CORPORATE INTEGRITY AGREEMENT between the Office of Inspector General of the Department of Health and Human Services and King Pharmaceuticals, Inc.
between
the
Office
of Inspector General
of
the
Department
of Health and Human Services
and
King
Pharmaceuticals, Inc.
I. Preamble
King
Pharmaceuticals, Inc., and its United States subsidiaries that manufacture
or
sell pharmaceutical products (collectively, “King”) hereby enters into this
Corporate Integrity Agreement (CIA) with the Office of Inspector General (OIG)
of the United States Department of Health and Human Services (HHS) to promote
compliance with the statutes, regulations, and written directives of Medicare,
Medicaid, and all other Federal health care programs (as defined in 42 U.S.C.
§
1320a-7b(f)) in which King participates and the requirements of other government
programs in which King participates (collectively, “Federal Health Care
Programs”) specified below in Section II.C.2 (Federal Health Care Program
Requirements). Contemporaneously with this CIA, King is entering into a
settlement agreement with the United States (Settlement Agreement), and this
CIA
is incorporated by reference into the Settlement Agreement. King also will
enter
into settlement agreements with various States, and King’s agreement to this CIA
is a condition precedent to those agreements.
Prior
to
the Effective Date of this CIA (as defined below), King established a voluntary
compliance program which, as represented by King, includes, among other things,
the appointment of a Corporate Compliance Officer, the development and
dissemination of a Code of Conduct, the establishment of written policies and
procedures, a Disclosure Program, screening measures for Ineligible Persons,
review and disciplinary proceedings, regular training to Covered Persons
concerning King’s Code of Conduct and policies and procedures, and regular
internal auditing.
King
shall continue the operation of its compliance measures in accordance with
the
terms set forth below for the term of this CIA. King may modify its voluntary
compliance measures as appropriate, but, at a minimum, King shall ensure that
during the term of this CIA, it shall comply with the integrity obligations
enumerated in this CIA.
II. Term
and Scope of the CIA
A.
The
period of the compliance obligations assumed by King under this CIA shall be
5
years from the effective date of this CIA, unless otherwise specified. The
effective date shall be the date on which the final signatory of this CIA
executes this CIA (Effective Date). Each one-year period, beginning with the
one-year period following the Effective Date, shall be referred to as a
“Reporting Period.”
B.
Sections VII, VIII, IX, X, and XI shall expire no later than 120 days after
OIG’s receipt of: (1) King’s final Annual Report; or (2) any additional
materials submitted by King pursuant to OIG’s request, whichever is
later.
C.
The
scope of this CIA shall be governed by the following definitions:
1.
“Covered Persons” means:
a.
all
officers, directors, and employees of King based in the United States;
and
b.
except
for the Third Party Personnel (as defined below), all contractors,
subcontractors, agents, and other persons who perform Government Pricing and
Medicaid Drug Rebate Related Functions, as defined below in Section II.C.2,
on
behalf of King.
Notwithstanding
the above, this term does not include part-time or per diem employees,
contractors, subcontractors, agents, and other persons who are not reasonably
expected to work more than 160 hours per year, except that any such individuals
shall become “Covered Persons” at the point when they work more than 160 hours
during the calendar year.
King
has
entered joint venture agreements and agreements to co-market its products with
other entities (hereafter “Relevant Third Party Agreements”), including Wyeth
Pharmaceuticals (Wyeth). The personnel of the entities with whom King has or
may, in the future, have such agreements shall be collectively referred to
as
“Third Party Personnel.” King has represented that: i) the Third Party Personnel
are employed by other pharmaceutical manufacturers; ii) King does not control
the Third Party Personnel; and iii) it would be unable to compel their
compliance with the requirements set forth in this CIA.
For
purposes of this CIA, King agrees to promote, to the maximum extent practicable,
compliance by the Third Party Personnel with Federal Health Care Program
Requirements. In order to fulfill this obligation, King agrees to the
following:
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a.
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within
120 days after the Effective Date and annually thereafter by the
anniversary of the Effective Date, King shall send a letter to all
entities with which King has entered Relevant Third Party Agreements.
The
letter shall outline King’s obligations under this CIA and its commitment
to full compliance with all Federal Health Care Program Requirements.
The
letter shall include a description of King’s compliance program. King
shall attach a copy of its Code of Conduct to the letter and ask
that the
Code of Conduct and the description of King’s compliance program be
distributed to all relevant Third Party Personnel; and
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x.
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Xxxx
shall submit: 1) a copy of each letter (including all attachments);
and 2)
a list of all King’s existing Relevant Third Party Agreements to the OIG
with the Implementation Report, the first Annual Report (to the extent
the
information changes from the date of the Implementation Report) and
with
each subsequent Annual Report.
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2.
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“Relevant
Covered Persons” means the following categories of Covered Persons:
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1)
all
employees of King whose job responsibilities relate to the collection,
calculation, verification, or reporting of information for purposes of the
Medicaid Drug Rebate Program (codified at 42 U.S.C. § 1396r-8, et seq.), the
Medicare Program (42 U.S.C. § 1395-1395ggg), or other government programs
(including the 340B Drug Pricing Program, codified at 42 USC § 256b (the “340B
Program”) and the Veterans Administration pricing programs (the “VA Programs”),
as set forth in the Federal Supply Schedule and the Veteran’s Healthcare Act of
1992) (hereafter collectively, “Government Pricing and Medicaid Drug Rebate
Related Functions”). This group includes, but is not limited to, those
individuals whose job responsibilities include the calculation and reporting
of
Average Sales Price, Average Manufacturer Price, Best Price, and all other
price
information reported and used in connection with reimbursement under the Federal
Health Care Programs described in this paragraph; and
2)
all
contractors, subcontractors, agents, and other persons who perform Government
Pricing and Medicaid Drug Rebate Related Functions on behalf of
King.
III. Corporate
Integrity Obligations
To
the
extent not already accomplished, King shall establish and maintain a Compliance
Program throughout the term of this CIA that includes the following
elements:
A.
Corporate
Compliance Officer and Committee.
1.
Corporate
Compliance Officer.
King
presently has a Corporate Compliance Officer (the “Compliance Officer”) with
responsibility for administering King’s compliance program. King shall continue
to employ an individual to serve as its Compliance Officer during the term
of
this CIA. The Compliance Officer shall be responsible for developing and
implementing policies, procedures, and practices designed
to
ensure
compliance with the requirements set forth in this CIA and with Federal Health
Care Program Requirements. The Compliance Officer shall be a member of senior
management of King, shall make periodic (at least quarterly) reports regarding
compliance matters directly to the Audit
Committee of the Board of Directors of King, and shall be authorized to report
on such matters to the Audit Committee of the Board of Directors at any
time.1
The
Compliance Officer shall not be or be subordinate to the General Counsel or
Chief Financial Officer. The Compliance Officer shall be responsible for
monitoring the day-to-day compliance activities engaged in by King as well
as
for any reporting obligations created under this CIA.
King
shall report to OIG, in writing, any changes in the identity or position
description of the Compliance Officer, or any actions or changes that would
affect the Compliance Officer’s ability to perform the duties necessary to meet
the obligations in this CIA, within 15 days after such a change.
2.
Compliance
Committee.
Prior
to the Effective Date, King established a Compliance Committee (Compliance
Committee) and King shall maintain a Compliance Committee during the term of
this CIA. The Compliance Committee shall, at a minimum, include the Compliance
Officer and other members of senior management necessary to meet the
requirements of this CIA (e.g.,
senior
executives of relevant departments, such as sales, marketing, government
contracting/pricing, regulatory affairs, human resources, audit, and
operations). The Compliance Officer shall chair the Compliance Committee and
the
Compliance Committee shall support the Compliance Officer in fulfilling his/her
responsibilities (e.g.,
shall
assist in the analysis of the organization’s risk areas and shall oversee
monitoring of internal and external audits and investigations).
King
shall report to OIG, in writing, any changes in the composition of the
Compliance Committee, or any actions or changes that would affect the Compliance
Committee’s
ability to perform the duties necessary to meet the obligations in this CIA,
within 15 days after such a change.
1
King has
represented that the Audit Committee of the Board of Directors is comprised
entirely of independent directors, and that the Compliance Officer makes
at
least annual reports to the full Board of Directors.
B.
Written
Standards.
1.
Code
of Conduct.
Prior
to the Effective Date, King developed, implemented, and distributed a written
code of conduct known as the Corporate Code of Conduct and Ethics (the “Code”)
to all Covered Persons. King shall make the promotion of, and adherence to,
the
Code an element in evaluating the performance of all employees. The Code shall,
at a minimum, set forth:
x.
Xxxx’x
commitment to full compliance with all Federal Health Care Program Requirements,
including its commitment to comply with all government contracting and price
reporting requirements, and to market, sell, promote, and advertise its products
in accordance with Federal Health Care Program Requirements (including but
not
limited to, the Federal anti-kickback Xxxxxxx, xxxxxxxx xx 00 X.X.X. §
0000x-0x);
x.
Xxxx’x
requirement that all of its Covered Persons shall be expected to comply with
all
Federal Health Care Program Requirements and with King’s own Policies and
Procedures as implemented pursuant to this Section III.B (including the
requirements of this CIA);
c.
the
requirement that all of King’s Covered Persons shall be expected to report to
the Compliance Officer or other appropriate individual designated by King
suspected violations of any Federal Health Care Program Requirements or of
King’s own Policies and Procedures;
d.
the
possible consequences to both King and Covered Persons of failure to comply
with
Federal Health Care Program Requirements and
with
King’s own Policies and Procedures and the failure to report such noncompliance;
and
e.
the
right of all individuals to use the Disclosure Program described in Section
III.E, and King’s commitment to nonretaliation
and
to
maintain, as appropriate, confidentiality and anonymity with respect to such
disclosures.
To
the
extent not already accomplished, within 120 days after the Effective Date,
each
Covered Person shall certify, in writing, that he or she has received, read,
understood, and shall abide by King’s Code. New Covered Persons shall receive
the Code and shall complete the required certification within 30 days after
becoming a Covered Person or
within
120 days after the Effective Date, whichever is later.
King
shall periodically review the Code to determine if revisions are appropriate
and
shall make any necessary revisions based on such review. Any revised Code shall
be distributed within 30 days after any revisions are finalized. Each Covered
Person shall certify, in writing, that he or she has received, read, understood,
and shall abide by the revised Code within 30 days after the distribution of
the
revised Code.
2.
Policies
and Procedures.
