors at any time. The Chief Compliance Offcer shall not be or besubordinate to the General Counelor Chief Financial Offcer. The Chief ComplianceOffcer shall be responsible for monitoring the day-to-day compliance activities engagedin by Cephalon as well as for any reporting obligations creatéd under this CIA.

Cephalon shall report to 01G, in writing, any changes in the identity or positiondescription of the Chief Compliance Offcer, or any actions or changes that would affectthe Chief Compliance Officer's abilty to perform the duties necessar to meet theobligations in this CIA, within 15 days afer such a change.

2. Compliance Committee. Prior to the Effective Date, Cephalonestablished a Compliance Committee, and Cephalon shall maintain a ComplianceCommttee during the term of this CIA. The Compliance Commttee shall, at a minimum,include the Chief Compliance Officer and other members of senior managementnecessar to meet the requirements of this CI ~ senior managers of relevantdeparents, such as legal, medical affairs, sales, marketing, human resources, andinternal audit). The Chief Compliance Offcer shall chair the Compliance Commttee andthe Committee shall support the Chief Compliance Offcer in fulfilling his/her


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responsibilties (~ shall assist in the analysis of the organzation's risk areas and shallreceive reports on compliance-related monitoring, audits, and investigations).

Cephalon shall report to OIG, in writing, any changes in the composition of theCompliance Conuittee, or any actions or changes that would affect the ComplianceCommittee's abilty to perform the duties necessar to meet the obligations in this CIA,within 15 days after such a change.

3. Board of Directors. . The Board of Directors (Board) or a Commtteeof the Board, if applicable, shall be responsible for the review and oversight of mattersrelated to compliance with Federal health care program requirements, FDA requirements,and the obligations of this CI. The Board, or a Commttee of the Board, shall, at aminimum, be responsible for the following:

a. meeting at least quarerly to review and oversee Cephalon's

Global Compliance Program, including but not limted to the pedormance of the ChiefCompliance Offcer and Global Compliance deparent.

b. for each Reporting Period of the CIA, adopting a resolution

(puruant to. the process outlined in the bylaws for adopting resolutions) sumarzing itsreview and oversight of Cephal on's compliance with Federal health care programrequirements, FDA requirements, and the obligations of this CIA. Each individualmember of the Board or, if applicable, each member of the Commttee of the Boardhaving responsibilty for compliance, shall sign a statement indicating that he or sheagrees with the resolution.

At minimum, the resolution shall include the following language:

liThe Board of Directors (or a Conuittee of the Board) has made a reasonable

inquiry into the operations of Cephalon's Global Compliance Program including theperformance of the Chief Compliance Offcer and the Global Compliance deparent.Based on its inquiry, the Board (or Committee) has concluded that, to the best of itslrowledge, Cephalon has implemented an effective Global Compliance Program to meetthe Federal health care program requirements, FDA requirements, and the obligations ofthe CIA."


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If the Board (or the Board Commttee) is unable to provide such a conclusion inthe resolution, the Board (or Commttee) shall include in the resolution a writtenexplanation of the reasons why it is unable to provide the conclusion and the steps it istakg to implement an effective Compliance Program at Cephalon.

Cephalon shall report to OIG, in wrting, any changes in the composition of theBoard, or any actions or changes that would afect the Board's abilty to perfonn theduties necessar to meet the obligations in this CIA, within 15 days after such a change.

4. Management Accountabilty and Certifcations: Cephalon representsÍhat compliance is a component of each employee's performance objectives. In additionto the responsibilties set fort in this CIA for all Covered Persons,. certain Cephalon

employees ("Certifying Employees") are specifically expected to monitor and overseeactivities within their areas of authority and shall anually cerify in writing orelectronically that the applicable area of authority is compliant with Federal health careprogram requirements, FDA requirements, and the obligations of this CIA. TheCertifying Employees include, at a minimum the following: Chairan and ChiefExecutive Offcer, Executive Vice President of Worldwide Medical and RegulatoryOperations, Executive Vice President of Worldwide Pharaceutical Operations, all.business unit sales vice presidents, all business unt marketig vice presidents, allbusiness unit sales directors, all business unit marketing diectors, the Vice President ofWorldwide Medical Affais, and all medical directors of communcations and medicalscience liaisons (MSLs).

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

"I have been trained on and understand the compliance requirements andresponsibilties as they relate to (deparent or fuctional area), an area under mysupervision. My job responsibilities include ensuring compliance with regard to the_ (insert name of the deparent or functional area.) To the best of my lmowledge,except as otherwise described herein, the (insert name of deparent or fuctional

area) of Cephalon is in compliance with all applicable Federal health care programrequirements, FDA requirements, and the obligations of the CIA."


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B. Written Standards.

I. Code of Conduct. Prior to the Effective Date, Cephalon developed,implemented, and distrbuted a written Còde of Conduct to all Covered Persons.Cephalon curently requires all newly employed persons to cerify in writing orelectronically that they have received, read, understood, and shall abide by Cephalon'sCode of Conduct. Cephalon shall continue to mae the promotion of, and adherence to,the Code of Conduct an element in evaluating the perormance of all employees.

The Code of Conduct sets fort and shall continue to set fort, at amimum, the following:

a. Cephalon's commtment to full èompliance with all Federal healthcare program and FDA requirements, including its commtment tomarket, sell, promote, research, develop, provide informtion about,and advertise its products in accordance with Federal health programrequirements and FDA requirements;

b. Cephalon's requirement that all of its Covered Persons shall beexpected to comply with all Federal health care program and FDArequirements and with Cephalon's own Policies and Procedures asimplemented pursuant to Section III.B (including the requirements ofthis CIA);

c. the requirement that all of Cephalon's Covered Persons shall beexpected to report to the Chief Compliance Offcer, or otherappropriate individual designated by Cephalon, suspected violationsof any Federal health care program and FDA requirements or ofCephalon's own Policies and Procedures;

d. the possible consequences to both Cephalon and Covered Personsof failure to comply with Federal health care program and FDArequirements and with Cephalon's own Policies and Procedures andthe failure to report such noncompliance; and

e. the right of all individuals to use the Disclosure Program describedin Section m.E, and Cephalon's commitment to nonretaliation and to

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maintain, as appropriate, confidentiality and anonymty with respectto such disclosures.

To the extent not already accomplished, within 120 days after the Effective Date,the Code of Conduct shall be distributed to each Covered Person and each CoveredPerson shall certfy, in writing or electronically, that he or she has received, read,understood, and shall abide by Cephalon's Code of Conduct. New Covered Persons shallreceive the Code of Conduct and shall complete the required certification within 30 daysafter becoming a Covered Person or within 120 days afer the Effective Date, whicheveris later.

Cephalon shall perodically review the Code of Conduct to determe if revisionsare appropriate and shall make any necessar revisions based on such review. Anyrevised Code of Conduct shall be distrbuted within 30 days afer any revisions arefinalized. Each Covered Person shall certify, in writing or electronically, that he or shehas received, read, understood, and shall abide by the revised Code of Conduct within 30

. days after the distribution of the revised Code of Conduct.

2. Third Party Personnel. Within 90 days after the Effective Date, andanually thereafer by the aniversar of the Effective Date, Cephalon shall send a letterto each entity employing Third Par PersonneL. The letter shall outline Cephalon'sobligations under the CIA and its commitment to full compliance with all Federal healthcare program and FDA requirements. The letter shall include a description of Cephalon'sCompliance Program. Cephalon shall attach a copy of its Code of Conduct to the letterand shall request the entity employing Third Par Personnel to either: (a) make a copy ofCephalon's Code of Conduct and a description of Cephalon' s Compliance Programavailable to its Third Pary Personnel; or (b) represent to Cephalon that it has andenforces a substantially comparable code of conduct and compliance program for itsThird Par PersonneL.

3. Policies and Procedures. Prior to the Effective Date, Cephalonimplemented wrtten Policies and Procedures regarding the operation of the ComplianèeProgram and Cephalon's compliance with Federal health care program and FDArequirements (policies and Procedures). To the extent not already accomplished, within120 days after the Effective Date, Cephalon shall ensure that the Policies and Proceduresaddress or shall continue to address:


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a. the subjects relating to the Code of Conduct identified in Sectionm.B.!;

b. appropriate ways to conduct Promotional and Product Services

Related Functions in compliance with all applicable Federalhealthcare program requirements, including, but not limited to theFederal anti-kickback statute (codified at 42 U.S.C. § I 320a-7b ),and the False Claims Act (codified at 31 V.S.C. §§ 3729-3733);

c. appropriate ways to conduct Promotional and Product Services

Related Functions in compliance with all applicable FDArequirements;

d. the mechanisms though, and maer in which, Cephalonreceives and responds to requests for information about non-FDAapproved (or "off-label") uses of Cephal on's products; the formand content of infonntion disseminated by Cephalon in responseto such requests; and the internal review process for theinformation disseminated.

The Policies and Procedures shall include a requirement that .Cephalon develop a database to track requests for inormationabout Cephalon' s products that are made to Cephalon' s MedicalServices (MS) deparent. This database shall be referred to asthe "Inquiries Database." The hiquiries Database shall includethe following items of information for each unique inquir(Inquiry) received for information about Cephalon's products: I) ,date ofhiquiry; 2) form of Inquir út fax, phone, etc.); 3)name of the requestig health care professional (HCP) or healthcare institUtion (HCI); 4) nature and topic of request (including

exact language of the Inquir if made in wrting); 5) natue/formof the response from Cephalon (including a record of thematerials provided to the HCP or HCI in response to the request);and 6) the name of the Cephalon representative who called on orinteracted with the HCP or HCI. Any response from MedicalServices to an HCP or HCI shall identify whether the informationprovided addresses an indication that is par of the approved

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product labeL. The statu aid findings of any follow-up reviewconducted by Cephalon in situations in which it appears that thehiquiry may have related to improper off-label promotion shall bemaintained by Global Compliance and the informtion shal be

included in the Inquiry Reports fuher discussed in SectionIIT.A.2 of Appendix B;

e. development of call plans for field sales representatives whopromote Governent Reimbursed Products. For each product,the Policies and Procedures shall require that Cephalon reviewthe call plans for the product and the bases upon which specifiedphysician specialties and institutional provider tyes are includedin, or excluded from, the call plans. The Policies and Proceduresshall also require that Cephalon modify the call plans asnecessar to ensure that Cephalon is promoting its products in amaer that complies with aU applicable Federal health care.program and FDA requirements. The call plan reviews shalloccur at least anually and shall.also occur each time the FDAapproves a new or additional indication for a GovernentReimbursed Product;

f. consultant or other fee-for-service arangements entered into withHCPs or HCIs (including, but not limited to, speaker program,speaker traiing programs, advisory boards, or any other financialrelationship with an HCP or HCI) and all events and expensesrelating to such engagements or arangements. These Policiesand Procedures shall be designed to ensure that the argementsand related events are used for legitimate and lawful puroses inaccordance with applicable Federal health care program and FDArequirements. The Policies and Procedures shall includerequirements about the content and circumstaces of sucharangements and events;

g. programs to educate field representatives, includingpreceptorships. These Policies and Procedures shall be designedto ensure that the programs are used for legitimate and lawfu

puroses in accordance with applicable Federal health care


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program and FDA requirements. The Policies shall includerequirements about the content and circumstances of sucharangements and events;

h. sponsorship or funding of grants (includig educational grants) or

chartable contributions. These Policies and Procedures shall be

designed to ensure that Cephalon's fuding and/or sponsorshipcomplies with all applicable Federal health care program andFDA requirements;

i. funding of, or paricipation in, any Third Par EducationalActivity. These Policies and Procedures shall be designed toensure that Cephalon' s fuding and/or sponsorship of suchprograms satisfies all applicable Federal health care program andFDA requirements.

