UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS

UNITED STATES ex rel. GREG THORPE, ET AL. [Consolidated]

Plaintiffs, v.

GLAXOSMITHKLINE PLC, and GLAXOSMITHKLINE LLC,

Defendants

) ) ) ) ) ) ) )

C.A. No. 11 -10398-RWZ

FILED UNDER SEAL

UNITED STATES' COMPLAINT

1. The United States brings this action to recover treble damages and Qivil penalties ·-·-·

under the False Claims Act, damages and other monetary relief under com.mon la~ and equity

against the defendants GlaxoSmithKline plc and GlaxoSmithKline LLC (together "GSK") for

causing the submission of false or fraudulent claims to federal health care programs.

2. From 1999 through 2010 in some instances, GSK engaged in a fraudulent scheme

to deceive and defraud physicians, patients, regulators, and federal health care programs to cause

prescribing and payment for certain of GSK's drugs. This conduct includes repeatedly publishing

and promoting false and misleading accounts of studies and treatment guidelines to convince

physicians to use GSK drugs. GSK misrepresented clinical evidence, downplayed or ignored

safety risks, and failed to disclose the rejection by the United States Food and Drug

Administration ("FDA") of some of the exact claims GSK was making to physicians. GSK

promoted these products for uses that the FDA had not approved as safe and effective ("off-label"

or "unapproved" uses), and for uses that were not medically accepted indications covered by

federal health care programs. GSK also used a wide variety of gifts, payments and other forms

of remuneration to induce physicians to prescribe GSK's drugs, including trips to Bermuda and

Jamaica, spa treatments and hunting trips, and sham consulting fees.

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3. GSK's fraudulent promotion of its drugs included the following:

(a) Promoting Paxil, an antidepressant drug, as safe and effective for children and adolescents, despite the lack of FDA approval for this use and three GSK clinical trials that failed to demonstrate Paxil's effectiveness while raising concerns regarding an increased risk of suicide among such patients.

(b) Promoting Wellbutrin SR ("WBSR"), an antidepressant drug, for unapproved uses including for children and adolescents, to treat Attention Deficit Disorder ("ADD"), Attention Deficit and Hyperactivity Disorder ("ADHD"), bipolar disorder, weight loss, obesity, sexual dysfunction, anxiety, and as an "add-on" therapy to other antidepressants, despite the fact that the drug was not demonstrated to be safe and effective for any of these uses.

(c) Promoting Advair, a combination of asthma drugs, for first-line use in mild asthma patients whose asthma could be controlled on one component alone--contrary to the FDA-approved label, specific FDA guidance, and established asthma treatment guidelines. In falsely claiming that Advair was superior to each of its components for this use, GSK relied on a study the FDA had specifically evaluated and rejected as showing superiority in GSK' s application for an indication for this use.

(d) Promoting certain GSK drugs listed below with various forms of illegal remuneration, including cash payments disguised as consulting fees, expensive meals, weekend boondoggles, and lavish entertainment to prescribers and other health care professionals to induce them to prescribe and recommend GSK's drugs, including those paid for by federal health care programs, all in violation of the federal anti-kickback statute. 42 U.S.C. § 1320a-7b.

4. GSK's conduct, including its false and fraudulent statements, illegal promotion

and payment of illegal inducements to prescribers, caused false or fraudulent claims to be

submitted to federal health care programs for GSK's drugs, including claims for Advair, Paxil and

WBSR, for uses that were not eligible for payment and for physician services relating to the

prescribing of those drugs.

I. THE PARTIES

5. The United States brings this action on behalf of the federal health care programs

the Department of Health and Human Services ("HHS") and the Centers for Medicare &

Medicaid Services ("CMS"), which administers the Medicare and Medicaid programs.

6. This is the United States' Complaint as to the claims as to which it has intervened

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in Civil Action Nos. 11-10398-NG, 03-10641-NG; 11-10741-NG, 11-10931-NG (D. Mass),

which were filed by various relators and are consolidated as C.A. No. 11-10398-NG.

7. Defendant GlaxoSmithKline plc is a public limited company, incorporated under

English law, with headquarters in Brentford, England. GlaxoSmithKline plc was formed in 2000

by the merger of Glaxo Wellcome plc and SmithKline Beecham plc. It has operational

headquarters in Research Triangle Park, North Carolina, and in Philadelphia, Pennsylvania.

8. Defendant GlaxoSmithKline LLC, a Delaware limited liability company, is the

United States subsidiary of GlaxoSmithKline plc. GlaxoSrnithKline LLC is the successor of

SmithKline Beecham Corporation, which was the successor of SmithKline Beckman

Corporation. GlaxoSmithKline LLC has headquarters in Philadelphia, Pennsylvania and

Research Triangle Park, North Carolina.

II. JURISDICTION AND VENUE

9. This Court has subject matter jurisdiction under 28 U.S.C. §§ 1331 and 1345.

The Court may exercise personal jurisdiction over GSK pursuant to 31 U.S.C. § 3732(a) and

because GSK transacts business in the District of Massachusetts.

10. Venue is proper in the District of Massachusetts under 31 U.S.C. § 3732 and 28

U.S.C. § 1391(b) and (c) because GSK has transacted business in this District.

III. GSK'S OFF-LABEL MARKETING OF PAXIL

11. Paxil (paroxetine) is an antidepressant approved by the FDA for adults with major

depressive disorder ("MDD" or "depression"), and other mental diseases.

12. The FDA has never approved Paxil to treat depression in children or adolescents

under the age of 18. Nevertheless, from 1999 through at least 2003, GSK promoted Paxil for use

in this population, while concealing the fact that Paxil failed to show efficacy on any of the

primary endpoints in three controlled trials funded by GSK to study Paxil for this population. To

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drive these promotional efforts, GSK touted a medical journal article that it paid to have drafted

and that exaggerated Paxil's efficacy while downplaying risks identified during one of the trials.

13. The risks identified in GSK's trials, once uncovered, led the FDA to require in

2004 that GSK and other manufacturers of a class of drugs known as "selective serotonin

reuptake inhibitors" ("SSRis") place a "black box" warning on the labels of these products to

warn doctors about the potential suicidality risks to children and adolescents. A black box

warning is the strongest type of warning the FDA can require in a product label.

14. By misstating and exaggerating Paxil's efficacy and downplaying and concealing

its risks during sales calls and promotional events, GSK misled the medical community about the

risks and benefits ofPaxil use in patients under 18 and caused false and medically inappropriate

claims for Paxil prescriptions to be submitted to federal health care programs.

A. Three GSK Clinical Trials Failed To Demonstrate Paxil's Effectiveness In Treating Depressed Children

15. Between 1994 and 2001, GSK conducted three clinical trials ofPaxil's safety and

efficacy in treating depression in persons under 18. In all three studies, Paxil failed to reach

statistical significance on the primary and secondary efficacy measures (or endpoints) in the

study protocols. Due to these negative results, internally described as "disappointing" and

"equivocal," GSK never sought FDA approval of Paxil for childhood or adolescent depression.

As described below, GSK published false and misleading reports of these results,

misrepresenting positive results while down-playing significant safety risks, including an

increased risk of suicide in child and adolescent patients.

1. Study 329 Failed to Show Efficacy of Paxil for Children or Adolescents.

16. The centerpiece ofGSK's efforts to market Paxil for childhood depression was

the GSK funded Study 329, which ran from April 1994 to February 1998. This was a double-

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blind, placebo-controlled study of the efficacy of Paxil in depressed children.

17. Study 329's clinical trial protocol contained two "primary" efficacy measures and

five "secondary" efficacy measures. A "protocol" is a document created prior to commencement

of the trial that describes the objectives, design, methodology, and statistical plan for the clinical

trial. Pre-specified protocols are required by the FDA and scientific community to prevent post­

hoc selection of favorable data and endpoints-i.e. "cherry-picking." A primary efficacy

endpoint is a specific event or outcome that the clinical trial is designed to assess-such as

whether a drug is more effective than a placebo in treating a condition. A "secondary" endpoint

is typically related to the primary endpoint and may be of interest, but is not one the study is

independently statistically-powered to assess.

18. The first primary endpoint in Study 329 was the degree to which a patient's

Hamilton Rating Scale for Depression ("HAM-D") total score changed from a baseline. The

HAM-Dis a questionnaire to rate the severity of a patient's depression. The other primary

endpoint: the patients' "response" to medication, as defined as (a) a 50% or greater reduction in

the patient's HAM-D score, or (b) aHAM-D score ofless than or equal to 8.

19. Study 329 did not show that Paxil was more effective than a placebo on either of

its primary endpoints or any of its predefined secondary endpoints.

20. The 329 Study investigators later added several additional efficacy measures not

specified in the protocol. Paxil separated statistically from placebo on certain of these measures.

2. Studies 377 and 701 Also Failed to Show Paxil Works in Patients Under 18.

21. In addition to Study 329, GSK conducted two other double-blind, placebo-

controlled studies ofPaxil for pediatric and adolescent depression: Study 377 from April1995 to

May 1998 and Study 701 from March 2000 to January 2001.

22. Like Study 329, both studies failed to demonstrate any statistically significant

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difference in efficacy between Paxil and the placebo on any pre-specified primary or secondary

endpoint. GSK noted in an internal report on Study 377, "the results failed to show any

superiority for Paxil over placebo in the treatment of adolescent depression."

23. Internally, GSK acknowledged that its studies failed to provide sufficient support

for the FDA to approve Paxil for childhood depression. In August 1998, six months after Study

329 closed, GSK noted in a Monthly Management SU11l11lary that:

In both 329 (US) and 377 (EU) unable to detect a clinically or statistically significant difference between treatment groups in the prospectively defined primary variable - therefore no submission (MAA/NDA) for label indication for use of [Paxil] in Adolescent Depression.

24. Similarly in October 1998, GSK noted in a discussion of Studies 329 and 377:

As you w[e]ll know, the results of the [329 and 377] studies were disappointing in that we did not reach statistical significance on the primary end points and thus the data do not support a label claim for the treatment of Adolescent Depression. The possibility of obtaining a safety statement from this data was considered but rejected. The best which could have been achieved was a statement that, although safety data was reassuring, efficacy had not been demonstrated. Consultation of the Marketing Teams via Regulatory confirmed that this would be unacceptable commercially and the decision to take no regulatory action was recently endorsed[.]

GSK concluded: "it would be commercially unacceptable to include a statement that efficacy had

not been demonstrated, as this would undermine the profile of [Paxil]." Exhibit ("Exh.") 1.

25. As for Study 701, GSK noted in its final clinical report on that study that "[t]he

results of this study failed to provide evidence for the primary and secondary endpoints that

[Paxil] is more efficacious than placebo in treating children and adolescents with MDD."

B. GSK Published an Article That Misstated Paxil's Efficacy and Safety for Children and Adolescents

26. In April1998, GSK hired Scientific Therapeutics Information, Inc. (STI) to

prepare a journal article about Study 329. GSK worked closely with STI on the article by

providing a draft clinical report to "serve as a template for the proposed publication,"

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commenting on multiple drafts, and approving the final version.

1. In Publishing Study 329, GSKFalsely Claimed that It Demonstrated Paxil's Efficacy in Treating Depression in Patients Under 18.

27. The abstract ofthe article sent to JAMA stated that Paxil was "a safe and effective

treatment for major depression in adolescents." The article, however, did not expressly identify

the two protocol-specified primary efficacy measures-or that Paxil failed to show superiority to

placebo on those two measures. Instead, the article claimed that there were eight efficacy

measures and Paxil was statistically superior to placebo on four of them.

28. JAMA rejected the article in December 1999 and provided comments to the

article's lead author, which he then circulated to GSK and STI. Some of the comments were

extremely critical of how the article portrayed the study's results. One comment provided:

[t]he major finding of this study was the high placebo response rate, nearly 50%. Paroxetine produced only a 20% higher response rate than placebo and then on some but not all of the scales used.... Readers of this paper might receive the wrong impression and believe that a 65 to 70% response rate could be achieved with paroxetine without the education and supportive psychotherapy that the placebo-treated patients in this study received. The outcome is particularly worrisome in this age of health cost containment. Thus, this study could do more harm than good unless the authors devote much more attention in their discussion to the fact that the bulk of the effect in this study was the result of good clinical management and not the medication.

Another noted that the ''description of 'numerically superior' is not appropriate and results

should be described as superior only when significant .... There is a bias in reporting [Paxil]

results as numerically superior but failing to emphasize this is also the case for many of the

outcome measures with imipramine."

29. Given the comments received, GSK and the lead author decided to revise the

article and send it to what they called "a less demanding journal." GSK then worked closely

with STI to revise and resubmit the article.

30. In June 2000, a revised version of the article was submitted to the Journal of the

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American Academy of Child and Adolescent Psychiatry (JAACAP). In July 2000, JAACAP

returned the article. Like JAMA, JAACAP questioned whether the article accurately

characterized Study 329's results on Paxil's efficacy. For example, one comment stated:

Overall, this is an important study due to its large size and its design of SSRI vs. TCA vs. Placebo. However, the results do not clearly demonstrate efficacy for [Paxil]. Therefore, the authors need to clearly note this.... [E]fficacy was not demonstrated for [Paxil]. It should be clearly noted that [Paxil] was not found to be superior to placebo on [three of the seven] completed measures of antidepressant efficacy in the Results subsection.

31. Another commenter noted the article obscured the primary endpoint results.

The authors should clearly note that [three of the seven] outcome measures did not show [Paxil] was superior to placebo[.] Therefore the authors should not overstate the efficacy of [Paxil]. The fact that there was not a single a priori primary outcome measure is quite unusual for an industry sponsored study. If this is the case, this should be clearly noted as a methodological shortcoming. If there was a "primary" outcome measure, the authors should clearly note what that was.

32. GSK worked closely with STI to address the reviewers' comments and the article

was resubmitted to JAACAP. JAACAP ultimately accepted the article in February 2001 and

published it in July 2001. The article was titled "Efficacy ofParoxetine in the Treatment of

Adolescent Major Depression: A Randomized, Controlled Trial." Exh. 2.

33. The final published article still mischaracterized the results of Study 329, even

with the changes. Although Paxil failed to separate statistically from placebo on both the

primary efficacy measures, as well as the five protocol-defined secondary efficacy measures, the

article abstract flatly stated that "[Paxil] is generally well tolerated and effective for major

depression in adolescents" and concluded that "[t]he findings of this study provide evidence of

the efficacy and safety of the SSRI, [Paxil], in the treatment of adolescent depression."

34. Although the JAACAP article identified the study's two primary endpoints in the

abstract, the article did not explicitly state that Paxil failed to show superiority to placebo on

either of the primary efficacy measures (the only measures that the Study 329 was specifically

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designed to assess). Instead, the article falsely stated that Paxil met one of the primary

endpoints, noting how Paxil "separated from placebo at endpoint among four ofthe parameters:

response (i.e., primary outcome measure) .... " Since one of the protocol-defined primary

endpoints was "response," the article's statement that Paxil "separated from placebo" on

"response," falsely stated that Paxil had met that primary efficacy measure.

35. The final article's description ofPaxil's performance on the protocol-defined

secondary efficacy measures was also misleading. While the article abstract listed the five

protocol-defined secondary endpoints, the text of the article omitted any discussion regarding

three of the secondary measures on which Paxil failed to statistically demonstrate its superiority

to placebo and instead focused on the five secondary measures that GSK added belatedly and

never incorporated into the Study 329 protocol. The article claimed that these five secondary

measures had been identified "a priori," thereby incorrectly suggesting that all the secondary

endpoints discussed had been part of the original study protocol.

36. In short, the article distorted the study results and gave the false impression that

the study's findings were primarily positive, when they were, in fact, primarily negative and as

discussed below, contained a significant safety signal.

2. GSK Caused the JAACAP Article to Misrepresent and Minimize Paxil's Risks to Children and Adolescents.

37. At the same time that the JAACAP article exaggerated Paxil's efficacy for

treating childhood depression, it downplayed the risks that Study 329 revealed. These risks

eventually led the FDA to require all SSRI manufacturers to add a black box warning about the

heightened risks of suicidality to adolescents taking Paxil and other drugs in the class.

38. An earlier draft of the JAACAP article (prior to the version ultimately published)

disclosed that eleven (11) patients who had received Paxil had experienced serious adverse

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events ("SAEs") potentially related to the drug. It stated:

Serious adverse effects occurred in 11 patients in the paroxetine group, 5 the imipramine group, and 2 in the placebo group. An event was defined as serious if it resulted in hospitalization, was associated with suicidal gestures, or was described by the treating physician as serious. The serious adverse effects in the paroxetine group consisted of headache during down-titration (1 patient), and various psychiatric events (10 patients): worsening depression (2); emotional lability (e.g, suicidal ideation/gestures, overdoses), (5); conduct problems or hostility (e.g, aggressiveness, behavioral disturbance in school) (2); and mania (1). Ofthese, worsening depression, emotional lability, headache, and hostility were considered related or possibly related to treatment.

39. When JAMA rejected the article, one reviewer noted: "[T]here is a major

omission from the tables. The serious adverse events should be at the top of any table of adverse

events and these do not favor paroxetine. In fact, it is troubling that the authors do not note a

significant increase in SAEs after paroxetine (but not IMI) relative to placebo." That comment

was never addressed by GSK in the article. The JAACAP article had a table listing adverse

events, but did not break out serious adverse events.

40. At the time GSK was circulating the draft article to JAMA and JAACAP, GSK

had concerns about disclosing and publishing the increased serious adverse events associated

with Paxil, particularly due to recent events in patients taking SSRis committing violent acts,

including the Columbine High School shootings.

41. GSK and STI instead revised the article to falsely state that only one of the 11

serious adverse events in Paxil patients was considered related to treatment-and failed to

mention the fact that others had been listed by the study investigators as possibly related to

treatment. The final article stated: "Of the 11 patients [who had serious adverse events while

taking Paxil], only headache (1 patient) was considered related to paroxetine treatment."

3. The FDA Found Paxil Was Not Proven To Be Safe and Effective To Treat Children and Adolescents and Required Warning of the Risks.

42. In April 2002, GSK provided the FDA the results of its three pediatric depression

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studies while attempting to gain an extension on Paxil's patent exclusivity period. In October

2002, the FDA informed GSK that the depression studies failed to demonstrate Paxil's efficacy

in treating depression in individuals under age 18.

43. Moreover, the FDA asked for additional information about patients in the studies

who had experienced adverse events and who had withdrawn from the study prematurely, as well

as why GSK used the term "emotional lability" to describe the five patients who attempted to

commit suicide or exhibited other self-injurious behavior. In May 2003, GSK for the first time

provided the FDA with additional safety data from the studies.

44. Although GSK told the FDA there was no statistically significant difference in

suicidality between placebo and Paxil in all the Paxil pediatric depression studies cumulatively,

the difference between the potential suicide-related events among Paxil patients versus potential

suicide-related events among placebo patients became statistically significant when the first 30

days after therapy were included in the analysis.

45. Likewise, upon closer examination the number of possible suicide-related events

among the Study 329 Paxil patients increased beyond the five patients that GSK described in the

JACAAP article as having "emotional lability." While collecting safety information for the

FDA, GSK admitted that there were four more possible suicide-related events among Paxil

patients in Study 329. In addition, the FDA later identified yet another possibly suicide-related

event in the Study 329 Paxil patients, which also was not among the 11 serious adverse events

listed in the JAACAP article. Thus, altogether, 10 ofthe 93 Paxil patients in Study 329

experienced a possibly suicidal event, compared to one of the 87 patients on placebo. This is a

fundamentally different picture ofPaxil's pediatric safety profile than the one painted by the

JAACAP article, which listed at most five possibly suicidal events among Paxil patients, brushed

those off as unrelated to Paxil, and concluded that treating children with Paxil was safe.

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46. In June 2003, the FDA announced that although it had not completed its review of

the data, it recommended that Paxil not be used to treat depression in patients under age 18.

47. In March 2004, the FDA issued a public health advisory requesting that SSRI

manufacturers, including GSK, change the labels on their drugs to include "a [w]arning

statement that recommends close observation of adult and pediatric patients treated with these

agents for worsening depression or the emergence of suicidality."

48. In June 2004, the British Medical Journal published an article that accused the

JAACAP article of "biased reporting." Regarding serious adverse events, the article said:

"[D]espite five of these patients being admitted to hospital with events known to occur with the

use of selective serotonin reuptak:e inhibitors, including suicidality, only one serious event

(headache) was judged by the treating investigator to be related to paroxetine treatment. The

criteria for determining causation of serious events were not stated."

49. In October 2004, the FDA directed GSK and other antidepressant manufacturers

to include on their labels a black box warning to alert physicians about the potential for increased

risk of suicidality in children and adolescents taking these drugs. The black box warning stated

that "[a]ntidepressants increased the risk of suicidal thinking and behavior (suicidality) in short-

term studies in children and adolescents with Major Depressive Disorder (MDD) and other

psychiatric disorders." The FDA also required the labels to state:

The risk of suicidality for these drugs was identified in a combined analysis of short-term (up to 4 months) placebo-controlled trials of nine antidepressant drugs, including the selective serotonin reuptak:e inhibitors (SSRis) and others, in children and adolescents with major depressive disorder (MDD), obsessive compulsive disorder (OCD), or other psychiatric disorders. A total of 24 trials involving over 4400 patients were included. The analysis showed a greater risk of suicidality during the first few months of treatment in those receiving antidepressants.

50. In May 2006, GSK sent letters to physicians and updated Paxil's label to include

an advisory regarding Paxil and suicidal tendencies in children, adolescents and young adults.

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C. GSK Off-Label Marketed Paxil For Depression In Children and Adolescents

51. Despite the failure of its three clinical trials and the absence of FDA approval,

GSK actively promoted Paxil to treat adolescent and childhood depression from 1999 to at least

2003. As reflected in internal GSK business plans, expanding Paxil's reach into the adolescent

depression market was a key strategic goal well before the clinical trials were completed and

well after GSK learned of the disappointing results of its three depression studies.

52. Likewise, notwithstanding Paxil's failure to meet the primary endpoints of

Studies 329 and 377, GSK's 2000-2002 Paxil operating plan was to"[ d]evelop/grow adolescent

market by leveraging recently completed studies in adolescent depression and OCD."

53. Similarly, in 2000, a GSK consultant prepared a 32-page report titled,

"Positioning Paxil in the adolescent depression market- getting a headstart." The purpose of the

report, prepared at GSK' s request, was "to assess the efficacy data relating to the use of Paxil for

the treatment of depression and anxiety-related disorders in adolescents and to make

recommendations on how to gain a headstart on the competition." The report acknowledged that

"[t]he fact that Paxil failed to separate from placebo according to four of the outcome measures

in the [329] study could be used as a weakness by competitors and may be an obstacle if filing

for an extension of the product license." Nonetheless, the report recommended ways to spin the

study to make Paxil the drug of choice in treating depressed children, including:

If successfully managed, this initiative will extend use of Paxil to another population. There are 2.5 million adolescents suffering from depression in the USA. This represents a large market, though uptake is likely to be slow. To tackle this market would provide contact with a large number of psychiatrists who specialize in pediatrics.

54. In an August 2002 strategic brand plan, GSK continued to list pediatric use,

including pediatric depression, as an opportunity for Paxil, even though it was four years after it

knew the negative results of Studies 329 and 377, and a year after the results of Study 701.

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1. GSK Provided its Sales Force Off-Label Information about Paxil for Children.

55. In September 1999, at a training for some of GSK's sales force promoting Paxil,

Dr. Karen Wagner, a child psychiatrist, told the sales force that depression in adolescents was a

lethal disorder that, if untreated, could lead to suicide and linger into adulthood. According to a

GSK newsletter (Exh. 3), Dr. Wagner recommended Paxil for this population as follows:

Obviously, therapy is needed and Paxil is one of the few pharmaceutical approaches that has safety and efficacy data to support its use in this [adolescent] patient population. And more data is on its way.

As many of you know, [GSK] is preparing an indication for adolescent depression for Paxil next year! [GSK's] clinical study demonstrating the success of Paxil in treating depression among adolescents will be published in a peer reviewed journal during first quarter 2000.

56. According to the same GSK newsletter, Dr. Wagner discussed Study 329 (the

results of which had not yet been published), explained that the results supporting Paxil use in

pediatric patients were "statistically significant," and stated that "[a]s a result of this large study,

we can say that [Paxil] has both efficacy and safety data for treating depression in adolescents."

2. GSK Provided the JAACAP Article to Its Sales Representatives.

57. In August 2001, the Paxil marketing team sent the JACAAP article to all2,000

sales representatives who were selling Paxil; including 160 neuroscience specialty

representatives. The article was accompanied by a cover memorandum created by a member of

the Paxil marketing team ("Paxil cover memo"). This memorandum stated in bold type:

This 'cutting-edge,' landmark study is the first to compare efficacy of an SSRI and a TCA with placebo in the treatment of major depression in adolescents. Paxil demonstrates REMARKABLE Efficacy and Safety in the treatment of adolescent depression.

(Emphasis in original). Exh. 4. The Paxil cover memo also stated that:

Paxil was significantly more effective than placebo with regard to achievement of both HAM-D total score <8; CGI score of 1 (very much improved) or 2 (much

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improved), and improvements in the depressed mood items of the HAM-D and the K-SADS-L.

58. The memo further provided that Paxil "was generally well tolerated in this

adolescent population, and most adverse events were not serious," and concluded:

[T]he findings of this study provide evidence of the efficacy and safety of Paxil in the treatment of adolescent depression. Here's another example of GlaxoSmithKline's commitment to Psychiatry by bringing forth "cutting edge" scientific data. Paxil is truly a REMARKABLE product that continues to demonstrate efficacy, even in this understudied population.

59. Notably, the Paxil cover memo did not disclose that Paxil had failed to show

statistical superiority over placebo for any of the study's protocol-specified primary and

secondary endpoints. The memo did not say that adolescents in the study who received Paxil

displayed more suicidal thinking and behavior than those who received a placebo. The memo

did not say that GSK had completed two additional pediatric studies (Study 377 and Study 701),

neither of which demonstrated that Paxil was effective in treating depression in children. The

memo also did not say that Paxil was approved for use only in patients age 18 or older.

60. Although the Paxil cover memo noted that "[t]his article is for pharmaceutical

consultants' information only" and instructed "Do not use it with, or distribute to, physicians,"

the memo's message was delivered to and used by the sales force to promote Paxil. The sales

representatives and managers, who were all compensated and received bonuses based upon

increased sales, including sales for off-label use in children, relayed the incorrect messages of the

JAACAP article and Paxil cover memo to falsely promote Paxil as safe and efficacious for

children and adolescents to health care providers arotmd the country.

3. GSK's Sales Force Used the JAACAP Article to Promote Paxil Off-Label.

61. Relying on the Wagner lecture and JAACAP article, GSK sales representatives

encouraged doctors to prescribe Paxil for children. GSK sales representatives documented their

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doctor visits in "call notes" that were recorded in the notes that sales representatives' routinely

prepared at or about the time of calls on prescribing physicians to record what had been

discussed. These notes were available for review by managers as well as others representatives

and reflect the one-sided picture that the sales force painted ofPaxil's efficacy and safety for

treating childhood depression. These call notes also demonstrate that the sales force ignored the

Paxil cover memo's instruction not to use the JAACAP article with physicians.

62. The call notes written by GSK sales representatives repeatedly reflect their off-

label promotion of Paxil, including the following:

"Left water fountain. Reviewed [article on] Paxil adolescent MDD. Emphasized significance vs. placebo, study size. . . . Had reviewed article. Cited data to help underscore to parents/patients Paxil's utility here. Also important ifliability an issue." 6/27/01 Milwaukee, WI

"Astros game. Discussed Paxil placebo and imipramine study in adolescents." 7/13/01 Houston, TX

"Detailed doctor on Paxil for major depression in adolescents and he agreed to use Paxil there." 6/1/01 Newark, OH

"Dinner and Yankee game with family. Talked about Paxil studies in children." 8/1/01 Westport, CT

63. It was not until August 2003, after Great Britain contraindicated Paxil for children

and the FDA warned doctors about possible suicide risks, that GSK for the first time asked its

sales representatives to identify doctors on their call lists who treated patients under 18. As of

May 2005, GSK had identified 5,800 child psychiatrists on the lists of physicians for Paxil

representatives to target for Paxil promotions, including by providing samples. Of these, GSK

confirmed that 1,324 were child-only prescribers.

4. GSK Promoted Paxil for Children by Giving Samples to Child Psychiatrists.

64. GSK also promoted Paxil for off-label uses by providing free Paxil samples to

doctors who primarily or exclusively treated children.

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65. GSK policies encouraged its sales representatives to provide samples to all

doctors on their call lists. Because the Paxil call lists included doctors who primarily or

exclusively treated children, GSK caused its sales representatives to give Paxil samples to

doctors who were likely or certain to use the samples for unapproved uses.

66. GSK knew that its samples were being used in this manner, as illustrated by a

survey of sales representatives which showed that the representatives wanted more smaller-dose

Paxil pills, "which were used for children, elderly, and anxiety patients."

5. GSK Promoted Paxil for Children During Paxil Forum Meetings.

67. In 2000 and 2001, GSK also promoted Paxil for unapproved uses by bringing top-

prescribing psychiatrists to lavish resorts for Paxil Forum meetings. There were four Forum

meetings each year. Each representative attended two per year, and got to invite two

psychiatrists to each meeting.

68. The meetings were held at expensive resorts such as the El Conquistador Resort

& Golden Door Spa in Puerto Rico, the Rio Mar Beach Resort in Hawaii, and the Renaissance

Esmeralda Resort & Spa in Palm Springs, California. GSK paid for the psychiatrists' lodging,

air fare, and a $750 honorarium. GSK paid speakers a $2,500 honorarium. GSK also paid

spouses' airfare if two cheaper tickets were available for the cost of one full-coach fare.

69. The psychiatrists typically arrived on a Friday morning. Presentations took place

on Friday afternoon and Saturday morning. GSK hosted nice dinners on Friday and Saturday

evenings and paid for entertainment including sailing, snorkeling, tours (e.g. the Bacardi rum

distillery), golf, deep sea fishing, rafting, glass-bottomed boat rides, and balloon rides.

70. The actor/comedian GSK hired to emcee one of the meetings told the attendees

"we have a wonderful and unforgettable night planned. Without giving it all away, I can tell

you-you'll be experiencing a taste of luxury." One psychiatrist complained, "the style of the

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conference would have been suitable for a convention of cosmetic sales reps; this is supposed to

be a scientific meeting. To me, the music, lights, videos, emcees are offputting and a distraction

(even demeaning)."

71. For many other psychiatrists, however, the Forum meetings seem to have had the

intended effect. After the May 2000 Forum meeting in Hawaii, one psychiatrist wrote: "A

beautiful location, enjoyable and fun-filled activities, an exciting, cutting edge, informative

educational program, well-presented and organized, all add up to a most valuable and helpful

experience- exhilarating!" Another doctor wrote after the Forum 2001 meeting in Palm

Springs: "Both my wife and I enjoyed the extra care our drug rep gave to us all weekend."

72. Dr. Wagner spoke and recommended the use ofPaxil for children and adolescents

at one Forum meeting in 2000, three in 2001, and two in 2002. Before one meeting at which she

spoke, a sales representative wrote to his supervisor that both of the psychiatrists he had invited

"have high volume and are child specialists, which the program is devoted to."

73. GSK also used the meetings to relay its incorrect and misleading claims in the

JACAAP article. GSK added Dr. Wagner to the agenda of a Paxil Forum meeting in June 2001

to "capitalize" on the impending JAACAP publication. Dr. Wagner's presentations during the

Forum meetings were similar to the one she gave to the sale force. Dr. Wagner said adolescent

patients who received Paxil in the 329 study showed "significantly greater improvement."

74. A GSK report of the 2000 meetings said that 12% of the attending psychiatrists

said they would be more comfortable prescribing Paxil for children and adolescents as a result of

the meeting. In written evaluations, numerous psychiatrists wrote that they would increase their

Paxil prescriptions for children as a result of the meeting.

75. GSK tracked the Paxil prescription by doctors who attended the 2000 Forum

meetings. "Results suggest that the Paxil Forum had a significant impact on Paxil market share

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in the months after attendance," said a November 2000 memo for the Paxil marketing director.

"Physicians grew actual market share versus their forecasted share immediately after Forum

attendance. Test physicians grew market share significantly relative to Control physicians." The

memo concluded that increased Paxil prescriptions due to the Forum 2000 meetings resulted in at

least $900,000 in additional revenue in 2000 alone.

IV. GSK'S OFF-LABEL MARKETING OF WELLBUTRIN SR

76. WBSR is an antidepressant that has been approved by the FDA for only one use:

the treatment of Major Depressive Disorder in adults eighteen years of age or older.

77. From 1999 through at least 2003, GSK engaged in a nationwide scheme to

promote the sale and use ofWBSR as safe and effective for indications, doses and populations

that the FDA never approved as safe and effective, and that were not medically accepted

indications. For example, GSK promoted WBSR for:

(1) weight loss and obesity; (2) sexual dysfunction; (3) Attention Deficit Hyperactivity Disorder (ADHD), Attention Deficit Disorder

(ADD), bipolar disease and anxiety; (4) addictions, including to drugs, alcohol and gambling; (5) patients under age 18, including children; (6) use as an add-on or in combination with other drugs; (7) use as an antidote for the side effects of other antidepressant medications; and (8) use in dosages contrary to that recommended in the label, with safety claims

greater than those justified in the label.

78. GSK targeted the promotion ofWBSR for unapproved uses especially in quality

of life areas, e.g., enhancing sex life, losing weight, addressing substance addictions and

attention issues. GSK promoted WBSR as what some sales representatives referred to as "the

happy, horny, skinny pill." GSK did so knowing that much of the cost of the unapproved, non-

medically accepted and/or inappropriate uses would be borne by federal health care programs.

79. GSK used the following tactics to achieve its marketing goals for WBSR:

19

(1) Publicity Strategies: GSK hired a public relations firm to hype small preliminary studies ofWBSR for weight loss, obesity and sexual dysfunction in consumer and general news media to encourage WBSR sales for unapproved uses;

(2) Speaker Programs: GSK hired physicians to speak to other health care professionals and recommend unapproved uses for WBSR;

(3) Details and Samples: GSK encouraged sales representatives to provide one-on­one sales pitches ("details") to physicians about off-label uses of WBSR and distributed samples for uses not approved as safe and effective, such as samples to child psychiatrists and pediatricians for use in children;

( 4) "CME": GSK sponsored ostensibly independent "medical education" events and/or medical society and grand rounds presentations on off-label WBSR uses where GSK effectively controlled topics, speakers, content, and participants; and

(5) Inducements: Sham Advisory Boards, Trainings and Entertainment: GSK used sham advisory boards, sham sales representative trainings and other forms of entertainment and remuneration to promote off-label usage ofWBSR and induce doctors to prescribe WBSR.

80. While GSK promoted WBSR for unapproved, non-medically necessary and/or

inappropriate uses, GSK also took steps to evade detection by government agencies and conceal

the real purpose and nature of activities, including making repeated false statements to the FDA

about the conduct and concealing the documents that demonstrated the conduct.

A. GSK's Corporate Plans Set Forth Its Intent to Promote WBS.R for Unapproved Uses

81. In a variety of national and regional strategy documents, GSK reflected its

corporate strategy to promote the use of WBSR for unapproved uses.

1. GSK Hired A Public Relations Firm to Create Buzz and Drive Sales of WBSR for Off-Label Uses.

82. In 1998 and 1999 and through at least 2002, GSK used media plans as part of its

marketing strategy to promote WBSR. These media plans were designed to "create [a] buzz"

and to publicize off-label uses ofWBSR, such as for weight loss or sexual dysfunction in non-

depressed patients. Exh. 5.

83. For example, GSK hired the Cooney/Waters Group ("Cooney/Waters"), a public

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relations firm, to promote and publicize a GSK-funded pilot study by Dr. Kishore Gadde of

Duke University on the use of WBSR in non-depressed obese patients. Although the pilot study

included only 25 patients who were on the drug for only eight weeks, GSK and Cooney/Waters

promoted the study in the mainstream media and fostered the coverage of WBSR as a diet pill.

This promotion included preparing and distributing a press release about the study to general

consumer magazines (such as Allure and Redbook), providing Dr. Gadde with media training,

and coordinating with the media "to make sure reporters and editors have the new data and

understand its significance." Given the limitations of the study and preliminary nature of the

data, its "significance" should only have been to researchers considering further research, not to

the general public.

84. Cooney/Waters and GSK's efforts generated stories from CNN and Dateline, as

well as tabloids. Exh. 6. It resulted in articles with headlines such as "Bigger than Viagra? It

sounds too good to be true: a drug to help you stop smoking, stay happy and lose weight" and

"Now That is a Wonder Drug." As Cooney/Waters itselftouted in a September 1999 report to

GSK (Exh. 7), its efforts to promote Gadde's "weight study has been canied by: []More than 70

local television stations []More than 50 local newspapers and consumer magazines nationwide

and in the United Kingdom [ ] More than 9 Internet outlets nationwide [] 12 trade publications

in the United States [and] Media impressions exceed[ed] 15 million (not including wire and

Internet impressions)."

85. One example of the media pick up included the following article in the tabloid

"The Sun":

21

1 The pi II doctors say will hel · ·· ... · ·u-ta-slim·

86. GSK also hired Cooney/Waters to publicize results of other off-label studies to

general and consumer media, including a small study ofWBSR to treat sexual dysfunction, and a

later study of WBSR for weight loss in patients with depressive symptoms but not depression.

87. GSK also hired Dr. Drew Pinsky from MTV and Loveline as a spokesperson to

deliver messages about WBSR in settings where it did not appear that Dr. Pinsky was speaking

for GSK. GSK indirectly paid Dr. Pinsky $100,000 in March 1999 and $175,000 in April1999.

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Exh. 8. In about June 1999, Dr. Pinsky spoke on a national radio program and communicated

key GSK WBSR campaign messages. The "Highlights" included: "Switching to or adding

Wellbutrin is recommended for people experiencing a loss of libido." During the program,

among other things, Dr. Pinsky noted that the drug in WBSR, bupropion, could explain a woman

suddenly having 60 orgasms in one night. Dr. Pinsky explained that one of the things he

advocates for people experiencing diminished libido or arousal is WBSR. Exh. 9.

88. According to a report prepared on behalf of GSK in 2002, the media campaigns

surrounding use ofWBSR for obesity, weight loss and sexual dysfunction reached a total

audience of more 387 million, "[s]parked sales growth" and caused WBSR to be used

increasingly as a first-line product, both alone and in combination with other therapies. Exh. 10

B. Follow-Up on Gadde Study

89. Following the pilot study by Dr. Gadde on the use ofWBSR for obese non-

depressed women, GSK hired Dr. Gadde and other weight loss specialists to give promotional

talks on behalf of GSK to other physicians and to discuss the use of WBSR as a "weight-loss

agent." In these talks, the speakers reviewed the use ofWBSR for weight loss in non-depressed

patients and advocated its use for weight loss, despite the lack of FDA approval or substantial

evidence suppmiing this use. In such programs, Dr. Gadde, a consultant for the Duke Diet and

Fitness Center, presented his study on the use of WBSR in non-depressed patients.

90. However, in the spring of2000, when Dr. Gadde was preparing the manuscript

about the study for publication, GSK had a falling out with him over his insistence on

emphasizing certain safety warnings and his refusal to use Wellbutrin SR's trade name.

91. Dr. Gadde was informed by a chairperson at his university, also a GSK

consultant, that GSK would not fund any more of Dr. Gadde's studies due to his refusal to

remove some of the safety discussion from the article. GSK' s Clinical Director for their Central

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Nervous System program, Tim Kuhn, also informed Dr. Gadde in writing that Dr. Gadde should

not have made the decision to submit his own article on the study to the journal Lancet rather

than JAMA without consulting with GSK as GSK was his "partner in publishing decisions that

consider both patient and brand issues." Kuhn explained to Dr. Gadde the consequences of such

a failure to consult with GSK: "It is unlikely that additional support for other investigator-

initiated projects will be embraced enthusiastically ifthere is no input from GW

[GlaxoWellcome, GSK's predecessor] or if input from GW is not considered." Exh. 11.

92. After this falling out, GSK' s national marketing team increasingly utilized other

physicians, including Dr. Ken Fujioka, an endocrinologist specializing in weight loss treatments,

as its spokespeople to present the Gadde study, rather than Dr. Gadde himself.

93. GSK hired Dr. Fujioka in September 2001 to train the WBSR sales force on using

WBSR for weight loss. Dr. Fujioka is known as the "Fat Doctor" due to his focus on diet and

weight loss. Dr. Fujioka does not treat depression and thus does not even utilize WBSR for its

only on-label use. Dr. Fujioka's talk on the effects ofWBSR on weight included slides claiming

WBSR is associated with significantly more weight loss than placebo and that 77% of patients

treated with WBSR 400 mg/day achieved more than 5% weight loss. This presentation also

included claims about the effectiveness of WBSR to treat obesity in non-depressed patients.

94. GSK sales force members utilized Dr. Fujioka in programs and sales calls to

discuss the weight loss effects ofWBSR. Some examples of the call notes reflecting GSK's

sales force use of Dr. Fujioka include:

"SIB program with local KOL's and visiting KOL's (Ken Fujioka). Goodman presented on WSR in ADHD and Depression, outstanding job, Fujioka presented the weight data which sparked alot of participation from the audience as well as feedback .... " 11/3/01 Durham, NC

"Followed up on sib. Enjoyed. Liked FuDJioka talk benef of lbs w/ wsr." I 0/26/01 Hudson, FL

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"she loved fujioka . .invited her to hear hudziak in january" 11126101 Brockton, MA

"Dr Fujioka lecture on weight studies in Boston. Send him info on the use of methadone and WSR." 11/9/01 Lynn, MA

"She came to the Fujioka program and I would expect to see her WSR numbers increase based on the weight loss data he presented tonight. ... thought we should really spread the word about these studies" 3/21/02 Redwood City, CA

"he says dr fujioka was great- he walked out of his office after the tele conf and implimented options he spoke about." 6/27/02 Bangor, MA

C. Operation Hustle: National Campaign for WBSR to Treat "Co-Morbidities"

95. In 1999, GSK also instituted "Operation Hustle"- a national sales campaign. In

meetings with national sales and marketing personnel in about 17 cities around the country, GSK

introduced a new approach to selling WBSR by promoting WBSR for "co-morbid conditions"

that were not FDA-approved uses for WBSR, but may also exist in depressed patients, such as

weight gain, sexual dysfunction, and ADHD. GSK instructed its sales force to promote WBSR as

increasing the neurochemical agents norepinephrine and dopamine, and thus effective in treating

"co-morbid" disorders thought to be com1ected to levels of norepinephrine and dopamine, such as

ADHD, addiction, and craving.

96. In April2000, GSK's strategic plan for WBSR identified as sales opportunities

off-label uses such as ADHD, anxiety, lethargy and bi-polar disorders and listed WBSR use in

combination with other antidepressants to their treat side effects as a growth opportunity.

97. GSK's off-label marketing strategies worked. Less than a year later, GSK noted

that WBSR' s "use for treatment of antidepressant induced sexual dysfunction has increased due

to product positioning," and that it was a "[p ]roduct of choice for adding ... patients who

experience sexual dysfunction or efficacy poop-out." Sales increased approximately 34% from

2000 to 2001, far in excess of the market rate of growth for antidepressants.

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98. Sharon Sharo, the Director ofWBSR Marketing, presented to the management

team the plans for WBSR for 2001 and included as WBSR "Growth Drivers for 2001 ":

• Completed 2 Obesity trials - results presented [at conferences] ...

• Obesity study investigating the efficacy and tolerability for WBSR in overweight and obese women published in Obesity Research 9/01 (Gadde).

• WBSR was effective and well tolerated for weight loss at 8 weeks with sustained [sic] the weight loss through the continuation phase.

99. Sharo also explained that GSK's objectives of speaker training for WBSR

included "Present and position Gadde and Anderson weight data" despite the fact that the weight

data was both off-label and extremely preliminary. She also noted that the December 2001

Speaker Training in Fort Lauderdale, Florida would include a key talk by Dr. Fujioka.

100. In August 2001, GSK's Strategic Brand Plan for WBSR noted under

"opportunities" an "increased awareness of sexual dysfunction and legitimacy of treatment of

sexual dysfunction in non-depressed patients." The Brand Plan also stated that GSK will

"[a]ggressively support the efficacy and utility ofWBSR with new clinical data" and "[t]hrough

non-promotional means (MI letters, publications etc.) optimize use of strong clinical data for

prevalence of antidepressant induced sexual dysfunction, comparison vs. key competitors in

depressed and non-depressed patients for weight loss and HSDD."

1 01. G SK also pushed throughout the company the message to promote WBSR as an

"add-on" drug to treat co-morbidities (i.e., side effects of other drugs) and for combination

therapy. For example, in a 2002 Business Plan forwarded by a Regional Sales Director in the

New England Region, a manager set forth the following strategy to grow market share:

Increased focus on D1 Medicaid High potential Prescribers: Target Medicaid areas with strong messages about the benefits associated with NE and DA (the components of WBSR) (i.e. LOW sexual dysfunction, impact on weight, cognition, lethargy and smoking cessation . . . Develop Medicaid Champions to

26

disseminate WBSR messages ... mcrease the switching/adding for sexual dysfunction.

102. Other business plans also encouraged growing WBSR sales by utilizing "weight

loss data" and promoting the product as "add-on therapy to SSRl." These plans also included

a specific focus on physicians prescribing for Medicaid patients.

D. GSK Used Speaker Programs to Promote WBSR for Unapproved Uses.

103. GSK used speaker programs to spread off-label information about WBSR. GSK

trained and paid physicians to speak to other physicians at thousands of promotional events per

year that were organized by GSK's sales representatives and managers. Many of these events

included false and/or misleading claims about WBSR's safety and efficacy for unapproved uses.

In these talks on behalf of GSK, the speakers recommended WBSR for a wide variety of

unapproved uses, including for weight loss, to treat sexual dysfunction, ADHD and other

attention disorders, and even for patients with bulimia or who were abruptly discontinuing alcohol

(both of which were specifically contraindicated in WBSR's labeling).

104. GSK paid physicians to attend lavish meetings, in places such as Jamaica, during

which GSK promoted WBSR for off-label uses. These meetings were intended to reward

physicians who were writing a large number of WBSR prescriptions and induce physicians to

write more WBSR prescriptions, including for unapproved uses. Sales representatives' call notes

reflect the off-label discussions and purpose of these meetings:

"Jamacia Discussed role of WSR in treating depression, ADHD, and obesity" 1127101 NY, NY

" ... Wellbutrin Speakers Training- Jamaica- Interacted several times. He was interested in meeting someone from Marketing about soft money - I told him to talk to [Marketing Director] Lafinin Morgan- which he did." 1/28/01 Durham, NC

"really enjoyed Jamaica - told of successfully using Welb m pt w/ADHD" 1/30/01 Minneapolis, MN

27

" ... had a wonderful time in jamaica with well sr marketing. spent some time with tom and bill which was great. he is eager and ready to talk for us. numbers are reflecting a large increase in new rx's ... i think he gets the picture. sched. a reprint mastery for the group in his office on the 16th ... " 1/31/01 Quincy, MA

105. In late 1999 or early 2000, GSK established a national WBSR speaker program

known as PRIDE (Peer Review of Intimacy, Depression and Efficacy) that featured many off-

label speakers. GSK determined that its PRIDE dinner programs yielded an approximate 280

percent "return on investment."

106. GSK representatives, including managers, attended every PRIDE program. GSK

obtained copies of the presentations and invited to speak most frequently those speakers who

effectively promoted off-label uses ofWBSR. Sales representatives and managers invited the

key speakers back to speak over and over again across the country and touted them to their

colleagues, sometimes precisely because of the off-label messages and their ability to increase

sales ofWBSR.

107. GSK paid such speakers in the range of $1,000 to $2,500 for a one hour program.

Because many of the speakers traveled the country making virtually identical presentations at

each location, little or no additional preparation time was necessary. Moreover, the same

speaker might be paid three times a day for making the same or similar presentation at breakfast,

lunch and dinner in a single day. Some speakers would not even agree to come to a territory to

speak unless they were guaranteed a "six pack" of speaking events at approximately $2,000 each,

for a total of at least $12,000 for the two day trip. This amount far exceeded the amounts they

were otherwise paid to practice medicine or lecture as university professors.

1. Dr. James Pradko

108. Dr. James Pradko was one ofGSK's top WBSR speakers from 2001-2003. From

2001 to 2002, he was paid half a million dollars per year for speaker programs about WBSR and

28

nearly a million dollars in 2003 alone. Dr. Pradko was also hired by GSK to present at sales

representative training sessions-both initial and advanced sales training-and was repeatedly a

presenter at GSK's WBSR National Speaker Training Meetings. Dr. Pradko, whose specialty is

family practice, was also appointed to GSK's National Advisory Board.

109. Dr. Pradko traveled to every GSK sales region to present his standard

presentation, "The Neuroreceptor Basis oflnitial Antidepressant Choice." In 2002, Dr. Pradko

made this presentation at more than 300 promotional speaker events.

110. Dr. Pradko's presentation was permeated with off-label claims about WBSR.

Among other claims, Dr. Pradko represented that WBSR could be used for weight loss, ADD in

pediatric patients, chronic fatigue syndrome, marital dysfunction, erectile dysfunction, addictions

and chemical dependencies, attention disorders, low energy in anxious patients, sleep disorders,

restoring REM levels of sleep, restoring libido and a healthy sex life, and treatment of pregnant

women. Dr. Pradko also told attendees that WBSR could be used as an "add-on" to treat SSRI

side effects such as "poop out", sexual dysfunction and weight gain.

111. Many of Dr. Pradko's claims were contrary to WBSR's label. For example, Dr.

Pradko asserted that he put all of his pregnant patients on WBSR and further claimed that the

FDA said that it is safest antidepressant in pregnancy. WBSR's prescribing information,

however, specifically cautioned that the drug "should be used during pregnancy only if clearly

needed" and that "there are no adequate or controlled studies in pregnant women." Moreover,

after animal studies were done, the FDA updated the label for WBSR in March 2007 to

Pregnancy Category C because "it did appear to cause hann to the fetus in previous animal

studies." According to the updated label, "[i]n these studies, there was an increased risk of birth

defects and lower fetal weights when the medication was given to pregnant rabbits."

112. Dr. Pradko's recommendations to use WBSR use in treating sleep disorders are

29

likewise called into question by WBSR's label. The label cautions that in placebo-controlled

trials, between 11 and 16 percent of patients receiving WBSR experienced insomnia. Even

GSK's own marketing department recognized that "[i]nsomnia is a common concern/comorbid

condition within the depressed patient population and bupropion [the operative molecule in

WBSR] is associated with increased insomnia."

113. Similarly, Dr. Pradko's claims advocating WBSR use in pediatric patients

contravene the drug's FDA approval, which was approved only for patients 18 and older. GSK's

prescribing information warned that the safety and effectiveness of WBSR in pediatric patients

has not been established. Moreover, as noted above, in October 2004, the FDA required all

antidepressants including WBSR to carry a black box warning that describes the increased risk of

suicide and suicidal thoughts and behavior in children and adolescents given antidepressants.

114. Despite its off-label content, GSK managers around the country and at

headquarters enthusiastically embraced Dr. Pradko's messages and his standard talk using a

baseball analogy known as the "baseball diamond talk." Sales representatives repeated and

reinforced Dr. Pradko's off-label messages in their calls upon physicians. For example, in July

2000, a northeast marketing development manager emailed the national brand directors:

First of all, congrats to you and your entire WSR team on a great WSR Univ.! Using Dr. Pradko's baseball graphic of neurotransmitters, you guys have hit a grand slam. The numbers, the incremental growth, what a success story. (Now I know why you called them "PRIDE" programs.)

115. In addition to live speaker programs, GSK actively promoted Dr. Pradko's off-

label messages with an audio cassette version of his lecture. From at least 2000 until into 2003,

GSK purchased and distributed to physicians hundreds, if not thousands, of audiocassette tapes

of Dr. Pradko's standard lecture with the off-label marketing messages (the "Pradko tape"). The

sales force reflected this and the impact on sales in their call notes, including the following:

30

"Raved about Pradko (could hear better on tapes than at program in A.C.) and the fact that he has increased his WSR use EVEN MORE!!!! in certain types of pts." 4/25/01 Vineland, NJ

"followed up w/ pradko tape, dr was so happy to have it, wants bubble sheets too, scheduled to speak to corporations in the area in march, reminder on wt loss data, adding sr, & first line therapy" 2/11/02 Bridgewater, NJ

"Stressed the Pradko Tape and he said she will listen to it on the drive back home tonight and he liked the analogies and he said he had just written for the 150 for 13yr ld girl that was on adderall and becoming combative but doing better with the add. He said he is starting slower and lower and seeing better compliance to start it out." 10/29/02 Wellston, MI

"told about morning program with pradko in march. has listened to half the pradko tape already and said he would come to the program." 1128/03 Battle Creek, MI

"She raved about the Pradko tape, has listened to it 3 times, much less commercial than the teleconference, loved the information, uses it daily now. I also gave her WSR bubble sheet tear-offs, which she likes and will use. Finally went over XL coming- very interested in this." 6/11/03 Grand Rapids, MI

"went through all products and then went through all reasons to use well xl and 100% conversion. pradko tapes and he said he would go to the program." 10/22/03 Smyrna, GA

116. In the spring of 2002, a GSK marketing development manager worked with Dr.

Pradko to prepare a DVD of Dr. Pradko's standard talk. GSK paid for the development costs.

Although the DVD purported to be independent medical education, it was in fact the promotional

talk Dr. Pradko gave on behalf of GSK and developed into a DVD at GSK's request.

117. Dr. Pradko provided the DVD to the southeast region of GSK for a pilot project,

with the hope that the company would purchase the rights to use the DVD nationally .. The

Regional Sales Director at the time, Anne Whitaker, supported the project and accompanied a

sales representative to a physician's office to view the DVD. Although Whitaker observed the

content of the DVD at that time, including the off-label messages it contained, her team

continued to distribute and play the DVD for physicians around the region.

118. In one month, GSK sales representatives in the southeast played this DVD for

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physicians approximately 900 times. The representatives raved about the "independent" CME

DVD's effectiveness in persuading physicians to prescribe WBSR with comments such as "This

DVD has been the best selling tool for me yet. It has not only helped me reach customers that

would not attend programs but also teach myself and customers the best way to use [WBSR]."

2. Dr. James Hudziak

119. In standard presentations that were delivered hundreds oftimes at GSK PRIDE

and local speaking events, Dr. James Hudziak, a child psychiatrist, advocated using WBSR for a

wide range of off-label treatments including ADHD, addictions, sexual dysfunction, obesity,

weight reduction, bi-polar disorders, addictions and bereavement. Dr. Hudziak's off-label

messages were in slide presentations he provided to GSK prior to his talks on behalf of the

company. Sales representatives were thrilled with the impact of Dr. Hudziak's off-label

messages, as reflected in their call notes, including the following:

"Lunch with the group today. we dsicussed the use of WSR to treat ped with ADD and ADHD problems. I used the Hudziak and Wilens articles to discuss WSR advantages. They all agreed." 5/10/01 Atlanta, GA

"Follow up on Hudziak SIB. He thought Hud was interesting and wanted to read everything Hud talked about. Need to follow with all the studies mentioned in the SIB, probably Sex Monograph, Rush, etc." 4/22102 Marion, OH

"disc what hudziak says in regard to wsr and adhd." 9/9/02 Franklin, TN

"hudziak approp pt profile for obese/smokers adhdlweight loss potential, the higher the BMI, the more you'll lose - said he would try" 9/10/02 Clearwater, FL

120. Not everyone was as impressed with Dr. Hudziak, however. According to one

sales representative, one physician who attended "thought [Dr. Hudziak] was a drug whore."

121. Dr. Hudziak's talks and messages were well-known to senior managers at GSK.

His slides were circulated among the members of the sales force, including to managers. He

spoke at both speaker trainings and national advisory boards. Senior marketing managers

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attended his talks. GSK managers around the country regularly booked Dr. Hudziak for speaker

engagements and repeatedly encouraged others to book him in their regions, even though they

knew his slides and presentation contained off-label information.

122. WBSR Brand Director Lafmin Morgan and Regional Sales Director Mike Delea

attended Dr. Hudziak's GSK sponsored talk in connection with the arrival of the Tall Ships

flotilla in Boston in the summer of 2000. Delea congratulated the team that organized the event

noting that "Dr. Hudziak gave a solid presentation on the effectiveness of [WB]SR. The weather

was perfect, along with the boat cruise and viewing ofthe Tall Ships." Exhs. 12-15.

123. Sales representative comments concerning this event include the following:

"wants to go to the 4pm tall ships. . . . - will get back to him if we decide agst kids. don't think we will.... numbers are way to imp. to us." 06/20/00 Boston

"confirmed 3 tix for tall ships for doc and kids." 07/07/00 Randolph, MA

"Still talking about Bermuda trip. Wants to play golf at Ipswich CC. Setting it up for Sept. Looking forward to Tall Ships." 07/13/00 Salem, MA

" ... r/t Hudziak program in Providence in Jan. Said she & Dr. had heard him at Tall Ships and Dr. loved him. Her prescribing in growth track show this!" 12/15/00 New Bedford, MA

124. Dr. Hudziak was also a popular moderator for advisory boards. He was hired by

GSK to lead numerous local and Special Issue Boards, where he presented off-label information

and encouraged other physicians to use WBSR for on and off-label uses.

125. For example, Dr. Hudziak was a featured speaker at a Regional Advisory Board

for the northeast region in August 2000 at the Fairmont Princess Hotel in Bermuda. Dr. Hudziak

was paid $5,000 and he and his wife were treated to accommodations and entertainment for the

weekend, which Dr. Hudziak described as a vacation. Exhs. 16-18.

126. The GSK manager who organized the event solicited input from the GSK sales

force as to which doctors to invite in order to impact sales. He asked managers to nominate

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attendees by providing information on their key "customers" (physicians), those customer's

prescribing habits and what the sales manager would "wish to achieve with [the] customer ... in

an effort to obtain the greatest ROI [Return on Investment] .... " Exh. 19.

127. GSK then selected doctors to attend in order to impact their prescribing of GSK

drugs. The organizers were provided instructions the sales team's goals for each physician,

including ways to increase their use ofWBSR off-label. For example, the sales team noted that

one doctor "is very pleased with the use ofWBSR especially with its effectiveness in ADHD.

Please utilize his positive experience and enthusiasm ofWBSR to influence other clinicians."