To the
extent not already accomplished, within 120 days after the Effective Date,
King
shall implement written Policies and Procedures regarding the operation of
King’s compliance program and its compliance with Federal Health Care Program
Requirements. At a minimum, the Policies and Procedures shall
address:
a.
the
subjects relating to the Code identified in Section III.B.1;
b.
collecting, calculating, verifying and reporting the data and information
reported to the Centers for Medicare & Medicaid Services (CMS), State
Medicaid programs or other government entities in connection with Government
Pricing and Medicaid Drug Related Functions;
c.
selling,
marketing, and promoting King products in compliance with
all
applicable Federal Health Care Program Requirements, including, but not limited
to, the Federal anti-kickback statute, codified at 42 U.S.C. § 1320a-7b;
and
d.
disciplinary policies and procedures for violations of King’s Policies and
Procedures, including policies relating to Federal Health Care Program
Requirements.
To
the
extent not already accomplished, within 120 days after the Effective Date,
the
relevant portions of the Policies and Procedures shall be
distributed in
hard-copy or electronic format to
all
individuals whose job functions relate to those Policies and Procedures.
Distribution may include publishing such Policies and Procedures on King’s
intranet or a web site, including the Axentis Corporate Governance System.
If
King publishes such Policies and Procedures on its intranet or a web site,
King
must notify the relevant persons receiving such Polices and Procedures that
the
Policies and Procedures will be distributed in such a manner and King must
track
distribution to ensure that all appropriate relevant persons received the
Policies and Procedures. Appropriate and knowledgeable staff shall be available
to explain the Policies and Procedures.
At
least
annually (and more frequently, if appropriate), King shall assess and update
as
necessary the Policies and Procedures. Within 30 days after the effective date
of any revisions, the relevant portions of any such revised Policies and
Procedures shall be distributed to
all
individuals whose job functions relate to those Policies and
Procedures.
C.
Training
and Education.
1.
General
Training.
Within
120 days after the Effective Date, King shall provide at least two hours of
General Training to each Covered Person2 .
This
training, at a minimum, shall explain King’s:
a.
CIA
requirements;
b.
Compliance Program (including the Code and the Policies and Procedures
as they pertain to general compliance issues); and
2
Independent directors of King shall receive training on the topics set
forth in
Sections III.C.1.a-b of the CIA. King has represented that its independent
directors sit on King’s Board of Directors and are not members of King’s
management.
c.
in
general, in a manner appropriate for the individual’s job function, the proper
methods of promoting, marketing and selling,
and contracting for products in accordance with Federal Health Care Program
Requirements; the need to calculate and report accurate pricing and other
information in connection with the Government Pricing and Medicaid Drug
Rebate
Related Functions; and a general discussion of King’s systems relating to the
Government Pricing and Medicaid Drug Rebate Related
Functions.
New
Covered Persons shall receive the General Training described above within 45
days after becoming a Covered Person or within 120 days after the Effective
Date, whichever is later. After receiving the initial General Training described
above, each Covered Person shall receive at least one hour of General Training
annually.
2.
Specific
Training.
Within
120 days after the Effective Date, each Relevant Covered Person shall receive
at
least two
hours
of Specific Training in addition to the General Training required above. This
Specific Training shall include a discussion of:
a.
in
detail, and as appropriate for the individual’s job functions, King’s systems
for gathering relevant data and calculating, verifying, and reporting
information to CMS and/or the State Medicaid Programs for purposes of the
Medicaid Drug Rebate Program, the Medicare Program, the 340B Program or the
VA
Programs;
b.
all
applicable Federal Health Care Program Requirements (including the sanctions
for
violations) relating to Government Pricing and Medicaid Drug Rebate Related
Functions;
c.
the
personal obligation of each individual to comply with Federal Health Care
Program Requirements, and, as appropriate for the individual’s job functions,
applicable legal requirements referenced above in Section III.C.2.b. and
to
track and review any pricing or
Corporate
Integrity Agreement
King
Pharmaceuticals, Inc.
9
contract
exceptions, variations, or outliers identified within King’s systems;
d.
the
legal sanctions for violations of the Federal Health Care Program Requirements
referenced above in Section III.C.2.b; and
e.
examples of proper and improper practices related to Government Pricing and
Medicaid Drug Rebate Related Functions.
Relevant
Covered Persons shall receive this training within 45 days after the beginning
of their employment or becoming Relevant Covered Persons, or within 120 days
after the Effective Date, whichever is later. A King employee who has completed
the Specific Training shall review a new Relevant Covered Person’s work, to the
extent that the work relates to Government Pricing and Medicaid Drug Rebate
Related Functions, until such time as the new Relevant Covered Person completes
his or her Specific Training.
After
receiving the initial Specific Training described in this Section, each Relevant
Covered Person shall receive at least two hours of Specific Training annually.
3.
Certification.
Each
individual who is required to attend training shall certify, in writing, or
in
electronic form, if applicable, that he or she has received the required
training. The certification shall specify the type of training received and
the
date received. The Compliance Officer (or designee) shall retain the
certifications, along with all course materials. These shall be made available
to OIG, upon request.
4.
Qualifications
of Trainer. The
training and education required under this Section III.C may be provided by
supervisory employees, knowledgeable staff, King trainers, and/or outside
consultant trainers selected by King. The Specific Training requirements
outlined in Section III.C.2 may be satisfied through relevant continuing
education programs offered by established and knowledgeable providers, so long
as the programs cover the topics outlined in Section III.C.2. Persons providing
the training shall be knowledgeable about the applicable subject areas,
including the relevant Federal Health Care Program Requirements relating to
the
promotion, sales, and marketing of
Corporate
Integrity Agreement
King
Pharmaceuticals, Inc.
10
King’s
products and requirements applicable to Government Pricing and Medicaid Drug
Rebate Related Functions.
5.
Update
of Training.
King
shall annually review the training, and, where appropriate, update the training
to reflect changes in applicable Federal Health Care Program Requirements,
any
issues discovered during internal audits or the IRO Reviews, and any other
relevant information.
6.
Computer-based
Training.
King may
provide the training required under this CIA through appropriate computer-based
training approaches. In that event, all applicable references to “hours” in this
Section III.C shall mean “normative hours” as that term is used in the
computer-based training industry. If King chooses to provide computer-based
training, it shall make available appropriately qualified and knowledgeable
staff or trainers to answer questions or provide additional information to
the
individuals receiving such training.
7.
Miscellaneous Training - Related Provisions. To
the
extent that King has provided training that satisfies the General or Specific
Training requirements set forth above within 180 days prior to the Effective
Date, the OIG shall credit that training for purposes of satisfying King’s
training obligations for the first Reporting Period of the CIA. For purposes
of
the General Training requirements, if King provided General Training that
satisfies the requirements set forth in Section III.C.1 above to Covered Persons
within 180 days prior to the Effective Date, King may satisfy its remaining
General Training obligation for the first year of the CIA by notifying those
Covered Persons of the fact that King entered a CIA and notifying them of King’s
requirements and obligations under the CIA.
King
provides training on a regular basis concerning a variety of topics to its
employees. The training required by this CIA need not be separate and distinct
from the regular
training provided by King, but instead may be integrated fully into such regular
training to the extent the training satisfies the requirements set forth in
this
CIA.
To
the
extent a Covered Person is on a leave of absence when the required training
is
offered, the Covered Person shall receive the training within 30 days of
the
conclusion of the leave of absence.
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Integrity Agreement
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Pharmaceuticals, Inc.
11
D.
Review
Procedures.
1.
General
Description.
a.
Engagement
of Independent Review Organization.
Within
120 days after the Effective Date, King shall engage an entity (or entities),
such as an accounting, auditing, or consulting firm (hereinafter the
“Independent Review Organization” or “IRO”), to perform reviews to assist King
in assessing and evaluating its systems, processes, policies, and practices
related to the Government Pricing and Medicaid Drug Rebate Related Functions.
The applicable requirements relating to the IRO are outlined in Appendix A
to
this Agreement, which is incorporated by reference.
Each
IRO
engaged by King shall have expertise in the applicable Federal Health Care
Program Requirements and other applicable legal requirements, as may be
appropriate to the Engagement for which it is retained. Each IRO shall assess,
along with King, whether it can perform the IRO review in a professionally
independent and/or objective fashion, as appropriate to the nature of the
engagement, taking into account any other business relationships or other
engagements that may exist.
The
IRO(s) review shall evaluate and analyze King’s systems, processes, policies,
and practices relating to the Government Pricing and Medicaid Drug Rebate
Related Functions (the “Government Pricing and Medicaid Drug Rebate Engagement”
or the “Engagement”).
b. Frequency
of Engagement.
The
Government Pricing and Medicaid Drug Rebate Engagement shall be performed
annually and shall cover each of the Reporting Periods.
c. Retention
of Records.
The IRO
and King shall retain and make available to OIG, upon request, (i) all work
papers relating to the
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Integrity Agreement
King
Pharmaceuticals, Inc.
12
Engagement,
and (ii) all supporting documentation, correspondence, and draft reports (those
exchanged between the IRO and King) related to the Engagement.
d. Entity
Performing Engagements.
The
Engagements shall each be performed by the IRO, as specified in this Section
III.D and the Appendices to this CIA, during the five Reporting Periods of
the
CIA. However, after the IRO(s) performs the first three Government Pricing
and
Medicaid Drug Rebate Engagements, King, at its option, may request the OIG
to
permit that those Engagements be conducted internally and subject only to
verification by the IRO for the remainder of the term of the CIA. The OIG
retains sole discretion over whether to permit those Engagements to be conducted
internally by King and subject to validation by the IRO. In making its decision,
the OIG will consider, among the factors, the results of the Engagements during
the first three Reporting Periods of the CIA and King’s demonstrated audit
capabilities to perform the Engagements internally. If the OIG denies King’s
request to shift the audit responsibilities, King agrees to engage the IRO
to
complete the remaining Engagements in accordance with the CIA.
2.
Government
Pricing and Medicaid Drug Rebate Engagement.
As set
forth more fully in Appendix B and below, the Government Pricing and Medicaid
Drug Rebate Engagement shall consist of two components - a Systems Review and
a
Transactions Review. If there are no material changes in King’s Government
Pricing and Medicaid Drug Rebate related systems, processes, policies, and
practices during the term of the CIA, the IRO shall perform the Government
Pricing and Medicaid Drug Rebate Engagement Systems Review covering the second
and fourth Reporting Periods. If
King
materially
changes its systems, processes, policies and practices relating to government
pricing or the Medicaid Drug Rebate Program, then the IRO shall perform a
Government Pricing and Medicaid Drug Rebate Engagement for the Reporting Period
in which such changes were made in addition to conducting the Medicaid Drug
Rebate Engagement for the second and fourth Reporting Periods. The Transactions
Review shall be performed annually and shall cover each of the five Reporting
Periods.
