DIVESTITURE AGREEMENT

Transcription

1 DIVESTITURE AGREEMENT 1. This is entered into by and between the Office of Inspector General (OIG) of the United States Department of Health and Human Services (HHS), ISTA Pharmaceuticals, Inc. (IST A), and Bausch & Lomb Incorporated (Bausch & Lomb) (collectively, "the Parties"). This addresses the arrangement between the Parties regarding the divestiture of the assets and operations of 1ST A to Bausch & Lomb, as further described below. 2. The United States Attorney's Office for the Western District of New York has been investigating certain conduct by 1ST A, and ISTA has agreed to a global resolution of the investigation. As part of the global resolution, 1ST A will plead guilty to criminal charges and enter into a civil False Claims Act settlement agreement with the United States (the "Settlement Agreement"). On such date as may be determined by the Court, ISTA will enter into a plea of guilty pursuant to Fed. R. Crim. P. 11(c)(I)(C) to specific conduct described in a Plea Agreement (the "Criminal Plea") to be filed in United States v. ISTA Pharmaceuticals, Inc., Criminal Action No. (to be assigned) (W.D.N.Y.) (the "Criminal Action"). Attachment The Settlement Agreement will resolve the United States' allegations that it has certain civil claims against 1ST A for engaging in the conduct described in the Settlement Agreement. Attachment The Criminal Plea by ISTA in the Criminal Action constitutes a basis for the OIG to mandatorily exclude ISTA from participation in Federal health care programs under sections 1128(a)(l) and 1128(a)(3) of the Social Security Act (the "Act"), 42 U.S.C. 1320a-7(a)(l) and (a)(3). 5. The OIG contends that the Covered Conduct in the Settlement Agreement also constitutes a basis for the OIG to permissively exclude ISTA from participation in Federal health care programs under section 1128(b)(7) of the Act, 42 U.S.C. 1320a- 7(b)(7). 6. In compromise and settlement of the rights ofoig-hhs to exclude ISTA pursuant to 42 U.S.c. 1320a-7(a)(l) and (a)(3) based on the Criminal Plea in the Criminal Action, and pursuant to 42 U.S.c. 1320a-7(b)(7) based upon the Covered Conduct in the Settlement Agreement, 1ST A agrees to be excluded under these statutory provisions from Medicare, Medicaid, and all other Federal health care programs, as defined in 42 U.S.C. 1320a-7b(f), for a period of 15 years consistent with the terms of this Divestiture Agreement.

2 7. Such exclusion shall have national effect. Federal health care programs shall not pay anyone for items or services, including administrative and management services, furnished by 1ST A in any capacity while 1ST A is excluded. This payment prohibition applies to 1ST A and all other individuals and entities (including, for example, anyone who contracts with ISTA) who furnish Relevant Drugs as defined in Paragraph 13, below. The exclusion applies regardless of who submits the claims or other request for payment. ISTA shall not submit or cause to be submitted to any Federal health care program any claim or request for payment for items or services, including administrative and management services, furnished by ISTA during the exclusion. Violation of the conditions of the exclusion may result in criminal prosecution, the imposition of civil monetary penalties and assessments, and an additional period of exclusion. 1ST A further agrees to hold the Federal health care programs, and all federal beneficiaries and/or sponsors, harmless from any financial responsibility for items or services furnished to such beneficiaries or sponsors after the effective date of the exclusion. 1ST A waives any further notice of the exclusion and agrees not to contest such exclusion either administratively or in any state or federal court. 8. Reinstatement to program participation is not automatic. If ISTA wishes to be reinstated, ISTA must submit a written request for reinstatement to the OIG in accordance with the provisions of 42 C.F.R Such request may be made to the OIG no earlier than 120 days prior to the expiration of the minimum period of exclusion. Reinstatement becomes effective upon application by 1ST A, approval of the application by the OIG, and notice of reinstatement by the OIG. 9. On June 6, 2012, Bausch & Lomb acquired ISTA. Bausch & Lomb represents that Bausch & Lomb had no involvement in the conduct that will form the basis for the Criminal Plea or the Covered Conduct and that such conduct did not occur following Bausch & Lomb's acquisition of 1ST A. Bausch & Lomb further represents that, prior to the acquisition, Bausch & Lomb did not have a corporate relationship with ISTA and was independent from and unrelated to 1ST A. Bausch & Lomb has a compliance program and instituted certain compliance measures prior to hiring any former 1ST A employees. Bausch & Lomb did not hire any 1ST A employees receiving target letters and did not hire ISTA managers. Bausch & Lomb required any ISTA employee seeking employment with Bausch & Lomb to take Bausch & Lomb's compliance training before the ISTA employee was hired. Prior to Bausch & Lomb's acquisition of 1ST A, Bausch & Lomb established a voluntary compliance program designed to address, among other things, compliance with Food and Drug Administration requirements and Federal health care program requirements. 10. Based on the information presented by Bausch & Lomb and conditioned on the accuracy of the representations by Bausch & Lomb and contingent upon Bausch & Lomb's compliance with the, OIG agrees not to exclude Bausch & Lomb or any of its direct or indirect subsidiaries, affiliates, divisions, successors, 2