For another: "Dr. [N] is a Child Psychiatrist and I would like the safety and efficacy of a first

line antidepressant and treatment option for ADHD to be relayed to him." Exh. 20.

128. One physician was told that he was invited to "sit for 4 hours, share your thoughts

around WSR, get paid at a nice place in Bemmda" and he was invited because he was "the

number one potential doc in the entire state of Maine prescribing anti-depressants." The event

included a four-hour meeting in three days in Bermuda. By noon Saturday, the "work" was done

and GSK provided meals, activities and an evening dinner cruise. Exh. 21.

129. The Bermuda meeting presentations included numerous recommendations for off-

label uses of WBSR by Dr. Hudziak. Moreover, sales force statements before and after the

meeting demonstrate the purpose ofthe meeting was really to encourage prescribing ofWBSR,

and not to gather needed consulting about WBSR, including:

"will be attending rabs program in Bermuda 8/11-8/13: low market share but high volume target. .. " 07/05100 Westerly, RI

"She spoke highly of their trip to Bermuda and of riding around on a scooter! She like Hudziak's talk, and is increasing her usage of SR." 02/01/01 Greenland, NH

"He attended the Bermuda RAB this past August and he has increased his prescribing of WellSR" 12/13/2000 email re: Marlborough, MA physician

34

130. Dr. Hudziak was also a speaker selected by GSK for ostensibly independent CME

events relating to WBSR. In fact, in the summer of2002, Dr. Hudziak expressed concern

because a new Vermont law required him to report the large amount of compensation that GSK

paid him to speak on its behalf. To avoid disclosing how much he was receiving from GSK, Dr.

Hudziak informed GSK that he would only do CME events, not promotional events.

131. GSK therefore arranged a series of purportedly independent "CME" events where

GSK scheduled the event and selected the speaker (Dr. Hudziak) but arranged for aCME

vendor, Primary Care Network, to "accredit" the events.

3. Other Physician Speakers

132. Besides Dr. Pradko, Dr. Hudziak, Dr. Gadde and Dr. Fujioka, many other GSK

physician speakers for WBSR also used presentations that promoted off-label uses. These

doctors were paid by GSK for such speaking engagements and spoke at GSK-sponsored events.

133. For example, Dr. Norman Sussman's standard PRIDE presentation incorporated

representations that WBSR promotes weight loss, including in non-depressed patients. Dr.

Sussman also advocated using WBSR to treat ADHD, smoking cessation, SSRI side effects,

chronic fatigue syndrome, restless sleep, and Parkinson's disease.

134. Dr. Sussman also made claims that improperly minimized or contradicted the

drug's FDA-approved label. Dr. Sussman represented that WBSR's seizure rates were either

equivalent to or less than the rates seen with SSRis, even though no head-to-head trials studied

comparative seizure rates and the seizure rate listed for WBSR in its label is higher than some

other antidepressants. Likewise, Dr. Sussman suggested WBSR be used to treat patients with

eating disorders, even though the label contraindication such use because of seizure risk.

135. GSK speakers Drs. Sarah Atkinson and Anita Clayton also recommended WBSR

for weight loss in non-depressed patients, among other off-label uses. Dr. Jeffrey Green

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presented WBSR as a treatment for cocaine and alcohol addictions and ADHD. In doing so, Dr.

Green, also improperly minimized WBSR's FDA-required seizure risk. Dr. Croft recommended

WBSR for the treatment of sexual dysfunction, for weight loss, ADD, chronic pain and children.

136. GSK representatives attended every PRIDE event and were well aware of the

speakers' off-label claims. Leading speakers such as Drs. Pradko, Hudziak, Sussman, Clayton

and Atkinson, Croft, and others spoke dozens of times a year and were highly sought after by

GSK for such events. GSK used these speakers to promote off-label use of WBSR by frequently

employing them as speakers, with full knowledge of the content of their presentations.

137. By at least October 2001, a GSK sales representative had notified senior GSK

managers of the use of speaker programs to promote off-label uses, including to promote WBSR

for children and ADHD and, in subsequent months, for weight loss. Exh. 22. The representative

pointed out the evidence of the off-label speaker programs in his colleagues' call notes.

138. When this representative did not receive a response, he escalated his complaints

to GSK's heads of human resources and compliance. In his complaint, the representative noted

that he had "come forward with the truth, which could save the reputation of GSK, and millions

of dollars in fines." Exh. 23. He later also wrote to GSK Chief Executives Robert Ingram and

David Stout about his complaints. In early 2002, GSK initiated a compliance investigation that

confirmed many of the representative's allegations, including the use ofWBSR speaker

programs to promote WBSR off-label and use of a spa program to entertain physicians.

139. The complaining sales representative was offered an unusually favorable

severance package, including relocation payments and keeping the company car.

140. Although a manager admitted during GSK' s internal investigation that he had

been told by the sales representative that the speaker programs were off-label, and although

another sales representative confirmed that the manager was aware of the off-label nature of the

36

programs, the manager received only a "verbal warning." Moreover, although the Chief

Compliance Officer noted that off-label discussions by GSK speakers were "normal" (i.e.

common) (Exh. 24), no action was taken to investigate further and the off-label promotion

continued.

A. Sales Representatives Repeatedly Promoted Off-Label Uses ofWBSR.

1. GSK Immersed Its Sales Force in Information on WBSR's Off-Label Uses.

141. GSK actively encouraged its sales force to promote WBSR for off-label uses.

From the time of their introductory sales training and throughout their tenure with the company,

sales representatives were bombarded with information about off-label uses ofWBSR, including

Dr. Pradko's standard presentation at new representative sales training (every GSK sales

representative who sold WBSR was also provided his or her own personal copy of Pradko' s

standard presentation, replete with off-label claims). Exh. 25.

14 2. Sales representatives were provided with multiple copies of the results of GSK-

funded studies on weight loss in the non-depressed. For example, in June 2001, GSK distributed

a memorandum to its WBSR sales force with new clinical data on the drug's impact on weight

loss in non-depressed obese patients. GSK also distributed to its sales force the Gadde study and

other studies of the use ofWBSR in patients who did not have a diagnosis for depression.

143. GSK required the WBSR sales forces to take a home study course that included a

review of studies on the off-label use of WBSR for weight loss. GSK required a mandatory

written "knowledge certification" on the off-label weight loss data in non-depressed patients and

other tests on off-label material about WBSR for ADHD.

144. Although representatives were "told" that they were not supposed to use this

information affirmatively in promotion, they were required to "role-play" scenarios with their

managers where they could use this off-label information. Moreover, their performance was

37

judged and their bonuses based on sales goals that reflected all sales, including off-label sales.

145. GSK sales representatives also proactively promoted the results of studies of non-

depressed patients treated with WBSR for weight loss and sexual dysfunction despite the lack of

any FDA-approval for these indications. Similarly, GSK directly promoted WBSR as an "add

on" combination therapy to address SSRI-induced side effects, such as weight gain, sexual

dysfunction, and so-called "poop out" or loss of energy. Thus, GSK' s emphasis on various off-

label uses translated into direct promotion to prescribing physicians by the company's sales

representatives and was reflected year after year in the sales representatives' call notes. GSK

took no action to correct the off-label marketing efforts documented in thousands of such call

notes during the relevant time periods. The following are just a few of the many instances:

"Killer detail today on SR. She wasn't seeming to know much about it but the line Happy Horny and Skinny was a good line for her today and we really got into the whole conversation" 211/01 Corvallis, OR

" ... we talked about wsr in combo. with a ssri as well as using it in non depressed women for sexual dis" 2/16/01 Millstadt, IL

"Wants to golf; Reminder on Happy horny skinny pill;" 5/9/0 I Bethel Park, P A

"Wellbutrin SR for the treatment of cocaine addiction." 8/9/01 Belle Mead, NJ

"Great conversation on WSR new wt loss study-augmenting for sex side affects­brought in rest of breakfast from NW health-loved it! Gave me more time to discuss the offlabel uses-ie Bipolar, ADD, Poop out." 8/20/01 Arlington Hghts., IL

"Nice follow up to last visit regarding use of WSR for anxiety, PTSD, ADD/ADHD, and social phobia." 9/26101 Santa Fe, NM

"asked to prescribe in overweight pts also any pts with addictions need dopamine and wsr will give to them" 3/6/02 Trenton, NJ

"Quick positive points and talked about why I was there. Nondepressed women libido but he wouldn't bite." 3/11/02 Seattle, WA

"WBsr for your couch potatoes, happy, horny, skinny pill" 8/30/02 Folsom, CA

"Told him the "happy-horny-skinny" line which he loved. Makes it easier to

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remember these profile." 10/29/02 Grand Rapids, MI

"quick hello and reminders - was in a hurry just reminded of the happy horny skinny pill great for over the holidays" 11125/02 Yellow Springs, OH

"talked to dr about using wsr for sexual dis. in his non depressed pat." · 1127/03 0 Fallon, IL

146. In addition, although WBSR is not FDA-approved for patients under the age of 18,

GSK targeted child psychiatrists and pediatricians for promotion of WBSR. GSK required sales

representatives to visit certain pediatricians and child psychiatrists repeatedly each quarter. On

these visits, GSK representatives actively promoted WBSR for such off label indications as

ADD/ ADHD and pediatric depression.

147. In these sales calls to child psychiatrists and pediatricians, GSK representatives

also routinely gave out samples of WBSR, knowing and intending that the samples would be

used for patients under 18, for whom the drug was not approved. GSK headquarters kept a

database of all sample deliveries and was thus well aware that its employees were giving samples

of WBSR to physicians who primarily or solely treated patients under 18.

148. This fact was also amply reflected in the call notes sales representatives made of

their visits to pediatricians and child psychiatrists. The following are a few examples of GSK' s

internal reports of off-label promotion ofWBSR to pediatricians and child psychiatrists.

"discussed use ofwellbutrin in children for depression" 1/26/01 Reno, NV

"good lunch. hit wsr with wilens and adhd. he says that it is effective and helps in disruptive kids alot. led him to hudziak article to show improvement in aggressiveness." 4120/01 Gainesville, GA

"apt today. Discussed W for ADD/ADHD. seems to be writing for these to indications the most. see primarily children[] OK on samples" 114102 Aurora, IL

"Even though he is a pediatrician, I talked with him about my products, because all have data in children. (adhd-wbsr; imitrex nasal spray-adolescent migraine). Had a good talk about kids." 5/14/02 Abbeville, SC

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"talked of baseball/told of well in adhd adolesence" 6/14/02 Chattanooga, TN

149. GSK also knew from its own market research from at least 2000 to 2003 that the

main messages being delivered by its sales force in promoting WBSR included repeated off-label

claims for the use of WBSR as add-on, to treat sexual dysfunction and weight gain, for bipolar

disease, for children and the treatment of ADHD. Reports from physicians of the main messages

they received from GSK sales representatives included off-label messages such as the following:

"Wellbutrin is indicated for anxiety ... " • " ... effective against ADHD symptoms." • " ... good in children who have attention span problems ... " • " .. .in pregnant patients." • "A useful medication in conjunction with the SSRls to deal with sexual

dysfunction induced by SSRls" • "Very good as an add-on medication to other SSRls" • "Very effective in add-on therapy in conjunction with other antidepressants" • "People suffering from addiction such as smoking, overeating, or illegal drugs" • "To prescribe Wellbutrin for anxiety disorder ... also discussed using ... it in

children and adults for attention deficit." • "It was now indicated for weight loss, as well as the treatment of depression, and

smoking cessation." • "Wellbutrin SR is indicated for generalized anxiety disorder ... "

"That it's safe, effective for treating depression, and also bipolar illness."

V. GSK'S OFF -LABEL MARKETING OF ADVAIR

150. Advair is a combination drug that is approved by the FDA for the treatment of

certain respiratory ailments under certain conditions. From the time of its launch in 2001 through

at least 2010, GSK promoted the asthma drug Advair for first-line therapy for patients and uses

that were neither FDA-approved nor medically appropriate. Among other things, GSK illegally

promoted Advair for "all persistent" asthma patients, including specifically mild persistent

asthma patients and patients who had not yet tried using just one component of the drug. GSK

also at times promoted Advair for all asthma patients, including even mild intermittent asthma

patients. GSK' s promotion dramatically increased medication costs for patients who did not need

the combination of two drugs provided by Advair. It also exposed patients to significant safety

40

risks without demonstrated treatment benefits.

151. GSK made false and misleading statements about Advair to health care providers,

causing them to consider Advair safer and more effective than it was and thus to prescribe

Advair to patients for whom it was not medically accepted and potentially unsafe and

dangerous. This marketing also caused physicians to use Advair for other unapproved uses

beyond asthma. GSK also made false and misleading statements directly to state and federal

health care programs to cause them to pay for Advair and persuade them not to place what would

have been medically appropriate restrictions on the reimbursement of Advair.

A. NIH Guidelines Do Not Recommend First-Line Use of Advair for Mild Asthma.

152. The prevailing guidelines for the diagnosis and treatment of asthma are the

Guidelines for the Diagnosis and Treatment of Asthma. They were first published by the

National Heart, Lung and Blood Institute of the National Institutes of Health (NIH Guidelines) in

1991 and were updated in 1997, 2002 and 2007.

153. Under the NIH Guidelines, patients are categorized into mild, moderate and severe

asthma. Patients with occasional asthma symptoms are categorized as mild "intermittent" asthma

patients. The recommended treatment for mild intermittent asthma is a "rescue inhaler" (short­

acting-beta-agonist (SABA) or albuterol) on an as-needed basis in response to symptoms.

154. Patients who regularly suffer asthma symptoms are categorized as having

"persistent" asthma. The NIH Guidelines further categorize persistent asthma patients along a

spectrum from "mild" to "severe." For mild persistent asthma, the Guidelines recommend

treatment with a maintenance therapy, such as low-dose inhaled corticosteroid (ICS). The NIH

Guidelines recommend that persistent asthma patients also use SABA on an as-needed basis.

155. For treatment of moderate persistent asthma, the 2007 NIH Guidelines

recommend either increasing the dose of ICS or adding another controller medication, a long-

41

acting-beta-agonist (LABA), to the low-dose res. A "controller" or "maintenance therapy"

refers to medication used every day, long-term, to control asthma symptoms

156. Under the NIH Guidelines, res is the recommended first-line maintenance

treatment for persistent asthma patients. The 2007 NIH Guidelines state that "leSs are the

preferred treatment option for initiating long-term control therapy."

157. Advair, GSK's best-selling drug, is a combination of two other GSK-owned,

FDA-approved drugs: Flovent (an reS) and Serevent (a LABA). Advair is predominantly

administered through a proprietary inhaler device called the "Diskus."

158. In the asthma context, "first-line" use refers to the first controller medication a

patient is prescribed. First-line use of Advair in mild asthma patients is not supported by the

NIH Guidelines.

B. Advair's Initial Approval and Label Limited Its First-Line Use.

159. Advair was approved by the FDA in August 2000 for the "long-term, twice-daily

maintenance treatment of asthma." The label's Dosing and Administration section stated:

The recommended starting doses for ADVAIR DISKUS are based upon patients' current asthma therapy. . . For patients who are not currently on an inhaled corticosteroid, whose disease severity warrants treatment with 2 maintenance therapies, including patients on non-corticosteroid maintenance therapy, the recommended starting dose is ADV AIR DISKUS 100/50 twice daily. [Emphasis added].

160. The language in Advair's label on disease severity and initiation of treatment was

extensively negotiated by the FDA and GSK. GSK understood and agreed that the la?el

restricted first-line use of Advair for "mild" asthma patients. These were patients for whom

"long-term, twice-daily" use of Advair was non- medically accepted and potentially unsafe.

161. None of the pivotal trials submitted to the FDA in GSK's New Drug Application

(NDA) for Advair studied the safety and efficacy of Advair for mild asthma patients. Moreover,

42

prior to the launch of the drug, GSK agreed with the FDA that Advair was not medically

appropriate for such patients and represented to the FDA that it would promote Advair only for

those for whom the combination of ICS and LABA was medically appropriate.

162. At the FDA's November 1999 Advisory Committee meeting to discuss GSK's

NDA for Advair, Dr. Tushar Shah, GSK's Director of Respiratory Clinical Research, stated "In

[mild] patients, combination therapy would be inappropriate" and "I think the label that we

provided actually would exclude mild patients, because what we're saying is that this product is

appropriate for patients in whom combination therapy is appropriate."

163. After that meeting, the FDA and GSK negotiated language in the Dosage and

Administration section of the label to restrict Advair's first-line use by mild persistent patients.

164. GSK agreed and understood the effect of the restrictions in the Dosing and

Administration section. Internally, just prior to the approval of the Advair label, GSK wrote:

Despite the implication that Advair Diskus is indicated for all asthma, FDA is not comfortable that Advair be used or promoted for mild disease. They propose to describe the appropriate patient populations in the "Dosage and Administration" section of the label. This section now contains language that allows Advair to be used in patients currently taking non-corticosteroid maintenance therapy (salmeterol, LTMs etc), as well as inhaled corticosteroids. In addition, FDA appear comfortable in allowing Advair to be used in patients currently taking albuterol if we qualify they have moderate or severe disease. We are submitting proposed wording to include this patient population.

In summary, it now looks like we have a broad indication with specific dosage recommendations for patients on any maintenance therapy, as well as a subset of patients taking albuterol only. [Exh. 26].

C. The FDA Rejected GSK's Application to Include First-Line Dosing Instructions for Mild or All Asthma Patients.

165. In addition, on April27, 2001, GSK submitted a supplemental NDA (sNDA) to

the FDA seeking a broader first-line dosing instruction by providing additional clinical data.

GSK specifically sought the removal of the language in the Dosage and Administration section

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that reflected the limitation on Advair's first-line indication to patients "whose disease severity

warrants treatment with 2 maintenance therapies .... "

166. In February 2002, the FDA rejected GSK's sNDA, and explained:

We do not believe that you have provided sufficient evidence of efficacy to support this broadened indication for Advair Diskus. . . . In addition, this supplement did not provide adequate assurance of the relative safety of the combination product compared to the single component fluticasone [ICS] for the proposed population.

167. Notably, the FDA told GSK that Advair had not been shown to be superior to ICS

-the recommended treatment for first-line use for mild (and later all) asthma patients. In its

non-approvable letter to GSK, the FDA stated that the pivotal trial of the application, SAS30017,

"failed to demonstrate the superiority of the combination product Advair Diskus to the single

component fluticasone propionate using the protocol-specified analysis." Exh. 27.

168. In its "non-approvable" letter regarding the 2001 sNDA, the FDA warned GSK

that marketing Advair with these claims could cause the drug to be considered "misbranded"

under the United States Food, Drug and Cosmetic Act ("FDCA").

169. In March 2002, GSK wrote to the FDA and withdrew its sNDA "[as] there are

currently no additional efficacy and safety data with which to amend this supplement."

D. The FDA Increased Warnings About Advair as GSK Studies Revealed Increased Risks.

170. In early 2003, GSK halted a clinical trial on the safety and efficacy ofLABAs-

the Salmeterol Multicenter Asthma Research Trial (or SMART study)-because a statistically

significant number patients on LABAs died from asthma-related causes. As a result, the FDA

added a "black-box" warning to Advair's label in 2003 that the data "showed a small but

significant increase in asthma-related deaths in patients receiving [LABAs] .... " The boxed

warning on the current version ofthe label states: "Long-acting beta2-adrenergic agonists

(LABA), such as salmeterol, one ofthe active ingredients in ADVAIR DISKUS, increase the

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risk of asthma-related death."

171. In November 2005, after analyzing the data from the terminated SMART study,

the FDA issued an advisory warning against first-line use ofLABA-containing products, such as

Advair. The FDA stated:

FDA is issuing this public health advisory to highlight recommendations about use of a LABA medicine for asthma: LABAs should not be the first medicine used to treat asthma. LABAs should be added to the asthma treatment plan only if other medicines do not control asthma, including the use of low-or-medium dose corticosteroids.

172. The FDA required revisions to Advair's label again in March 2006 to clarify the

first-line restriction and further restrict first-line use to only severe asthma patients-those for

whom a doctor determined ICS and SABA could not control asthma symptoms. The revised

black box warning and Indications and Usage section of the label restricted first-line use of

Advair to asthma patients whose "disease severity clearly warrants initiation with two

maintenance therapies .... "(Emphasis added). The FDA also added to the Indication statement

an "Important limitation of use" that "ADVAIR DISKUS is not indicated in patients whose

asthma can be successfully managed by inhaled corticosteroids along with occasional use of

inhaled, short-acting beta2-agonists." Accordingly, Advair was not approved for patients whose

asthma could be controlled with medium or high dose ICS.

173. The day after the label revision, GSK noted internally that Dr. Badrul

Chowdhury, Director of Pulmonary and Allergy Products at the FDA's Office ofNew Drugs,

confirmed that the word "clearly" limited the first-line exception only to severe patients.

174. In February 2010, the FDA announced that it had conducted "a meta-analysis" of

studies evaluating the use of LAB As which "suggested an increased risk for severe exacerbation

of asthma symptoms in patients using LAB As compared to those not using LAB As." In June

2010, the FDA restated that "LABAs should only be used as additional therapy for patients with

45

asthma who are currently taking but are not adequately controlled on a long-term asthma control

medication, such as an inhaled corticosteroid."

175. Despite FDA's warnings, GSK downplayed Advair's safety risks to physicians

both before and after the March 2006 label revision and promoted Advair with claims of

superiority, safety and recommended use inconsistent with the safety risks and label revisions ..

E. From the Launch of Advair, GSK Promoted Advair for First-line Use by Mild Patients Despite the FDA's Rejection ofthis Use.

176. Despite the FDA's restrictions, the lack of supporting clinical evidence and the

fact that GSK told the FDA it would not promote for such use, GSK promoted Advair for first-

line use in mild persistent and intermittent asthma patients from the time of Advair' s product

launch in April 2001.

177. GSK's product launch for Advair was a lavish event attended by thousands of

sales representatives. The event was held in Las Vegas, Nevada, and attended and led by

individuals at the highest levels of GSK management.

178. Advair's launch trained sales representatives to promote Advair for first-line use

for all asthma patients, including mild persistent and mild intermittent asthma patients. The sales

message was delivered by top GSK executives speaking to the sales force from the stage at the

launch of Advair in Las Vegas, Nevada:

(a) Jim Daly, Advair's Product Manager, known as "Mr. Advair," presented the company's sales pitch to the entire sales force: "Advair is the complete, simple solution for persistent asthma. The proof- proof is everywhere. The proof is in the package insert. Our label is big, broad and beautiful. The proof is in the clinical data. We have superiority claims over virtually everything that physicians are prescribing today."

(b) Stan Hull, a Senior Vice President, rhetorically asked the Advair sales representatives: "The clinical data that supports Advair-you know you gotta just ask the simple question: What patient with asthma is not appropriate for Advair?"

46

(c) GSK President David Stout told the sales force: "You've got to make Advair the 1st choice, 1st line, for the treatment of asthma."

(d) GlaxoSmithKline plc's Chief Executive Officer J.P. Gamier instructed the entire Advair sales force that they could promote Advair as necessary for all asthma patients by purporting to quote a conversation he had with a doctor as follows: "[H]e said, and you can quote him everywhere you want in the [United States], 'He said it would be criminal not to put an asthmatic patient on Advair.' It would be criminal."

Exh. 28 (launch presentation DVDs) & 28A (selected portions oflaunch DVDs).

179. Thus, from the time of Advair's launch, GSK at the highest levels encouraged and

caused GSK sales representatives to make false and misleading statements about Advair' s

indication and clinical support. GSK's "superiority claims" over other drugs, including ICS,

were not only unfounded-they were specifically rejected by the FDA.

180. GSK provided large financial incentives to sales representatives to promote Advair

for unapproved, off-label uses. GSK executives took to the stage in the Las Vegas product launch

and, using images of a slot machine to illustrate the potential for the sales force to make money by

selling Advair, outlined the bonuses available to sales representatives as follows:

(a) Daly: "There are people in this room who are going to make an ungodly sum of money selling Advair. . . . That's the way it should be. When GSK makes money you make money. The more you sell the more you make. God bless America."

(b) Stout: "But I know it takes a little bit more than just good luck a little hard work, you need what? Extra incentives! ... Let's spin the big [launch bonus] jackpot here .... [Jackpot spins on screen] $5 for every rep for every 100[/50 Advair] script. I think we can make some millionaires out there."

(c) Garnier: "What is the #1 reason why you should love to be a GSK sales rep? ADVAIR'S BONUS PLAN! Yeah!"

Exh. 28 & 28A (DVDs).

181. By spinning the jackpot wheel, Stout demonstrated GSK' s lucrative launch bonus

plan for Advair that, in addition to all other bonuses, would pay each sales representative $5 per

prescription of Advair 100/50 written in their territory. Advair 100/50 was the lowest dose of

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Advair, and GSK used this incentive to push its representatives to promote Advair for mild

asthma patients.

F. High Level GSK Executives Implemented the Off-Label Promotion of Advair

182. The direction to target mild and newly diagnosed patients for first-line Advair use

came from the highest level of the company and was reiterated by the company's senior

management, including in presentations to investors.

183. For example, in a June 2002 presentation to investors, Stan Hull, GSK's Senior

Vice President of United States Pharmaceuticals, explained:

So, to summarize ... we have cannibalized the majority of the Serevent and Flovent business and we are really dominating our efforts now into getting patients who are inadequately treated on short-acting beta-agonists onto Advair.

184. Hull went on to note that GSK was promoting for all patients on SABA, despite

the physicians' reluctance. He asserted: "It's potentially a fatal mistake to manage a patient only

with a short-acting beta agonist because ofthe perception that the disease is mild." To the

contrary, the FDA had concluded that there were potential increased safety risks from putting

mild patients who did not need the combination product on Advair.

185. In a presentation to investors in March 2004, Hull, accompanied by President of

United States Pharmaceuticals Chris Viehbacher, was even more explicit about GSK's intent to

pursue the mild asthma population for Advair, stating: "One of our strategies this year, or

objectives, will be focusing on this category the mild asthmatic .... So our objective in simple

terms this year is to persuade a physician to start their patients on Advair."

186. Hull admitted that many physicians do not agree with such an approach as

medically appropriate. He stated: "the biggest objection we get back is, Advair is my medicine of

choice for many patients who have moderate to severe asthma. However, not everybody needs

Advair." Hull explains GSK's response, which is essentially that Advair is the best patient care

48

for all asthmatics, as reflected in the company's false and misleading marketing: "[I]fl am a

physician I want my asthmatic patients to get the best care possible, so why would you ... not be

giving a patient with asthma Advair."

187. Hull even bragged to investors about GSK' s success in promoting Advair for first-

line use in the mild population to investors. He stated:

You may ask yourself how we are doing in this mild segment. We started this overall approach in 2003 and we started with a share of about 18% and now we are approaching 34% in this segment, so we are seeing this initiative is working, not as fast as I would like it to, but definitely working.

188. In 2004, Viehbacher, in an investor presentation in London, England, with the

Chairman of the Board of GlaxoSmithKline plc Sir Christopher Hogg present, emphasized that it

was GSK's strategy to push Advair for all asthmatics. He stated: "The real opportunity for us

with Advair is that we can now convince physieians that there is no such thing as mild or severe

asthma: you have asthma, and you can achieve better control."

189. At the same meeting, Hull explained: "So with Advair we want to help physicians

think simply: if the patient is asthmatic, what do I do? We want them to prescribe Advair 100/50

as their first choice for managing these patients."

190. In January 2006, GSK's CEO J.P. Garnier, told investors that the FDA warning

about the safety of Advair should not affect GSK' s stock price because it is "not meaningful and

it is not going to have a big effect." He stated: "I think products such as Advair are phenomenal

for the treatment of asthma, and they should be used for mild to moderate and severe asthmatics."

Garnier also explained: "Physicians are not going to listen to the FDA."

191. These top executives drove the off-label strategies for Advair to keep Advair sales

growing because Advair sales were critical to GSK's stock price and investor ratings. For

example, when, in April 2003 Advair sales declined for just three weeks, David Stout, then Chief

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Operating Officer of GlaxoSmithKline pic, sent an email to Viehbacher, President of U.S.

Pharmaceuticals, asking "What is happening with Advair? . . . I think we better light a fire under

the team ... sooner rather than later."

192. In June 2004, when investment analysts noticed a decline in Advair's growth, they

downgraded their rating of GSK stock. The analysts noted that GSK was seeking to grow Advair

in the category of mild persistent asthma "despite the drug not being recommended in the

guidelines for this level of disease severity." Exh. 33.

193. In response, GSK's Advair brand team was asked to prepare a response for GSK's

senior management, including Garnier, Stout, Viehbacher, Hull, and set forth a plan to increase

Advair's growth. Exh. 34. The response quoted the Deutsche Bank statement that "Strict

adherence to the US guidelines would imply that Advair usage should be confined to patients with

moderate and severe persistent asthma." The response also noted that much of the recent sales of

Advair had been for patients who had neither asthma nor COPD. The GSK marketing team

nonetheless stated: "We are confident that the changes that we have made to the selling [Plan of

Action] and the promotional message will drive growth in Q3 and Q4. The changes include:

Focus on earlier use of Advair, specifically in patients who have uncontrolled asthma but are

typically thought of as 'mild' by primary care physicians." Exh. 34.

1. GSK's False and Misleading Promotion of Advair for First-Line Use.

194. From 2000-2010, GSK promoted Advair for unapproved and non-medically

accepted first-line use in asthma by making false and misleading statements about Advair's

indication and the NIH Guidelines, as well as false claims that Advair was superior to other

asthma drugs, including res, for first-line use.

195. From immediately following the Advair launch in April2001, GSK inundated the

market with its improper marketing messages, sending nearly 2,300 sales representatives to

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70,000 physicians in the first five days alone. From the beginning, GSK's senior managers in

the field also instructed the sales force to promote Advair for first-line use and all asthma

patients, including mild asthma patients. For example, on or about March 2001, a GSK Regional

Sales Director manager forwarded a message to train sales representatives with the leading line:

"Doctor, three benefits of treating your mild asthma patients with Advair are: ... "

196. GSK aggressively pursued a national strategy to "Establish ADVAIR Diskus as

the Physician's First Choice for the Treatment of ALL Persistent Asthma." GSK created and

distributed to its sales force for sharing with physicians all around the country glossy sales aids

that told physicians to "Prescribe Advair for your persistent asthma patients."

197. GSK's promotion of Advair for all asthma patients and all persistent asthma

patients directly contradicted the NIH Guidelines and the FDA-approved label.

198. GSK's promotion of Advair as superior for first-line use was false and misleading

because GSK did not inform health care providers that the FDA specifically rejected the

company's sNDA for first-line use of Advair by mild persistent asthma patients. Nor did GSK

disclose that the FDA had reviewed the data and analysis and concluded that the available

evidence did not support Advair's safety and efficacy, let alone its superiority, for patients on

SABA alone, including intermittent and mild persistent asthma patients.

199. The FDA specifically rejected the pivotal trial in GSK's sNDA application-

study SAS30017-for failure to meet its protocol defined endpoints. GSK had submitted a

modified statistical analysis for study SAS30017 to the FDA to claim statistical significance, but

the FDA's explicitly concluded that the study failed to meet its protocol-defined endpoints and

did not demonstrate superiority of Advair over ICS for asthma patients taking SABA alone. The

FDA also noted certain safety signals from the study in this population. Exh. 35.

200. Without informing health care providers of the FDA's rejection of the sNDA or

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study or the concerns raised by the FDA, GSK used SAS30017 to construct its core marketing

messages that Advair "delivers superior symptom control" compared to res alone and that

Advair provides "more symptom free-days" than res alone. GSK disseminated this false claim

of superiority to res for patients previously on SABA alone in GSK's written marketing

materials for Advair and in advertising campaigns for Advair, including in nationally broadcast

pre-recorded teleconferences across the country.

201. Moreover, although the SAS30017 study was limited to moderate to severe

patients, GSK used the study to claim superiority to res alone for all asthma patients

uncontrolled on SABA alone. This claim directly contradicted the FDA's conclusions when it

reviewed SAS30017. In addition, after the March 2006 FDA-required label change, this

promotional claim directly contradicted the "Important Limitation of Use" in GSK's label for

Advair, which stated that Advair should not be used for patients who could be adequately

controlled on res alone.

202. GSK also misled prescribers with its "Myth of Mild" asthma campaign. GSK

trained sales representatives to promote Advair based on the false assertion that mild asthma

does not exist or that patients do not go to a doctor for "mild" asthma. GSK told physicians that

all of their patients deserve the most effective asthma treatment, i.e., Advair. One GSK manager

explained to her team that the portion of asthmatics with mild asthma was essentially non­

existent or "infinitesimally small." The same regional manager signed communications to the

regional sales team and outside physicians with the tag line "If it's asthma, its Advair."

203. GSK depicted its view of the asthma market as follows:

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The Asthma World According to GSK

1 Albuterol

204. GSK sales representatives widely used the "myth of mild" arguments to convince

physicians to treat their mild asthma patients as though they were moderate or severe, in

contradiction ofthe NIH Guidelines' recommendations and the FDA-approved label.

2. GSK Deliberately Sought to Convert ICS/Flovent Sales to Advair, Without Regard to Safety or Medical Appropriateness.

205. GSK promoted Advair, the most expensive of its asthma products, even against

Flovent-its own (cheaper) ICS product. Internal training documents refer to Flovent as the

Advair sales representative's "#1 Competition." GSK also instructed portions of the sales force

to promote Advair based on claims that the physicians could save time and earn more money by

prescribing Advair and with the phrase "Advair is easy to use for all asthma patients." Exh. 29.

Although Flovent!ICS was the medically appropriate medication for many asthma patients, GSK

promoted Advair for these patients because it was more profitable. GSK internally stated that

"Advair is now the engine that drives GSK."

206. GSK emphasized to its sales force that a high percentage of patients stay on the

drug that they are initially prescribed, and thus they needed to promote Advair for use earlier in

the treatment paradigm. GSK instructed its sales force to "please remember to deliver the

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message 'Make Advair the First Controller' on each and every sales call." Exhs. 30-32.

207. GSK national marketing managers also explained to the sales force that in order

to realize the opportunity of Advair, they needed to "Realize that one opportunity is in patients

new to asthma therapy," who had not even used SABA, and "Understand that getting your

product on first is the most important thing to do." Thus, contrary to the general medical

principle of treating patients with only as much medication as they need, GSK's sales force

promoted non-medically necessary and off-label use of Advair for all asthma patients with false

arguments of safety and efficacy. Exh. 31.

208. Thus, using the diagram below, GSK taught its sales teams "It is all about Getting

ADVAIR on First!!!" and "Advair is superior to Flovent and Singulair." The selling line GSK

gave the sales force was "Make Advair 100/50 your first choice for patients symptomatic on

rescue medication" despite the lack of evidence for superiority in this group, the FDA's explicit

rejection of such initial Advair use and the safety risk associated with Advair. Exh. 31.

Adivair Asthma Strategy

Make Advair the First Controller

209. As part of this effort, the GSK central marketing team also incorrectly informed

the sales force that the SAS30017 study showed that Advair was superior to Flovent on every

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efficacy measure for patients symptomatic on albuterol alone. Exhs. 31-32.

210. Throughout this time period, GSK heavily rewarded Advair sales in its sales force

compensation, but did not reward Flovent sales, despite its medical appropriateness. For years,

GSK refused to provide Flovent samples, despite complaints from doctors. Instead, GSK

explained to physicians that the patients the physicians wanted to prescribe Flovent should be

prescribed Advair-with one sales representative saying GSK could not "ethically" provide

samples of Flo vent.

3. From 2006-2010, GSK Continued to Misleadingly Promote Advair for First­Line Use Despite Additional Warnings and Restrictions by the FDA.

211. Despite the additional restrictions on first-line use in the Advair label placed in

March 2006, GSK continued to promote Advair for first-line use by falsely claiming the NIH

Guidelines supported such use and by using the FDA-rejected study SAS30017 to falsely claim

that Advair was superior to ICS for first-line use.

212. One of GSK's anchor strategies for promoting Advair for inappropriate first-line

use after the March 2006 label revisions was based on the number of SABA refills a patient

filled. GSK promoted Advair for patients who refilled their SABA a certain number of times

(two to four) in the last year. GSK did this by falsely claiming that these patients must be using

their inhaler daily. GSK told physicians that these patients were therefore "Step 3" [moderate

astluna] patients tmder the NIH Guidelines.

213. GSK then falsely told physicians that Advair was "preferred" or "a preferred"

treatment for these patients under the NIH Guidelines, even though the 2007 NIH Guidelines did

not recommend initiation of treatment with Advair for these patients GSK's promotion was

therefore contrary to the first-line restriction in Advair's approved label to patients "whose

disease severity clearly warrants" initiation with combination treatment and also contrary to the

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Important Limitation of Use in Advair's label, which stated that Advair was not indicated if a

patient could be controlled on ICS plus occasional SABA.

214. GSK's claim as to SABA refills reflecting a lack of controlled asthma was faulty

for several reasons. First, it is common for patients to keep spare SABA canisters in multiple

locations (e. g. home, work and car), and thus the use of several canisters does not necessarily

reflect how often patients use the drug. Also, NIH Guidelines caution that "[b ]efore increasing

therapy ... the clinician should review the patient's inhaler technique and adherence" because

often patients who overuse albuterol are not using their inhaler properly.

215. GSK's false and misleading promotion of Advair was reflected by the sales

representatives in their call notes including the following:

"Advair appro. for ALL persistent asthmatics, inc. mild/start-ups." 07/26/2001 Doylestown, P A

"Advair for all persistent asthmatics ... mild moderate or severe." 05/16/2001 Kenosha, WA

"Emphasized Advair not just for severe asthmatics but also mild intermittent." 10/31/2001 Milwaukee, WI

"advair diskus for mild intermittent." 02/05/2002 Trenton, NJ

"Discussed benefit of offering to all intermittent asthma patients." 03/26/2003 Oakdale, CA

" ... advair diskus for mild intermittent. ... " 02/05/2002 Trenton, NJ

" ... ADVAIR GOALS OF THERAPY. ASKED FOR MILD PATIENTS AS INITIAL THERAPY" 03/27/2002 Fort Wayne, IN

" ... Advair first-line, even mild asthma, superior to singulair and FP alone ... " 03/25/2002 Hemietta, TX

"... Used NIH to close hard that there are NO mild asthma pts. Advair IS the solution." 03/04/2003 San Antonio, TX

" ... discussed stressing myth of mild asthma. Ifthere in your office, never mild ... " 03/04/2003 Garden City, MI

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" ... he laughed and said "you want me to use Advair for every patient?" I said yes, anyone that is "persistent" by nih criteria ... " 03/06/2003 Alexandria, VA

" ... She said that she had heard that the mild asthma erne program was a Advair advertisement ... " 03/06/2003 Madera, eA

"Dr. says that she is going to start writing more Advair since she attended the Myths of Mild Asthma eME in Beverly Hills awhile back. Said the talk was excellent and Advair was spoken very highly of, which has influenced her to begin writing more of it." 03/12/2003 Torrance, eA

"Remind her of the new indication/usage of Advair 100/50 for her patients suffering from mild to severe cases of asthma." 06/24/2004 Long Beach, eA

"Asked docs to try Advair lrst line rather than Flovent" 09/7/2004 Revere, MA

" ... discussed no reason not to put pts on Advair more effective in reducing albuterol use and increase in symptom free days." 03/3112005 Weston, FL

216. GSK's promotion convinced doctors that Advair was safer and more effective

than it really was and thereby caused them to use Advair not only for non-medically accepted,

off-label uses in asthma patients, but also for other off-label respiratory conditions, such as

bronchitis, coughs, common colds and wheezing.

217. GSK also did not train its sales representatives to relay the contrary "important

limitation of use" in Advair's label, which restricted Advair use by those who could not be

controlled on res even with occasional use of SABAs.

218. In 2006, GSK, knowing that it was under federal investigation and that the

government investigators were looking at call notes as a source of evidence, modified its call

note system to use a drop-down menu of approved core messages and anticipated and desired

responses from the physicians. Sometimes there was also a small space for additional comments.

Nonetheless, even in this pre-scripted system, GSK included as one of its approved core

messages that Advair delivered "more symptom free days" than other asthma products, including

res, even though it had not proven such superiority for most patients. Furthermore, in the

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section for desired physician responses, GSK listed the response "will use first line."

219. Fallowing the implementation of this system, in thousands of call notes, GSK

sales representatives reflected that they delivered the approved core message of"Advair Diskus

delivers more symptom free days" and in many instances reflected that the physician gave the

response agreeing to use Advair "first line." Below are a few examples of this pattern:

"ADVAIR DISKUS ASTHMA: Approved Core Message(s) Delivered: Physician's Response: Will use first line uncontr mild persis." 06/5/2006 Boca Raton, FL

"ADVAIR DISKUS ASTHMA: Approved Core Message(s) Delivered: ADVAIR DISKUS? delivers more symptom free days. Physician's Response: ... Will use first line for persistent asthma." 06/13/2006 Schwenksville, P A

"ADV AIR DISKUS ASTHMA: Approved Core Message(s) Delivered: ADV AIR DIKUS 100/50 delivers superior symptom control. Physician's Response: Challenge/issue for physician Guidelines + ICS 1st ... Will use first line." 06/04/2007 Teleford, PA

"ADVAIR DISKUS ASTHMA: Approved Core Message(s) Delivered: Advair Diskus 100/50 delivers superior symptom control. Physician's Response: Will use first line keep smoke pts on it." 06/20/2007 Orlando, FL

220. In 2009, the Executive Director of Advair Marketing emailed "innovative ideas"

from a senior manager including once again recommending Advair for all patients: "[M]y

favorite thing to say is 'Step 3 [for moderate asthma patients under the NIH guidelines] with

ADV AIR is just a starting place'. Why wouldn't you give it to everyone. Guidelines are just that

- guidelines. . . . I am just being honest with what works. You can't argue with our success."

G. GSK Made Additional False and Misleading Statements about Advair.

221. GSK also promoted Advair with other false and misleading claims, including:

(1) purporting to quote the NIH Guidelines' recommendation that physicians aggressively treat asthma to "gain control quickly" of symptoms, while ignoring-and omitting from quotes in printed materials-the second half of the sentence that states patients should be frequently reevaluated to see if they can be "stepped-down" to less medication;

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(2) advising physicians that they should not step patients down from Advair because doing so could result in a loss of control over the patients' asthma, even though this advice is directly contrary to the NIH Guidelines and good medical practice;

(3) promoting Advair as a means to reduce steroid use, a claim rejected by the FDA in 2003. In just the last half of 2003, GSK budgeted over $5 million to train speakers and held thousands of "faculty led teleconferences" on topics including steroid sparing;

( 4) promoting Advair to avoid "airway remodeling" in the lungs from asthma, despite a lack of substantial evidence or FDA approval for such a claim;

( 5) promoting Advair with the unsubstantiated claim of "increased patient compliance" despite a lack of evidence or FDA approval for this claim;

(6) promoting Advair as more "cost-effective" despite a lack of evidence or approval for this claim, the fact that Advair cost nearly twice as much as ICS alone, the increased the risk of Advair-related exacerbations and death, and the fact that Advair was not approved or medically accepted for mild first line use;

(7) promoting Advair 500/50 ("Advair 500") for COPD patients, even though the FDA refused to approve Advair 500 for COPD, finding that it was not an approvable dose for safety and efficacy reasons. Studies showed that the COPD patients treated with Advair had a higher incidence of respiratory tract infections and pneumonia. COPD patients treated with Advair 500 also showed no documented benefit over those treated with the lower dose; and

(8) promoting Advair 500 for COPD and with misleading information regarding its efficacy. Even though the FDA denied the "mortality" claim and approval for the 500 dosage for COPD because Advair 500 continued to increase patients' risk of pneumonia, GSK nonetheless promoted Advair 500 for COPD patients.

222. To drive sales of Advair for COPD, GSK also engaged in an "only 1" campaign

to promote Advair for COPD patients who had previously had only one exacerbation. In April

2008, the FDA approved Advair Diskus 250/50 for the reduction of exacerbations in patients

with COPD with a history of exacerbations.

223. To support its "Only One" campaign, GSK made false and misleading statements

about the American Thoracic Society Treatment Guidelines for COPD (the ATS Guidelines).

The ATS Guidelines recommend an ICS/LABA combination for COPD patients with one prior

exacerbation only ifthe patient also has a FEV (forced expiratory volume) ofless than 50%,

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which is categorized as severe eOPD. GSK trained its representatives to omit this important

requirement and instead state that ATS guidelines recommend Advair for eOPD patients who

had "only one" exacerbation, thereby promoting Advair for milder eOPD patients, contrary to

ATS guidelines. GSK gave sales representatives buttons to wear with the phrase "Only One."

224. Moreover, when a sales representative questioned this message as "not true," a

GSK marketing manager nonetheless encouraged the use of the false message with primary care

physicians who were unlikely to perform the FEV test. She thus acknowledged that GSK was

promoting Advair for eOPD to doctors who did not have the tools to diagnose eOPD.

225. GSK continued to direct its sales force in sales training to deliver this false and

misleading message to physicians through at least the spring of2010.

H. GSK Made False and Misleading Statements to Medicaid Programs to Prevent Medically Appropriate Restrictions on Advair Reimbursement.

226. GSK presented false and misleading information directly to the Medicaid

programs to block step edits and prior authorization requirements for Advair that would have

restricted non-medically accepted off-label use-edits such as requiring a patient to try an res

before a LABA-containing product, such as Advair, unless the physician diagnosed the patient as

having moderate to severe asthma.

227. GSK made the false and misleading claims described above, including the

statements regarding control, superiority to res, mortality, and albuterol refills, directly to

Medicaid program representatives. GSK also made unfounded claims of Advair's cost-

effectiveness compared to res, despite the fact that Advair is much more expensive than res.

228. GSK also tied the payment of state supplemental rebates and discounts to

Medicare Part D drug plans to agreements by Medicaid programs and insurance plans not to

"disadvantage" Advair with prior authorizations, step edits or requirements that patients first fail

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to be treated sufficiently by other drugs. As a general matter, GSK paid certain supplemental

rebates on its products only if Medicaid agreed not to place restrictions on its products. Here,

however, the proposed restrictions would have only brought recommended usage in line with the

FDA-approved indication and NIH Guidelines. Thus, GSK used its rebate payments to

encourage off-label use of Advair by penalizing efforts to limit Advair's use for Medicaid

patients to patients for whom it is indicated in its label.

229. GSK's State Government Affairs group closely monitored and attempted to defeat

state efforts to restrict off-label use, including step edits, in order to pursue its promotion of

unapproved first-line use and to ensure Medicaid programs paid for these uses. For example, in

2006, Arkansas Medicaid restricted first-line Advair use consistent with the March 2006 label.

Arkansas Medicaid determined that this restriction increased appropriate use of Advair and

decreased Advair utilization by 25% without adverse impact on patient care.

230. GSK internally called Arkansas' efforts to promote appropriate use of Advair as

an "infestation" and fought to remove Arkansas' step-edit because "these people [the state

Medicaid employees] talk" to each other. GSK internal documents stated: "We are facing a

Medicaid step edit in Arkansas. All levels of GSK are involved including [Senior Vice

President] Stan Hull." In 2008, it appears that GSK provided campaign donations to an

Arkansas legislator who introduced a bill to remove the step edit. One GSK employee wrote to

Stan Hull regarding GSK's Arkansas strategy: "Thanks for your time today and 'God save

political donations'." Exh. 36.

231. GSK viewed such restrictions on Advair as "not acceptable" from a business

perspective even though they encouraged more appropriate use of Advair and only would have

restricted unapproved uses of Advair. GSK implemented a "hold the line" strategy to prevent

other states from adopting step edits like Arkansas'. For example, Hull flew directly to an Ohio

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Medicaid meeting in an attempt to defeat a proposed step edit that was entirely consistent with

appropriate Advair use. GSK falsely argued that Advair "help[ ed] the State avoid costs

associated with asthma visits to emergency rooms across the State by Medicaid's asthmatic

patients." GSK's proposed alternative step edit (for any patient who had been prescribed a

SABA in the past year) was inconsistent with the FDA-approved label and recommendations of

the NIH Guidelines. Even though Ohio implemented its step edit, reducing off-label use of

Advair, GSK nominated the team that fought the step edit for a "Spirit Award" for delaying the

implementation of the step-edit by three months. Exh. 37.

I. GSK's False and Misleading Marketing Caused Massive Overutilization of Advair.

232. GSK's promotion of Advair was both fraudulent and effective.

233. Numerous studies have confirmed Advair's overutilization. Some studies have

shown that 50-90% of Advair asthma use is not justified by patients' medical history based on

national treatment guidelines and the Advair label.

234. GSK's claims that Advair is more cost-effective than other medications were not

only unapproved or unproven- they appear to be false. A 2010 Medea Health Solutions study

of initial maintenance therapies for asthma "found that the group on a combination ICS/LABA

had asthma-related pharmacy costs that were $215 more per patient per year than the ICS

monotherapy group." The study also states: "These findings confirm that ICS/LABA

combination use is prevalent in mild asthma patients and is associated with increased asthma­

related pharmacy and total healthcare costs with no observed clinical benefit."

23 5. A 2010 meta-analysis of studies on initial maintenance therapy by the Cochrane

Collaboration also found that such first-line use of Advair is not justified from a safety or

efficacy perspective: "In patients with asthma who require daily anti-inflammatory therapy, there

is insufficient evidence to support initiating therapy with a combination of inhaled

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corticosteroids (ICS) and long-acting B2-agonist (LABA) rather than with inhaled corticosteroids

alone." The analysis showed that "the combination ofiCS and LABA does not significantly

reduce the risk of patients with exacerbations requiring rescue oral corticosteroids over that

achieved with a similar dose ofiCS alone."

VI. GSK PAID KICKBACKS TO PHYSICIANS AND OTHERS TO INDUCE THEM TO PRESCRIBE AND RECOMMEND GSK DRUGS

236. In order to induce physicians to prescribe and recommend its drugs, GSK paid

kickbacks to health care professionals in various forms, including speaking or consulting fees,

travel, entertainment, gifts, grants, and sham advisory boards, trainings and continuing medical

education (CME) programs. These payments induced physicians to prescribe GSK's products,

including specifically Paxil, Wellbutrin and Advair, for both on and off-label uses. GSK

provided budgets to the sales teams to entertain and pay physicians to induce them to prescribe

and promote GSK' s drugs. The allocation of "customer focus funds" for each sales district

ranged from $600,000 in 2002 to $300,000 in 2008. Of these funds, each GSK sales

representatives received between $15,000 to $30,000 per year to spend on speaker programs,

including breakfasts and lunches at physician offices. In a New England regional marketing

plan, GSK instructed its sales force on how to use entertainment as follows:

Extra entertainment is highly recommended to reach as many ADVAIR targets as possible. Any form of entertainment should be utilized (in accordance with the AMA guidelines) and a speaker is not required. (Lunches, Clinic Round Tables and Speaker Programs are not considered extra entertainment. Extra entertainment is defined as taking a customer to dinner or a venue after business hours E.G. attending the Circuit with a large ADVAIR target). This type of activity will help you increase your business and total number of scripts for the national incentive program. [picture of dollars] On a regional basis any representative that does more than 2 entertainment programs in one week will receive a $100 American Express Gift Cheque from their manager. We will track these programs in the regional score card.

23 7. In some instances, GSK required sales representatives to track prescribing of

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attendees after the entertainment events in order to demonstrate return on investment ("ROI")

from the event. For example, the Northeast region purchased tickets to Fleet Center events such

as Celtics and Bruins games at a cost of approximately $350 per premium seat. The managers

instructed the representatives that "[f]or ROI it's imperative only KEY Customers attend these

valuable venues," and required the representatives to complete a prescription tracking form four

months after the event "to ensure ROI and continued funding .... " Exhs. 38-39.

238. For each drug, GSK also created a group of national "key opinion leaders"

("KOLs") who were paid generous consulting fees. GSK selected many of these physicians

based on their prescribing habits and influence within the community and used the speaker fees

paid to these physicians to induce and reward prescribing of GSK' s products. GSK used these

individuals to communicate marketing messages focused on the drugs' marketing campaigns at

the time, including off-label uses. Some physicians on GSK's speaker's board have been paid

more than a million dollars for speaking on behalf of the company and recommending its drugs.

239. GSK's sales representatives reflected in their call notes their use of money, gifts,

entertainment and other kickbacks to induce doctors to prescribe GSK drugs, including:

"invited to sib at clearwater will come doc very into QUID PRO QUO wants to be taken care of for his business. said not into food but likes sports and programs even into li ducks baseball. using wb sr for add on mostly not 1 line use said that will come as relationship grows" 2/20/01 Central Islip, NY

"I took him to a Cardinals ball game. We had a great time. He is a Cub fan and his wife is a Cards fan. The Cards won but he still had a great time. He is detail sensitive but I did what I could, When I asked for the business he laughed. I didnt really see the humor in it. How could he think I wouldn't ask for the business when I've treated his family to a day at the ball park. Oh well. I'll see what else I can do to try to influence him." 9/17/00 Decatur, IL

"Tkts to Crosby Still Nash. Asked for business in return ... " 3/30/00 Oakland Gardens, NY

" ... told him no gol[f] unless we se more scripts for srI need to see a better roi from him he agreed ... " 4/7/00 Mansfield, OH

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"took him to lunch and golf lesson ... gained commitment to increase his use. will do this every three weeks, great ROI, very cheap." 5/9/01 Quinton, VA

One doctor in Rockledge, Florida during 2000 and 2001: "gave dr. his Nascar tickets .. .I will be going back at dr. for a return on investment"

"followed up from sending dr. to the race, he was very appreciative, I asked that he thank mew/ wsr scripts ... "

"promised to use more wsr since we sent him to the races ... "

"told him he's going to the pepsi 400 on WSR ... asked him to rx w/ both hands ... "

"attended Rockies game. asked him to prefer GSK products in return, said he will." 4110/01 Aurora, CO

" ... will attend knicks-nets game. asked him to help us out in return" 2/4102 North Bergen, NJ

". . . Came out and asked me if I would still be interested in taking him fishing w/Dr. Fazal, Kahn, etc. . . HOW BOUT WRITING SOME SCRIPTS AND WE'LL GO FISHING ALL YOU WANT." 8/10/01 Escanaba, MI

"discussed fishing when the $ comes back - asked for the business point blank" 7/10101 Clearwater, FL

" ... He said he has been writing tons of SR with good results. He isn't kidding. His new scripts are almost 20%. That's almost 3000. That's a big change .... I have spent a lot of money on him and it has paid off." 5/3/01 Decatur, IL

"Great call with Dr. J He enjoyed the pheasant hunt and would like to go again also he likes to fish leverage imitrex wellbutrin and valtrex business to get him to write more to go on our activity program trips he will help us" 3/8/01 Dothan, AL

"Dr.[ ] now has a 15.5% MS for WBSR. I guess the tennis lessons helped." 1128/02 Glen Cove, NY

"Need to get his mkt shr up, all he wants to talk about is money and where we can send him. Asked to him to use more wsr." 5/15/02 Shreveport, LA

"he wants to go to dinner programs and out of town meeting if can. he really can be bought. said he is using more well 100 in the peds which is mainly what he sees. didn't need any samples" 2/28/01 Knoxville, TN

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"always wants money. was giving wsr to a patient when I walked in .. showed me the script." 2112/02 Fort Walton Beach, FL

"Asked me about any upcoming programs--he said he could take care of us if we take care of him. wants to go somewhere for advisory boards or something like that)" 6/4/03 Gonzales, Louisiana

"Wanted WXL for herself. Told her that I need scripts and switches in return." 12/10/03 Fort Pierce, Florida

A. GSK Promoted Off-Label Uses Through "Special Issue Boards" Which Paid High­Prescribing Physicians To Listen To Improper Promotional Claims

240. During 2000 and 2001 at least, GSK also utilized events termed "advisory

boards" or consultant meetings and forums to disseminate its promotional messages. Although

these boards were purportedly comprised of"thought leaders" for the purpose of obtaining

advice from the physician, in fact, the "advisory" boards were little more than promotional

events coupled with financial inducements to prescribing and influential physicians.

241. GSK invited and paid high-prescribing physicians at these events to listen to off-

label promotion and/or to influence their prescribing practices. GSK held hundreds of "Special

Issue Boards" or "SIBS" across the country. Indeed, in the first six months of2001, for

example, GSK held twenty WBSR "advisory" boards in and around the Philadelphia area alone.

242. GSK typically paid the physician between $250 and $750 each to attend a local

"advisory" meeting. The payments did not reflect the value of services. The physician was not

required to do anything but show up. GSK had no legitimate business reason to hire thousands

of "advisors" to "consult" with the company about a single drug. GSK used these events as a

reward or kickback to induce the attendees to prescribe and recommend GSK drugs.

243. The "advisory" meetings were often conducted over dinner at top local restaurants

or hotels or in weekend retreats. At a typical "advisory board" meeting, physicians would listen

to presentations about GSK's drugs, including their off-label uses. The "advisory" board

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speakers-Drs. Pradko, Hudziak, Green and others-were often paid $2,000 to $3,000 to

moderate the events with their standard presentation.

244. GSK records before and after such advisory boards demonstrate the plan to use

these and other entertainment to influence the physicians, rather than to gain advice. For

example, the following are comments of the sales representatives about the attendees of a Special

Issue Board held on July 14, 2001 in Philadelphia moderated by Dr. James Hudziak.

