SERVICES AGREEMENT
THIS SERVICES AGREEMENT (this "Agreement") is made this 29th day of
July, 2002 (the "Effective Date"), by and between EXPRESS SCRIPTS SPECIALTY
DISRIBUTION SERVICES, INC., a Delaware corporation ("SDS"), having a business
address at 00000 Xxxxxxxxx Xxxxx, Xxxxxxxx Xxxxxxx, Xxxxxxxx, 00000, and ORPHAN
MEDICAL, INC. ("Orphan"), a Delaware corporation, having a business address at
00000 Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxxx 00000
RECITALS
WHEREAS, Orphan manufactures Product, and desires to enter into an
agreement with SDS, whereby SDS will facilitate the dispensing and distribution
of Product, and perform certain ancillary functions associated therewith; and
WHEREAS, SDS has experience in providing the services desired by
Orphan, and is willing to provide such services for Orphan on the terms set
forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual promises
herein stated, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
TERMS OF AGREEMENT
ARTICLE 1
DEFINITIONS
As used in this Agreement, each of the following terms (and the plural
or singular thereof, when appropriate) shall have the meaning set forth herein,
except where the context makes it clear that such meaning is not intended:
1.1 "ACT" shall mean the United States Federal, Food, Drug and Cosmetic
Act, as amended from time to time.
1.2 "AWP" shall mean the average wholesale price of Product as reported
by First Data Bank.
** The appearance of a double asterisk denotes confidential information
that has been omitted from the exhibit and filed separately,
accompanied by a confidential treatment request, with the Securities
and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.
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1.3 "BUSINESS RULES" shall mean those written business rules mutually
agreed upon and executed prior to the Implementation Date by the parties (or
subsequently agreed to by the parties by amendment to this Agreement), which
either further describe how the Covered Services are to be performed or describe
additional services to be performed under this Agreement.
1.4 "CONFIDENTIAL INFORMATION" shall have the meaning assigned to it in
Section 5.1.
1.5 "COVERED SERVICES" shall mean those services to be performed by SDS
as set forth on Exhibit A or as described in any SOP.
1.6 "DEA" shall mean the United States Drug Enforcement Administration.
1.7 "FACILITY" shall mean a distribution facility (or facilities) owned
and/or operated by SDS and utilized in connection with the Xyrem Risk Management
Program, as selected by SDS in its discretion and subject to change from time to
time. Orphan Medical reserves the right to inspect and approve any facility used
for Xyrem distribution prior to any change in the aforementioned facility.
1.8 "FDA" shall mean the United States Food and Drug Administration.
1.9 "FEES" shall mean the fees as described in Section 4.2 hereof below
to be paid by Orphan to SDS hereunder.
1.10 "HIPAA" shall mean Health Insurance Portability and Accountability
Act of 1996, as further defined in the United States Code of Federal Regulations
(CRF) 45, Part 164 - Security and Privacy section.
1.11 "IMPLEMENTATION DATE" shall mean the date on which SDS will first
begin to perform the Covered Services, which will be approximately 30 days after
FDA approval of Xyrem.
1.12 "NON-PAP ORDER" shall mean each shipment of Product by SDS to any
Person other than a PAP Patient in accordance with applicable law and FDA
guidelines.
1.13 "NON-PAP PATIENT" shall mean a Patient who is not eligible to
participate in the PAP, as determined by NORD, but for whom SDS dispenses
Product pursuant to a Non-PAP Order.
1.14 "NORD" shall mean the National Organization of Rare Disorders,
which will be solely responsible for determination whether individuals are
eligible for participation for in the PAP, based on criteria established by NORD
and/or Orphan, and for communicating such eligibility to SDS.
1.15 "PAP" shall mean the patient assistance program established by
Orphan, pursuant to which SDS will provide dispensing services as described in
the applicable SOP.
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1.16 "PAP PATIENT" shall mean a Patient who has been approved by NORD
as eligible to participate in the PAP.
1.17 "PAP ORDER" shall mean a valid prescription indicating the dose,
amount and strength of Product properly prescribed to a PAP Patient by a health
care practitioner who is licensed to prescribe Product, and which is submitted
to SDS in accordance with the relevant SOP.
1.18 "PATIENT" means an individual who: (a) properly completes all
necessary intake and Xyrem Patient Success forms (the form and content of which
shall be mutually agreed upon by Orphan and SDS prior to the Implementation
Date, and which shall comply with applicable laws and all applicable FDA
requirements), as described in the relevant SOP; and (b) is either deemed
eligible by NORD to participate in the PAP, or is otherwise approved by SDS to
receive Product.
1.19 "PATIENT CONFIDENTIAL INFORMATION" means individually-specific
medical or prescription information and any other individually-identifiable
information which may be deemed to be confidential or protected under federal or
state law or regulations, including, without limitation, information that
constitutes Protected Health Information under HIPAA.