3 transferees, or assigns, except that OIG agrees to exclude ISTA for 15 years as specified in this. II. ISTA has represented to the OIG that it intends to transfer all the assets and operations of ISTA (collectively "1ST A Assets") to Bausch & Lomb or a subsidiary of Bausch & Lomb. 12. In order to implement the exclusion of 1ST A in a way that minimizes disruption to beneficiaries of Federal health care programs and other individuals or entities who may purchase or use 1ST A products, and consistent with the terms of this Divestiture Agreement: (a) ISTA agrees to divest the ISTA Assets to Bausch & Lomb or a subsidiary of Bausch & Lomb within six months of the Effective Date of this Divestiture Agreement; (b) the exclusion of 1ST A shall become effective beginning six months after the Effective Date of the Settlement Agreement (the "Agreed Exclusion Date"); (c) Bausch & Lomb and ISTA agree that they will not sell the Relevant Drugs, as defined below, on or after the Agreed Exclusion Date; and (d) Bausch & Lomb agrees to comply with its obligations as set forth in this to implement the notification provision regarding the effect of 1ST A's exclusion on all ISTA products, as specified in paragraph 14 below, and to certify to OIG that it has complied with its obligations as set forth in this by the Agreed Exclusion Date. 13. Relevant Drugs: For purposes of this, the following drugs manufactured by ISTA and labeled with their corresponding National Drug Codes (NDCs) will be referred to as the "Relevant Drugs": Bromday, NDCs , , and ; Bepreve, NDCs , , and ; Istalol, NDCs , , and ; and Vitrase, NDCs and Beginning on the Agreed Exclusion Date, all Relevant Drugs that are in the possession of ISTA or Bausch & Lomb shall no longer be reimbursable by Federal health care programs. As of the Agreed Exclusion Date, all Relevant Drugs that are in the possession of third parties, such as wholesalers, pharmacies, or providers shall continue to be reimbursable by Federal healthcare programs. Drugs other than the Relevant Drugs are not subject to exclusion. Accordingly, Bausch & Lomb will be able to continue to furnish to Federal healthcare program beneficiaries former 1ST A products for which Bausch & Lomb or a subsidiary of Bausch & Lomb has obtained NDCs. 3