As to one doctor in the Philadelphia area:

• "Flyers game. Will carbon every well sr script to prove to me how much he is using. Said he will now have to start writing more ... " 02/27/2001

• "Admits to using a lot of samples for some indigent patients, or until they patients receive script in mail. I still am curious as to where all well sr rxs are going because we are not seeing them." 05/02/2001

• "well sr-he attended dr hudziak prog. He wrote 92 well sr scripts ... " 07/20/2001

As to another doctor in Philadelphia, P A:

• " ... uses it in combo and first line, for ADD, etc ... has heard Hudziak speak at SIB ... invited him to RAB [Regional Advisory Board] but need to confirm that there is no conflict due to the fact that he's heard Hudziak before .. .is only interested in attending programs where he gets paid .. geee, go figure!" 06/28/2001

• "quick stop in to let dr know he is confirmed for RAB ... no conflict w/ his prior participation at SIB" 06/29/2001

• "gaining good access to dr's ... talked about prior auth ... annot make dave s program. maybe next yr if we do one." 11/21/2001

245. GSK representatives around the country also reflected in their call notes

their use of sham consulting arrangements like SIBs to promote their products, including:

"Had good discussion with Dr. [ ] on all products. Wants to plan a fishing trip ... Dr. [ ] will research places and costs, and we'll do it as a program or sib." 5/30/01 Spencer, IN

" ... He certainly doesn't like to be talked to about products. I need to be more

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sneaky. Such as the SIBS program." 1/30/01 Bend, OR

"loved the sib. leaned a lot of new info about migraine and exercise. told me he wrote two new imitrex scripts this week. It is all about the one hand washes the other with this guy. I am totally fine with this because that is why we have a budget!!. .. " 3/16101 Danville, IN

"She has received her honorarium for the Pride program and she said she has used a lot of WSR recently. uses it as add on and also in obese pts. Said SIB changed her rx habits .... " 1214101 Saxonburg, PA

"Gave him his SIB check. He said I made his day. I requested him to make my days by giving me just 10% more pf his Imitrex & Wellburtin prescriptions." 11/16/01 Huntington, NY

"Spoke at SIB. did a fantastic job. Should see big ROI" 2/15/01 Hackensack, NJ

246. Not all doctors, however, were susceptible to this tactic. One representative

bemoaned: "he is killing me, wont come to SIB, thinks of it as a bribe." 4/16/01 Alton, IL

B. GSK Paid Kickbacks Through CME and Other Sham Trainings

247. GSK also used so-called CME and CME Express programs and other sham

trainings for marketing purposes, and to promote off-label uses for the GSK prescription drugs.

248. For example, in or about 2000 and 2001, GSK used "Reprint Mastery Training

Programs" or "RMTS" to further promote its drugs by purporting to pay physicians to train sales

representatives on clinical reprints. To do an RMT, a GSK representative set up "training

sessions" with physicians to review reprints of studies. Although the training was purportedly

for the representatives, in fact, the sales force was already familiar with the materials. GSK

typically paid physicians $250 to $500 to review the reprints.

249. GSK representatives used these presentations to pay the physicians to review off-

label articles. For example, in the case ofWBSR, reprint training covered such materials as the

Gadde weight loss study and a study of WBSR to treat sexual dysfunction.

250. Sales representatives also touted their use of these reprint programs to disseminate

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off-label information and induce doctors to prescribe, with comments such as:

"both sib and rmt has increased his scripts, uses wellsr much more and anxiety is not a concern ... " 7117 /OJ Union, NJ

"RMT with doc- went over ADHD and weight loss data." 8/27/01 Metuchen, NJ

"Confirmation of wellsr rmt check, planted seed with Madonna tickets that he is probably getting 2, therefore needed more support" 7/16101 Iselin, NJ

"reinforced everything we had done for him and we need his business now" 2/23/01

"gave him reprint check told him we need a good roi for our efforts and need him to write our products exclusively agreed and said he would" 3/9/01 Orrville, OH

251. These CME programs purported to be independent education free of company

influence, but in fact functioned as GSK promotional programs disguised as medical education.

GSK maintained control and influence over the purportedly independent CME programs through

speaker selection, and influence over content and audience, among other things. Although third

party vendors were usually also involved, they served only as artificial "firewalls" that did not

insulate the program from GSK' s influence.

252. GSK also used the "speaker" payments for CME programs to reward physician

loyalty and induce increased prescriptions. Physicians trained at GSK "speaker training"

programs often doubled as CME presenters, giving substantially the same presentation as they

did for the GSK speaking events. For example, Dr. Pradko's standard lecture at GSK sponsored

talks was essentially the same presentation that he made at GSK-funded CME programs.

253. In or about 2001, GSK initiated a "CME Express" program, funded by GSK's

Marketing Department, which offered CME credits for attendance at GSK-sponsored events.

CME Express was not independent of GSK' s influence. The content was often reviewed and

approved by GSK representatives. GSK sales representatives selected the speaker, chose the

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date and venue, and targeted potential attendees for invitation.

254. GSK used CME Express honoraria as a way to reward physicians and to induce

prescriptions. For example, a GSK representative noted that he would "work on setting [a doctor

in Knoxville] up to speak for us possibly as CME express speaker on roundtable presentation to

his own group over lunch. $'s may be the way to his business." Another representative noted

about a doctor in Maryville, Tennessee: "he wants money in his pocket. scheduled lunch. []see if

he wants to do a wellbutrin erne express for his office."

VII. THE FEDERAL HEALTH CARE PROGRAMS

A. The Medicaid Program

255. The Medicaid program is a joint federal-state program that provides health care

benefits for certain groups, primarily the poor and disabled. Each state administers a state

Medicaid program and receives funding from the federal government, known as federal financial

participation, based upon a formula set forth in the federal Medicaid statute.

256. Before the beginning of each quarter, each state submits to CMS an estimate of its

Medicaid funding needs for the quarter. CMS reviews and adjusts the quarterly estimate as

necessary, and determines the amount of federal funding the state will be permitted to draw

down as the state actually incurs expenditures during the quarter (for example, as provider claims

are presented for payment). After the end of each quarter, the state submits to CMS a final

expenditure report, which provides the basis for adjustment to quarterly federal funding.

257. The federal Medicaid statute sets forth the minimum requirements for state

Medicaid programs to qualify for federal funding. 42 U.S.C. § 1396a. It also requires each

participating state to implement a plan containing certain specified minimum criteria for

coverage and payment of claims. 42 U.S. C. §§ 1396b, 1396a(a)(13), 1396a(a)(30)(A).

258. While federal drug coverage is an optional benefit available to the states, most

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states provide coverage for prescription drugs that meet the definition of a covered outpatient

drug, which is defined in the federal Medicaid Rebate Statute, 42 U.S.C. § 1396r-8(k)(2).

259. The Medicaid Rebate Statute generally prohibits federal payment for a covered

outpatient drug unless the manufacturer enters into a rebate agreement with HHS. Once a

manufacturer has entered into a drug rebate agreement, a state is generally required to cover the

covered outpatient drugs of that manufacturer under the state plan unless "the prescribed use is

not for a medically accepted indication." 42 U.S.C. § 1396r-8(d)(l)(B)(i).

260. With certain limited exceptions not pertinent here, a prescription drug cannot be

distributed legally in interstate commerce without first being approved by the FDA as safe and

effective for a particular use. To gain FDA approval for a particular use, data from adequate and

well-controlled clinical studies must demonstrate that the drug is safe and effective for the

proposed use. As part of the approval process, the FDA also must approve the drug's labeling,

which sets forth detailed information about the drug, including the approved conditions of use,

dosages, and patient population(s). The drug's manufacturer cannot lawfully distribute or cause

the distribution in interstate commerce of a drug that it intends to be used for an unapproved

purpose or in a manner inconsistent with the drug's approved labeling, and cannot make or cause

to be made false or misleading claims about the drug.

261. The Medicaid Rebate Statute defines "medically accepted indication" as any FDA

approved use or a use that is "supported by one or more citations included or approved for

inclusion in any of the compendia" set forth in the statute (i.e., Drugdex, American Hospital

Formulary Service, and U.S. Pharmacopeia-Drug Information). 42 U.S.C. § 1396r-8(k)(6).

262. Thus, even if a drug is FDA-approved, Medicaid ordinarily docs not cover off­

label uses of the drug that are not supported by one or more citations included or approved for

inclusion in the specified compendia.

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263. The Federal Anti-kickback Statute, 42 U.S.C. § 1320a-7b(b) ("AKS") prohibits

any person or entity from offering, making, or accepting payment to induce or reward any person

for referring, recommending, or arranging for the purchase of any item for which payment may

be made in whole or in part by a federal health care program.

264. Medicaid does not cover claims for services or products where there has been a

kickback relating to the underlying transaction. Any provider who submits claims to Medicaid

must sign a provider agreement with each Medicaid program to which it submits claims.

Massachusetts regulations, for example, provide that: "All pharmacies participating in

MassHealth must comply with the regulations governing MassHealth, including but not limited

to MassHealth regulations set forth in 130 CMR 406.000 and 450.000." The Massachusetts

regulation at 130 CMR 450.261 provides: "All members and providers must comply with all

federal and state laws and regulations prohibiting fraudulent acts and false reporting, specifically

including but not limited to 42 U.S.C. 1320a-7b [the federal anti-kickback statute]."

B. The Medicare Program

265. The Medicare program pays for the costs of certain health care services and items

for eligible beneficiaries based on age, disability or affliction with end-stage renal disease.

Generally, no payments may be made under Medicare for expenses incurred for items and

services that are not "reasonable and necessary" for the diagnosis and treatment of an illness. 42

U.S.C. § 1395y(a)(l)(A).

266. ln 2003, Congress amended the relevant statutes to create Medicare Part D, which

provides additional optional drug coverage for Medicare beneficiaries. Under the Part D benefit,

a "covered part D drug" means, in relevant part a drug that is approved by the FDA and is used

for a "medically accepted indication." 42 U.S.C. § 1395w-102(d)(l) & (e)(4)(A)(ii) (citing 42

U.S.C. § 1396r-8(k)(6)). A medically accepted indication is defined as any use which is FDA-

72

approved or which is supported by one or more citations included or approved for inclusion in

one of three specified drug compendia. Generally, Part D coverage is provided by sponsors who

contract with CMS to provide such coverage and are responsible for making coverage

determinations in accordance with the statutes and regulations.

267. Medicare does not cover claims for drugs and/or physician services where there

is a kickback involved in the underlying transaction. Claims submitted to federal health care

programs where a kickback paid or accepted relating to the transaction are false under the FCA.

268. Providers that seek to bill Medicare must sign a Provider Agreement that states:

I agree to abide by the Medicare laws, regulations and program instructions that apply to [me] . . . . I understand that payment of a claim by Medicare is conditioned upon the claims and the underlying transaction complying with such laws, regulations and program instructions (including, but not limited to Federal anti-kickback statute and the Stark law), and on the [provider's] compliance with all applicable conditions of participation in Medicare.

C. GSK's False, Misleading and Illegal Marketing Caused the Submission of False and Fraudulent Claims to Federal Health Care Programs

269. GSK's promotion of its drugs described above was both fraudulent and effective,

utilizing false and misleading statements and claims and kickbacks to cause doctors to prescribe

GSK's drugs and federal health care programs to pay millions of dollars in false and fraudulent

claims. Exhibit 39 is a sample of the claims submitted to federal health care programs for

reimbursement of Paxil for patients under 18. Exhibit 40 is a sample of claims for WBSR for

patients under 18 and for other off-label and non-medically accepted uses. Exhibit 41 is a

sample of the claims submitted to federal health care programs for reimbursement of Advair for

asthma patients who did not have a demonstrated need for Advair. These patients had no claims

for an ICS in the past year, no diagnosis code for COPD and no markers of moderate to severe

asthma i.e. no asthma-related hospital or ER visits in the previous month and either A) only 1 or

2 claims for SABA in the past year or B) no prior asthma medications in the past year. Exhibit

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42 is a sample of claims submitted to federal health care programs for reimbursement of Advair

for patients who did not even have a diagnosis of asthma or COPD. Through the false and

misleading marketing schemes and kickbacks detailed herein, GSK caused these drugs to be

prescribed for these uses.

270. Through payment of kickbacks described above to prescribers ofWBSR, Advair

and Paxil, GSK also caused the claims to federal health care programs for reimbursement of the

GSK drugs subsequently written by those prescribers and for the prescribers' services connected

with the selection of the GSK drugs to be false and fraudulent claims.

COUNT I: FALSE CLAIMS ACT (PRESENTMENT OF FALSE CLAIMS)

271. The United States hereby incorporates by reference the documents and exhibits

attached, recited or referenced in the Relators' Complaints in these four consolidated matters.

272. The United States realleges the preceding paragraphs as if fully set forth herein.

273. GSK's false and fraudulent statements, including with respect to the safety and

efficacy, superiority, and medical necessity and appropriateness of its drugs, to the public, to

patients, to physicians and directly to Medicaid and other federal health care programs, were

material to the physician's decisions to prescribe these drugs and the United States' decision to

pay claims for these drugs and related services.

274. GSK knowingly caused to be presented false or fraudulent claims for payment or

approval to the United States in violation of 31 U.S.C. § 3729(a)(l)(A), including

(a) claims for drugs caused by GSK' s illegal promotion of its products as set forth above, samples of which are set forth in Exhs. 40-43; and

(b) claims for physician services by physicians who had received the improper inducements from GSK alleged above.

275. By virtue of the false or fraudulent claims that GSK caused to be made, the

United States suffered damages in an amount to be determined at trial.

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COUNT II: FALSE CLAIMS ACT (FALSE STATEMENTS)

276. The United States realleges the preceding paragraphs as if fully set forth herein.

277. As set forth above, GSK knowingly made and caused to be made or used false

and/or fraudulent statements or records material to false and/or fraudulent claims and/or to get

these claims paid or approved by the United States, in violation of 31 U.S.C. § 3729(a)(1)(B) and

former 31 U.S.C. § 3729(a)(2)\ including

(a) claims for drugs caused by GSK's illegal promotion of its products as set forth above, samples of which are set forth in Exhs. 40-43;

(b) claims for physician services by physicians who had received the improper inducements from GSK alleged above.

278. By reason of these payments, the United States has been damaged in an amount to

be determined at trial.

COUNT III: UNJUST ENRICHMENT/DISGORGEMENT

279. The United States realleges the preceding paragraphs as if fully set forth herein.

280. As a consequence of the acts set forth above, GSK was unjustly enriched and

received illegal profits. The United States conferred benefits upon GSK, GSK knew of and

appreciated these benefits, and GSK's retention of these benefits under the circumstances would

be unjust as a result of its conduct.

281. The United States therefore claims the recovery of all monies by which GSK has

been unjustly enriched and has illegally profited, in an amount to be determined, which in equity

1 The Fraud Enforcement and Recovety Act of 2009 ("FERA''), Pub. L. No. 111-21, 123 Stat. 1617 (May

20, 2009), modified and renumbered the subsections of31 U.S.C. § 3729(a) of the False Claims Act, "to reflect the

original intent of the law." ld. § 4, 123 Stat. 1621. Among other things, FERA modified former section 3729(a)(2)

to impose civil liability on any person who "knowingly makes, uses, or causes to be made or used, a false record or

statement material to a false or fi'audulent clain1." Id. (recodifYing section 3729(a)(2) as 3729(a)(1)(B)). Although

FERA generally applies only to conduct occurring on or after the date of its enactment, Congress specified that

Section 3729(a)(1)(B) "shall take effect as if enacted on June 7, 2008, and apply to all claims under the False Claims

Act. .. that are pending on or after that date." 123 Stat. 1625.

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should be paid to the United States.

PRAYER FOR RELIEF

WHEREFORE, the United States seeks against GSK the following:

1. On Counts One and Two under the False Claims Act, the amount of the United

States' damages, trebled as required by law, and such civil penalties as are required by law,

together with all such further relief as may be just and proper.

2. On Count Three for unjust enrichment/disgorgement, the damages sustained

and/or amounts by which GSK was unjustly enriched or obtained illegally, plus interest, costs,

and expenses, and all such further relief as may be just and proper.

DEMAND FOR JURY TRIAL

The United States demands a jury trial in this case.

Dated: October 26, 2011

Respectfully submitted,

TONY WEST ASSISTANT ATTORNEY GENERAL

SARA MIRON BL OM Assistant United States Attorney United States Attorney's Office 1 Courthouse Way, Suite 9200 Boston, MA 02210 (617) 748-3366

JOYCE R. BRANDA JAMIE ANN YA VELBERG ANDY J.MAO DOUGLAS J. ROSENTHAL Attorneys, Civil Division United States Department of Justice P.O. Box 261, Ben Franklin Station Washington, D. C. 20044 (202) 616-0539

76

UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS

Crim. No. UNITED STATES OF AMERICA

v. Violations: 21 U.S.C. §§ 331(a} ,333(a} (1}, 352 (Misbranding}

GLAXOSMITHKLINE LLC

Defendant 21 U.S.C. §§ 331(e} ,333 (a} (1}, 355 (k} (1} (Failure to Report Data to FDA}

INFORMATION

The United States Attorney charges that:

GENERAL ALLEGATIONS

At all times material hereto, unless otherwise alleged:

1. From 1999 through 2003, GLAXOSMITHKLINE LLC or entities

for which it is the corporate successor (hereinafter "GSK"}

promoted the sale of its drugs Paxil and Wellbutrin for uses

other than those approved as safe and effective by the Food and

Drug Administration ("FDA"}. Specifically, GSK

a. promoted Paxil for children and adolescents, and

b. promoted Wellbutrin for weight loss, the treatment

of sexual dysfunction, substance addictions, Attention Deficit

Hyperactivity Disorders, among other unapproved uses.

2. From 2001 through September 2007, GSK failed to report

data relating to clinical experience and other data and

information as required by law, regarding Avandia, a diabetes

medication, to the FDA.

The Defendant

3. Defendant GSK was a pharmaceutical company originally

organized as a corporation under the laws of Pennsylvania, and

later converted to a Delaware Limited Liability Company,

GlaxoSmithKline LLC. GSK's operational headquarters were in

Philadelphia, Pennsylvania, and Research Triangle Park, North

Carolina. GSK manufactured, distributed, and sold pharmaceutical

drugs for human use, including for sale and use in Massachusetts.

The FDA and the FDCA

4. The FDA was the federal agency of the United States

responsible for protecting the health and safety of the public.

The FDA was responsible for enforcing the Food, Drug, and

Cosmetic Act ("FDCA") and ensuring, among other things, that

drugs intended for use in humans were safe and effective for

their intended uses and that the labeling of such drugs contained

true and accurate information.

5. With certain limited exceptions not pertinent here, a

drug could not be distributed in interstate commerce without FDA

approval. To gain FDA approval, data from adequate and well­

controlled clinical studies had to demonstrate that the drug

would be safe and effective for a particular use. As part of the

approval process, the FDA had to approve the drug's labeling,

2

which was required to set forth detailed information about the

drug, including the approved medical conditions of use, dosages,

and patient population(s).

6. Once the FDA found a drug to be safe and effective for

a particular use and approved it for that use, doctors were free

to exercise their medical judgment to prescribe the drug for

other, unapproved (or "off-label") uses.

7. Under the FDCA, however, the manufacturer could not

lawfully market and promote the drug for off-label uses.

8. The FDCA provided that a drug was misbranded if, among

other things, "its labeling is false or misleading in any

particular." 21 U.S.C. § 352(a). Labeling includes written,

printed, or graphic information on or accompanying a drug,

including information that explains the uses of the drug and is

used in connection with the sale of the drug, whether or not it

physically accompanies the drug when distributed. False and

misleading safety and efficacy claims in a drug's labeling

rendered the drug misbranded.

9. The FDCA also provided that a drug was misbranded if

its labeling did not bear "adequate directions for use." 21

u.s.c. § 352(f) (1). As the phrase was used in the FDCA and its

regulations, "adequate directions for use" meant directions under

which a layperson could use a drug safely and effectively for the

3

purposes for which it was intended. 21 C.F.R. § 201.5. A

prescription drug, by definition, could not bear adequate

directions for use by a layperson, but an FDA-approved

prescription drug, bearing the FDA-approved labeling, could be

exempt from the adequate directions for use requirement if it met

a number of conditions, including that it was sold only for an

FDA-approved use. A prescription drug that was marketed for

unapproved, off-label uses would not qualify for this exemption

and therefore was misbranded. 21 C.F.R. § 201.100.

10. The FDCA prohibited causing the introduction or

delivery for introduction into interstate commerce of, or

introducing or delivering for introduction into interstate

commerce, any drug that was misbranded. 21 U.S.C. § 331(a)

4

COUNT ONE - PAXIL

(Distribution of a Misbranded Drug: False and Misleading Labeling: 21 U.S.C. §§ 33l(a}, 333 (a} (1}, & 352 (a})

11. The allegations contained in paragraphs 1 and 3

through 10 are realleged and incorporated herein as if set forth

in full.

GSK'S OFF-LABEL PROMOTION OF PAXIL FOR CHILDREN AND ADOLESCENTS

12. GSK manufactured, distributed, and sold the

prescription drug Paxil for human use. Paxil was GSK's trade

name for the drug paroxetine hydrochloride. Paxil was part of a

class of drugs known as selective serotonin reuptake inhibitors

( "SSRis") .

13. In December 1992, the FDA approved Paxil to treat

depression in adults. The FDA subsequently approved Paxil for

other uses in adults.

14. The FDA never approved Paxil for any purpose for

patients under age 18 ("children and adolescents").

15. GSK promoted the use of Paxil to doctors through a

sales force of approximately 1,900 sales representatives who made

personal visits ("sales calls") to doctors to encourage those

doctors to prescribe Paxil to their patients.

16. GSK sales representatives wrote •call notes" to

document what happened during their sales calls with doctors.

5

Once sales representatives entered their call notes into GSK's

computer system, the call notes could be read by the sales

representatives' colleagues and supervisors.

17. Paxil became one of the 10 top-selling drugs in the

United States and for a time the most commonly prescribed SSRI.

Paxil sales in the United States surpassed $1.8 billion per year

in 2001 and 2002.

Placebo-Controlled Clinical Trials

18. The safety and efficacy of pharmaceutical drugs were

tested in clinical trials or studies.

19. In a "placebo-controlled" clinical study, one group of

patients was treated with the drug being studied and another

group of patients received a placebo. A placebo looked like the

drug that was being studied, but contained no active ingredient.

20. In a "double-blinded" clinical study, neither the

patient nor the treating doctor knew whether the patient was

receiving the drug being studied or a placebo.

21. In a placebo-controlled clinical study, the efficacy of

a drug was measured by primary and secondary "endpoints" that

typically were identified before the study began in a protocol

prepared by the sponsor of the study. The primary endpoint or

endpoints were the main measures of whether the drug worked. The

secondary endpoints contained additional measures to assess the

6

drug's efficacy.

22. At the end of the study, the study was "unblinded" and

the results on the endpoints of patients who had received the

drug being studied were compared to the results on the endpoints

of the patients who received a placebo.

23. In determining whether a study had demonstrated a

drug's efficacy, the FDA typically looked at whether there was a

statistically significant difference on the primary endpoints

between the patients in the study who received the drug being

studied and patients in the study who received a placebo.

Three Clinical Studies Failed to Establish Paxil's Efficacy for Treating Depression in Children and Adolescents

24. Between 1994 and 2001, GSK conducted three placebo-

controlled clinical studies that studied Paxil's safety and

efficacy in treating depression in children and adolescents.

These studies were known as Study 329, Study 377, and Study 701.

25. Study 329 compared the efficacy of Paxil and a second

drug, imipramine, to placebo in treating depression in patients

age 12 to 18. Imipramine was part of a class of drugs known as

tricyclic antidepressants ("TCAs"). The acute phase of Study 329

began in April 1994 and ended in May 1997. GSK's internal

clinical report summarizing the results of Study 329 was issued

on November 24, 1998.

7

26. Paxil failed to demonstrate efficacy on Study 329's two

primary endpoints. Paxil also failed to demonstrate efficacy on

the five secondary endpoints identified in Study 329's protocol.

Paxil demonstrated efficacy on four other secondary endpoints

that were not identified in the protocol, but that were

identified as secondary endpoints by the clinical investigators

before Study 329's results were unblinded.

27. Study 377 compared the efficacy of Paxil to placebo in

treating depression in patients age 13 to 18. Study 377 began in

April 1995 and was completed in May 1998. GSK's internal

clinical report summarizing the results of Study 377 was issued

on November 19, 1998.

28. Paxil failed to demonstrate efficacy on any of the

primary or secondary endpoints in Study 377.

29. Study 701 compared the efficacy of Paxil to placebo in

treating depression in patients age 7 to 17. Study 701 began in

March 2000 and ended in January 2001. GSK's internal clinical

report summarizing the results of Study 701 was issued on July

30, 2001.

30. Paxil failed to demonstrate efficacy on any of the

primary or secondary endpoints in Study 701.

8

GSK Helped Write and Approved a Medical Journal Article Which Stated that Study 329 Demonstrated that Paxil Was Effective in

Treating Depression in Adolescents

31. GSK hired a contractor to help write an article about

the results of Study 329. The contractor wrote the first draft

of the article based on GSK's internal final clinical report on

Study 329. The contractor then incorporated into subsequent

drafts of the article revisions made by the clinical

investigators and a GSK employee involved in the study.

32. The article about Study 329 was published in July 2001

in the Journal of the American Academy of Child and Adolescent

Psychiatry ("JAACAP"). The article listed 22 authors, including

20 clinical investigators who were not GSK employees and two GSK

employees. In addition, the contractor was identified as having

provided "editorial assistance." GSK and the authors approved

the article before it was submitted to JAACAP.

33. The JAACAP article identified Study 329's two primary

endpoints. The JAACAP article also listed five secondary

endpoints "that were declared a priori." Three of these five

secondary endpoints were not identified before the study began,

but had been identified as secondary endpoints by the clinical

investigators before Study 329's results were unblinded.

Elsewhere, the article contained a chart that showed the results

of eight endpoints. The chart did not indicate which endpoints

9

were primary, which endpoints were identified as secondary in the

protocol before the study began, and which endpoints had been

added after the study had begun but before the results were

unblinded.

34. The JAACAP article was false and misleading. Although

the article's text identified the two primary endpoints and the

article's chart reported the results on those endpoints, the

article never explicitly stated that Study 329 failed to

demonstrate efficacy on either of its two primary endpoints. The

article at one point inaccurately stated that Paxil "separated

statistically from placebo" on a primary endpoint. The article

also did not explicitly state that Paxil failed to demonstrate

efficacy on all of the secondary endpoints that had been

identified in the protocol.

35. The JAACAP article presented the results of Study 329

as favorable, based on Paxil having demonstrated efficacy on the

four secondary endpoints that were not identified in the protocol

and which were added after the study had begun but before the

results were unblinded. The JAACAP article's abstract stated

that Paxil "is generally well tolerated and effective for major

depression in adolescents." The JAACAP article's conclusion

stated that "[t]he findings of this study provide evidence of the

efficacy and safety of the SSRI, [Paxil], in the treatment of

10

adolescent depression."

36. The article disclosed that serious adverse events

("SAEs") were experienced by 11 patients in Study 329 who

received Paxil, five patients who received imipramine, and two

patients who received the placebo. An earlier draft of the

article stated that of the 11 SAEs experienced by Paxil patients,

"worsening depression, emotional lability, headache, and

hostility were considered related or possibly related to

treatment." A GSK employee suggested that the contractor change

this section of the article. The revised version printed in

JAACAP stated: "Of the 11 patients [who had serious adverse

events while taking Paxil], only headache (1 patient) was

considered by the treating investigator to be related to [Paxil]

treatment. 11

GSK Used the Article in JAACAP to Promote Paxil for Children and Adolescents

37. The contractor hired by GSK to help prepare the medical

journal article provided drafts of the article to the head of

GSK's Paxil marketing team.

38. On or about August 16, 2001, GSK's Paxil marketing team

sent a copy of the JAACAP article to all of the approximately

1,900 GSK sales representatives who sold Paxil. A cover

memorandum summarizing the article (the "GSK Cover Memo") stated

11

in bold type:

This 'cutting-edge,' landmark study is the first to compare efficacy of an SSRI and a TCA with placebo in the treatment of major depression in adolescents. Paxil demonstrates REMARKABLE Efficacy and Safety in the treatment of adolescent depression.

39. The GSK Cover Memo also stated:

In conclusion, the findings of this study provide evidence of the efficacy and safety of Paxil in the treatment of adolescent depression. Here's another example of GlaxoSmithKline's commitment to Psychiatry by bringing forth •cutting edge" scientific data. Paxil is truly a REMARKABLE product that continues to demonstrate efficacy, even in this understudied population.

40. The GSK Cover Memo did not disclose that Paxil failed

to demonstrate efficacy on the protocol-defined primary and

secondary endpoints of the same study. The GSK Cover Memo also

did not disclose that GSK had completed two other studies that

also did not demonstrate that Paxil was effective in treating

depression in children and adolescents.

41. The GSK Cover Memo did not state that Paxil was not

approved for the treatment of children and adolescents. The GSK

Cover Memo stated that the article was for sales representatives'

information only and should not be used with or distributed to

doctors, and both the Cover Memo and the article were stamped

"FOR REPRESENTATIVES' INFORMATION ONLY."

42. Some GSK sales representatives used the JAACAP article

12

to urge doctors to prescribe Paxil to treat depression in

children and adolescents.

GSK Did Not Publicize the Results of Studies 377 and 701

43. GSK learned the results of Study 377 in 1998 and the

results of Study 701 in 2001. Paxil failed to demonstrate

efficacy on any of the endpoints in either study.

44. GSK did not hire a contractor to help write medical

journal articles about the results of Studies 377 and 701, as it

had with Study 329.

45. GSK did not inform its sales representatives about the

results of Studies 377 and 701.

Safety Issues

46. After GSK provided to the FDA the results of Studies

329, 377, and 701, as well as additional statistical analyses

performed by GSK, some of which suggested a possible increased

suicidality associated with Paxil use in patients under age 18,

the FDA conducted a broad inquiry into the safety of Paxil, other

SSRis, and other antidepressants to treat depression in patients

under age 18.

47. On or about June 19, 2003, the FDA recommended that

Paxil not be used to treat depression in patients under age 18.

48. On or about October 27, 2003, the FDA stated that

antidepressants should be used only with caution to treat

13

depression in patients under age 18.

49. On or about October 15, 2004, the FDA required all

antidepressants, including Paxil, to include on their labels a

"black box warning• stating that antidepressants increased the

risk of suicidal thinking and behavior in short-term studies in

patients under age 18.

GSK Provided Sales Representatives With Other Information Which Was Used to Promote the Use of Paxil in Children and Adolescents

50. In 1999, GSK created a 150-person neuroscience

specialty sales force to promote Paxil to psychiatrists. On or

about September 28, 1999, GSK paid a child psychiatrist, whose

research primarily dealt with patients under age 18, to speak at

the launch meeting of GSK's neuroscience specialty sales force.

According to a subsequent internal GSK newsletter reporting on

the event, this child psychiatrist discussed the results of Study

329 and said that GSK had a •window of opportunity.• According

to the internal GSK newsletter, this child psychiatrist told the

neuroscience sales representatives that, as a result of Study

329, "We can say that paroxetine has both efficacy and safety

data for treating depression in adolescents.•

51. On or about February 14, 2001, GSK sent a copy of a

medical journal article about the use of Paxil for adolescent

obsessive compulsive disorder ("OCD") to all of the approximately

14

1,900 GSK sales representatives who sold Paxil. An accompanying

memorandum summarizing the article stated: "This study suggests

that Paxil is an effective short-term treatment for OCD in

children [and] adolescents (aged 9-15 years) and has fewer AE's

[adverse events]." The memorandum stated that the information

was for sales representatives' information only and should not be

used with or distributed to doctors.

52. From 2000 to 2002, some GSK sales representatives used

information provided by GSK to urge doctors to use Paxil to treat

children and adolescents with depression, OCD, and other

psychiatric conditions.

GSK Used Paxil Forum Events to Promote Paxil for Children and Adolescents

53. GSK held eight "Paxil Forum" events at resorts in

Puerto Rico, Hawaii, and California in 2000 and 2001. GSK

invited psychiatrists who prescribed large amounts of SSRis to

attend the events. Each of GSK's approximately 150 neuroscience

sales representatives could attend up to two of the events per

year, and each representative could invite up to two different

psychiatrists to each event. The 3-day Paxil Forum events

included presentations about Paxil and other topics. The events

also included dinners and recreational activities such as deep

sea fishing, kayaking, snorkeling, sailing, horseback riding,

15

balloon rides, and golf. GSK paid for the psychiatrists' air

fare, lodging, meals, recreational activities, and provided to

each of them an honorarium of $750. The Paxil marketing team

organized, attended, and participated in the Paxil Forum events.

54. GSK paid a leading child psychiatrist to speak at four

of the eight Paxil Forum events in 2000 and 2001. At each of

these four Paxil Forum events, this child psychiatrist encouraged

other doctors to use SSRis to treat depression and social anxiety

disorder in patients under age 18. This child psychiatrist

claimed that patients treated with Paxil in Study 329 showed

"significantly greater improvement" than patients who received

the placebo.

55. To promote the use of Paxil in children and

adolescents, some GSK sales representatives purposely invited

psychiatrists with a significant percentage of patients under age

18 to attend the Paxil Forum events at which the child

psychiatrist recommended the use of SSRis for children and

adolescents.

56. Following the Paxil Forum events, some GSK sales

representatives gave doctors during sales calls copies of the

slides shown during the Paxil Forum events by the child

psychiatrist referenced in Paragraph 52 above. The slides

reported only select, favorable results from Study 329. The

16

slides did not report the unfavorable results from Study 329 or

other studies of Paxil's efficacy in treating depression in

children and adolescents. The slides also did not state that the

FDA had not approved the use of Paxil in patients under age 18.

The slides distributed by the GSK sales representatives were

false and misleading.

57. GSK monitored the prescriptions written by

psychiatrists who attended the Paxil Forum events in 2000 to

determine whether the events increased Paxil's market share. GSK

concluded that the Paxil Forum events in 2000 "had a significant

impact on Paxil market share in the months after attendance."

GSK found that the percentage of Paxil prescriptions relative to

other SSRI prescriptions prescribed by psychiatrists who attended

the Paxil Forum events in 2000 increased when compared to the

percentage prescribed by psychiatrists who had not attended the

Paxil Forum events. Individual GSK sales representatives

continued to monitor whether psychiatrists who attended the Paxil

Forum events in 2001 increased their Paxil prescriptions after

attending the events.

GSK Used Dinner Programs to Promote the Use of Paxil in Children and Adolescents

58. GSK sponsored dinner programs, lunch programs, spa

programs, and similar activities to promote the use of Paxil in

17

children and adolescents. At such events, GSK paid a speaker to

talk to an audience of doctors. GSK paid for the meal or spa

treatment for the doctors who attended. These events were

approved in advance by GSK's district sales managers and by GSK's

speakers bureau.

GSK Used Samples to Promote the Use of Paxil in Children and Adolescents

59. GSK provided each sales representative with a list of

doctors on whom the sales representatives should make sales

calls. The lists specified how frequently sales representatives

should make sales calls on each doctor. Sales representatives

were required to call most frequently on doctors who prescribed

the most SSRis.

60. GSK encouraged its sales representatives to give

doctors free Paxil samples during the sales calls. GSK's purpose

in distributing free samples was to allow doctors to start

patients on Paxil, with the hope that the patient would be

shifted to a paid Paxil prescription if the treatment was

successful.

61. Beginning in or around August 2003, GSK began

attempting to remove from its Paxil call lists doctors who

exclusively treated patients under age 18. This process

continued until at least on or about May 11, 2005. Thus, prior

18

to in or around August 2003, GSK required its sales

representatives to make sales calls on, and encouraged its sales

representatives to provide Paxil samples to, doctors who treated

only patients under age 18. There was no FDA-approved use for

Paxil in patients under age 18.

DISTRIBUTION OF PAXIL

62. Throughout the relevant time period of the above­

described actions, GSK distributed Paxil in Massachusetts and

elsewhere and held Paxil for sale in Massachusetts and elsewhere.

DISTRIBUTION OF MISBRANDED PAXIL

63. From on or about April 3, 1998, through in or around

the end of August 2003, in the District of Massachusetts, and

elsewhere, defendant

GlaxoSmithKline LLC

did introduce and cause the introduction into interstate

commerce, directly and indirectly, into Massachusetts and

elsewhere from outside of Massachusetts, Paxil, a drug within the

meaning of the FDCA, 21 U.S.C. § 321(g}, that was misbranded, in

that its labeling was false and misleading.

All in violation of 21 U.S.C. §§ 331(a}, 333 (a} (1}, and

352 (a} .

19

COUNT TWO - WELLBUTRIN

(Distribution of a Misbranded Drug: Inadequate Directions for Use 21 u.s. c. §§ 331 (a), 333 (a) (1) & 352 (f) (1))

64. The allegations contained in paragraphs 1 and 3 through

10 are realleged and incorporated herein as if set forth in full.

GSK'S PROMOTION OF WELLBUTRIN FOR UNAPPROVED USES

65. GSK manufactured, distributed, and sold the

prescription drug Wellbutrin for human use. Wellbutrin was GSK's

trade name for the drug bupropion hydrochloride.

66. At all times relevant to the Information, Wellbutrin

was approved by the FDA only as a treatment for major depressive

disorder in adults age 18 or older.

67. From 1999 to 2003, Wellbutrin was not approved for any

use other than to treat major depressive disorder in adults.

68. To increase its profits from Wellbutrin, from in or

about 1999 through 2003, GSK promoted the sale and use of

Wellbutrin for a variety of uses for which GSK had not received

FDA approval including:

a. for weight loss and the treatment of obesity;

b. to treat sexual dysfunction;

c. as an "add-on" drug to treat the side effects of other antidepressant medications, including weight gain and sexual dysfunction;

d. to treat Attention Deficit Hyperactivity Disorder ("ADHD") and other attention disorders;

20

e. to treat addiction to drugs, alcohol, or gambling;

f. to treat other mental diseases such as anxiety and bipolar disorder;

g. to treat patients under age 18; and

h. with dosing regimens different than those in the

label.

69. GSK encouraged sales representatives to provide

messages about off-label uses of Wellbutrin during one-on-one

sales calls with doctors.

70. GSK sales representatives sometimes referred to

Wellbutrin as "the happy, horny, skinny pill" as a way to remind

doctors of the unapproved uses for Wellbutrin that they were

promoting.

71. GSK used speaker programs to spread off-label

information about Wellbutrin to doctors. GSK trained and paid

doctors to speak to other doctors at hundreds of promotional

events per year that were organized by GSK's sales

representatives. At many of these events, speakers recommended

the use of Wellubutrin for unapproved uses. Some of these

speakers also made additional false and misleading claims about

Wellbutrin's safety and efficacy for approved and unapproved

uses.

72. Two of GSK's most frequently used speakers, who each

21

spoke more than 800 times and were each paid more than $1.5

million by GSK from 2000 to 2003, recommended Wellbutrin for a

wide variety of unapproved uses, including for weight loss, to

treat sexual dysfunction, to treat ADHD and other attention

disorders, and even for patients with bulimia or who were

abruptly discontinuing alcohol (both of which were specifically

contraindicated in Wellbutrin's labeling).

73. GSK paid doctors to attend lavish meetings in places

such as Jamaica and Bermuda during which GSK provided off-label

information about Wellbutrin in a manner to encourage doctors to

write Wellbutrin prescriptions for unapproved uses of the drug.

GSK tried to disguise the promotional nature of these meetings by

characterizing them as "speaker training" meetings.

74. GSK paid doctors to attend "Local Advisory Boards,"

"Regional Advisory Boards," and Special Issues Boards" during

many of which GSK provided information about unapproved uses of

Wellbutrin.

75. GSK called these meetings "advisory board" or

"consultant" meetings to create the pretense that GSK was

gathering information and feedback from the doctors. In fact,

there generally was little consulting provided by the doctors

during these meetings and GSK made no real effort to capture and

disseminate the advice it supposedly obtained.

22

76. GSK held such sham advisory board meetings repeatedly

and frequently, sometimes holding more than one such meeting on

the same day in the same city or hotel, with similar off-label

agendas for many events, and the same speakers.

77. GSK also sponsored extensive continuing medical

education ("CME") programs for doctors during which off-label

information about Wellbutrin was disseminated. Although CME

programs were ostensibly independent, in certain CME programs,

GSK influenced the content and frequently selected the location

and the speakers and invited many of the attendees, and GSK in

some instances determined how much the speaker was paid.

78. GSK's sales representatives frequently arranged for the

speakers at CME programs to be the same doctors who spoke most

frequently at GSK's Wellbutrin promotional events. In some

instances, GSK's sales representatives knew that these speakers

would deliver at the CME programs the same off-label information

they provided during promotional programs.

79. GSK sales representatives distributed and played for

doctors certain purportedly independent CME materials in the form

of audiocassettes or DVDs that GSK had funded and/or prepared and

which contained messages about unapproved uses of Wellbutrin.

23

DISTRIBUTION OF WELLBUTRIN

80. Throughout the relevant time period of the above­

described actions, GSK distributed Wellbutrin in Massachusetts

and elsewhere and held Wellbutrin for sale in Massachusetts and

elsewhere.

DISTRIBUTION OF MISBRANDED WELLBUTRIN

81. From in or about January 1999 through in or about

December 2003, in the District of Massachusetts, and elsewhere,

defendant

GlaxoSmithKline LLC

did introduce and cause the introduction into interstate

commerce, directly and indirectly, into Massachusetts and

elsewhere, from outside of Massachusetts, Wellbutrin, a drug

within the meaning of the FDCA, 21 U.S.C. § 32l(g), which was

intended for use for the treatment of sexual dysfunction, for

weight loss, addiction, ADHD, and as an add-on to other

antidepressant drugs and for other conditions and which was

misbranded within the meaning of 21 U.S.C. § 352(f) (1), in that

its labeling lacked adequate directions for such uses.

All in violation of 21 U.S.C. §§ 331(a), 333(a) (1), and

352 (f) (1).

24

COUNT THREE - AVANDIA

(Failure to Report Data to FDA: 21 U.S.C. §§ 33l(e), 333 (a) (1) & 355 (k) (1))

82. The allegations in paragraphs 2 through 4 are realleged

and incorporated by reference herein.

REQUIRED REPORTING OF INFORMATION REGARDING DRUGS TO THE FDA

83. Under the FDCA, the term "drug" included articles that

(1) were intended for use in the diagnosis, cure, mitigation,

treatment, or prevention of disease in humans; and (2) were

intended to affect the structure or any function of the human

body. 21 u.s. c. § 321 (g) (1) (B) and (C).

84. A drug was a ''new drug" if it was, in part, "not

generally recognized, among experts qualified by scientific

training and experience to evaluate the safety and effectiveness

of drugs, as safe and effective for use under the conditions

prescribed, recommended, or suggested in the labeling thereof

" 21 u.s.c. § 321 (p) (1). To be lawfully introduced into

interstate commerce, new drugs required an approved marketing or

investigational application. 21 U.S.C. §§ 331(d) and 355.

Approved marketing or investigational applications included New

Drug Applications ("NDAs"). 21 U.S.C. § 355.

85. To obtain FDA approval of an NDA, the sponsor was

required to demonstrate, to FDA's satisfaction, that the drug was

25

both safe and effective for each of its claimed uses. 21 U.S.C.

§ 355(b). Toward this end, the NDA sponsor was required to

provide, to the satisfaction of FDA, substantial evidence,

including data generated in adequate and well-controlled clinical

investigations, that demonstrated that the drug was safe and

effective when used in accordance with the proposed labeling for

its intended uses. 21 U.S.C. § 355(d). An NDA sponsor was not

permitted to promote or market the drug until the FDA had

approved the NDA.

86. Once the NDA had been approved, the holder of the NDA

was required to provide the FDA certain periodic reports of data

relating to clinical experience to permit the FDA to determine,

among other things, whether grounds for withdrawal of the NDA

existed based upon clinical experience showing that the drug was

unsafe for use under the conditions of use for which it was

approved. 21 U.S.C. §§ 355(k) (1), (e). These periodic reports

of data were intended to provide the FDA an overview of all

safety-related information learned by the holder of the NDA

during that quarter or year, and thereby facilitate the FDA's

ability to spot drug safety trends.

87. Among other reporting, the holder of the NDA was

required to submit to the FDA certain reports regarding

postmarketing adverse drugs experiences. 21 C.F.R. § 314.80.

26

These reports were required to include, among other information,

''a history of actions taken since the last report because of

adverse drug experiences (for example, labeling changes or

studies initiated)." 21 C.F.R. § 314.80 (c) (2) (ii) (c).

88. Also among other reporting, the holder of the NDA was

required to file an Annual Report each year regarding the

approved drug. 21 C.F.R. § 314.81(b) (2). Among other

information required to be included in the Annual Report was a

"status report of each postmarketing study of the drug product

concerning clinical safety, clinical efficacy, clinical

pharmacology, and nonclinical toxicology that is required by the

FDA . . " 21 C.F.R. § 314.81(b) (2) (vii); and a "status report

of any postmarketing study not included under paragraph

(b) (2) (vii) of this section that is being performed by, or on

behalf of, the applicant." 21 C.F.R. § 314.81(b) (2) (viii).

89. At all times material to this Information, it was a

crime, in violation of Title 21 United States Code, Section

331 (e) to fail to make reports required by Section 355 (k) (1),

including reports of data relating to clinical experience, and

other data and information, as necessary for the FDA to determine

whether the NDA approval should be withdrawn or suspended for any

reason set forth in Section 355(e).

27

DEVELOPMENT OF AND STUDIES REGARDING AVANDIA

90. One of the prescription drugs that was developed by GSK

was Avandia (rosiglitazone maleate), a diabetes medication.

Avandia was one of a class of drugs known as thiazolidediones

that were designed to increase insulin sensitivity. The FDA

approved the NDA application for Avandia in May 1999.

Thereafter, GSK promoted, sold, and distributed Avandia into

interstate commerce in the United States, including within the

District of Massachusetts.

91. In 2001, GSK initiated two separate studies at the

request of European regulatory authorities as postmarketing

commitments to further evaluate the cardiovascular safety of

Avandia. Those two studies were known as Study 211 and RECORD.

A. The GSK protocol for Study 211 indicated that this

study was initiated because "rosiglitazone (like other

thiazolidnediones) causes a mild increase in plasma volume. An

increase in plasma volume might aggravate existing cardiac

failure unless appropriate diuretic therapy is initiated .

This study will investigate the effect of rosiglitazone in

addition to background anti-diabetic therapy on cardiac structure

and function and cardiovascular morbidity and mortality in type 2

diabetic patients with pre-existing CHF [congestive heart

failure[(NYHA grade I/II). "

28

B. The GSK protocol for RECORD indicated that this

study was initiated because rosiglitazone "also increases body

weight (albeit without altering known weight-associated

cardiovascular risk factors), has a multifactoral effect on

lipids (some effects putatively beneficial, some putatively

adverse) , and leads to a modest increase in plasma volume .

There is a need formally to evaluate long term cardiovascular

outcome, both for those who receive the most widely used oral

combination therapy (sulphonylurea (SU) plus metformin (MET), and

for those who are given rosiglitazone in addition to their first­

line therapy (metformin or SU) ."

92. In its 2001 Periodic Report for Avandia, GSK did not

notify the FDA of the initiation of Study 211 and RECORD, despite

the regulatory requirement that each periodic report contain "a

history of actions taken since the last report because of adverse

drug experiences (for example, labeling changes or studies

initiated)." 21 C.F.R. § 314.80(c) (2) (i) (c).

93. Moreover, in each of its Annual Reports for Avandia

between 2001 and 2007, GSK did not provide the FDA with a status

report on certain postmarketing studies being performed by, or on

behalf of, GSK, despite the regulatory requirement to provide

that information in 21 C.F.R. § 314.81(b) (2) (viii). Some of the

studies that were omitted from certain of those Annual Reports

29

included Study 211, RECORD, and APPROACH, all of which involved

cardiovascular safety issues.

94. Additionally, in its 2007 Annual Report for Avandia

that was submitted to the FDA, GSK did not provide the FDA with a

status report of the post-marketing study, ADOPT, which concerned

clinical efficacy, despite the regulatory requirement to provide

that information in 21 C.F.R. § 314.81(b) (2) (vii).

FAILURE TO MAKE REQUIRED REPORTING TO FDA

95. Beginning in or about 2001 and continuing until in or

about September 2007, in the District of Maryland and elsewhere,

the defendant,

GLAXOSMITHKLINE LLC

did fail to make required reporting of data relating to clinical

experience and other data and information regarding Avandia, as

required by law, to the United States Food and Drug

Administration.

All in violation of 21 U.S .C. §§331 (e), 333 (a) (1), and

355 (k) (1).

30

FORFEITURE ALLEGATIONS

(21 U.S.C. §§ 334, 853 and 28 U.S.C. § 2461(c}}

96. Upon conviction of one or more of the offenses charged

in Counts One and Two of this Information, defendant

GlaxoSmithKline LLC

shall forfeit to the United States pursuant to 21 U.S.C. § 334

and 28 U.S.C. § 2461(c}, any quantities of Paxil that between

April 3, 1998 and the end of August 2003, and any quantities of

Wellbutrin that between January 1999 and December 2003, were

introduced into interstate commerce in violation of 21 U.S.C. §§

331 (a} and 352 (a) and 352 (f) (1).

97. If any of the property subject to forfeiture, as a

result of any act or omission of the defendant:

a. cannot be located upon the exercise of due

diligence;

b. has been transferred or sold to, or deposited

with, a third party;

c. has been placed beyond the jurisdiction of the

court;

d. has been substantially diminished in value; or

e. has been commingled with other property which

cannot be divided without difficulty;

31

it is the intent of the United States, pursuant to 21 U.S.C. §

853(p), incorporated by reference in 28 U.S.C. § 2461(c), to seek

forfeiture of any other property of the defendant up to the value

of the property subject to forfeiture, that is $43,185,600.

All pursuant to 21 U.S.C. §§ 334 and 853, and 28 u.s.c. §

2461(c), and Rule 32.2 of the Federal Rules of Criminal

Procedure.

By:

Date: July 2, 2012

CARMEN M. ORTIZ

Shannon T. Kelley Amanda Strachan Brian Perez-Dapple Assistant u.s. Attorneys United States Attorney's Office District of Massachusetts

STUART F. DELERY ACTING ASSISTANT ATTORNEY GENERAL U.S. DEPARTMENT OF JUSTICE

Patrick Jasperse Jill Furman Mark Josephs David Frank Timothy Finley Trial Attorneys Consumer Protection Branch u.s. Department of Justice

32

it is the intent of the United States, pursuant to 21 u.s.c. §

853(p), incorporated by reference in 28 u.s.c. § 246l(c), to seek

forfeiture of any other property of the defendant up to the value

of the property subject to forfeiture, that is $43,185,600.

All pursuant to 21 u.s.c. §§ 334 and 853, and 28 u.s.c. §

2461(c), and Rule 32.2 of the Federal Rules of Criminal

Procedure.

By:

By:

Date: July 2, 2012

CARMEN M. ORTIZ UNITED STATES ATTORNEY

Sara Miron Bloom

Susan G. Winkler Shannon T. Kelley Amanda Strachan Brian Perez-Dapple Assistant U.S. Attorneys United States Attorney's Office District of Massachusetts

STUART F. DELERY ACTING ASSISTANT ATTORNEY GENERAL

r~;=Tz~~-Patrick Jasperse ~~ Jill Furman Mark Josephs David Frank Timothy Finley Trial Attorneys Consumer Protection Branch U.S. Department of Justice

32

Main Reception: {617) 748-3100

Geoffrey E. Hobart Matthew J. O'Connor Covington & Burling, LLP 1201 Pennsylvania Avenue, N.W. Washington, D.C. 20004-2401

U.S. Department of Justice

Carmen M. Ortiz United States Attorney District of Massachusetts

John Joseph Moakley United States Courthouse

1 Courthouse Way Suite 9200 Boston, Massachusetts 02210

June 27, 2012

Re: United States v. GlaxoSmithKline LLC

Dear Counsel:

This letter sets forth the Agreement between the United States Attorney for the District of Massachusetts ("the U.S. Attorney") and the United States Department of Justice ("collectively, the "United States") and your client, GlaxoSmithKline LLC ("GSK"), in the above-referenced case. The Agreement is as follows:

1. Change of Plea

At the earliest practicable date, GSK shall waive indictment and plead guilty to a three-count Information attached to this Agreement as Exhibit A. Count One charges GSK with delivery into interstate commerce of a misbranded drug, Paxil, in violation of21 U.S.C. §§ 331(a), 333(a)(1) and 352(a). Count Two charges GSK with delivery into interstate commerce of a misbranded drug, Wellbutrin, in violation of21 U.S. C.§§ 331(a), 333(a)(1), and 352(f). Count Three charges GSK with failure to report data relating to clinical experience, along with other data and information, regarding Avandia to the FDA as required by law, in violation of21 U.S.C. §§ 331(e), 333(a)(1), and 355(k)(l). GSK expressly and unequivocally admits that it committed the crimes charged in the Information, and is in fact guilty of those offenses. GSK also agrees to waive venue, to waive any applicable statute of limitations, and to waive any legal or procedural defects in the Information.

2. Penalties

GSK faces the following maximum penalties with respect to the counts of conviction:

a. Count One (21 U.S.C. §§ 33l(a), 333(a)(l), 352(a) regarding Paxil):

1. A fine of$200,000, or twice the gross gain derived from the offense or twice the gross loss to a person other than the defendant, whichever is greater. See 18 U.S.C. §§ 3571(c)(5) and (d). Given GSK's gross gain from the offense in Count One was $99,855,000, the maximum possible fine in connection with this Count is $199,710,000;

ii. A term of probation of not more than five (5) years. See 18 U.S.C. § 356l(c)(2);

iii. Restitution to any victims of the offense. See 18 U.S.C. § 3563; and

IV. A mandatory special assessment of$125. See 18 U.S.C. § 3013(a)(l)(B)(iii).

b. Count Two (21 U.S.C. §§ 33l(a), 333(a)(l), 352(f) regarding Wellbutrin):

1. A fine of $200,000, or twice the gross gain derived from the offense or twice the gross loss to a person other than the defendant, whichever is greater. See 18 U.S. C.§§ 357l(c)(5) and (d). Given GSK's gross gain from the offense in Count Two was $346,521,000, the maximum possible fine in connection with this Count is $693,042,000;

n. A term of probation of not more than five (5) years. See 18 U.S.C. § 356l(c)(2);

iii. Restitution to any victims of the offense. See 18 U.S.C. § 3563; and

IV. A mandatory special assessment of$125. See 18 U.S.C. § 3013(a)(l)(B)(iii).

c. Count Three (21 U.S.C. §§ 331(e), 333(a)(l), 355(k)(l) regarding Avandia):

1. A fine of $200,000, or twice the gross gain derived from the offense or twice the gross loss to a person other than the defendant, whichever is greater. See 18 U.S.C. §§ 357l(c)(5) and (d). Given GSK's gross gain from the offense in Count Three was $151,633,000, the maximum possible fine in connection with this Count is $303,266,000;

2

11. A term of probation of not more than five (5) years. See 18 U.S.C. § 356l(c)(2);

111. Restitution to any victims of the offense. See 18 U.S. C. § 3563; and

IV. A mandatory special assessment of$125. See 18 U.S.C. § 3013(a)(l)(B)(iii).

3. Fed. R. Crim. P. ll(c)(l)(C) Plea

This plea agreement is made pursuant to Fed. R. Crim. P. ll(c)(l)(C), and GSK's plea will be tendered pursuant to that provision. In accordance with Fed. R. Crim. P. 11 ( c )(1 )(C), if the District Court ("Court") accepts this plea agreement, the Court must include the agreed disposition in the judgment. If the Court rejects any aspect of this plea agreement or fails to impose a sentence consistent herewith, this Agreement shall be null and void at the option of either the United States or GSK, with the exception of Paragraph 12 (Waiver of Defenses) which shall remain in full effect. GSK expressly understands that it may not withdraw its plea of guilty unless the Court rejects this Agreement under Fed. R. Crim. P. ll(c)(5) or fails to impose a sentence consistent herewith.

GSK may seek sentencing by the District Court immediately following the Rule 11 plea hearing. The United States does not object to the Court proceeding to sentence GSK immediately following the Rule 11 plea hearing or in the absence of a Presentence Report in this case. GSK understands that the decision whether to proceed immediately following the plea hearing with the sentencing proceeding, and to do so without a Presentence Report, is exclusively that of the United States District Court.

4. Sentencing Guidelines

The parties agree that while the fine provisions of the United States Sentencing Guidelines ("U.S. S. G.") do not apply to organizational defendants for misdemeanor violations of the Food, Drug and Cosmetic Act, see U.S.S.G. § 8C2.1, the agreed upon fine is consonant with those guidelines and takes into account GSK's conduct under 18 U.S.C. §§ 3553 and 3572, as follows:

a. The parties agree that the base fine is $598,009,000 in that such amount was the reasonably estimated pecuniary gain to the organization from the offenses See U.S.S.G. §§ 8C2.4(a), 8C2.3;

b. Pursuant to U.S.S.G. § 8C2.5, the culpability score is eight (8), which is determined as follows:

1. Base culpability score is five (5) pursuant to U.S.S. G. § 8C2.5(a);

n. Add five (5) points pursuant to U.S.S.G. § 8C2.5(b)(l)(A); and

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111. Deduct two (2) points for GSK's full cooperation and acceptance of responsibility for its criminal conduct pursuant to U.S.S.G. § 8C2.5(g)(2).

c. Pursuant to U.S.S.G. § 8C2.6, the appropriatemultiplierrange associated with a culpability score of eight (8) is 1.6 to 3.2; and

d. Thus, the advisory Guideline Fine Range is $956,814,400 to $1,196,018,000. See U.S.S.G. §§ 8C2.7(a), (b); 18 U.S.C. §§ 3571(c), (d).

The U.S. Attorney may, at her sole option, be released from her commitments under this Agreement, including, but not limited to, her agreement that Paragraph 5 constitutes the appropriate disposition of this case, if at any time between GSK's execution of this Agreement and sentencing, GSK:

(a) Fails to admit a complete factual basis for the plea;

(b) Fails to truthfully admit its conduct in the offenses of conviction;

(c) Falsely denies, or frivolously contests, relevant conduct for which GSK is accountable under U.S.S.G. § IBI.3;

(d) Gives false or misleading testimony in any proceeding relating to the criminal conduct charged in this case and any relevant conduct for which GSK is accountable under U.S.S.G. § IBI.3;

(e) Engages in acts which form a basis for finding that GSK has obstructed or impeded the administration of justice under U.S.S.G. § 3Cl.l;

(f) Commits a crime; or

(g) Attempts to withdraw its guilty plea.

5. Agreed Disposition

Pursuant to Fed. R. Crim. P. 11(c)(1)(C), the United States and GSK agree that the appropriate disposition of this case is as follows, and will result in imposition of a reasonable sentence that is sufficient, but not greater than necessary, taking into consideration all of the factors set forth in 18 U.S.C. §§ 3553(a) and 3572:

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a. a criminal fine in the amount of$956,814,400 to be imposed as follows:

I. Count One: $159,768,000

11. Count Two: $554,433,600

111. Count Three: $242,612,800

GSK shall pay this fine within one week of the date of sentencing;

b. a mandatory special assessment in the amount of $375 pursuant to 18 U.S.C. § 3013;

c. forfeiture in the amount of$43,185,600 to be paid within one week of the date of sentencing;

d. The United States agrees that it will not seek a separate restitution order as to GSK as part of the resolution of the Information and the Parties agree that the appropriate resolution of this case does not include a restitution order for the following reasons:

1. Counts One and Two: In light of the pending civil actions, including United States et al. ex rei. Thorpe, et al. v. GSK eta!., Civ. No. 11-10398 (D. Mass.), and the Civil Settlement Agreement between GSK and the United States and others (which is being signed contemporaneously with this Plea Agreement, and is attached hereto as Exhibit B), which requires payment of$! ,042,612,800 plus interest from December 1, 2011, the parties agree that the complication and prolongation of the sentencing process that would result from an attempt to fashion a restitution order outweighs the need to provide restitution to the non-federal victims, if any, in this case, given that numerous unknown individuals and insurance companies purchased Paxil and Wellbutrin, that many of those persons and companies have obtained restitution in private actions, and that tracing reimbursements to the various unknown insurance companies and patients and determining the apportionment of payment pertaining to the products at issue would be extraordinarily difficult, if not impossible. See, 18 U.S.C. § 3663(a)(3); Cf 18 U.S.C. § 3663(a)(l)(B)(ii).