1.20 "PERSON" shall mean any natural person, corporation, organization,
association, partnership, limited liability company, HMO, or similar entity.
1.21 "PRODUCT" shall mean Xyrem(R) (sodium oxybate) oral solution and
dosing kit.
1.22 "SOPS" shall mean those written standard operating procedures
mutually agreed upon and executed prior to the Implementation Date by the
parties (or subsequently agreed to by the parties by amendment to this
Agreement), which either further describe how the Covered Services are to be
performed or describe additional services to be performed under this Agreement.
1.23 "TERRITORY" shall mean the United States of America.
1.24 "MARKS" shall mean those registered and common law trademarks of
Orphan that are listed in Exhibit C.
ARTICLE II
SERVICES
2.1 Covered Services. From and after the Implementation Date, SDS shall
provide the Covered Services for the benefit of Orphan.
2.2 Exclusive Distributor. During the term of this Agreement, all
Product sold in the Territory, or made available through the PAP, will be
distributed exclusively through SDS pursuant to this Agreement. Further, Product
sold, or made available through the PAP, in the Territory shall be warehoused at
the Facility in accordance with Exhibit A and any related SOP.
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ARTICLE III
SUPPLY OF PRODUCT; AUDIT
3.1 Consignment Relationship
(a) General. Orphan shall deliver, at its own expense, to
SDS's possession at the Facility (on a consignment basis) sufficient quantities
of Product to enable SDS to provide the Covered Services in accordance with this
Agreement. The parties shall mutually agree upon a sufficient level of inventory
of Product to be maintained at the Facility. The Product to be shipped pursuant
to Non-PAP Orders will be furnished to, and held by, SDS on a consignment basis
at all times, except as provided in Subsection 3.1(b). The consignment of
Product hereunder shall at no time be construed as a loan or other debt
financing or secured transaction arrangement between the parties, and title to
consigned Product shall remain with Orphan until transferred pursuant to
Subsection 3.1(b).
(b) Transfer of Title. Immediately prior to the shipment of
Product by SDS from the Facility pursuant to a Non-PAP Order, SDS shall purchase
from Orphan such Product being shipped. Title to the consigned Product so
purchased by SDS in connection with a Non-PAP Order shall pass to SDS at the
time of such purchase
(c) Shipment of Non-PAP Orders. Subject to the restrictions
set forth in Subsection 4.2(d) of this Agreement or any FDA requirements, SDS
shall have sole authority to determine to whom it will ship a Non-PAP Order and
at what price, although SDS shall not provide Product to any Person suspected of
diversion as outlined in the corresponding SOP.
3.2 PAP Orders. The Product to be shipped by SDS pursuant to PAP Orders
shall be for the account of Orphan, and title to such Product shall remain with
Orphan until shipped to the PAP Patient, at which time title will pass to the
PAP Patient. Once NORD approves a Patient as eligible to participate in the PAP,
SDS shall treat such Patient as so eligible until notified otherwise by NORD.
SDS shall fulfill PAP Orders and perform certain ancillary services relating
thereto as set forth in the applicable SOP.
3.3 Risk of Loss. All risk of Product loss or damage during the time
that such Product is at the Facility, after receipt in good condition by SDS at
the Facility, including inventory shortages which are unaccounted for, shall be
borne by SDS, except to the extent caused by the negligence or willful
misconduct of Orphan. Payment to Orphan by SDS for consigned Product lost or
damaged while at SDS's Facility shall be based on Orphan's reasonable
replacement costs, as reasonably determined and documented by Orphan.
3.4 Financial Audit. During the term of this Agreement (excluding the
months of December and January) and for a period of ninety (90) days after the
expiration or termination of this Agreement, upon reasonable prior notice and
during normal business hours, Orphan, or any third party auditor designated by
Orphan shall be entitled to audit and inspect those books and records of SDS
which are maintained by SDS in connection with its performance of the Covered
Services, subject to confidentiality constraints and applicable law. Such third
party auditor (a) shall not have a conflict of interest with SDS or any of its
affiliates (as determined by SDS in
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good faith), and (b) will be required to sign a confidentiality agreement in a
form reasonably acceptable to SDS prior to commencing such audit. Neither Orphan
nor its auditor shall have access to any Patient Confidential Information in the
context of an audit.
3.5 Regulatory and Compliance Audits and Information Requests.
(a) SDS shall provide to Orphan and/or the FDA, DEA or any
other governmental body all documents and information requested by the FDA, DEA
or any other governmental body in support of Orphan's regulatory filings or any
governmental investigations or inquires. Copies of all documents to be provided
to the FDA or DEA shall be provided to Orphan in advance, if practicable, or
otherwise within two (2) business days of delivery to the FDA or DEA. SDS shall
notify Orphan immediately upon receipt of notice of any inspection by the FDA or
DEA directed specifically toward Product, and Orphan shall have the right to
have an employee present at any such inspection, if allowed by law. In addition,
SDS shall notify Orphan of any FDA or DEA correspondence or inspections that
concern SDS generally and which are related to any SDS compliance issues that
may adversely impact SDS's ability to perform the services contemplated by this
Agreement. SDS shall notify Orphan immediately of any notices, requests for
information or other communications related to Product from the U.S. Department
of Health and Human Services or any other government agency or any state
healthcare program or other state agency and, to the extent permitted under
applicable law, shall give Orphan copies of such communications.