The Policies and Procedures shall require that: 1) Cephalondisclose its financial support of the Third Par EducationalActivity and any financial relationships with faculty, speakers, ororganizers at such Activity; 2) as a condition of fuding, the third

par shall agree to disclose Cephalon's financial support of theThird Par Educational Activity and any financial relationshipsthat Cephalon might have with faculty, speakers, or organers atsuch Activity; 3) any faculty, speakers, or organizers at the ThirdPar Educational Activity disclose any fmancial relationshipwith Cephalon; 4) the Thrd Par Educational Activity have aneducational focus;. 5) the content, organization, and operation ofthe Third Par Educational Activity be independent of Cephalon

control; 6) Cephalon support only Third Par EducationalActivity that is non-promotional in tone/natue; and 7)Cephalon's support of a Third Par Educational Activity shall becontingent on the provider's commitment to provide informationat the Educational Activity that is fair, balanced, accurate and notmisleadig;

j. review of promotional materials by appropriate qualified

personnel (such as regulatory, medical, and/or legal personnel), .

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and the review of other materials and information intended to bedisseminated outside Cephalon in a maier designed to ensurethat legal, reguatory, and medical concerns are properlyaddressed durg Cephalon' s review and approval process andare elevated when appropriate. The Policies and Procedures shallbe designed to ensure that such materials and inormation, whenfinally approved, comply with all applicable Federal health careprogram and FDA requirements;

k. sponsorship or fuding of research or related activities. ThesePolicies and Procedures shall be designed to ensure thatCephalon's funding and/or sponsorship complies with allapplicable Federal health care progr and FDA requirements;

1. compensation (including salares and bonuses) for RelevantCovered Persons. These Policies and Procedures shall bedesigned to ensure that financial incentives do not inappropriatelymotivate such individuals to engage in improper promotion,sales, and marketig of Cephal on's products;

m. disciplinar policies and procedures for violati~ns of Cephal on'sPolicies and Procedures, including policies relating to Federalhealth care program and FDA requirements.

To the extent not already accomplished, within 120 days afer the Effective Date,the relevant portions of the Policies and Procedures shall be made available to allindividuals whose job fuctions relate to those Policies and Procedures. Appropriate andknowledgeable staff shall be available to explain the Policies and Procedures.

At least anually (and more frequently, if appropriate), Cephalon shall assess andupdate, as necessar, the Policies and Prôcedures. Within 30 days afer the effective dateof any revisions, the relevant portions of any such revised Policies and Procedures shallbe made available to all individuals whose job functions relate to those Policies andProcedures.


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C. Traininiz and Education.

Cephalon represents that it provides training to its employees on a regular basisconcerning a variety of topics. The training required by this CIA need not be separateand distinct from the regular training provided by Cephalon, but instead may beintegrated fully into such regular training so long as the traiing covers the areas specifiedbelow.

1. General Training. Within 120 days after the Effective Date, Cephalonshall provide at least two hours of General Training to each Covered Person. Thistraining, at a miimum shall explai Cephalon's:

a. CIA requirements; and

b. Cephalon's Compliance Program (including the Code of Conductand the Policies and Procedures as they pertain to generalcompliance issues).

To the extent that Cephalon provided General Training to Covered Persons durgthe 180 days immediately prior to the Effective Date that satisfied the requirements setfort in Section III.C. l.b above, the OIG shall credit that training for puroses ofsatisfying Cephalon's General Training obligations of Section III.C.1 for the firstReporting Period. Cephalon may satisfy its remaining General Training obligations forthe Covered Persons who received the training described in the preceding sentence bynotifying them within 90 days after the Effective Date in writing or in electronic formatof the fact that Cephalon entered a CIA and providing an explanation of Cephal on'srequirements and obligations under the CIA.

New Covered Persons shall receive the General Training described above within30 days after becoming a Covered Person or within 120 days afer the Effective Date,whichever is later. Afer receiving the initial General Traiing described above,.eachCovered Person shall receive at least one hour of General Training in each subsequentReporting Period.

2. Specifc Training. Within 120 days afer the Effective Date, each

Relevant Covered Person shall receive at least three hours of Specific Traiing in additionto the General Training required above. .

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This Specific Training shall include a discussion of:

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

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

c. all Cephalon policies, procedures, and other requirements

applicable to Promotional and Product Services RelatedFunctions;

d. the personal obligation of each individual involved in

Promotional and Product Services Related Functions to complywith all applicable Federal health care program and FDArequirements and all other applicable legal requirements;

e. the legal sanctions for violations of the applicable Federal health

care program and FDA requirements; and

f. examples of proper and improper practices related to Promotional

and Product Services Related Functions.

To the extent that Cephalon provided Specific Training to Relevant CoveredPersons durg the 180 days immediately prior to the Effective Date that satisfied therequiements set forth in Section II.C.2 above, the OIG shall credit that traing forpurposes of satisfying Cephalon's Specific Training obligations of this Section III.C.2 forthe first Reporting Period.

New Relevant Covered Persons shall receive this traiing within 30 days after thebegiing of their employment or becoming Relevant Covered Persons, or with 120.

days after the Effective Date, whichever is later. A Cephalon employee who hascompleted the Specific Training shall review a new Relevant Covered Person's work, tothe extent that the work relates to Promotional and Product Services Related Functions,until such time as the new Relevant Covered Person completes his or her SpecificTraining.


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After receiving the initial Specific Training described in this Section, eachRelevant Covered Person shall receive at least two hours of Specific Traiing in eachsubsequent Reportg Period.

3. Certifcation. Each individual who is required to attend training shallcertify, in writing or electronically, that he or she has received the required training. Thecertification shall specify the tye of training received and the date received. TheCompliance Officer ( or designee) shall retain the certifications, along with all coursematerials. These shall be made available to OIG, upon request.

4. Qualifcations of Trainer. Persons providig the traiing shall beknowledgeable about the subject area of the training, including applicable Federal healthcare program and FDA requirements. The traiing and education required under thisSection III.C may be provided by supervisory employees, knowledgeable staff, Cephalontrainers, and/or outside consultant trainers selected by Cephalon or may be satisfied byrelevant, accredited continuing education program provided they cover topics outledabove in Section III.C.2.

5. Update of Training. Cephalon shall review the training anually, and,where appropriate, update the traig to reflect changes in Federal health care program

requirements, FDA requirements, any issues discovered durg any internal audits or anyIRO Review, and any other relevant information.

6. Computer-based Training. Cephalon may provide the training requiredunder this CIA though appropriate computer-based traing approaches. If Cephalonchooses to provide computer-based traiing, it shall make available appropriatelyqualified and knowledgeable staff or trainers to answer questions or provide additionalinformation to the individuals receiving such trainig. In addition, if Cephalon chooses toprovide computer-based General or Specific Traiing, all applicable requirements toprovide a number of "hours" of training in this Section III.C may be met with respect tocomputer-based training by providing the required number of "normative" hours as thatter is used in the computer-based training industr.


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D. Review Procedures.

I. General Description.

a. Engagement of Independent Review Organization. Within 90 daysafer the Effective Date, Cephalon shall engage an entity (or entities),such as an accounting, auditing, or consulting firm (hereinafter"Independent Review. Organization" or "IRQ"), to perfot1 reviews

to assist Cephalon in assessing and evaluating its Promotional andProduct Serices Related Functions. The applicable requiements .relating to the IRQ are outlined in Appendix A to this CIA, which isincorporated by reference.

Each IRO engaged by Cephalon shall have expertise in applicableFederal health care program and FDA requiements as may beappropriate to the Review for which the IRO is retained. Each IROshall assess, along with Cephalon, whether it can perform theengagement in a professionally independent and objective fashion, asappropriate to the natue of the review, takng into account any otherbusiness relationships or other engagements that may exist.

The IRO(s) shall conduct reviews that assess Cephalon's systems,processes, policies, procedures, and practices relatig to Promotionaland Product Services Related Functions (Promotional and ProductServces Reviews).

b. Frequency and Brief Description of Reviews. As set fort morefully in Appendix B, the Promotional and Product Services Reviewshall consist of two components - a Systems Review and aTransactions Review. The Systems Review shall assess Cephalon'ssystems, processes, policies, and procedures relating to Promotionaland Product Services Related Functions. If there are no materialchanges in Cephalon's systems, processes, policies, and proceduresrelating to Promotional and Product Services Related Functions, thePromotional and Product Services Systems Review shall beperformed for the periods covering the first and fourh ReportingPeriods. If Cephalon materially changes its systems, processes,

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policies, and procedures relating to Promotional and ProductServices Related Functions, the IRO shall perform a Systems Reviewfor the Reporting Period in which such changes were made inaddition to conducting the Systems Review for the first and fourReporting Periods.

The Promotional and Product Services Transactions Review shall beperformed anually and shall cover each of the five ReportgPeriods. The IRO(s) shall perform all components of each anualTransaction Review. As set fort more fully in Appendix B, theTransactions Review shall include several components, including areview relating to hiquires included in Cephalon's InquiriesDatabas~, a review of Cephal on's Call Plan Assessments, and areview of a records relating to a sample of the Payments that arereported by Cephalon pursuant to Section m.M below. hi addition,beging with the second Reporting Period, each TransactionsReview shall also include a review of up to thee additional areas or

practices of Cephalon identified by the OIG in its discretion(hereafer "Additional Items").

For puroses of identifying the Additional Items to be included inthe Transactions Review for a paricular Reporting Period, the OIGwil consult with Cephalon and may consider internal audit workconducted or planed by Cephalon, Cephalon's product portolio, thenature and scope of Cephalon's promotional practices andmangements with HCPs, and other information lmown to it. As setfort more fuly in Section m.D of Appendix B, Cephalon maypropose to the OIG that its internal audit(s) be parially substitutedfor one or more of the Additional Items that would otherise bereviewed by the IRO as par of the Transactions Review. The OIGretains sole discretion over whether, and in what maner, to allowCephalon's internal audit work to be substituted for a portion of theAdditional Items review conducted by the IRO.

The OIG shall notify Cephalon of the natue and scope of the lROreview for each of the Additional Items no later than 90 days prior tothe end of the second through fift Reporting Periods. Prior to

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underaking the review of the Additional Item, the IRO and/orCephalon shall submit" an audit work plan to the OIG for approvaland the IRO shall conduct the review of the Additional Items basedon a work plan approved by the OIG.

c. Retention of Records. The IRO and Cephalon shall retain andmake available to OIG, upon request, all work papers, supportingdocumentation, correspondence, and draft reports (those exahangedbetween the IRO and Cephalon) related to the reviews.

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

3. Validation Review. In the event OIG has reason to believe that: (a) anyIRO Review fails to conform to the requirements of ths CI; or (b) the IRO's findings or

Review results are inaccurate, OIG may, at its sole discretion, conduct its own review todetermine whether the applicable IRO Review complied with .the requirements of the CIAand/or the findiigs or Review results are inaccurate (Validation Review). Cephalonshallpay for the reasonable cost of any such review performed by OIG or any of its designatedagents. Any Validation Review of Reports submitted as par of Cephal on's final AnualReport shall be initiated no later than one year after Cephalon's fmal submission (asdescribed in Section II) is received by OIG.