11. Count Three: No identifiable economic loss appears to have been suffered by the federal Food and Drug Administration ("FDA"), and the parties were unable to determine any economic loss to others directly and proximately caused by this offense of conviction in this case. In addition, in light of the Civil Settlement Agreement between

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the United States and GSK (being signed contemporaneously with this Plea Agreement, and attached hereto as Exhibit C) which requires the payment of $657,387,200, plus interest from December I, 2011, the parties agree that the complication and prolongation of the sentencing process that would result from an attempt to fashion a restitution order outweighs the need to provide restitution to any non-federal victims in this case if any such victims exist given that establishing causation of loss to others by the delay in providing this particular information to the FDA would be extraordinarily difficult, if not impossible. Cf 18 U.S.C. § 3663(a)(l)(B)(ii).

e. The United States agrees that it will not seek a term of probation in light of (i) the Compliance Measures and Certifications attached hereto as Addendum A; and (ii) the Corporate Integrity Agreement entered into between GSK and the Office of Inspector General of the Department ofHealth and Human Services, attached as Exhibit D.

6. No Further Prosecution of GSK

Pursuant to Fed. R. Crim. P. ll(c)(l)(A), the United States agrees that, other than the charges in the attached Information, it shall not further prosecute GSK for any additional federal criminal charges with respect to the conduct covered by the Information, conduct that was the subject of the grand jury investigation in the District ofMassachusetts, or facts currently known to the United States regarding:

(a) GSK's sales, marketing and promotion of Imitrex, Lamictal, Lotronex, Flovent, Paxil, Valtrex, Wellbutrin, and Zofran between January 1998 and December 2004;

(b) GSK's sales, marketing and promotion of Advair between January 1998 and June 2010;

(c) GSK's communications with and reporting to the FDA in connection with Advair, Paxil, and Wellbutrin between July 1998 and December 2004;

(d) GSK's sales, marketing and promotion of Avandia, Avandamet, and Avandaryl between January 2000 and December 2010; and

(e) GSK's communications with and reporting to the FDA in connection with Avandia, Avandamet, and Avandaryl.

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This declination is expressly contingent upon:

(I) the guilty plea ofGSK to the attached Information being accepted by the Court and not withdrawn or otherwise challenged; and

(2) GSK's performance of all of its obligations as set forth in this Agreement and the attached Civil Settlement Agreements.

IfGSK's guilty plea is not accepted by the Court or is withdrawn for any reason, or ifGSK should fail to perform any obligation under this Agreement or the Civil Settlement Agreements, this declination of prosecution shall be null and void.

The United States expressly reserves the right to prosecute any individual, including but not limited to present and former officers, directors, employees, and agents of GSK, in connection with the conduct encompassed by this plea agreement, within the scope of the grand jury investigation, or known to the United States.

7. Payment of Mandatory Special Assessment

GSK shall pay the mandatory special assessment to the Clerk of the Court on or before the date of sentencing.

8. Waiver of Right to Appeal and to Bring Other Challenge

a. GSK has conferred with its attorneys and understands that it has the right to challenge its convictions in the United States Court of Appeals for the First Circuit ("direct appeal"). GSK waives any right it has to challenge its conviction on direct appeal or in any future proceeding;

b. GSK has conferred with its attorneys and understands that defendants ordinarily have a right to appeal their sentences and may sometimes challenge their sentences in future proceedings. GSK understands, however, that once the Court accepts this Rule 11 ( c )(1 )(C) plea agreement, the Court is bound by the parties' agreed-upon sentence. GSK may not contest the agreed-upon sentence in an appeal or challenge the sentence in a future proceeding in federal court. Similarly, the Court has no authority to modify an agreed-upon sentence under 18 U.S.C. § 3582(c), even if the Sentencing Guidelines are later modified in a way that appears favorable to GSK. Given that a defendant who agrees to a specific sentence cannot later challenge it, and also because GSK desires to obtain the benefits of this Agreement, GSK agrees that it will not challenge the sentence imposed in an appeal or other future proceeding. GSK also agrees that it will not seek to challenge the sentence in an appeal or future proceeding even if the Court rejects one or more positions advocated by any party at sentencing; and

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c. The United States agrees that it will not appeal the imposition by the Court of the sentence agreed to by the parties as set out in Paragraph 5, even if the Court rejects one or more positions advocated by a party at sentencing.

9. Probation Department Not Bound By Agreement

The sentencing disposition agreed upon by the parties and their respective calculations under the Sentencing Guidelines are not binding upon the United States Probation Office.

10. Forfeiture

GSK will forfeit to the United States assets subject to forfeiture pursuant to 21 U.S. C. § 334 and 28 U.S.C. § 246l(c) as a result of its guilty plea.

GSK admits that the value of the quantities ofPaxil and Wellbutrin that were misbranded and distributed in violation of2l U.S.C. § 331, totaled at least $43,185,600 in United States currency. GSK acknowledges and agrees that the quantities of Paxil and Wellbutrin which were misbranded and distributed in violation of2l U.S.C. § 331 cannot be located upon exercise of due diligence, or have been transferred or sold to, or deposited with, a third party, placed beyond the jurisdiction of the Court, substantially diminished in value, or commingled with other property which cannot be divided without difficulty. Accordingly, GSK agrees that the United States is entitled to forfeit as "substitute assets" any other assets of GSK up to the value of the now missing directly forfeitable assets.

GSK agrees that, no later than one week after sentencing, it shall remit the amount of $43,185,600 in United States currency to the United States Marshals Service pursuant to wire instructions provided by the United States Attorney's Office. GSK and the United States agree that this payment shall satisfy any and all forfeiture obligations that GSK may have as a result of its guilty plea.

Forfeiture of substitute assets shall not be deemed an alteration of GSK's sentence. The forfeitures set forth herein shall not satisfy or offset any fine, restitution, cost of imprisonment, or other penalty imposed upon GSK, nor shall the forfeiture be used to offset GSK's tax liability or any other debt owed to the United States.

GSK agrees to consent to the entry of orders of forfeiture for the $43,185,600 in United States currency, and waives the requirements of Federal Rules of Criminal Procedure 32.2 and 43(a) regarding the notice of the forfeiture in the charging instrument, entry of a preliminary order of forfeiture, announcement of the forfeiture at sentencing, and incorporation of the forfeiture in the judgment. GSK acknowledges that it understands that the forfeiture of assets is part of the sentence that may be imposed in this case and waives any failure by the Court to advise it of this, pursuant to Rule ll(b)(l)(J), at the time the guilty plea is accepted.

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In addition to all other waivers or releases set forth in this Agreement, GSK hereby waives any and all claims arising from or relating to the forfeitures set forth in this section, including, without limitation, any claims arising under the Double Jeopardy Clause of the Fifth Amendment, or the Excessive Fines Clause of the Eighth Amendment, to the United States Constitution, or any other provision of state or federal law.

The United States District Court for the District of Massachusetts shall retain jurisdiction to enforce the provisions of this section.

11. Civil and Administrative Liability

By entering into this Agreement, the United States does not compromise any civil or administrative liability, including but not limited to any False Claims Act or tax liability, which GSK may have incurred or may incur as a result of its conduct and its plea of guilty to the attached Information.

GSK's civil liability to the United States in connection with certain of the matters under investigation by the United States is resolved in the attached Civil Settlement Agreements, according to the terms set forth in those Agreements.

12. Waiver of Defenses

IfGSK's guilty plea is not accepted by the Court for whatever reason, ifGSK's guilty plea is later withdrawn or otherwise successfully challenged by GSK for whatever reason, or if GSK breaches this Agreement, GSK hereby waives, and agrees it will not interpose, any defense to any charges brought against it which GSK might otherwise have under the Constitution for pre-indictment delay, any statute of limitations, or the Speedy Trial Act, except any such defense that GSK may already have for (a) conduct occurring before October 19, 2000, as further described in the parties' tolling agreement dated December 1, 2011, and attached hereto as Exhibit E; and (b) conduct occurring before May 1, 2010, as further described in the parties' tolling agreement dated September 21, 2011, attached hereto as Exhibit F. This waiver is effective provided that charges are filed within six months of the date on which such guilty plea is rejected, withdrawn, or successfully challenged, or a breach is declared by the United States.

13. Breach of Agreement

If the United States determines that GSK has failed to comply with any material provision of this Agreement (which shall not include a failure to comply with the provisions in Addendum A, any alleged breach of which is governed solely by the terms of Addendum A), the United States may, at its sole option, be released from its commitments under this Agreement in its entirety by notifying GSK, through counsel or otherwise, in writing. The United States may also pursue all remedies available under the law, even if it elects not to be released from its commitments under this

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Agreement. GSK recognizes that no such breach by GSK of an obligation under this Agreement shall be grounds for withdrawal of its guilty plea. GSK understands that should it breach any material provision of this Agreement, the United States will have the right to use against GSK before any grand jury, at any trial or hearing, or for sentencing purposes, any statements which may be made by GSK, and any information, materials, documents or objects which may be provided by it to the government subsequent to this Agreement, without any limitation.

GSK understands and agrees that this Rule II (c)(! )(C) plea agreement and its agreed upon criminal disposition:

a. are wholly dependant upon GSK's timely compliance with the material provisions of the attached Civil Settlement Agreements; and

b. failure by GSK to comply fully with the material terms of this Agreement (which, as described above, shall not include a breach of the provisions of Addendum A) or the attached Civil Settlement Agreements will constitute a breach of this Agreement.

In the event GSK at any time hereafter breaches any material provision of this Agreement (other than a failure to comply with the provisions in Addendum A, which, as described above, shall not constitute a breach of this Agreement), GSK understands that (I) the United States will as of the date of that breach be relieved of any obligations it may have in this Agreement and the attached Civil Settlement Agreements, including but not limited to the promise not to further prosecute GSK as set forth in this Agreement; and (2) GSK will not be relieved of its obligation to make the payments set forth in this Agreement and the attached Civil Settlement Agreements, nor will it be entitled to return of any monies already paid. Moreover, in the event of a material breach of this Agreement, GSK understands and agrees that the United States may pursue any and all charges that might otherwise have been brought but for this Agreement, and GSK hereby waives, and agrees it will not interpose, any defense to any charges brought against it which it might otherwise have under the Constitution for pre-indictment delay, any statute oflimitations, or the Speedy Trial Act, except any such defense that GSK may already have for conduct occurring before October 19, 2000 as further described in the tolling agreement attached as Exhibit E, and for conduct occurring before May 1, 2010, as further described in the tolling agreement attached as Exhibit F.

Any breach of the provisions of Addendum A shall not constitute a breach of this Agreement and shall be resolved solely under the breach provision of that Addendum.

14. Who Is Bound By Agreement

With respect to matters set forth in Paragraph 6, this Agreement is binding upon GSK and the Office ofthe United States Attorney for the District of Massachusetts, the United States Attorney's Offices for each ofthe other 92 judicial districts of the United States, and the Consumer Protection Branch of the Civil Division of the Department of Justice. The non-prosecution provisions in Paragraph 6 are also binding on the Criminal Division of the United States Department of Justice, with the exception of any investigations of GSK that are or may be conducted in the future by the

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Fraud Section of the Criminal Division regarding possible violations of the Foreign Corrupt Practices Act and related offenses in connection with the sales and marketing of GSK's products to foreign customers, which investigations are specifically excluded from the release in Paragraph 6. A copy of the letter to United States Attorney Carmen M. Ortiz from the Assistant Attorney General, Criminal Division, Department of Justice, authorizing this Agreement is attached as Exhibit G. GSK understands that this Agreement does not bind any state or local prosecutive authorities, the Tax Division of the U.S. Department of Justice or the Internal Revenue Service of the U.S. Department of the Treasury.

15. Corporate Authorization

GSK' s acknowledgment of this Agreement and execution of this Agreement on behalf of the limited liability company is attached as Exhibit H. GSK shall provide to the U.S. Attorney and the Court a certified copy of a resolution of the governing authority of GSK, affirming that it has authority to enter into the Plea Agreement and has (l) reviewed the Information in this case and the proposed Plea Agreement; (2) consulted with legal counsel in connection with the matter; (3) authorized execution of the proposed Plea Agreement; (4) authorized GSK to plead guilty to the charge specified in the Information; and ( 5) authorized the corporate officer identified below to execute the Plea Agreement and all other documents necessary to carry out the provisions of the Plea Agreement. A copy of the resolution is attached as Exhibit I. GSK agrees that either a duly authorized corporate officer or a duly authorized attorney for GSK, at the discretion of the Court, shall appear on behalf of GSK and enter the guilty plea and will also appear for the imposition of sentence.

16. Complete Agreement

This Agreement and the attachments hereto, together with an additional Civil Settlement Agreement and attachments thereto that is set forth as Exhibit J (civil agreement regarding pricing), and the side letter with GlaxoSmithKline plc (attached as Exhibit K), set forth the complete and only agreement between the parties relating to the disposition of this case and are the complete and only agreements between the parties. No promises, agreements, or conditions have been entered into other than those set forth or referred to in the above-identified documents. This Agreement supersedes prior understandings, if any, of the parties, whether written or oral. This Agreement cannot be modified other than in a written memorandum signed by the parties or on the record in court.

If this letter accurately reflects the Agreement between the United States and your client, GSK, please have the authorized representative of GSK sign the Acknowledgment of Agreement below. Please also sign below as Witness. Return the original of this letter to Assistant U.S. Attorneys Sara

ll

Miron Bloom and Susan G. Winkler of the United States Attorney's Office for the District of Massachusetts.

Very truly yours,

t~/)/11~f<- \11 &i,L / CARMENM. ORTIZ Z/ UNITED STATES ATTORNEY DISTRICT OF MASSACHUSETTS

Sara Miron Bloom Susan G. Winkler Shannon T. Kelley Amanda Strachan Brian Perez-Dapple Assistant U.S. Attorneys

STUART F. DELERY ACTING ASSISTANT ATTORNEY GENERAL CIVIL DIVISION DEPARTMENT OF JUSTICE

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Patrick Jasperse Jill Furman Mark L. Josephs David Frank Timothy Finley Trial Attorneys Consumer Protection Branch U.S. Department of Justice

ADDENDUM A

COMPLIANCE MEASURES AND CERTIFICATIONS

GlaxoSmithKline LLC ("GSK") agrees that, prior to entering its plea of gnilty, it has instituted and will maintain policies and procedures to prevent further violations of the Federal Food, Drug and Cosmetic Act ("FDCA") in its sales, marketing and promotion of prescription pharmaceutical products, and specifically for at least five years following entry of the plea, will do the following:

I. COMPLIANCE MEASURES

A. Compensation and Incentives Not Based on Sales

GSK will maintain policies and procedures that shall (I) be designed to ensure that financial incentives do not inappropriately motivate prescriber-facing field sales professionals or their direct managers to engage in improper promotion, sales, and marketing ofGSK's prescription pharmaceutical products; and (2) include mechanisms, where appropriate to exclude from incentive compensation sales that may indicate off-label promotion of prescription pharmaceutical products. These policies and procedures are collectively referred to as the "Patient First Program." Pursuant to the Patient First Program, which GSK has already implemented, GSK shall not provide financial reward (through compensation, including incentive compensation or otherwise) or discipline (through tangible employment action) to its prescriber-facing field sales professionals or their direct managers based upon the volume of sales of GSK products within a given employee's own territory or the manager's district. Instead, GSK will evaluate its sales representatives based on business acumen, customer engagement, and scientific lmowledge about GSK's products.

B. Full, Fair and Accurate Reporting of Scientific Data

For at least the next five years, GSK will continue to maintain standards, policies and practices (consistent with GSK' s Policy 408) regarding full, fair, and accurate reporting and transparency in scientific data in the following ways:

(l) GSK will, in relation to GSK-sponsored studies of prescription pharmaceutical products, publicly disclose: (a) at the time of primary publication of a human research study, the full clinical study protocol (with the removal of any personally identifiable information), (b) a protocol summary before enrollment begins and after completion of the study, a summary of primary and secondary efficacy endpoints, and safety results for interventional human subject research studies (in which participants are administered medical care, medicinal products, and/or medical/scientific procedures as described in a research protocol), (c) a

1

summary protocol and, after completion, a summary of the results for observational studies designed to inform safety, efficacy, or effectiveness (including cost-effectiveness); and (d) a protocol summary or plan for analysis and, after completion, a summary of results for meta-analyses and pooled analyses designed to inform appropriate, effective, or safe use.

(2) GSK will register summary results from all applicable GSK-sponsored clinical trials of GSK prescription pharmaceutical products, and report results of such clinical trials on the National Institutes of Health sponsored website (www.clinicaltrials.gov) in compliance with all federal requirements, and any changes to those requirements.

(3) GSK will seek to publish the results ofGSK-sponsored research studies, certain GSK-sponsored observational research studies and certain GSK­sponsored meta-analyses and pooled analyses, in peer-reviewed, searchable journals. GSK will also continue its operating practices that require, among other requirements, implementation of data dissemination plans that establish prospective publication strategies for GSK-sponsored research and address requirements for appropriateness, accuracy, and balance in publications of GSK-sponsored research. In all publications about GSK-sponsored research, GSK shall acknowledge its role as the funding source.

(4) GSK will require all GSK-sponsored research to be approved by its medical and/or research organizations. GSK will maintain its current policy that no sales, marketing or other commercial personnel may participate in the design, conduct, or publication of GSK-sponsored research, with limited exceptions relating to non-interventional health outcome studies (for which a relevant GSK medical group has oversight). GSK will continue to assure its human subject research and resulting publications are intended to foster increased understanding of scientific, clinical or medical issues.

(5) GSK will require as a condition of its funding that all researchers disclose in any publication of GSK-sponsored research GSK's support and any financial interest the researcher may have in GSK (including any interest in any GSK prescription pharmaceutical product). GSK will require all authors of journal articles about GSK-sponsored research to adhere to International Committee of Medical Journal Editors (ICMJE) requirements regarding authorship except when a journal requires an alternative procedure.

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( 6) GSK will, by September 1, 2012, require that its employees and medical writing contractors complete, and GSK will maintain for ten years, as to any publication regarding GSK-sponsored research on which the employee or contractor is listed as an author, a certification that the publication provides a fair, accurate, and balanced summary of the GSK-sponsored research.

(7) GSK will require that a person will be represented as an "author" on any GSK publication of GSK -sponsored research only if he or she has made substantial contributions to the study and has final approval of the version to be published.

(8) GSK will properly report adverse event data to the FDA. GSK will maintain policies and procedures designed to ensure that all periodic reports to the FDA contain all required information and data regarding clinical studies. GSK will require investigators to report study-related information and data, including data about adverse events before

receiving final payment from GSK.

C. Payer Related Obligations

For a period of at least five years from the entry of the plea, GSK will adopt and maintain policies and procedures governing its strategies and practices in contracting, Payer negotiations and interactions, providing of discounts and rebates, and interactions relating to formularies and co-pay status and amounts ("Payer-Related Functions"), which policies shall provide that GSK will perform these functions in compliance with all applicable laws and federal and state health care program requirements, and shall be consistent with GSK U.S. Commercial Practices Policy regarding "Administration of Contracts with Payers."

D. No Sales and Marketing Role in Independent Medical Edncation

GSK will maintain policies that prohibit commercial involvement in independent medical education ("IME") programs, while also ensuring that this programming is focused on genuine educational need and scientific development. GSK will require that the content, organization, and operation of the IME program (including the faculty, educational methods, materials, and venue) be independent ofGSK's control. GSK's commercial organization (including the sales and marketing departments) will have no involvement in, or influence over, the review and approval of independent medical education grants.

E. Require Confirmation That Requests for Information Were Unsolicited

GSK will maintain its policy that prohibits sales personnel from engaging in off-label promotion (directly or indirectly) and requiring sales personnel to refer all requests for

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information about off-label uses to Medical Affairs personnel. GSK will require sales personnel to obtain a signature from the medical professional who verbally requested written information regarding off-label uses in order to confirm the infonnation requested and that the request was unsolicited.

H. NOTIFICATION OF SETTLEMENT

Within ninety (90) days of the public announcement of the settlement, GSK will send a letter to health care providers that GSK currently details regarding the products at issue in this resolution, the terms of the resolution, and a link to a website that will contain all of the relevant public resolution documents relating to this matter.

Within ninety (90) days of the public announcement of the settlement, GSK will send a letter to all payers with whom GSK currently has contracts or enters into contracts for formulary access or rebates (including all state Medicaid programs) regarding the products at issue in this resolution, the terms of the resolution, and a linlc to a website that will contain all of the relevant public resolution documents relating to this matter.

III. CERTIFICATIONS AND REPORTING TO THE UNITED STATES

In addition to any commitment to provide any certifications and reports to other government agencies or entities, GSK shall provide the following reports and certifications to the United States Department of Justice for a period of five years commencing on the date of sentencing. The certifications and reports shall be sent to:

and

Chief, Health Care Fraud Unit U.S. Attorney's Office One Courthouse Way, Suite 9200 Boston, MA 02210

Director, Consumer Protection Branch Civil Division Department of Justice 450 S'h Street, NW Washington, DC 20530

A. Annual GSK's U.S. President Certification

The President of GSK's North America Pharma division ("GSK's U.S. President") shall conduct a review of the effectiveness of GSK's Compliance Program as it relates to the marketing, promotion, and sale of prescription pharmaceutical products during the preceding year. The first review period shall run from the date of sentencing through December 31,2013. Thereafter, the reviews will be conducted on an annual basis. Based on his or her review, GSK's

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U.S. President shall submit to the United States a signed certification stating that, to the best of his or her knowledge, during the period [insert time period]: (1) GSK's Compliance Program continued to include the compliance policies and procedures set forth in the section of this Addendum entitled "COMPLIANCE MEASURES," and (2) to the extent that a Reportable Incident (as that term is defined below) has been determined to have occurred, GSK has fully complied with the Reportable Incident reporting requirements of this Addendum. The certification by GSK's U.S. President shall summarize the review described above that he or she conducted to provide the required certification. IfGSK's U.S. President is unable to provide any part of this certification regarding GSK's compliance, he or she shall provide an explanation of why he or she is unable to provide such certification. This certification shall be provided within 60 calendar days following the end of each review period.

B. Annual Board of Directors Resolution

The Board of Directors of GlaxoSmithK!ine pic, or a designated Committee thereof (the "Board"), shall conduct a review of the effectiveness of GSK' s Compliance Program as it relates to the marketing, promotion, and sale of prescription pharmaceutical products. This review shall be conducted on an annual basis and shall include, but not be limited to, updates and reports by GSK's Compliance Officer and other compliance personnel. The Board shall evaluate the effectiveness of the Compliance Program, including, among other means, by receiving updates about the activities of the Compliance Officer and other compliance personnel and updates about adoption and implementation of policies, procedures, and practices designed to ensure compliance with applicable Federal health care program and FDA requirements. The first review will cover the time period from the date of sentencing through December 31, 2013. Thereafter the reviews will be conducted on an annual basis. Based on its review, the Board shall submit to the United States a resolution that summarizes its review and oversight of GSK's compliance with Federal health care program requirements and FDA requirements and, at a minimum, includes the following language:

The Board of Directors has made a reasonable inquiry into the operations of GSK's Compliance Program for the time period [insert time period], including the performance of the Compliance Officer and the compliance personnel who are Covered Persons under the Corporate Integrity Agreement ("CIA") between GSK and the Office of Inspector General of the United States Department of Health and Human Services ("OIG-HHS"). The Board has concluded that, to the best of its knowledge, GSK has implemented an effective Compliance Program to meet Federal health care program requirements, FDA requirements, and the requirements of the Addendum to the Plea Agreement.

If the Board is unable to provide any part of this statement, it shall include in the resolution an explanation of the reasons why it is unable to provide such a statement about the effectiveness of GSK's Compliance Program. This resolution shall be provided within 60 calendar days following the end of each review period.

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C. Reportable Incidents

Fifteen days after the end of each calendar quarter (that is, by January 15 for the calendar quarter ending December 31, April 15 for the calendar quarter ending March 31, July 15 for the calendar quarter ending June 30, and October 15 for the calendar quarter ending September 30) GSK shall submit a report to the United States in writing stating whether any Reportable Incidents have been determined to have occurred during the preceding calendar quarter, and providing updated information about Reportable Incidents that occurred during any other calendar quarters. A Reportable Incident is any matter that a reasonable person would consider a probable violation of the FDCA, 21 U.S.C. §§ 33l(a) or (k), related to the misbranding of a prescription pharmaceutical product within the meaning of21 U.S.C. § 352; and/or a probable violation of21 U.S.C. §§ 33l(e) and 355(k) related to the failure to provide required reports for prescription pharmaceutical products, including reports of data relating to clinical experience and other information as required by the FDA. A Reportable Incident may be the result of an isolated event or a series of occurrences. The written report to the United States shall include: (i) a complete description of the Reportable Incident, including the relevant facts, identity of persons involved, and legal authorities implicated; (ii) a description of GSK's actions taken to investigate and correct the Reportable Incident; and (iii) a description of any further steps GSK plans to take to address the Reportable Incident and prevent it from recurring. Any Reportable Incident determined to have occurred by GSK shall be promptly reported to the President of GSK's North America Pharma division. The first calendar quarter for which a report shall be due nnder this Paragraph is the quarter ending December 31,2012.

D. SEC Filings

Within seven (7) days of filing, GSK shall submit copies of each Securities and Exchange Commission Form 6-K.

E. DEFINITIONS

For the purpose of this addendum, the following terms shall have the following meaning:

1. The term "certification" shall mean a statement sworn to under the pains and penalties of perjury and which shall set forth that the representations contained therein may be provided to, relied upon and material to the government of the United States, and that a knowing false statement could result in criminal or civil liability for the signatory.

2. The term "Compliance Officer" refers to the Vice President and Compliance Officer for GSK's North America Pharma division. For at least the term of this Addendum, the Compliance Officer shall be a member of GSK' s senior management of the North America Pharma division and GSK's U.S. Compliance Committee. Not later than thirty

6

(30) days after the date of sentencing, GSK shall notify the United States in writing of the name of the Compliance Officer and provide a written description of that person's responsibilities with respect to complying with the FDCA and FDA's regulations and guidance documents relating to the marketing, promotion, and sale of prescription pharmaceutical products. GSK shall, in writing, report to the United States any changes in the identity of or any material changes in the position and responsibilities of the Chief Compliance Officer within fifteen (15) days of any such change.

3. The term "U.S. Compliance Committee" refers to the North America Pharma Risk Management & Compliance Board which, in conjunction with the Compliance Officer, assists in the implementation and enhancement of the Compliance Program. For at least the term of this Addendum, this committee shall, at a minimum, include the Chief Compliance Officer and other members of North America Pharma division senior management with responsibilities concerning the marketing, promotion, and sale ofGSK's prescription pharmaceutical products. Not later than thirty (30) days after the date of sentencing, GSK shall notify the United States in writing of the names of the members of the U.S. Compliance Committee and provide a written description of their responsibilities with respect to complying with the FDCA and FDA's regulations and guidance documents relating to the marketing, promotion, and sale of prescription pharmaceutical products. GSK shall, in writing, report to the United States any changes in the composition of the U.S. Compliance Committee. This report shall be provided within fifteen (15) days of any such change.

4. The term "Compliance Program" refers to the policies, procedures, practices, and other measures that GSK has established or will establish to address regulatory compliance issues relating to the marketing, promotion and sale of prescription pharmaceutical products, including GSK's compliance with FDCA and FDA regulations and guidance documents.

5. The term "prescription pharmaceutical products" means drugs marketed, promoted, or sold in the United States and intended for use by humans which must be used under the supervision of a practitioner licensed by law to administer such drugs. 21 U.S.C. § 353(b)(l).

6. The term "Payers" refers to entities that provide a drug health benefit program for prescription pharmaceutical products, including but not limited to government payers (e.g., Medicaid and Medicare) or individuals or entities under contract with or acting on behalf of government payers and commercial health plans.

7

IV. BREACH OF THIS ADDENDUM

GSK recognizes that each of the terms in this Addendum constitutes a material term of this Addendum. As a contractual remedy, GSK and the United States agree that failure to comply with the obligations set forth in this Addendum may lead to the imposition of the following monetary penalties (hereafter referred to as "Stipulated Penalties") in accord with the following provisions.

A. A Stipulated Penalty of $20,000 per day for each day GSK (1) fails to maintain each of the compliance measures set forth in Subsection I, above (if more than one compliance measure fails to be maintained, the Stipulated Penalty will apply separately to each compliance measure); or (2) fails to timely supply any of the certifications or reports required in Subsection III, above. With regard to the certifications and reports, the Stipulated Penalty will begin to accrue on the day after the date the obligation was due, subject to the provisions for extension of time for compliance and the opportunity to cure set forth below.

B. GSK may submit a timely written request for an extension of time to provide any certification or report required in Subsection III. A written request is timely if received by the Chief of the Healthcare Fraud Unit for the U.S. Attorney's Office for the District of Massachusetts at least five business days prior to the date by which the certification or report is due. Timely requests for extension will not be unreasonably denied. If an extension of time is granted in writing, Stipulated Penalties shall not accrue until one day after GSK fails to meet the revised deadline. If not granted, Stipulated Penalties shall not begin to accrue until three business days after GSK receives the United States' written denial of such request or the original due date, whichever is later.

C. Upon the United States' sole reasonable determination that GSK has failed to comply with any of the obligations described herein, the United States shall notify GSK in writing ofGSK's failure to comply and the United States' exercise of its contractual right to demand payment of the Stipulated Penalties (the "Demand Letter"). The Demand Letter shall set forth: (i) the provision breached; (ii) the date of the breach; (iii) a description of the breach sufficient to permit GSK to cure (as described below); and (iv) the amount of Stipulated Penalties claimed by the United States as of the date of the Demand Letter. Within fourteen (14) days after receipt of the Demand Letter, or such other period as the United States may agree in writing, GSK shall cure the breach to the United States' reasonable satisfaction ("Cure Period"). If GSK cures the breach within the Cure Period, no Stipulated Penalties shall be due. If GSK fails to cure the breach during the Cure Period, Stipulated Penalties calculated from the date of breach to the date of payment shall be immediately payable to the United States. The Stipulated

8

Penalties shall be paid by electronic fund transfer according to wire instructions that will be provided by the United States. A joint reasonable determination by the United States Attorney for the District of Massachusetts and the Assistant Attorney General for the Civil Division regarding GSK's failure to comply with any of the obligations described herein will be final and non-appealable. GSK agrees that the United States District Court for the District of Massachusetts shall have jurisdiction over any action to collect such a penalty.

9

UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS

Crim. No. UNITED STATES OF AMERICA

v. Violations: 21 U.S.C. §§ 331(a} ,333(a} (1}, 352 (Misbranding}

GLAXOSMITHKLINE LLC

Defendant 21 U.S.C. §§ 331(e} ,333 (a} (1}, 355 (k} (1} (Failure to Report Data to FDA}

INFORMATION

The United States Attorney charges that:

GENERAL ALLEGATIONS

At all times material hereto, unless otherwise alleged:

1. From 1999 through 2003, GLAXOSMITHKLINE LLC or entities

for which it is the corporate successor (hereinafter "GSK"}

promoted the sale of its drugs Paxil and Wellbutrin for uses

other than those approved as safe and effective by the Food and

Drug Administration ("FDA"}. Specifically, GSK

a. promoted Paxil for children and adolescents, and

b. promoted Wellbutrin for weight loss, the treatment

of sexual dysfunction, substance addictions, Attention Deficit

Hyperactivity Disorders, among other unapproved uses.

2. From 2001 through September 2007, GSK failed to report

data relating to clinical experience and other data and

information as required by law, regarding Avandia, a diabetes

medication, to the FDA.

The Defendant

3. Defendant GSK was a pharmaceutical company originally

organized as a corporation under the laws of Pennsylvania, and

later converted to a Delaware Limited Liability Company,

GlaxoSmithKline LLC. GSK's operational headquarters were in

Philadelphia, Pennsylvania, and Research Triangle Park, North

Carolina. GSK manufactured, distributed, and sold pharmaceutical

drugs for human use, including for sale and use in Massachusetts.

The FDA and the FDCA

4. The FDA was the federal agency of the United States

responsible for protecting the health and safety of the public.

The FDA was responsible for enforcing the Food, Drug, and

Cosmetic Act ("FDCA") and ensuring, among other things, that

drugs intended for use in humans were safe and effective for

their intended uses and that the labeling of such drugs contained

true and accurate information.

5. With certain limited exceptions not pertinent here, a

drug could not be distributed in interstate commerce without FDA

approval. To gain FDA approval, data from adequate and well­

controlled clinical studies had to demonstrate that the drug

would be safe and effective for a particular use. As part of the

approval process, the FDA had to approve the drug's labeling,

2

which was required to set forth detailed information about the

drug, including the approved medical conditions of use, dosages,

and patient population(s).

6. Once the FDA found a drug to be safe and effective for

a particular use and approved it for that use, doctors were free

to exercise their medical judgment to prescribe the drug for

other, unapproved (or "off-label") uses.

7. Under the FDCA, however, the manufacturer could not

lawfully market and promote the drug for off-label uses.

8. The FDCA provided that a drug was misbranded if, among

other things, "its labeling is false or misleading in any

particular." 21 U.S.C. § 352(a). Labeling includes written,

printed, or graphic information on or accompanying a drug,

including information that explains the uses of the drug and is

used in connection with the sale of the drug, whether or not it

physically accompanies the drug when distributed. False and

misleading safety and efficacy claims in a drug's labeling

rendered the drug misbranded.

9. The FDCA also provided that a drug was misbranded if

its labeling did not bear "adequate directions for use." 21

u.s.c. § 352(f) (1). As the phrase was used in the FDCA and its

regulations, "adequate directions for use" meant directions under

which a layperson could use a drug safely and effectively for the

3

purposes for which it was intended. 21 C.F.R. § 201.5. A

prescription drug, by definition, could not bear adequate

directions for use by a layperson, but an FDA-approved

prescription drug, bearing the FDA-approved labeling, could be

exempt from the adequate directions for use requirement if it met

a number of conditions, including that it was sold only for an

FDA-approved use. A prescription drug that was marketed for

unapproved, off-label uses would not qualify for this exemption

and therefore was misbranded. 21 C.F.R. § 201.100.

10. The FDCA prohibited causing the introduction or

delivery for introduction into interstate commerce of, or

introducing or delivering for introduction into interstate

commerce, any drug that was misbranded. 21 U.S.C. § 331(a)

4

COUNT ONE - PAXIL

(Distribution of a Misbranded Drug: False and Misleading Labeling: 21 U.S.C. §§ 33l(a}, 333 (a} (1}, & 352 (a})

11. The allegations contained in paragraphs 1 and 3

through 10 are realleged and incorporated herein as if set forth

in full.

GSK'S OFF-LABEL PROMOTION OF PAXIL FOR CHILDREN AND ADOLESCENTS

12. GSK manufactured, distributed, and sold the

prescription drug Paxil for human use. Paxil was GSK's trade

name for the drug paroxetine hydrochloride. Paxil was part of a

class of drugs known as selective serotonin reuptake inhibitors

( "SSRis") .

13. In December 1992, the FDA approved Paxil to treat

depression in adults. The FDA subsequently approved Paxil for

other uses in adults.

14. The FDA never approved Paxil for any purpose for

patients under age 18 ("children and adolescents").

15. GSK promoted the use of Paxil to doctors through a

sales force of approximately 1,900 sales representatives who made

personal visits ("sales calls") to doctors to encourage those

doctors to prescribe Paxil to their patients.

16. GSK sales representatives wrote •call notes" to

document what happened during their sales calls with doctors.

5

Once sales representatives entered their call notes into GSK's

computer system, the call notes could be read by the sales

representatives' colleagues and supervisors.

17. Paxil became one of the 10 top-selling drugs in the

United States and for a time the most commonly prescribed SSRI.

Paxil sales in the United States surpassed $1.8 billion per year

in 2001 and 2002.

Placebo-Controlled Clinical Trials

18. The safety and efficacy of pharmaceutical drugs were

tested in clinical trials or studies.

19. In a "placebo-controlled" clinical study, one group of

patients was treated with the drug being studied and another

group of patients received a placebo. A placebo looked like the

drug that was being studied, but contained no active ingredient.

20. In a "double-blinded" clinical study, neither the

patient nor the treating doctor knew whether the patient was

receiving the drug being studied or a placebo.

21. In a placebo-controlled clinical study, the efficacy of

a drug was measured by primary and secondary "endpoints" that

typically were identified before the study began in a protocol

prepared by the sponsor of the study. The primary endpoint or

endpoints were the main measures of whether the drug worked. The

secondary endpoints contained additional measures to assess the

6

drug's efficacy.

22. At the end of the study, the study was "unblinded" and

the results on the endpoints of patients who had received the

drug being studied were compared to the results on the endpoints

of the patients who received a placebo.

23. In determining whether a study had demonstrated a

drug's efficacy, the FDA typically looked at whether there was a

statistically significant difference on the primary endpoints

between the patients in the study who received the drug being

studied and patients in the study who received a placebo.

Three Clinical Studies Failed to Establish Paxil's Efficacy for Treating Depression in Children and Adolescents

24. Between 1994 and 2001, GSK conducted three placebo-

controlled clinical studies that studied Paxil's safety and

efficacy in treating depression in children and adolescents.

These studies were known as Study 329, Study 377, and Study 701.

25. Study 329 compared the efficacy of Paxil and a second

drug, imipramine, to placebo in treating depression in patients

age 12 to 18. Imipramine was part of a class of drugs known as

tricyclic antidepressants ("TCAs"). The acute phase of Study 329

began in April 1994 and ended in May 1997. GSK's internal

clinical report summarizing the results of Study 329 was issued

on November 24, 1998.

7

26. Paxil failed to demonstrate efficacy on Study 329's two

primary endpoints. Paxil also failed to demonstrate efficacy on

the five secondary endpoints identified in Study 329's protocol.

Paxil demonstrated efficacy on four other secondary endpoints

that were not identified in the protocol, but that were

identified as secondary endpoints by the clinical investigators

before Study 329's results were unblinded.

27. Study 377 compared the efficacy of Paxil to placebo in

treating depression in patients age 13 to 18. Study 377 began in

April 1995 and was completed in May 1998. GSK's internal

clinical report summarizing the results of Study 377 was issued

on November 19, 1998.

28. Paxil failed to demonstrate efficacy on any of the

primary or secondary endpoints in Study 377.

29. Study 701 compared the efficacy of Paxil to placebo in

treating depression in patients age 7 to 17. Study 701 began in

March 2000 and ended in January 2001. GSK's internal clinical

report summarizing the results of Study 701 was issued on July

30, 2001.

30. Paxil failed to demonstrate efficacy on any of the

primary or secondary endpoints in Study 701.

8

GSK Helped Write and Approved a Medical Journal Article Which Stated that Study 329 Demonstrated that Paxil Was Effective in

Treating Depression in Adolescents

31. GSK hired a contractor to help write an article about

the results of Study 329. The contractor wrote the first draft

of the article based on GSK's internal final clinical report on

Study 329. The contractor then incorporated into subsequent

drafts of the article revisions made by the clinical

investigators and a GSK employee involved in the study.

32. The article about Study 329 was published in July 2001

in the Journal of the American Academy of Child and Adolescent

Psychiatry ("JAACAP"). The article listed 22 authors, including

20 clinical investigators who were not GSK employees and two GSK

employees. In addition, the contractor was identified as having

provided "editorial assistance." GSK and the authors approved

the article before it was submitted to JAACAP.

33. The JAACAP article identified Study 329's two primary

endpoints. The JAACAP article also listed five secondary

endpoints "that were declared a priori." Three of these five

secondary endpoints were not identified before the study began,

but had been identified as secondary endpoints by the clinical

investigators before Study 329's results were unblinded.

Elsewhere, the article contained a chart that showed the results

of eight endpoints. The chart did not indicate which endpoints

9

were primary, which endpoints were identified as secondary in the

protocol before the study began, and which endpoints had been

added after the study had begun but before the results were

unblinded.

34. The JAACAP article was false and misleading. Although

the article's text identified the two primary endpoints and the

article's chart reported the results on those endpoints, the

article never explicitly stated that Study 329 failed to

demonstrate efficacy on either of its two primary endpoints. The

article at one point inaccurately stated that Paxil "separated

statistically from placebo" on a primary endpoint. The article

also did not explicitly state that Paxil failed to demonstrate

efficacy on all of the secondary endpoints that had been

identified in the protocol.

35. The JAACAP article presented the results of Study 329

as favorable, based on Paxil having demonstrated efficacy on the

four secondary endpoints that were not identified in the protocol

and which were added after the study had begun but before the

results were unblinded. The JAACAP article's abstract stated

that Paxil "is generally well tolerated and effective for major

depression in adolescents." The JAACAP article's conclusion

stated that "[t]he findings of this study provide evidence of the

efficacy and safety of the SSRI, [Paxil], in the treatment of

10

adolescent depression."

36. The article disclosed that serious adverse events

("SAEs") were experienced by 11 patients in Study 329 who

received Paxil, five patients who received imipramine, and two

patients who received the placebo. An earlier draft of the

article stated that of the 11 SAEs experienced by Paxil patients,

"worsening depression, emotional lability, headache, and

hostility were considered related or possibly related to

treatment." A GSK employee suggested that the contractor change

this section of the article. The revised version printed in

JAACAP stated: "Of the 11 patients [who had serious adverse

events while taking Paxil], only headache (1 patient) was

considered by the treating investigator to be related to [Paxil]

treatment. 11

GSK Used the Article in JAACAP to Promote Paxil for Children and Adolescents

37. The contractor hired by GSK to help prepare the medical

journal article provided drafts of the article to the head of

GSK's Paxil marketing team.

38. On or about August 16, 2001, GSK's Paxil marketing team

sent a copy of the JAACAP article to all of the approximately

1,900 GSK sales representatives who sold Paxil. A cover

memorandum summarizing the article (the "GSK Cover Memo") stated

11

in bold type:

This 'cutting-edge,' landmark study is the first to compare efficacy of an SSRI and a TCA with placebo in the treatment of major depression in adolescents. Paxil demonstrates REMARKABLE Efficacy and Safety in the treatment of adolescent depression.

39. The GSK Cover Memo also stated:

In conclusion, the findings of this study provide evidence of the efficacy and safety of Paxil in the treatment of adolescent depression. Here's another example of GlaxoSmithKline's commitment to Psychiatry by bringing forth •cutting edge" scientific data. Paxil is truly a REMARKABLE product that continues to demonstrate efficacy, even in this understudied population.

40. The GSK Cover Memo did not disclose that Paxil failed

to demonstrate efficacy on the protocol-defined primary and

secondary endpoints of the same study. The GSK Cover Memo also

did not disclose that GSK had completed two other studies that

also did not demonstrate that Paxil was effective in treating

depression in children and adolescents.

41. The GSK Cover Memo did not state that Paxil was not

approved for the treatment of children and adolescents. The GSK

Cover Memo stated that the article was for sales representatives'

information only and should not be used with or distributed to

doctors, and both the Cover Memo and the article were stamped

"FOR REPRESENTATIVES' INFORMATION ONLY."

42. Some GSK sales representatives used the JAACAP article

12

to urge doctors to prescribe Paxil to treat depression in

children and adolescents.

GSK Did Not Publicize the Results of Studies 377 and 701

43. GSK learned the results of Study 377 in 1998 and the

results of Study 701 in 2001. Paxil failed to demonstrate

efficacy on any of the endpoints in either study.

44. GSK did not hire a contractor to help write medical

journal articles about the results of Studies 377 and 701, as it

had with Study 329.

45. GSK did not inform its sales representatives about the

results of Studies 377 and 701.

Safety Issues

46. After GSK provided to the FDA the results of Studies

329, 377, and 701, as well as additional statistical analyses

performed by GSK, some of which suggested a possible increased

suicidality associated with Paxil use in patients under age 18,

the FDA conducted a broad inquiry into the safety of Paxil, other

SSRis, and other antidepressants to treat depression in patients

under age 18.

47. On or about June 19, 2003, the FDA recommended that

Paxil not be used to treat depression in patients under age 18.

48. On or about October 27, 2003, the FDA stated that

antidepressants should be used only with caution to treat

13

depression in patients under age 18.

49. On or about October 15, 2004, the FDA required all

antidepressants, including Paxil, to include on their labels a

"black box warning• stating that antidepressants increased the

risk of suicidal thinking and behavior in short-term studies in

patients under age 18.

GSK Provided Sales Representatives With Other Information Which Was Used to Promote the Use of Paxil in Children and Adolescents

50. In 1999, GSK created a 150-person neuroscience

specialty sales force to promote Paxil to psychiatrists. On or

about September 28, 1999, GSK paid a child psychiatrist, whose

research primarily dealt with patients under age 18, to speak at

the launch meeting of GSK's neuroscience specialty sales force.

According to a subsequent internal GSK newsletter reporting on

the event, this child psychiatrist discussed the results of Study

329 and said that GSK had a •window of opportunity.• According

to the internal GSK newsletter, this child psychiatrist told the

neuroscience sales representatives that, as a result of Study

329, "We can say that paroxetine has both efficacy and safety

data for treating depression in adolescents.•

51. On or about February 14, 2001, GSK sent a copy of a

medical journal article about the use of Paxil for adolescent

obsessive compulsive disorder ("OCD") to all of the approximately

14

1,900 GSK sales representatives who sold Paxil. An accompanying

memorandum summarizing the article stated: "This study suggests

that Paxil is an effective short-term treatment for OCD in

children [and] adolescents (aged 9-15 years) and has fewer AE's

[adverse events]." The memorandum stated that the information

was for sales representatives' information only and should not be

used with or distributed to doctors.

52. From 2000 to 2002, some GSK sales representatives used

information provided by GSK to urge doctors to use Paxil to treat

children and adolescents with depression, OCD, and other

psychiatric conditions.

GSK Used Paxil Forum Events to Promote Paxil for Children and Adolescents

53. GSK held eight "Paxil Forum" events at resorts in

Puerto Rico, Hawaii, and California in 2000 and 2001. GSK

invited psychiatrists who prescribed large amounts of SSRis to

attend the events. Each of GSK's approximately 150 neuroscience

sales representatives could attend up to two of the events per

year, and each representative could invite up to two different

psychiatrists to each event. The 3-day Paxil Forum events

included presentations about Paxil and other topics. The events

also included dinners and recreational activities such as deep

sea fishing, kayaking, snorkeling, sailing, horseback riding,

15

balloon rides, and golf. GSK paid for the psychiatrists' air

fare, lodging, meals, recreational activities, and provided to

each of them an honorarium of $750. The Paxil marketing team

organized, attended, and participated in the Paxil Forum events.

54. GSK paid a leading child psychiatrist to speak at four

of the eight Paxil Forum events in 2000 and 2001. At each of

these four Paxil Forum events, this child psychiatrist encouraged

other doctors to use SSRis to treat depression and social anxiety

disorder in patients under age 18. This child psychiatrist

claimed that patients treated with Paxil in Study 329 showed

"significantly greater improvement" than patients who received

the placebo.

55. To promote the use of Paxil in children and

adolescents, some GSK sales representatives purposely invited

psychiatrists with a significant percentage of patients under age

18 to attend the Paxil Forum events at which the child

psychiatrist recommended the use of SSRis for children and

adolescents.

56. Following the Paxil Forum events, some GSK sales

representatives gave doctors during sales calls copies of the

slides shown during the Paxil Forum events by the child

psychiatrist referenced in Paragraph 52 above. The slides

reported only select, favorable results from Study 329. The

16

slides did not report the unfavorable results from Study 329 or

other studies of Paxil's efficacy in treating depression in

children and adolescents. The slides also did not state that the

FDA had not approved the use of Paxil in patients under age 18.

The slides distributed by the GSK sales representatives were

false and misleading.

57. GSK monitored the prescriptions written by

psychiatrists who attended the Paxil Forum events in 2000 to

determine whether the events increased Paxil's market share. GSK

concluded that the Paxil Forum events in 2000 "had a significant

impact on Paxil market share in the months after attendance."

GSK found that the percentage of Paxil prescriptions relative to

other SSRI prescriptions prescribed by psychiatrists who attended

the Paxil Forum events in 2000 increased when compared to the

percentage prescribed by psychiatrists who had not attended the

Paxil Forum events. Individual GSK sales representatives

continued to monitor whether psychiatrists who attended the Paxil

Forum events in 2001 increased their Paxil prescriptions after

attending the events.

GSK Used Dinner Programs to Promote the Use of Paxil in Children and Adolescents

58. GSK sponsored dinner programs, lunch programs, spa

programs, and similar activities to promote the use of Paxil in

17

children and adolescents. At such events, GSK paid a speaker to

talk to an audience of doctors. GSK paid for the meal or spa

treatment for the doctors who attended. These events were

approved in advance by GSK's district sales managers and by GSK's

speakers bureau.

GSK Used Samples to Promote the Use of Paxil in Children and Adolescents

59. GSK provided each sales representative with a list of

doctors on whom the sales representatives should make sales

calls. The lists specified how frequently sales representatives

should make sales calls on each doctor. Sales representatives

were required to call most frequently on doctors who prescribed

the most SSRis.

60. GSK encouraged its sales representatives to give

doctors free Paxil samples during the sales calls. GSK's purpose

in distributing free samples was to allow doctors to start

patients on Paxil, with the hope that the patient would be

shifted to a paid Paxil prescription if the treatment was

successful.

61. Beginning in or around August 2003, GSK began

attempting to remove from its Paxil call lists doctors who

exclusively treated patients under age 18. This process

continued until at least on or about May 11, 2005. Thus, prior

18

to in or around August 2003, GSK required its sales

representatives to make sales calls on, and encouraged its sales

representatives to provide Paxil samples to, doctors who treated

only patients under age 18. There was no FDA-approved use for

Paxil in patients under age 18.

DISTRIBUTION OF PAXIL

62. Throughout the relevant time period of the above­

described actions, GSK distributed Paxil in Massachusetts and

elsewhere and held Paxil for sale in Massachusetts and elsewhere.

DISTRIBUTION OF MISBRANDED PAXIL

63. From on or about April 3, 1998, through in or around

the end of August 2003, in the District of Massachusetts, and

elsewhere, defendant

GlaxoSmithKline LLC

did introduce and cause the introduction into interstate

commerce, directly and indirectly, into Massachusetts and

elsewhere from outside of Massachusetts, Paxil, a drug within the

meaning of the FDCA, 21 U.S.C. § 321(g}, that was misbranded, in

that its labeling was false and misleading.

All in violation of 21 U.S.C. §§ 331(a}, 333 (a} (1}, and

352 (a} .

19

COUNT TWO - WELLBUTRIN

(Distribution of a Misbranded Drug: Inadequate Directions for Use 21 u.s. c. §§ 331 (a), 333 (a) (1) & 352 (f) (1))

64. The allegations contained in paragraphs 1 and 3 through

10 are realleged and incorporated herein as if set forth in full.

GSK'S PROMOTION OF WELLBUTRIN FOR UNAPPROVED USES

65. GSK manufactured, distributed, and sold the

prescription drug Wellbutrin for human use. Wellbutrin was GSK's

trade name for the drug bupropion hydrochloride.

66. At all times relevant to the Information, Wellbutrin

was approved by the FDA only as a treatment for major depressive

disorder in adults age 18 or older.

67. From 1999 to 2003, Wellbutrin was not approved for any

use other than to treat major depressive disorder in adults.

68. To increase its profits from Wellbutrin, from in or

about 1999 through 2003, GSK promoted the sale and use of

Wellbutrin for a variety of uses for which GSK had not received

FDA approval including:

a. for weight loss and the treatment of obesity;

b. to treat sexual dysfunction;

c. as an "add-on" drug to treat the side effects of other antidepressant medications, including weight gain and sexual dysfunction;

d. to treat Attention Deficit Hyperactivity Disorder ("ADHD") and other attention disorders;

20

e. to treat addiction to drugs, alcohol, or gambling;

f. to treat other mental diseases such as anxiety and bipolar disorder;

g. to treat patients under age 18; and

h. with dosing regimens different than those in the

label.

69. GSK encouraged sales representatives to provide

messages about off-label uses of Wellbutrin during one-on-one

sales calls with doctors.

70. GSK sales representatives sometimes referred to

Wellbutrin as "the happy, horny, skinny pill" as a way to remind

doctors of the unapproved uses for Wellbutrin that they were

promoting.

71. GSK used speaker programs to spread off-label

information about Wellbutrin to doctors. GSK trained and paid

doctors to speak to other doctors at hundreds of promotional

events per year that were organized by GSK's sales

representatives. At many of these events, speakers recommended

the use of Wellubutrin for unapproved uses. Some of these

speakers also made additional false and misleading claims about

Wellbutrin's safety and efficacy for approved and unapproved

uses.

72. Two of GSK's most frequently used speakers, who each

21

spoke more than 800 times and were each paid more than $1.5

million by GSK from 2000 to 2003, recommended Wellbutrin for a

wide variety of unapproved uses, including for weight loss, to

treat sexual dysfunction, to treat ADHD and other attention

disorders, and even for patients with bulimia or who were

abruptly discontinuing alcohol (both of which were specifically

contraindicated in Wellbutrin's labeling).

73. GSK paid doctors to attend lavish meetings in places

such as Jamaica and Bermuda during which GSK provided off-label

information about Wellbutrin in a manner to encourage doctors to

write Wellbutrin prescriptions for unapproved uses of the drug.

GSK tried to disguise the promotional nature of these meetings by

characterizing them as "speaker training" meetings.

74. GSK paid doctors to attend "Local Advisory Boards,"

"Regional Advisory Boards," and Special Issues Boards" during

many of which GSK provided information about unapproved uses of

Wellbutrin.

75. GSK called these meetings "advisory board" or

"consultant" meetings to create the pretense that GSK was

gathering information and feedback from the doctors. In fact,

there generally was little consulting provided by the doctors

during these meetings and GSK made no real effort to capture and

disseminate the advice it supposedly obtained.

22

76. GSK held such sham advisory board meetings repeatedly

and frequently, sometimes holding more than one such meeting on

the same day in the same city or hotel, with similar off-label

agendas for many events, and the same speakers.

77. GSK also sponsored extensive continuing medical

education ("CME") programs for doctors during which off-label

information about Wellbutrin was disseminated. Although CME

programs were ostensibly independent, in certain CME programs,

GSK influenced the content and frequently selected the location

and the speakers and invited many of the attendees, and GSK in

some instances determined how much the speaker was paid.

78. GSK's sales representatives frequently arranged for the

speakers at CME programs to be the same doctors who spoke most

frequently at GSK's Wellbutrin promotional events. In some

instances, GSK's sales representatives knew that these speakers

would deliver at the CME programs the same off-label information

they provided during promotional programs.

79. GSK sales representatives distributed and played for

doctors certain purportedly independent CME materials in the form

of audiocassettes or DVDs that GSK had funded and/or prepared and

which contained messages about unapproved uses of Wellbutrin.

23

DISTRIBUTION OF WELLBUTRIN

80. Throughout the relevant time period of the above­

described actions, GSK distributed Wellbutrin in Massachusetts

and elsewhere and held Wellbutrin for sale in Massachusetts and

elsewhere.

DISTRIBUTION OF MISBRANDED WELLBUTRIN

81. From in or about January 1999 through in or about

December 2003, in the District of Massachusetts, and elsewhere,

defendant

GlaxoSmithKline LLC

did introduce and cause the introduction into interstate

commerce, directly and indirectly, into Massachusetts and

elsewhere, from outside of Massachusetts, Wellbutrin, a drug

within the meaning of the FDCA, 21 U.S.C. § 32l(g), which was

intended for use for the treatment of sexual dysfunction, for

weight loss, addiction, ADHD, and as an add-on to other

antidepressant drugs and for other conditions and which was

misbranded within the meaning of 21 U.S.C. § 352(f) (1), in that

its labeling lacked adequate directions for such uses.

All in violation of 21 U.S.C. §§ 331(a), 333(a) (1), and

352 (f) (1).

24

COUNT THREE - AVANDIA

(Failure to Report Data to FDA: 21 U.S.C. §§ 33l(e), 333 (a) (1) & 355 (k) (1))

82. The allegations in paragraphs 2 through 4 are realleged

and incorporated by reference herein.

REQUIRED REPORTING OF INFORMATION REGARDING DRUGS TO THE FDA

83. Under the FDCA, the term "drug" included articles that

(1) were intended for use in the diagnosis, cure, mitigation,

treatment, or prevention of disease in humans; and (2) were

intended to affect the structure or any function of the human

body. 21 u.s. c. § 321 (g) (1) (B) and (C).

84. A drug was a ''new drug" if it was, in part, "not

generally recognized, among experts qualified by scientific

training and experience to evaluate the safety and effectiveness

of drugs, as safe and effective for use under the conditions

prescribed, recommended, or suggested in the labeling thereof

" 21 u.s.c. § 321 (p) (1). To be lawfully introduced into

interstate commerce, new drugs required an approved marketing or

investigational application. 21 U.S.C. §§ 331(d) and 355.

Approved marketing or investigational applications included New

Drug Applications ("NDAs"). 21 U.S.C. § 355.

85. To obtain FDA approval of an NDA, the sponsor was

required to demonstrate, to FDA's satisfaction, that the drug was

25

both safe and effective for each of its claimed uses. 21 U.S.C.

§ 355(b). Toward this end, the NDA sponsor was required to

provide, to the satisfaction of FDA, substantial evidence,

including data generated in adequate and well-controlled clinical

investigations, that demonstrated that the drug was safe and

effective when used in accordance with the proposed labeling for

its intended uses. 21 U.S.C. § 355(d). An NDA sponsor was not

permitted to promote or market the drug until the FDA had

approved the NDA.