(b) SDS shall from time to time submit to audits and
inspections by Orphan during normal business hours or at any other time during
which the services being audited are ongoing, including but not limited to,
audits of regulatory and quality assurance SOPs and of records of contacts with
regulatory agencies, provided the scope of any such audit or inspection shall be
limited to information and facilities pertaining to Orphan's program. Orphan
shall give SDS at least two (2) business days prior notice of any such
inspection and at least thirty (30) days prior notice for any such audit, and
Orphan shall bear the out of pocket costs of such audit or inspection.
3.6 Returns and Replacement. In the event that SDS-purchased Product is
damaged in transit as a result of SDS's negligence or its designated shipper,
SDS will replace the Product to the Patient free of charge once the damaged
Product is returned to SDS. SDS will monitor all reports of lost Product for the
potential for abuse and diversion. SDS will cooperate with state and federal
authorities fully in any investigations of lost Product, and will provide
reports of such loss to Orphan on a monthly basis for the purpose of allowing
Orphan to track the Product and satisfy its FDA reporting requirements. SDS will
investigate the loss of Product by interviewing the Patient, and/or physician,
report the loss to Orphan and to the appropriate regulatory authorities, as
required by law, and record the loss in the Patient's file. Where there is
suspicion of abuse of diversion, SDS will contact the Orphan designee
responsible for DEA issues, and lost Product will not be replaced without
Orphan's approval. Where abuse or diversion is not suspected, SDS will replace
the lost Product at no charge to the Patient in the event such loss is the
result of SDS's negligence or its designated shipper and record the shipment in
the Patient file. SDS will treat a repeat request for lost Product as a
suspicion of abuse or diversion and report to the Orphan designee responsible
for DEA issues, and SDS will not replace the lost
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Product without Orphan's approval. For damaged Product, SDS will make a good
faith effort to arrange for the damaged Product to be returned to SDS. Upon
receipt of damaged Product, SDS will keep the damaged Product in a secure locked
area, and will dispose of it at SDS's cost in compliance with the applicable SOP
for destruction of Product. SDS shall not be required to disclose any Patient
Confidential Information to Orphan pursuant to this Section 3.6 to the extent
such disclosure is not permitted under HIPAA and other federal and state law.
3.7 Recalls. If Orphan is required to recall or, on its own initiative,
recalls or withdraws Product sold in the Territory, SDS shall reasonably assist
Orphan in such recall in accordance with applicable laws and regulations. For
such purposes, SDS shall maintain a complete and current list of all Patients
and other third parties to who SDS has shipped (or dispensed) Product, as well
as from whom SDS as accepted returns of Product, with the lot numbers of Product
dispensed/distributed or returned. Orphan shall pay for all costs and expenses
of SDS in connection with any such recall. SDS shall provide to Orphan, at
Orphan's request, any information reasonably requested by Orphan in connection
with Orphan investigations relating to recalled Product, subject to the
confidentiality constraints imposed by HIPAA and any other federal or state law.
3.8 Expired Product. Orphan will at its cost replace Product that
expires. Orphan will not replace expired Product once it has been purchased by
SDS. SDS will dispose of, or return, expired Product as reasonably directed by
Orphan, subject to applicable law, and Orphan shall promptly reimburse SDS for
all reasonable expenses incurred in complying with this Section 3.8
ARTICLE IV
PURCHASE PRICE OF PRODUCT; FEES
4.1 Set-up Fee. On the Effective Date, Orphan shall pay SDS a
non-refundable set-up fee in the amount set forth on Exhibit B, as payment for
up-front expenses anticipated to be incurred by SDS in preparation for the
performance of the Covered Services.
4.2 Purchase Price of Product.
(a) With respect to all Product purchased by SDS pursuant to
Subsection 3.1(b), SDS shall pay a purchase price to Orphan equal to Orphan's
current wholesale price, as it may be changed by Orphan from time to time on at
least 30 days prior written notice to SDS.
(b) The purchase price for Product purchased by SDS within the
first ninety (90) days after the Implementation Date shall be due and payable to
Orphan within ninety (90) days from the date of sale. Thereafter, the purchase
price for Product purchased by SDS shall be due and payable to Orphan within
thirty (30) days from the date of sale. SDA shall provide Orphan with written
confirmation of sales of Product on a weekly basis. If SDS makes payment of the
purchase price of Product within the applicable time period, it shall be
entitled to a two percent (2%) discount off the purchase price of such Product,
and the discount shall be applied by SDS by reducing the amount due and payable
to Orphan by two percent (2%).