Prior to initiating a Validation Review, OIG shall notify Cephalon of itsintent to do so and provide a written explanation of why OIG believes such a review isnecessary. To resolve any concerns raised by OIG, Cephalon may request a meeting withOIG to: (a) discuss the results of any Review submissions or findings; (b) present anyadditional information to clarify the results of the applicable Review or to correct theinaccuracy of the Review; and/or (c) propose alternatives to the proposed ValidationReview. Cephalon agrees to provide any additional information as may be requested byOIG under this Section III.D.3 in an expedited maner. OIG wil attempt in good faith toresolve any Review issues with Cephalón prior to conducting a Validation Review.However, the fmal determination as to whether or not to proceed with a ValidationReview shall be made at the sole discretion of OIG.

Corporate Integrity AgreementCephal on. Inc.

18

4. Independence and Objectivity Certification. The IRO shall include in itsreport( s) to Cephalon a certification or sworn affidavit that it has evaluated itsprofessional independence and objectivity, as appropriate to the natue of theengagement, with regard to the applicable Review and that it has concluded that it is, infact, independent and objective.

E. Disclosure Proizam.

Cephalon represents that it has a disclosure program designed to faciltatecommunications relating to compliance with Federal health care program and FDArequirements and Cephalon's policies (the "Disclosure Program"). During the term of theCIA, Cephalon shall maitain a Disclosure Program that includes a mechansm (a toll-free compliance telephone line) to enable individuals to disclose, to the ComplianceOfficer or some other person who is not in the disclosing individual's chai ofcnmmand,any identified issues or questions associated with Cephalon's policies, conduct, practices,Qr procedures with respect to a Federal health care program or FDA requirement believedby the individual to be a potential violation of criinal, civil, or admistrative law.Cephalon shall continue to appropriately publicize the existence of the disclosuremechanism (U, via periodic e-mails to employees or by posting the informtion inpromient common .areas).

The Disclosure Program shall emphasize a nonretaliation policy, and shall includea reporting mechanism for anonymous communications for which appropriateconfdentiality shall be maintained. Disclosures made by individuals residing outside theUnited States shall be in accordance with applicable laws, including the European UnionData Protection Directive. Upon receipt of a disclosure, the Compliance Offcer (ordesignee) shall gather all relevant information from the disclosing individuaL. TheCompliance Officer (or designee) shall make a prelimar, good faith inquiry into theallegations set fort in every disclosure to ensure that he or she has obtaied all of theinformation necessar to determine whether a furter review should be conducted. For

any disclosure that is sufficiently specific so that it reasonably: (1) permts adeternation of the appropriateness of the alleged improper practice; and (2) provides anopportity for takg corrective action, Cephalon shall conduct an internal review of theallegations set fort in the disclosure and ensure that proper follow-up is con~ucted.

The Compliance Offcer ( or designee) shall maintain a disclosure log, which shallinclude a record and sumar of each disclosure received (whether anonymous or not),


19

the status of the respective internal reviews, and any corrective action taken in response tothe interal reviews. The disclosure log shall be made available to OIG upon request.

F. Ineligible Persons.

1. Definitions. For puroses of this CIA:

a. an "hieligible Person" shall include an individual or entity who:

i. is curently excluded, debared, suspended, or otherwiseineligible to paricipate in the Federal health care program orin Federal procurement or nonprocurement program; or

ii. has been convicted of a criminal offense that falls withinthe ambit of 42 U.S.C. § 1320a-7( a), but has not yet beenexcluded, debared, suspended, or otherwise declared

ineligible.

b. "Exclusion Lists" include:

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

ii. the General Services Administration's List of ParesExcluded from Federal Program (available though thehiternet at htt://ww.eols.gov).

c. "Screened Persons" include: prospective and curent owners ofCephalon (other than shareholders who: (1) have an ownershipinterest of less than 5%; and (2) acquired the ownership interestthrough public trading); and prospective and curent offcers,

directors, employees, and contractors and agents of Cephalon. For

puroses of employees residing outside the United States, "ScreenedPersons" shall be limited to Covered Persons.


20

2. Screening Requirements. Cephalon shall ensure that all ScreenedPersons are not hieligible Persons, by implementing the following screeningrequirements.

a. Cephalon shall screen all Screened Persons agaist the ExclusionLists prior to engaging their services and, as par of the hiring orcontracting process, shall require such Screened Persons to disclosewhether they are hieligible Persons.

b. Cephalon shall screen all Screened Perons against the ExclusionLists within 90 days afer the Effective Date and on an anual basisthereafter.

c. Cephalon shall implement a policy requiring all Screened Personsto disclose immediately any debarent, exclusion, suspension, orother e~ent that makes that person an Ineligible Person.

Nothing in this Section affects the responsibilty of (or liabilty for)Cephalon to refrain (if applicable) from biling Federal health care program for items or.services furished, ordered, or prescribed by an hieligible Person. Cephalon understadsthat items or services fuished by excluded persons are not payable by Federal healthcare programs and that Cephalon may be liable for overpayments (if applicable) and/orcriminal, civil, and administrative sanctions for employing or contracting with anexcluded person regardless of whether Cephalon meets the requirements of Section II.F.

3. Removal Requirement. If Cephalon has actual notice that a ScreenedPerson has become an hieligible Person, Cephalon shall remove such Screened Personfrom responsibilty for, or involvement with, Cephalon's business operations related tothe Federal health care programs and shall remove such Screened Person from anyposition for which the Screened Person's compensation or the items or serices fuished,

ordered, or prescribed by the Screened Person are paid in whole or par, directly orindirectly, by Federal health care program or otherise with Federal funds at least untilsuch time as the Screened Person is reinstated into participation in the Federal health careprograms.

4. Pending Charges and Proposed Exclusions. IfCephalon has actualnotice that a Screened Person is charged with a criminal offense that falls with the


21

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

G. Notification of Governent hivestigation or Leizai Proceedings.

Withn 30 days afer discovery by senior management at U.S. corporate headquarers,Cephalon shall notify OIG, in wrting, of any ongoing investigation or legal proceedingknown to Cephalon conducted or brought by a governental entity or its agents involvingan allegation that Cephalon has commtted a crime or has engaged in fraudulent activities.This notification shall include a description of the allegation, the identity of the

investigating or prosecuting agency, and the status of such investigation or legalproceeding. Cephalon shall also provide written notice to OIG within 30 days afer theresolution of the matter, and shall provide OIG with a description of the findings and/orresults of the investigation or proceedings, if any.

H. Reoortiniz.

1. Reportable Events.

a. Definition of Reportable Event. For puroses of this CIA a''Reportable Event" means anyting that involves:

i. a matter that a reasonable person would consider a probableviolation of crimal, civil, or administrative laws applicable

to any Federal health care program and/or applicable to anyFDA requirements relating to the promotion of Cephalonproducts for which penalties or exclusion may be authorized;or

ii.. the filing of a banptcy petition by Cephalon.

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


22

b. Reporting of Reportable Events. If Cephalon deteres (afer a

reasonable opportunity to conduct an appropriate review orinvestigation of the allegations) through any means that there is aReportable Event, Cephalon shall notify OIG, in writing, within 30days after making the deternation that the Reportable Event exists.The report to OIG shall include the following information:

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

ii. a description of Cephal on's actions taken to correct theReportable Event; and

iii. any furher steps Cephalon plans to take to address theReportable Event and prevent it from recurg.

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

v. Cephalon shall not be required to report as a ReportableEvent any matter previously disclosed under Section II.G

above.

i. Notification of Communications with FDA.

Within 30 days afer the date of any written report, correspondence, orcommunication between Cephalon and the FDA that materially discusses Cephalon's or aCovered Person's actual or potential unlawful or improper promotion of Cephal on'sproducts (including any improper dissemiation of inormation about off-label .indications), Cephalon shall provide a copy of the report, correspondence, orcommunication to the OIG. Cephalon shall also provide written notice to the OIG within30 days after the resolution of any such disclosed off-label matter, and shall provide theOIG with a description of the findings and/or results of the matter, if any.


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J. Review of Records ReflectinlZ the Content ofDetailinlZ Sessions.

Cephalon shall implement a Message Recall Monitoring Program designed toidentify, for each Reporting Period, potential-off-label promotional activities byCephalon's field sales force though the analysis of studies generated by an independententity (Surey Entity) reflecting physician recall of the maketing messages delivered byCephalon's sales force (Message Recall Studies) for up to thee Covered Products (asdefined below). Cephalon shall obtain Message Recall Studies for eac~ Reporting Period.In order to satisfy its obligations under ths Section III.J, Cephalon may propose that itobtai an alternative tye of surey record ~ verbatims or similar records) rather than

Message Recall Studies. The OIG wil consider Cephalon's proposal, and afterconsiderig Cephalon's proposal shall, in its discretion, identify the tye of sureyrecords to be obtained.

For each Reporting.Period and for each Covered Product, Cephalon shall contractwith the Surey Entity to. conduct Message Recall Studies. The OIG shall select andnotify the Surey Entity of a one week period within every other quarer of the ReportingPeriod for which the Message Recall Studies shall be conducted beginning in the secondfull quarer after the Effective Date. For each Covered Product, Cephalon shall obtainMessage Recall Studies coverig the identified week in all regions across the UnitedStates.

Prior to the star of the second Reporting Period and every Reporting Periodthereafter, based on the inormtion provided and other information mown to it, and afterconsultation with Cephalon, the OIG shall select up to three Governent ReimbursedProducts to be the basis for the review outlied in ths Section III. and shall notif

Cephalon of its selection. These identified products shall be mown as the "CoveredProducts." The pares have already identified the Covered Products for the firstReporting Period.

Cephalon shall review the records obtaied from the Surey Entity and shall

identify any instances in which the records appear to indicate that Covered Persons mayhave discussed and/or disseminated information about off-label uses of the CoveredProducts. Cephalon shall make findings based on its review (Off-Label Findings) andshall take any responsive action it deems necessar. If necessar for puroses of itsreview, Cephalon shall endeavor to gather additional factual information about thecircumtances relating to any Off-Label Findings. As par of each Anual Report,


24

Cephalon shall provide the OrG with copies of the underlyig records of the detalinginteractions, a copy of Cephal on's Off-Label Findigs, and a description of the action(s),if any, Cephalon took in response to the Off-Label Findings.

K. Field Force Monitoring and Review Efforts.

To the extent not already accomplished, within 120 days afer the Effective Date,Cephalon shall establish a FieldForce Monitoring Program (FFMP) to evaluate andmonitor field sales force representatives' interactions with HCPs. The FFMP shall be aformlized process designed to directly observe the appropriateness of field sales forcerepresentative's interactions with HCPs and to identify potential off-label promotionalactivities. .

Under this program, Cephalon compliance personnel, or appropriately traineddesignees who are not from marketing or the field sales organzations and who are notwithin three levels of the field sales force representative's reporting strcture, shallconduct direct field observations (Observations) offield sales force representatives toassess whether the messages delivered and materials distrbuted to HCPs are consistentwith Cephalon's Policies and Procedures. These Observations shall be full day ride-alongs with field sales representatives, and each Observation shall consist of directlyobserving all meetings between a sales representative and HCPs durg the workday. TheObserations shall be scheduled throughout the year, randomly selected by Cephaloncompliance personnel, include each therapeutic area and actively promoted product, andbe conducted across the United States. At the completion of each Obseration, Cephaloncompliance personnel or the designee shall prepare a report which includes:

1) the identity of the sales representative;2) the identity of the Cephal on compliance professiona;

3) the date and duration of the Observation;4) the product(s) promoted durg the Observation;5) an overall assessment of compliance with Cephalon policy; and6) the identification of any potential off-label promotional activity by the

field sales representative.