86. Once the NDA had been approved, the holder of the NDA

was required to provide the FDA certain periodic reports of data

relating to clinical experience to permit the FDA to determine,

among other things, whether grounds for withdrawal of the NDA

existed based upon clinical experience showing that the drug was

unsafe for use under the conditions of use for which it was

approved. 21 U.S.C. §§ 355(k) (1), (e). These periodic reports

of data were intended to provide the FDA an overview of all

safety-related information learned by the holder of the NDA

during that quarter or year, and thereby facilitate the FDA's

ability to spot drug safety trends.

87. Among other reporting, the holder of the NDA was

required to submit to the FDA certain reports regarding

postmarketing adverse drugs experiences. 21 C.F.R. § 314.80.

26

These reports were required to include, among other information,

''a history of actions taken since the last report because of

adverse drug experiences (for example, labeling changes or

studies initiated)." 21 C.F.R. § 314.80 (c) (2) (ii) (c).

88. Also among other reporting, the holder of the NDA was

required to file an Annual Report each year regarding the

approved drug. 21 C.F.R. § 314.81(b) (2). Among other

information required to be included in the Annual Report was a

"status report of each postmarketing study of the drug product

concerning clinical safety, clinical efficacy, clinical

pharmacology, and nonclinical toxicology that is required by the

FDA . . " 21 C.F.R. § 314.81(b) (2) (vii); and a "status report

of any postmarketing study not included under paragraph

(b) (2) (vii) of this section that is being performed by, or on

behalf of, the applicant." 21 C.F.R. § 314.81(b) (2) (viii).

89. At all times material to this Information, it was a

crime, in violation of Title 21 United States Code, Section

331 (e) to fail to make reports required by Section 355 (k) (1),

including reports of data relating to clinical experience, and

other data and information, as necessary for the FDA to determine

whether the NDA approval should be withdrawn or suspended for any

reason set forth in Section 355(e).

27

DEVELOPMENT OF AND STUDIES REGARDING AVANDIA

90. One of the prescription drugs that was developed by GSK

was Avandia (rosiglitazone maleate), a diabetes medication.

Avandia was one of a class of drugs known as thiazolidediones

that were designed to increase insulin sensitivity. The FDA

approved the NDA application for Avandia in May 1999.

Thereafter, GSK promoted, sold, and distributed Avandia into

interstate commerce in the United States, including within the

District of Massachusetts.

91. In 2001, GSK initiated two separate studies at the

request of European regulatory authorities as postmarketing

commitments to further evaluate the cardiovascular safety of

Avandia. Those two studies were known as Study 211 and RECORD.

A. The GSK protocol for Study 211 indicated that this

study was initiated because "rosiglitazone (like other

thiazolidnediones) causes a mild increase in plasma volume. An

increase in plasma volume might aggravate existing cardiac

failure unless appropriate diuretic therapy is initiated .

This study will investigate the effect of rosiglitazone in

addition to background anti-diabetic therapy on cardiac structure

and function and cardiovascular morbidity and mortality in type 2

diabetic patients with pre-existing CHF [congestive heart

failure[(NYHA grade I/II). "

28

B. The GSK protocol for RECORD indicated that this

study was initiated because rosiglitazone "also increases body

weight (albeit without altering known weight-associated

cardiovascular risk factors), has a multifactoral effect on

lipids (some effects putatively beneficial, some putatively

adverse) , and leads to a modest increase in plasma volume .

There is a need formally to evaluate long term cardiovascular

outcome, both for those who receive the most widely used oral

combination therapy (sulphonylurea (SU) plus metformin (MET), and

for those who are given rosiglitazone in addition to their first­

line therapy (metformin or SU) ."

92. In its 2001 Periodic Report for Avandia, GSK did not

notify the FDA of the initiation of Study 211 and RECORD, despite

the regulatory requirement that each periodic report contain "a

history of actions taken since the last report because of adverse

drug experiences (for example, labeling changes or studies

initiated)." 21 C.F.R. § 314.80(c) (2) (i) (c).

93. Moreover, in each of its Annual Reports for Avandia

between 2001 and 2007, GSK did not provide the FDA with a status

report on certain postmarketing studies being performed by, or on

behalf of, GSK, despite the regulatory requirement to provide

that information in 21 C.F.R. § 314.81(b) (2) (viii). Some of the

studies that were omitted from certain of those Annual Reports

29

included Study 211, RECORD, and APPROACH, all of which involved

cardiovascular safety issues.

94. Additionally, in its 2007 Annual Report for Avandia

that was submitted to the FDA, GSK did not provide the FDA with a

status report of the post-marketing study, ADOPT, which concerned

clinical efficacy, despite the regulatory requirement to provide

that information in 21 C.F.R. § 314.81(b) (2) (vii).

FAILURE TO MAKE REQUIRED REPORTING TO FDA

95. Beginning in or about 2001 and continuing until in or

about September 2007, in the District of Maryland and elsewhere,

the defendant,

GLAXOSMITHKLINE LLC

did fail to make required reporting of data relating to clinical

experience and other data and information regarding Avandia, as

required by law, to the United States Food and Drug

Administration.

All in violation of 21 U.S .C. §§331 (e), 333 (a) (1), and

355 (k) (1).

30

FORFEITURE ALLEGATIONS

(21 U.S.C. §§ 334, 853 and 28 U.S.C. § 2461(c}}

96. Upon conviction of one or more of the offenses charged

in Counts One and Two of this Information, defendant

GlaxoSmithKline LLC

shall forfeit to the United States pursuant to 21 U.S.C. § 334

and 28 U.S.C. § 2461(c}, any quantities of Paxil that between

April 3, 1998 and the end of August 2003, and any quantities of

Wellbutrin that between January 1999 and December 2003, were

introduced into interstate commerce in violation of 21 U.S.C. §§

331 (a} and 352 (a) and 352 (f) (1).

97. If any of the property subject to forfeiture, as a

result of any act or omission of the defendant:

a. cannot be located upon the exercise of due

diligence;

b. has been transferred or sold to, or deposited

with, a third party;

c. has been placed beyond the jurisdiction of the

court;

d. has been substantially diminished in value; or

e. has been commingled with other property which

cannot be divided without difficulty;

31

it is the intent of the United States, pursuant to 21 U.S.C. §

853(p), incorporated by reference in 28 U.S.C. § 2461(c), to seek

forfeiture of any other property of the defendant up to the value

of the property subject to forfeiture, that is $43,185,600.

All pursuant to 21 U.S.C. §§ 334 and 853, and 28 u.s.c. §

2461(c), and Rule 32.2 of the Federal Rules of Criminal

Procedure.

By:

Date: July 2, 2012

CARMEN M. ORTIZ

Shannon T. Kelley Amanda Strachan Brian Perez-Dapple Assistant u.s. Attorneys United States Attorney's Office District of Massachusetts

STUART F. DELERY ACTING ASSISTANT ATTORNEY GENERAL U.S. DEPARTMENT OF JUSTICE

Patrick Jasperse Jill Furman Mark Josephs David Frank Timothy Finley Trial Attorneys Consumer Protection Branch u.s. Department of Justice

32

it is the intent of the United States, pursuant to 21 u.s.c. §

853(p), incorporated by reference in 28 u.s.c. § 246l(c), to seek

forfeiture of any other property of the defendant up to the value

of the property subject to forfeiture, that is $43,185,600.

All pursuant to 21 u.s.c. §§ 334 and 853, and 28 u.s.c. §

2461(c), and Rule 32.2 of the Federal Rules of Criminal

Procedure.

By:

By:

Date: July 2, 2012

CARMEN M. ORTIZ UNITED STATES ATTORNEY

Sara Miron Bloom

Susan G. Winkler Shannon T. Kelley Amanda Strachan Brian Perez-Dapple Assistant U.S. Attorneys United States Attorney's Office District of Massachusetts

STUART F. DELERY ACTING ASSISTANT ATTORNEY GENERAL

r~;=Tz~~-Patrick Jasperse ~~ Jill Furman Mark Josephs David Frank Timothy Finley Trial Attorneys Consumer Protection Branch U.S. Department of Justice

32

SETTLEMENT AGREEMENT

This Settlement Agreement ("Agreement") is entered into by and among the United

States of America, acting through the United States Department of Justice on behalf of the

Office of Inspector General of the United States Department of Health and Human Services

("OIG-HHS"), the TRICARE Management Activity ("TMA"), the United States Department of

Veteran's Affairs ("VA"), and the United States Office ofPersonnel Management ("OPM")

(collectively the "United States"), Relators identified in the cases listed in Paragraph B ofthe

Preamble to this Agreement ("Relators"), and GlaxoSmithKline LLC ("GSK"), through their

authorized representatives. Collectively, all of the above will be referred to as "the Parties."

PREAMBLE

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

A. GlaxoSmithKline LLC is a Delaware limited liability company and an indirect

subsidiary of GlaxoSmithKline plc, a public limited company incorporated under English law

with headquarters in Brentford, England. At all relevant times, GSK developed, manufactured,

distributed, marketed and sold pharmaceutical products in the United States, including drugs

sold under the trade names ofPaxil, Wellbutrin, Advair, Lamictal, Zofran, Imitrex, Lotronex,

Flovent and Valtrex (collectively the "Covered Drugs").

B. The Relators listed herein have filed the following ill!! tam actions against GSK

(collectively the "Civil Actions"):

(1) United States et al. ex rel. Thorpe, et al. v. GSK et al., Civ. No. 11-10398 (D. Mass.);

(2) United States et al. ex rel. Gerahty, et al. v. GSK et al., Civ. No. 03-10641 (D. Mass.);

(3) United States ex rel. Graydon v. GSK et al., Civ. No. 11-10741 (D. Mass);

( 4) United States et al. ex rel. LaFauci v. GSK, Civ. No. 11-1 0921 (D. Mass.);

The United States filed a notice of intervention on January 14, 2011 and filed its Complaint-In­

Intervention on October 26, 2011 ("Complaint-in-Intervention").

C. On such date as may be determined by the Court, GSK will enter a plea of guilty

pursuant to Fed. R. Crim. P. 11 ( c )(1 )(C) (the "Plea Agreement") to an Information to be filed in

United States of America v. GlaxoSmithKline LLC., Criminal Action No. [to be assigned]

(District of Massachusetts) (the "Criminal Action") that will allege: (i) violations of Title 21,

United States Code, Sections 331(a), 333(a)(l) and 352, namely, the introduction into interstate

commerce of the misbranded drugs Wellbutrin and Paxil; and (ii) a violation of Title 21, United

States Code, Sections 331(e), 333(a)(l), and 355(k)(1), namely, that GSK failed to report data

relating to clinical experience, along with other data and information, regarding A vandia to the

Food and Drug Administration ("FDA") in mandatory reports, all in violation of the Food, Drug

and Cosmetic Act ("FDCA").

D. GSK has entered into or will be entering into separate settlement agreements,

described in Paragraph 1 (b) below (hereinafter referred to as the "Medicaid State Settlement

Agreements") with certain states and the District of Columbia in settlement ofthe Covered

Conduct. States with which GSK executes a Medicaid State Settlement Agreement in the form

to which GSK and the National Association of Medicaid Fraud Control Units ("NAMFCU")

Negotiating Team have agreed, or in a form otherwise agreed to by GSK and an individual State,

shall be defined as "Medicaid Participating States."

E. The United States alleges that GSK caused to be submitted claims for payment

for the Covered Drugs to the Medicare Program, Title XVIII of the Social Security Act, 42

U.S.C. §§1395-1395kkk ("Medicare"), and to the Medicaid Program, Title XIX of the Social

Security Act, 42 U.S.C. §§ 1396-1396w-5 ("Medicaid"). The United States further alleges that

2

GSK caused claims for payment for the Covered Drugs to be submitted to the TRICARE

program, 10 U.S.C. §§ 1071-1110b; the Federal Employees Health Benefits Program

("FEHBP"), 5 U.S.C. §§ 8901-8914; the Federal Employees Compensation Act Program, 5

U.S. C. § 8101, et seq; and caused purchases of the Covered Drugs by the Department of

Veterans' Affairs Programs, 38 U.S.C. §§ 1701-1743 (collectively, the "other Federal Health

Care Programs").

F. The United States contends that it and the Medicaid Participating States have

certain civil claims, as specified in Paragraph 2, below, against GSK for engaging in the conduct

set forth in the Complaint-in-Intervention and as described as follows (hereinafter referred to as

the "Covered Conduct"):

(1) Paxil: During the period January 1, 1998 through December 31,2003, GSK knowingly: (a) promoted the sale and use ofPaxil for conditions and for patients other than those for which its use was approved as safe and effective by the Food and Drug Administration ("FDA"), specifically for children and adolescents under the age of 18, and which uses were not medically-accepted indications as defined by 42 U.S.C. § 1396r-8(k)(6) for which the United States and state Medicaid programs provided coverage for Paxil; (b) made and/or disseminated unsubstantiated and/or false and/or misleading representations or statements about the safety and efficacy ofPaxil concerning the uses described in section (a) of this sub­paragraph, including concealing, omitting or failing to disclose material information about the safety and efficacy ofPaxil; and (c) offered and paid illegal remuneration to health care professionals to induce them to promote and prescribe Paxil, in violation of the Federal Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b). As a result ofthe foregoing conduct, GSK knowingly caused false or fraudulent claims for Paxil to be submitted to, or caused purchases by Medicaid and the other Federal Health Care Programs.

(2) Wellbutrin: During the period January 1, 1999 through December 31, 2003, GSK knowingly: (a) promoted the sale and use of Wellbutrin for conditions (including weight loss, the treatment of obesity, sexual dysfunction and in combination with other anti­depressants) and at dosages other than those for which its use was approved as safe and effective by the FDA, and some of which were not medically-accepted indications as defined by 42 U.S.C. §

3

1396r-8(k)(6) for which the United States and state Medicaid programs provided coverage for Wellbutrin; (b) made and/or disseminated unsubstantiated and/ or false and/ or misleading representations or statements about the safety and efficacy of Wellbutrin; and (c) offered and paid illegal remuneration to health care professionals to induce them to promote and prescribe Wellbutrin, in violation ofthe Federal Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b). As a result of the foregoing conduct, GSK knowingly caused false or fraudulent claims for Wellbutrin to be submitted to, or caused purchases by Medicaid and the other Federal Health Care Programs.

(3) Advair: During the period January 1, 2001 through June 30, 2010, GSK knowingly: (a) promoted the sale and use of Advair for conditions and dosing regimens other than those for which its use was approved as safe and effective by the FDA (including first line use for mild or all asthma, and for asthma previously treated by short-acting inhalers alone), and some of which were not medically-accepted indications as defined by 42 U.S.C. § 1396r-8(k)(6) for which the United States and state Medicaid programs provided coverage for Advair; (b) made and/or disseminated unsubstantiated and/or false and/or misleading representations or statements about the safety and efficacy of Advair (including that Advair was superior to the single component, inhaled corticosteroid alone, for patients previously treated by short -acting inhalers alone); and (c) offered and paid illegal remuneration to health care professionals to induce them to promote and prescribe Advair, in violation of the Federal Anti­Kickback Statute, 42 U.S.C. § 1320-7b(b ). As a result ofthe foregoing conduct, GSK knowingly caused false or fraudulent claims for Advair to be submitted to, or caused purchases by Medicaid, Medicare and the other Federal Health Care Programs.

( 4) Lamictal: During the period January 1, 1999 through December 31, 2003, GSK knowingly: (a) promoted the sale and use ofLamictal for a variety of conditions other than those for which its use was approved as safe and effective by the FDA (including bi-polar depression, neuropathic pain, and various other mental diseases), and some of which were not medically-accepted indications as defined by 42 U.S.C. § 1396r-8(k)(6) for which the United States and state Medicaid programs provided coverage for Lamictal; (b) made and/or disseminated unsubstantiated and/or false and/or misleading representations or statements about the safety and efficacy of Lamictal concerning the uses described in section (a) ofthis sub-paragraph; and (c) offered and paid illegal remuneration to health care professionals to induce them to promote and prescribe Lamictal, in violation of the Federal Anti-Kickback Statute, 42 U.S.C. § 1320-7b(b). As a result of the foregoing conduct, GSK knowingly caused

4

false or fraudulent claims for Lamictal to be submitted to, or caused purchases by Medicaid and the other Federal Health Care Programs.

(5) Zofran: During the period January 1, 2002 through December 31, 2004, GSK knowingly: (a) promoted the sale and use of Zofran for a variety of conditions other than those for which its use was approved as safe and effective by the FDA (including hyperemesis or pregnancy-related nausea), and some of which were not medically-accepted indications as defined by 42 U.S.C. § 1396r-8(k)(6) for which the United States and state Medicaid programs provided coverage for Zofran; (b) made and/or disseminated unsubstantiated and! or false representations or statements about the safety and efficacy of Zofran concerning the uses described in section (a) of this sub-paragraph; and (c) offered and paid illegal remuneration to health care professionals to induce them to promote and prescribe Zofran, in violation of the Federal Anti-Kickback Statute, 42 U.S.C. § 1320-7b(b). As a result ofthe foregoing conduct, GSK knowingly caused false or fraudulent claims for Zofran to be submitted to, or caused purchases by Medicaid and the other Federal Health Care Programs.

( 6) Imitrex, Lotronex, Flovent and Valtrex: From J anumy 1, 1999 through December 30, 2004, GSK paid illegal remuneration for speaker programs, mentorships, preceptorships, journal clubs, advisory boards (including Local and Regional Advisory Boards and Special Issues Boards), Reprint Mastery Trainings, and provided gifts (including entertainment, cash, travel and meals) to health care professionals to induce them to promote and prescribe the drugs Imitrex, Lotronex, Flo vent and V altrex, in violation of the Federal Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b). As a result of the foregoing conduct, GSK caused false claims to be submitted to, or caused purchases by Medicaid and certain other Federal Health Care Programs.

G. The United States also contends that it has certain administrative claims against

GSK as specified in Paragraphs 4 through 6, below, for engaging in the Covered Conduct.

H. This Agreement is made in eompromise of disputed claims. This Agreement is

neither a11 admission of facts or liability by GSK. GSK expressly denies the allegations of the

United States a11d the Relators as set forth herein and in the Civil Actions and the Complaint-In-

Intervention, and denies that it engaged in any wrongful conduct in connection with the Covered

Conduct, except as to such admissions GSK makes in connection with the Plea Agreement. This

5

Agreement is not a concession by the United States or the Relators that their claims are not well­

founded. Neither this Agreement, nor the performance of any obligation arising under it,

including any payment, nor the fact of settlement, is intended to be or shall be understood as, an

admission of liability or wrongdoing, or other expression reflecting on the merits of the dispute,

except as set forth in this Paragraph.

I. Relators claim entitlement under 31 U.S.C. § 3730(d) to a share of the proceeds

of this Settlement Agreement and to reasonable expenses, attorneys' fees and costs, among other

things. This agreement does not cover the claims of any Relator to a share of the proceeds or

their attorneys' fees, costs, and expenses under 31 U.S. C. § 3 73 0( d), and nothing in this

Agreement shall constitute evidence or an admission that any Relator has filed a valid qui tam

action under 31 U.S.C. § 3730 or is entitled to a share of the proceeds or attorneys' fees, costs,

and expenses under 31 U.S.C. §3730(d).

J. To avoid the delay, expense, inconvenience and uncertainty of protracted

litigation of these. claims, the Parties desire to reach a final settlement as set forth below.

TERMS AND CONDITIONS

NOW, THEREFORE, in reliance on the representations contained herein and in

consideration of the mutual promises, covenants, and obligations in this Agreement, and for

good and valuable eonsioeration, receipt of which is hereby acknowledged, the Parties agree as

follows:

1. GSK agrees to pay to the United States and the Medicaid Pruiicipating States,

collectively, the sum of one billion, forty-two million, six hundred twelve thousand, eight

hundred dollars ($ 1 ,042,612,800), plus interest at the rate of 1.625% per annum from December

1, 2011, and continuing until and including the day before payment is made under this

6

Agreement (collectively, the "Settlement Amount"). The Settlement Amount is allocated to the

drugs set forth in the Covered Conduct and at issue in the Civil Actions as follows:

Paxil:

W ellbutrin:

Advair-Asthma:

Advair-COPD July 2008 to June 2010:

Lamictal:

Zofran:

Kickbacks for Paxil, Wellbutrin, Advair, Lamictal, Zofran, Imitrex, Lotronex, Flovent, and Valtrex:

$52,622,130

$166,979,130

$686,049,841

$25,273,910

$54,729,862

$2,320,640

$54,637,287

The Settlement Amount shall constitute a debt inunediate1y due and owing to the United States

and the Medicaid Participating States on the Effective Date of this Agreement. This debt shall

be discharged by payments to the United States and the Medicaid Participating States, under the

following terms and conditions:

(a) GSK shall pay to the United States the sum of eight hundred thirty-two million,

four hundred eighty-five thousand, four hundred and thirty-six dollars ($832,485,436), plus

interest at the rate of 1.625% per annum from December 1, 2011, and continuing until and

including the day before payment is made under this Agreement (the "Federal Settlement

Amount"). The Federal Settlement Amount shall be paid by electronic funds transfer pursuant to

written instructions from the United States no later than seven (7) business days after (i) this

Agreement is fully executed by the Parties and delivered to GSK's attorneys; or (ii) the Court

accepts a Fed. R. Crim. P. 11(c)(l)(C) guilty plea as described in Preamble Paragraph C in

7

connection with the Criminal Action and imposes the agreed upon sentence, whichever occurs

later.

(b) GSK shall pay to the Medicaid Participating States the sum of two hundred and

ten million, one hundred and twenty-seven thousand, three hundred and sixty-four dollars

($210,127,364), plus interest at the rate ofl.625% per annum from December 1, 2011, and

continuing until and including the day before payment is made under this Agreement (the

"Medicaid State Settlement Amount"). The Medicaid State Settlement Amount shall be paid by

electronic funds transfer to an interest bearing account pursuant to written instructions from the

NAMFCU Negotiating Team and under the terms and conditions of the Medicaid State

Settlement Agreements that GSK will enter into with the Medicaid Participating States.

(c) If GSK' s agreed-upon guilty plea pursuant to Fed. R. Crim. P. 11 ( c )(1 )(C) in the

Criminal Action described in Preamble Paragraph Cis not accepted by the Court or the Court

does not impose the agreed-upon sentence for whatever reason, this Agreement shall be null and

void at the option of either the United States or GSK. If either the United States or GSK

exercises this option, which option shall be exercised by notifying all Parties, through counsel, in

writing within five (5) business days ofthe Court's decision, the Parties will not object and this

Agreement will be rescinded. If this Agreement is rescinded, GSK will not plead, argue or

otherwise raise any defenses under the theories of statute of limitations, laches, estoppel or

similar theories, to any civil or administrative claims, actions or proceedings arising from the

Covered Conduct that are brought by the United States within 90 calendar days of rescission,

except to the extent such defenses were available on the day on which the gill tam complaints

listed in Preamble Paragraph B, above, were filed.

8

2. Subject to the exceptions in Paragraph 7 below (concerning excluded claims), in

consideration ofthe obligations ofGSK set forth in this Agreement, conditioned upon GSK's

payment in full of the Settlement Amount, the United States (on behalf of itself, its officers,

agencies, and departments) agrees to release GSK, together with its predecessors, current and

former parents, direct and indirect affiliates, divisions, subsidiaries, successors, transferees and

assigns and their current and former directors, officers, and employees, individually and

collectively, from any civil or administrative monetary claim that the United States has or may

have for the Covered Conduct under the False Claims Act, 31 U.S.C. §§ 3729-3733; the Program

Fraud Civil Remedies Act, 31 U.S.C. §§ 3801-3812; the Civil Monetary Penalties Law, 42

U.S.C. § 1320a-7a; the Food, Drug and Cosmetic Act, 21 U.S.C. § 301, et seq.; any statutory

provision creating a cause of action for civil damages or civil penalties for which the Civil

Division of the Department of Justice has actual and present authority to assert and compromise

pursuant to 28 C.F.R. Part 0, Subpart I, 0.45(d) and common law claims for fraud, payment by

mistake, breach of contract, disgorgement and unjust emichment.

3. Conditioned upon the United States' receipt of the payments described in

Paragraph 1(a) above, and in consideration ofthe obligations ofGSK in this Agreement,

Relators, for themselves and for their heirs, successors, attorneys, agents, and assigns and any

other person or entity acting on their behalf or asserting their rights, release GSK together 'vith

its predecessors, and its current and former divisions, parents, direct and indirect affiliates,

divisions, subsidiaries, transferees, successors, and assigns, and all of their current and former

directors, officers, employees, representatives, servants, agents, consultants and attorneys,

individually and collectively, from any civil monetary claim the United States has or may have

under the False Claims Act, 31 U.S.C. §§ 3729-3733, for the Covered Conduct and from all

9

liability, claims, demands, actions or causes of action whatsoever, whether known or unknown,

fixed or contingent, in law or in equity, in contract or in tort, under any federal or state statute or

regulation, or in common law, that they, their heirs, successors, attorneys, agents and assigns

otherwise would have standing to bring as of the date of this Agreement, including any liability

to Relators arising from or relating to the claims Relator asserted or could have asserted in the

Civil Actions. Provided, however, that Relators and Relators' counsel do not release GSK for

any claims they may have for reasonable attorneys' fees, expenses and costs pursuant to 31

U.S.C. § 3730(d); or for any claims Relators may have pursuant to 31 U.S.C. § 3730(h).

4. In consideration ofthe obligations ofGSK in this Agreement and the Corporate

Integrity Agreement ("CIA") entered into between OIG-HHS and GSK, and conditioned upon

GSK's full payment of the Settlement Amount, the OIG-HHS agrees to release and refrain from

instituting, directing, or maintaining any administrative action seeking exclusion from Medicare,

Medicaid, and other Federal health care programs (as defined in 42 U.S.C. § 1320a-7b(f))

against GSK under 42 U.S.C. § 1320a-7a (Civil Monetary Penalties Law) or 42 U.S.C. § 1320a-

7(b )(7) (permissive exclusion for fraud, kickbacks, and other prohibited activities) for the

Covered Conduct, or against GSK under 42 U.S.C. § 1320a-7(b)(l) based on GSK's agreement

to plead guilty to the charges set forth in the Information in the Criminal Action referenced in

Paragraph C above, except as reserved in Paragraph 7 (concerning excluded claims), below, and

as reserved in: this Paragraph. The OIG-HHS expressly reserves all rights to comply with any

statutory obligations to exclude GSK from Medicare, Medicaid, and other Federal health care

programs under 42 U.S.C. § 1320a-7(a) (mandatory exclusion) based upon the Covered

Conduct. Nothing in this Paragraph precludes the OIG-HHS from taking action against entities

10

or persons, or for conduct and practices, for which claims have been reserved in Paragraph 7,

below.

5. In consideration of the obligations of GSK set forth in this Agreement,

conditioned upon GSK's full payment of the Settlement Amount, TMA agrees to release and

refrain from instituting, directing, or maintaining any administrative action seeking exclusion or

suspension from the TRICARE Program against GSK under 32 C.P.R. § 199.9 for the Covered

Conduct, except as reserved in Paragraph 7 (concerning excluded claims), below, and as

reserved in this Paragraph. TMA expressly reserves authority to exclude GSK under 32 C.P.R.

§§ 199.9 (f)(l)(i)(A), (f)(1)(i)(B), and (f)(1)(iii), based upon the Covered Conduct. Nothing in

this Paragraph precludes TMA or the TRICARE Program from taking action against entities or

persons, or for conduct and practices, for which claims have been reserved in Paragraph 7,

below.

6. In consideration ofthe obligations ofGSK in this Agreement, conditioned upon

GSK's full payment of the Settlement Amount, OPM agrees to release and refrain from

instituting, directing, or maintaining any administrative action against GSK under 5 U.S.C. §

8902a or 5 C.P.R. Part 970 for the Covered Conduct, except as reserved in Paragraph 7

(concerning excluded claims), below, and except if excluded by the OIG-HHS pursuant to 42

U.S.C. § 1320a-7(a) or required by 5 U.S.C. § 8902a(b), or 5 C.P.R. Part 970. Nothing in this

Paragraph precludes OPM from taking action against entities or persons, or for conduct and

practices, for which claims have been reserved in Paragraph 7, below.

11

7. Notwithstanding any term of this Agreement, specifically reserved and excluded

from the scope and terms of this Agreement as to any entity or person (including GSK and the

Relators) are the following claims of the United States:

(a) Any civil, criminal, or administrative liability arising under Title 26, U.S.

Code (Internal Revenue Code);

(b) Any criminal liability;

(c) Except as explicitly stated in this Agreement, any administrative liability,

including mandatory exclusion from Federal health care programs;

(d) Any liability to the United States (or its agencies) for any conduct other

than the Covered Conduct;

(e) Any liability based upon such obligations as are created by this

Agreement;

(f) Any liability for express or implied warranty claims or other claims for

defective or deficient products and services, including quality of goods

and services;

(g) Any liability for personal injury or property damage or for other

consequential damages arising from the Covered Conduct;

(h) Any liability for failure to deliver items or services due; or

(i) Any liability of individuals (including current or former directors, officers,

employees, or agents of GSK) who receive written notification that they

are the target of a criminal investigation, are criminally indicted or

charged, or are convicted, or who enter into a criminal plea agreement

related to the Covered Conduct.

12

8. (A) Each Relator and his/her respective heirs, successors, attorneys, agents,

and assigns agree not to object to this Agreement and agree and confirm that this Agreement and

the amounts set forth in Paragraph 1(a) are fair, adequate and reasonable under all the

circumstances, pursuant to 31 U.S.C. § 3730( c )(2)(B). Each Relator and his/her respective heirs,

successors, attorneys, agents, and assigns, expressly waives the opportunity for a hearing on any

objection to this agreement pursuant to 31 U.S.C. § 3730(C)(2)(B).

(B) Of the federal and states drug claims listed in Paragraphs 1(a), the following were

alleged in United States et al. ex rel. Thorpe, et al. v. GSK et al., Civ. No. 11-10398 (D. Mass.)

and/or United States et al. ex rel. Gerahty, et al. v. GSK et al., Civ. No. 03-10461 (D. Mass):

Paxil, Wellbutrin, Advair-Asthma, Lamictal, Zo:fran, Flovent, Imitrex, Lotronex, Valtrex, and

kickbacks. Of the federal and state drug claims listed in paragraph 1(a), Advair-COPD (July

2008-June 2010) was alleged in United States ex rel. Graydon v. GSK et al., Civ. No. 11-10741

(D. Mass) and United States et al. ex rel. La Fauci v. GSK, Civ. No. 11-10921 (D. Mass). The

Parties incorporate herein by reference the fairness, adequacy and reasonableness letters

executed by each Relator and their counsel. Nothing in this subparagraph (B) is intended to

address whether or to what extent any of the relators in these actions are entitled to a share of

any of the proceeds allocated to the federal and state drug claims listed in Paragraph l(a).

(C) All parties reserve all rights under the False Claims Act unless expressly waived

or released herein. This Agreement does not resolve or in any manner affect any claims the

United States has or may have against the Relators arising under Title 26, U.S. Code (Internal

Revenue Code), or any claims arising under this Agreement.

9. GSK waives and shall not assert any defenses it may have to any criminal

prosecution or administrative action relating to the Covered Conduct that may be based in whole

13

or in part on a contention that under the Double Jeopardy Clause in the Fifth Amendment of the

Constitution, or under the Excessive Fines Clause in the Eighth Amendment of the Constitution,

this Agreement bars a remedy sought in such criminal prosecution or administrative action.

Nothing in this paragraph or any other provision of this Agreement constitutes an agreement by

the United States concerning the characterization of the Settlement Amount for purposes of the

Internal Revenue laws, Title 26 of the United States Code.

10. GSK fully and finally releases the United States, its agencies, employees,

servants, and agents from any claims (including attorneys' fees, costs, and expenses of every

kind and however denominated) which GSK has asserted, could have asserted, or may assert in

the future against the United States, its agencies, employees, servants, and agents, related to the

Covered Conduct or arising from the United States' investigation and prosecution of the Civil

Actions and the Criminal Action.

11. Should this Agreement be challenged by any person as not fair, adequate or

reasonable pursuant to 31 U.S.C. § 3730(c)(2)(B), the Parties agree that they will take all

reasonable and necessary steps to defend this Agreement and the allocation set forth herein.

12. In consideration of the obligations of the Relators set forth in this Agreement,

GSK, on behalf of itself, its predecessors, and its current and former divisions, parents,

subsidiaries, agents, successors, assigns, and their current and former directors, officers and

employees, fully and finally release, waive, and forever discharge the Relators and their

respective heirs, successors, assigns, agents, and attomeys from any claims or allegations GSK

has asserted or could have asserted, arising from the Covered Conduct and from all liability,

claims, demands, actions or causes of action whatsoever, whether known or unknown, fixed or

contingent, in law or in equity, in contract or in tort, under any federal or state statute or

14

regulation, or in common law, that they, their heirs, successors, attorneys, agents and assigns

otherwise would have standing to bring as of the date of this Agreement, including any liability

to GSK arising from or relating to the claims Relator asserted or could have asserted in the Civil

Actions. Provided, however, that GSK expressly reserves any defenses or claims as to Relators'

and Relators' counsel's claims for reasonable attorneys' fees, expenses and costs pursuant to 31

U.S.C. § 3730(d) and as to any claims Relators may have pursuant to 31 U.S. C. § 3730(h), which

are reserved pursuant to Paragraph 3 above.

13. The Settlement Amount shall not be decreased as a result of the denial of claims

for payment now being withheld from payment by any Medicare carrier or intermediary or any

state payer, related to the Covered Conduct; and GSK agrees not to resubmit to any Medicare

carrier or intermediary or any state payer any previously denied claims related to the Covered

Conduct, and agrees not to appeal any such denials of claims.

14. GSK agrees to the following:

(a) Unallowable Costs Defined: that all costs (as defined in the Federal

Acquisition Regulations (FAR) 48 C.F.R. § 31.205-47 and in Titles XVIII and XIX ofthe Social

Security Act, 42 U.S. C. §§ 1395-1395kkk and 1396-1396w-5, and the regulations and official

program directives promulgated thereunder) incurred by or on behalf of GSK, its present or

former officers, directors, employees, shareholders, and agents in connection with the following

shall be "Unallowable Costs" on government contracts and under the Medicare and Medicaid

Programs and other Federal Health Care Programs:

(1) the matters covered by this Agreement and the related Plea Agreement;

15

(2) the United States' audit and civil and criminal investigation of the matters

covered by this Agreement;

(3) GSK's investigation, defense, and any corrective actions undertaken in

response to the United States' audit and civil and criminal investigation in

connection with the matters covered by this Agreement (including

attorneys' fees);

(4) the negotiation and performance of this Agreement, the Plea Agreement,

and the Medicaid State Settlement Agreements;

(5) the payments GSK makes to the United States or any State pursuant to this

Agreement, the Plea Agreement, or the Medicaid State Settlement

Agreements and any payments that GSK may make to Relators (including

costs and attomeys' fees);

(6) the negotiation of, and obligations undertaken pursuant to the CIA to:

(i) retain an independent review organization to perform annual reviews

as described in Section III of the CIA; and (ii) prepare and submit reports

to OIG-HHS. However, nothing in this paragraph 14 affects the status of

costs that are not allowable based on any other authority applicable to

GSK.

(b) Future Treatment_ofUnallowable Costs: These Unallowable Costs shall

be separately determined and accounted for by GSK, and GSK shall not charge such

Unallowable Costs directly or indirectly to any contracts with the United States or any State

Medicaid Program, or seek payment for such Unallowable Costs through any cost report, cost

16

statement, information statement, or payment request submitted by GSK or any of its

subsidiaries or affiliates to the Medicare, Medicaid, TRICARE, or FEHBP Programs.

(c) Treatment ofUnallowable Costs Previously Submitted for Payment: GSK

further agrees that within 90 days of the Effective Date of this Agreement, it shall identify to

applicable Medicare and TRICARE fiscal intermediaries, carriers, and/or contractors, and

Medicaid, and FEHBP fiscal agents, any Unallowable Costs (as defined in tlus Paragraph)

included in payments previously sought from the United States, or any State Medicaid Program,

including, but not limited to, payments sought in any cost reports, cost statements, information

reports, or payment requests already submitted by GSK or any of its subsidiaries or affiliates,

and shall request, and agree, that such cost reports, cost statements, information reports, or

payment requests, even if already se1tled, be adjusted to account for the eiTecl of the inclusion of

the Unallowable Costs. GSK agrees that the United States, at a minimum, shall be entitled to

recoup from GSK any overpayment plus applicable interest and penalties as a result of the

inclusion of such Unallowable Costs on previously-submitted cost reports, information reports,

cost statements, or requests for payment.

Any payments due after the adjustments have been made shall be paid to the

United States pursuant to the direction of the Department of Justice, and/or the affected agencies.

The United States reserves its rights to disagree with any calculations submitted by GSK or any

of its subsidiaries or affiliates on the effect of inclusion of Unallowable Costs (as defined in this

Paragraph) on GSK's or any of its subsidiaries' or aiTiliatcs' cost reports, cost statements, or

information reports.

17

(d) Nothing in this Agreement shall constitute a waiver of the rights of the

United States to audit, examine or reexamine GSK's books and records to determine that no

Unallowable Costs have been claimed in accordance with the provisions of this Paragraph.

15. This Agreement is intended to be for the benefit of the Parties only. The Parties

do not release any claims against any other person or entity, except to the extent provided for in

Paragraph 2 above and 16 below (waiver for beneficiaries paragraph).

16. GSK agrees that it waives and shall not seek payment for any of the health care

billings covered by this Agreement from any health care beneficiaries or their parents, sponsors,

legally responsible individuals, or third party payors based upon the claims defined as Covered

Conduct.

17 _ GSK expressly warrants that it has reviewed its financial situation and that it is

currently solvent within the meaning of 11 U.S.C. §§ 547(b)(3) and 548(a)(1)(B)(ii)(I), and will

remain solvent following payment of the Settlement Amount. Further, the Parties warrant that,

in evaluating whether to execute this Agreement, they (a) have intended that the mutual

promises, covenants and obligations set fmih herein constitute a contemporaneous exchange for

new value given to GSK, within the meaning of 11 U.S.C. § 547(c)(l); and (b) conclude that

these mutual promises, covenants and obligations do, in fact, constitute such a contemporaneous

exchange. Further, the Parties warrant that the mutual promises, covenants, and obligations set

forth herein are intended to and do, in fact, represent a reasonably equivalent exchange of value

that is not intended to hinder, delay, or defraud any entity to which GSK was or became indebted

to on or after the date of this transfer, within the meaning of 11 U.S.C. § 548(a)(1).

18. Within seven (7) business days following payment of the Settlement Amount, the

Parties shall seek dismissal of the Complaint-in-Intervention and each of the Civil Actions. Each

18

dismissal shall be with prejudice as to all claims of the United States and the Relators with the

exception of the following claims, if any, and over which the Court shall retain jurisdiction: (a)

Relators' claims for a share ofthe proceeds of the Civil Actions pursuant to 31 U.S.C. § 3730(d);

(b) Relators' claims against GSK for reasonable attorneys' fees, expenses, and costs pursuant to

31 U.S.C. § 3730(d); (c) Relators' claims against GSK under 31 U.S.C. § 3730(h); and (d)

Relators' claims against the States for Relators' Shares. This provision shall not limit the rights

of the United States to in any way challenge or contest claims under subsection (a) above,

including but not limited to challenging or contesting those claims under 31 U.S. C. § 3730(b)(5)

and/or 31 § U.S.C. 3730(e)(4), or as to GSK, to in any way challenge or contest claims under

subsection (b) and (c) above.

19. Each party shall bear its own legal and other costs incurred in connection with

this matter, including the preparation and performance of this Agreement, except Relators

reserve their rights against GSK to seek attorneys' fees, costs and expenses under 31 U.S.C. §

3730(d).

20. The Parties each represent that this Agreement is freely and voluntarily entered

into without any degree of duress or compulsion.

21. This Agreement is governed by the laws of the United States. The Parties agree

that the exclusive jurisdiction and venue for any dispute arising between and among the Parties

under this Agreement, including any issues regarding relators' share or payment of Relators'

attorneys' fees, expenses and costs, shall be the United States District Court for the District of

Massachusetts, except that disputes arising under the CIA shall be resolved exclusively under the

dispute resolution provisions in the CIA.

19

22. For purposes of construction, this Agreement shall be deemed to have been

drafted by all Parties to this Agreement and shall not, therefore, be construed against any party

for that reason in any dispute.

23. This Agreement including any documents incorporated by reference herein

constitutes the complete agreement between the Parties with respect to the issues covered by the

Agreement. This Agreement may not be amended except by written consent of all the Parties.

24. The individuals signing this Agreement on behalf of GSK represent and warrant

that they are authorized by GSK to execute this Agreement. The individuals signing this

Agreement on behalf of each Relator represent and warrant that they are authorized by that

Relator to execute this Agreement. The United States' signatories represent that they are signing

this Agreement in their official capacities and they are authorized to execute this Agreement.

25. This Agreement may be executed in counterparts, each of which constitutes an

original and all of which shall constitute one and the same Agreement.

27. This Agreement is binding on GSK's successors, transferees, heirs and assigns.

26. This Agreement is binding on Relators' successors, transferees, heirs, attorneys

and assigns.

27. All Parties consent to the disclosure of this Agreement, and information about this

Agreement, to the public after the Effective Date.

28. This Agreement is effective on the date of signature of the last signatory to the

Agreement (Effective Date of this Agreement). Facsimiles or electronic versions of signatures

shall constitute acceptable, binding signatures for purposes of this Agreement.

20

By:

UNITED STATES OF AMERICA

CARMEN M. ORTIZ

Assistant United States Attomeys District of Massachusetts

21

By:

United States Attorney John Walsh

EDWIN WINSTEAD Assistant United States Attorney District of Colorado

Dated: /T\A t>; .11

,2,0 /~

I

22

By:

By:

STUART F. DELERY Acting Assistant Attorney General

DANfE~Rso:L---JAMIE ANN YAVELBERG ANDY MAO BRIAN MCCABE DOUGLAS ROSENTHAL Attorneys Commercial Litigation Branch, Civil Division United States Department of Justice

JILLFURMANP I PATRICK JASPERSE DAVID FRANK Attorneys Consumer Protection Branch, Civil Division United States Department of Justice

23

nated: __ -hz,__/~-+-.i--<-'-~----

Dated: 7 f 2 / I L

tj,"f' ,. . ~ ' /~~ ~ By: I { ,,~,l Li<-<1-"Y~,~".,L'

l~ l 'GREGti)fy E. DEMSKtJ ;?';/ Chief Counsel to the Inspector General " Office of Cotmsel to the Inspector General

Office of Inspector General U.S. Department of Health and Human Services

24

Dated:

By: ~~~\k PAUL J. HU'l\TE General Coun;2t-TRICARE Management Activity United States Department of Defense

Dated: Co j ~""1-(\(}..

By: ~71~ SHIRL YR. P fl'TERSON . Assistant Director for Federal Employee Insurance Operations United States Office ofPersonnel Management

Dated: t.j~z.

J. DAVID COPE Debarring Official Office of the Assistant Inspector General for Legal Affairs United States Office of Personnel Management

Dateti:

By:

By:

GLAXOSMITHKLINE LLC

ELPIDIO VILLARREAL

Covington & Burling LLP Counsel to GlaxoSmitbKline LLC.

Dated:

Dated: {~6-~ ~

27

By:

By:

By:

RELATOR GREG THORPE

Dated: -------------------GREG THORPE

RELATOR BLAIR HAMRICK

Dated: -------------------BLAIR HAMRICK

BRIAN KENNEY

t~ ~:!::~ Dated _ __,.(;~-~ 11-/~d"--. _,._)/-+I_J_?-1 ..-;.;'"""~--M .. TAVYDEMING ~·· KENNEY & McCAFFE~TY, PC Counsel to RelatorJG_r~ Thorpe & Blair Hamrick

28

RELATOR GREG THORPE

By:~ GREGTRi>E

By:

By:

RELATORBLAIRHANGUCK

BLAIR HAMRICK

BRIAN KENNEY

BRIAN KENNEY M. TA VY DEMING KENNEY & McCAFFERTY, PC Counsel to Relators Greg Thorpe & Blair Hamrick

Dated: 6' / '{_ T /{L

Dated: ________ _

Dated: -------------

By:

By:

By:

RELATOR GREG THORPE

GREG THORPE

RELATOR BLAIR HAMRICK

"BLAIR HAMRICK

BRIAN KENNEY

BRIAN KENNEY M. TAVYDEMING KENNEY & McCAFFERTY, PC Counsel to Relators Greg Thorpe & Blair Hamrick

Dated: ________ _

Dated: {;~ C l. / (_

Dated: --------------

RELATORTHOMASGERAHTY

By: Dated: _________ _ THOMAS GERAHTY

RELATORMATTHEWBURKE

By:

By:

MATTHEWB~- I rf

~~~ Dated: & / 2-& /I Z----~~~-y~----

ERIKA KELTON Phillips & Cohen Counsel to Relators Thomas Gerahty and Matthew Burke

29

RELATOR THOMAS GERAHTY

By~~~ Dated:_----'=6~/2_(;'---~..__z_a_;_-:2-_

RELATOR MATTHEW BURKE

By: Dated: -------------------MATTHEW BURKE

By tfiVr ~ tt0th E KELTON

Dated: & (~b } VJ {? I I

Phillips & Cohen Counsel to Relators Thomas Gerahty and Matthew Burke

29

2012-06-27 08:34

By;

By:

LOIS C GRAYDON 8563095174 >> Grant & Eisenhofer

RELATOR LOIS GRAYDON'

LOlSGRA ON

REUBEN GUTTMAN Grant & Eisenhofer, P A Counsel to Relator Lois Graydon

Dated:. ___ 0___c_/f_J..__,:,....~~.J.-ct_._., _2....

p 1/1

By:

!··

l .

RELATOR l\i[fCI.IAEL LAFAUCI

ffi~off-~~

DAVID~NE ROBERT A.MAGNANIN1

·Stone &.MagnaniniLLP · Counsel to RetatotMi.chael LaFauci

.·· /

31

SETTLEMENT AGREEMENT

This Settlement Agreement ("Agreement") is entered into by and among the United

States of America, acting through the United States Department of Justice and on behalf of the

Office of Inspector General ("OIG-HHS") of the United States Department of Health and

Human Services ("HHS"), the TRICARE Management Activity ("TMA"), the United States

Department of Veteran Affairs ("VA"), and the United States Office of Personnel Management

("OPM") (collectively the "United States"), and GlaxoSmithKline LLC ("GSK"), through their

authorized representatives. Collectively, all of the above will be referred to as "the Parties."

PREAMBLE

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

A. GlaxoSmithKline LLC is a Delaware limited liability company and an indirect

subsidiary of GlaxoSmithKline plc, a public limited company incorporated under English law

with headquarters in Brentford, England. At all relevant times, GSK developed, manufactured,

distributed, marketed and sold pharmaceutical products in the United States, including drugs

sold under the trade names Avandia, Avandamet, and Avandaryl (collectively, the "Covered

Drugs"), which were medications for treatment of Type 2 diabetes.

B. On such date as may be determined by the Court, GSK will enter a plea of guilty

pursuant to Fed. R. Crim. P. ll(c)(l)(C) (the "Plea Agreement") to an Information to be filed in

United States of America v. GlaxoSmithKline LLC, Criminal Action No. [to be assigned]

(District of Massachusetts) (the "Criminal Action") that will allege violations of Title 21, United

States Code, Sections 33l(a), 333(a)(l) and 352, namely, the introduction into interstate

commerce of the misbranded drugs Wellbutrin and Paxil, and a violation of Title 21, United

States Code, Sections 33l(e), 333(a)(l), and 355(k)(l), namely, that GSK failed to report data

relating to clinical experience, along with other data and information, regarding Avandia to the

Food and Drug Administration ("FDA") in mandatory reports, in violation of the Food, Drug and

Cosmetic Act ("FDCA").

C. GSK has entered into or will be entering into separate settlement agreements,

described in Paragraph I (b) below (hereinafter referred to as the "Medicaid State Settlement

Agreements") with certain states and the District of Columbia in settlement of the Covered

Conduct described in Preamble Paragraph E, below. States with which GSK executes a

Medicaid State Settlement Agreement in the form to which GSK and the N a tiona! Association of

Medicaid Fraud Control Units ("NAMFCU") Negotiating Team have agreed, or in a form

otherwise agreed to by GSK and an individual State, shall be defined as "Medicaid Participating

States."

D. The United States alleges that GSK caused claims for payment for the Covered

Drugs to be submitted to the Medicare Program, Title XVill of the Social Security Act, 42

U.S.C. §§ 1395-1395k:kk ("Medicare"); the Medicaid Program, Title XIX of the Social Security

Act, 42 U.S.C.§§ 1396-1396w-5 ("Medicaid"); the TRICARE program, 10 U.S.C. §§ 1071-

lllOb; the Federal Employees Health Benefits Program ("FEHBP"), 5 U.S.C.§§ 8901-8914; the

Federal Employees Compensation Act Program, 5 U.S.C. § 8101, et. seq.; and caused purchases

of the Covered Drugs by the Veterans Affairs Program, 38 U.S.C. § 1701-1743 (collectively, the

"Government Health Care Programs").

E. The United States contends that it and the Medicaid Participating States have

certain civil claims, as specified in Paragraph 2, below, against GSK for engaging in the

following conduct at certain times between January 2000 and December 2010 (hereinafter

referred to as the "Covered Conduct"):

(i) GSK promoted Avandia to physicians and other health care providers with

false and misleading representations about Avandia's lipid profile, effect on cardiovascular

biomarkers, and the overall safety of A vandia and as a result, GSK knowingly caused false or

fraudulent claims for Avandia to be submitted to, or caused purchases by, one or more of the

Government Health Care Programs. This alleged conduct included:

(a) GSK communicated messages to physicians regarding the effect of

A vandia on diabetics' lipid profiles that were based upon inadequate scientific data. At times

between 200 I and April 2005, GSK misleadingly represented that A vandia had a "positive lipid

profile," and trained its sales force to promote the positive lipid profile as one of three core

selling messages, despite having no well-controlled studies sufficient to establish those

representations. Moreover, those representations were inconsistent with the FDA-approved label

for Avandia which included information that Avandia was associated with statistically

significant increases in low density lipoprotein particles ("LDL" or the "bad" cholesterol), high

density lipoprotein particles ("HDL" or the "good" cholesterol), and total cholesterol. Lipid

information was particularly important for diabetics, a patient population that was at a

significantly increased risk of suffering from cardiac-related illnesses.

(b) GSK represented that use of A vandia resulted in more "light and

fluffy" or "buoyant" LDL, despite having no well-controlled studies sufficient to establish those

representations. At times between 2001 and April2005, GSK falsely stated in certain sales

brochures that data showing more buoyant LDL particles came from "a randomized, placebo­

controlled, pharmacodynamic study," when it did not; GSK also promoted the light and fluffy

LDL theory to physicians by bringing "popcorn lunches" to physicians' offices to highlight the

purported change in density of the LDL particles.

3

(c) In 2001, GSK conducted a small, randomized control trial of

Actos, a competitor diabetes drug, tbat suggested that treatment with Actos resulted in more

buoyant LDL particles. GSK did not publish this scientific data about Actos because it was

unhelpful to GSK's marketing message on lipids. In March 2001, a GSK Vice President,

Metabolism Therapeutic Area, North American Medical Affairs directed that the results of this

Actos study not be published, stating that the trial was done "way under the radar" and that

"[p ]er Sr Mgmt request, these data should not see the light of day to anyone outside of GSK."

When later concerned that Actos' manufacturer intended to publish new clinical trial results

regarding Actos' lipid profile, GSK, as part of the "lipid war games," again instructed sales

representatives to emphasize Avandia's purportedly favorable lipid profile with physicians.

(d) Some GSK sales aids also contained certain implied cardiovascular

claims for which GSK did not have adequate scientific support, such as the message that

Avandia may reduce cardiovascular risk by decreasing insulin resistance. That message was

inconsistent with the FDA approved label for Avandia which always contained a warning on

congestive heart failure associated with use of the drug, and later contained additional

cardiovascular warnings regarding use of the drug. From 2001 to 2005, GSK sponsored the

CardioA!liance, a program through which cardiologists gave speeches to other doctors about the

available A vandia data, including data suggesting cardiovascular benefits from A vandia therapy.

Some of the CardioAlliance materials included information about the relationship between

insulin resistance and cardiac risk factors and stated that A vandia has "beneficial effects on

cardiovascular risk factors" and the "potential to reduce cardiovascular disease" but failed to

disclose that GSK did not have cardiovascular outcome data for A vandia. In purpose and effect,

GSK paid cardiologists to influence endocrinologists and general practitioners to prescribe

4

Avandia on the suggestion that the drug may be cardioprotective, despite having no

cardiovascular outcome data regarding Avandia.

(ii) GSK made false and misleading representations about Avandia's lipid

profile, effect on cardiovascular biomarkers, and the overall safety of A vandia in labeling used

during the promotion of Avandia to physicians and other health care providers in violation of the

FDCA, 21 U.S.C. §§ 33l(a) and 352(a), and through the sale and distribution of a misbranded

product, GSK obtained proceeds and profits to which it was not entitled; and

(iii) GSK made false representations concerning the lipid profile, effect on

cardiovascular biomarkers, and the overall safety of A vandia to state Medicaid agencies on

which state Medicaid agencies relied to their detriment in making formulary and prior

authorization decisions.

The United States contends that engaging in the Covered Conduct gives rise to civil

liability under the False Claims Act, 31 U.S. C. §§ 3729-3733; the Food, Drug and Cosmetic Act,

21 U.S.C. § 301 et. gg.; or common law.

F. The United States also contends that it has certain administrative claims against

GSK as specified in Paragraphs 3 through 6, below, for engaging in the Covered Conduct.

G. This Agreement is made in compromise of disputed claims. This Agreement is

neither an admission of facts or liability by GSK. GSK expressly denies the allegations of the

United States as set forth herein that it engaged in any wrongful conduct in connection with the

Covered Conduct, except as to such admissions GSK makes in connection with the Plea

Agreement. This Agreement is not a concession by the United States that its claims are not well

founded. Neither is this Agreement, nor the performance of any obligation arising under it,

including any payment, nor the fact of settlement, intended to be, or shall be understood as, an

5

admission of liability or wrongdoing, or other expression reflecting the merits of the dispute by

GSK, except as set forth in this paragraph.

H. To avoid the delay, expense, inconvenience and uncertainty of protracted

litigation of these claims, the Parties desire to reach a final settlement as set forth below.

TERMS AND CONDITIONS

NOW, THEREFORE, in reliance on the representations contained herein and in

consideration of the mutual promises, covenants, and obligations in this Agreement, and for

good and valuable consideration, receipt of which is hereby aclmowledged, the Parties agree as

follows:

I. GSK agrees to pay to the United States and the Medicaid Participating States,

collectively, the sum of six hundred fifty seven million three hundred eighty seven thousand two

hundred dollars ($657,387,200), plus interest at the rate of 1.625% per annum from December I,

20 II, and continuing until and including the day before payment is made under this Agreement

(collectively, the "Settlement Amount"). The Settlement Amount shall constitute a debt

immediately due and owing to the United States and the Medicaid Participating States on the

Effective Date of this Agreement. This debt shall be discharged by payments to the United

States and the Medicaid Participating States, under the following terms and conditions:

(a) GSK shall pay to the United States the sum of five hundred eight million

one hundred sixty one thousand sixty three dollars ($508,161 ,063), plus interest accrued thereon

at the rate of 1.625% per annum from December I, 2011, continuing until and including the day

before payment is made ("Federal Settlement Amount"). The Federal Settlement Amount shall

be paid by electronic funds transfer pursuant to written instructions from the United States no

later than seven (7) business days after (i) this Agreement is fully executed by the Parties and

6

delivered to GSK's attorneys; or (ii) the Court accepts a Fed. R. Crim. P. ll(c)(l)(C) guilty plea

as described in Preamble Paragraph B in connection with the Criminal Action and imposes the

agreed upon sentence, whichever occurs later.

(b) GSK shall pay to the Medicaid Participating States the sum of one

hundred forty nine million two hundred twenty six thousand one hundred thirty seven dollars

($149,226,137), plus interest accrued thereon at the rate of 1.625% per annum from December

1, 2011, continuing until and including the day before payment is made ("Medicaid State

Settlement Amount"). The Medicaid State Settlement Amount shall be paid by electronic funds

transfer to an interest bearing account pursuant to written instructions from the NAMFCU

Negotiating Team and under the terms and conditions of the Medicaid State Settlement

Agreements that GSK will enter into with the Medicaid Participating States.

(c) IfGSK's agreed-upon guilty plea pursuant to Fed. R. Crim. P. ll(c)(l)(C)

in the Criminal Action described in Preamble Paragraph B is not accepted by the Court or the

Court does not impose the agreed-upon sentence for whatever reason, this Agreement shall be

null and void at the option of either the United States or GSK. If either the United States or GSK

exercises this option, which option shall be exercised by notifYing all Parties, through counsel, in

writing within five (5) business days of the Court's decision, the Parties will not object and this

Agreement will be rescinded. If this Agreement is rescinded, GSK will not plead, argue or

otherwise raise any defenses under the theories of statnte of limitations, laches, estoppel or

similar theories, to any civil or administrative claims, actions or proceedings arising from the

Covered Conduct that are brought by the United States within 90 calendar days of rescission,

unless such defenses were available to GSK prior to the effective date of this Agreement and

excluding time periods covered by the tolling agreement dated September 21,2011.

7

2. Subject to the exceptions in Paragraph 6 below (concerning excluded claims), in

consideration of the obligations ofGSK set forth in this Agreement, conditioned upon GSK's

payment in full of the Settlement Amount, the United States (on behalf of itself, its officers,

agencies, and departments) agrees to release GSK, together with its predecessors, current and

former parents, direct and indirect affiliates, divisions, subsidiaries, successors, transferees, and

assigns and their current and former directors, officers, and employees, individually and

collectively, from any civil or administrative monetary claim that the United States has or may

have for the Covered Conduct under the False Claims Act, 31 U.S.C. §§ 3729-3733; the Program

Fraud Civil Remedies Act, 31 U.S.C. §§ 3801-3812; the Civil Monetary Penalties Law, 42

U.S. C.§ 1320a-7a; the Food, Drug and Cosmetic Act, 21 U.S.C. § 301, et seq.; any statutory

provision creating a cause of action for civil damages or civil penalties for which the Civil

Division of the Department of Justice has actual and present authority to assert and compromise

pursuant to 28 C.F.R. Part 0, Subpart I, 0.45(d), and common law claims for fraud, payment by

mistake, breach of contract, disgorgement and unjust enrichment.

3. In consideration of the obligations of GSK in this Agreement and the Corporate

Integrity Agreement (CIA) entered into between OIG-HHS and GSK, and conditioned upon

GSK's full payment of the Settlement Amount, the OIG-HHS agrees to release and refrain from

instituting, directing, or maintaining any administrative action seeking exclusion from Medicare,

Medicaid, and other Federal health care programs (as defined in 42 U.S.C. § 1320a-7b(f))

against GSK under 42 U.S.C. § 1320a-7a (Civil Monetary Penalties Law) or under 42 U.S.C.

§ 1320a-7(b )(7) (permissive exclusion for fraud, kickbacks, and other prohibited activities) for

the Covered Conduct, or under 42 U.S.C. § 1320a-7(b)(l) based on GSK's agreement to plead

guilty to the charges set forth in the Information in the Criminal Action referenced in Paragraph

8

B above, except as reserved in Paragraph 6 (concerning excluded claims), below, and as reserved

in this Paragraph. The OIG-HHS expressly reserves all rights to comply with any statutory

obligations to exclude GSK from Medicare, Medicaid, and other Federal health care programs

under 42 U.S.C. § 1320a-7(a) (mandatory exclusion) based upon the Covered Conduct. Nothing

in this Paragraph precludes the OIG-HHS from taking action against entities or persons, or for

conduct and practices, for which claims have been reserved in Paragraph 6, below.

4. In consideration of the obligations of GSK set forth in this Agreement,

conditioned upon GSK's full payment of the Settlement Amount, TMA agrees to release and

refrain from instituting, directing, or maintaining any administrative action seeking exclusion or

suspension from the TRICARE Program against GSK under 32 C.F.R. § 199.9 for the Covered

Conduct, except as reserved in Paragraph 6 (concerning excluded claims), below, and as

reserved in this Paragraph. TMA expressly reserves authority to exclude GSK under 32 C.F.R.

§§ 199.9 (f)(l)(i)(A), (f)(l)(i)(B), and (f)(l)(iii), based upon the Covered Conduct. Nothing in

this Paragraph precludes TMA or the TRICARE Program from taking action against entities or

persons, or for conduct and practices, for which claims have been reserved in Paragraph 6,

below.

5. In consideration of the obligations ofGSK in this Agreement, conditioned upon

GSK's full payment of the Settlement Amount, OPM agrees to release and refrain from

instituting, directing, or maintaining any administrative action against GSK under 5 U.S.C.

§ 8902a or 5 C.F.R. Part 970 for the Covered Conduct, except as reserved in Paragraph 6

(concerning excluded claims), below, and except if excluded by the OIG-HHS pursuant to 42

U.S.C. § 1320a-7(a) or required by 5 U.S.C. § 8902a(b), or 5 C.F.R. Part 970. Nothing in this

9

Paragraph precludes OPM from taking action against entities or persons, or for conduct and

practices, for which claims have been reserved in Paragraph 6, below.

6. Notwithstanding any term of this Agreement, specifically reserved and excluded

from the scope and terms of this Agreement as to any entity or person are the following claims

ofthe United States:

(a) Any civil, criminal, or administrative liability arising under Title 26, U.S.

Code (Internal Revenue Code);

(b) Any criminal liability;

(c) Except as explicitly stated in this Agreement, any administrative liability,

including mandatory exclusion from Government Health Care programs;

(d) Any liability to the United States (or its agencies) for any conduct other

than the Covered Conduct;

(e) Any liability based upon such obligations as are created by this

Agreement;

(f) Any liability for express or implied warranty claims or other claims for

defective or deficient products and services, including quality of goods

and services;

(g) Any liability for personal injury or property damage or for other

consequential damages arising from the Covered Conduct;

(h) Any liability for failure to deliver items or services due; or

(i) Any liability of individuals (including current or former directors, officers,

employees, or agents of GSK) who receive written notification that they

are the target of a criminal investigation, are criminally indicted, charged,

10

or convicted, or who enter into a criminal plea agreement related to the

Covered Conduct.

7. GSK waives and shall not assert any defenses it may have to any criminal

prosecution or administrative action relating to the Covered Conduct that may be based in whole

or in part on a contention that under the Double Jeopardy Clause in the Fifth Amendment of the

Constitution, or under the Excessive Fines Clause in the Eighth Amendment of the Constitution,

this Agreement bars a remedy sought in such criminal prosecution or administrative action.

Nothing in this paragraph or any other provision of this Agreement constitutes an agreement by

the United States concerning the characterization of the Settlement Amount for purposes of the

Internal Revenue laws, Title 26 of the United States Code.

8. GSK fully and finally releases the United States, its agencies, employees,

servants, and agents from any claims (including attorneys' fees, costs, and expenses of every

kind and however denominated) which GSK has asserted, could have asserted, or may assert in

the future against the United States, its agencies, employees, servants, and agents, related to the

Covered Conduct or arising from the United States' investigation, settlement of this matter, and

prosecution of the Criminal Action.

9. The Settlement Amount shall not be decreased as a result of the denial of claims

for payment now being withheld from payment by any Medicare carrier or intermediary or any

state payer, related to the Covered Conduct; and GSK agrees not to resubmit to any Medicare

carrier or intermediary or any state payer any previously denied claims related to the Covered

Conduct, and agrees not to appeal any such denials of claims.

I 0. GSK agrees to the following:

II

(a) Unallowable Costs Defined: that all costs (as defined in the Federal

Acquisition Regulations (FAR) 48 C.F.R. § 31.205-47 and in Titles XVIII and XIX of the Social

Security Act, 42 U.S. C.§§ 1395-1395kkk and 1396-1396w-5, and the regulations and official

program directives promulgated thereunder) incurred by or on behalf of GSK, its present or

former officers, directors, employees, shareholders, and agents in connection with the following

shall be "Unallowable Costs" on goverrnnent contracts and under the Government Health Care

Programs:

( 1) the matters covered by this Agreement and the related Plea Agreement;

(2) the United States' audit and civil and criminal investigation of the matters

covered by this Agreement;

(3) GSK's investigation, defense, and any corrective actions undertaken in

response to the United States' audit and civil and criminal investigation in

connection with the matters covered by this Agreement (including

attorneys' fees);

( 4) the negotiation and performance of this Agreement, the Plea Agreement,

and the Medicaid State Settlement Agreements;

(5) the payments GSK makes to the United States or any State pursuant to this

Agreement, the Plea Agreement, or the Medicaid State Settlement

Agreements;

(6) the negotiation of, and obligations undertaken pursuant to the CIA to:

(i) retain an independent organization to perform annual reviews as

described in Section Ill of the CIA; and (ii) prepare and submit reports to

12

OIG-HHS. However, nothing in this paragraph 10.a.(6) that may apply to

the obligations undertaken pursuant to the CIA affects the status of costs

that are not allowable based on any other authority applicable to GSK.

(b) Future Treatment of Unallowable Costs: These Unallowable Costs shall

be separately determined and accounted for by GSK, and GSK shall not charge such

Unallowable Costs directly or indirectly to any contracts with the United States or any State

Medicaid Program, or seek payment for such Unallowable Costs through any cost report, cost

statement, information statement, or payment request submitted by GSK or any of its

subsidiaries or affiliates to the Medicare, Medicaid, TRICARE, or FEHBP Programs.

(c) Treatment of Unallowable Costs Previously Submitted for Payment: GSK

further agrees that within 90 days of the Effective Date of this Agreement, it shall identify to

applicable Medicare and TRICARE fiscal intermediaries, carriers, and/or contractors, and

Medicaid, and FEHBP fiscal agents, any Unallowable Costs (as defined in this Paragraph)

included in payments previously sought from the United States, or any State Medicaid Program,

including, but not limited to, payments sought in any cost reports, cost statements, information

reports, or payment requests already submitted by GSK or any of its subsidiaries or affiliates,

and shall request, and agree, that such cost reports, cost statements, information reports, or

payment requests, even if already settled, be adjusted to account for the effect of the inclusion of

the Unallowable Costs. GSK agrees that the United States, at a minimum, shall be entitled to

recoup from GSK any overpayment plus applicable interest and penalties as a result of the

inclusion of such Unallowable Costs on previously-submitted cost reports, information reports,

cost statements, or requests for payment.

13

Any payments due after the adjustments have been made shall be paid to the United

States pursuant to the direction of the Department of Justice, and/or the affected agencies. The

United States reserves its rights to disagree with any calculations submitted by GSK or any of its

subsidiaries or affiliates on the effect of inclusion of Unallowable Costs (as defined in this

Paragraph) on GSK's or any of its subsidiaries' or affiliates' cost reports, cost statements, or

information reports.

(d) Nothing in this Agreement shall constitute a waiver of the rights of the

United States to examine or reexamine GSK's books and records to determine that no

Unallowable Costs have been claimed in accordance with the provisions of this Paragraph.

II. This Agreement is intended to be for the benefit of the Parties only. The Parties

do not release any claims against any other person or entity, except to the extent provided for in

Paragraph 2 above or 12 below (waiver for beneficiaries paragraph).

12. GSK agrees that it waives and shall not seek payment for any of the health care

billings covered by this Agreement from any health care beneficiaries or their parents, sponsors,

legally responsible individuals, or third party payors based upon the claims defined as Covered

Conduct.

13. GSK expressly warrants that it has reviewed its financial situation and that it is

currently solvent within the meaning of II U.S.C. §§ 547(b)(3) and 548(a)(l)(B)(ii)(I), and will

remain solvent following payment of the Settlement Amount. Further, the Parties warrant that,

in evaluating whether to execute this Agreement, they (a) have intended that the mutual

promises, covenants and obligations set forth herein constitute a contemporaneous exchange for

new value given to GSK, within the meaning of II U.S. C. § 547(c)(l); and (b) conclude that

14

these mutual promises, covenants and obligations do, in fact, constitute such a contemporaneous

exchange. Further, the Parties warrant that the mutual promises, covenants, and obligations set

forth herein are intended to and do, in fact, represent a reasonably equivalent exchange of value

that is not intended to hinder, delay, or defraud any entity to which GSK was or became indebted

to on or after the date of this transfer, within the meaning of II U.S.C.§ 548(a)(1).

14. Each party shall bear its own legal and other costs incurred in connection with

this matter, including the preparation and performance of this Agreement.

15. The Parties each represent that this Agreement is freely and voluntarily entered

into without any degree of duress or compulsion.

16. This Agreement is governed by the laws of the United States. The Parties agree

that the exclusive jurisdiction and venue for any dispute arising between and among the Parties

under this Agreement shall be the United States District Court for the District of Massachusetts,

except that disputes arising under the CIA shall be resolved exclusively under the dispute

resolution provisions in the CIA.

17. For purposes of construction, this Agreement shall be deemed to have been

drafted by all Parties to this Agreement and shall not, therefore, be construed against any party

for that reason in any dispute.

18. This Agreement constitutes the complete agreement between the Parties with

respect to the issues covered by the Agreement. This Agreement may not be amended except by

written consent of all the Parties.

19. The individuals signing this Agreement on behalf of GSK represent and warrant

that they are authorized by GSK to execute this Agreement. The United States' signatories

15

represent that they are signing this Agreement in their official capacities and they are authorized

to execute this Agreement.

20. This Agreement may be executed in counterparts, each of which constitutes an

original and all of which shall constitute one and the same Agreement.

21. This Agreement is binding on GSK's successors, transferees, heirs and assigns.

22. All parties consent to the disclosure of this Agreement, and information about this

Agreement, to the public after the Effective Date.

23. This Agreement is effective on the date of signature of the last signatory to the

Agreement (Effective Date of this Agreement). Facsimiles or electronic versions of signatures

shall constitute acceptable, binding signatures for purposes of this Agreement.

By:

UNITED STATES OF AMERICA

CARMEN M. ORTIZ United States Attorney