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(c) SDS shall be responsible for any sales tax or similar
taxes payable in connection with the sale of Product to SDS.
(d) SDS shall have the right to establish the price at which
it resells Product to Non-PAP Patients, and shall have all right, title and
interest in and to any amounts that SDS receives from third parties in
connection with Product dispensed or distributed pursuant to Non-PAP Orders;
provided, however, that the price at which SDS sells Product shall not exceed
the greater of (i) 125% of Orphans' then-current wholesale price for Product or
(ii) the then AWP of Product.
4.3 Fees. As compensation for the Covered Services performed by SDS,
Orphan shall pay SDS the Fees described in Exhibit B. SDS shall invoice Orphan
for the Fees on a bi-weekly basis, commencing on the second Friday after the
Implementation Date, and such Fees shall be due and payable to SDS within thirty
(30) days of the date of SDS's invoice. On the first anniversary of the
Implementation Date, and each anniversary thereafter, SDS shall be entitled to
increase each of the Fees by no more than a percentage which is equal to the
percentage increase to the then current twelve (12) month Consumer Price Index
(all items) as published by the U.S. Department of Labor, Bureau of Labor
Statistics during such twelve (12) month period. SDS shall notify Orphan in
writing within thirty (30) days after the effective time of any such increase in
Fees.
4.4 Late Penalty. Any amount not paid by the owing party on or before
the respective due date thereof shall bear interest at the rate of 18% per annum
(1.5% per month) or, if lower, the highest interest rate permitted by law.
4.5 Adjustment. In December, 2003, and annually thereafter, the parties
will, in good faith, re-evaluate the pricing set forth on Exhibit B to determine
whether an adjustment thereto is warranted in light of certain unanticipated
expenditures, efficiencies, reductions or other circumstances that may
necessitate such an adjustment; provided, however, in no event shall either
party be obligated at such time to agree to any such adjustment.
ARTICLE V
CONFIDENTIAL INFORMATION
5.1 Nondisclosure Commitments. The parties acknowledge that, as a
result of this Agreement, each may learn confidential and proprietary
information, including, but not limited to, information about Orphan's
operations, business, and products, and information about SDS's report formats,
computer software, business, and operations (all of which shall collectively be
considered the "Confidential Information" of the respective party). Except as
specifically provided herein, neither Orphan nor SDS shall disclose any
Confidential Information of the other to any person or entity, or use, or permit
any person or entity to use, any of such Confidential Information, excepting
only: (a) disclosures to and use by the employees of Orphan or SDS who have a
reasonable need to know such information in connection with performance to this
Agreement, (b) disclosures which are required by law, and (c) disclosures that
are made on a confidential basis to the attorneys, accountants, and other
professional advisors of Orphan or SDS in connection with matters relating to
this Agreement. Notwithstanding the foregoing,
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Confidential Information shall not include: (x) information which is public or
becomes public through no fault of the receiving party, (y) information of which
the receiving party has knowledge prior to receipt, and (z) information which is
received by one party from a third person not under an obligation of
confidentiality to the other party to this Agreement.
5.2 Patient Confidential Information. Except as otherwise provided in
Section 6.7, Orphan shall neither have access to nor be entitled to receive any
Patient Confidential Information, except to the extent Orphan must have access
to such Patient Confidential Information to satisfy its FDA reporting
requirements associated with Product. Each party shall maintain the
confidentiality of all information and records, including patient information if
such party receives Patient Confidential Information in any form or manner, to
the extent required by applicable law, including, but not limited to, HIPAA. All
patient-related data and information obtained by SDS hereunder shall be and
remain the property of SDS and shall be deemed the Confidential Information of
SDS. SDS will not utilize Patient Confidential Information it comes into
possession of as a result of this Agreement outside the scope of this Agreement.
SDS will not engage in any activity designed to expand its information of
individual Patients through the use of third parties for a purpose other than to
effectuate the uses and disclosures contemplated by this Agreement. There shall
be no prior use of Patient Confidential Information outside of the scope of this
Agreement. Notwithstanding anything to the contrary, however, SDS and/or its
affiliates may use any such Patient Confidential Information in the aggregate
and on a de-identified basis with other drug-use data, to the extend permitted
by law, without charge, for research, cost analysis, and other business purposes
of SDS and its affiliates, so long as there is no specific disclosure of the
Confidential Information of Orphan. Notwithstanding anything to the contrary
herein, with respect to any information or documents that are subject to
disclosure or that are requested pursuant to Section 3.5 or otherwise, and which
contain Patient Confidential Information, SDS shall only be required to disclose
such information and documents to the extent permitted by federal and state
confidentiality laws and regulations, including, but not limited to, HIPAA and,
in connection with any such disclosure to Orphan pursuant to Section 3.5 or
otherwise which involves Patient Confidential Information, Orphan hereby
represents that such disclosure is required by law or is intended for one of the
purposes described in 45 C.F.R. ss. 164.512(b) and that such documents and
information received by Orphan will be used solely to comply with such law or
with one of the intended purposes under 45 C.F.R. ss. 164.512(b).