Cephalon compliance personnel shall conduct at least 30 full-day Observationsduring each Reportng Period. The number of inpections conducted for each therapeutic


25

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

In the event that a compliance issue, including potential off-label promotion, isidentified during any Obseration, Cephalon shall investigate the incident consistent with.established Policies and Procedures for the handling of investigations. As par of theforml investigation procedures, findings shall be made and all necessar and appropriateresponsive action (including disciplinar action) and corrective action shall be taken. TheCompliance Offcer shall ~isclose Reportable Events pursuant to Section TI.H above, ifapplicable. Any compliance issues identified during an Observation and any correctiveaction shall be recorded in the files of Global Compliance.

Cephalon shall include a sumar of the FFMP and the results of the FFMP aspar of each Anual Report. As par of each Anual Report, Cephalon also shall providethe OIG with copies of the Obseration report for any instances in which it wasdetermed that improper promotion occured and a description of the action(s) thatCephalon took as a result of such detenninations. Cephalon shall make the Observationreport for all other Observations available to the OIG upon request.

L. Notice to Health Care Providers and Entities.'

Within. 90 days after the Effective Date, Cephalon shall send, by postage prepaidfirst class mail, Certificate of Mailing requested, an exact copy of the notice attachedhereto as Attchment A, showing the date of the mailing, to any health care provider orentity that Cephalon curently details. This mailing shall notify each health care providerand entity of the terms of the global settlement with the United States, includig anexplanation of the conduct to which Cephalon pled guilty and the conduct resolved by thecivil settlement. The mailing shall also notify each health care provider or entity that theymay report any questionable conduct by Cephalon representatives to a compliancetelephone number or e-mail address established by Cephalon or to the FDA.

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


26

Implementation Report and each Anual Report, Cephalon shall provide to the OIG asumar of the calls and messages received.

M. Reporting of Physician Pavrents.

I. Phase I Reporting

By Januar 31, 2010, Cephalon shall post in a prominent position on its website aneasily accessible and readily searchable listing of all physicians who received any Phase IPayments (as defmed below in Section III.M.3) directly or indirectly from Cephalondurng Calendar Year 2009 and the aggregate value of such payments Ín the calendaryear.

After the initial posting, 30 days after the end of each subsequent calendar quareruntil March 2011, Cephalon shall also post on its website a listing of updated infomiation

about all Phase I Payments provided during the applicable calendar year durg thepreceding quarer(s). The quarerly listing shall be easily accessible and readilysearchable.

Each listing shall include a complete list of all individual physicians to whomCephalon directly or indirectly made Phase I Payments in the preceding calendar year.Each listing shall be aranged alphabetically accordig to the physicians' last name. ThePayment amounts in the lists shall be reported in $10,000 increments (e.g., $0 - $10,000;$10,001- $20,000; etc.) For each physician, the applicable listing shal include thefollowing information: i) full name; ii) city and state of the physician's practice; and ii)

the aggregate value of the payment(s) in the preceding quarer(s) or year (as applicable).The reporting described in this Section III.M.l shall be referred to hereafter as "Phase IReporting. "

2. Phase II Reportng

No later than March 31,2011 and during the remaining tenn of the CIA, Cephalonshall post in a promient position on its website an easily accessible and readilysearchable listing of physicians and Related Entities (as derined in Section nI.M.3) whoreceived any Payments directly or indirectly from Cephalon and the aggregate value ofsuch Payments in the preceding Calendar Year. After the initial posting, 30 days after theend of each subsequent calendar quarer Cephalon shall also post on its website a listing


27

of updated information about all Payments provided during the applicable calendar yeadurng the preceding quarer(s). The quarerly listing shall be easily accessible andreadily searchable.

Each listing shall include a complete list .of all individual physicians and RelatedEntities to whom Cephalon directly or indirectly mae Payments in the precedingcalenda year. Each listing shall be aranged alphabetically according to the physicians'last name and the name of the Related Entity. The Payment amounts in the lists shall bereported in $10,000 increments (e.g., $0 - $10,000; $10,001- $20,000; etc.) For eachphysician and Related Entity, the applicable listing shall include the followinginonnation: i) full name; ii) city and state of the physician's practice; iii) name, city, andstate in which the Related Entity is located; and iv) aggregate value of the Payment(s) inthe preceding quarer(s) or year (as applicable). The reporting described in this SectionIII.M.2 shall be referred to hereafter as "Phase II Reporting."

3. Miscellaneous Provisions

Cephalon shall continue to make eachaiuallisting and the most recent quarerly

listing of both Phase I Reportg and Phase II Reporting available on its website at leastthroughout the term of this CIA. Cephalon shall reta and make available to OIG, uponrequest, all work papers, supportng documentation, correspondence, and records relatedto all applicable Payments and to the aiual and quarerly listings of Payments. Nothigin this Section III.M affects the responsibilty of Cephalon to comply with (or liabilty fornoncompliance with) all applicable Federal health care program requirements and statelaws as they relate to all applicable Payments made to physicians or Related Entities.

If the proposed Physician Payments Sunshine Act of 2008 or simlar legislation isenacted, the OIG shall determe whether the puroses of this Section III.M arereasonably satisfied by Cephalon's compliance with such legislation. In such case, and inits sole discretion, the OIG may agree to modify or terminate provisions of Section III.Mas appropriate.

For puroses of this Section m.M, the term "Payments" is defined to include allpayments or transfers of value (whether in cash or in kind) made to physicians and/or toRelated Entities. The term Payments includes, for example, payments or compensationfor services rendered, grants, fees, honoraria, and payments relating to research oreducation. The term Payments also includes food, entertainent, gifts, trips or travel,

Corporate Integrty AgreementCephaloii Inc.

28

product(s)/item(s) provided for less than fai market value; or other economic benefit.The term Payments does not include: i) samples of drg products that meet the definitionset fort in 21 C.F.R. § 203.3(i), or ii) discounts, rebates, or other pricing terms.

For puroses of this Section III.M, the term "Phase I Payments" is defined as thosePayments made in connection with physicians serving as speakers, paricipating inspeaker traiing, or serving as consultants (including for advisory boards, or

preceptorships. )

For puroses of this Section III.M, the term "Related Entity" is defined to be anyentity by or in which any physician receiving Payments is employed, has tenure, or has anownership interest.

IV. CHANGES TO BUSINESS UNITS OR LOCATIONS

A. Change or Closure of Unit or Location. hi the event that, after the EffectiveDate, Cephalon changes locations or closes a business unt or location related töPromotional and Product Services Related Functions, Cephalon shall notify OIG of thisfact as soon as possible, but no later than within 30 days afer the date of change orclosure of the location.

B. Purchase or Establishment of New Unit or Location. hi the event that, after theEffective Date, Cephalon purchases or establishes a new business unt or location relatedto Promotional and Product Services Related Functions, Cephalon shall notify OIG nolater than the date the purchase or establishment is publicly disclosed. This notificationshall include the address of the new business unit or location, phone number, fax number,Federal health care program provider or supplier number (if applicable), and the nameand address of the contractor that issued each number (ifapplicable). Each new businessunit or location and all Covered Persons at each new business unit or location shall besubject to the applicable requirements of this CIA.

C. Sale of Unit or Location. hi the event that, after the Effective Date, Cephalonproposes to sell any or all of its business unts or locations related to the Promotional andProduct Services-Related Functions that are subject to this CIA, Cephalon shall notifOIG of the proposed sale no later than the date the sale is publicly disclosed. Thsnotification shall include a description of the business unit or location to be sold, a brief


29

description ofthe tenu of the sale, and the name and contact inormtion of theprospective purchaser. This CIA shall be binding on the purchaser of such business unitor location, unless otherwise deterned and agreed to in writing by the OIG.

V. IMPLEMENTATION AND ANNUAL REpORTS

A. Imlementation Reoort. Within 150 days afer the Effective Date, Cephalonshall submit a written report to OIG sumizing the status of its implementation of therequirements of this CIA (Implementation Report). The Implementation Report shall, at aminimum, include:

1. the name, address, phone number, and position description of the ChiefCompliance Offcer required by Section III.A.!, and a sumar of other noncompliancejob responsibilities the Compliance Offcer may have;

2. the names and positions of the members of the Compliance 'Commttèerequired by Section III.A.2;

3. (a) a copy of the letter (including all attchments) required by SectionsII.C.6 and III.B.2 sent to each par employing Thd Par Personnel; (b) a list of all suchexisting agreements; and (c) a description of the entities' response to Cephalon's letter;

4. the names and positions of the Certifyg Employees required by Section

m.A.4;

5. a copy of Cephal on's Code of Conduct required by Section III.B.I;

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

. 7. the number of individuals required to complete the Code of Conductcertification required by Section III.B. 1, the percentage of individuals who havecompleted such cerfication, and an explanation of any exceptions (the documentation

supporting this information shall be available to OIG, upon request);

8. the following information regarding each tye of training required .by

Section III.C:


30

a. a description of such traig, including a sumar of the topicscovered, the length of sessions, and a schedule of training sessions;

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

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

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

10. the following information regarding the IRO(s): (a) identity, address,and phone number; (b) a copy of the engagement letter; and (c) a sumar anddescription of any and all curent and prior engagements and agreements betweenCephalon and the IRO;

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

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

13. the name, title, and responsibilties of any person who is determed tobe an Ineligible Person under Section II.F; the actions taken in response to the screeningand removal obligations set fort in Section II.F;

14. a list of all of Cephal on , s locations (including locations and mailingaddresses); the corresponding name under which each location is doing business; thecorresponding phone numbers and fax numbers; each location's Federal health careprogram provider or supplier number(s) (if applicable), and the name and address of eachFederal health care program contractor to which Cephalon curently submits claims (ifapplicable);

15. a description of Cephal on's corporate strcture, including identification

of any parent and sister companies, subsidiares, and their respective lines of business;


31

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

to the notice; and

17. the certfications required by Section V.C.

B. Anual Reports. Cephalon shall submit to OIG anually a report with respectto the statu of, and findings regarding, Cephalon's compliance activities for each of thefive Reporting Periods (Anual Report).

Each Anual Report shall include, at a mium:

1. an explanation of any change in the identity, position description, orother noncompliance job responsibilties of the Chief Compliance Offcer and any changein the membership of the Compliance Commttee or Certifying Employees described inSections m.A. 1, 2 or 4;

2. a sumar of any signficant changes or amendments to the Policies and

Procedures required by Section m.B.3 and the reasons for such changes Cl change inapplicable requirements);

3. the number of individuals required to complete the Code of Conductcertification required by Section m.B.l, the percentage of individuals who havecompleted such certification, and an explanation of any exceptions (the documentationsupporting this information shall be available to OIG, upon request);

4. (a) a copy of the letter (including all attachments) required by Sections.II.C.6 and III.B.2 sent to each entity employing Third Par Personnel; (b) a list of allsuch existing agreements; and (c) a description of the entities' response to Cephalon'sletter;

5. the following information regarding each tye of training required bySection III.C:


32

a. a description of such training, including a sum of the topicscovered, the length of sessions, and a schedule of training sessions;

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

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

6. a complete copy of all reports prepared pursuant to Section m.D, alongwith a copy of the IRO's engagement letter (if applicable);

7. Cephalon's response and corrective action planes) related to any issuesraised by the reports prepared pursuat to Section III.D;

8. a sumar and description of any and all curent and prior engagementsand agreements between Cephalon and the IRO, if different from what was submitted aspar of the Implementation Report;

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

to. a sumar of Reportable Events (as defmed in Section III.H) identifieddurng the Reporting Period and the status of any corrective and preventative actionrelating to all such Reportable Events;

1 1. a summar of the disclosures in the disclosure log required by SectionIII.E that relate to Federal health care programs;

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

13. the name, title, and responsibilties of any person who is deternined tobe an Ineligible Person under Section III.F; the actions taken by Cephalon in response tothe screening and removal obligations set forth in Section m.F;


33

.14. i; sumar describing any ongoing investigation or legal proceeding

required to have been reported pursuant to Section III.G. The sumIar shall include adescription of the allegation, the identity of the investigating or prosecuting agency, andthe status of such investigation or legal proceedng;

15. a sumar describing any communication with the FDA requied to

have been reported pursuant to Section m.i. Ths sumar shall include a description ofthe matter and the status of the matter;

16. all information required by Section Ill.J;

17. all information required by Section Ill.K;

18. a sumar of the calls and messages received in response to the noticerequired by Section III.L and the disposition of those calls and messages;

19. a description of all changes to the most recently provided list ofCephalon's locations (including addresses) as requied by Section V.A.14; thecorresponding name under which each location is doing business; the correspondingphone numbers and fax numbers; each location's Federal health care progr provider or

supplier number(s) (if applicable), and the name and address of each Federal health careprogram contractor to which Cephalon curently submits clais (if applicable);

20. a cerification from the Chief Compliance Offcer that inormationregarding payments has been posted on.Cephalon's website as required Section III.M; and

21. the certifications required by Section V.C.