~~~ ~1/-&0 SUSAN G. WINKLER SHANNON T. KELLEY BRIAN PEREZ-DAPLE Assistant United States Attorneys District of Massachusetts

Dated:

16

STUART F. DELERY Acting Assistant Attorney General

By: ID ·fu~~Jr-JOYCE R. BRANDA JAMIE ANN YA VELBERG CHARLES J. BIRO NATALIE A. PRIDDY Attorneys

By:

Co=ercial Litigation Branch, Civil Division United States Department of Justice

Dated: 7/ t( to I 'Z.

JILL FURMAN MARK L. JOSEPHS TIMOTHY T. FINLEY Attorneys Consumer Protection Branch, Civil Division United States Department of Justice

Dated:

17

By:

STUART F. DELERY Acting Assistant Attorney General

JOYCE R. BRANDA JAMIE ANN YAVELBERG CHARLES J. BJRO NATALIE A. PRIDDY Attorneys Commercial Litigation Branch, Civil Division United States Department of Justice

Dated:

By: ~Wv-z:t ~URMAN MARK L. JOSEPHS TIMOTHY T. FINLEY Attorneys Consumer Protection Branch, Civil Division United States Department of Justice

Dated: 7 (2 /ze.r 2._

17

By:

Chief Counsel to the Inspector General Office of Inspector General U.S. Department of Health and Human Services

Dated: G. i

18

By: PAUL J. H ."[IE General Counse TRICARE Management Activity United States Depmtmcnt of Defense

Dated: (p j;2c/ 1....--

Settlement- US/GSK (Avandia)

By:

By:

Assistant Director for Federal Employee Insurance Operations United States Office of Pers~mnel Management

Dated: (./.:J¥ 2..

.J. Oac.aA (~ hy ~~ - -i"DAVID COPE -/,.._~ ~y C. t.v-:,ff::-,. Debarring Official · C" <A f .f-., f--.._ "F.~~ .fv Office of the Assistant Inspector Ge'h'tra! for Legal AfTaYrs""" United States Office of Personnel Management

Dated: t;/2 (; j 1 2_

20

By:

GLAXOSMITHKLINE LLC

ELP!DIO VILLARREAL Senior Vice President, Global Litigation GlaxoSrnithKI inc LLC

. I , J/1 (} . By: . -:..iLU<J..~ I /1' '/JuMML

NINA M. GUSSACK/ SEANP.FAHEY

By:

Pepper Hamilton LLP 3000 Two Logan Square 1811

' & Arch Streets Philadelphia, PA 19103-2799 (215) 981-4000 Counsel to GlaxoSmithK!ine LLC

MATTHEW O'CONNOR Covington & Burling LLP 120 I Pennsylvania Avenue, N. W. Washington, D.C. 20004-2401 (202) 662-6000 Counsel to GlaxoSmithKline LLC

21

Dated: {~ 2 8 - ( 'L

Dated (;; · /-'(, / 2_./

Dated:

GlaxoSmithKline LLC Corporate Integrity Agreement

1

CORPORATE INTEGRITY AGREEMENT BETWEEN THE

OFFICE OF INSPECTOR GENERAL OF THE

DEPARTMENT OF HEALTH AND HUMAN SERVICES AND

GLAXOSMITHKLINE LLC

I. PREAMBLE

GlaxoSmithKline LLC (GSK) hereby enters into this Corporate Integrity Agreement (CIA) with the Office of Inspector General (OIG) of the United States Department of Health and Human Services (HHS) to promote compliance with the statutes, regulations, and written directives of Medicare, Medicaid, and all other Federal health care programs (as defined in 42 U.S.C. § 1320a-7b(f)) (Federal health care program requirements) and with the statutes, regulations, and written directives of the Food and Drug Administration (FDA requirements).

Contemporaneously with this CIA, GSK is entering into Settlement Agreements with the United States. GSK will also enter into settlement agreements with various States (State Settlement Agreements) and GSK’s agreement to this CIA is a condition precedent to those agreements. Effective October 26, 2010, GSK entered into a Settlement Agreement with the United States to resolve allegations regarding certain drugs manufactured at SB Pharmco’s Cidra, Puerto Rico facility.

Prior to the Effective Date of this CIA (as defined below), GSK and GSK

Affiliates (as defined below in Section II.C.10) established a worldwide voluntary compliance program designed to address the companies’ operations globally. In the United States, the compliance program is designed to address, among other things, compliance with Federal health care program and FDA requirements (Compliance Program).

GSK shall continue its Compliance Program throughout the term of this CIA and

shall do so in accordance with the terms set forth below. GSK may modify its Compliance Program as appropriate, but, at a minimum, GSK shall ensure that during the term of this CIA, it shall comply with the obligations set forth herein.

GlaxoSmithKline LLC Corporate Integrity Agreement

2

II. TERM AND SCOPE OF THE CIA

A. Unless otherwise specified, the period of the compliance obligations assumed

by GSK and its Affiliates under this CIA shall be five reporting periods, as defined below. The “Effective Date” shall be the date on which the final signatory of this CIA executes this CIA. The first Reporting Period shall be from the Effective Date through December 31, 2013. The second and subsequent Reporting Periods shall be from January 1 through December 31 of each of the subsequent four calendar years.

B. Sections VII, X, and XI shall expire no later than 120 days after OIG=s receipt

of: (1) GSK’s final Annual Report; or (2) any additional materials submitted by GSK pursuant to OIG=s request, whichever is later.

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

1. “Covered Persons” includes:

a. all owners of GlaxoSmithKline PLC who are natural persons (other than shareholders who: (1) have an ownership interest of less than 5% and (2) acquired the ownership interest through public trading or in connection with the operation of employee long term incentive plans) and all directors of GlaxoSmithKline PLC; b. all employees of GSK or any GSK Affiliate who are engaged in or supervise personnel who are engaged in any of the Covered Functions (as defined below in Section II.C.7); and c. contractors, subcontractors, agents and other persons (including, but not limited to, third party vendors who provide services relating to the Covered Functions) who perform any of the Covered Functions on behalf of GSK or any GSK Affiliate and who in that capacity either: (i) interact directly with health care professionals (HCPs), healthcare institutions (HCIs), or consumers; or (ii) perform activities, provide services, or create materials relating to the Covered Functions and those activities, services, or materials are not reviewed or supervised by a Covered Person prior to execution or dissemination.

GlaxoSmithKline LLC Corporate Integrity Agreement

3

Notwithstanding the above, the term Covered Persons does not include part-time or per diem employees, contractors, subcontractors, agents, and other persons who are not reasonably expected to work more than 160 hours per year, except that any such individuals shall become “Covered Persons” at the point when they work more than 160 hours during the calendar year.

2. “Relevant Covered Persons” includes all Covered Persons who engage

in Covered Functions or who supervise Covered Persons who engage in Covered Functions.

3. “Government Reimbursed Products” refers to all GSK prescription1

pharmaceutical products that are marketed or sold by GSK (including by its Pharma, Stiefel, Vaccines, and Oncology division) in the United States (or pursuant to contracts with the United States) that are reimbursed by Federal health care programs.

4. The term “Promotional Functions” includes: (a) the selling, detailing,

marketing, advertising, promoting, or branding of Government Reimbursed Products; and (b) the preparation or external dissemination of promotional materials or information about, or the provision of promotional services relating to, Government Reimbursed Products, including those functions relating to any applicable review committees, including GSK’s Copy Approval Team (CAT).

5. The term “Product Related Functions” includes: (a) the preparation or

external dissemination of non-promotional materials that are governed by Federal healthcare program and/or FDA requirements and distributed to HCPs and HCIs about Government Reimbursed Products, including those functions relating to GSK’s CAT or other applicable review committee(s) and activities by GSK’s North America Medical Affairs department (Medical Affairs); (b) contracting with HCPs and HCIs in the United States to conduct post-marketing clinical trials, investigator sponsored studies (ISSs), and other post-marketing studies relating to Government Reimbursed Products; (c) authorship, publication, and

1 GSK represents that its Consumer Healthcare business unit shall not market, detail, or otherwise promote prescription pharmaceutical products for the duration of the CIA. Should the Consumer Healthcare business unit begin to do so, it shall become subject to the terms of the CIA.

GlaxoSmithKline LLC Corporate Integrity Agreement

4

disclosure of articles or study results relating to post-marketing clinical trials and other post-marketing studies for Government Reimbursed Products (including studies of investigational and other uses and indications outside the currently approved uses and conditions of use); and (d) activities related to the submission of information about Government Reimbursed Products to compendia (such as DrugDex or other compendia of information about Government Reimbursed Products as defined below in Section III.B.3.t.)

6. The term “Payer Related Functions” refers to activities of GSK’s Policy, Payers and Vaccines (PPV) Unit and includes Promotional Functions and Product Related Functions as they relate to interactions between GSK and entities that provide a drug health benefit program for Government Reimbursed Products, including but not limited to government payers (e.g., Medicaid and Medicare) or individuals or entities under contract with or acting on behalf of government payers and commercial health plans (collectively referred to as “Payers”). Payer Related Functions also includes interactions with Payers related to formulary placement, supplemental rebate agreements, and other types of rebate agreements.

7. The term “Covered Functions” refers to “Promotional Functions,”

“Product Related Functions,” and “Payer Related Functions” collectively.

8. The term “Third Party Educational Activity” shall mean any scientific,

educational, or professional program, meeting, or event for HCPs conducted by a third party and supported by GSK, including but not limited to, continuing medical education (CME), disease awareness, or sponsorship of symposia at medical conferences.

9. The term “Third Party Personnel” shall mean employees of entities with

whom GSK currently has, or in the future does, enter into agreements to promote or co-promote a Government Reimbursed Product or to engage in joint promotional activities relating to such a product. GSK represents that: (1) the Third Party Personnel are employed by independent entities other than GSK; (2) GSK does not control Third Party Personnel; and (3) it would be commercially impracticable to

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compel the compliance of Third Party Personnel with the requirements set forth in this CIA. GSK agrees to promote compliance by Third Party Personnel with Federal health care program requirements and FDA requirements by complying with the provisions set forth below in Sections III.B.2, V.A.8, and V.B.4 related to Third Party Personnel. Provided that GSK complies with the requirements of Sections III.B.2, V.A.8, and V.B.4, GSK shall not be required to fulfill the remaining CIA obligations that would otherwise apply to Third Party Personnel who meet the definition of Covered Persons.

10. The term “GSK Affiliate” shall mean GlaxoSmithKline PLC and any other entity (other than GlaxoSmithKline LLC) that is majority owned or controlled, directly or indirectly, by GlaxoSmithKline PLC and whose employees or contractors perform Covered Functions.

D. Appendix D to the CIA sets forth the obligations to which GSK and its Affiliates agree relating to manufacturing operations in connection with the settlement regarding the Cidra facility reference above in the Preamble. To the extent that certain general provisions and obligations are not specifically addressed in Appendix D, the terms of this CIA shall apply to CGMP Activities, Manufacturing Covered Persons, and to GSK and its Affiliates as specified herein.

III. CORPORATE INTEGRITY OBLIGATIONS

GSK shall establish and maintain a Compliance Program that includes the following elements:

A. Compliance Responsibilities of Certain GSK Employees and the Board of

Directors.

1. Compliance Officer. Prior to the Effective Date, GSK appointed an individual to serve as Vice President and Compliance Officer for its North America Pharma division (Compliance Officer). GSK shall maintain a Compliance Officer for the term of the CIA. During the term of this CIA, the Compliance Officer shall be authorized to oversee compliance with Federal health care program and FDA requirements and with the requirements of this CIA. The Compliance Officer is, and shall continue to 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

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care program and FDA requirements. The Compliance Officer shall be a member of senior management of GSK, and shall report directly to the Senior Vice President for Governance, Ethics, and Assurance of GlaxoSmithKline PLC who, in turn, reports to the Chief Executive Officer of GlaxoSmithKline PLC. The Compliance Officer shall make periodic (at least quarterly) reports regarding compliance matters directly to the Board of GlaxoSmithKline PLC or any authorized committee thereof (hereinafter, “the Board”), and shall be authorized to report on such matters to the Board at any time. 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 GSK as well as for any reporting obligations created under this CIA. Any noncompliance job responsibilities of the Compliance Officer shall be limited and must not interfere with the Compliance Officer’s ability to perform the duties outlined in this CIA.

GSK shall report to OIG, in writing, any change in the identity 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 five days after such a change.

2. Compliance Committee. Prior to the Effective Date, GSK formed

compliance committee known as the NA Pharma Risk Management & Compliance Board (hereafter “Compliance Committee”) which, in conjunction with the Compliance Officer, assists in the implementation and enhancement of the Compliance Program. GSK shall continue the Compliance Committee during the term of this CIA. The Compliance Committee shall, at a minimum, include the Compliance Officer and other members of senior management necessary to meet the requirements of this CIA (e.g., senior executives of relevant departments, such as such as legal, Medical Affairs, regulatory affairs, sales, marketing, human resources, research and development, global manufacturing quality control, and operations.) In addition, GSK’s Audit function provides regular reports to the Compliance Committee. The Compliance Officer and the President of GSK shall co-chair the Compliance Committee. The Compliance Committee shall support the Compliance Officer in fulfilling his/her responsibilities (e.g., shall assist in the analysis of the GSK’s risk areas and shall oversee monitoring of internal and external compliance-related audits and investigations). The Compliance Committee shall meet at least quarterly.

GSK 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

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Committee’s ability to perform the duties necessary to meet the obligations in this CIA, within 15 days after such a change.

3. Board of Directors Compliance Obligations. The Board shall be

responsible for the review and oversight of matters related to compliance with Federal health care program requirements, FDA requirements, and the obligations of this CIA. The Board shall, at a minimum, be responsible for the following:

a. The Board shall meet at least quarterly to review and oversee GSK’s Compliance Program, including but not limited to the performance of the Compliance Officer and other compliance personnel. The Board shall evaluate the effectiveness of the Compliance Program, including, at a minimum, by receiving updates about the activities of the Compliance Officer and other compliance personnel and updates about adoption and implementation of policies, procedures, and practices designed to ensure compliance with the requirements set forth in this CIA and with applicable Federal health care program and FDA requirements.

b. For each Reporting Period of the CIA, the Board shall adopt a

resolution, signed by each individual member of the Board, summarizing its review and oversight of GSK’s compliance with Federal health care program requirements, FDA requirements, and the obligations of this CIA.

At minimum, the resolution shall include the following language: “The Board of Directors has made a reasonable inquiry into the operations of

GSK’s Compliance Program as applicable to the CIA (including its Appendices) for the time period [insert time period], including the performance of the Compliance Officer and the compliance personnel who are Covered Persons under this CIA. The Board has concluded that, to the best of its knowledge, GSK has implemented an effective Compliance Program to meet Federal health care program requirements, FDA requirements, and the obligations of the CIA.”

If the Board is unable to provide such a conclusion in the resolution, the Board

shall include in the resolution a written explanation of the reasons why it is unable to provide the conclusion and the steps it is taking to implement an effective Compliance Program at GSK.

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GSK shall report to OIG, in writing, any changes in the composition of the Board, or any actions or changes that would affect the Board's ability to perform the duties necessary to meet the obligations in this CIA, within 15 days after such a change.

4. Deputy Compliance Officers. Prior to the Effective Date, GSK

appointed Deputy Compliance Officers (DCOs) for each U.S. Pharma commercial business unit and for NA Pharma Medical Affairs, and GSK shall maintain the DCOs for the term of the CIA. Each DCO shall be a member of senior management of his/her respective business unit(s) and shall report directly to the Compliance Officer. The DCOs shall be responsible for working together with the Compliance Officer to oversee the development and implementation of policies, procedures, and practices designed to ensure business unit compliance with the requirements set forth in this CIA and with Federal health care program and FDA requirements. Any noncompliance job responsibilities of the DCOs shall be limited and shall not interfere with each DCO’s ability to perform the duties outline in this CIA.

5. Integrity Champions. Prior to the Effective Date, GSK implemented a

program through which indentified individuals serve as Integrity Champions within each U.S. Pharma commercial business unit. Each individual selected to be an Integrity Champion shall be at least a manager within his/her respective business unit, and the responsibilities undertaken as an Integrity Champion shall be in addition to the individuals’ existing management responsibilities. Integrity Champions shall be responsible for facilitating local implementation of, and adherence to, GSK policies and procedures, Federal health care program and FDA requirements, and the requirements of this CIA. Integrity Champions shall meet with their respective DCO on a regular basis. The performance of Integrity Champions, as such, will be a factor in their annual performance reviews.

6. Management Accountability and Certifications: In addition to the

responsibilities set forth in this CIA for all Covered Persons, certain GSK officers or employees (Certifying Employees) are specifically expected to monitor and oversee activities within their areas of authority and shall annually certify that the applicable business unit is compliant with applicable Federal health care program and FDA requirements and with the obligations of this CIA. These Certifying Employees shall include, at a minimum, the following: President, GSK; the heads of the U.S. Pharma commercial business units; Chairman, Research and Development; Vice President, Strategic, Planning and Operations; Senior Vice President, NA Medical Affairs; President, Pharmaceuticals Research and Development; President, Vaccines; and Vice

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President, Stiefel North America Dermatology, and, to the extent that a business unit performs Covered Functions and is not covered by the certification of one of the above-listed individuals, such other executives, vice-presidents, and directors of business units as would be necessary to ensure that there is a Certifying Employee from each such business unit.

For each Reporting Period, each Certifying Employee shall sign a certification that

states: “I have been trained on and understand the compliance requirements and

responsibilities as they relate to [department or functional area], an area under my supervision. My job responsibilities include ensuring compliance with regard to the _____ [insert name of the department or functional area] with all applicable Federal health care program requirements, FDA requirements, obligations of the Corporate Integrity Agreement, and GSK policies, and I have taken steps to promote such compliance. To the best of my knowledge, except as otherwise described herein, the ______ [insert name of department or functional area] of GSK is in compliance with all applicable Federal health care program requirements, FDA requirements, and the obligations of the CIA. I understand that this certification is being provided to and relied upon by the United States.”

If any Certifying Employee is unable to provide such a conclusion in the

certification, the Certifying Employee shall provide a written explanation of the reasons why he or she is unable to provide the certification outlined above and the steps being taken to address the issue(s) identified in the certification.

B. Written Standards.

1. Code of Conduct. Prior to the Effective Date, GSK developed and

implemented a written Code of Conduct. Within 120 days after the Effective Date, GSK shall distribute the written Code of Conduct to all Covered Persons. GSK shall make adherence to the Code of Conduct an element in evaluating the performance of all employees who are Covered Persons. The Code of Conduct includes, or within 120 days after the Effective Date shall be revised to address the following:

a. GSK’s commitment to full compliance with all Federal health care program requirements and FDA requirements, including its

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commitment to comply with all requirements relating to the Covered Functions;

b. GSK’s requirement that all of its Covered Persons shall be expected to comply with all applicable Federal health care program requirements, FDA Requirements, and with GSK’s own Policies and Procedures;

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

e. the right of all individuals to use the Disclosure Program described in Section III.F, and GSK’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 or electronically, that he or she has received, read, understood, and shall abide by the Code of Conduct. New Covered Persons shall receive the Code of Conduct and shall complete the required certification within 30 days after becoming a Covered Person or within 120 days after the Effective Date, whichever is later.

GSK shall periodically review the Code of Conduct to determine if revisions are appropriate and shall make any necessary revisions based on such review. Any revised Code of Conduct shall be distributed within 30 days after any revisions are finalized. Each Covered Person shall certify, in writing or electronically, that he or she has received, read, understood, and shall abide by the revised Code of Conduct within 30 days after the distribution of the revised Code of Conduct.

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2. Third Party Personnel. Within 120 days after the Effective Date and annually thereafter by the anniversary of the Effective Date, GSK shall send a letter to each entity employing Third Party Personnel. The letter shall describe GSK’s obligations under the CIA and its commitment to full compliance with all Federal health care program requirements and FDA requirements. The letter shall include a description of GSK’s Compliance Program. GSK shall attach a copy of its Code of Conduct to the letter and shall request the entity employing Third Party Personnel to either: (a) make a copy of GSK’s Code of Conduct and a description of GSK’s Compliance Program available to its employees who meet the definition of Third Party Personnel as set forth in Section II.C.9; or (b) represent to GSK that it has and enforces a substantially comparable set of code of conduct and Compliance Program for its employees who meet the definition of Third Party Personnel as set forth in Section II.C.9.

3. Policies and Procedures. To the extent not already accomplished, GSK

shall implement written policies and procedures regarding the operation of the Compliance Program and GSK’s compliance with Federal health care program and FDA requirements (Policies and Procedures). At a minimum, the Policies and Procedures must address the following:

a. the subjects relating to the Code of Conduct identified in Section

III.B.1;

b. appropriate ways to conduct Promotional Functions in compliance with all applicable Federal healthcare program requirements, including, but not limited to the Federal anti-kickback statute (codified at 42 U.S.C. § 1320a-7b(b)), and the False Claims Act (codified at 31 U.S.C. §§ 3729-3733) and in compliance with all applicable FDA requirements;

c. appropriate ways to conduct Product Related Functions in

compliance with all applicable Federal healthcare program requirements, including, but not limited to the Federal anti-kickback statute (codified at 42 U.S.C. § 1320a-7b(b)), and the False Claims Act (codified at 31 U.S.C. §§ 3729-3733) and in compliance with all applicable FDA requirements;

d. appropriate ways to conduct Payer Related Functions in compliance with all applicable Federal health care program

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requirements, including but not limited to the Federal anti-kickback statute (codified at 42 U.S.C. § 1320a-7b(b)); the False Claims Act (codified at 31 U.S.C. §§ 3729-3733); applicable FDA requirements; and applicable state laws. During the term of the CIA, the Policies and Procedures shall be consistent with GSK’s US Commercial Practices Policy regarding “Administration of Contracts with Payers.”

e. the materials and information that may be distributed by GSK

sales personnel about Government Reimbursed Products and the manner in which GSK sales personnel respond to requests for information about non-FDA approved (or “off-label”) uses of Government Reimbursed Products. These Policies and Procedures shall require that sales personnel may not engage in off-label promotion (directly or indirectly) and must refer all requests for information about off-label uses of Government Reimbursed Products to Medical Affairs;

f. the materials and information that may be distributed by GSK

personnel from the PPV Unit and the manner in which PPV personnel respond to requests for information about off-label uses of Government Reimbursed Products. These Policies and Procedures shall require that all requests for information about off-label uses of Government Reimbursed Products be referred to Medical Affairs (i.e., Medical Information Scientists (MISs), Medical Science Liaisons (MSLs), and/or Health Outcome Liaisons (HOLs));

g. the materials and information (including product information and

product dossiers about Government Reimbursed Products) that may be distributed by Medical Affairs and the mechanisms through, and manner in which, Medical Affairs receives and responds to requests for information from an HCP or another individual or entity about off-label uses of GSK’s Government Reimbursed Products; the form and content of information disseminated by GSK in response to such requests; and the internal review and approval process for the information disseminated. These Policies and Procedures shall require that

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GSK sales personnel obtain a signature from the medical professional who verbally requested the written information confirming what information was requested and the request was unsolicited. The Policies and Procedures shall include a requirement that Medical Affairs develop a database (“Inquiries Database”) to track all requests for information about Government Reimbursed Products to Medical Affairs. The Inquiries Database shall include the following items of information for each unique inquiry (Inquiry) received for information about GSK’s products: (1) date of Inquiry; (2) form of Inquiry (e.g., fax, phone, etc.); (3) name of the requesting HCP, HCI, or other individual or entity; (4) nature and topic of request (including exact language of the Inquiry if made in writing); (5) an evaluation of whether the Inquiry relates to information about an off-label use for the product; (6) nature/form of the response from GSK (including a record of the materials provided to the HCP or HCI in response to the request); and (7) the name of the GSK representative who called on or interacted with the HCP, customer, or HCI, if known;

h. the materials and information that may be distributed or made available by GSK through social media and/or through direct-to-consumer advertising. These policies and procedures shall be designed to ensure that GSK’s activities in this area and the information distributed or made available complies with all applicable Federal health care program and FDA requirements, and have been reviewed and approved by GSK before they are disseminated;

i. the manner and circumstances under which medical personnel

from Medical Affairs interact with or participate in meetings or events with HCPs or HCIs (either alone or with sales representatives or account executives) and the role of the medical personnel at such meetings or events, as well as how they handle responses to unsolicited requests about off-label indications of Government Reimbursed Products;

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j. the development, implementation, and review of target plans for

sales personnel and other GSK personnel who promote and sell Government Reimbursed Products (Target Plans). For each Government Reimbursed Product, the Policies and Procedures shall require that GSK review Target Plans for the product and the bases upon, and circumstances under which HCPs and HCIs belonging to specified medical specialties or types of clinical practice are included in, or excluded from, the Target Plans. The Policies and Procedures shall also require that GSK modify the Target Plans as necessary to ensure that GSK is promoting Government Reimbursed Products in a manner that complies with all applicable Federal health care program and FDA requirements. The Target Plan reviews shall occur at least annually and shall also occur each time when the FDA approves a new or additional indication for a Government Reimbursed Product;

k. the development, implementation, and review of policies and

procedures (including excluded specialties lists) for the distribution of samples of, or coupons or vouchers for, Government Reimbursed Products (collectively “Sample Distribution Policies and Procedures”). This shall include a review of the bases upon, and circumstances under, which HCPs and HCIs belonging to specified medical specialties or types of clinical practice may receive samples, coupons, or vouchers from GSK. GSK shall modify the Sample Distribution Policies and Procedures as necessary to ensure that GSK is promoting Government Reimbursed Products in a manner that complies with all applicable Federal health care program and FDA requirements;

l. consultant or other fee-for-service arrangements entered into with

HCPs or HCIs relating to Covered Functions (including, but not limited to speaker programs, speaker training programs, presentations, consultant task force meetings, advisory boards, and ad hoc advisory activities, and any other financial engagement or arrangement with an HCP or HCI) and all events

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and expenses relating to such engagements or arrangements. These Policies and Procedures shall be designed to ensure that the arrangements and related events are used for legitimate and lawful purposes in accordance with applicable Federal health care program and FDA requirements and shall include requirements about the content and circumstances of such arrangements and events. The Policies and Procedures shall require that compensation be based on fair market value, include caps on the total amount of payment that may be provided annually, and that HCPs who sit on formulary boards or develop clinical guidelines are required to disclose their relationship with GSK;

m. programs to educate sales personnel, including but not limited to

presentations by HCPs at sales meetings and experience-based learning activities, if any. These Policies and Procedures shall be designed to ensure that the programs are used for legitimate and lawful purposes in accordance with applicable Federal health care program and FDA requirements. The Policies shall include requirements about the content and circumstances of such arrangements and events;

n. sponsorship or funding of grants to healthcare-related

organizations and donations to community partners in the United States (including support of any educational programs they conduct for non-HCP audiences). These Policies and Procedures shall be designed to ensure that GSK’s funding and/or sponsorship complies with all applicable Federal health care program and FDA requirements. In addition, the Policies and Procedures continue to limit the situations in which GSK shall make grants and donations and shall state that GSK does not provide funding in order to influence the use of GSK products or services;

o. funding of, or participation in, any Third Party Educational

Activity as defined in Section II.C.8 above. These Policies and Procedures shall be designed to ensure that any GSK funding and/or sponsorship of such programs satisfies all applicable Federal health care program and FDA requirements. Prior to the

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Effective Date of the CIA, GSK implemented policies restricting funding for Third Party Educational Activity to a limited number of specific types of entities (i.e., academic medical centers and their affiliated teaching and patient care institutions and professional medical associations that represent HCPs responsible for the delivery of patient care). These Policies and Procedures prohibit funding for independent medical education by commercial providers. During the term of the CIA, the Policies and Procedures shall continue to require that GSK provide funding for Third Party Educational Activity in accordance with its Policies and Procedures and practices outlined in this Section III.B.3.o and below in Section III.M.4.

The Policies and Procedures shall also require that: (1) GSK disclose its financial support of the Third Party Educational Activity and, to the extent feasible consistent with subsection III.B.3.o.4 below, any financial relationships with faculty, speakers, or organizers at such Activity; (2) as a condition of funding, the third party shall agree to disclose GSK’s financial support of the Third Party Educational Activity and to require faculty, speakers, or organizers at such Activity to disclose any financial relationship with GSK; (3) the Third Party Educational Activity have an educational focus; (4) the content, organization, and operation of the Third Party Educational Activity (including the faculty, educational methods, materials, and venue) be independent of GSK’s control; (5) GSK support only Third Party Educational Activity that is non-promotional in tone/nature; and (6) GSK’s support of a Third Party Educational Activity shall be contingent on the provider’s commitment to provide information at the Third Party Educational Activity that is fair, balanced, accurate and not misleading;

p. review of promotional materials and information intended to be

disseminated outside GSK by appropriate qualified personnel (such as regulatory, medical, and/or legal personnel) in a manner designed to ensure that legal, regulatory, and medical concerns are properly addressed during GSK’s review and approval process and are elevated when appropriate. The Policies and

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Procedures shall be designed to ensure that such materials and information comply with all applicable Federal health care program and FDA requirements. The Policies and Procedures shall require that: (1) applicable review committees (including the overall Copy Approval Team (CAT) and the CAT for each product) review all promotional materials prior to the distribution or use of such materials; (2) GSK’s copy review and approval process ensure that FDA communications relevant to the product are considered and appropriately reflected in promotional materials and in a copy approval repository maintained by each CAT; and that (3) deviations from the standard review committee practices and protocols (including timetables for the submission of materials for review) shall be documented and referred for appropriate follow-up;

q. sponsorship, funding of, and disclosures relating to Product

Related Functions. These Policies and Procedures shall be designed to ensure that GSK’s funding, sponsorship, and disclosure complies with all applicable Federal health care program and FDA requirements;

r. compensation (including through salaries, bonuses, or other

means) for Covered Persons. These Policies and Procedures shall: (1) be designed to ensure that financial incentives do not inappropriately motivate such individuals to engage in improper promotion, sales, and marketing of GSK’s Government Reimbursed Products; and (2) include mechanisms, where appropriate, to exclude from incentive compensation sales that may indicate off-label promotion of Government Reimbursed Products. GSK represents that, prior to the Effective Date, it implemented a program in the United States to eliminate incentive compensative based on territory/individual level sales goals for prescriber-facing sales personnel (e.g., sales representatives) and their direct managers (Patient First Program). The Patient First Program is described in more detail below in Section III.H. GSK shall

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continue its Patient First Program, or a substantially equivalent program, during the term of the CIA.

s. GSK’s right to recoup or cause the forfeiture of annual performance pay of GSK employees and Covered Executives if certain triggering events relating to misconduct by the employees or executives occur;

t. the submission of information about any Government Reimbursed Product to any compendia such as Drugdex or other published source of information used in connection with the determination of coverage by a Federal health care program for the product (hereafter “Compendia”). This includes any initial submission of information to any Compendia and the submission of any additional, updated, supplemental, or changed information (e.g., any changes based on GSK’s discovery of erroneous or scientifically unsound information or data associated with the information in the Compendia.) The Policies and Procedures shall include a requirement that GSK conduct an annual review of all arrangements, processing fees, or other payments or financial support (if any) provided by GSK to any Compendia. GSK U.S. compliance personnel or other appropriately trained GSK personnel who are independent from the functional unit being reviewed shall be involved in this review;

u. sponsorship by GSK of human subject research of Government

Reimbursed Products (i.e., post-marketing clinical trials and post-marketing studies (collectively, “GSK-Sponsored Research”)), and support by GSK of investigator-sponsored studies of Government Reimbursed Products (ISSs) (collectively, GSK-Sponsored Research and ISSs shall be referred to as “Research”), including the decision to provide financial or other support for Research; the manner in which Research support is provided; the publication of information about the Research, including the publication of information about the Research results and trial outcomes, and uses made of publications relating to Research;

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Policies/Procedures regarding Sponsorship or Support of Studies Involving Government Reimbursed Products: GSK represents that it requires Research to be approved by its medical and/or research organizations. Under GSK’s current policies and procedures, sales, marketing, or other commercial personnel may not participate in the design, conduct, or publication of GSK-Sponsored Research, with limited exceptions relating to non-interventional health outcomes studies (for which a relevant GSK medical group has oversight). GSK also represents that its human subject research and any resulting publications are intended to foster increased understanding of scientific, clinical or medical issues. To the extent not already accomplished, GSK shall require as a condition of its funding that all researchers disclose in any publication of Research, GSK’s support and any financial interest the researcher may have in GSK.

Posting of Study Results and Protocols/Registry of Studies: GSK represents that, prior to the Effective Date, it developed a Clinical Study Register on which it posts, within a specified number of months from study completion and with rare exception, summary results from all GSK-Sponsored interventional Research studies of Government Reimbursed Products; and from GSK-Sponsored observational studies designed to inform the safety, efficacy or effectiveness, including cost-effectiveness, of Government Reimbursed Products; and from GSK-Sponsored meta-analyses and pooled analyses designed to inform appropriate, effective or safe use of Government Reimbursed Products. In addition, GSK posts summaries of its protocols for the studies and analyses described in the preceding sentence (including amendments that change the content of the summary) in its Register. GSK shall continue these practices throughout the term of the CIA. In addition, GSK represents that it has established policies, systems, and practices to publish results from and information about discontinued studies on its Clinical Register, including the fact that the study terminated early. GSK shall continue these practices throughout the term of the CIA.

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GSK represents that it registers summary results from all applicable GSK-sponsored clinical trials of GSK products and reports results of such clinical trials on the National Institutes of Health (NIH) sponsored website (www.clinicaltrials.gov) in compliance with all Federal requirements. GSK shall continue to comply with Federal requirements or other applicable requirements relating to the registration and results reporting of clinical studies throughout the term of this CIA. In addition, if there is a change in Federal requirements or other applicable requirements relating to registration and results reporting of clinical study information, GSK shall fully comply with such requirements. Publication of Study Results: GSK represents that it generally seeks publication of the results of all GSK-Sponsored interventional Research in peer-reviewed, searchable journals and imposes specified timeframes for the drafting and submission of manuscripts following completion of a study. For purposes of these publication requirements, GSK’s publication policy includes certain GSK-Sponsored observational Research studies and certain GSK-Sponsored meta-analyses and pooled analyses. In addition, GSK represents that it has established policies and “operating practices” governing scientific engagement, which included detailed directions regarding publications. Among other things, the operating practices require the implementation of data dissemination plans that establish prospective publication strategies for GSK-Sponsored Research and address requirements for appropriateness, accuracy, and balance in publications of GSK-Sponsored Research. In all publications about GSK-Sponsored Research, GSK shall acknowledge its role as the funding source. In addition, GSK represents that it has established policies, systems, and practices designed to ensure that adverse event data is properly reported to the FDA. In addition, GSK requires investigators to report study-related information and data,

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including data about adverse events before receiving final payment from GSK. The standards, policies, and practices described above shall hereafter be referred to collectively as the “Research and Publication Practices.” GSK shall maintain its Research and Publication Practices (or standards and practices substantially equivalent to those set forth above) for studies initiated or completed after the Effective Date for the term of the CIA. To the extent that GSK intends to materially change these Research and Publication Practices, it shall notify the OIG about the change 30 days in advance of the effective date of the change;

v. authorship of journal articles or other publications about GSK-

Sponsored Research or about therapeutic areas or disease states that may be treated with Government Reimbursed Products, including, but not limited to, the disclosure of any and all financial relationships between the author and GSK, the identification of all authors or contributors (including professional writers) associated with a given publication, and that research results be made available to each author or contributor.

Authorship Requirements: GSK represents that it requires all authors of journal articles about GSK-Sponsored Research to adhere to International Committee of Medical Journal Editors (ICMJE) requirements regarding authorship except when a particular journal requires an alternative procedure. In addition, GSK requires all authors of articles on GSK-Sponsored Research to disclose any GSK financial support for the study and any financial relationship with GSK (including any financial interest the author may have in GSK or a GSK product). In addition, GSK represents that individuals may be considered an “author” on a GSK publication of GSK-Sponsored Research only if the individual has made substantial contributions to the study and has given final approval to the version of the publication ultimately published.

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GSK shall require that its employees and medical writing contractors complete certain certification as to any GSK publication of GSK-Sponsored Research on which the individual is listed as an author or contributor. The standards, policies and practices described above shall be referred to collectively as “Authorship-Related Practices”; and

w. disciplinary policies and procedures for violations of GSK’s

Policies and Procedures, including policies relating to Federal health care program and FDA requirements.

To the extent not already accomplished, within 150 days after the Effective Date,

the Policies and Procedures shall be made available to all Covered Persons. Appropriate and knowledgeable staff shall be available to explain the Policies and Procedures.

At least annually (and more frequently, if appropriate), GSK shall assess and

update, as necessary, the Policies and Procedures. Within 30 days after the effective date of any revisions, any such revised Policies and Procedures shall be made available to all Covered Persons.

C. Training and Education.

1. General Training. To the extent not already accomplished, within 120 days after the Effective Date, GSK shall provide at least one hour of General Training to each Covered Person. This training, at a minimum, shall explain GSK’s:

a. CIA requirements; and

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

New Covered Persons shall receive the General Training described above within 30 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 in each subsequent Reporting Period.

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2. Specific Training. GSK shall provide annual training to each Relevant Covered Person relating to his or her specific job responsibilities. This training shall be known as Specific Training.

By December 31, 2012, each Relevant Covered Person engaged in Promotional Functions, Product Related Functions, or Payer Related Functions shall receive at least three hours of Specific Training in addition to the General Training required above.

For Relevant Covered Persons engaged in Promotional Functions or

Product Related Functions, this Specific Training shall include a discussion of:

a. all applicable Federal health care program requirements relating to Promotional Functions and to Product Related Functions;

b. all applicable FDA requirements relating to Promotional

Functions and to Product Related Functions;

c. all GSK Policies and Procedures and other requirements applicable to Promotional Functions and Product Related Functions;

d. the personal obligation of each individual involved in

Promotional Functions and Product Related Functions to comply with all applicable Federal health care program and FDA requirements and all other applicable legal requirements;

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

care program and FDA requirements; and f. examples of proper and improper practices related to Promotional

Functions and Product Related Functions.

For Relevant Covered Persons engaged in Payer Related Functions, this Specific Training shall include a discussion of topics a-f above, as well as:

g. all applicable Federal health care program requirements and FDA requirements relating to Payer Related Functions;

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h. GSK’s systems and processes applicable to Payer Related

Functions;

i. all GSK Policies and Procedures and other requirements applicable to Promotional Functions and Product Related Functions;

j. the personal obligation of each individual involved in Payer

Related Functions to ensure that all information provided or reported to Payers is complete, accurate and not misleading;

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

care program and FDA requirements; and

l. examples of proper and improper practices relating to Payer Related Functions.

New Relevant Covered Persons shall receive their Specific Training within 30

days after the beginning of their employment or becoming Relevant Covered Persons, or by December 31, 2012, whichever is later. A GSK employee who has completed the Specific Training shall oversee a new Relevant Covered Person’s work, to the extent that the work relates to any of the Covered 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 three hours of Specific Training in each subsequent Reporting Period.

3. Compliance Training for Management. By December 31, 2012, GSK

shall provide to managers of employees performing Covered Functions and supervisors of sales personnel (collectively “Management”) at least three hours of specialized compliance-related training applicable to the functional area of the manager (Management Compliance Training). This training shall address the responsibility of Management to promote compliance and to identify and mitigate compliance-related risks in their functional areas.

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New members of Management shall receive the Management Compliance Training within 30 days after becoming a member of Management or by December 31, 2012, whichever is later.

After receiving the initial Management Compliance Training described in

this Section, each Relevant Covered Person shall receive at least three hours of Specialized Compliance Training in each subsequent Reporting Period.

4. Board Member Training. Within 150 days after the Effective Date, GSK shall provide at least two hours of training to each member of the Board of Directors, in addition to the General Training. This training shall address the responsibilities of board members and corporate governance.

New members of the Board of Directors shall receive the Board Member

Training described above within 30 days after becoming a board member or within 120 days after the Effective Date, whichever is later.

5. Certification. Each Covered Person who is required to complete training

shall certify, in writing or in electronic form, if applicable, that he or she has received such training. The certification shall specify the type of training received and the date received. The Compliance Officer (or designee) shall retain these certifications, along with all course materials. These shall be made available to OIG, upon request.

6. Qualifications of Trainer. Persons responsible for providing the training

described above shall be knowledgeable about the subject area of the training, including about applicable Federal health care program and FDA requirements.

7. Update of Training. GSK shall review its training annually, and, where appropriate, shall update the training to reflect changes in Federal health care program requirements, FDA requirements, any issues discovered during internal audits or the IRO Reviews, the TRACER program (defined below in Section III.D), and any other relevant information.

8. Computer-based Training. GSK may provide the training required under this CIA through appropriate computer-based training approaches. If GSK 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. All applicable requirements to provide a number

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of “hours” of training as set forth in this Section III.C may be met with respect to computer-based training by providing the required number of “normative” hours as that term is used in the computer-based training industry.

D. Risk Assessment and Mitigation Process. GSK represents that prior to the Effective Date, GSK began to implement a

standardized process to allow GSK compliance, legal, and business unit leaders to assess and identify risks associated with Government Reimbursed Products that have field force support in the United States (GSK Products). This program is referred to as the Targeted Risk-based Analysis Compliance Evaluations and Review (TRACER) program and is described in more detail in Appendix C. TRACER involves an annual evaluation and mitigation of risks associated with the marketing of the GSK Products. GSK shall maintain a TRACER process for the duration of the CIA.

E. Review Procedures.

1. General Description.

a. Engagement of Independent Review Organization. Within 120 days after the Effective Date, GSK shall engage an entity (or entities), such as an accounting, auditing, or consulting firm (hereinafter “Independent Review Organization” or “IRO”), to perform reviews to assist GSK in assessing and evaluating its Covered Functions. More specifically, the IRO(s) shall conduct reviews that assess GSK’s systems, processes, policies, procedures, and practices relating to the Covered Functions (including Research and Publication Practices and Authorship-Related Practices) and the TRACER program (collectively “IRO Reviews”). The applicable requirements relating to the IRO are outlined in Appendix A to this CIA, which is incorporated by reference. Each IRO engaged by GSK shall have expertise in applicable Federal health care program and FDA requirements as may be appropriate to the Review for which the IRO is retained including expertise in the pharmaceutical industry with regard to risk identification and mitigation in relation to pharmaceutical product marketing and promotion. Each IRO shall assess, along with GSK,

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whether it can perform the engagement in a professionally independent and objective fashion, as appropriate to the nature of the review, taking into account any other business relationships or other engagements that may exist.

b. Frequency and Brief Description of Reviews. As set forth more fully in Appendices B and C, the IRO Reviews shall consist of three components: (1) Systems Reviews and Transactions Reviews relating to the Covered Functions; (2) Additional Items reviews; and (3) Systems Reviews and Transaction Reviews relating to the TRACER program. The Systems Reviews shall assess GSK’s systems, processes, policies, and procedures relating to the Covered Functions and the TRACER program. The IRO Reviews shall cover each of the six calendar years of the CIA. The first IRO Reporting Period shall cover the time from the Effective Date through December 31, 2012. The second through sixth IRO Reporting Periods shall cover, respectively, 2013 and each subsequent calendar year through 2017 (hereafter the “IRO Reporting Periods.”) If there are no material changes in GSK’s relevant systems, processes, policies, and procedures, the Systems Review shall be performed for the periods covering the second and fifth IRO Reporting Periods. If GSK materially changes its relevant systems, processes, policies, and procedures, the IRO shall perform Systems Reviews for the IRO Reporting Periods in which such changes were made in addition to conducting the Systems Reviews for the second and fifth IRO Reporting Periods, as set forth more fully in Appendices B and C. The IRO shall perform a limited Transactions Review for the first IRO Reporting Period as set forth more fully in Appendix B. For each of the remaining IRO Reporting Periods, the IRO shall perform full Transaction Reviews as set forth in Appendices B and C. The IRO(s) shall perform all components of each annual Transaction Review. In addition, the Transactions Reviews for the second through sixth IRO Reporting Periods shall also include a review of up to three

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additional areas or practices of GSK identified by the OIG in its discretion (hereafter “Additional Items”). For purposes of identifying the Additional Items to be included in the Transactions Review for a particular IRO Reporting Period, the OIG will consult with GSK and may consider internal audit work conducted by GSK, the Government Reimbursed Product portfolio, the nature and scope of GSK’s promotional practices and arrangements with HCPs and HCIs, and other information known to it. As set forth more fully in Appendix B, GSK may propose to the OIG that its internal audit(s) be partially substituted for one or more of the Additional Items that would otherwise be reviewed by the IRO as part of the Transactions Review. The OIG retains sole discretion over whether, and in what manner, to allow GSK’s internal audit work to be substituted for a portion of the Additional Items review conducted by the IRO. The OIG shall notify GSK of the nature and scope of the IRO review for each of the Additional Items not later than 150 days prior to the end of each applicable IRO Reporting Period. Prior to undertaking the review of the Additional Items, the IRO and/or GSK shall submit an audit work plan to the OIG for approval and the IRO shall conduct the review of the Additional Items based on a work plan approved by the OIG.

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

2. IRO Review Reports. The IRO shall prepare a report based upon each

IRO Review performed (IRO Review Report). Information to be included in each IRO Review Report is described in Appendices B and C.

3. Validation Review. In the event OIG has reason to believe that: (a) any

of GSK’s IRO Reviews fails to conform to the requirements of this CIA; or (b) the IRO’s findings or Review results are inaccurate, OIG may, at its sole discretion, conduct its own review to determine whether the applicable IRO Review complied with the requirements

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of the CIA and/or the findings or Review results are inaccurate (Validation Review). GSK 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 GSK’s final Annual Report shall be initiated no later than one year after GSK’s final submission (as described in Section II.B) is received by OIG.

Prior to initiating a Validation Review, OIG shall notify GSK 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, GSK may request a meeting with OIG to: (a) discuss the results of any IRO Review submissions or findings; (b) present any additional information to clarify the results of the IRO Review or to correct the inaccuracy of the IRO Review; and/or (c) propose alternatives to the proposed Validation Review. GSK agrees to provide any additional information as may be requested by OIG under this Section III.E.3 in an expedited manner. OIG will attempt in good faith to resolve any IRO Review issues with GSK prior to conducting a Validation Review. However, the final determination as to whether or not to proceed with a Validation Review shall be made at the sole discretion of OIG.

4. Independence and Objectivity Certification. The IRO shall include in its report(s) to GSK a certification that the IRO has: (a) evaluated its professional independence and objectivity with respect to the reviews conducted under this Section III.E; and (b) concluded that it is, in fact, independent and objective in accordance with the requirements specified in Appendix A.