ARTICLE VI
TERM AND TERMINATION
6.1 Initial Term; Renewal. The initial term of this Agreement shall
begin on the Effective Date and continue for a period of three (3) years after
the Implementation Date, and may be terminated earlier or automatically extended
in accordance with the terms thereof. Not less than one hundred twenty (120)
days prior to the end of the initial or any renewal term of this Agreement,
either party may notify the other party in writing that it desires to terminate
this Agreement, effective as of the end of the then current term. If no such
written notification is given, this Agreement shall automatically continue with
the same terms and conditions as set forth herein for an additional one (1) year
term, subject to the right of termination as otherwise provided herein.
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6.2 Termination for Bankruptcy. Either party shall have the right to
terminate this Agreement upon five (5) days' written notice, if (a) the other
party files a petition for reorganization or liquidation under any federal or
state bankruptcy law, or any such petition is filed against such other party
and, in either case, the petition is not withdrawn or dismissed within sixty
(60) days after filing, or (b) a receiver is appointed for any part of its
assets and said appointment is not vacated within sixty (60) days.
6.3 Termination for Noncompliance. Orphan shall have the right to
terminate this agreement upon five (5) days' written notice to SDS if SDS is
cited as non-compliant with regulatory requirements as determined by an audit of
SDS facilities by Orphan and confirmed by a third-party audit, or if SDS is
cited as non-compliant as determined by a regulatory body, and appropriate
corrective action cannot be mutually agreed to by the parties within thirty (30)
days after such determination of non-compliance or such earlier date as is
specified by the regulatory body.
6.4 Termination for Cause. Notwithstanding anything to the contrary
herein, either party may give the other written notice of a material breach of
this Agreement. If the breaching party has not cured said breach within thirty
(30) days from the date such notice was sent, this Agreement may be terminated
at the option of the non-breaching party. If the amount of time commercially
reasonable for the breach to be cured is longer than thirty (30) days, this
Agreement may not be terminated by the non-breaching party pursuant to this
provision until such commercially reasonable period of time has elapsed;
provided, however, that in no event shall such cure period exceed sixty (60)
days from the date such notice was sent. Notwithstanding the foregoing, Orphan
may terminate this Agreement under Section 10.5 if SDS is precluded from
rendering Covered Services as a result of an event of force majeure.
6.5 Transition of Covered Services. Upon termination or expiration of
this Agreement, the parties shall mutually agree on an expeditious schedule of
transition of the Covered Services. SDS shall promptly return to Orphan (or to
any other third party as directed by Orphan) all Product then in SDS's
possession or control which has not been purchased by SDS pursuant to Subsection
3.1(b). If this Agreement has been terminated by Orphan under Sections 6.2, 6.3,
or 6.4, SDS shall be responsible for the costs of returning Product to Orphan;
otherwise, Orphan shall be responsible for such costs.
6.6 Return of Confidential Information. Upon termination or expiration
of this Agreement, each party shall, if requested by the other party, promptly:
(a) return to the other party all documentation and other materials (including
all copies of original documentation or other materials) containing any
Confidential Information, and (b) certify to the other party as to the
destruction or return of all such documentation and other materials public
through no fault of the receiving party.
6.7 Transfer of Patient Information, Etc. Upon termination or
expiration of this Agreement, for whatever reason, Orphan shall have the right
to transfer all mutually-developed Xyrem Risk Management SOPs and the toll free
Xyrem telephone number to another specialty pharmacy and/or distributor of its
choice, and SDS shall cooperate with Orphan in the transfer of such items to
another qualified specialty pharmacy and/or distributor. In addition, Orphan may
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request that SDS also transfer Patient Confidential Information to such other
specialty pharmacy for the purpose of continuing "treatment" (as that term is
defined under HIPAA) of such Patients, and SDS shall expeditiously honor such
request to the extent disclosure of such Patient Confidential Information by SDS
is permitted under applicable law, including, but not limited to, HIPAA. If this
Agreement has been terminated by Orphan under Sections 6.2, 6.3 or 6.4, Orphan
shall promptly reimburse SDS for all expenses incurred in connection with the
transition described in this Section 6.7; otherwise, SDS shall be responsible
for all such costs incurred by SDS in connection with such transition.