The first Anual Report shall be received by OIG no later than 60 days afer theend of the first Reporting Period. Subsequent Anual Reports shall be received by DIGno later than the aniversar date of the due date of the first Anual Report.

C. Cerfications. The following certifications shall be included in theImplementation Report and Anual Reports:

1. Certifying Emolovees: hi each Anual Report Cephalon shall includethe certifications of Certifying Employees as required by Section III.AA.


34

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

a. he or she has reviewed the Report and has made reasonableinquiry regarding its content and believes that the information in the Report is accurateand trthl;

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

c. to the best of his or her lmowledge, Cephalon has complied withits obligations under the Settlement Agreement: (a) not to resubmit to any Federal healthcare program payors any previously denied claims related to the Covered Conductaddressed 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 unalloWablecosts (as dermed in the Settlement Agreement); and (c) to identify and adjust any pastcharges or clai for unallowable costs;

d. Cephalon's: 1) Policies and Procedures as referenced in SectionIII.B.3 above; 2) templates for standardized contracts and other similar documents; and 3)the training materials used for puroses of Section III.C all have been reviewed bycompetent legal counsel and have been found to be in compliance with all applicableFederal health care program and FDA requirements. In addition, Cephalon's promotionalmaterials containg claims or information about Governent Reimbursed Products andother materials and information intended to be dissemiated outside Cephalon have beenreviewed by competent regulatory, medical and/or legal personnel in accordance withapplicable Policies and Procedures to ensure that legal, medical, and regulatory concerhave been addressed and elevated when requied, and that the materials and informatonwhen finally approved are in compliance with all applicable Federal health care progrand FDA requirements. If the appliçable legal requirements have not changed, after theinitial review of the documents listed above, only material changes to the documents mustbe reviewed by competent regulatory, medical and/or legal personneL. The certificationshall include a description of the document(s) reviewed and approximately when the


35

review was completed. The documentation supporting this aertfication shall be availableto OIG, upon request; and

e. Cephalon's call plan for Governent Reimbured Products werereviewed at least once during the Reporting Perod (consistent with Section III.B.3.e) and,for each product the call plans were found to be consistent with Cephalon's policyobjectives as referenced above in Section III.B.3.e.

D. Designation of Information. Cephalon shall clearly identify any portons of itssubmissions that it believes are trade secrets, or information that is commercial orfinancial and privileged or confidential, and therefore potentially exempt from disclosureunder the Freedom of Information Act (FOIA), 5 U.S.C. § 552. Cephalon shall refrainfrom identifying any information as exempt from disclosure if that informtion does notmeet 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 andreports required under this CIA shall be submitted-to the following entities:

OIG: Admnistrative and Civil Remedies BranchOffce of Counsel to the Inspector GeneralOffce of hipector General

u.s. Deparent of Health and Human SericesCohen Building, Room 5527330 hidependence Avenue, S.W.Washington, DC 20201Telephone: (202) 619-2078Facsimile: (202) 205-0604

CEPHALON: Executive Vice President, Chief Compliance OfficerCephalon, hic.40 Moores RoadFrazer, P A 19355Phone: (610) 727-6280Facsimile: (610) 727-6001


36

Unless otherwise specified, all notifications and reports required by this CIA may bemade by certfied mail, overnight mail, hand delivery, or other means, provided that thereis proof that such notification was received. For puroses of this requirement, internalfacsimile confiration sheets do not constitute proof of receipt. Upon request by OIG,Cephalon may be required to provide OIG with an electronic copy of each notification orreport required by this CIA in searchable portable document format (pdt), either insteadof or in addition to, a paper copy.

VII. OIG INSPECTION. AUDIT. AND REVIW RIGHTS

In addition to any other rights OIG may have by statute, reguation, or contract,DIG or its duly authorized representative( s) may examne or request copies of Cephalon' sbooks, records, and other documents and supporting materials and/or conduct on-sitereviews of any of Cephal on's locations for the purose of verifyig and evaluatig: (a)Cephalon's compliance with the terms of this CIA; and (b) Cephalon's compliance withthe requirements of the Federal health care programs in which it paricipates and with allapplicable FDA requirements. The documentation described above shall be madeavailable by Cephalon to OIG or its duly authorized representative(s) at all reasonabletimes for inspection, audit, or reproduction. Furherore, for puroses of this provision,DIG or its duly authorized representative(s) may interiew any of Cephalon's employees,contractors, or agents who consent to be intervewed at the individual's place of businessduring normal business hours or at such other place and tie as may be mutually agreedupon between the individual and OIG. Cephalon shall assist OIG or its duly authoriedrepresentative(s) in contacting and aranging interviews with such individuals upon DIG'srequest. Cephalon's employees may elect to be interiewed with or without arepresentative of Cephalon present.

VI. DOCUMENT AND RECORD RETENTION

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


37

IX. DISCLOSURES

Consistent with HHS's FOIA procedures, set forth in 45 C.F.R. Par 5, OIG shallmake a reasonable effort to notify Cephalon prior to any release by DIG of informationsubmitted by Cephalon pursuant to its obligations under this CIA and identified uponsubmission by Cephalon as trade secrets, or information that is commercial or financialand privileged or confidential, under the FOIA rules. With respect to such releases,Cephalon shall have the rights set fort at 45 C.F.R. § 5.65(d).

X. BREACH AND DEFAULT PROVISIONS

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

A. Stipulated Penalties for Failure to Comolv with Certain Obligations. As acontractual remedy, Cephalon and OIG hereby agree that failure to comply with certinobligations as set forth in this CIA may lead to the imposition of the following monetarpenalties (hereinafer referred to as "Stipulated Penalties") in accordance with thefollowing provisions.

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

a. a Compliance Officer;

b. a Compliance Commttee;

c. the Board resolution;

d. a written Code of Conduct;

e. written Policies and Procedures;

f. the training of Covered Persons;

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


38

h. Ineligible Persons screening and removal requirements;

i. notification of Governent investigations or legal proceedigs;

j. notification of communcations with FDA regarding off-labelmatters;

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

1. a program for FFMP;

m. notification to any health care providers or entities as required bySection II.L; or

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

2. A Stipulated Penalty of $2,500 (which shall begin to accrue on the dayafter the date the obligation became due) for each day Cephalon fails to engage an IRO,as required in Section m.D and Appendices A-B.

3. A Stipulated Penalty of $2,500 (which shall begin to accrue on the dayafter the date the obligation became due) for each day Cephàlon fails to submit theImplementation Report or the Anual Reports to OIG in accordance with therequirements of Section V by the deadlines for submission.

.4. A Stipulated Penalty of $2,500 (which shall begin to accrue on the dayafter the date the obligation became due) for each day Cephalon fails to submit the anual .IRO Review Report(s) in accordance with the requirements of Sections III.n and V.B.6and Appendix B.

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


39

6. A Stipulated Penalty of $5,000 for each false certification submitted byor on behalf of Cephalon as par of its Implementation Report, Anual Report, additionaldocumentation to a report (as requested by the OIG), or otherwise required by ths CIA.

7. A Stipulated Penalty of$I,OOO for each day Cephalon fails to complyfully and adequately with any obligation ofthis CIA. DIG shall provide notice toCephalon, stating the specific grounds for its determation that Cephalon has failed tocomply fully and adequately with the CIA obligation(s) at issue and steps Cephalon shalltake to comply with the CIA. (This Stipulated Penalty shall begin to accrue 10 days aferCephalon receives this notice from OIG of

the failure to comply.) A Stipulated Penalty asdescribed in ths Subsection shall not be demaded for any violation for which OIG hassought a Stipulated Penalty under Subsections 1-6 of

this Section.

B. Timelv Written Requests for Extensions. Cephalon may, in advance of the due

date, submit a timely written request for an extension of time to perform any act or fieany notification or report required by this CIA. Notwithstanding any other provision inthis Section, if GIG grants the timely written request with resect to an act, notification,or report, Stipulated Penalties for failure to perform the act or fie the notification orreport shall not begin to accrue until one day afer Cephalon fails to meet the reviseddeadline set by OIG. Notwithstanding any other provision in this Section, if OIG deniessuch a timely written request, Stipulated Penalties for failure to perform the act or fie thenotification or report shall not begin to accrue until three business days after Cephalonreceives OIG's. written denial of such request or the origial due date, whichever is later.A "timely wrtten request" is defined as a request in writing received by OIG at least fivebusiness days prior to the date by which any act is due to be performed or any notificationor report is due to be fied.

C. Payment of Stioulated Penalties.

1. Demand Letter. Upon a finding that Cephalon has failed to comply withany of the obligations described in Section X.A and after determining that StipulatedPenalties are appropriate, OIG shall notify Cephalon of: (a) Cephalon's failure tocoinply; 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 afer the receipt of the

Demand Letter, Cephalon shall either: (a) cure the breach to OIG's satisfaction and pay

Corprate Integrity AgreementCephal on, Inc.

40

the applicable Stipulated Penalties; or (b) request a hearng before an liS admistrativelaw judge (ALl) to dispute OIG's determation of noncompliance, pursuant to the agreedupon provisions set forth below in Section X.E. In the event Cephalon elects to requestan ALl hearg, the Stipulated Penalties shall continue to accrue until CephaIon cures, toOIG's satisfaction, the alleged breach in dispute. Failure to respond to the Demand Letterin one of these two maners within the allowed time period shall be considered a materialbreach of this CIA and shall be grounds for exclusion under Section X.D.

3. Form o/Payment. Payment of the Stipulated Penalties shall be made byelectronic fuds transfer to an account specified by the OIG in the Demand Letter.

4. Independence from Material Breach Deterination. Except as set forthin Section X.D. l.c, these provisions for payment of Stipulated Penalties shall not affect orotherise set a stadard for OIG's decision that Cephalon has materially bréached this

CIA, which decision shall be made at OIG's discretion and shall be govered by theprovisions in Section X.D, below.

D. Exclusion for Material Breach of this CIA.

1. Definition 0/ Material Breach. A material breach of ths CIA means:

a. a failure by Cephalon to report a Reportable Event and taecorrective action, as required in Section III.H;

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

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

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

e. a failure of the Board to issue a resolution in accordance withSection III.A.3.