F. Disclosure Program.

Prior to the GSK Effective Date, GSK and its Affiliates established a Disclosure

Program that includes a mechanism (the toll free “Integrity Helpline”) to enable individuals to disclose, to the Compliance Officer or some other person who is not in the disclosing individual’s chain of command, any identified issues or questions associated with GSK’s or a GSK Affiliate’s policies, conduct, practices, or procedures with respect to a Federal health care program or an FDA requirement (including as they relate to CGMP Activities) believed by the individual to be a potential violation of criminal, civil, or administrative law. The Integrity Helpline may be used by employees of third party suppliers that contract with GSK. GSK and its Affiliates publicize, and shall continue to appropriately publicize, the existence of the Disclosure Program and the Integrity Helpline (e.g., via periodic e-mails to employees, by posting the information in prominent common areas, or through references in the Code of Conduct and during training.)

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The Disclosure Program shall emphasize a nonretribution, non-retaliation policy and shall include a reporting mechanism for anonymous communications for which appropriate confidentiality shall be maintained. Upon receipt of a disclosure, the Compliance Officer (or designee) shall gather all relevant information from the disclosing individual. The Compliance Officer (or designee) shall make a preliminary, good faith inquiry into the allegations set forth in every disclosure to ensure that it obtains all necessary information to determine whether a further review should be conducted. For any disclosure that is sufficiently specific so that it reasonably: (1) permits a determination of the appropriateness of the alleged improper practice; and (2) provides an opportunity for taking corrective action, GSK and/or any applicable Affiliate shall conduct an internal review of the allegations set forth in the disclosure and ensure that proper follow-up is conducted.

GSK shall maintain, a disclosure log, which includes a record and summary of

each disclosure received (whether anonymous or not), the status of the respective internal reviews, and any corrective action taken in response to the internal reviews. This disclosure log shall be made available to OIG upon request. G. 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 scope of 42 U.S.C. § 1320a-7(a), but has not yet been excluded, debarred, suspended, or otherwise declared ineligible.

b. “Exclusion Lists” include:

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

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ii. the General Services Administration’s List of Parties Excluded from Federal Programs (available through the Internet at http://www.epls.gov).

2. Screening Requirements. GSK shall ensure that all prospective and

current Covered Persons and Manufacturing Covered Persons are not Ineligible Persons, by implementing the following screening requirements.

a. as part of the hiring or contracting process, GSK shall require all prospective and current Covered Persons and Manufacturing Covered Persons to disclose whether they are Ineligible Persons and shall screen potential Covered Persons and Manufacturing Covered Persons against the Exclusion Lists prior to engaging their services.

b. GSK shall screen all Covered Persons and Manufacturing Covered Persons against the Exclusion Lists within 120 days after the Effective Date and on an annual basis thereafter.

c. GSK shall maintain a policy requiring all Covered Persons and Manufacturing Covered Persons to disclose immediately any debarment, exclusion, suspension, or other event that makes that person an Ineligible Person.

Nothing in this Section III.G affects GSK’s responsibility to refrain from (and liability for) billing Federal health care programs for items or services furnished, ordered, or prescribed by excluded persons. GSK understands that items or services furnished by excluded persons are not payable by Federal health care programs and that GSK may be liable for overpayments and/or criminal, civil, and administrative sanctions for employing or contracting with an excluded person regardless of whether GSK meets the requirements of Section III.G.

3. Removal Requirement. If GSK has actual notice that a Covered Person or Manufacturing Covered Person has become an Ineligible Person, GSK shall remove such Covered Person or Manufacturing Covered Person from responsibility for, or involvement with, GSK’s business operations related to the Federal health care programs and shall remove such Covered Person or Manufacturing Covered Person from any position for which the Covered Person’s or Manufacturing Covered Person’s

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compensation or the items or services furnished, ordered, or prescribed by the Covered Person or Manufacturing Covered 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 Covered Person or Manufacturing Covered Person is reinstated into participation in the Federal health care programs.

4. Pending Charges and Proposed Exclusions. If GSK has actual notice

that a Covered Person or Manufacturing Covered Person is charged with a criminal offense that falls within the scope of 42 U.S.C. §§ 1320a-7(a), 1320a-7(b)(1)-(3), or is proposed for exclusion during the Covered Person’s or Manufacturing Covered Person’s employment or contract term, GSK shall take all appropriate actions to ensure that the responsibilities of that Covered Person or Manufacturing Covered Person have not and shall not adversely affect the quality of care rendered to any beneficiary, patient, or resident, or the accuracy of any claims submitted to any Federal health care program.

H. Employee and Executive Incentive Compensation and Recoupment Policies and Practices. Pursuant to its existing Patient First program, GSK agrees that it will not provide

financial reward (through compensation, including incentive compensation or otherwise) or discipline (through tangible employment action) its prescribing-customer-facing field sales professionals (pharmaceutical sales representatives) or their direct managers based upon the volume of sales of GSK products within a given employee’s own territory or the manager’s district. The Patient First program includes evaluations for sales representatives based on business acumen, customer engagement, and scientific knowledge about GSK’s products. GSK shall continue its Patient First Program, or a substantially equivalent program, during the term of this CIA. GSK commits to maintaining for at least the duration of the CIA, absent agreement otherwise with the OIG, the restrictions on such tangible employment decisions set forth in its Use of Territory/Individual Sales Data policy.

In addition, GSK shall establish and maintain throughout the term of this CIA a financial recoupment program that puts at risk of forfeiture and recoupment an amount equivalent to up to 3 years of annual performance pay (i.e., annual bonus, plus long term incentives) for an executive who is discovered to have been involved in any significant misconduct (Executive Financial Recoupment Program). This financial recoupment program shall apply to both covered executives who are either current GSK employees or who are former GSK employees at the time of a Recoupment Determination. The

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specific terms and conditions of the Executive Financial Recoupment Program are set forth in Appendix E. GSK commits to maintaining an Executive Financial Recoupment Program consistent with the terms of Appendix E for at least the duration of the CIA absent agreement otherwise by the OIG.

I. Notification of Government Investigation or Legal Proceedings.

Within 30 days after discovery, GSK shall notify OIG, in writing, of any ongoing investigation or legal proceeding known to GSK conducted or brought by a U.S.-based governmental entity or its agents involving an allegation that GSK or a GSK Affiliate has committed a crime or has engaged in fraudulent activities. This notification shall include a description of the allegation, the identity of the investigating or prosecuting agency, and the status of such investigation or legal proceeding. GSK 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.

J. Reportable Events.

1. Definition of Reportable Event. For purposes of this CIA, a “Reportable

Event” means anything that involves:

a. 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; b. a matter that a reasonable person would consider a probable violation of criminal, civil, or administrative laws applicable to any FDA requirements relating to the promotion of Government Reimbursed Products (including an FDA Warning Letter issued to GSK); c. the employment of or contracting with a Covered Person who is an Ineligible Person as defined by Section III.G.1.a; or d. the filing of a bankruptcy petition by GSK.

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A Reportable Event may be the result of an isolated event or a series of occurrences. A Reportable Event that meets the one of the definitions set forth above may arise from within the operations of GSK or any GSK Affiliate.

2. Reporting of Reportable Events. If GSK determines (after a reasonable

opportunity to conduct an appropriate review or investigation of the allegations) through any means that there is a Reportable Event, GSK shall notify OIG, in writing, within 30 days after making the determination that the Reportable Event exists.

3. Reportable Events under Sections III.J.1.a-c. For Reportable Events

under Sections III.J.1.a-c, the report to OIG shall include:

a. a complete description of the Reportable Event, including the relevant facts, persons involved, and legal and Federal health care program or FDA authorities implicated;

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

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

GSK shall not be required to report any Reportable Event which is the subject of an ongoing investigation or legal proceeding by a governmental entity or its agents previously disclosed under Section III.I above.

4. Reportable Events under Section III.J.1.d. For Reportable Events under

Section III.J.1.d, the report to the OIG shall include documentation of the bankruptcy filing and a description of any Federal health care program and/or FDA authorities implicated. K. Notification of Communications with FDA. Within 30 days after the date of any written report, correspondence, or communication between GSK and the FDA that materially discusses GSK’s or a Covered Person’s actual or potential unlawful or improper promotion of GSK’s products (including any improper dissemination of information about off-label indications), GSK shall provide a copy of the report, correspondence, or communication to the OIG. GSK shall also provide written notice to the OIG within 30 days after the resolution of any such disclosed off-label matter, and

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shall provide the OIG with a description of the findings and/or results of the matter, if any.

L. Field Force Monitoring and Review Efforts. To the extent not already accomplished, within 120 days after the Effective Date,

GSK shall establish a comprehensive Field Force Monitoring Program (FFMP) to evaluate and monitor its sales personnel’s interactions with HCPs and HCIs. The FFMP shall be a formalized process designed to directly and indirectly observe the appropriateness of sales personnel’s interactions with HCPs and HCIs and to identify potential off-label promotional activities or other improper conduct. As described in more detail below, the FFMP shall include: (1) a Speaker Monitoring Program; (2) direct field observations (Observations) of sales personnel; and (3) the monitoring and review of other records relating to sales personnel’s interactions with HCPs and HCIs (Records Reviews).

1. Speaker Program Activities. With regard to speaker programs, GSK shall maintain processes to require all speakers to complete training and enter written agreements that describe the scope of work to be performed, the speaker fees to be paid, and compliance obligations for the speakers (including requirements that the speaker may only use GSK approved materials and may not directly or indirectly promote the product for off-label uses.) GSK shall maintain a centralized electronic system through which all speaker programs are administered. This system shall establish controls regarding eligibility and qualifications of speakers and venues for the programs and require that speakers are paid according to a centrally managed, pre-set rate structure determined based on a fair-market value analysis conducted by GSK. GSK shall maintain a comprehensive list of speaker program attendees through its centralized system. In addition, GSK shall track and review the aggregate amount (including speaker fees, travel, and other expenses) paid to each speaker in connection with speaker programs conducted during each Reporting Period. GSK shall require certified evaluations by sales personnel regarding whether a speaker program complied with GSK requirements, and in the event of non-compliance, GSK shall require the identification of the policy violation and ensure appropriate follow up activity to address the violation.

To the extent not already accomplished, GSK shall institute a Speaker Monitoring

Program under which GSK compliance or other appropriately trained GSK personnel who are independent from the functional area being monitored (hereinafter “GSK Monitoring Personnel”) shall attend speaker programs during each Reporting Period and

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conduct live audits of the programs (Speaker Program Audits). For the first Reporting Period, GSK shall conduct live audits of 150 speaker programs and for the subsequent Reporting Periods, GSK shall conduct live audits of 75 speaker programs. The programs subject to Speaker Program Audits shall be selected both on a risk-based targeting approach and on a sampling approach. For each program reviewed, personnel conducting the Speaker Program Audits shall review slide materials and other materials used as part of the speaker program, speaker statements made during the program, and GSK representative activities during the program to assess whether the programs were conducted in a manner consistent with GSK’s Policies and Procedures. GSK shall maintain the controls around speaker programs as described above, and shall conduct its Speaker Program Audits as described above throughout the term of the CIA.

2. Observations. As a component of the FFMP, GSK Monitoring Personnel

shall conduct observations of field personnel (e.g., sales personnel, MSLs, HOLs, and account managers and directors from the PPV group) to assess whether the messages delivered and materials distributed to HCPs, HCIs, and others are consistent with applicable legal requirements and with GSK’s Policies and Procedures. These observations shall be full day ride-alongs with the field personnel (Observations), and each Observation shall consist of directly observing all meetings between field personnel and HCPs during the workday. The Observations shall be scheduled throughout the year, selected by GSK Monitoring Personnel both on a risk-based targeting approach and on a sampling approach, include each therapeutic area and actively promoted product, and be conducted across the United States. At the completion of each Observation, GSK Monitoring Personnel shall prepare a report which includes:

1) the identity of the field personnel; 2) the identity of the GSK Monitoring Personnel; 3) the date and duration of the Observation; 4) the product(s) promoted during the Observation; 5) an overall assessment of compliance with GSK policy; and 6) the identification of any potential off-label promotional activity or other

improper conduct by the field personnel.

GSK Monitoring Personnel shall conduct at least 50 Observations during the first Reporting Period, and shall conduct at least 25 Observations during the subsequent Reporting Periods.

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3. Records Reviews. As a component of the FFMP, GSK shall also review various types of records to assess sales personnel interactions with HCPs and HCIs in order to identify potential or actual compliance violations. For each Reporting Period, GSK shall develop and implement a plan for conducting Records Reviews associated with at least three Government Reimbursed Products and a sampling of the personnel supporting those products in regions across the country (as agreed with the OIG for each Reporting Period.) The OIG shall have the discretion to identify the three Government Reimbursed Products to be reviewed for each Reporting Period. The OIG will select the products based on information about GSK’s products provided by GSK, upon request by the OIG no later than 60 days prior to the beginning of the Reporting Period, and other information known to the OIG. If the OIG does not identify the Government Reimbursed Products to be reviewed within the first 30 days of the Reporting Period, GSK shall select the three products to be reviewed. These Records Reviews shall include the monitoring and review of: (1) records and systems relating to sales personnel interactions with HCPs and HCIs (including records from the electronic call reporting system used by sales personnel (which includes call notes), sales communications from managers, sample distribution records, and expense reports); (2) requests for medical information about, or inquiries relating to, Government Reimbursed Products; (3) message recall studies or other similar records (such as Verbatims) purporting to reflect the details of sales personnel interactions with HCPs and HCIs; (4) sales personnel e-mails and other electronic records; and (5) recorded results of the Observations of sales representatives and applicable notes or information from the sales personnel managers. 4. Reporting and Follow-up. Personnel conducting the Speaker Program Audits, Observations, and Records Reviews shall have access to all relevant records and information necessary to assess potential or actual compliance violations. Results from the FFMP audits, including the identification of potential violations of policies and/or legal requirements, shall be compiled and reported to the Compliance Officer (or compliance personnel designee) for review and follow-up as appropriate. In the event that a potential violation of GSK’s Policies and Procedures or of legal or compliance requirements, including but not limited to potential off-label promotion, is identified during any aspect of the FFMP, GSK shall investigate the incident consistent with established policies and procedures for the handling of investigations and shall take all necessary and appropriate responsive action (including disciplinary action) and corrective action, including the disclosure of Reportable Events pursuant to Section III.J above, if applicable. Any compliance issues identified during a Speaker Program Audit,

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Observation and/or Records Review and any corrective action shall be recorded in the files of the Compliance Officer (or compliance personnel designee). GSK shall include a summary of the FFMP and the results of the FFMP as part of each Annual Report. As part of each Annual Report, GSK also shall provide the OIG with copies of the Observation report for any instances in which it was determined that improper promotion occurred and a description of the action(s) that GSK took as a result of such determinations. GSK shall make the Observation reports for all other Observations available to the OIG upon request.

M. Monitoring of Non-Promotional Activities.

To the extent not already accomplished, within 120 days after the Effective Date GSK shall develop and implement a monitoring program for the following types of activities: (1) consultant arrangement activities; (2) research-related activities; (3) publication activities; and (4) medical education grants. This program shall be referred to as the Non-Promotional Monitoring Program.

1. Consultant Arrangement Activities. To the extent that GSK engages U.S.-based HCPs or HCIs for services that relate to Promotional Functions or to Product Related Functions other than for speaker programs, research-related activities, or publication activities (e.g., as a member of an advisory board or to attend consultant meetings), such HCPs or HCIs shall be referred to herein as Consultants. GSK shall require all Consultants to enter written agreements describing the scope of work to be performed, the fees to be paid, and compliance obligations for the Consultants. Consultants shall be paid according to a centrally managed, pre-set rate structure that is determined based on a fair-market value analysis conducted by GSK.

To the extent not already accomplished, within 120 days after the Effective Date,

GSK shall establish a process to develop annual budgeting plans that identify the business needs for, and the estimated numbers of, various Consultant engagements and activities to occur during the following year. The annual Consultant budgeting plans shall also identify the budgeted amounts to be spent on Consultant-related activities. GSK’s Monitoring Personnel shall be involved in the review and approval of such budgeting plans, including any subsequent modification of an approved plan. The purpose of this review shall be to ensure that Consultant arrangements and related events are used for legitimate purposes in accordance with applicable GSK Policies and Procedures.

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To the extent not already accomplished, within 120 days after the Effective Date, GSK shall establish a process to ensure that a needs assessment has been completed to justify the retention of a Consultant prior to the retention of the Consultant. The needs assessment shall identify the business need for the retention of the Consultant and provide specific details about the consulting arrangement (e.g., information about the numbers and qualifications of the HCPs or HCIs to be engaged, the agenda for the proposed meeting, and a description of the proposed work to be done and type of work product to be generated.) Any deviations from the Consultant budgeting plans shall be documented in the needs assessment form and shall be subject to review and approval by GSK Monitoring Personnel.

To the extent not already accomplished, within 120 days after the Effective Date,

GSK shall amend its policies and procedures in a manner designed to ensure that each Consultant performed the work for which the Consultant was engaged and that, as applicable, GSK received the work product generated by the Consultant.

Within 120 days after the Effective Date, GSK shall establish a Consultant

Monitoring Program through which it shall conduct audits for each Reporting Period (Consultant Program Audits) of at least 50 Consultant arrangements with HCPs for the first Reporting Period and 25 Consultant arrangements for subsequent Reporting Periods. The Consultant Monitoring Program shall review Consultant arrangements both on a risk-based targeting approach and on a sampling approach. GSK Monitoring Personnel conducting the Consultant Program Audits shall review needs assessment documents, consultant contracts, and materials relating to the program or work of the Consultant (including work product resulting from any program or event), in order to assess whether the programs and arrangements were conducted in a manner consistent with GSK’s Policies and Procedures. Results from the Consultant Program Audits, including the identification of potential violations of policies, shall be compiled and reported to the Compliance Officer (or compliance personnel designee) for review and follow-up as appropriate.

2. Research-Related Activities. To the extent that GSK engages or supports U.S.-

based HCPs or HCIs to conduct Research (as defined above in Section III.B.3.u), such HCPs and HCIs shall be referred to collectively as “Researchers”. GSK shall require all Researchers to enter written agreements describing the scope of the clinical research or other work to be performed, the fees to be paid or support to be given, and compliance obligations for the Researchers. Researchers retained to conduct Research shall be paid

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according to a centrally managed, pre-set rate structure that is determined based on a fair-market value analysis conducted by GSK.

To the extent not already accomplished, within 120 days after the Effective Date,

GSK shall establish an annual budgeting plan for Researchers that identifies the business or scientific need or scientific opportunity for, and the estimated numbers of, the various Researcher engagements and activities to occur during the year. The annual Researcher budgeting plan shall also identify the budgeted amounts to be spent on Researcher-related activities during the year. GSK Monitoring Personnel shall be involved in the review and approval of such budgeting plans, including any subsequent modification of an approved plan. The purpose of this review shall be to ensure that Research arrangements and related events are used for legitimate purposes in accordance with GSK Policies and Procedures.

To the extent not already accomplished, within 120 days after the Effective Date,

GSK shall establish a process to ensure that a needs assessment has been completed to justify the retention of the Researcher prior to the retention of the Researcher. The needs assessment shall identify the business or scientific need for the information to be provided by the Researcher and provide specific details about the research arrangement (including, for example, information about the numbers and qualifications of the HCPs or HCIs to be engaged, a description of the proposed research to be done (including the research protocol) and type of work product to be generated). Any deviations from the Researcher budgeting plans shall be documented in the needs assessment form (or elsewhere, as appropriate) and shall be subject to review and approval by GSK Monitoring Personnel.

To the extent not already accomplished, within 120 days after the Effective Date,

GSK shall amend its policies and procedures in a manner designed to ensure that each Researcher performed the work for which the Researcher was engaged.

Within 120 days after the Effective Date, GSK shall establish a Researcher

Monitoring Program through which it shall conduct audits for each Reporting Period (Researcher Program Audits). GSK shall review 20 Researcher arrangements with HCPs or HCIs for the first Reporting Period and 10 Researcher Arrangements for subsequent Reporting Periods. The Researcher Monitoring Program shall review Researcher arrangements both on a risk-based targeting approach and on a sampling approach. GSK Monitoring Personnel conducting the Researcher Program Audits shall review needs assessment documents, proposal and/or protocol documents, approval documents, contracts, and payments in order to assess whether the programs and arrangements were

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supported by GSK and performed by the Researchers in a manner consistent with GSK’s Policies and Procedures. Results from the Researcher Program Audits, including identification of potential violations of policies, shall be compiled and reported to the Compliance Officer (or compliance personnel designee) for review and follow-up as appropriate.

3. Publication Activities. GSK represents that it generally does not engage HCPs

or HCIs exclusively to produce articles or other publications relating to GSK-Sponsored Research, and that generally HCPs or HCIs who perform this work do so as part of an engagement for Research Related Activities. To the extent that, in connection with Research Related Activities, U.S.-based HCPs or HCIs produce articles or other publications relating to GSK-Sponsored Research (collectively “Publication Activities”) such HCPs or HCIs shall be referred to as Authors. GSK shall require all Authors to enter written agreements describing the terms of the arrangement between GSK and the Author and compliance obligations of the Authors. Authors shall be paid according to the centrally managed, pre-set rate structure that is established for Research Related Activities but will not be paid separately for authorship or other publication-specific activity (provided that GSK may reimburse travel expenses incurred to make public presentations of data from GSK-Sponsored Research Studies). If, in a departure from usual practice, GSK engages an HCP or HCI for a stand-alone project involving the production of an article or other publication relating to GSK-Sponsored Research (e.g., a review article summarizing research in a field that includes GSK-Sponsored Research), GSK will require a written agreement with the same compliance obligations as it requires of Author generally and will pay for the work according to the centrally managed, pre-set rate structure as applied to Consultants generally.

To the extent not already accomplished, within 120 days after the Effective Date,

GSK shall establish a process to develop annual plans that identify the business needs for and the estimated numbers of various Publication Activities (Publications Plans). The annual Publications Plan shall also identify the budgeted amounts to be spent on Publication Activities. GSK’s U.S. compliance personnel shall be involved in the review and approval of such annual Publications Plans, including any modification of an approved plan. The purpose of this review shall be to ensure that Publication Activities and related events are used for legitimate purposes in accordance with GSK Policies and Procedures.

To the extent not already accomplished, within 120 days after the Effective Date,

GSK shall establish a needs assessment process for Publication Activities. This process

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shall ensure that a needs assessment has been completed prior to the retention of an Author for a Publication Activity. The needs assessment shall provide specific details about Publication Activities to be performed (including a description of the proposed work to be done, type of work product to be generated, and the purpose for the work.) Any deviations from the Publications Plan shall be documented in the needs assessment form (or elsewhere, as appropriate) and shall be subject to review and approval by GSK Monitoring Personnel.

Within 120 days after the Effective Date, GSK shall establish a Publication

Monitoring Program through which it shall conduct audits for each Reporting Period of at least 50 Publication Activities for the first Reporting Period and 25 Publication Activities for subsequent Reporting Periods. The Publication Monitoring Program shall select publications for review both on a risk-based targeting approach and on a sampling approach. GSK Monitoring Personnel conducting the Publication Monitoring Program shall review needs assessment documents, proposal documents, approval documents, contracts, payments and materials relating to the Publication Activities (including work product resulting from the Activities), in order to assess whether the activities were conducted in a manner consistent with GSK’s Policies and Procedures. Results from the Publication Monitoring Programs, including the identification of potential violations of policies, shall be compiled and reported to the Compliance Officer (or compliance personnel designee) for review and follow-up as appropriate.

4. Medical Education Grant Activities. GSK represents that it provides

grants for medical education of HCPs on a limited basis and that it provides such grants only to educational providers (including academic medical centers, hospital or delivery systems, or professional medical associations that represent HCPs who deliver patient care) that satisfy pre-set criteria established by GSK. Potentially eligible educational providers are selected annually and invited to submit grant proposals for a future fiscal year. GSK represents that it does not provide funding to any commercial providers of medical education.

GSK’s Medical Affairs organization reviews the grant proposals from the potential

providers and makes recommendations for approval based on objective criteria, compliance policies and procedures, and budget availability. GSK represents that its commercial organization (including the sales and marketing departments) has no involvement in, or influence over, the review and approval of medical education grants. GSK shall continue the medical education grant process described above (or an equivalent process) throughout the term of the CIA, and shall notify the OIG in writing at

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least 60 days prior to the implementation of any new system subsequent to the Effective Date.

To the extent not already accomplished, within 120 days after the Effective Date,

GSK shall establish a Grants Monitoring Program through which it shall conduct audits for each Reporting Period of at least 10 medical education grants for the first Reporting Period and 5 medical education grants for subsequent Reporting Periods. The Grants Monitoring Program shall select grants for review both on a risk-based targeting approach and on a sampling approach. GSK Monitoring Personnel conducting the Grants Monitoring Program shall review proposal documents (including grant requests), approval documents, contracts, payments and materials relating to the grant office’s review of the requests, and documents and materials relating to the grants and any events or activities funded through the grants in order to assess whether the activities were conducted in a manner consistent with GSK’s Policies and Procedures. Results from the Grant Monitoring Programs, including the identification of potential violations of policies, shall be compiled and reported to the Compliance Officer (or compliance personnel designee) for review and follow-up as appropriate.

5. Follow Up Reviews and Reporting. In the event that a potential violation of GSK’s Policies and Procedures or of legal or compliance requirements, including but not limited to potential improper promotion, are identified during any aspect of the Non-Promotional Monitoring Program, GSK shall investigate the incident consistent with established Policies and Procedures for the handling of investigations and shall take all necessary and appropriate responsive action (including disciplinary action) and corrective action, including the disclosure of Reportable Events pursuant to Section III.J above, if applicable. Any compliance issues identified during any Non-Promotional Monitoring Program referenced above, and any corrective action, shall be recorded in the files of the U.S. Compliance Department. GSK shall include a summary of the Non-Promotional Monitoring Program and the results of the Non-Promotional Monitoring Program as part of each Annual Report. As part of each Annual Report, GSK also shall provide the OIG with descriptions of any instances identified through the Non-Promotional Monitoring Program in which it was determined that improper promotion of Government Reimbursed Products occurred or the activities violated GSK’s requirements or Policies and Procedures, and a description of the action(s) that GSK took as a result of such determinations. GSK shall make the documents relating to the Non-Promotional Monitoring Program available to the OIG upon request.

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N. Notices to Health Care Providers, Entities, Payers. Within 90 days after the Effective Date, GSK shall send, by first class mail, postage prepaid with delivery confirmation, a notice containing the language set forth below to all HCPs and HCIs that GSK currently details. This notice shall be dated and shall be signed by GSK’s President. The body of the letter shall state the following:

As you may be aware, GSK recently entered into a global civil, criminal, and administrative settlement with the United States and individual states in connection with the promotion and use of some of its products. This letter provides you with additional information about the settlement, explains GSK’s commitments going forward, and provides you with access to information about those commitments. In general terms, the Government alleged that GSK unlawfully promoted Wellbutrin, Paxil, Advair, Lamictal, and Zofran for uses not approved by the Food & Drug Administration (FDA) and that GSK engaged in other improper conduct relating to several of its other drugs including Avandia. To resolve these matters, GSK pled guilty to three misdemeanor criminal violations of the Federal Food, Drug & Cosmetic Act and agreed to pay a criminal fine of $1 billion. In addition, the Government alleged that GSK violated the False Claims Act and GSK entered into three civil settlements to resolve these allegations pursuant to which GSK agreed to pay $ 2 billion to the Federal Government and State Medicaid programs. More information about this settlement may be found at the following: [GSK shall include a link to the USAO, OCL, and GSK websites in the letter.] As part of the federal settlement, GSK also entered into a five-year corporate integrity agreement (CIA) with the Office of Inspector General of the U.S. Department of Health and Human Services. The CIA is available at http://oig.hhs.gov/fraud/cia/index.html. Under this agreement, GSK agreed to undertake certain obligations designed to promote compliance with Federal health care program and FDA requirements. We also agreed to notify healthcare providers about the settlement and inform them that they can report any questionable practices by GSK’s representatives to GSK’s Compliance Department or the FDA. GSK is fully committed to meeting the terms of the CIA and to sales and

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marketing practices that promote compliance. We have fundamentally changed our procedures for compliance, marketing and selling in the United States. For example, we now compensate our medical sales representatives based on the quality of service they deliver to customers, not on sales targets. Please call GSK at XXXX or visit us at [insert name of web link] if you have questions about the settlement referenced above or to report any instances in which you believe that a GSK representative inappropriately promoted a product or engaged in other questionable conduct. Alternatively, you may report any improper conduct associated with prescription drug marketing committed by a GSK representative to the FDA’s Office of Prescription Drug Promotion at 301-796-1200. You should direct medical questions or concerns about the products to XXXXX.

Within 90 days after the Effective Date, GSK shall send to all Payers with whom GSK currently has contracts or enters into contracts for formulary access or rebates (including all state Medicaid programs), by first class mail, postage prepaid with delivery confirmation, a notice containing the language set forth. This notice shall be dated and shall be signed by GSK’s President. The body of the letter shall state the following:

As you may be aware, GSK recently entered into a global civil, criminal, and administrative settlement with the United States and individual states in connection with the promotion and of some of its products. This letter provides you with additional information about the settlement, explains GSK’s commitments going forward, and provides you with access to information about those commitments. In general terms, the Government alleged that GSK unlawfully promoted Wellbutrin, Paxil, Advair, Lamictal, and Zofran for uses not approved by the Food & Drug Administration (FDA) and that GSK engaged in other improper conduct relating to several of its other drugs including Avandia. To resolve these matters, GSK pled guilty to three misdemeanor criminal violations of the Federal Food, Drug & Cosmetic Act (FDCA) and agreed to pay a criminal fine of $ 1 billion. In addition, the Government alleged that GSK violated the False Claims Act and GSK entered into three civil settlements to resolve these allegations pursuant to which GSK agreed to pay $ 2 billion to the Federal Government and State Medicaid programs.

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More information about this settlement may be found at the following: [GSK shall include a link to the USAO, OCL, and GSK websites in the letter.] As part of the federal settlement, GSK also entered into a five-year corporate integrity agreement (CIA) with the Office of Inspector General of the U.S. Department of Health and Human Services. The CIA is available at http://oig.hhs.gov/fraud/cia/index.html. Under this agreement, GSK agreed to undertake certain obligations designed to promote compliance with Federal health care program and FDA requirements. We also agreed to notify payers about the settlement and inform them that they can report any questionable practices by GSK’s representatives to GSK’s Compliance Department or the FDA. GSK is fully committed to meeting the terms of the CIA and to sales and marketing practices that promote compliance. We have fundamentally changed our procedures for compliance, marketing and selling in the United States. For example, we now compensate our medical sales representatives based on the quality of service they deliver to customers, not on sales targets. In addition, GSK is committed to promoting its products in a manner consistent with the FDA approved label for the product. GSK will pay rebates under applicable agreements (Rebates) involving a prior authorization or formulary requirement (a “Restriction”) in relation to the drugs at issue in this settlement, and will not reduce or alter its Rebates due to such a Restriction, provided that the Restriction: (1) does not limit any patient from receiving such drugs, including at the point of sale, for uses that are consistent with the FDA-approved label for each product; (2) is applied consistently across the therapeutic class; (3) is consistent with GSK’s policies, procedures and financial guidelines; and, (4) does not require the use of another manufacturer’s drug for a use that is not consistent with the FDA approved label for the other product. This paragraph shall not be interpreted to require GSK to contract or not to contract with any Payer. GSK shall administer its agreements with Payers in a manner consistent with the requirements of this paragraph, including agreeing to amend or modify applicable agreements to be consistent with this provision.

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Please call GSK at XXXX or visit us at [insert name of web link] if you have questions about the settlement referenced above or to report any instances in which you believe that a GSK representative inappropriately promoted a product or engaged in other questionable conduct. Alternatively, you may report any improper conduct associated with prescription drug marketing committed by a GSK representative to the FDA’s Office of Prescription Drug Promotion at 301-796-1200. You should direct medical questions or concerns about the products to XXXXX.

The Compliance Officer (or a designee) shall maintain a log of all calls and messages received in response to the notices. The log shall include a record and summary of each call and message received (whether anonymous or not), the status of the call or message, and any corrective action taken in response to the call or message. The log of all calls and messages received in response to the notices shall be made available to OIG upon request. As part of the Implementation Report and each Annual Report, GSK shall provide to the OIG a summary of the calls and messages received. O. Reporting of Physician Payments. Prior to the Effective Date, GSK began a voluntary Physician Payment Transparency Program through which GSK posted on its corporate website quarterly reports of payments to physicians for speaking and consulting fees. GSK shall continue to post such reports until the Annual Reporting requirements of Section III.O.1 take effect. 1. Reporting of Payment Information. Quarterly Reporting: On or before March 1, 2013, GSK shall post in a prominent position on its website an easily accessible and readily searchable listing of all U.S.-based physicians and Related Entities who or which received Payments (as defined in Section III.O.2) directly or indirectly from GSK during the fourth quarter of 2012 and the aggregate value of such Payments. Thereafter, 60 days after the end of each calendar quarter, GSK shall post on its website a report of the cumulative value of the Payments provided to each physician and Related Entity during the preceding calendar quarter.

Annual Reporting: On or before March 1, 2013, and 60 days after the end of each subsequent calendar year, GSK shall post on its website a report of the cumulative value

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of the Payments provided to all U.S.-based physicians and Related Entities directly or indirectly from GSK during the prior applicable calendar year. Each quarterly and annual report shall be easily accessible and readily searchable.

Each listing made pursuant to this Section III.O shall include a complete list of all individual physicians or Related Entities to whom or which GSK made Payments in the preceding quarter or year (as applicable). Each listing shall be arranged alphabetically according to the physicians’ last name or name of Related Entity. The Payment amounts in the lists shall be reported in the actual amount paid for all physicians or Related Entity on the listing. For each physician, the applicable listing shall include the following information: i) physician’s full name; ii) name of any Related Entities (if applicable); iii) city and state that the physician has provided to GSK for contact purposes; and (iv) the aggregate value of the payment(s) in the preceding quarter or year (as applicable). If payments for multiple physicians have been made to one Related Entity, the aggregate value of all payments to the Related Entity will be the reported amount.

2. Definitions and Miscellaneous Provisions.

(i) GSK shall continue to make each annual listing and the most recent quarterly listing of Payments available on its website during the term of the CIA. GSK shall retain and make available to OIG, upon request, all supporting documentation, correspondence, and records related to all applicable Payments and to the annual and/or quarterly listings of Payments. Nothing in this Section III.O affects the responsibility of GSK to comply with (or liability for noncompliance with) all applicable Federal health care program requirements and state laws as they relate to all applicable Payments made to physicians or Related Entity.

(ii) For purposes of Section III.O.1, “Payments” is defined to include all “payments or other transfers of value” as that term is defined in §1128G(e)(10) under Section 6002 of the Affordable Care Act and any regulations promulgated thereunder. The term Payments includes, by way of example, the types of payments or transfers of value enumerated in §1128G(a)(1)(A)(vi) of the Affordable Care Act. The term includes all payments or transfers of value made to Related Entities on behalf of, at the request of, for the benefit or use of, or under the name of a physician for whom GSK would otherwise report a Payment if made directly to the physician. The term Payments also includes any payments or transfers of value made, directly by GSK or by a vendor retained by GSK to a physician or Related Entity in connection with, or under the auspices of, a co-promotion arrangement.

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(iii) For purposes of its annual and quarterly website postings as described above, and only with regard to payments made pursuant to product research or development agreements and clinical investigations as set forth in § 1128G(c)(E) of the Affordable Care Act, GSK may delay the inclusion of such payments on its website listings consistent with § 1128G(c)(E) of the Act and any subsequent regulations promulgated thereunder.

(iv) The term “Payments” does not include transfers of value or other items that are not included in or are excluded from the definition of “payment” as set forth in § 1128G(e)(10) under Section 6002 of the Affordable Care Act and any regulations promulgated thereunder.

(v) For purposes of this Section III.O, the term “Related Entity” is defined to be any entity by or in which any physician receiving Payments is employed, has tenure, or has an ownership interest. P. Other Transparency/Disclosure Initiatives. GSK represents that it posts on its company website the following information with respect to both grants and charitable contributions in the United States: GSK shall continue to post (and provide updates to) the above-described information about grants and charitable contributions throughout the term of this CIA. GSK shall notify the OIG in writing at least 60 days prior to any change in the substance of its policies regarding the funding of grants and charitable contributions or posting of the above-referenced information relating to such funding. GSK shall require all Consultants to comply fully with all applicable disclosure obligations relating to their relationship with GSK that may be externally imposed on the Consultants based on their affiliation with formulary or P&T committees or committees associated with the development of treatment protocols or standards. GSK shall maintain this requirement throughout the term of this CIA. GSK represents that within 120 days after the Effective Date, GSK shall, if necessary, amend its policies relating to Consultants to explicitly state that GSK requires all Consultants to fully comply with all applicable disclosure obligations relating to their relationship with GSK that may be externally imposed on the Consultants based on their affiliation with formulary, P&T committees, or committees associated with the development of treatment protocols or standards or that are required by any HCI, medical committee, or other medical or scientific organization with which the Consultants are affiliated. In addition, for any

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amendment to its contracts with Consultants and in any new contracts with Consultants entered into after 150 days following the Effective Date, GSK shall include an explicit requirement that the Consultants fully comply with all applicable disclosure requirements, as referenced above in this paragraph. GSK shall continue these disclosure requirements throughout the term of this CIA. To the extent not already accomplished, within 120 days after the Effective Date, GSK shall post or make available information on its company website about FDA postmarketing commitments (PMCs). The GSK website or links included therein shall provide access to general information about the PMC process, descriptions of ongoing GSK studies, and information about the nature and status of the post-marketing commitments. GSK shall continue to post or make available the above-described information about PMCs on its website or links included therein throughout the term of this CIA. IV. CHANGES TO BUSINESS UNITS OR LOCATIONS

A. Change or Closure of Unit or Location. In the event that, after the Effective Date, GSK changes locations or closes a business unit or location related to or engaged in any of the Covered Functions or in CGMP Activities, GSK shall notify OIG of this fact as soon as possible, but no later than within 30 days after the date of change or closure of the location.

B. Purchase or Establishment of New Unit or Location. In the event that, after the

Effective Date, GSK purchases or establishes a new business unit or location related to or engaged in any of the Covered Functions or in cGMP Activities, GSK shall notify OIG no later than five days after the date that the purchase or establishment of the new business unit or location is publicly disclosed by GSK. This notification shall include the address of the new business unit or location, phone number, fax number, the location’s Federal health care program provider number and/or supplier number(s) (if applicable); and the name and address of each Federal health care program contractor to which GSK currently submits claims (if applicable). Each new business unit or location and all Covered Persons or Manufacturing Covered Persons at each new business unit or location shall be subject to the applicable requirements of this CIA.

C. Sale of Unit or Location. In the event that, after the Effective Date, GSK

proposes to sell any or all of its business units or locations that are subject to this CIA (including the terms of Appendix D), GSK shall notify OIG of the proposed sale at no

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later than five days after the sale is publicly disclosed by GSK. This notification shall include a description of the business unit or location to be sold, a brief description of the terms of the sale, and the name and contact information of the prospective purchaser. This CIA shall be binding on the purchaser of such business unit or location, unless otherwise determined and agreed to in writing by the OIG. V. IMPLEMENTATION AND ANNUAL REPORTS

A. Implementation Report. Within 150 days after the Effective Date, GSK shall submit a written report to OIG summarizing the status of its implementation of the requirements of this CIA (Implementation Report). The Implementation Report shall, at a minimum, include:

1. the name, address, phone number, and position description of the Compliance Officer required by Section III.A.1, 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.2;

3. the names of the members of the Board of Directors referenced in

Section III.A.3; 4. the names of the DCOs required by Section III.A.4; 5. the names and positions of the Certifying Employees required by Section

III.A.6; 6. a copy of GSK’s Code of Conduct required by Section III.B.1;

7. the number of individuals required to complete the Code of Conduct

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

8. (a) a copy of the letter (including all attachments) required by Section

II.C.9 and III.B.2 sent to each party employing Third Party Personnel; (b) a list of all existing co-promotion and other applicable agreements between GSK and the party

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employing Third Party Personnel; and (c) a description of each entity’s response to GSK’s letter;

9. a summary of all Policies and Procedures required by Section III.B.3 (a

copy of such Policies and Procedures shall be made available to OIG upon request);

10. 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 participate in General Training and Board Member Training, 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.2

11. the following information regarding the IRO(s): (a) identity, address,

and phone number; (b) a copy of the engagement letter; and (c) information to demonstrate that the IRO has the qualifications outlined in Appendix A; (d) a summary and description of any and all current and prior engagements and agreements between GSK and the IRO; and (e) a certification from the IRO regarding its professional independence and objectivity with respect to GSK;

12. a description of the Disclosure Program required by Section III.F;

13. a description of the process by which GSK fulfills the requirements of Section III.G regarding Ineligible Persons;

14. a certification by the Compliance Officer that the notices required by Section III.N was mailed to each HCP, HCI, and Payer, the number of HCPs, HCIs and

2 In Addition to the Implementation Report, GSK shall submit to OIG by January 30, 2013 a letter containing the information specified in Section V.A.10 as it pertains to Specific Training and Management Training as required by Section III.C.

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Payers to whom or which the notice was mailed, a sample copy of the notices required by Section III.N, and a summary of the calls or messages received in response to the notices;

15. a certification from the Compliance Officer that, if required under

Section III.O and to the best of his/her knowledge, information regarding Payments has been posted on GSK’s website as required by Section III.O;

16. a list of all of GSK’s locations (including locations and mailing addresses); the corresponding name under which each location is doing business; the corresponding phone numbers and fax numbers; each location’s Federal health care program provider number and/or supplier number(s) (if applicable); and the name and address of any each Federal health care program contractor to which GSK currently submits claims (if applicable);

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

18. the certifications required by Section V.D.

B. Annual Reports. GSK shall submit to OIG annually a report with respect to the status of, and findings regarding, GSK’s compliance activities for each of the five Reporting Periods (Annual Report). 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, the Board of Directors, the DCOs or the group of Certifying Employees described in Sections III.A.2-4 and 6;

2. a copy of the resolution by the Board required by Section III.A.3; 3. the number of individuals required to review GSK’s Code of Conduct

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

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4. (a) a copy of the letter (including all attachments) required by Section II.C.9 and III.B.2 sent to each party employing Third Party Personnel; (b) a list of all existing co-promotion and other applicable agreements between GSK and the party employing Third Party Personnel; and (c) a description of each entity’s response to GSK’s letter;

5. a summary of any significant changes or amendments to the Policies and

Procedures required by Section III.B, including any changes to the Research and Publication Practices and Authorship-Related Practices, and the reasons for such changes (e.g., change in applicable requirements);

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

a. a description of the initial and annual 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 complete each type of training specified in Section III.C, percentage of individuals who completed the training, 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. 7. a summary of any significant changes to the TRACER program required by Section III.D;

8. a complete copy of all reports prepared pursuant to Section III.E, and Appendices B-C along with a copy of the IRO’s engagement letters;

9. GSK’s response to the reports prepared pursuant to the reviews outlined in Section III.E and Appendices B-C, along with corrective action plan(s) related to any issues raised by the reports;

10. a summary and description of any and all current and prior

engagements and agreements between GSK and the IRO (if different from what was submitted as part of the Implementation Report);

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11. certifications from the IRO regarding its professional independence and

objectivity with respect to GSK; 12. a summary of the disclosures in the disclosure log required by Section

III.F that relate to Federal health care programs, FDA requirements (including CGMP Activities), or Government Reimbursed Products;

13. any changes to the process by which GSK fulfills the requirements of

Section III.G regarding Ineligible Persons; 14. a summary of any changes to GSK’s employee and executive incentive

compensation and recoupment programs required by Section III.H and Appendix E and the information regarding Triggering Events and Recoupment Determinations required to be reported pursuant to Section E of Appendix E;

15. a summary describing any ongoing investigation or legal proceeding required to have been reported pursuant to Section III.I. 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;

16. a summary of Reportable Events (as defined in Section III.J) identified

during the Reporting Period and the status of any corrective and preventative action relating to all such Reportable Events;

17. a summary describing any written communication with the FDA

required to have been reported pursuant to Section III.K. This summary shall include a description of the matter and the status of the matter;

18. a summary of the FFMP and the results of the FFMP required by

Section III.L, including copies of the Observation report for any instances in which it was determined that improper promotion occurred and a description of the action(s) that GSK took as a result of such determinations;

19. a summary of the Non-Promotional Monitoring Program and the results

of the program described in Section III.M, including detailed description of any identified instances in which it was determined that the activities violated GSK’s policies or that improper promotion of Government Reimbursed Products occurred and a description of

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the action(s) GSK took as a result of such determinations; 20. a summary of the calls and messages received in response to the notices

required by Section III.N and the disposition of those calls and messages; 21. a certification from the Compliance Officer that information regarding

Payments has been posted on GSK’s website as required by Section III.O; 22. a description of all changes to the most recently provided list of GSK’s

locations (including addresses) as required by Section V.A.16; the corresponding name under which each location is doing business; and the corresponding phone numbers and fax numbers;

23. a description of any additional, updated, supplemental or changed

information submitted to any Compendia in accordance with Section III.B.3.t; and a description of all arrangements, processing fees, and other payments or financial support (if any) with or made to any Compendia evaluated during the annual review described in Section III.B.3.t; and 24. the certifications required by Section V.D.

The first Annual Report shall be received by OIG no later than 60 days after the end of the first Reporting Period. Subsequent Annual Reports shall be received by OIG no later than the anniversary date of the due date of the first Annual Report.

C. IRO Initial Report. By March 1, 2013, GSK shall submit to OIG a report with

respect to the status of, and findings regarding, the IRO Reviews for the first IRO Reporting Period (IRO Initial Report).

The IRO Initial Report shall include at a minimum:

1. a complete copy of all reports prepared pursuant to Section III.E, and Appendix B along with a copy of the IRO’s engagement letters;

2. GSK’s response to the reports prepared pursuant to the reviews outlined in Section III.E and Appendix B, along with corrective action plan(s) related to any issues raised by the reports;

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3. a summary and description of any and all current and prior engagements and agreements between GSK and the IRO (if different from what was submitted as part of the Implementation Report);

4. certifications from the IRO regarding its professional independence and objectivity with respect to GSK;

D. Certifications. 1. Certifying Employees: In each Annual Report, GSK shall include the certifications of Certifying Employees as required by Section III.A.6;

2. Compliance Officer: In the Implementation Report, and each Annual Report, GSK shall include the following individual certification by the Compliance Officer: a. to the best of his or her knowledge, except as otherwise described in the report, GSK is in compliance with the requirements of this CIA;

b. 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;

c. to the best of his or her knowledge, GSK has complied with its obligations under the Settlement Agreement: (1) not to resubmit to any Federal health care program Payers any previously denied claims related to the Covered Conduct addressed in the Settlement Agreement, and not to appeal any such denials of claims; (2) not to charge to or otherwise seek payment from federal or state Payers for unallowable costs (as defined in the Settlement Agreement); and (3) to identify and adjust any past charges or claims for unallowable costs; d. GSK’s: (1) Policies and Procedures as referenced in Section III.B.3 above; (2) templates for standardized contracts and other similar documents; and (3) the training materials used for purposes of Section III.C all have been reviewed by competent legal counsel and have been found to be in compliance with all applicable Federal health care program and FDA requirements. In addition, GSK’s promotional materials containing claims or information about Government Reimbursed Products and other materials and information intended to be disseminated outside GSK have been reviewed

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by competent regulatory, medical, or, as appropriate, legal counsel in accordance with applicable Policies and Procedures to ensure that legal, medical, and regulatory concerns have been addressed by GSK and brought to the attention of the appropriate individuals when required, and that the materials and information when finally approved are in compliance with all applicable Federal health care program and FDA requirements. If the applicable legal requirements have not changed, after the initial review of the documents listed above, only material changes to the documents must be reviewed by competent legal counsel. The certification shall include a description of the document(s) reviewed and approximately when the review was completed. The documentation supporting this certification shall be available to OIG, upon request;

e. GSK’s Target Plans for Government Reimbursed Products were

reviewed at least once during the Reporting Period (consistent with Section III.B.3.j) and, for each product the Target Plans were found to be consistent with GSK’s policy objectives as referenced above in Section III.B.3.j; and

f. GSK has maintained an employee and executive incentive compensation

and recoupment program in accordance with the terms set forth above in Section III.H and Appendix E.

3. Certification for the IRO Initial Report: In the IRO Initial Report, GSK

shall include an individual certification by the Compliance Officer that he or she has reviewed the report and has made reasonable inquiry regarding its content and believes the information in the report is accurate and truthful.

E. Designation of Information. GSK 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. GSK shall refrain from identifying any information as exempt from disclosure if that information does not meet the criteria for exemption from disclosure under FOIA.

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VI. NOTIFICATIONS AND SUBMISSION OF REPORTS

Unless otherwise stated in writing after the Effective Date, all notifications and reports required under this CIA shall be submitted to the following entities:

OIG: Administrative and Civil Remedies Branch Office of Counsel to the Inspector General Office of Inspector General U.S. Department of Health and Human Services Cohen Building, Room 5527 330 Independence Avenue, S.W. Washington, DC 20201 Telephone: 202.619.2078 Facsimile: 202.205.0604

GSK: Michael L. Shaw Vice President & Compliance Officer North America Pharmaceuticals GlaxoSmithKline Three Franklin Plaza 200 N. 16th Street Philadelphia, PA 19102 Telephone: 215.751.7337 Facsimile: 215.751.7547

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. Upon request by OIG, GSK may be required to provide OIG with an electronic copy of each notification or report required by this CIA in searchable portable document format (pdf), either instead of or in addition to, a paper copy. 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 GSK’s or an applicable GSK Affiliate’s books, records, and other documents and supporting

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

VIII. DOCUMENT AND RECORD RETENTION

GSK and its Affiliates shall maintain for inspection all documents and records relating to reimbursement from the Federal health care programs and to compliance with this CIA (including Appendix D) until the end of 2018 (or longer if otherwise required by law) from the Effective Date.

IX. DISCLOSURES

Consistent with HHS’s FOIA procedures, set forth in 45 C.F.R. Part 5, OIG shall make a reasonable effort to notify GSK prior to any release by OIG of information submitted by GSK pursuant to its obligations under this CIA and identified upon submission by GSK as trade secrets, or information that is commercial or financial and privileged or confidential, under the FOIA rules. With respect to such releases, GSK shall have the rights set forth at 45 C.F.R. § 5.65(d). X. BREACH AND DEFAULT PROVISIONS GSK is expected to fully and timely comply with all of the CIA obligations.

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A. Stipulated Penalties for Failure to Comply with Certain Obligations. As a contractual remedy, GSK and OIG hereby agree that failure to comply with certain obligations as set forth in this CIA may lead to the imposition of the following monetary penalties (hereinafter referred to as “Stipulated Penalties”) in accordance with the following provisions.

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

a. a Compliance Officer;

b. a Compliance Committee; c. the Board compliance obligations, including the resolution from the Board; d. the management accountability and certification obligations;

e. a written Code of Conduct;

f. written Policies and Procedures; g. the training of Covered Persons, Relevant Covered Persons, Management, and Board Members; h. a TRACER program;

i. a Disclosure Program;

j. Ineligible Persons screening and removal requirements;

k. an employee and executive incentive compensation and recoupment program as required by Section III.H and Appendix E; l. notification of Government investigations or legal proceedings as required by Section III.I;

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m. reporting of Reportable Events as required in Section III.J; n. notification of written communications with FDA as required by Section III.K; o. a program for FFMP as required by Section III.L; p. a program for Non-Promotional Monitoring Program as required by Section III.M; q. notifications to HCPs, HCIs, and Payers as required by Section III.N; and r. posting of any Payments as required by Section III.O.

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 GSK fails to engage and use an IRO as required in Section III.E and Appendices A-C.

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 GSK fails to submit the Implementation Report or any Annual Report to OIG in accordance with the requirements of Section V of the CIA or of Appendix D 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 GSK fails to submit any IRO Review report (including the IRO Initial Report) in accordance with the requirements of Sections III.E and III.V and Appendices A-C.

5. A Stipulated Penalty of $2,500 (which shall begin to accrue on the day after the date the obligation became due) for each day GSK fails to establish and implement any of the following obligations as described in Section III of Appendix D:

a. a GMS Compliance Officer;

b. a GMS Compliance Committee; c. the Board compliance obligations, including the resolution from

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the Board;

d. a written Code of Conduct;

e. written Policies and Procedures; f. the training of Manufacturing Covered Persons; g. cGMP Requirements;

h. reporting of Manufacturing Reportable Events; or i. reporting of a recall under Section III.F of Appendix D.

6. A Stipulated Penalty of $1,500 for each day GSK or a GSK Affiliate

fails to grant access as required in Section VII. (This Stipulated Penalty shall begin to accrue on the date GSK or a GSK Affiliate fails to grant access.)

7. A Stipulated Penalty of $5,000 for each false certification submitted by

or on behalf of GSK as part of its Implementation Report, the IRO Initial Report, or any Annual Report, additional documentation to a report (as requested by the OIG), or otherwise required by this CIA.

8. A Stipulated Penalty of $10,000 for each day that GSK fails to timely

submit any report required under Section III.D.3.a or III.D.3.b of Appendix D. 9. A Stipulated Penalty of $10,000 for each lot of each Covered Product for

each day that GSK fails to initiate a recall for specified lots under Section III.D of Appendix D after receipt of a Final Determination.

10. A Stipulated Penalty of $10,000 for each lot of each Covered Product

for each day that GSK fails to complete a recall within a deadline established in the Final Determination for specified lots under Section III.D of Appendix D.

11. A Stipulated Penalty of $1,000 for each day GSK or a GSK Affiliate

fails to comply fully and adequately with any obligation of this CIA. OIG shall provide notice to GSK or a GSK Affiliate stating the specific grounds for its determination that GSK or a GSK Affiliate has failed to comply fully and adequately with the CIA

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obligation(s) at issue and steps GSK or a GSK Affiliate shall take to comply with the CIA. (This Stipulated Penalty shall begin to accrue 10 days after GSK or a GSK Affiliate 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- 10 of this Section.

B. Timely Written Requests for Extensions. GSK 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 GSK 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 GSK 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 GSK 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 GSK of: (a) GSK’s failure to comply; and (b) OIG’s exercise of its contractual right to demand payment of the Stipulated Penalties (this notification is referred to as the “Demand Letter”).

2. Response to Demand Letter. Within 10 days after the receipt of the

Demand Letter, GSK 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 GSK elects to request an ALJ hearing, the Stipulated Penalties shall continue to accrue until GSK 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.

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3. Form of Payment. Payment of the Stipulated Penalties shall be made by electronic funds transfer to an account specified by OIG in the Demand Letter.

4. Independence from Material Breach Determination. Except as set forth

in Section X.D.1.d, these provisions for payment of Stipulated Penalties shall not affect or otherwise set a standard for OIG’s decision that GSK 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 repeated or flagrant violation of the obligations under this CIA, including, but not limited to, the obligations addressed in Section X.A; b. a failure by GSK to report a Reportable Event and take corrective action as required in Section III.J of the CIA or Section III.E of Appendix D; c. a failure to engage and use an IRO in accordance with Section III.E and Appendices A-C;

d. a failure to respond to a Demand Letter concerning the payment of Stipulated Penalties in accordance with Section X.C; e. a failure of the Board to issue a resolution in accordance with Section III.A.3 of the CIA or Section III.A.3 of Appendix D. f. a failure by GSK to timely initiate a recall of Covered Products sold in the United States pursuant to a Final Determination made under Section III.D of Appendix D after receipt of a Final Determination; or g. a failure by GSK to timely complete a recall of Covered Products sold in the United States as required in the Final Determination after receipt of the Final Determination under Appendix D.

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2. Notice of Material Breach and Intent to Exclude. The parties agree that

a material breach of this CIA by GSK constitutes an independent basis for GSK’s exclusion from participation in the Federal health care programs. Upon a determination by OIG that GSK has materially breached this CIA and that exclusion is the appropriate remedy, OIG shall notify GSK of: (a) GSK’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. GSK shall have 30 days from the date of receipt of

the Notice of Material Breach and Intent to Exclude to demonstrate to OIG’s satisfaction that:

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

4. Exclusion Letter. If, at the conclusion of the 30 day period, GSK fails to

satisfy the requirements of Section X.D.3, OIG may exclude GSK from participation in the Federal health care programs. OIG shall notify GSK in writing of its determination to exclude GSK (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 GSK’s receipt of the Exclusion Letter. The exclusion shall have national effect and shall also apply to all other Federal procurement and nonprocurement programs. Reinstatement to program participation is not automatic. After the end of the period of exclusion, GSK may apply for reinstatement by submitting a written request for reinstatement in accordance with the provisions at 42 C.F.R. §§ 1001.3001-.3004.

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E. Dispute Resolution 1. Review Rights. Upon OIG’s delivery to GSK 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, GSK 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 GSK was in full and timely compliance with the obligations of this CIA for which OIG demands payment; and (b) the period of noncompliance. GSK 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 GSK to pay Stipulated Penalties, such Stipulated Penalties shall become due and payable 20 days after the ALJ issues such a decision unless GSK requests review of the ALJ decision by the DAB. If the ALJ decision is properly appealed to the DAB and the DAB upholds the determination of OIG, the Stipulated Penalties shall become due and payable 20 days after the DAB issues its decision.

3. Exclusion Review. Notwithstanding any provision of Title 42 of the

United States Code or Title 42 of the Code of Federal Regulations, the only issues in a proceeding for exclusion based on a material breach of this CIA shall be:

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

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

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c. whether the alleged material breach could not have been cured within the 30-day period, but that: (i) GSK had begun to take action to cure the material breach within that period; (ii) GSK has pursued and is pursuing such action with due diligence; and (iii) GSK provided to OIG within that period a reasonable timetable for curing the material breach and GSK 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 GSK, only after a DAB decision in favor of OIG. GSK’s election of its contractual right to appeal to the DAB shall not abrogate OIG’s authority to exclude GSK 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 GSK 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. GSK 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 GSK, GSK shall be reinstated effective on the date of the original exclusion.

4. Finality of Decision. The review by an ALJ or DAB provided for above

shall not be considered to be an appeal right arising under any statutes or regulations. Consequently, the parties to this CIA agree that the DAB’s decision (or the ALJ’s decision if not appealed) shall be considered final for all purposes under this CIA.

XI. EFFECTIVE AND BINDING AGREEMENT

GSK and OIG agree as follows:

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

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

obtained on the CIA; C. This CIA constitutes the complete agreement between the parties and may not

be amended except by written consent of the parties to this CIA;

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D. The undersigned GSK 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.

E. This CIA may be executed in counterparts, each of which constitutes an

original and all of which constitute one and the same CIA. Facsimiles of signatures shall constitute acceptable, binding signatures for purposes of this CIA.