ARTICLE VII
COMPLIANCE WITH LAW; REPRESENTATIONS AND WARRANTIES
7.1 Compliance With Law. Each party agrees that it will perform its
respective obligations hereunder in accordance with applicable federal, state
and local laws, including but not limited to applicable DEA, FDA, state and
local retail and wholesale pharmacy requirements. FDA laws are not limited to
section 505 of the Federal Food, Drug and Cosmetic Act, but also include any
special considerations required by the FDA for approval of Product. SDS will be
notified of such requirements in writing by Orphan. In the event any such
special FDA requirements not communicated to SDS by the Effective Date cause
SDS's obligations under this Agreement to be materially more burdensome or
expensive, the parties shall promptly negotiate an appropriate modification to
the Fees, and if the parties cannot agree on such a modification, or SDS in good
faith views such additional responsibility as too burdensome to continue with
the Agreement, SDS shall have the right to terminate this Agreement without
penalty upon five (5) days written notice to Orphan.
7.2 Representations and Warranties.
(a) Each party hereby represents and warrants to the other
party that: (i) it has all requisite corporate power and authority to enter into
this Agreement and perform and observe all obligations and conditions required
to be performed or observed by that party under this Agreement; (ii) neither the
execution and delivery of the Agreement nor the performance by that party of its
respective obligations under this Agreement will conflict with or result in a
breach of any covenant or agreement between that party and any third party;
(iii) this Agreement represents the legal, valid and binding obligation of that
party; and (iv) such party has (or will have at such time as performance of its
obligations under this Agreement may require) obtained all of the local, state
and federal permits, licenses or another regulatory registrations or approvals
necessary for the performance of its obligations under this Agreement; provided,
however, SDS shall make a good faith effort to apply and obtain the requisite
DEA license necessary in order for SDS to distribute Product to Persons other
than the end-user, but the failure to obtain such license shall not constitute a
breach of this Agreement by SDS.
(b) Orphan hereby represents and warrants that Product at the
time of shipment to SDS's facility: (i) shall not be adulterated or misbranded
within the meaning of the Act, or within the meaning of any applicable state or
municipal law in which the definitions of adulteration or misbranded are
substantially the same as those contained in the Act, as the Act and such laws
are constituted and effective at the time of shipment; and (ii) shall not be a
product which may not, under the provisions of the Act or FDA guidelines
pertaining to the Product, be introduced into interstate commerce.
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ARTICLE VIII
INDEMNIFICATION AND INSURANCE
8.1 Indemnification.
(a) SDS shall indemnify and hold harmless Orphan and its
directors, officers, employees, and affiliates from and against all claims,
liabilities, losses, damages, costs, and expenses (including without limitation
reasonable attorneys' fees) arising out of: (i) any breach by SDS of this
Agreement, including, but not limited to, its representations and warranties;
(ii) the negligent act or negligent omission, or the willful misconduct, of SDS
or any of its employees or agents in connection with the performance of its
obligations under this Agreement; and (iii) SDS's use of patient information in
violation of applicable laws governing confidentiality; except to the extend
such claims arise out of Orphan's negligence or willful misconduct or breach
hereunder, including, but not limited to, a breach of Orphan's representations
and warranties hereunder.
(b) Orphan shall indemnify and hold harmless SDS and its
directors, officers, employees and affiliates from and against all claims,
liabilities, losses, damages, costs, and expenses (including without limitation
reasonable attorneys' fees) arising out of (i) any breach by Orphan of this
Agreement, including , but not limited to, its representations and warranties;
(ii) the negligent act or negligent omission, or the willful misconduct, of
Orphan or any of its employees or agents in connection with the performance of
its obligations under this Agreement; (iii) any claim relating to the
manufacturing of the Product or use of the Product by a Patient or other
individual; and (iv) use by SDS of a Xxxx in accordance with the terms of this
Agreement, except to the extent such claims arise out of SDS's negligence or
willful misconduct or breach hereunder, including, but not limited to, a breach
of SDS's representations and warranties hereunder.
8.2 Insurance. Each party shall procure and maintain during the term of
this Agreement, comprehensive general liability insurance in the amount of **
per claim made, and in the aggregate, including but not limited to, for
contractual liability, personal and bodily injury, and product liability. Each
party shall provide the other party with evidence of such insurance upon
request. A party may not cause or permit such insurance to be canceled without
obtaining comparable replacement coverage or modified to materially reduce its
scope or limits of coverage during the term of the Agreement.
ARTICLE IX
TRADEMARKS
9.1 Grant of License. Orphan grants to SDS a nonexclusive,
royalty-free, nontransferable license to use the Marks in the Territory in
connection with the rendering of the services and sale of Product contemplated
by this Agreement, and SDS accepts the license subject to the following terms
and conditions.
9.2 Ownership of the Service Marks. SDS acknowledges that Orphan is the
exclusive owner of the Marks and that all use of the marks by SDS will inure to
the benefit of and be on
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behalf of Orphan. SDS will do nothing inconsistent with such ownership and will
reasonably assist Orphan in recording the evidence of this license arrangement
with any appropriate government authorities. Nothing in this Agreement shall
give SDS any right, title, or interest in the Marks other than the right to use
the Marks in accordance with this Agreement, and SDS will not attack the title
of Orphan to the Marks.