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Pharmaceuticals, Inc.
13
3.
Government
Pricing and Medicaid Drug Rebate Engagement Report.
The IRO
shall prepare a report based upon the Engagement performed (Engagement Report).
Information to be included in the Engagement Report is described in Appendix
B.
4.
Validation
Review.
In the
event OIG has reason to believe that: (a) King’s Engagement fails to conform to
the requirements of this CIA; or (b) the IRO’s findings or Engagement results
are inaccurate, OIG may, at its sole discretion, conduct its own review to
determine whether the Engagement complied with the requirements of this CIA
and/or the findings or Engagement results are inaccurate (Validation Review).
King shall pay for the reasonable cost of any such review performed by OIG
or
any of its designated agents. Any Validation Review of Reports submitted as
part
of King’s final Annual Report must be initiated no later than one year after
King’s final submission (as described in Section II.B) is
received by OIG.
Prior
to
initiating a Validation Review, OIG shall notify King of its intent to do so
and
provide a written explanation of why OIG believes such a review is necessary.
To
resolve any concerns raised by OIG, King may request a meeting with OIG to:
(a)
discuss the results of any Engagement submissions or findings; (b) present
any
additional information to clarify the results of the Engagement or to correct
the inaccuracy of the Engagement; and/or (c) propose alternatives to the
proposed Validation Review. King agrees to provide any additional information
as
may be requested by OIG under this Section in an expedited manner. OIG will
attempt in good faith to resolve any Engagement issues with King prior to
conducting a Validation Review. However, the final determination as to whether
or not to proceed with a Validation Review shall be made at the sole discretion
of OIG.
5.
Independence/Objectivity
Certification.
The IRO
shall include in its report(s) to King a certification or sworn affidavit that
it has evaluated its professional independence and/or objectivity, as
appropriate to the nature of the Engagement, with regard to the Engagement
and
that it has concluded that it is, in fact, independent and/or
objective.
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E.
Disclosure
Program.
Prior
to
the Effective Date, King established a Disclosure Program that includes a
mechanism (e.g.,
a
toll-free compliance telephone line) to enable individuals to disclose, to
the
Compliance Officer or some other person who is not in the disclosing
individual’s chain of command, any identified issues or questions associated
with King’s policies, conduct, practices, or procedures with respect to a
Federal Health Care Program Requirement believed by the individual to be a
potential violation of criminal, civil, or administrative law. King shall
appropriately publicize the existence of the disclosure mechanism (e.g.,
via
periodic e-mails to employees or by posting the information in prominent common
areas), and King shall maintain the Disclosure Program during the term of the
CIA.
The
Disclosure Program shall emphasize a nonretribution, nonretaliation policy,
and
shall include a reporting mechanism for anonymous communications for which
appropriate confidentiality shall be maintained. Upon receipt of a disclosure
that relates to a Federal Health Care Program Requirement, the Compliance
Officer (or designee) shall gather all relevant information from the disclosing
individual. The Compliance Officer (or designee) shall make a preliminary,
good
faith inquiry into the allegations set forth in every disclosure to ensure
that
he or she has obtained all of the information necessary to determine whether
a
further review should be conducted. For any disclosure that is sufficiently
specific so that it reasonably: (1) permits a determination of the
inappropriateness of the alleged improper practice; and (2) provides an
opportunity for taking corrective action, King shall conduct an internal review
of the allegations set forth in the disclosure and ensure that proper follow-up
is conducted.
The
Compliance Officer (or designee) shall maintain a disclosure log, which shall
include a record and summary of each disclosure received that relates to a
Federal Health Care Program Requirement (whether anonymous or not), the status
of the respective internal reviews, and any corrective action taken in response
to the internal reviews. The disclosure log shall be made available to OIG
upon
request.
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Integrity Agreement
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Pharmaceuticals, Inc.
15
F.
Ineligible
Persons.
1.
Definitions.
For
purposes of this CIA:
a.
an
“Ineligible Person” shall include an individual or entity who:
i.
is
currently excluded, debarred, suspended, or otherwise ineligible to participate
in the Federal Health Care Programs or in Federal procurement or nonprocurement
programs; or
ii.
has
been convicted of a criminal offense that falls within the ambit of 42 U.S.C.
§
1320a-7(a), but has not yet been excluded, debarred, suspended, or otherwise
declared ineligible.
b.
“Exclusion Lists” include:
i.
the
HHS/OIG List of Excluded Individuals/Entities (available through the Internet
at
xxxx://xxx.xxx.xxx);
and
ii.
the
General Services Administration’s List of Parties Excluded from Federal Programs
(available through the Internet at xxxx://xxxx.xxxxx.xxx).
c.
“Screened Persons” means prospective and current owners (other than shareholders
who: (1) have an ownership interest of less than 5%; and (2) acquired the
ownership interest through public trading), officers, directors, employees,
contractors, and agents of King.
2.
Screening
Requirements.
King
shall ensure that all Screened Persons are not Ineligible Persons, by
implementing the following screening requirements:
x.
Xxxx
shall screen all Screened Persons against the Exclusion Lists prior to engaging
their services and, as part of the hiring or
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contracting
process, shall require such persons to disclose whether they are an Ineligible
Person.
x.
Xxxx
shall screen all Screened Persons against the Exclusion Lists within 120 days
after the Effective Date and on an annual basis thereafter.
x.
Xxxx
shall implement a policy requiring all Screened Persons to disclose immediately
any debarment, exclusion, suspension, or other event that makes that person
an
Ineligible Person.
To
the
extent that King has screened certain Screened Persons against the Exclusions
Lists and required disclosure of eligibility status within 180 days prior the
Effective Date, such actions will satisfy King’s obligations with regard to
those Screened Persons for purposes of Section III.F.2.b for the first year
of
the CIA.
3.
Removal
Requirement.
If King
has actual notice that a Screened Person has become an Ineligible Person, King
shall remove such person from responsibility for, or involvement with, King’s
business operations related to the Federal Health Care programs and, if
applicable, shall remove such person from any position for which the person’s
compensation or the items or services furnished, ordered, or prescribed by
the
person are paid in whole or part, directly or indirectly, by Federal Health
Care
Programs or otherwise with Federal funds at least until such time as the person
is reinstated into participation in the Federal health care
programs.
4.
Pending
Charges and Proposed Exclusions.
If King
has actual notice that a Screened Person is charged with a criminal offense
that
falls within the ambit of 42 U.S.C. §§ 1320a-7(a), 1320a-7(b)(1)-(3), or is
proposed for exclusion during his or her employment or contract term, King
shall
take all appropriate actions to ensure that the responsibilities of that person
have not and shall not affect the accuracy of any claims submitted to any
Federal Health Care Program.
Corporate
Integrity Agreement
King
Pharmaceuticals, Inc.
17
G.
Notification
of Government Investigation or Legal Proceedings.
Within
30
days after discovery by senior management at King’s corporate headquarters, King
shall notify OIG, in writing, of any ongoing investigation or legal proceeding
known to King conducted or brought by a governmental entity or its agents
involving an allegation that King has committed a crime or has engaged in
fraudulent activities in the United States (including the United States, the
District of Columbia, and the territories and possessions of the United States).
This notification shall include a description of the allegation, the identity
of
the investigating or prosecuting agency, and the status of such investigation
or
legal proceeding. King shall also provide written notice to OIG within 30 days
after the resolution of the matter, and shall provide OIG with a description
of
the findings and/or results of the investigation or proceedings, if any.
H.
Reportable
Events.
a.
Definition
of Reportable Events.
For
purposes of this CIA, a “Reportable Event” means anything that involves a matter
that a reasonable person would consider a probable violation of criminal, civil,
or administrative laws applicable to any Federal Health Care Program for which
penalties or exclusion may be authorized. A Reportable Event may be the result
of an isolated event or a series of occurrences.
b.
Notification
of Reportable Events.
If King
determines (after a reasonable opportunity to conduct an appropriate review
or
investigation of the allegations) through any means that there is a Reportable
Event, King shall notify OIG, in writing, within 30 days after making the
determination that the Reportable Event exists. The report to OIG shall include
the following information:
i.
a
complete description of the Reportable Event, including the relevant facts,
persons involved, and legal and Federal Health Care Program authorities
implicated;
Corporate
Integrity Agreement
King
Pharmaceuticals, Inc.
18
ii.
a
description of King’s actions taken to correct the Reportable Event;
and
iii.
any
further steps King plans to take to address the Reportable Event and prevent
it
from recurring.
King’s
notification of OIG of any Reportable Event pursuant to this CIA does not
preclude King from making the same disclosure through OIG’s Self-Disclosure
Protocol.
|
IV.
|
New
Business Units or
Locations
|
In
the
event that, after the Effective Date, King changes locations or sells, closes,
purchases, or establishes a new business unit or other location engaged in
Government Pricing and Medicaid Drug Rebate Related Functions or in the
promotion, sales, or marketing of items that may be reimbursed by Federal Health
Care Programs (collectively “Relevant Activities”), King shall notify OIG of
this fact as soon as possible, but no later than within 30 days after the date
of change of location, sale, closure, purchase, or establishment. This
notification shall include the address of the new business unit or other
location, phone number, fax number, Federal Health Care Program provider or
supplier number (if any), and the corresponding contractor’s name and address
that has issued each provider or supplier number. Each new business unit or
location that is engaged in the Relevant Activities shall be subject to all
the
requirements of this CIA.
King
shall use its best efforts to implement the requirements of this CIA in new
business units or other locations engaged in Relevant Activities.
Notwithstanding any other provisions to the contrary, the requirements of this
CIA shall not become effective for new business units or other locations until
120 days after the purchase or establishment or acquisition of such new business
units or locations.
|
V.
|
Implementation
and Annual Reports
|
A.
Implementation
Report.
Within
120 days after the Effective Date, King shall submit a written report to OIG
summarizing the status of its implementation of the requirements
of this CIA (Implementation Report). The Implementation Report shall, at a
minimum, include:
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Integrity Agreement
King
Pharmaceuticals, Inc.