4 14. Notification Provision: On or before the Agreed Exclusion Date, Bausch & Lomb shall place a prominent notice on Bausch & Lomb's public website notifying the public regarding ISTA's exclusion, explaining the effect of the exclusion on purchasers of Relevant Drugs beginning on the Agreed Exclusion Date, and listing the Relevant Drugs by name and NDC. 15. Duration of Notification Provisions: Unless otherwise agreed by the OIG, Bausch & Lomb shall continue to implement the Notification Provision (as applicable) for one year following the Agreed Exclusion Date. 16. The OIG will not implement any exclusion of 1ST A prior to the Agreed Exclusion Date. 17. Stipulated Penalties: If Bausch & Lomb fails to comply with its obligations under this and no extension has been granted, the OIG in its sole discretion may impose a stipulated penalty of up to $10,000 per day for each day after the Agreed Exclusion Date that Bausch & Lomb has failed to comply with the terms of this. Payment of the stipulated penalties shall be made by electronic funds transfer to an account to be specified by the OIG. Upon OIG's delivery to Bausch & Lomb of its demand for stipulated penalties, and as an agreed-upon contractual remedy for the resolution of any dispute arising under this regarding stipulated penalties, Bausch & Lomb shall be afforded certain review rights comparable to those provided in 42 U.S.c. 1320a-7(f) and 42 C.F.R. Part 1005 as if they applied to the stipulated penalties sought pursuant to this. Specifically, OIG's determination to demand payment of stipulated penalties shall be subject to review by an HHS Administrative Law Judge and, in the event of an appeal, the HHS Departmental Appeals Board, in a manner consistent with the provisions in 42 C.F.R Notwithstanding the language in 42 C.F.R (c), the request for a hearing involving stipulated penalties shall be made within 10 days after receipt of the OIG's demand for stipulated penalties under this. 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 shall be whether Bausch & Lomb complied with the Notification Provisions and the number of days after the Agreed Exclusion Date, without an extension, that Bausch & Lomb did not comply with the Notification Provisions. 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 regarding a failure by the Bausch & Lomb to comply with the Notification Provisions and orders Bausch & Lomb to pay stipulated penalties, such stipulated penalties shall become due and payable 20 days after the ALJ issues such a decision unless Bausch & Lomb requests review of the ALJ 4

5 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. 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 agree that the DAB's decision (or the ALI's decision if not appealed) shall be considered final for all purposes under this. 18. All notices, reports, and payments of stipulated penalties required by this shall be submitted to the following: OIG: Administrative and Civil Remedies Branch Office of Counsel to the Inspector General Office of Inspector General U.S. Department of Health and Human Services Cohen Building, Room Independence Avenue, SW Washington, DC Attention: Christina K. McGarvey, Senior Counsel Bausch & Lomb: Susan A. Roberts Chief Compliance Officer Bausch & Lomb Incorporated One Bausch & Lomb Place Rochester, NY Unless otherwise specified, all notices and payments required by this Divestiture Agreement 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. 19. This shall be binding on the successors, assigns, and transferees of Bausch & Lomb. 20. This shall become final and binding on the Effective Date of the Settlement Agreement. 21. All Parties consent to the 01 G' s disclosure of this, and information about this, to the public. 5

6 22. This may be executed in counterparts, each of which constitutes an original and all of which constitute one and the same agreement. 23. The undersigned ISTA and Bausch & Lomb signatories represent and warrant that they are authorized to execute this on behalf of 1ST A and Bausch & Lomb. The undersigned OIG signatory represents that he is signing this Divestiture Agreement in his official capacity and that he is authorized to execute this Divestiture Agreement. 6

7 , Inc. 1ST isa.polyn A Pharmaceuticals, Inc. sl::u;lr~ Date On Behalf of, Inc. AULE.KALB KRISTIN GRAHAM KOEHLER Sidley Austin LLP Date s/~ ~Iii ALICE S. FISHER Latham & Watkins LLP Counsel for 1ST A Pharmaceuticals, Inc. ISTA Pharmaceuticals 7

8 Bausch & Lomb Incorporated A. ROBER D. BAILEY SL~k3 (Date Executive Vice President, General Counsel and Secretary Bausch & Lomb Incorporated On Behalf of Bausch & Lomb Incorporated PAULE.KALB KRISTIN GRAHAM KOEHLER Sidley Austin LLP ALICE S. FISHER Latham & Watkins LLP Counsel for Bausch & Lomb Incorporated 8

9 On Behalf of the Office of Inspector General of the Department of Health and Human Services t~ Î'-.lJde.JJ" ROBERT DECONTI Assistant Inspector General for Legal Affairs Office of Inspector General U.S. Department of Health and Human Services 5/1-1'3 Date 9