41

2. Notice of Material Breach and Intent to Exclude. The paries agree thata material breach of this CIA by Cephalon constitutes an independent basis forCephalón's exclusion from paricipation in the Federal health care programs. .Upon adetermnation by OIG that Cephalon has materially breached this CIA and that exclusionis the appropriate remedy, OIG shall notify Cephalon of: (a) Cephalon's material breach;and (b) OIG's intent to exercise its contractual right to impose exclusion (this notificationis hereinafter refered to as the ''Notice of Material Breach and Intent to Exclude").

3. Opportunity to Cure. Cephalon shall have 30 days from the date ofreceipt of the Notice of Material Breach and Intent to Exclude to demonstrate to OIG'ssatisfaction that:

a. Cephalon is in compliance with the obligations of the CIA cited byOIG as being the basis for the material breach;

b. the alleged material breach has been cured; or

c. the alleged material breach canot be cured within the 30-dayperiod, but that: (i) Cephalon has begu to take action to cure thematerial breach; (ii) Cephalon is pursuing such action with duedilgence; and (ii) Cephalon has provided to OIG a reasonable

timetable for curing the material breach.

4. Exclusion Letter. If, at the conclusion of the 30-day period, Cephalonfails to satisfy the requirements of Section X.D.3, OIG may exclude Cephalon .fromparicipation in the Federal health care programs. OIG shall notify Cephalon in wrtig ofits deternation to exclude Cephalon (this letter shall be referred to hereinafer as the"Exclusion Letter"). Subject to the Dispute Resolution provisions in Section XE, below,the exclusion shall go into effect 30 days afer the date of Cephalon's receipt of theExclusion Letter. The exclusion shall have national effect and shall also apply to all otherFederal procurement and nonprocurement program. Reinstatement to program .paricipation is not automatic. Afer the end of the period of exclusion, Cephalon mayapply for reinstatement by submitting a wrtten request for reinstatement in accordancewith the provisions at 42 C.F.R. §§ 1001.3001-.3004.


42

E. Dispute Resolution.

1. Review Rights. Upon OIG's delivery to Cephalon of its Demand Letteror of its Exclusion Letter, and as an agreed-upon contractual remedy for the resolution ofdisputes arsing under this CIA, Cephalon shall be afforded cerain review rightscomparable to the ones that are provided in 42 U.S.C. § 1320a-7(f) and 42 C.F.R. Par. 1005 as if they applied to the Stipulated Penalties or exclusion sought pursuant to thisCIA. Specifically;OIGts determination to demand payment of Stipulated Penalties or toseek exclusion shall be subject to review' by an HHS ALJ and, in the event of an appeal,the HHS Deparental Appeals Board (DAB), in a maner consistent with the provisionsin 42 G.F.R. § ~005.2-io05.2i. Notwithstanding the language in 42 C.F.R. § io05.2(c),the request for a hearng involving Stipulated Penalties shall be made withn 10 days afterreceipt of the Demand Letter and the request for a hearg involving exclusion shall bemade within 25 days after receipt of the Exclusion Letter.

2. Stipulated Penalties Review. Notwithstanding any provision of Title 42of the United States Code or Title 42 of the Code of Federal Regulations, the only issuesín a proceeding for Stipulated Penalties under ths CIA shall be: (a) whether Cephalon .was ii full and timely compliance with the obligations of this CIA for which OIGdemands payment; and (b) the period of noncompliance. Cephalon shall have the burdenof 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 relatedto Stipulated Penalties. If the ALJ agrees with OIG with regard to a fiding of a breachof this CIA and orders Cephalon to pay Stipulated Penalties, such StipUlated Penaltiesshall become due and payable 20 days after the ALJ issues such a decision unlessCephalon requests review of the ALJ decision by the DAB. If the ALJ decision isproperly appealed to the DAB and the DAB upholds the determination of OIG, theStipulated Penalties shall become due and payable 20 days after the DAB issues its.decision.

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

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

Corporate Integrity AgreementCephal on, Inc. .

43

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

c. whether the alleged material breach could not have been curedwithin the 30-day period, but that: (i) Cephalon had begu to taeaction to cure the material breach withn that perod; (ii) Cephalonhas pUrsued and is pursuing such action with due dilgence; and (ii)

Cephalon provided to OIG within that perod a reàsonable tietable

for curng the material breach and Cephalon has followed thetimetable.

For puroses of the exclusion herein, exclusion shall take effect only afteran ALJ decision favorable to OIG, or, if the ALJ rules for Cephalon, only after a DABdecision in favor ofOIG. Cephalon's election of its contractual right to appeal to theDAB shall not abrogate GIG's authority to exclude Cephalon upon the issuance of anALl's decision in favor ofOIG. If the ALJ sustains the determation ofOIG anddetermnes that exclusion is authorized, such exclusion shall take effect 20 days afer theALJ issues such a decision, notwithstading that Cephalon may request review of the ALJdecision by the DAB. If the DAB finds in favor of OIG afer an ALJ decision adverse toOIG, the exclusion shall take effect 20 days afer the DAB decision. Cephalon shallwaive its right to any notice of such an exclusion if a decision upholdig the exclusion isrendered by the ALJ or DAB. If the DAB fmds in favor of Cephal on, Cephalon shall bereinstated effective on the date of the original exclusion.

4. Finality of Decision. The review by an ALJ or DAB provided for aboveshall 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 ALl'sdecision if not appealed) shall be considered final for all puroses under this CIA.

XI. EFFECTIV AND BINDING AGREEMENT

Cephalon and OIG agree as follows:

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


44

B. This CIA shall become final and binding on the date the final signatue isobtaied on the CIA;

C. This CIA constitutes the complete agreement between the paries and may notbe amended except by written consent of the pares to this CIA;

D. The undersigned Cephalon signatories represent and warant that they areauthoried to execute this CIA. The undersigned OIG signatory represents that he issigning this CIA in his offcial capacity and that he is authorized to execute this CIA; and

E. This CIA may be executed in counterpars, each of which constitutes anoriginal and all of which constitute one and the same CIA. Facsimiles of signatues shallconstitute acceptable, binding signatures for puroses of this CIA.

Corprate Integrity AgreementCephal on, Inc.

45

.

!.

ON BEHA OF CEHAON, Ll\c.

...... ).Rr. ~ I'r) ,. ~'.o! (..Ll L .L,()i/Øt"l..._._..___. i';... ~__.._~_____._Valii BaldisM()Cephalor Chief CmnpHauee Offwe.t'

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Ce.ph~ik)l1 Gzr$l'l'il (\)uii~.d

C:l FJO l~o .11(1 $ IVl)__....1.. ...__.~_......._.

Date

(£ ...2! 22:/ ò.C(.D~itcEdc W. SitlSChu.E(

Cmmsel ttJf C~lhak?', Inc.

_!1~IL/~_.oDate t

Corpomte Int~gtity Agreet.'ltCephaloo, In.

46

:'.

ON BEHALF OF TH OFFICE OF INSPECTOR GENERALOF THE DEPARTMENT OF H~ALTH AND HUMAN SERVICES

( __c:Gregory E. DemskeAssistant hispector General for Legal AffairsOffce of hispector GeneralU. S. Deparent of Health and Human Services

Corporate Integrty AgreementCephalon, Inc.

47

1/UI!!( ,Date

.'

Attacbment A

Dear Healthcare Provider:

As you may be aware Cephalon, Inc. recently entered into a global civil, criminal, and,admnistrative settement with the United States and individual states in connection withits promotion of three Cephalon products. This letter provides you with additionalinformation about the .settlement, explains Cephalon's commitments going forward, andprovides you with access to information about those commitments. In general tems, theGovenuent alleged that Cephalon unlawfully promoted thee drgs (Actiq, Gabitrl, andProvigil) for uses not approved by the Food & Drg Administrtion (FDA). To resolvethese matters, Cephalon pled guilty to a misdemeanor criinal violation and agreed topay a total of $425 milion to the Federal Goverent and state Medicaid programs. Inaddition, Cephalon paid $6,150,000 in' a companion settlement with the ConnecticutAttorney General related to unfair trde practice laws. Additional infornation about thesettlements may be found at the following websites (include a link to tbe USAO,Cepbalon (ww.cepbalon.com). and Attorney General of Connecticut's websites.)

As part of the federal settlement, Cephalon also entered a five-year corporate integrtyagreement with the Offce ofInspector General of the U:S. Deparent of Health andHuman Services. The corporate integrity agreement is available athtt://oIii:.hhs.gov/fraudlcia/index.htmL. Under this agreement, Cephalon agreed toundertake certin obligations designed to promote compliance with Federal health care

program and FDA requirements. We also agreed to notify healthcare providers about thesettlement and inform them that they can report any questionable practices by Cephalon'srepresentatives to Cephalon's Compliance Departent or the FDA.

Please call or email Cephalon at 1-866-900-7167 orquestions&)cepbalon.com if you

have questions about the settlement referenced above or to reort any instances in whichyou believe that a Cephalon representative inappropriately promoted a product orengaged in other questionable conduct. Alterntively, you may report any such instances

to the FDA's Division of Drug Marketing, Advertsing, and Communications at 301-796-1200. You should direct medical questions or concerns about the products to Cephalon'sMedical Infornation departent.

We appreciate your ti.me and attention. We are dedicated to ensurng that we bring youthe scientific and medical infornation you need to make well-informed decisions aboutwhether Cephalon products are right for your patients.

Sincerely,

Chief Executive OffcerCephalon, Inc.

,.

APPENDIX A

INDEPENDENT REVIEW ORGANIZATION

this Appendix contains the requirements relating to the Independent ReviewOrganization (IRO) required by Section III.D of the CIA.

A. IRO EnlZalZement.

Cephalon shall engage an IRO that possesses the qualifications set fort inParagraph B, below, to perform the responsibilties in Paragraph C, below. The IROshall conduct the review in a professionally independent and objective fashion, as setfort in Paragraph D. Within 30 days after OIG receives wrtten notice of the identity ofthe selected IRO, OIG wil notify Cephalon if the IRO is unacceptable. Absentnotification from OIG that the IRO is unacceptable, Cephalon may continue to engage theIRO.

If Cephalon engages a new IRO durg the term of the CIA, this IRO shall alsomeet the requirements of this Appendix. If a new IRO is engaged, Cephalon shall submitthe inormation identified in Section V.A.10 of the CIA to OIG within 30 days ofengagement of the IRO. Within 30 days after OIG receives wrtten notice of the identity

of the selected IRO, OIG wil notify Cephalon if the IROis unacceptale. Absentnotification from OIG that the IRO is unacceptable, Cephalon may continue to engage theIRO.

B. IRO Qualifications.

The IRO shall:

1. assign individuals to conduct the Promotional and Product Serices Reviewwho have expertise in all applicable Federal health care program and FDA requirementsrelating to Promotional and Product Services Related Functions. The assignedindividuals shall also be lmowledgeable about the general requirements of the Federalhealth care program(s) under which Cephalon products are reimbursed;

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

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

Appendix ACephalon, Inc.

,

C. IRO Responsibilties.

The IRO shall:

1. perform each Promotional and Product Serices Review in accordance with thespecific requirements of the CIA;

2. follow all applicable Federal health care program and FDA requirements inmaking assessments in each Promotional and Product Services Review;

3. if in doubt of the application of a paricular Federal health care program orFDA requirement, policy, or regulation, request clarification from the appropriateauthority CM CMS or FDA);

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

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

D. IRO hideoendence and Objectivity.

The IRO must perform each Promotional and Product Services Review in aprofessionally independent and objective fashion, as appropriate to the nature of theengagement, takg into account any other business relationships or engagements thatmay exist between the IRO and Cephalon.