19
1.
the
name, address, phone number, and position description of the Compliance Officer
required by Section III.A, and a summary of other noncompliance job
responsibilities the Compliance Officer may have;
2.
the
names and positions of the members of the Compliance Committee required by
Section III.A;
3.
a copy
of King’s Code required by Section III.B.1;
4.
a copy
of all Policies and Procedures required by Section III.B.2;
5.
the
number of individuals required to complete the Code certification required
by
Section III.B.1, the percentage of individuals who have completed such
certification, and an explanation of any exceptions (the documentation
supporting this information shall be available to OIG, upon
request);
6.
the
following information regarding each type of training required by Section
III.C:
a.
a
description of such training, including a summary of the topics covered, the
length of sessions and a schedule of training sessions; and
b.
the
number of individuals required to be trained, percentage of individuals actually
trained, and an explanation of any exceptions.
A
copy of
all training materials used in the training required by Section III.C and the
documentation supporting this information shall be available to OIG, upon
request.
7.
a
description of the Disclosure Program required by Section III.E;
8.
the
following information regarding the IRO(s): (a) identity, address, and phone
number; (b) a copy of the engagement letter; (c) a summary and description
of
any and
all
current and prior engagements and agreements between King and the IRO; and
(d)
the proposed start and completion dates of the Engagement;
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Integrity Agreement
King
Pharmaceuticals, Inc.
20
9.
a
certification from the IRO regarding its professional independence and/or
objectivity with respect to King;
10.
a
description of the process by which King fulfills the requirements of Section
III.F regarding Ineligible Persons;
11.
the
name, title, and responsibilities of any person who is determined to be an
Ineligible Person under Section III.F; the actions taken in response to the
screening and removal obligations set forth in Section III.F; and the actions
taken to identify, quantify, and repay any overpayments to Federal Health Care
Programs relating to items or services furnished, ordered or prescribed by
an
Ineligible Person;
12.
a
list of all of King’s locations (including locations and mailing addresses) as
required by Section IV; the corresponding name under which each location is
doing business; the corresponding phone numbers and fax numbers; each location’s
Federal Health Care Program provider or supplier number(s) (if any); and the
name and address of each contractor to which King currently submits claims
(if
any);
13.
a
description of King’s corporate structure, including identification of any
parent and sister companies, subsidiaries, and their respective lines of
business;
14.
the
certifications required by Section V.C, and
15.
a
list of all King’s existing Relevant Third Party Agreements, as required by
Section II.C.1.
B. Annual
Reports.
King
shall submit to OIG annually a report with respect to the status of, and
findings regarding, King’s compliance activities for each of the five Reporting
Periods (Annual Report).
Corporate
Integrity Agreement
King
Pharmaceuticals, Inc.
21
Each
Annual Report shall include, at a minimum:
1.
any
change in the identity, position description, or other noncompliance job
responsibilities of the Compliance Officer and any change in the membership
of
the Compliance Committee described in Section III.A;
2.
a
summary of any significant changes or amendments to the Policies and Procedures
required by Section III.B and the reasons for such changes (e.g.,
change
in contractor policy) and copies of any such Policies and Procedures that have
changed since previously provided to the OIG;
3.
the
number of individuals required to complete the Code certification required
by
Section III.B.1, the percentage of individuals who have completed such
certification, and an explanation of any exceptions (the documentation
supporting this information shall be available to OIG, upon
request);
4.
the
following information regarding each type of training required by Section
III.C:
a.
a
description of such training, including a summary of the topics covered, the
length of sessions and a schedule of training sessions; and
b.
the
number of individuals required to be trained, percentage of individuals actually
trained, and an explanation of any exceptions.
A
copy of
all training materials and the documentation supporting this information shall
be available to OIG, upon request.
5.
a
complete copy of all reports prepared pursuant to Section III.D, along with
a
copy of the IRO’s engagement letter (if applicable);
6.
King’s
response and corrective action plan(s) related to any issues raised by the
reports prepared pursuant to Section III.D;
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Integrity Agreement
King
Pharmaceuticals, Inc.
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7.
a
summary and description of any and all current and prior engagements and
agreements between King and the IRO, if different from what was submitted as
part of the Implementation Report;
8.
a
certification from the IRO regarding its professional independence and/or
objectivity with respect to King;
9.
a
summary of Reportable Events (as defined in Section III.H) identified during
the
Reporting Period and the status of any corrective and preventative action
relating to all such Reportable Events;
10.
a
summary of the disclosures in the disclosure log required by Section III.E
that
relate to Federal Health Care Program Requirements;
11.
any
changes to the process by which King fulfills the requirements of Section III.F
regarding Ineligible Persons;
12.
the
name, title, and responsibilities of any person who is determined to be an
Ineligible Person under Section III.F; the actions taken by King in response
to
the screening and removal obligations set forth in Section III.F; and the
actions taken to identify, quantify, and repay any overpayments to Federal
Health Care Programs relating to items or services furnished, ordered or
prescribed by an Ineligible Person;
13.
a
summary describing any ongoing investigation or legal proceeding required to
have been reported pursuant to Section III.G. The summary shall include a
description of the allegation, the identity of the investigating or prosecuting
agency, and the status of such investigation or legal proceeding;
14.
a
description of all changes to the most recently provided list of King’s
locations (including addresses) as required by Section V.A.12; the corresponding
name under which each location is doing business; the corresponding phone
numbers and fax numbers; each location’s Federal Health Care Program provider or
supplier number(s) (if any); and the name and address of each Federal Health
Care Program contractor to which King
currently submits claims (if any);
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Integrity Agreement
King
Pharmaceuticals, Inc.
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15.
the
certifications required by Section V.C; and
16.
a
list of all King’s existing Relevant Third Party Agreements, as required by
Section II.C.1.
The
first
Annual Report shall be received by OIG no later than 90 days after the end
of
the first Reporting Period. Subsequent Annual Reports shall be received by
OIG
no later than the anniversary date of the due date of the first Annual
Report.
C.
Certifications.
The
Implementation Report and Annual Reports shall include a certification by the
Compliance Officer that:
1.
except
as expressly provided in the certification relating to policies and materials
under development or subject to revision, all policies and procedures,
standardized contracts, promotional materials, and training materials relating
to Government Pricing and Medicaid Drug Rebate Related Functions and to the
promotion, sales, or marketing of King’s products have been reviewed by legal
counsel and been found to be in compliance with all applicable Federal Health
Care Program Requirements;
2.
King
has provided to the OIG the Medicaid Drug Rebate certification as set forth
in
Appendix C covering the applicable Reporting Period(s), and such certification
is true and correct in all respects;
3.
to the
best of his or her knowledge, except as otherwise described in the applicable
report, King is in compliance with all of the requirements of this CIA;
4.
he or
she has reviewed the Report and has made reasonable inquiry regarding its
content and believes that the information in the Report is accurate and
truthful; and
5.
if
applicable, King has complied with its obligations under the Settlement
Agreement: (a) not to resubmit to any Federal health care program payors any
previously denied claims related to the Covered Conduct addressed in the
Settlement Agreement, and not to appeal any such denials of claims; (b) not
to
charge to or otherwise
Corporate
Integrity Agreement
King
Pharmaceuticals, Inc.
24
seek
payment from Federal or State payors for unallowable costs (as defined in the
Settlement Agreement); and (c) to identify and adjust any past charges or claims
for unallowable costs.
D.
Designation
of Information.
King
shall clearly identify any portions of its submissions that it believes are
trade secrets, or information that is commercial or financial and privileged
or
confidential, and therefore potentially exempt from disclosure under the Freedom
of Information Act (FOIA), 5 U.S.C. § 552. King shall refrain from identifying
any information as exempt from disclosure if that information does not meet
the
criteria for exemption from disclosure under FOIA.
VI. Notifications
and Submission of Reports
Unless
otherwise stated in writing after the Effective Date, all notifications and
reports required under this CIA shall be submitted to the following
entities:
OIG:
Administrative
and Civil Remedies Branch
Office
of
Counsel to the Inspector General
Office
of
Inspector General
U.S.
Department of Health and Human Services
Xxxxx
Building, Room 5527
000
Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx,
XX 00000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
King:
Xxxxxxxxx
Xxxxxxxxxxx, Xx.
Xxxx
Pharmaceuticals, Inc.
Corporate
Compliance Officer
000
Xxxxx
Xxxxxx
Xxxxxxx,
XX 00000
Corporate
Integrity Agreement
King
Pharmaceuticals, Inc.
25
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
with
a
copy to:
General
Counsel
King
Pharmaceuticals, Inc.
000
Xxxxx
Xxxxxx
Xxxxxxx,
XX 00000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Unless
otherwise specified, all notifications and reports required by this CIA may
be
made by certified mail, overnight mail, hand delivery, or other means, provided
that there is proof that such notification was received. For purposes of this
requirement, internal facsimile confirmation sheets do not constitute proof
of
receipt.
VII. OIG
Inspection, Audit, and Review Rights
In
addition to any other rights OIG may have by statute, regulation, or contract,
OIG or its duly authorized representative(s) may examine or request copies
of
King’s books, records, and other documents and supporting materials and/or
conduct on-site reviews of any of King’s locations for the purpose of verifying
and evaluating: (a) King’s compliance with the terms of this CIA; and (b) King’s
compliance with the requirements of the Federal Health Care Programs. The
documentation described above shall be made available by King to OIG or its
duly
authorized representative(s) at all reasonable times for inspection, audit,
or
reproduction. Furthermore, for purposes of this provision, OIG or its duly
authorized representative(s) may interview any of King’s employees, contractors,
or agents who consent to be interviewed at the individual’s place of business
during normal business hours or at such other place and time as may be mutually
agreed upon between the individual and OIG. King shall assist OIG or its duly
authorized representative(s) in contacting and arranging interviews with such
individuals upon OIG’s request.
King’s employees may elect to be interviewed with or without a representative of
King present.
Corporate
Integrity Agreement
King
Pharmaceuticals, Inc.
26
VIII. Document
and Record Retention
King
shall maintain for inspection all documents and records relating to
reimbursement from the Federal Health Care Programs, or to compliance with
this
CIA, for six years from the Effective Date (or longer if otherwise required
by
law).
IX. Disclosures
Consistent
with HHS’s FOIA procedures, set forth in 45 C.F.R. Part 5, OIG shall make a
reasonable effort to notify King prior to any release by OIG of information
submitted by King pursuant to its obligations under this CIA and identified
upon
submission by King as trade secrets, or information that is commercial or
financial and privileged or confidential, under the FOIA rules. With respect
to
such releases, King shall have the rights set forth at 45 C.F.R. § 5.65(d).