9.3 Quality Standards. All use of the marks by SDS will be in
compliance with the quality control standards that are furnished from time to
time by Orphan or its agents. SDS will reasonably cooperate with Orphan in
facilitating Orphan's ultimate control of such nature and quality standards,
will permit reasonable inspection of SDS's operation, and, upon request of
Orphan, will supply Orphan with specimens of all uses by SDS of the Marks.
9.4 Marking. SDS's use of the Marks will comply with all marking
requirements and other laws pertaining to trademarks in force during the term of
this Agreement.
9.5 Form of Use. SDS will use the Marks only in the form and manner and
with appropriate legends as prescribed from time to time by Orphan.
9.6 Infringement Proceedings. SDS will promptly notify Orphan of an
unauthorized uses of the Marks by others that come to SDS's attention. Orphan
will have the sole right and discretion to bring infringement, dilution or
unfair competition proceedings involving the Marks.
9.7 Effect of Termination. Upon termination of this Agreement, SDS will
immediately discontinue all use of the Marks and any term or symbol confusingly
similar thereto, will cooperate with Orphan or its agents to apply to the
appropriate authorities to cancel any recording of evidence of this Agreement
from all government records, and will destroy all printed materials bearing the
Marks.
ARTICLE X
MISCELLANEOUS
10.1 Notices. Except as otherwise specified in this Agreement any
notice or other communication required or contemplated under the provisions of
this Agreement shall be in writing and (a) delivered in person, evidenced by a
signed receipt, (b) deposited in the United States mail, first class postage
prepaid, (c) sent by electronic facsimile transmission, or (d) sent via Federal
Express, Airborne, or any other similar express delivery service, to the
addresses indicated below or to such other persons or addresses as the parties
may provide by written notice to the other. The date of the notice shall be (x)
the date of delivery if the notice is personally delivered or sent via Federal
Express or similar express service, or (y) three (3) days after the date of
mailing if the notice is mailed by United States mail.
If to SDS: Express Scripts Specialty Distribution Services, Inc.
00000 Xxxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attn: Vice President and General Manager
Fax No. (000) 000-0000
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WITH A COPY TO: Express Scripts, Inc.
00000 Xxxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attn: General Counsel
Fax No. (000) 000-0000
If to Orphan: Orphan Medical, Inc.
00000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxx 00000
Attn: Vice President of Commercial Operations
Fax No. 000-000-0000
10.2 Invalidity. Should any of the provisions hereof become legally
invalid or unenforceable, the remainder of this Agreement shall remain
effective, provided that the essential purpose of the Agreement can still be
carried out. In such event, the parties agree to negotiate a mutually acceptable
amendment to the terms and conditions of this Agreement.
10.3 Non-Waiver. A failure by any party to insist upon strict
compliance with any term of this Agreement, to exercise any option, to enforce
any right, or to seek any remedy upon any default of any other party shall not
affect, or constitute a waiver of, the first party's right to insist upon any
default of the other party shall affect, or constitute a waiver of, the first
party's right to insist upon strict compliance, to exercise that option, to
enforce that right, or to seek that remedy with respect to that default or any
prior, contemporaneous, or subsequent default. No custom or practice of the
parties at variance with any provision of this Agreement shall affect, or
constitute a waiver or, a party's right to demand strict compliance with all
provisions of this Agreement
10.4 Remedies. The rights and remedies of each party under this
Agreement shall be cumulative and in addition to any other rights or remedies
available to such party, whether under any other agreement, at law, or in
equity, including without limitation specific performance, a temporary
restraining order, and temporary or permanent injunctions.
10.5 Force Majeure. If the performance of any part of this Agreement by
either party shall be affected for any length of time by fire or other casualty,
government restrictions, war, riots, strikes, or labor disputes, lock out,
transportation delays, and acts of God, or any other similar causes which are
beyond the reasonable control of such party, such party shall not be responsible
for delay or failure of performance of this Agreement for such length of time;
provided, however, that the obligation of the parties to pay amounts then due
shall not be suspended or delayed; and provided, further, that if SDS is
precluded from rendering Covered Services for a continuous period in excess of
ten (10) business days, Orphan shall be entitled to terminate this Agreement
upon five (5) days written notice to SDS.
10.6 Governing Law. This Agreement and performance hereunder shall be
governed by, and construed in accordance with, the laws of the State of
Delaware, without regard to choice of law principles.
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10.7 Successors and Assigns. This Agreement may not be assigned by any
party hereto without the prior written consent of the other parties, which
consent shall not be unreasonably withheld.
10.8 Relationship of the Parties. The parties are independent
contractors and shall not be considered as an employee, agent or legal
representative of any other party for any purposes whatsoever. Nothing herein
shall be construed to create a partnership, joint venture or general agency.