E. IRO Removal/Termination.

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

2. OIG Removal ofIRO. hi the event OIG has reason to believe that the IRO doesnot possess the qualifications described in Paragraph B, is not independent and/orobjective as set forth in Paragraph D, or has failed to car out its responsibilties as

described in Paragraph C, OIG may, at its sole discretion, require Cephalon to engage anew IRO in accordance with Paragraph A of this App.endix.

Prior to requiring Cephalon to engage a new IRO, OIG shall notify Cephalon of itsintent to do so and provide a written explanation of why OIG believes such a step isnecess.ar. To resolve any concerns raised by OIG, Cephalon may request a meetig withOIG to discuss any aspect of the IRO's qualifications, independence or performance of its


2

responsibilties and to present additional information regarding these matters. Cephalonshall provide any additional information as may be requested by OIG under thisParagraph in an expedited maner. OIG will attempt in good faith to resolve anydifferences regarding the IRO with Cephalon prior to requirig Cephalon to terinate the

mo. However, the final determination as to whether or not to require Cephalon toengage a new IRO shall be made at the sole discretion ofOIG.


3

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

I. Promotional and Product Services Review, General Description

As specified more fully below, Cephalon shall retain an Independent ReviewOrganization (IRO) to perform reviews to assist Cephalon in assessing andevaluating its systems, processes, policies, procedures, and practices related toCephalon's Promotional and Product Services Related Functions (Promotional andProduct Services Review). The Promotional and Product Services Review shallconsist of two components - a systems review (the "Promotional and ProductSerices Systems Review" or "Systems Review"), and a transactions review (the"Promotional and Product Services Transactions ReviewJt or ''TransactionsReview") as described more fully below. Cephalon.mayengage, at its discretion,a single IRO to perform both components of the Promotional and Product ServicesReview provided that the entity has the necessar experise and capabilties toperform both.

Ifthere are no material changes in Cephalon's systems, processes, policies,and procedures relating to Promotional and Product Services Related Functions,the IRO shall perform the Promotional and Product Services Systems Review forthe first and four Reporting Perods. If Cephalon materially changes its systems,

processes, policies, and procedures relating to Promotional and Product ServicesRelated Functions, the IRO shall perform a Promotional and Product ServicesSystems Review for the Reporting Period(s) in which such changes were made inaddition to conducting the Review for the first and four Reporting Periods. Theadditional Systems Review(s) shall consist of: 1) an identification of the materialchanges; 2) an assessment of whether other systems, processes, policies, andprocedures previously reported did not materially change; and 3) a review of thesystems, processes, policies, and procedures that materially changed. The IROshal conduct the Promotional and Product Services Transactions Review for each

Reporting Period of the CIA.

II. Promotional and Product Services Systems Review

A. Description of Reviewed Policies and Procedures

The Promotional and Product Services Systems Review shall be a review ofCephalon's systems, processes, policies, and procedures (including the controls onthose systems, processes, policies, and procedures) relating to certain Promotionaland Product Services Related Functions. Where practical, Cephalon personnelmay compile documentation, schedule and organize interviews, and undertakeother efforts to assist the IRO in ~erforming the Systems Review. The IRO is notAppendix B 1Cephalon, Inc.

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

Specifically, the IRO shall review Cephalon's systems, processes, policies, andprocedures associated with the following (hereafer "Reviewed Policies andProcedures''):

1) Cephalon's systems, policies, processes, and procedures

applicable to the maner in which Cephalon representatives(including sales representatives and/or Medical Services deparentpersonnel) handle requests or inquiries relatig to information aboutthe uses of Cephal on products (including non-FDA-approved (i.e.,off-label) uses) and the dissemination of materials relating to off-label uses of products. This review includes:

Appendix BCephalon, Inc.

a) the maner in which Cephalon sales representatives. and marketing personnel handle requests forinformation about off-label uses of Cephal on products

(i.e., by referring all such requests to Medical Servcesdeparent personnel at Cephalon);the maner in which Medical Servces deparentpersonnel, including those at Cephalon's headquarers,handle and respond to requests for information aboutoff-label uses of Cephalon products (inclùdigtracking the requests and using pre-approved materialsfor puroses of responding to the request);.the form and content of information and materalsrelated to Cephalon' s products disseminated tophysicians, pharacists, or other health care

professionals (collectively "HCPs") or health careinstitutions (HCIs) by Cephalon;Cephalon's systems, processes, and procedures

(including the hiquiries Database) to track requests forinormation about off-label uses of products andresponses to those requests;the maner in which Cephalon collects and supportsinformation reported in any systems used to track andrespond to requests for product information, includingits hiquiries Database;the processes and procedures by which the ComplianceOffcer (and other appropriate individuals withn.Cephalon) identify situations in which it appears thatimproper off-label promotion may have occurred; and

2

b)

c)

d)

e)

t)

g) Cephalon's processes and procedures for investigating,

documenting, resolving, and takg appropriate

disciplinar action for potential situations involving

off-label promotion; ,

2) Cephalon's policies and procedures applicable to the maner

and circumstances under which its Medical Services deparentpersonnel (including any medical science liaisons (MSLs)) parcipatein meetings or events with HCPs or HCIs (either alone or with salesrepresentatives) and the role of the medical personnel at suchmeetings or events;

3) Cephalon's systems, policies, processes, and proceduresrelating to Cephaloils internal review and approval of informationand materials related to Cephalon's products dissemnated to HCPs orHCIs by Cephalon; .

4) Cephalon's systems, polices, processes and procedures

relating to incentive compensation for Covered Pèrsons who are salesrepresentatives, with regard to whether the systems, policies,processes, and procedures are designed to ensure that fmancialincentives do not inappropriately motivate such individuals to engagein the improper promotion, sales, and marketig of Cephal on'sproducts. This shall include a review of the bases upon whichcompensation is determined and the extent to which compensation isbased on product performance; and

5) Cephalon's systems, processes, policies, and procedures

relating to the development and review of call plans for Cephalon'sproducts. This shall include a review of the bases upon which HCPsand HCls belonging to specified medical specialties are included in,or excluded from, the call plans based on expected utilzation ofCephalon prqducts for FDA-approved uses or non-fDA-approveduses.

B. Promotional and Product Services Systems Review Report

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


I) a description of the documentation (including policies)

reviewed and any personnel interviewed;

3

2) a detailed description of Cephal on's systems, policies,processes, and procedures relating to the items identified in SectionsII.A.1-5 above, including a general description of Cephalon' s contrl

and accountabilty systems ~ documentation and approvalrequirements, and tracking mechanisms) and wrtten policiesregarding the Reviewed Policies and Procedures;

3) a description of the maner in which the control andaccountabilty systems and the wrtten policies relatig to the itemsidentified in Sections II.A. I -5 above are made lmown ordisseminated within Cephalon;

4) a detailed description of any system( s) used to track and

respond to requests for information about Cephalon's products(including the hiquiries Database);

5) a detailed description of Cephal on's incentive compensationsystem for Covered Persons who are sales representatives, includinga description of the bases upon which compensation is deterinedand the extent to which compensation is based on productperformance. To the extent that Cephalon may establishcompensation differently for individual products, the IRO shallreport separately on each such tye of compensation arangement;

6) findings and supporting rationale regardig any weaesses

in Cephalon's systems, processes, policies, and procedures relatingto the Reviewed Policies and Procedures, if any; and

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

III. Promotional and Product Services Transaction Review

As described more fully below in Sections III.A-D, the Promotional andProduct Services Transactions Review shall include: (1) a review of a sample ofhiquires reflected in the hiquiries Database; (2) a review of Cephal on's call planand Cephalon's call plan review process; (3) a review of records relating to asample of the Payments that are reported by Cephalon pursuant to Section m.M ofthe CIA; and (4) a review of up to three additional items identified by the OIG inaccordance with Section III.D. l.b of the CIA (hereafter "Additional Items".) The


4

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

A. Review of Inquires and hiquiries Database

1) Description of hiquires Database

As set forth in Section III.B.3.d ofthe CIA, Cephalon shall establisha database to track inormation relating to requests for informationreceived by Cephalon about its products (hereafter "hiquires").Specifically, Cephalon shall document and record all hiquiresreceived from HCPs or HCIs regarding Cephalon's products in adatabase (the "Inquires Database''). Cephalon shall record in theInquiries Database the following information for each Inquiryreceived: I) date of Inquir; 2) form of Inquir ~ fax, phone,

medical information request form); 3) name of requesting HCP orHCI; 4) nature and topic of request (including exact language of theInquir if made in writing); 5) natue/form of the response fromCephalon (including a record of any materials provided in responseto the request); and 6) the name of the Cephalon representative whocalled upon or interacted with the HCP or HCI. Any response fromMedical Services to an HCP or HCI shall identify whether theinformation provided addresses an indication that is par of anapproved product labeL. The statu and findings of any follow-up

review conducted by Cephalon in situations in which improper off-hibel promotion is suspected shall be maintained by GlobalCompliance.

2) hiternal Review ofhiquiries Database

On a semi-anual basis, the Compliance Officer or other appropriatepersonnel shall review the Inquires Database and relatedinformation, as appropriate, and shall generate a report sumarizingthe items of information outlined in Section III.A. I above for eachInquiry received during the preceding two quarers ("Inquir

Report"). The Compliance Officer or other appropriate personnelshall review the hiquir Reports tò assess whether the informationcontained in the report suggests that improper off-label promotionmay have occurred in connection with any Inquir(ies). If theCompliance Offcer or other appropriate personnel, in consultationwith other appropriate Cephalon personnel, suspects that improperoff-label promotion may have occured in connection with anyInquiry, the Compliance Offcer or other appropriate personnel shallAppendix B 5

Cephalon, Inc.

undertake a follow-up review of the hiqui (Off-Label Review),

make specific findigs based on his/her Off-Label Review, and taeall appropriate responsive action (including disciplinar action of theCovered Person and reporting of the conduct, including disclosingReportable Events pursuant to Section III.H of the CIA, ifapplicable).

3) IRO Review of Inquiries Reflected in hiquires Database

The IRO shall select and review a random sample of 60 hiquiriesfrom among the hiquires reflected in the hiquiries Database for eachReporting Period. Fort-five of the hiquires reviewed by the IROshall be Inquiries for which Cephalon conducted an Off-LabelReview, and the other 15 shall be hiquires for which Cephalon didnot conduct an Off-Label Review. For each hiqui reviewed, theIRO shall determine:

a) Whether each item of information listed above in Section III.A.lis reflected in the hiquires Database for each reviewed hiquiry;and

b) For each hiquiry for which the Compliance Offcer or other

appropriate personnel conducted an Off-Label Review, the basisfor suspecting that improper off-label promotion may haveoccured; the steps undertaken as par of the Off-Label Review;

the findings of the Compliance Officer or other appropriate

personnel as a result of the Off-Label Review; and any follow-upactions taken by Cephalon based on the Off-Label Review.findings.

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

The IRO shall conduct a review and assessment of Cephalon' s review of itscall plans for Governent Reimbursed Products as set fort in Section m.B.3.e of

the CIA. Cephalon shall provide the IRO with: i) a list of products promoted byCephalon durng the Reporting Period; ii) information about the FDA-approveduses for each Cephalon product; and ii) the call plans for each product. Cephalonshall also provide the IRO with information about the reviews of call plans thatCephalon conducted during the Reporting Period and any modifications to the callplans made as a result of Cephal on's reviews.