X. Breach
and Default Provisions
A
breach
of this CIA does not constitute a breach of the Settlement Agreement between
King and the United States or the settlement agreements with the individual
States referred to in the Preamble to this CIA. Any breach of the terms of
those
agreements does not constitute a breach of the CIA, except to the extent that
such a breach independently also constitutes a breach of this CIA. This Section
X specifies all of the remedies available to the OIG if King fails to satisfy
its obligations under this CIA. The remedies available to the OIG under this
Section X do not preempt or limit any actions that individual States may take
against King under the appropriate authorities not specified in this
CIA.
King
is
expected to fully and timely comply with all of its CIA
obligations.
A.
Stipulated
Penalties for Failure to Comply with Certain Obligations.
As a
contractual remedy, King and OIG hereby agree that failure to comply with
certain obligations as set forth in this CIA may lead to the imposition of
the
following monetary penalties (hereinafter referred to as “Stipulated Penalties”)
in accordance with the following provisions.
Corporate
Integrity Agreement
King
Pharmaceuticals, Inc.
27
1.
A
Stipulated Penalty of $2,500 (which shall begin to accrue on the day after
the
date the obligation became due) for each day King fails to establish and
implement any of the following obligations as described in Section
III:
a.
a
Compliance Officer;
b.
a
Compliance Committee;
c.
a
written Code of Conduct;
d.
written Policies and Procedures;
e.
the
training of Covered Persons;
f.
a
Disclosure Program;
g.
Ineligible Persons screening and removal requirements; and
h.
Notification of Government investigations or legal proceedings.
2.
A
Stipulated Penalty of $2,500 (which shall begin to accrue on the day after
the
date the obligation became due) for each day King fails to engage an IRO, as
required in Section III.D and Appendix A.
3.
A
Stipulated Penalty of $2,500 (which shall begin to accrue on the day after
the
date the obligation became due) for each day King fails to submit the
Implementation Report or the Annual Reports to OIG in accordance with the
requirements of Section V by the deadlines for submission.
4.
A
Stipulated Penalty of $2,500 (which shall begin to accrue on the day after
the
date the obligation became due) for each day King fails to submit the annual
Engagement Report in accordance with the requirements of Section III.D and
Appendix B.
5.
A
Stipulated Penalty of $1,500 for each day King fails to grant access
to
Corporate
Integrity Agreement
King
Pharmaceuticals, Inc.
28
the information or documentation as required in Section VII. (This Stipulated Penalty shall begin to accrue on the date King fails to grant access.)
6.
A
Stipulated Penalty of $5,000 for each false certification submitted by or on
behalf of King as part of its Implementation Report, Annual Report, additional
documentation to a report (as requested by the OIG), or otherwise required
by
this CIA.
7.
A
Stipulated Penalty of $1,000 for each day King fails to comply fully and
adequately with any obligation of this CIA. OIG shall provide notice to King,
stating the specific grounds for its determination that King has failed to
comply fully and adequately with the CIA obligation(s) at issue and the steps
King shall take to comply with the CIA. (This Stipulated Penalty shall begin
to
accrue 10 days after King receives this notice from OIG of the failure to
comply.) A Stipulated Penalty as described in this Subsection
shall not be demanded for any violation for which OIG has sought a Stipulated
Penalty under Subsections 1-6 of this Section.
B.
Timely
Written Requests for Extensions.
King
may, in advance of the due date, submit a timely written request for an
extension of time to perform any act or file any notification or report required
by this CIA. Notwithstanding any other provision in this Section, if OIG grants
the timely written request with respect to an act, notification, or report,
Stipulated Penalties for failure to perform the act or file the notification
or
report shall not begin to accrue until one day after King fails to meet the
revised deadline set by OIG. Notwithstanding any other provision in this
Section, if OIG denies such a timely written request, Stipulated Penalties
for
failure to perform the act or file the notification or report shall not begin
to
accrue until three business days after King receives OIG’s written denial of
such request or the original due date, whichever is later. A “timely written
request” is defined as a request in writing received by OIG at least five
business days prior to the date by which any act is due to be performed or
any
notification or report is due to be filed.
C.
Payment
of Stipulated Penalties.
1.
Demand
Letter.
Upon a
finding that King has failed to comply with any of the obligations described
in
Section X.A and after determining that Stipulated Penalties are appropriate,
OIG
shall notify King of: (a) King’s failure to comply; and (b) OIG’s
Corporate
Integrity Agreement
King
Pharmaceuticals, Inc.
29
exercise
of its contractual right to demand payment of
the Stipulated Penalties (this notification is referred to as the “Demand
Letter”). Such demand letter shall state the conduct that the OIG contends
constitutes the basis for imposing the Stipulated Penalty.
2.
Response
to Demand Letter.
Within
10 days after the receipt of the Demand Letter, King
shall either: (a) cure the breach to OIG’s satisfaction and pay the applicable
Stipulated Penalties; or (b) request a hearing before an HHS administrative
law
judge (ALJ) to dispute OIG’s determination of noncompliance, pursuant to the
agreed upon provisions set forth below in Section X.E. In the event King
elects
to request an ALJ hearing, the Stipulated Penalties shall continue to accrue
until King cures, to OIG’s satisfaction, the alleged breach in dispute. Failure
to respond to the Demand Letter in one of these two manners within the allowed
time period shall be considered a material breach of this CIA and shall be
grounds for exclusion under Section X.D.
3.
Form
of Payment.
Payment
of the Stipulated Penalties shall be made by certified or cashier’s check,
payable to: “Secretary of the Department of Health and Human Services,” and
submitted to OIG at the address set forth in Section VI.
4.
Independence
from Material Breach Determination.
Except
as set forth in Section X.D.1.c, these provisions for payment of Stipulated
Penalties shall not affect or otherwise set a standard for OIG’s decision that
King has materially breached this CIA, which decision shall be made at OIG’s
discretion and shall be governed by the provisions in Section X.D,
below.
D.
Exclusion
for Material Breach of this CIA.
1.
Definition
of Material Breach.
A
material breach of this CIA means:
a.
a
failure by King to report a Reportable Event and take corrective action, as
required in Section III.H;
b.
a
repeated or flagrant violation of the obligations under this CIA, including,
but
not limited to, the obligations addressed in Section X.A;
Corporate
Integrity Agreement
King
Pharmaceuticals, Inc.
30
c.
a
failure to respond to a Demand Letter concerning the payment of Stipulated
Penalties in accordance with Section X.C;
or
d.
a
failure to engage and use an IRO in accordance with Section III.D.
2.
Notice
of Material Breach and Intent to Exclude.
The
parties agree that a material breach of this CIA by King constitutes an
independent basis for King’s exclusion from participation in the Federal health
care programs. Upon a determination by OIG that King has materially breached
this CIA and that exclusion is the appropriate remedy, OIG shall notify King
of:
(a) King’s material breach; and (b) OIG’s intent to exercise its contractual
right to impose exclusion (this notification is hereinafter referred
to
as the
“Notice of Material Breach and Intent to Exclude”).
3.
Opportunity
to Cure.
King
shall have 30 days from the date of receipt of the Notice of Material Breach
and
Intent to Exclude to demonstrate to OIG’s satisfaction that:
x.
Xxxx
is in compliance with the obligations of the CIA cited by OIG as being the
basis
for the material breach;
b.
the
alleged material breach has been cured; or
c.
the
alleged material breach cannot be cured within the 30-day period, but that:
(i)
King has begun to take action to cure the material breach; (ii) King is pursuing
such action with due diligence; and (iii) King has provided to OIG a reasonable
timetable for curing the material breach.
4.
Exclusion
Letter.
If, at
the conclusion of the 30-day period, King fails to satisfy the requirements
of
Section X.D.3, OIG may exclude King from participation in the Federal health
care programs. OIG shall notify King in writing of its determination to exclude
King (this letter shall be referred to hereinafter as the “Exclusion Letter”).
Subject to the Dispute Resolution provisions in Section X.E, below, the
exclusion shall go into effect 30 days after the date of King’s
receipt of the Exclusion Letter. The exclusion shall have national effect and
shall also apply to all other Federal procurement and
Corporate
Integrity Agreement
King
Pharmaceuticals, Inc.
31
nonprocurement programs. Reinstatement to program participation is not automatic. After the end of the period of exclusion, King may apply for reinstatement by submitting a written request for reinstatement in accordance with the provisions at 42 C.F.R. §§ 1001.3001-.3004.
E.
Dispute
Resolution
1.
Review
Rights.
Upon
OIG’s delivery to King of its Demand Letter or of its Exclusion Letter, and as
an agreed-upon contractual remedy for the resolution of disputes arising under
this CIA, King shall be afforded certain review rights comparable to the ones
that are provided in 42 U.S.C. § 1320a-7(f) and 42 C.F.R. Part 1005 as if they
applied to the Stipulated Penalties or exclusion sought pursuant to this CIA.
Specifically, OIG’s
determination to demand payment of Stipulated Penalties or to seek exclusion
shall be subject to review by an HHS ALJ and, in the event of an appeal, the
HHS
Departmental Appeals Board (DAB), in a manner consistent with the provisions
in
42 C.F.R. § 1005.2-1005.21. Notwithstanding the language in 42 C.F.R. §
1005.2(c), the request for a hearing involving Stipulated Penalties shall be
made within 10 days after receipt of the Demand Letter and the request for
a
hearing involving exclusion shall be made within 25 days after receipt of the
Exclusion Letter.
2.
Stipulated
Penalties Review.
Notwithstanding any provision of Title 42 of the United States Code or Title
42
of the Code of Federal Regulations, the only issues in a proceeding for
Stipulated Penalties under this CIA shall be: (a) whether King was in full
and
timely compliance with the obligations of this CIA for which OIG demands
payment; and (b) the period of noncompliance. King shall have the burden of
proving its full and timely compliance and the steps taken to cure the
noncompliance, if any. OIG shall not have the right to appeal to the DAB an
adverse ALJ decision related to Stipulated Penalties. If the ALJ agrees with
OIG
with regard to a finding of a breach of this CIA and orders King to pay
Stipulated Penalties, such Stipulated Penalties shall become due and payable
20
days after the ALJ issues such a decision unless King requests review of the
ALJ
decision by the DAB. If the ALJ decision is properly appealed to the DAB and
the
DAB upholds the determination of OIG, the Stipulated Penalties shall become
due
and payable 20 days after the DAB issues its decision.
3.
Exclusion
Review.