Except as expressly provided for herein, the parties shall have no authority to
act for or on behalf of the any party or to sign or otherwise enter into any
kind of contract, undertaking or agreement, or make any promise, warranty or
representation, with respect to the Product or any other matter on behalf of any
other party, and no other party shall be bound by or liable for any acts,
obligations, or defaults of the other party, its employees or agents. Each party
shall have exclusive liability and responsibility for workers' compensation
insurance, taxes and other obligations with respect to itself, its employees and
agents.
10.9 Complete Agreement; Amendment. This Agreement (together with the
exhibits, all of which are hereby incorporated herein by reference) contains the
entire agreement between the parties and supersedes all prior or contemporaneous
discussions, negotiations, representations, warranties, or agreements relating
to the subject matter of this Agreement. This Agreement may not be amended or
changed in any of its provisions except by a subsequent written agreement
between the parties.
10.10 Headings. The article, section and paragraph headings used in
this Agreement are for convenience only and are not part of the agreement
between the parties.
10.11 Survival. Notwithstanding any provisions of this Agreement to the
contrary, Section 3.3, Section 3.5(a), Article IV, Article V, Section 6.5,
Article VII, Article VIII, and Sections 10.3, 10.4, 10.6 and 10.11 shall survive
the expiration or termination of this Agreement for any reason.
IN WITNESS WHEREOF, the parties have signed this Agreement effective as
of the Effective Date.
EXPRESS SCRIPTS SPECIALTY ORPHAN MEDICAL, INC.
DISTRIBUTION SERVICES, INC.
By: /s/ Xxxx-Xxxx Xxxxx By: /s/ Xxxx X. Buillion
-------------------- ----------------------
Name: Xxxx-Xxxx Xxxxx Name: Xxxx X. Xxxxxxx
Title: Vice President and Title: Chief Executive Officer
General Manager
EXHIBIT A
COVERED SERVICES
o ADMINISTRATION OF THE XYREM SUCCESS PROGRAMSM
|X| Call Center Services
|X| Drug Information and Fulfillment Services
|X| Physician and Patient Registries
|X| Xyrem Patient Assistance Program
|X| **
|X| Dispensing Services
|X| Pharmacy Services
|X| Distribution Services
|X| Provision of a Xyrem program manager
o INVENTORY MANAGEMENT
|X| Orphan monitors production cycles and expected inventories and
communicates information to SDS
|X| SDS's inventory system tracks Product production cycles and planned
availability
|X| Inventory reports daily to Orphan
o MASTER WAREHOUSE
|X| Sole source distribution agent for Xyrem
|X| Separate storage, dispensing distribution and security area for Xyrem
|X| Inventory of Xyrem
|X| Inventory storage in compliance with Orphan's reasonable requirements
|X| Maintaining mutually agreed upon inventory levels.
|X| Tracking of Xyrem, by lot #, NDC# and expiration date.
|X| Maintaining and FIFO inventory
|X| Full Class I Recall capabilities
|X| Management of a database of lot numbers
|X| Return goods-storage, processing and disposal
o REPORTING
|X| Reporting as agreed on Product inventory (non-patient identifiable)
|X| **
|X| Adverse event reporting as required by Orphan medical
|X| **
|X| Other reports mutually agreed upon
|X| Custom and ad hoc reports reasonably requested by Orphan Medical
o SOPS AND BUSINESS RULES
Any other services as mutually agreed upon by the parties and memorialized in
written SOPs or Business RuLes.
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EXHIBIT B
FEES
---------------------------------- ----------------------------
Type of Fee Amount Owed by Orphan
---------------------------------- ----------------------------
---------------------------------- ----------------------------
Set-Up Fee **
---------------------------------- ----------------------------
---------------------------------- ----------------------------
Non-PAP Administrative Fee ** *
---------------------------------- ----------------------------
---------------------------------- ----------------------------
PAP Administrative Fee **
---------------------------------- ----------------------------
---------------------------------- ----------------------------
PAP Order Dispensing Fee **
---------------------------------- ----------------------------
---------------------------------- ----------------------------
PAP Order Shipping Costs **
---------------------------------- ----------------------------
---------------------------------- ----------------------------
Custom and ad hoc reports **
---------------------------------- ----------------------------
* The ** fee is based on the current strength, dosage and bottle size of
Product as of the Effective Date, and is subject to change as
mutually determined in good faith by SDS and Orphan if the current
strength, dosage or bottle size changes.
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EXHIBIT C
XYREM
XYREM & DESIGN (As identified in U.S. Reg. No. 2,472,156)
XYREM & DESIGN (Color)(As identified in U.S. Reg. No. 2,423,880)
XYREM CIII SODIUM OXYBATE ORAL SOLUTION & DESIGN
XYREM SUCCESS PROGRAM
XYREM PATIENT SUCCESS PROGRAM
XYREM PHYSICIAN SUCCESS PROGRAM
1-866-XYREM88
O ORPHAN MEDICAL & DESIGN (As shown in U.S. Reg. No. 1,906,107)
ORPHAN
ORPHAN MEDICAL
ORPHAN MEDICAL, INC.
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