For each call plan, the IRO shall select a sample of 50 of the HCPs andHCIs included on the call plan. For each call plan, the IRO shall compare theAppendix B 6Cephalon, Inc.

sampled HCPs and HCIs against the critera ~ medical specialty or practicearea) used by Cephalon in conducting its review and/or modification of the callplan in order to determe whether Cephalon followed its critera and Policies andProcedures in reviewing ~d modifyg the call plan.

The IRO shall note any intances in which it appears that the sampledHCPs and HCIs on a paricular call plan are inconsistent with Cephalon's criteriarelating to the call plan and/or Cephalon's Policies and Procedures. The IRO shallalso note any instances in which it appears that Cephalon failed to follow itscriteria or Policies and Procedures.

C. IRO Review of Physician Payment Listings

1. hiormation Contained in Physician Payment Listings

As set forth in Section III.M of the CIA, Cephalon shall post quarerly andanual listings of physicians and Related Entities who received Payments, asdefined in the CIA, directly or indirectly from Cephalon. For

puroses of the IROreview as set fort in this Section III.C, each anual listing shall be referred to asthe "Physician Payment Listing" or "Listing." For each physician and RelatedEntity, each Physician Payment Listing shall include the followÌng information:. i)full name; ii) city and state of the physician; iii) name, city, and state of theRelated Entity (if applicable); and iv) the aggregate value of the Payment(s) in thepreceding year.

. For puroses of this IRO review, the term "Control Documents" shallinclude all documents or electronic records associated with each Payment reflectedin the Physician Payments Listing for the sampled physician and/or Related Entity.For example, the term "Control Documents" includes, but is not limited to,documents relating to the nature, purose, and amount of all Payments reflected inthe Listing; contracts relating to the Payment(s) reflected in the Listing;documents relating to the occurrence ofPayment(s) reflected in the Listing;documents reflecting any work product generated in connection with the .

. Payment(s); documents submitted by sales representatives or headquarerspersonnel to request approval for the Payment(s); and business rationale orjustification forms relating to the Payment(s).

2. Selection of Sample for Review

For each Reporting Period, the OIG shall have the discretion to identify 50physicians or Related Entities from the applicable Physician Payment Listing thatwil be subject to the IRO review described below. If the OIG elects to exercisethis discretion, it shall notify the IRO of the 50 physicians and/or Related EntitiesAppendix B 7Cephalon, Inc.

"

subject to the IRO review. If the OIG elects not to exercise its discretion asdescribed above, the IRO shall randomly select 50 physicians and/or RelatedEntities to be included in the review. For each selected physician and/or RelatedEntity, the IRO shall review the entr in the Physician Payment Listin~ and the.Control Documents relating to Payments reflected in Listing identified by the IROas necessar and suffcient to validate the Payment information in the Listing:

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

For each physician and/or Related Entity selected as par of the sample, theIRO shall review the Control Documents identified by the IRO as necessar andsuffcient to validate each Payment reflected in the Llsting to evaluate thefollowing:

a) Whether Control Documents are available relatig to each

Payment reflected in the Listing for the sampled physicianand/or Related Entity;

b) Whether the Control Documents were completed andarchived in accordance with the requirements set fort in

Cephalon's policies;

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

d) Whether the Control Documents reflect that Cephalon's

policies were followed in connection with Payment(s)

reflected in the Listing ~ all required wrtten approvals forthe activity were obtained in accordance with Cephalon'spolicies.)' .

4. Identification of Material Errors and Additional Review

A Material Error is defined as any of the following:

a) A situation in which all required Control Documents relating to

Payments reflected in the Listing for the sampled physicianand/or Related Entity do not exist and:

Appendix BCephal on, Inc.

8

"

1. no corrective action was initiated prior to theselection of the sampled physicians and/or RelatedEntities; or .

11. the IRO canot confrm that Cephalon otherwisefollowed its policies and procedures relating to theentr in the Listig for the sampled physician or

Related Entity, including its policies andprocedures relating to any Payment(s) reflected inthe Listing; or

b) Information or data is omitted from key fields in the ControlDocuments that prevents the IRO from assessing compliancewith Cephalon's policies and procedures, and the IRO canotobtain this information or data from reviewing other ControlDocuments.

If a Control Document does not exist, but Cephalon has intiated correctiveaction prior to the selection of the sampled physicians and/or Related Entities, or ifa Control Document does not exist but the IRO can determe that Cephalonotherwise followed its policies and procedures with regard to each entr in the

Listing for a sampled physician or Related Entity, the IRO shall consider such asituation to be an exception (rather than a Material Error) and the IRO shall reportthe situation as such. Similarly, the IRO shall note as exceptions any ControlDocuments for which non-material information or data is omitted.

If the IRO identifies any Material Errors, the IRO shall conduct suchAdditional Review of the underlying Payment associated with the eroneousControl Documents as may be necessar to determne the root cause of theMaterial Errors. For example, the IRO may need to review additionaldocumentation and/or conduct interviews with appropriate personnel to identifythe root cause of the Material Error(s) discovered.

D. IRO Review of Additional Items

As set forth in Section HI.D. i.b of the CIA and begining with the secondReporting Period, the OIG at its discretion may identify up to thee additionalitems for the IRO to review (hereafter "Additional Items".) No later than 90 daysprior to the end of the second through fifth Reporting Periods, the OIG shall notifyCephalon of the nature and scope of the IRO review to be conducted for each ofthe Additional Items. Prior to undertakng the review of the Additional Items, theIRO and/or Cephalon shall submit an audit work plan to the GIG for approval andthe IRO shall conduct the review of the Additional Items based on a work planapproved by the OIG. The IRO shall include inforiation about its review of eachAppendix B 9Cephalon, Inc.

-

Additionàl Item in the Transactions Review Report (including a description of thereview conducted for each Additional Item; the IRQ's fmdings based on its reviewi .for each Additional Item; and the IRO' s recommendations for any changes inCephalon's systems, processes, policies, and procedures based on its review ofeach Additional Item.)

Cephalon may propose to the OIG that .its internal audit(s) be pariallysubstituted for one or more of the Additional Items that would otherwise bereviewed by the IRO for the applicable Reporting Period. The OIG retains solediscretion over whether, and in what maer, to allow Cephalon's internal auditwork to be substituted for a portion of the Additional Items review conducted bythe IRO.

In makg its decision, the OIG agrees to consider, among other factors, thenature and scope of Cephalon' s planed internal audit work, the results of theTransactions Review(s) during prior Reporting Period(s), and Cephalon'sdemonstrated audit capabilties to perform the proposed audit work internally. Ifthe OIG denies Cephalon's request to perit its internal audit work to besubstituted for a portion of the IRO's review of Additional Items in a givenReporting Period, Cephalon shall engage the IRO to pedorm the Review asoutlined in this Section III.

If the OIG agrees to permit certain of Cephal on's interal audit work for a

given Reporting Period to be substituted for a portion of Additional Items review,such internal work would be subject to verification by the IRO (VerificationReview). hi such an instance, the OIG would provide additional details about thescope of the Verification Review to be conducted by the IRO. However, forpuroses of any Verification Review, the IRO shall review oÎat least 20% of thesampling units reviewed by Cephalon in its internal audits.

E. Promotional and Product Services Transactions Review Report

For each Reporting Period, the IRO shall prepare a report based on itsPromotional and Product Services Transactions Review. The report shall includethe following:

1) General Elements to.Be Included in Report

a) Review Objectives: A clear statement of the objectivesintended to be achieved by each par of the review;

b) Review Protocol: A detailed narative description of theprocedures performed and a description of the samplig unit

10Appendix BCephal on, Inc.

4.

Appendix BCephal on. Inc.

and universe utilzed in performing the procedures for eachsample reviewed; and

c) Sources of Data: A full description of documentation and

other information, if applicable, relied upon by the IRO inperformng the Promotional and Product ServicesTransactions Review.

2) Results to be Included in Report

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

(Relating to the Review ofhiquiries)

a) in connection with the review ofhiquies, a description of

each type of sample unit reviewed, including the number ofeach tye of sample units reviewed ~ the number ofInquiries) and an identification of the tyes of documents andinformation reviewed for the Inquires;

b) for each hiquiry sample unit, the IRO shall sumare theinformation about the hiquiry contained in the InquiriesDatabase;

c) for each Inquir sample unit, findigs and supporting

rationale as to whether: (1) each item of information listed inSection III.A. I is reflected in the Inquires Dataase; and (ü)for each Inquir for which an Off-Label Review wasconducted, the basis for suspecting that improper off-labelpromotion may have occured; the steps undertaken as par ofthe Off-Label Review; the findings of the Compliance Officeras a result of the Off-Label Review; and any follow-upactions taken by Cephalon as a result of-the ComplianceOfficer's findings;

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

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e) recommendations for improvement in Cephalon' s systems,

processes, policies, procedures, and practices relating to theInquiries and the Inquiries Database, if any;

(Relating to the Call Plan Reviews)

t) a list of the products promoted by Cephalon durg theReporting Period and a sumar of the FDA-approved usesfor such products;

g) for each Cephalon product: i) a description of the critera

used by Cephalon in developing or reviewing the cal plansand for including or excluding specified tyes ofHCPs orHCIs from the call plans; ii) a description of the reviewconducted by Cephalon of the cal plans and an indication ofwhether Cephalon reviewed the call plans as required bySection III.B.3.e of the CIA; iü) a description of al instances

for each call plan in which it appears that the HCPs and HCIsincluded on the call plan are inconsistent with Cephalon'scriteria relating to the call plan and/or Cephalon's Policiesand Procedures; and iv) a description of all instances in whichit appears that Cephalon failed to follow its criteria or Policiesand Procedures relating to call plans or the review of the callplans;

h) . the findings and supporting rationale regarding any

wealmesses in Cephalon's systems, processes, policies,procedures, and practices relating to Cephalon's call plans orthe review of the call plans, ifany;

i) recommendations, if any, for changes in Cephalon's systems,

processes, policies, procedures, and practices that wouldcorrect or address any wealmesses or deficiencies uncoveredduring the Transactions Review with respect to call plans orthe review of the call plans; .

(Relating to the Physician Payment Listig Reviews)

j) a description of the entres in the Physician Payment Listingfor each physician or Related Entity sampled and adescription of Control Documents reviewed in connectionwith each selected physician or Related Entity;

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.

..!


k) for each sampled physician or Related Entity, findings and

supportmg rationale as. to whether: (i) all required ControlDocuments exist; (ii) each Control Document was completedin accordance with all of the requirements set fort in the

applicable Cephalon policy; (Hi) the aggregate value of thePayment(s) as reflected in the Listing for the sampledphysician or entity is consistent with the value of thePayment(s) reflected in the Control Documents; (iv) eachControl Document reflects that Cephalon's policies werefollowed in connection with the underlyig activity reflectedin the document ~ all required approvals were obtaied);and (y) any disciplinar action was undertaken in thoseinstances in which Cephalon policies were not followed;

1) for each sampled physician or Related Entity unit reviewed,

an identification and description of all exceptions discovered.The report shall also describe those instances in whichcorrective action was initiated prior to the selection of thesampled physicians or Related Entities, including adescription of the circumtaces requiring corrective actionand the nature of the corrective action;

m) if any Material Errors are discovered in any sample untreviewed, a description of the eror, the Additional Reviewprocedures performed and a statement of findings as to the . .root cause(s) of the Material Error;

(Relating to the Review of Additional Items)

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

0) for each Additional Item reviewed, the IRO's findings basedon its review;

p) for each Additional Item reviewed, the findings andsupportng rationale regarding any wealesses in Cephalon'ssystems, processes, policies, procedures, and practicesrelating to the Additional Item, if any; and

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

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. J!

If

procedures that would correct or address any weakesses ordeficiencies uncovered durg the review.


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