Notwithstanding any provision of Title 42 of the
Corporate
Integrity Agreement
King
Pharmaceuticals, Inc.
00
Xxxxxx
Xxxxxx Code or Title 42 of the Code of Federal
Regulations, the only issues in a proceeding for exclusion
based on a material breach of this CIA shall be:
a.
whether King was in material breach of this CIA;
b.
whether such breach was continuing on the date of the Exclusion Letter; and
c.
whether the alleged material breach could not have been cured within the
30-day
period, but that: (i) King had begun to take action to cure the material
breach
within that period; (ii) King has pursued and is pursuing such action with
due
diligence; and (iii) King provided
to OIG within that period a reasonable timetable for curing the material
breach
and King has followed the timetable.
For
purposes of the exclusion herein, exclusion shall take effect only after an
ALJ
decision favorable to OIG, or, if the ALJ rules for King, only after a DAB
decision in favor of OIG. King’s election of its contractual right to appeal to
the DAB shall not abrogate OIG’s authority to exclude King upon the issuance of
an ALJ’s decision in favor of OIG. If the ALJ sustains the determination of OIG
and determines that exclusion is authorized, such exclusion shall take effect
20
days after the ALJ issues such a decision, notwithstanding that King may request
review of the ALJ decision by the DAB. If the DAB finds in favor of OIG after
an
ALJ decision adverse to OIG, the exclusion shall take effect 20 days after
the
DAB decision. King shall waive its right to any notice of such an exclusion
if a
decision upholding the exclusion is rendered by the ALJ or DAB. If the DAB
finds
in favor of King, King shall be reinstated effective on the date of the original
exclusion.
4.
Finality
of Decision. The
review by an ALJ or DAB provided for above shall not be considered to be an
appeal right arising under any statutes or regulations. Consequently, the
parties to this CIA agree that the DAB’s
decision (or the ALJ’s decision if not appealed) shall be considered final for
all purposes under this CIA.
Corporate
Integrity Agreement
King
Pharmaceuticals, Inc.
33
XI. Effective
and Binding Agreement
Consistent
with the provisions in the Settlement Agreement pursuant to which this CIA
is
entered, and into which this CIA is incorporated, King and OIG agree as
follows:
A.
This
CIA shall be binding on the successors, assigns, and transferees of
King;
B.
This
CIA shall become final and binding on the date the final signature is obtained
on the CIA;
C.
Any
modifications to this CIA shall be made with the prior written consent of the
parties to this CIA;
D.
The
undersigned King signatories’ represent and warrant that they are authorized to
execute this CIA. The undersigned OIG signatory represents that he is signing
this CIA in his official capacity and that he is authorized to execute this
CIA;
and
E.
This
CIA may be executed in counterparts, each of which constitutes an original
and all of which constitute one and the same agreement.
Corporate
Integrity Agreement
King
Pharmaceuticals, Inc.
34
On
Behalf of King Pharmaceuticals, Inc.
| /s/ Xxxxxxxx Xxxxxxxxxxx, Xx. | 10/31/05 | |
|
Xxxxxxxxx
Xxxxxxxxxxx, Xx.
|
||
|
Corporate
Compliance Officer
|
DATE
|
| /s/ Xxxx X. Xxxxxxxxx | 10/31/05 | |
|
Xxxx
X. Xxxxxxxxx, Esq.
|
||
|
Counsel
for King Pharmaceuticals, Inc.
|
DATE
|
Corporate
Integrity Agreement
King
Pharmaceuticals, Inc.
35
On
behalf of the Office of Inspector General
of
the Department of Health and Human Services
| /s/ Xxxxx Xxxxxx | 10/28/05 | |
|
Xxxxx
Xxxxxx
|
||
|
Chief
Counsel to the Inspector General
Office
of Inspector General
U.
S. Department of Health and Human Services
|
DATE
|
Corporate
Integrity Agreement
King
Pharmaceuticals, Inc.
36
APPENDIX
A
INDEPENDENT
REVIEW ORGANIZATION
This
Appendix contains the requirements relating to the Independent Review
Organization (IRO) required by Section III.D of the CIA. Capitalized terms
used
in this Appendix A and not defined herein have the meanings assigned to them
in
the CIA.
A. IRO
Engagement.
King
shall engage an IRO that possesses the qualifications set forth in Paragraph
B,
below, to perform the responsibilities in Paragraph C, below. The IRO shall
conduct the review in a professionally independent and/or objective fashion,
as
set forth in Paragraph D. Within 30 days after OIG receives written notice
of
the identity of the selected IRO, OIG will notify King if the IRO is
unacceptable. Absent notification from OIG that the IRO is unacceptable,
King
may continue to engage the IRO.
If
King
engages a new IRO during the term of the CIA, this IRO shall also meet the
requirements of this Appendix A. If a new IRO is engaged, King shall submit
the
information identified in Section V.A.8 of the CIA to OIG within 30 days
of
engagement of the IRO. Within 30 days after OIG receives written notice of
the
identity of the selected IRO, OIG will notify King if the IRO is unacceptable.
Absent notification from OIG that the IRO is unacceptable, King may continue
to
engage the IRO.
B.
IRO
Qualifications.
The
IRO
shall:
1.
assign
individuals to conduct the Government Pricing and Medicaid Drug Rebate
Engagement who have expertise in the Federal Health Care Program Requirements;
2.
assign
individuals who are knowledgeable about the appropriate statistical sampling
techniques and select the samples required for the Government Pricing and
Medicaid Drug Rebate Engagement; and
3.
have
sufficient staff and resources to conduct the reviews required by the CIA
on a
timely basis.
C. IRO
Responsibilities.
The
IRO
shall:
Appendix
A
King
Pharmaceuticals CIA
Page
1
1.
perform each Government Pricing and Medicaid Drug Rebate Engagement in
accordance with the specific requirements of the CIA;
2.
follow
all applicable Federal Health Care Program Requirements in making assessments
in
the Government Pricing and Medicaid Drug Rebate Engagement;
3.
request clarification from the appropriate authority (e.g.,
CMS),
if in doubt as to the application of a particular Medicare or Medicaid Drug
Rebate Program policy or regulation that is not addressed in King’s Policies and
Procedures;
4.
respond to all OIG inquires in a prompt, objective, and factual manner;
and
5.
prepare timely, clear, well-written reports that include all the information
required by Appendix B.
D.
IRO
Independence/Objectivity.
The
IRO
must perform the Government
Pricing and Medicaid Drug Rebate Engagement in
a
professionally independent and/or objective fashion, as appropriate to the
nature of the engagement, taking into account any other business relationships
or engagements that may exist between the IRO and King.
E. IRO
Removal/Termination.
1.
Provider.
If King
terminates its IRO during the course of the engagement, King must submit
a
notice explaining its reasons to OIG no later than 30 days after termination.
King must engage a new IRO in accordance with Paragraph A of this Appendix
A.
2.
OIG
Removal of IRO.
In
the
event OIG has reason to believe that the IRO does not possess the qualifications
described in Paragraph B of this Appendix A, is not independent and/or objective
as set forth in Paragraph D of this Appendix A, or has failed to carry out
its
responsibilities as described in Paragraph C of this Appendix A, OIG may,
at its
sole discretion, require King to engage a new IRO in accordance with Paragraph
A
of this Appendix A.
Prior
to
requiring King to engage a new IRO, OIG shall notify King of its intent to
do so
and provide a written explanation of why OIG believes such a step is necessary.
To resolve any concerns raised by OIG, King may request a meeting with OIG
to
discuss any aspect of the IRO’s qualifications, independence or performance of
its responsibilities and to present additional information regarding these
matters. King shall provide any additional information as may be requested
by
OIG under this Paragraph in an expedited manner. OIG will attempt in good
faith
to resolve any differences regarding the IRO
Appendix
A
King
Pharmaceuticals CIA
Page
2
with
King
prior to requiring King to terminate the IRO. However, the final determination
as to whether or not to require King to engage a new IRO shall be made at
the
sole discretion of OIG.
Appendix
A
King
Pharmaceuticals CIA
Page 3
Appendix
B to the CIA for King Pharmaceuticals, Inc.
Government
Pricing and Medicaid Drug Rebate Engagement
This
Appendix B contains the requirements relating to the Engagement required to
be
performed by the Independent Review Organization under Section III.D of the
CIA.
Capitalized terms used herein and not defined herein have the meanings assigned
to them in the CIA.
I.
Government Pricing and Medicaid Drug Rebate Engagement - General
Descriptions
As
specified more fully below, King Pharmaceuticals, Inc. (King), shall retain
an
Independent Review Organization (IRO) to perform reviews to assist King in
assessing and evaluating its systems, processes, policies, and practices
(including the controls on the systems, processes, policies, and practices)
related to its government price reporting requirements for Best Price (BP)
and
Average Manufacturer Price (AMP) under the Medicaid Drug Rebate Program and
for
Average Sales Price (ASP) for purposes of the Medicare program. The IRO shall
perform two types of engagements: 1) a systems review of King’s systems,
processes, policies, and practices relating to the calculation and reporting
of
AMP, BP and ASP (collectively “Systems Review Consulting Engagement”); and 2)
testing of samples of transactions to assess whether King is calculating AMP
and
BP in accordance with the policies, procedures, and methodologies developed
by
King relating to the Medicaid Drug Rebate Program (Medicaid Drug Rebate
Transactions Engagement).
Prior
to
performing the Government Pricing and Medicaid Drug Rebate Engagement, the
IRO
and King shall design Consulting Procedures outlining the specific work to
be
performed by the IRO, and the Consulting Procedures may be submitted to the
OIG
for comment. However, any comments or recommendations made by the OIG in
connection with a review of the submitted workplan(s) will not preclude the
OIG
from making further comments or recommendations for future workplan(s) after
reviewing the reports from the Government Pricing and Medicaid Drug Rebate
Engagement.
If
there
are no material changes in King’s systems, processes, policies, and practices
during the term of the CIA, then the IRO shall perform the Systems Review
Consulting Engagement covering the second and fourth Reporting Periods. If
King
materially changes its systems, processes, policies, and practices as they
relate to the calculation of AMP, BP, or ASP, then the IRO shall perform a
Systems Review Consulting Engagement
Appendix
B
King
Pharmaceuticals CIA
1
covering
the Reporting Period in which such changes were made in addition to conducting
the Engagement for the second and fourth Reporting Periods. The additional
Systems Review Consulting Engagement(s) shall consist of: 1) an identification
of the material changes; 2) an assessment of whether the systems, processes,
policies, and practices already reported on did not materially change; and
3) an
update on the systems, processes, policies, and practices that materially
changed.
The
Medicaid Drug Rebate Transactions Engagement shall be designed to test whether
King is calculating AMP and BP in accordance with the policies, procedures,
and
methodologies developed by King relating to the Medicaid Drug Rebate Program.
The Medicaid Drug Rebate Transaction Engagement shall consist of two parts,
the
“Reported Prices Procedures for AMP,” and the “Reported Prices Procedures for
BP.”
Consistent
with Section III.D.1.d of the CIA, after the third Reporting Period, the OIG
may, at its discretion and upon written request of King, permit King to perform
the engagements described in this Appendix B, subject to verification by the
IRO.
|
II.
|
Systems
Review Consulting Engagement
|
A. Average
Sale Price Systems Review
For
at
least the second and fourth Reporting Periods, the IRO shall review King’s
systems, processes, policies, and practices (including the controls on the
systems, processes, policies, and practices) associated with the tracking,
gathering, verifying, and accounting for all relevant data for purposes of
calculating ASP reported to the Centers for Medicare and Medicaid Services
(CMS)
as required under the Medicare program.
In
general terms, the IRO shall review the following:
1. the
systems, processes, policies, and practices in place to track, gather, and
appropriately account for price terms and transactions with King customers
that
are relevant for purposes of the ASP calculation and reporting requirements.
Specifically, this includes:
|
a)
|
the
process, policies, and procedures used to determine which customers
are
included in the calculation of ASP for ASP covered
products;
|
Appendix
B
King
Pharmaceuticals CIA
2
|
b)
|
the
process, policies, and procedures used to determine whether and which
particular transactions reflecting final sales prices are included
in or
excluded from the ASP calculation;
|
|
c)
|
a
review of King’s methodology for applying transactions to the ASP
calculations;
|
|
d)
|
the
relevant flow of data and information by which price terms and
transactions with King customers are accumulated from source systems
and
entered and tracked in King’s ASP system for purposes of calculating ASP;
|
|
e)
|
a
review of any King inquiries to CMS regarding the ASP calculation
and
reporting requirements and any responses to those inquiries; and
|
|
f)
|
the
controls and processes in place to examine and address system reports
that
require critical evaluation (such as reports of variations, exceptions,
and outliers). This shall include a review of the basis upon which
variations, exceptions, and outliers are identified and the follow-up
activities undertaken to identify the cause of any
variations.
|
B. Medicaid
Rebate Systems Review
For
at
least the second and fourth Reporting Periods, the IRO shall review King’s
systems, processes, policies, and practices (including the controls on the
systems, processes, policies, and practices) associated with the tracking,
gathering, and accounting for all relevant data for purposes of calculating
and
reporting AMP and BP to CMS under the Medicaid Drug Rebate Program.
In
general terms, the IRO shall review the following:
|
1.
|
The
systems, processes, policies, and practices that are in place to
track,
gather, and appropriately account for contract terms and transactions
with
King customers that are relevant to the calculation of AMP and
BP under
Medicaid Drug Rebate Program. Specifically, this includes a review
of:
|
|
a)
|
the
process used to determine which customers are included in the calculation
of AMP and BP for Medicaid rebate eligible products;
|
Appendix
B
King
Pharmaceuticals CIA
3
|
|
included
in the calculation of AMP and BP for Medicaid rebate eligible
products;
|
|
b)
|
the
process used to determine whether and which discounts or rebates
in King
customer contracts, or other price terms or transactions with King
customers, are included in the calculation of BP and AMP for Medicaid
rebate eligible products;
|
|
c)
|
a
review of the methodology for applying transactions to the AMP and
BP
calculations;
|
|
d)
|
the
relevant flow of data and information by which price terms and
transactions with King customers are accumulated from the source
systems
and entered and tracked in King’s information systems for purposes of
calculating the AMP and BP;
|
|
e)
|
a
review of any King inquiries to CMS regarding the Medicaid Drug Rebate
Program (including those pertaining to the determination of AMP and
BP)
and any responses to those inquiries; and
|
|
f)
|
the
controls and processes in place to examine and address system reports
that
require critical evaluation (such as reports of variations, exceptions,
and outliers). This shall include a review of the basis upon which
variations, exceptions, and outliers are identified and the follow-up
activities undertaken to identify the cause of any
variations.
|
C. Systems
Review Consulting Engagement Report
For
each
relevant Reporting Period, the IRO shall prepare a report based upon the
Systems
Review Consulting Engagement. This report may be combined with the report
for
the Medicaid Drug Rebate Transactions Engagement and shall include the
following:
|
1.
|
A
description of the systems, processes, policies, and practices
in place to
track, gather, and account for price terms, contract terms, and
transactions with King customers that are relevant to the calculation
and
reporting of AMP, BP, and ASP including, but not limited
to:
|
Appendix
B
King
Pharmaceuticals CIA
4
|
a)
|
the
computer or other relevant systems (including the source systems,
and any
other information systems (as applicable) used to calculate and report
AMP, BP, and ASP;
|
|
b)
|
the
information input into King’s relevant computer or other
systems used to calculate AMP, BP, and ASP;
|
|
c)
|
the
system logic or decisional rationale used to determine which King
customers are included for purposes of calculating AMP, BP, and ASP;
|
|
d)
|
the
system logic or decisional rationale used to determine whether contract
terms, discounts, rebates and all other relevant transactions with
King
customers are included or excluded when calculating AMP, BP and ASP;
and
|
|
e)
|
the
policies and practices of the Government Contracts and Commercial
Contracts subgroups of King’s Contract Administration Group in examining
system reports for variations that require critical evaluation, including
the bases upon which variations, exceptions, and outliers are identified,
and the follow up actions taken in
response.
|
|
2.
|
A
description of the documentation, information, and systems reviewed
and
the personnel interviewed, if any, including a description of the
following:
|
|
a)
|
King’s
inquiries to CMS regarding the Medicaid Drug Rebate Program or the
Medicare Program (including those pertaining to the determination
of AMP,
BP, and ASP) and any responses to those inquiries;
|
|
b)
|
King’s
systems and practices for reporting AMP, BP, and ASP to CMS for
purposes
of the Medicaid Drug Rebate Program on a quarterly basis;
and
|
|
c)
|
King’s
systems and practices for making any adjustments to reported AMP,
BP, or
ASP or additional information related to the
submissions.
|
Appendix
B
King
Pharmaceuticals CIA
5
|
3.
|
Observations,
findings, and recommendations on possible improvements to King’s systems,
processes, policies, and practices.
|
III. Medicaid
Drug Rebate Transactions Engagement
Except
for the first Reporting Period
as provided below, following the end of each Reporting Period, the IRO shall
randomly select one quarter for review in the Medicaid Drug Rebate Transactions
Engagement, including both the BP and AMP procedures described in this Section
III. For the first Reporting Period, the selected quarter shall be one in which
King’s new system for performing Medicare and Medicaid calculations was
installed and in use.
A. Reported
Prices Procedures for BP
For
each
Reporting Period, the IRO shall conduct Reported Prices Procedures for BP to
test whether King calculated and reported BP in accordance with King’ policies
and procedures and methodology developed for the Medicaid Drug Rebate Program.
The
Reported Prices Procedures for BP shall consist of two parts:
1.
Part One of Reported Prices and Procedures for BP
The
IRO
will obtain a listing of all King Customers1 to whom sales of
Medicaid rebate eligible products were made at contracted prices during the
selected quarter of the Review Period. The IRO will randomly select a sample
of
20 King Customers using the following methodology. The IRO will aggregate the
number of NDCs2 for each King Customer and will categorize each
King Customer as “large” or “small” based upon the total volume of
sales3 of the contracted Medicaid rebate eligible NDCs to that
King Customer in the Reporting Period quarter selected. The IRO shall randomly
1
A King Customer is any commercial (a) customer with whom King contracts
directly
for the sale of pharmaceutical products at discounted prices and (b) managed
care entity to which King pays rebates based on the utilization of its
pharmaceutical products by covered persons.
2
For purposes of this Appendix B, “NDC” means a single dosage, form, and strength
of a pharmaceutical product, without regard to package size (i.e., an NDC
9).
3
For purposes of this Section III, “volume of sales” means: (i) with respect to
purchasers of King’s pharmaceutical products, net sales before government
rebates; and (ii) for managed care entities, utilization (equal to WAC
less unit
rebate amount), in either case, in the most recent quarter for which complete
data is available.
Appendix
B
King
Pharmaceuticals CIA
6
select
10
King Customers from the large King Customer pool and 10 King Customers from
the
small King Customer pool.
The
IRO’s
review shall cover the five NDCs for which King paid the largest amount
(i.e., total dollars) of Medicaid rebates for the Reporting Period and
five randomly selected NDCs (collectively, the “Selected BP NDCs”); provided
that if King paid less than $20,000 in Medicaid rebates for the Reporting Period
for any randomly selected NDC, the IRO will replace such NDC with a randomly
selected NDC for which King paid at least $20,000 in Medicaid rebates for the
Reporting Period.
For
each
King Customer selected, the IRO will identify all contracts with King and all
Selected BP NDCs for which the King Customer had a contract price with King.
The
IRO will then test for each King Customer selected that each contract price
for
each Selected BP NDC is accurately reflected in King’s government pricing
system(s) and that the contract price is appropriately considered for purposes
of determining BP in accordance with the policies, procedures, and methodology
developed by King relating to the Medicaid Drug Rebate Program. To the extent
possible, the IRO shall perform this work using automated database inquiries.
2. Part
Two of Reported Prices Procedures for BP
The
IRO
will obtain the following information:
|
a)
|
the
five Medicaid rebate eligible NDCs for which King paid the largest
amount (i.e., total dollars) of Medicaid rebates for the
Reporting Period;
|
|
b)
|
for
each of the five Medicaid rebate eligible NDCs selected, obtain
a copy of
the internal King report(s) that identifies for each of the selected
NDCs
all unique prices lower than the reported BP for the selected quarter
that
existed within King’s systems used to determine BP;
and
|
|
c)
|
for
each unique price lower than the reported BP identified in the
applicable
report(s), the IRO will review a minimum of five randomly selected
contracted transactions associated with each of those unique lower
prices
(or, if there are fewer
|
Appendix
B
King
Pharmaceuticals CIA
7
|
|
than
five such transactions, all such transactions) to assess if each
was
properly excluded from the determination of BP for that Medicaid
rebate
eligible NDC in the quarter under review in accordance with King’s stated
methodology and/or policies and procedures.
|
3.
Additional Investigations
If
the
IRO identifies any prices reviewed in Part One or Part Two of the Reported
Prices Procedures for BP that were not accurately reflected in King’s systems
and/or were not appropriately included in, or excluded from, King’s BP
determination in accordance with King’s policies, procedures, and methodologies,
such prices shall be considered an error. The IRO shall conduct such Additional
Investigation as may be necessary to determine the root cause of the error.
For
example, the IRO may need to review additional documentation, conduct additional
interviews with appropriate personnel, and/or review additional contracts to
identify the root cause of the error.
Upon
completion of this review and Additional Investigation, if warranted, the IRO
will report to the OIG its findings relating to any errors and their root
cause(s).
In
the
event the IRO finds more than one error for the quarter under review in Part
One
or Part Two testing, the IRO will perform a second set of Part One or Part
Two
testing procedures (i.e., Part One or Part Two testing depending which
Part of the Reported Prices Procedures for BP resulted in an Additional
Investigation being warranted) for the same quarter and population of data
after
King has submitted its management response to the IRO findings to the OIG,
after
the OIG has reviewed and considered King’s management response, and the OIG has
determined that additional Part One or Part Two testing is warranted following
consultations with King and the IRO.
Should
it
be determined that additional Part One or Part Two testing is warranted,
the IRO
shall:
|
a)
|
If
additional Part One testing is required, test a random selection of
an additional five King Customers and
contract
|
Appendix
B
King
Pharmaceuticals CIA
8
|
|
prices
associated with those Customers from the large King Customer pool;
and/or
|
|
b)
|
If
additional Part Two testing is required, test the next five Medicaid
rebate eligible NDCs with the highest amounts of Medicaid rebates
(total
dollars) paid by King.
|
B. Reported
Prices Procedures for AMP
1. The
IRO shall select AMPs that were reported to CMS for five products for the
selected quarter. The selected NDCs shall be: (i) the three NDCs for which
King
paid the largest amount (i.e., total dollars) of Medicaid rebates in the
Reporting Period and (ii) two NDCs selected at random (collectively, the
“Selected AMP NDCs”); provided that if King paid less than $20,000 in Medicaid
rebates in the Reporting Period for any randomly selected NDC, the IRO will
replace such NDC with a randomly selected NDC for which King paid at least
$20,000 in Medicaid rebates in the Reporting Period.
The
IRO
shall randomly select 50 transactions (sales transactions and price concessions)
associated with each of the five selected AMPs. More specifically, the IRO
shall
review 25 transactions that were included from the calculation of AMP and 25
transactions that were excluded from the calculation of AMP. This review shall
determine, in accordance with King’s policies, procedures, and methodologies,
whether: 1) each transaction is supported by source documentation; and 2) the
transaction was appropriately included or excluded from the AMP under review.
2.
Additional Investigations
If
the
IRO identifies any transactions that were not supported by source documentation
and/or were not appropriately included in, or excluded from, the calculation
of
AMP in accordance with King’s policies, procedures, and methodology, such
transactions shall be considered an error. The IRO shall conduct such Additional
Investigation as may be necessary to determine the root cause of the error.
For
example, the IRO may need to review additional
Appendix
B
King
Pharmaceuticals CIA
9
documentation,
conduct additional interviews with appropriate personnel, and/or review
additional contracts to identify the root cause of the error.
Upon
completion of this review and Additional Investigation, if warranted, the
IRO
will report to the OIG its findings relating to any errors and their root
cause(s).
In
the
event the IRO finds more than one error for the quarter under review, the IRO
will perform a second set of review procedures relating to the AMP calculations
for the same quarter and population of data as in the first review. These
additional review procedures will be developed in consultation with the OIG
after King has submitted its management response to the IRO findings to the
OIG,
after the OIG has reviewed and considered King’s management response, and the
OIG has determined that additional testing is warranted.
C. Medicaid
Drug Rebate Transactions Report
The
IRO
shall prepare a report annually based upon each Medicaid Drug Rebate Transaction
Engagement performed. The report shall contain the following general elements
pertaining to the Reported Prices Procedures for AMP and the Reported Prices
Procedures for BP (Part One and Part Two):
|
1.
|
Testing
Objective – a clear statement of the objective(s) intended to be
achieved by each part of the Reported Prices
Procedures;
|
|
2.
|
Testing
Protocol – a detailed narrative description of: (a) the procedures
performed; (b) the sampling units; and (c) the universe from
which the
sample was selected; and
|
|
3.
|
Sources
of Data – a full description of documentation and/or other relevant
information relied upon by the IRO when performing the
testing.
|
The
IRO’s
report shall include the following results for each engagement:
|
1.
|
The
Reported Prices Procedures for AMP
|
Appendix
B
King
Pharmaceuticals CIA
10
|
a)
|
a
list of the five AMPs reported to CMS that were selected by the IRO
for
review, a descriptive list of the 50 selected transactions associated
with
each reported AMP, and the underlying documentation supporting the
random
selection of the AMPs and the transactions;
|
|
b)
|
a
description of the steps taken and the supporting documentation reviewed
to assess whether: 1) supporting documentation exists for each of
the
selected transactions; and 2) each selected transaction was appropriately
included in, or excluded from, the AMP calculation in accordance
with
King’s policies, procedures, and methodologies;
|
|
c)
|
a
list of any transactions not supported by source documentation and/or
not
appropriately included in, or excluded from, King’s AMP calculation; a
description of any adjustments to AMP reported to CMS; and a description
of any additional follow-up action taken by
King;
|
|
d)
|
a
detailed description of any Additional Investigation or review undertaken
with regard to any transactions that were not supported by source
documentation and/or were not appropriately included in, or excluded
from,
King’s AMP calculation and the results of any such investigation or
review; and
|
|
e)
|
the
IRO’s recommendations for changes in King’s policies, procedures, and/or
methodology to correct or address any weaknesses or deficiencies
uncovered
during the review.
|
2. The
Reported Prices Procedures for BP – Part One
|
a)
|
a
list of the 20 King Customers selected under Part One, the number
of
contracts associated with each King Customer; the NDCs tested; the
contract prices for each NDC tested; a list of any supporting
documentation reviewed;
|
|
b)
|
a
description of the IRO’s stratification system for identifying the “large”
and “small” customers and documentation supporting the random selection of
the customers;
|
Appendix
B
King
Pharmaceuticals CIA
11
|
c)
|
for
each selected King Customer, a description of the steps taken to
test that
the contract price(s) for each NDC selected was accurately reflected
in
King’s systems;
|
|
d)
|
for
each selected King Customer, the results from testing whether each
NDC
contract price was accurately reflected in King’s contracting systems. If
the correct price was not reflected in the systems, the IRO should
identify the correct price term;
|
|
e)
|
a
detailed description of any Additional Investigation or review undertaken
with regard to any price not accurately reflected in King’s systems and
the results of any Additional Investigation or review undertaken
with
respect to any such price;
|
|
f)
|
for
each selected King Customer, a description of the steps taken to
test that
each contract price term was appropriately considered in King’s
determination of BP for that NDC in accordance with King’s policies,
procedures, and methodologies;
|
|
g)
|
for
each selected King Customer, a list of any price inappropriately
included
in, or excluded from, King’s BP determination for that quarter based on
King’s policies, procedures, and methodologies; a description of any
adjustments to BP reported to CMS; and a description of any additional
follow-up action taken by King;
|
|
h)
|
a
detailed description of any Additional Investigation or review
undertaken
with regard to any price not appropriately included in, or excluded
from,
King’s BP determination for the selected quarter, and the results of
any
Additional Investigation or reviews undertaken with respect to
any such
price; and
|
|
i)
|
the
IRO’s recommendations for changes in King’s policies and procedures and/or
methodology to correct or address any weaknesses or deficiencies
uncovered
during the review.
|
3. The
Reported Prices Procedures for BP – Part Two
Appendix
B
King
Pharmaceuticals CIA
12
|
a)
|
a
narrative list of the five Medicaid rebate eligible NDCs with the
highest
rebates paid by King for the quarter under review and the BP reported
by
King to the Medicaid Drug Rebate Program for each of the five NDCs
for the
quarter under review, and the underlying documentation supporting
the
random selection of the five NDCs;
|
|
b)
|
a
description of the steps and the supporting documentation reviewed
to
assess the unique lower prices identified in the King report(s) for
each
of the selected NDCs, which were below BP reported by King to CMS
in the
quarter. If more than five contracted transactions are associated
with any
of the unique lower prices, the IRO shall also identify how many
such
transactions exist for each unique lower
price;
|
|
c)
|
a
list of any prices not included in, or excluded from, King’s BP
determination for that quarter in accordance with King’s policies,
procedures and methodology; a description of any adjustments to BP
reported to CMS; and a description of any additional follow-up action
taken by King;
|
|
d)
|
a
detailed description of any Additional Investigation or review undertaken
with regard to any prices that were not accurately included in, or
excluded from, King’s BP determination for the quarter under review and
the results of any such investigation or review;
and
|
|
e)
|
the
IRO’s recommendations for changes in King’s policies, procedures, and/or
methodology to correct or address any weaknesses or deficiencies
uncovered
during the review.
|
Appendix
B
King
Pharmaceuticals CIA
12
Appendix
C
Certification
for CIA with King Pharmaceuticals, Inc.
CERTIFICATION
In
accordance with the Corporate Integrity Agreement (CIA) entered between
King
Pharmaceuticals, Inc. (King) and the OIG, the undersigned hereby certifies
the
following to the best of my knowledge, information, and belief:
|
1)
|
King
has in place policies and procedures describing in all material
respects
the methods for collecting, calculating, verifying and reporting
the data
and information reported to the Centers for Medicare and Medicaid
Services
(CMS) and/or the State Medicaid programs in connection with the
Medicaid
Drug Rebate program (Medicaid Rebate Policies and Procedures);
|
|
2)
|
the
Medicaid Rebate Policies and Procedures have been designed to
ensure
compliance with King’s obligations under the Medicaid Drug Rebate Program;
and
|
|
3)
|
King’s
Medicaid Rebate Policies and Procedures were followed in all
material
respects in connection with the calculation of Average Manufacturer
Price
and Best Price for King’s products for each of the following four
quarters: [specifically identify each quarter].
|
__________________________________
Xxxxxxxxx
Xxxxxxxxxxx, Xx.
Corporate
Compliance Officer
__________________________________
Date
Appendix
C
King
Pharmaceuticals CIA