ON BEHALF OF GLAXOSMITHKLINE LLC

Pr stdent GlaxoSmithKline LLC

MICW£~ Vice President & Compliance Officer

North America Pharmaceuticals GlaxoSmithKline LLC

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DATE

DATE

DATE

ON BEHALF OF THE OFFICE OF INSPECTOR GENERAL OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES

" .,_./ - . -<"----·---·- .

GREGORY E. DEMSKE Chief Counsel to the Inspector General Office of Inspector General U. S. Department of Health and Human Services

MARY E. RIORDAN

Senior Counsel Office of Inspector General U. S. Department of Health and Human Services

CHRISTINA K. MCGARVEY

Senior Counsel Office of Inspector Genera] U.S. Department of Health and Human Services

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I ! DATE

DATE

DATE

ON BEHALF OF THE OFFICE OF INSPECTOR GENERAL

OF THE DEPARTMENT OF HEAL HI AND HUMAN SERVICES

GREGORY E. DEMSKE Chief Counsel to the Inspector General Office of Inspector General U.S. Department of Health and Human Services

MARY E. R IORDAN

Senior Counsel Office of Inspector General U.S. Department of Health and Human Services

CHRISTINA K. MCGARVEY

Senior Counsel Office of Inspector General U.S. Department of Health and Human Services

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DATE

DATE

fi~ 1~ :J_OtL 0 DATE

GlaxoSmithKline LLC Corporate Integrity Agreement Appendix A

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Appendix A to CIA for GlaxoSmithKline LLC

Independent Review Organization

This Appendix contains the requirements relating to the Independent Review Organization (IRO) required by Section III.E of the CIA. A. IRO Engagement.

GSK shall engage an IRO (or IRO(s)) 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 objective fashion, as set forth in Paragraph D. Within 30 days after OIG receives the information identified in Section V.A.11 of the CIA or any additional information submitted by GSK in response to a request by OIG, whichever is later, OIG will notify GSK if the IRO is unacceptable. Absent notification from OIG that the IRO is unacceptable, GSK may continue to engage the IRO.

If GSK engages a new IRO during the term of the CIA, this IRO shall also meet

the requirements of this Appendix. If a new IRO is engaged, GSK shall submit the information identified in Section V.A.11 of the CIA to OIG within 30 days of engagement of the IRO. Within 30 days after OIG receives this information or any additional information submitted by GSK at the request of OIG, whichever is later, OIG will notify GSK if the IRO is unacceptable. Absent notification from OIG that the IRO is unacceptable, GSK may continue to engage the IRO. B. IRO Qualifications. The IRO shall:

1. assign individuals to conduct the IRO Reviews who have expertise in the pharmaceutical industry and have expertise in applicable Federal health care program and FDA requirements that relate to the Covered IRO Functions, including expertise relating to: i) marketing and promotional activities associated with pharmaceutical products; ii) research regarding such products; and iii) publication, authorship, and disclosure activities associated with such research). The assigned individuals shall also be experienced in risk identification and mitigation in relation to pharmaceutical product marketing and promotion. The assigned individuals also shall be knowledgeable about the general requirements of the Federal health care programs under which GSK products are reimbursed;

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2. assign individuals to design and select the samples for the IRO Transactions Reviews who are knowledgeable about appropriate statistical sampling techniques; 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:

1. perform each component of each IRO Review in accordance with the specific requirements of the CIA;

2. follow all applicable Federal health care program and FDA requirements in making assessments in each IRO Review;

3. if in doubt of the application of a particular Federal health care program or FDA requirement, request clarification from the appropriate authority (e.g., CMS or FDA); 4. respond to all OIG inquiries in a prompt, objective, and factual manner; and

5. prepare timely, clear, well-written reports that include all the information required by Appendices B and C to the CIA.

D. Independence and Objectivity.

The IRO must perform the IRO Reviews in a professionally independent and objective fashion, as defined in the most recent Government Auditing Standards issued by the United States Government Accountability Office. E. IRO Removal/Termination.

1. GSK Termination of IRO. If GSK terminates its IRO or if the IRO withdraws from the engagement during the term of the CIA, GSK must submit a notice explaining its reasons for termination or the reason for withdrawal to OIG no later than 30 days after termination or withdrawal. GSK must engage a new IRO in accordance with Paragraph A of this Appendix and within 60 days of the termination or withdrawal of the IRO.

2. OIG Removal of IRO. In the event OIG has reason to believe that the IRO does

not possess the qualifications described in Paragraph B, is not independent and/or objective as set forth in Paragraph D, or has failed to carry out its responsibilities as

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described in Paragraph C, OIG may, at its sole discretion, require GSK to engage a new IRO in accordance with Paragraph A of this Appendix. GSK must engage a new IRO within 60 days of termination of the IRO. Prior to requiring GSK to engage a new IRO, OIG shall notify GSK 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, GSK may present additional information regarding the IRO’s qualifications, independence or performance of its responsibilities. OIG will attempt in good faith to resolve any differences regarding the IRO with GSK prior to requiring GSK to terminate the IRO. However, the final determination as to whether or not to require GSK to engage a new IRO shall be made at the sole discretion of OIG.

GlaxoSmithKline LLC Corporate Integrity Agreement Appendix B

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Appendix B to CIA for GlaxoSmithKline LLC

Independent Review Organization Reviews I. Covered Functions Review, General Description

As specified more fully below, GlaxoSmithKline (GSK) shall retain an Independent Review Organization (IRO) (or IROs) to perform reviews (IRO Reviews) to assist GSK in assessing and evaluating its systems, processes, policies, procedures, and practices related to certain of GSK's Covered Functions (collectively, “IRO Covered Functions”). The IRO Review shall consist of two components - a systems review (Systems Review) and a transactions review (Transactions Review) as described more fully below. GSK may engage, at its discretion, a single IRO to perform both components of the IRO Review provided that the entity has the necessary expertise and capabilities to perform both. If there are no material changes in GSK’s systems, processes, policies, and procedures relating to the Covered IRO Functions, the IRO shall perform the Systems Review for the second and fifth IRO Reporting Periods. If GSK materially changes its systems, processes, policies, and procedures relating to the Covered IRO Functions, the IRO shall perform a Systems Review for the IRO Reporting Period(s) in which such changes were made in addition to conducting the Review for the second and fifth IRO Reporting Periods. The additional Systems Review(s) shall consist of: 1) an identification of the material changes; 2) an assessment of whether other systems, processes, policies, and procedures previously reported did not materially change; and 3) a review of the systems, processes, policies, and procedures that materially changed. The IRO shall conduct the Transactions Review for each IRO Reporting Period of the CIA. II. IRO Systems Review A. Description of Reviewed Policies and Procedures

The Covered IRO Functions Systems Review shall be a review of GSK’s systems, processes, policies, and procedures (including the controls on those systems, processes, policies, and procedures) relating to certain of the Covered Functions. Where practical, GSK personnel may compile documentation, schedule and organize interviews, and undertake other efforts to assist the IRO in performing the Systems Review. The IRO is not required to undertake a de novo review of the information gathered or activities undertaken by GSK in accordance with the preceding sentence.

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Specifically, the IRO shall review GSK’s systems, processes, policies, and procedures associated with the following (hereafter “Reviewed Policies and Procedures”):

1) GSK’s systems, processes, policies, and procedures applicable to the manner in which GSK field personnel (including sales personnel, marketing personnel, MSLs, HOLs, and personnel from the PPV group) and personnel from the Medical Affairs department (including MISs) handle requests or inquiries relating to information about the uses of Government Reimbursed Products (including non-FDA-approved (i.e., off-label) uses of Government Reimbursed Products) and the dissemination of materials relating to the uses of these products. This review shall include:

a) the manner in which GSK sales personnel and PPV personnel

handle requests for information about off-label uses of Government Reimbursed Products (i.e., by referring all such requests to Medical Affairs personnel at GSK);

b) the manner in which Medical Affairs personnel, including

those at GSK’s headquarters, handle and respond to requests for information about off-label uses of Government Reimbursed Products (including tracking the requests and using pre-approved materials for purposes of responding to the request);

c) the form and content of information and materials related to

Government Reimbursed Products disseminated to physicians, pharmacists, or other health care professionals (collectively “HCPs”), and health care institutions (HCIs), Payers, and formulary decision-makers by GSK;

d) GSK's systems, processes, policies, and procedures (including

the Inquiries Database) to track requests to Medical Affairs for information about off-label uses of products and responses to those requests;

e) the manner in which GSK collects and supports information

reported in any systems used to track and respond to requests to Medical Affairs for Government Reimbursed Product information, including its Inquiries Database;

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f) the processes and procedures by which Medical Affairs, the

Compliance Officer, or other appropriate individuals within GSK identify situations in which it appears that off-label or other improper promotion may have occurred; and

g) GSK's processes and procedures for investigating,

documenting, resolving, and taking appropriate disciplinary action for potential situations involving improper promotion;

2) GSK’s systems, processes, policies, and procedures applicable to the manner and circumstances under which its Medical Affairs personnel (including MSLs, HOLs, or analogous personnel) participate in meetings or events with HCPs or HCIs (either alone or with sales representatives) regarding Government Reimbursed Products and the role of the Medical Affairs personnel at such meetings or events; 3) GSK’s systems, processes, policies, and procedures relating to GSK's internal review of promotional materials related to Government Reimbursed Products disseminated to HCPs, HCIs and Payers and individuals or entities (e.g.¸ PBMs) acting on behalf of HCPs, HCIs or government payers; 4) GSK's systems, policies, processes and procedures (the “Patient First Program”) relating to incentive compensation for Relevant Covered Persons who are prescriber-facing sales personnel and their direct managers, with regard to whether the systems, policies, processes, and procedures are designed to ensure that financial incentives do not inappropriately motivate such individuals to engage in the improper promotion, sales, and marketing of Government Reimbursed Products. This shall include a review of the bases upon which compensation is determined and the extent to which compensation is based on product performance. To the extent that GSK establishes different methods of compensation for different Government Reimbursed Products, the IRO shall review each type of compensation arrangement separately; 5) GSK’s systems, policies, processes and procedures relating to the Executive Financial Recoupment Program described in Section III.H of the CIA and in Appendix E;

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6) GSK’s systems, processes, policies, and procedures relating to the development and review of Target Plans (as defined in Section III.B.3.j of the CIA) for Government Reimbursed Products. This shall include a review of the bases upon which HCPs and HCIs belonging to specified medical specialties are included in, or excluded from, the Target Plans based on expected utilization of Government Reimbursed Products for FDA-approved uses or non-FDA-approved uses; 7) GSK’s systems, processes, policies, and procedures relating to Sample Distribution Policies and Procedures (as defined in Section III.B.3.k of the CIA). This shall include a review of the bases upon, and circumstances under, which HCPs and HCIs belonging to specified medical specialties or types of clinical practice may receive samples from GSK (including, separately, from GSK sales representatives and other GSK personnel or components). It shall also include a review of whether samples of Government Reimbursed Products are distributed by GSK through sales representatives or are distributed from a central location and the rationale for the manner of distribution; 8) GSK’s systems (including any centralized electronic systems), processes, policies, and procedures relating to speaker programs, speaker training programs, and all events and expenses relating to such engagements or arrangements; 9) GSK’s systems, processes, policies, and procedures relating to engagement of “Consultants” (as defined in Section III.M.1 of the CIA) and all events and expenses associated with such activities; 10) GSK’s systems, processes, policies, and procedures relating to GSK’s funding, directly or indirectly, of Third Party Educational Activities for HCPs (as defined in Section II.C.8 of the CIA) and all events and expenses relating to such activities; 11) GSK’s systems, processes, policies, and procedures relating to the submission of information about any Government Reimbursed Product to any compendia such as Drugdex or other published source of information used in connection with the determination of coverage by a Federal health care program for the product (“Compendia”). This includes any initial submission of information to any Compendia and the submission of any

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additional, updated, supplemental, or changed information, (e.g., any changes based on GSK's discovery of erroneous or scientifically unsound information or data associated with the information in the Compendia). The review shall also assess GSK's processes relating to its annual review of all arrangements, processing fees, or other payments or financial support (if any) provided to any Compendia; 12) GSK's systems, processes, policies, and procedures relating to Research and Publication Practices (as defined in Section III.B.3.u of the CIA), including the decision to provide financial or other support for such Research; the manner in which Research support is provided; the publication of information about the Research, including the publication of information about the Research results and trial outcomes, and uses made of publications relating to such research; 13) GSK's systems, processes, policies and procedures relating to authorship of any journal articles or other publications about GSK-Sponsored Research or about therapeutic areas or disease states that may be treated with Government Reimbursed Products, including, but not limited to, the disclosure of any and all financial relationships between the author and GSK, the identification of all authors or contributors (including professional writers, if any) associated with a given publication, and the scope and breadth of research results made available to each author or contributor;

14) GSK’s systems, policies, processes, and procedures applicable to the manner and circumstances under which GSK personnel (including sales personnel (if any), personnel from the PPV Unit, MSLs, HOLs, or analogous personnel) participate in meetings with Payers (as defined in Section II.C.6 of the CIA) regarding Government Reimbursed Products and the role of the GSK personnel at such meetings; and 15) the form and content of information and materials disseminated by GSK to Payers and GSK’s systems, policies, processes, and procedures relating to GSK's internal review and approval of information and materials related to Government Reimbursed Products disseminated to Payers by GSK.

B. IRO Systems Review Report

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The IRO shall prepare a report based upon each Systems Review. For each of the Reviewed Policies and Procedures identified in Section II.A above, the report shall include the following items: 1) a description of the documentation (including policies) reviewed and

any personnel interviewed; 2) a detailed description of GSK’s systems, policies, processes, and

procedures relating to the items identified in Sections II.A.1-15 above, including a general description of GSK’s control and accountability systems (e.g., documentation and approval requirements, and tracking mechanisms) and written policies regarding the Reviewed Policies and Procedures;

3) a description of the manner in which the control and accountability

systems and the written policies relating to the items identified in Sections II.A.1-15 above are made known or disseminated within GSK;

4) a detailed description of any system(s) used to track and respond to requests for information about Government Reimbursed Products (including the Inquiries Database);

5) findings and supporting rationale regarding any weaknesses in

GSK’s systems, processes, policies, and procedures relating to the Reviewed Policies and Procedures, if any; and

6) recommendations to improve any of the systems, policies, processes,

or procedures relating to the Reviewed Policies and Procedures, if any. III. IRO Transactions Review As described more fully below in Sections III.A-F, the Transactions Review for the second through sixth IRO Reporting Periods shall include: (1) a review of a sample of Inquiries reflected in the Inquiries Database; (2) a review of GSK’s Target Plans and GSK’s Target Plan review process; (3) a review of Sampling Events as defined below in Section III.C; (4) a review of records relating to a sample of the Payments that are reported by GSK pursuant to Section III.O of the CIA; (5) a review of Research and Publication Practices and Authorship-Related Practices; and (6) a review of up to three additional items identified by the OIG in accordance with Section III.E.1.b of the CIA

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(hereafter “Additional Items”). The IRO shall report on all aspects of its reviews in the Transactions Review Reports. For purposes of the Transactions Review for the first IRO Reporting Period, the Transactions Review shall include a review of Items 1-3 outlined in the preceding paragraph. The Transaction Review Report for the first IRO Reporting Period shall report on Items 1-3 in accordance with Section III.G below. A. Review of Inquiries and Inquiries Database

1) Description of Inquiries Database

As set forth in Section III.B.3.g of the CIA, GSK shall establish a database to track information relating to requests for information received by GSK about its Government Reimbursed Products (hereafter “Inquiries”). Specifically, GSK shall document and record all Inquiries received from HCPs or HCIs regarding Government Reimbursed Products in a database(s) (the “Inquiries Database”). GSK shall record in the Inquiries Database the following information for each Inquiry received: 1) date of Inquiry; 2) form of Inquiry (e.g., fax, phone, medical information request form); 3) name of requesting HCP or HCI or other individual or entity; 4) nature and topic of request (including exact language of the Inquiry if made in writing); 5) an evaluation of whether the Inquiry relates to information about an off-label indication for the product; 6) nature/form of the response from GSK (including a record of any materials provided in response to the request); and 7) the name of the GSK representative who called upon or interacted with the HCP or HCI.

2) Internal Review of Inquiries Database

On a semi-annual basis, the Compliance Officer or designee shall review the Inquiries Database and related information, as appropriate, and shall generate a report summarizing the items of information outlined in Section III.A.1 above for each Inquiry received during the preceding two quarters (“Inquiry Report”). The Compliance Officer or designee shall review the Inquiry Reports to assess whether the information contained in the report suggests that improper off-label promotion may have occurred in connection with any Inquiry(ies). If the Compliance Officer or designee, in consultation with other appropriate GSK personnel, suspects that improper off-label promotion may have occurred in connection with any Inquiry, the

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Compliance Officer or designee shall undertake a follow-up review of the Inquiry (Off-Label Review), make specific findings based on his/her Off-Label Review, and take all appropriate responsive action (including disciplinary action of the Covered Person and reporting of the conduct, including disclosing Reportable Events pursuant to Section III.J of the CIA, if applicable).

3) IRO Review of Inquiries Reflected in Inquiries Database The IRO shall select and review a random sample of 50 Inquiries from among the Inquiries reflected in the Inquiries Database for each Reporting Period. Forty of the Inquiries reviewed by the IRO shall be Inquiries for which GSK conducted an Off-Label Review, and the other ten shall be Inquiries for which GSK did not conduct an Off-Label Review. For each Inquiry reviewed, the IRO shall determine: a) Whether each item of information listed above in Section III.A.1 is

reflected in the Inquiries Database for each reviewed Inquiry; and b) For each Inquiry for which the Compliance Officer conducted an Off-

Label Review, the basis for suspecting that improper off-label promotion may have occurred; the steps undertaken as part of the Off-Label Review; the findings of the Compliance Officer as a result of the Off-Label Review; and any follow-up actions taken by GSK based on the Off-Label Review findings.

B. IRO Review of GSK’s Target Plans and Target Plan Review Process

The IRO shall conduct a review and assessment of GSK’s review of its Target Plans for Government Reimbursed Products as set forth in Section III.B.3.j of the CIA. GSK shall provide the IRO with: i) a list of Government Reimbursed Products promoted by GSK during the IRO Reporting Period; ii) information about the FDA-approved uses for each such product; and iii) the Target Plans for each such product. GSK shall also provide the IRO with information about the reviews of Target Plans that GSK conducted during the relevant IRO Reporting Period and any modifications to the Target Plans made as a result of GSK’s reviews.

For each Target Plan, the IRO shall select a sample of 50 of the HCPs and HCIs included on the Target Plan. For each Target Plan, the IRO shall compare the sampled HCPs and HCIs against the criteria (e.g., medical specialty or practice area) used by GSK

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in conducting its review and/or modifying the Target Plan. The IRO shall seek to determine whether GSK followed its criteria and Policies and Procedures in reviewing and modifying the Target Plan.

The IRO shall note any instances in which it appears that the sampled HCPs or

HCIs on a particular Target Plan are inconsistent with GSK’s criteria relating to the Target Plan and/or GSK’s Policies and Procedures. The IRO shall also note any instances in which it appears that GSK failed to follow its criteria or Policies and Procedures.

C. IRO Review of the Distribution of Samples of GSK Government Reimbursed Products

The IRO shall conduct a review and assessment of the distribution of samples of Government Reimbursed Products to HCPs and HCIs. GSK shall provide the IRO with: i) a list of Government Reimbursed Products for which GSK distributed samples during the IRO Reporting Period; ii) information about the FDA-approved uses for each such product; and iii) information about GSK’s Sample Distribution Policies and Procedures, including GSK’s exclusion lists showing which types of samples may not be distributed by sales personnel or other GSK personnel to HCPs and HCIs of particular medical specialties or types of clinical practices. GSK shall also provide the IRO with information about the reviews of Sample Distribution Policies and Procedures that GSK conducted during the IRO Reporting Period as set forth in Section III.B.3.k of the CIA and any modifications to the Sample Distribution Policies and Procedures or exclusion lists made as a result of GSK’s reviews.

For each Government Reimbursed Product for which GSK distributed samples during the IRO Reporting Period, the IRO shall randomly select a sample of 50 separate instances in which GSK provided samples of the product to HCPs or HCIs. Each such instance shall be known as a “Sampling Event.”

For each Sampling Event, the IRO shall review all documents and information

relating to the distribution of the sample to the HCP or HCI. The reviewed materials shall include materials about the following: 1) the quantity, dosage, and form of the GSK product provided to the HCP or HCI; 2) the identity and type of medical specialty or clinical practice of the HCP or HCI; 3) which individual GSK sales personnel or other GSK personnel provided the sample to the HCP or HCI; and 4) the manner and mechanism through which the sample was requested (e.g., sample request form, letter, or call to GSK).

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For each Sampling Event, the IRO shall evaluate whether the sample was provided to an HCP or HCI whose medical specialty or clinical practice is consistent with the uses of the Government Reimbursed Product approved by the FDA and whether the sample was distributed by an GSK representative in a manner consistent with GSK’s sample distribution policy for the product(s) provided during the Sampling Event. To the extent that a sample was provided to an HCP or HCI by a GSK representative other than a sales personnel, the IRO shall contact the HCP or HCI by letter. The letter shall request that the HCP or HCI: 1) verify that he/she/it received the quantity and type of samples identified by the IRO as the Sampling Event; 2) verify that he/she/it requested the samples provided during the Sampling Event; 3) explain or confirm its type of medical specialty or clinical practice; and 4) identify the basis for requesting the sample (e.g., conversations with a GSK sales representative, conversation with a GSK representative at headquarters, independent research, or knowledge of the HCP or HCI).

For each Sampling Event, the IRO shall compare the medical specialty and type of

clinical practice of the HCPs and HCIs that received the sample with uses of the Government Reimbursed Product approved by the FDA. The IRO shall note any instances in which it appears that the medical specialty or clinical practice of the HCPs or HCIs that received a sample during a Sampling Event were not consistent with the uses of the Government Reimbursed Product approved by the FDA. For each such situation, the IRO shall note the process followed by GSK in determining that it was appropriate to provide a sample to such HCP or HCI and the basis for such determination. The IRO shall also note any instances in which it appears that GSK failed to follow its Sample Distribution Policies and Procedures for the Government Reimbursed Product(s) provided during the Sampling Event.

D. IRO Review of Physician Payment Listings 1. Information Contained in Physician Payment Listings

For purposes of the IRO review as set forth in this Section III.D, each annual listing of physicians and Related Entities who received Payments (as defined in Section III.O of the CIA) from GSK shall be referred to as the “Physician Payment Listing” or “Listing.” For each physician and Related Entity, each Physician Payment Listing shall include the following information: i) physician’s full name; ii) name of Related Entity (if applicable); iii) city and state of the physician’s practice or the Related Entity; and (iv) the aggregate value of the Payment(s) in the preceding year(s).

For purposes of this IRO review, the term “Control Documents” shall include all

documents or electronic records associated with each Payment reflected in the Physician

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Payments Listing for a sampled physician and/or Related Entity. For example, the term “Control Documents” includes, but is not limited to, documents relating to the nature, purpose, and amount of all Payments reflected in the Listing; contracts relating to the Payment(s) reflected in the Listing; documents relating to the occurrence of Payment(s) reflected in the Listing; documents reflecting any work product generated in connection with the Payment(s); documents submitted by field personnel or headquarters personnel to request approval for the Payment(s); and business rationale or justification forms relating to the Payment(s). 2. Selection of Sample for Review

For each IRO Reporting Period, the OIG shall have the discretion to identify up to

50 physicians or Related Entities from the applicable Physician Payment Listing that will be subject to the IRO review described below. If the OIG elects to exercise this discretion, it shall notify the IRO at least 90 days prior to the end of the IRO Reporting Period, of the physicians and/or Related Entities subject to the IRO review. If the OIG elects not to exercise its discretion as described above, the IRO shall randomly select 50 physicians and/or Related Entities to be included in the review. For each selected physician and/or Related Entity, the IRO shall review the entry in the Physician Payment Listing and the Control Documents relating to Payments reflected in the Listing identified by the IRO as necessary and sufficient to validate the Payment information in the Listing.

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

For each physician and/or Related Entity selected as part of the sample, the IRO shall review the Control Documents identified by the IRO as necessary and sufficient to validate each Payment reflected in the Listing to evaluate the following:

a) Whether Control Documents are available relating to each

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

b) Whether the Control Documents were completed and

archived in accordance with the requirements set forth in GSK’s policies;

c) Whether the aggregate value of the Payment(s) as reflected in

the Listing for the sampled Physician is consistent with the

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value of the Payments(s) reflected in the Control Documents; and

d) Whether the Control Documents reflect that GSK’s policies

were followed in connection with Payment(s) reflected in the Listing (e.g., all required written approvals for the activity were obtained in accordance with GSK’s policies).

4. Identification of Material Errors and Additional Review

A Material Error is defined as any of the following:

a) A situation in which all required Control Documents relating to Payments reflected in the Listing for the sampled physician and/or Related Entity do not exist and:

i. no corrective action was initiated prior to the selection of

the sampled physicians and/or Related Entities; or

ii. the IRO cannot confirm that GSK otherwise followed its policies and procedures relating to the entry in the Listing for the sampled physician or Related Entity, including its policies and procedures relating to any Payment(s) reflected in the Listing; or

b) Information or data is omitted from key fields in the Control

Documents that prevents the IRO from assessing compliance with GSK’s policies and procedures, and the IRO cannot obtain this information or data from reviewing other Control Documents.

If a Control Document does not exist, but GSK has initiated corrective action prior

to the selection of the sampled physicians and/or Related Entities, or if a Control Document does not exist but the IRO can determine that GSK otherwise followed its policies and procedures with regard to each entry in the Listing for a sampled physician or Related Entity, the IRO shall consider such a situation to be an exception (rather than a Material Error) and the IRO shall report the situation as such. Similarly, the IRO shall note as exceptions any Control Documents for which non-material information or data is omitted.

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If the IRO identifies any Material Errors, the IRO shall conduct such Additional Review of the underlying Payment associated with the erroneous Control Documents as may be necessary to determine the root cause of the Material Errors. For example, the IRO may need to review additional documentation and/or conduct interviews with appropriate personnel to identify the root cause of the Material Error(s) discovered.

E. IRO Review of Research and Publications Practices and Authorship-Related Activities The IRO shall conduct a review and assessment of GSK’s Research and Publications Practices and Authorship-Related Activities as described in Sections III.B.3. u-v of the CIA. Review of Research Activities: GSK shall provide the IRO with a list of all Research activities (as defined in Section III.B.3.u of the CIA) that were “active” (as classified in GSK’s tracking system) during the IRO Reporting Period, and the IRO shall select a sample of 40 such activities, which sample shall include a review of each type of Research (i.e., GSK-Sponsored post-marketing clinical trials, other GSK-Sponsored post-marketing studies, and post-marketing investigator-sponsored studies (ISSs).) The IRO shall review samples of each type of Research in proportion to the relative number of each type of Research that occurred during the reporting period. GSK shall provide the IRO with documents relating to the Research activities sufficient for the IRO to conduct the reviews outlined below. For each sampled Research activity, the IRO will review whether: (i) the activity was approved consistent with GSK’s standards, policies, procedures and processes regarding sponsorship or support of Research, including obtaining required approval for the Research by GSK’s medical and/or research organizations and ensuring that the Research was conducted for the purpose of fostering increased understanding of scientific, clinical or medical issues; (ii) there is an executed written agreement with the Researcher that meets the requirements of GSK’s standards, policies and procedures and, among other things, requires the Researcher to disclose in any publication of Research, GSK’s support and any financial interest the researcher may have in GSK; and (iii) GSK’s sales, marketing, or other commercial personnel did not participate in the design, conduct, or publication of the Research activity except as permitted under the limited exceptions in GSK’s policies and procedures. Review of Publication Activities:

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GSK shall provide the IRO with a list of publication activities (as defined in Section III.M.3 of the CIA) that resulted in publication of data from GSK-Sponsored post-marketing clinical trials or post-marketing studies of Government Reimbursed Products that appeared during the IRO Reporting Period. The list will be broken down into two categories: (i) GSK-Sponsored post-marketing clinical trials, and (ii) other GSK-Sponsored post-marketing studies (e.g., observational studies, health outcomes studies, epidemiology studies, and meta-analyses and pooled analyses.) The IRO shall select a sample from each category for review, in proportion to the relative numbers in each category (collectively, “Reviewed Publication Activities”). The IRO shall review a total of 60 Reviewed Publication Activities. GSK shall provide the IRO with copies of the publications and documents and information relating to each of the Reviewed Publication Activities sufficient for the IRO to conduct the reviews outlined below. The IRO will assess each of the Reviewed Publication Activities to test whether the Reviewed Publication Activity was conducted in a manner consistent with GSK’s standards, policies, procedures and processes, including those that require: i) posting of summary results from all GSK-Sponsored post-marketing interventional research studies of Government Reimbursed Products on GSK’s Clinical Study Register within a specified periods of time; ii) posting of summaries of study protocols for such research studies in the GSK Clinical Study Register; iii) registration of summary results from applicable GSK-Sponsored clinical trials on the NIH sponsored website in compliance with all Federal requirements; iv) publication (or attempted publication) of the results of GSK-Sponsored post-marketing interventional Research studies in peer-reviewed journals within specified periods of times; and v) compliance with GSK’s operating practices regarding publications relating to GSK-Sponsored post-marketing interventional research studies of Government Reimbursed Products (including standards relating to appropriateness, accuracy, balance, and acknowledgement of GSK’s role as the funding source for the Research). Review of Authorship-Related Activities: For each of the Reviewed Publication Activities, the IRO shall also assess the activity to test whether the activity was conducted in a manner consistent with GSK’s standards, policies, procedures and processes relating to authorship, including those that require: i) authors of journal articles about GSK-Sponsored Research to adhere to ICMJE authorship requirements (except in instances in which a particular journal requires an alternative procedure); ii) authors of articles on GSK-Sponsored Research to disclose any GSK financial support for the study and any financial relationship with GSK; iii) authors of a GSK publication of GSK-Sponsored Research to make substantial contributions to the study and give final approval to the version of the publication ultimately published;

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and iv) certifications from employees and medical writing contractors as to any GSK publication of GSK-Sponsored Research on which the individual is listed as an author or contributor. F. IRO Review of Additional Items

As set forth in Section III.E.1.b of the CIA, for the second through sixth IRO Reporting Periods, the OIG at its discretion may identify up to three additional items for the IRO to review (hereafter “Additional Items”). No later than 150 days prior to the end of the applicable IRO Reporting Period, the OIG shall notify GSK of the nature and scope of the IRO review to be conducted for each of the Additional Items. Prior to undertaking the review of the Additional Items, the IRO and/or GSK shall submit an audit work plan to the OIG for approval and the IRO shall conduct the review of the Additional Items based on a work plan approved by the OIG. The IRO shall include information about its review of each Additional Item in the Transactions Review Report (including a description of the review conducted for each Additional Item; the IRO’s findings based on its review for each Additional Item; and the IRO’s recommendations for any changes in GSK’s systems, processes, policies, and procedures based on its review of each Additional Item).

GSK may propose to the OIG that its internal audit(s) be substituted, subject to the

Verification Review requirements set forth below, for one or more of the Additional Items that would otherwise be reviewed by the IRO for the applicable IRO Reporting Period. The OIG retains sole discretion over whether, and in what manner, to allow GSK’s internal audit work to be substituted for a portion of the Additional Items review conducted by the IRO.

In making its decision, the OIG agrees to consider, among other factors, the nature

and scope of GSK’s planned internal audit work, the results of the Transactions Review(s) during prior IRO Reporting Period(s), and GSK’s demonstrated audit capabilities to perform the proposed audit work internally. If the OIG denies GSK’s request to permit its internal audit work to be substituted for a portion of the IRO’s review of Additional Items in a given IRO Reporting Period, GSK shall engage the IRO to perform the Review as outlined in this Section III.

If the OIG agrees to permit certain of GSK’s internal audit work for a given IRO

Reporting Period to be substituted for a portion of Additional Items review, such internal work would be subject to verification by the IRO (Verification Review). In such an instance, the OIG would provide additional details about the scope of the Verification Review to be conducted by the IRO. However, for purposes of any Verification Review,

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the IRO shall review at least 20% of the sampling units reviewed by GSK in its internal audits. G. Transactions Review Report For each IRO Reporting Period, the IRO shall prepare a report based on its Transactions Review. The report shall include the following:

1) General Elements to Be Included in Report

a) Review Objectives: A clear statement of the objectives intended to be achieved by each part of the review;

b) Review Protocol: A detailed narrative description of the procedures performed and a description of the sampling unit and universe utilized in performing the procedures for each sample reviewed; and

c) Sources of Data: A full description of documentation and other information, if applicable, relied upon by the IRO in performing the Transactions Review.

2) Results to be Included in Report

Consistent with the scope of items reviewed by the IRO for the applicable IRO Reporting Period, the following results shall be included in each Transaction Review Report:

(Relating to the Review of Inquiries) a) in connection with the review of Inquiries, a description of each type

of sample unit reviewed, including the number of each type of sample units reviewed (e.g., the number of Inquiries) and an identification of the types of documents and information reviewed for the Inquiries;

b) for each Inquiry sample unit, the IRO shall summarize the

information about the Inquiry contained in the Inquiries Database;

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c) for each Inquiry sample unit, findings and supporting rationale as to whether: (i) each item of information listed in Section III.A.1 is reflected in the Inquiries Database; and (ii) for each Inquiry for which an Off-Label Review was conducted, the basis for suspecting that improper off-label promotion may have occurred; the steps undertaken as part of the Off-Label Review; the findings of the Compliance Officer as a result of the Off-Label Review; and any follow-up actions taken by GSK as a result of the Compliance Officer’s findings;

d) the findings and supporting rationale regarding any weaknesses in

GSK’s systems, processes, policies, procedures, and practices relating to the Inquiries, and the Inquiries Database, if any;

e) recommendations for improvement in GSK’s systems, processes, policies, procedures, and practices relating to the Inquiries and the Inquiries Database, if any;

(Relating to the Target Plan Reviews)

f) a list of the Government Reimbursed Products promoted by GSK

during the IRO Reporting Period and a summary of the FDA-approved uses for such products;

g) for each Government Reimbursed Product which was promoted

during the IRO Reporting Period: i) a description of the criteria used by GSK in developing or reviewing the Target Plans and for including or excluding specified types of HCPs or HCIs from the Target Plans; ii) a description of the review conducted by GSK of the Target Plans and an indication of whether GSK reviewed the Target Plans as required by Section III.B.3.j of the CIA; iii) a description of all instances for each Target Plan in which it appears that the HCPs and HCIs included on the Target Plan are inconsistent with GSK’s criteria relating to the Target Plan and/or GSK’s Policies and Procedures; and iv) a description of all instances in which it appears that GSK failed to follow its criteria or Policies and Procedures relating to Target Plans or the review of the Target Plans;

h) the findings and supporting rationale regarding any weaknesses in

GSK’s systems, processes, policies, procedures, and practices

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relating to GSK’s Target Plans or the review of the Target Plans, if any;

i) recommendations, if any, for changes in GSK’s systems, processes,

policies, procedures, and practices that would correct or address any weaknesses or deficiencies uncovered during the Transactions Review with respect to Target Plans or the review of the Target Plans;

(Relating to the Sampling Event Reviews)

j) for each Government Reimbursed Product distributed during the

IRO Reporting Period: i) a description of Sample Distribution Policies and Procedures (including whether sales representatives may provide samples for the product and, if so, to HCPs or HCIs of which medical specialty or type of clinical practice a sales representative may provide samples); ii) a detailed description of any instances in which it appears that the medical specialty or clinical practice of the HCPs or HCIs that received a sample during a Sampling Event was not consistent with the uses of the product approved by the FDA. This description shall include a description of the process followed by GSK in determining that it was appropriate to provide a sample to such HCP or HCI and the basis for such determination; and iii) a detailed description of any instances in which it appears that GSK failed to follow its Sample Distribution Policies and Procedures for the Government Reimbursed Product(s) provided during the Sampling Event;

k) the findings and supporting rationale regarding any weaknesses in GSK’s systems, processes, policies, procedures, and practices relating to GSK’s distribution of samples of Government Reimbursed Products, if any;

l) recommendations, if any, for changes in GSK’s systems, processes, policies, procedures, and practices that would correct or address any weaknesses or deficiencies uncovered during the Transactions Review with respect to the distribution of samples;

(Relating to the Physician Payment Listing Reviews)

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m) a description of the entries in the Physician Payment Listing for each physician or Related Entity sampled and a description of Control Documents reviewed in connection with each selected physician or Related Entity;

n) for each sampled physician or Related Entity, findings and supporting rationale as to whether: (i) all required Control Documents exist; (ii) each Control Document was completed in accordance with all of the requirements set forth in the applicable GSK policy; (iii) the aggregate value of the Payment(s) as reflected in the Listing for the sampled physician or entity is consistent with the value of the Payment(s) reflected in the Control Documents; (iv) each Control Document reflects that GSK’s policies were followed in connection with the underlying activity reflected in the document (e.g., all required approvals were obtained); and (v) disciplinary action was undertaken in those instances in which GSK policies were not followed;

o) for each sampled physician or Related Entity unit reviewed, an identification and description of all exceptions discovered. The report shall also describe those instances in which corrective action was initiated prior to the selection of the sampled physicians or Related Entities, including a description of the circumstances requiring corrective action and the nature of the corrective action;

p) if any Material Errors are discovered in any sample unit reviewed, a description of the error, the Additional Review procedures performed and a statement of findings as to the root cause(s) of the Material Error;

(Relating to the Review of Research and Publication Practices and Authorship-Related Activities)

q) a description of each sampled Research activity reviewed, including

an identification of the types of documents and information reviewed in connection with each sampled Research activity;

r) an assessment of whether, for each sampled Research activity: (i) the activity was approved consistent with GSK’s standards, policies, procedures and processes regarding sponsorship or support of Research; (ii) there is an executed written agreement with the

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Researcher that meets the requirements of GSK’s standards, policies and procedures; and (iii) GSK’s sales, marketing, or other commercial personnel did not participate in the design, conduct, or publication of the Research Activity except as permitted under GSK’s policies and procedures. If a sampled Research activity failed to meet GSK standards, policies, procedures and processes, an explanation of the deficiency;

s) a description of each Reviewed Publication Activity assessed by the IRO, including an identification of the types of documents and information reviewed in connection with each Reviewed Publication Activity;

t) an assessment of whether for each Reviewed Publication Activity; i) authors of journal articles about GSK-Sponsored Research adhered to ICMJE requirements; ii) authors of articles about GSK-Sponsored Research disclosed any GSK financial support for the study and any financial relationship with GSK; iii) authors of a GSK publication about GSK-Sponsored Research made substantial contributions to the study and gave final approval to the version of the publication ultimately published; and iv) GSK obtained certifications from employees, medical writing contractors, and outside authors as to any GSK publication of GSK-Sponsored Research on which the individual is listed as an author or contributor;

u) an assessment of whether for each Reviewed Publication Activity; i)

authors of journal articles about GSK-Sponsored Research adhered to ICMJE requirements; ii) authors of articles on GSK-Sponsored Research disclosed any GSK financial support for the study and any financial relationship with GSK; iii) authors of a GSK publication of GSK-Sponsored Research made substantial contributions to the study and gave final approval to the version of the publication ultimately published; and iv) GSK obtained certifications from employees, medical writing contractors, and outside authors as to any GSK publication of GSK-Sponsored Research on which the individual is listed as an author or contributor;

v) if any Reviewed Publication Activity failed to meet GSK standards, policies, procedures and processes, an explanation of the deficiency;

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w) the IRO’s findings and supporting rationale regarding any weaknesses or deficiencies in GSK’s systems, processes, policies, procedures, and practices relating to GSK’s Research and Publications Practices and Authorship-Related Activities, if any;

x) recommendations, if any, for changes in GSK’s systems, processes, policies, and procedures that would correct or address any weaknesses or deficiencies uncovered during the Transactions Review with respect to Research and Publications Practices and Authorship-Related Activities;

(Relating to the Review of Additional Items)

y) for each Additional Item reviewed, a description of the review conducted;

z) for each Additional Item reviewed, the IRO’s findings based on its review;

aa) for each Additional Item reviewed, the findings and supporting rationale regarding any weaknesses in GSK’s systems, processes, policies, procedures, and practices relating to the Additional Item, if any;

bb) for each Additional Item reviewed, recommendations, if any, for changes in GSK’s systems, processes, policies, and procedures that would correct or address any weaknesses or deficiencies uncovered during the review.

Appendix C to CIA for GlaxoSmithKline LLC

IRO Reviews of GSK’s Targeted Risk Analysis and Compliance Evaluation Review (TRACER) Program

I. General Description of TRACER program

GSK uses the Targeted Risk Analysis and Compliance Evaluation Review process (TRACER) as a tool to evaluate and mitigate promotional risks (hereinafter, “risks”) associated with all prescription Government Reimbursed Products that have field force support in the United States (GSK Products).

1. Risk Identification and Evaluation

As part of TRACER, risk information will be solicited from four key sources: (i) Copy Approval Teams; (ii) U.S. Pharma’s Monitoring Control Center of Excellence (CCoE); (iii) Deputy Compliance Officers (DCOs); and (iv) Legal department personnel.

Based on inputs from these sources, a relative risk ranking report will be produced for all GSK Products (Risk Evaluation Report). The Risk Evaluation Report will be presented to the leadership team of each U.S. Pharma commercial business unit (Leadership Team) and the U.S. Pharma Commercial Leadership Team (CLT) along with recommendations regarding which products may require enhanced risk mitigation plans.

The Risk Evaluation Report will also be used by the CCoE to inform the risk-based selection of products as required by the Field Force Monitoring Program described in CIA Section III.L.

2. Risk Mitigation Plans

Risk Mitigation Plans (RMPs) will be completed annually for all GSK Products. All RMPs will outline standard risk mitigation activities that will be performed and tracked for each GSK Product, regardless of the product’s relative risk ranking (Standard RMPs). Standard risk mitigation activities will consist of the monitoring activities to be conducted for each GSK Product in the upcoming year, such as monitoring of speaker programs, speaker training, advisory boards, sampling, verbatim reviews, medical information requests and ride-alongs with sales personnel.

Based on the Risk Evaluation Report, products may be selected for Enhanced RMPs by either (or both) the Leadership Teams and the CLT. These RMPs will include enhanced risk mitigation activities, in addition to the standard activities (Enhanced RMPs). Enhanced RMPs will consist of activities tailored to the risks identified during the risk ranking process. For example, such activities may include increased compliance

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messaging from Leadership Teams, modifications to or limitations of promotional programs, or enhanced training requirements.

All RMPs (whether Standard or Enhanced) will be developed by brand teams, in consultation with their respective DCOs and the CCoE, on an annual basis. Each RMP will specify the: (i) risk monitoring activities; (ii) metrics by which monitoring activities and results will be evaluated and/or measured; (iii) risk mitigation action items, if necessary; (iv) metrics by which risk mitigation activities and results will be evaluated and/or measured; (v) responsible individual(s); and (vi) expected date(s) of monitoring and/or action item completion. The RMPs will be reviewed and approved by the respective business unit Leadership Teams.

3. Risk Mitigation Plan Tracking

RMP activities (including risk monitoring activities, risk mitigation activities, and risk mitigation action items) will be tracked by the CCoE and reported using a Monitoring Dashboard which will identify risk monitoring and mitigation activities and track their progress on at least a quarterly basis. The status of the RMPs will be tracked and reported to Leadership Teams and compliance personnel on at least a quarterly basis. II. TRACER Reviews, General Description

A. As specified more fully below, GSK shall retain an IRO to assist GSK in assessing and evaluating its systems, processes, policies, procedures, and practices relating to the TRACER program (TRACER Review). The TRACER Review shall consist of two components - a systems review (TRACER Systems Review) and a transactions review (TRACER Transactions Review) as described more fully below. GSK may engage, at its discretion, a single IRO to perform both components of the TRACER Review provided that the entity has the necessary expertise and capabilities to perform both. B. If there are no material changes in GSK’s systems, processes, policies, and procedures relating to TRACER, the IRO shall perform the TRACER Systems review for the second and fifth IRO Reporting Periods. If GSK materially changes its systems, processes, policies, and procedures relating to TRACER, the IRO shall perform a TRACER Systems Review for the IRO Reporting Period(s) in which such changes were made in addition to conducting the Systems Review for the second and fifth IRO Reporting Periods. The additional TRACER Systems Review(s) shall consist of: (1) an identification of the material changes; (2) an assessment of whether other systems, processes, policies, and procedures previously reported did not materially change; and (3) a review of the systems, processes, policies, and procedures that materially changed. The IRO shall conduct the TRACER Transactions Review for second through sixth IRO Reporting Periods of the CIA.

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III. TRACER Systems Review A. The TRACER Systems review shall consist of the following:

1. A review of the processes by which GSK develops and evaluates Risk Evaluation Reports and develops Standard and Enhanced RMPs, including the sources of information (e.g., the individual personnel, departments or functional areas, and/or any systems involved) used to compile the Reports and RMPs; the types of underlying data and information that are considered or evaluated during the development of the Risk Evaluation Reports and the RMPs; and the timing for development of Risk Evaluation Reports and the RMPs (including modifications to the Reports or RMPs in the event of significant new developments);

2. An assessment of whether, in developing the Risk Evaluation Reports

and the RMPs: i) additional or different sources of information; ii) additional or different types of data or information; and iii) additional or different timing cycles should be utilized;

3. A review of the experience and background of the brand directors

responsible for development of the RMPs and an assessment of the completeness and appropriateness of the training, policies, procedures, standard operating procedures, and guidance such individuals receive regarding the development of the RMPs;

4. An assessment of whether the standard risk mitigation activities

(monitoring activities) included in RMPs are designed to: (i) adequately monitor all relevant identified risks; (ii) identify any actual problems that have occurred in connection with the identified potential risk; and/or (iii) ensure that the activity associated with an identified risk does not occur in the future;

5. An assessment of whether standard risk mitigation activities

(monitoring activities) that may be included in RMPs should be: (i) enhanced, revised, or refined; (ii) changed to include additional or different mitigation/monitoring options to be considered based upon specific identified risks; (iii) tracked and reviewed more frequently than prescribed by current policies to ensure that the options address all relevant risks for the specific products reviewed;

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6. An assessment of whether enhanced risk mitigation activities and risk mitigation action items (and options for such activities) included in Enhanced RMPs are designed to: (i) adequately address all relevant identified risks; (ii) identify any actual problems that have occurred in connection with the identified potential risk; and/or (iii) ensure that the activity associated with an identified risk does not occur in the future;

7. An assessment of whether enhanced risk mitigation activities that may

be included in RMPs should be: (i) enhanced, revised, or refined; (ii) changed to include additional or different mitigation/monitoring options to be considered based upon specific identified risks; (iii) tracked and reviewed more frequently than prescribed by current policies to ensure that the options address all relevant risks for the specific products reviewed; and

8. A review of the systems, policies, procedures, and processes (including

the Monitoring Dashboard and any narrative supplements) by which GSK tracks and manages RMP activities and an assessment of whether the systems, policies, procedures and processes ensure that the RMPs are appropriately implemented (including by identifying individuals responsible for the follow-up or action items).

B. The IRO shall prepare a report based upon each Systems Review performed (System Review Report). The Systems Review Report will include the IRO’s findings, recommendations, observations, and comments on items 1-8 above and, to the extent not otherwise addressed, an assessment of the following: (i) whether the Risk Evaluation Reports and RMPs identify and prioritize relevant risks; (ii) whether the risk monitoring activities, risk mitigation activities and any risk mitigation action items identified in RMPs address identified risks; (iii) whether sufficient controls exist to ensure that all risk mitigation steps (including monitoring activities and risk mitigation activities) are completed in accordance with the RMPs; iv) whether the options for risk monitoring activities and risk mitigation activities identified in the RMPs address and potentially mitigate identified risks; and (iv) whether sufficient controls exist to ensure that all agreed-upon risk monitoring activities and risk mitigation activities are completed in accordance with the RMPs. IV. TRACER Transactions Review A. At least thirty (30) days prior to the end of the second through sixth IRO Reporting Periods, GSK shall submit to OIG a list of all GSK Products for which RMPs were developed. GSK shall notify the OIG about which products had Standard RMPs and which products had Enhanced RMPs. Prior to the end of the applicable IRO

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Reporting Period, OIG shall select 3 GSK Products (each a “Selected Product” and together the “Selected Products”) to be reviewed in connection with the TRACER Transactions Review. B. For each IRO Reporting Period and for each Selected Product, the IRO shall conduct a review of: i) the applicable Risk Evaluation Report entry and RMP; ii) documents and materials related to the development of the RMP; and iii) documents and materials relating to the implementation of the RMP (including the Monitoring Dashboard and any supplements to the Scorecard). The IRO shall also interview the brand team director responsible for the development of the RMP and the individual(s) responsible for the implementation of the risk monitoring and risk mitigation activities specified in the RMP. The objective of the IRO shall be to: (i) understand the processes followed by GSK in developing the RMP for each Selected Product, including the underlying bases for GSK’s decision to develop either a Standard RMP or an Enhanced RMP for the Selected Product; (ii) determine whether, based on the information contained in the Risk Evaluation Report, an appropriate RMP (including as to the included risk monitoring activities, risk mitigation activities, and risk mitigation action items) was developed for the Selected Product; and (iii) assess GSK’s implementation and tracking of the implementation of the RMP for the Selected Product.

C. The IRO will prepare a report based on each TRACER Transactions Review performed (Transactions Review Report). The Transactions Review Report shall include the following:

1. an identification of the 3 Selected Products and a description of the

documents and information reviewed in connection with each Selected Product, including a description of whether the RMP for each Selected Product was a Standard RMP or an Enhanced RMP,

2. for each Selected Product, a description of: i) the process followed in

developing the RMP; and ii) the types of identified risks associated with the Selected Product;

3. for each Selected Product, an assessment of whether it was appropriate

for GSK to develop, as applicable, an Enhanced or a Standard, RMP for the product;

4. for each Selected Product, an assessment of whether, based on the

information contained in the Risk Evaluation Report, an appropriate RMP was developed for the Selected Product;

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5. for each Selected Product, a description of the expertise and

backgrounds of the brand directors who were responsible for the development of the RMP;

6. for each Selected Product, a description of the following items set forth

in the RMP: (i) risk monitoring activities; (ii) metrics by which the risk monitoring activities and results will be evaluated and/or measured; (iii) risk mitigation activities, including any risk mitigation action items; (iv) metrics by which the risk mitigation activities and results will be evaluated and/or measured; (v) responsible individual(s); (vi) expected date(s) of completion for each risk monitoring activity and risk mitigation activity; and (vii) if the RMP did not specify each of the items set forth above, a description of any deficiencies;

7. for each Selected Product, a description of whether risk monitoring

activities specified in the RMP were implemented and tracked in accordance with the RMP and GSK’s policies and procedures, and a description of any deficiencies;

8. for each Selected Product, a description of whether risk mitigation

activities (including any action items) specified in the RMP were implemented and tracked in accordance with the RMP and GSK’s policies and procedures, and a description of any deficiencies;

9. for each Selected Product a description of: (i) any recommendations

made by the IRO regarding the RMP or any risk monitoring activities and risk mitigation activities included in the RMP; (ii) whether, and in what manner, GSK implemented the recommendations from the IRO; and (iii) if GSK did not implement the IRO recommendations, a description of the rationale for GSK’s decision not to implement the recommendations; and

10. the IRO’s findings and supporting rationale regarding any weaknesses

or deficiencies in GSK’s systems, processes, policies, procedures, and practices relating to the TRACER program, if any; and recommendations, if any, for changes in GSK’s systems, processes, policies, procedures, and practices that would correct or address any weaknesses or deficiencies uncovered during the Transactions Review with respect to the TRACER program.

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Appendix D to CIA for GlaxoSmithKline LLC

Global Manufacturing and Supply-Related Provisions I. PREAMBLE

Prior to the Effective Date of the CIA (as defined below), GSK and its Affiliates established a voluntary compliance program applicable to the Global Manufacturing and Supply business unit (GMS Compliance Program). GMS has responsibility for the compliance function at the manufacturing facility located in Zebulon, North Carolina (Zebulon) and at manufacturing facilities worldwide. GMS employees at Zebulon are responsible for the release and post-release management of all Covered Products (defined below in Section II.C.3) distributed in the United States that are either manufactured at the Zebulon site or manufactured at other manufacturing facilities operated by GMS and located outside of the United States.

The GMS Compliance Program includes a GMS Compliance Officer and a GMS Compliance Committee. The GMS Compliance Program also includes a Code of Conduct (as described in Section III.B.1 of the CIA), written policies and procedures, educational and training initiatives, a Disclosure Program that allows for the confidential disclosure and investigation of potential compliance violations and disciplinary procedures, screening measures for Ineligible Persons, and internal auditing procedures. GSK shall continue the GMS Compliance Program throughout the term of this Appendix and shall do so in accordance with the terms set forth below. GSK may modify its GMS Compliance Program as appropriate, but, at a minimum, GSK shall ensure that during the term of this Appendix, it shall comply with the obligations set forth in this Appendix.

II. TERM AND SCOPE OF THIS APPENDIX

A. Unless otherwise specified, the period of the compliance obligations assumed by GSK and its Affiliates under this Appendix D shall be five reporting periods, as defined below. The “Effective Date” shall be the date on which the final signatory of the CIA executes the CIA. The first Reporting Period shall be from the Effective Date through December 31, 2013. The second and subsequent Reporting Periods shall be from January 1 through December 31 of each of the subsequent four calendar years.

B. Sections III.D of this Appendix to the CIA and sections VII, X, and XI of the CIA shall expire no later than 120 days after OIG’s receipt of: (1) GSK’s final Annual Report with respect to this Appendix; or (2) any additional materials submitted by GSK pursuant to OIG’s request, whichever is later.

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

1. “Manufacturing Covered Persons” includes:

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a. President, Global Manufacturing and Supply; b. All members of the GMS Executive Team; c. Senior Vice President of GMS Quality; d. All members of the Quality Executive Team (QET); e. All “above-site” employees with a direct reporting line into a

QET member, and whose responsibilities include managing GMS employees that directly support cGMP Activities at the Covered Manufacturing Facility(ies);

f. The Site Quality Director at the Covered Manufacturing Facility(ies);

g. All GSK employees at the Covered Manufacturing Facility(ies) who are engaged in cGMP Activities;

h. Senior Vice President of GMS Pharma Operations; i. All above-site employees with a direct reporting line to the

Senior Vice President of Pharma Operations whose responsibilities include managing manufacturing operations at the Covered Manufacturing Facility(ies);

j. With respect to GMS manufacturing facilities (other than a Covered Manufacturing Facility) located in the United States that manufacture and/or release drug products for distribution in the United States, the Site Director, the Site Quality Director, and any employee who is directly responsible for authorizing the release for distribution of drug products at such GMS manufacturing facilities;

k. With respect to GSK vaccines manufacturing facilities (other than a Covered Manufacturing Facility) located in the United States that manufacture and/or release vaccines for distribution in the United States, the Site Director, the Site Quality Director and any employee who is directly responsible for authorizing the release for distribution of vaccines at such vaccines manufacturing facilities;

l. Any GSK employee at a distribution center located in the United States that is operated by or on behalf of GSK who is directly responsible for authorizing the release for distribution of drug products or vaccines from such distribution center; and

m. Any contractor, subcontractor, agent or other person whose normal place of work is a Covered Manufacturing Facility(ies) and whose day-to-day responsibilities directly relate to cGMP Activities.

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Notwithstanding the above, this term does not include employees, contractors, subcontractors, agents, and other persons who are not reasonably expected to work more than 160 hours per calendar year, except that any such individuals shall become “Manufacturing Covered Persons” at the point when they work more than 160 hours during the calendar year.

2. “cGMP Activities” means activities directly related to ensuring compliance with current Good Manufacturing Practice (cGMP) requirements contained in the Federal Food, Drug, and Cosmetic Act and applicable regulations (collectively “cGMP Requirements”), to submitting cGMP-related reports and information to the FDA, and/or responding to FDA inspectional observations or other correspondence, including correspondence regarding cGMP Requirements.

3. “Covered Products” means prescription drug products sold by GSK that are reimbursed by a Federal health care program and that are manufactured at a GSK facility and released by a Covered Manufacturing Facility (as defined below in Section II.C.4) or any other GSK facility for distribution into the United States. Vaccines are not Covered Products.

4. “Covered Manufacturing Facility” means the GSK facility in Zebulon, North Carolina, and subject to Section IV.A, any other GSK facility that after the Effective Date of this CIA and Appendix, manufactures, or is responsible for the release of Covered Products in the United States.

III. CORPORATE INTEGRITY OBLIGATIONS

To the extent not accomplished prior to the Effective Date, GSK shall establish and maintain a GMS Compliance Program that includes the following elements:

A. Compliance Officer and GMS Compliance Committee

1. Compliance Officer. Prior to the Effective Date, GSK appointed an individual to serve as a Compliance Officer for its GMS business unit (GMS Compliance Officer) and GSK shall maintain a GMS Compliance Officer for the term of this Appendix. The GMS Compliance Officer shall be responsible for overseeing the development and implementation of policies, procedures, and practices designed to ensure compliance with the requirements set forth in this Appendix relating to cGMP Activities, with applicable Federal health care program requirements and applicable FDA requirements. The GMS Compliance Officer shall be a member of senior management of GMS, and shall report directly to the Senior Vice President for Governance, Ethics and Assurance of GlaxoSmithKline PLC, who, in turn reports to the Chief Executive Officer of GlaxoSmithKline PLC. The GMS Compliance Officer shall make periodic (at least quarterly) reports regarding GMS compliance matters related to this Appendix to the Board of Directors (or an authorized committee thereof) of GlaxoSmithKline PLC

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(hereinafter, “the Board”), and shall be authorized to report on such matters to the Board at any time. The GMS Compliance Officer shall not be or be subordinate to the General Counsel or Chief Financial Officer. The GMS Compliance Officer shall be responsible for oversight of the day-to-day compliance activities engaged in by GMS as well as for any reporting obligations created under this CIA. Any noncompliance job responsibilities of the GMS Compliance Officer shall be limited and must not interfere with the GMS Compliance Officer’s ability to perform the duties outlined in this CIA.

GSK shall report to OIG, in writing, any changes in the identity of the GMS Compliance Officer, or any actions or changes that would affect the GMS Compliance Officer’s ability to perform the duties necessary to meet the obligations in this Appendix, within 5 days after such a change.

2. GMS Compliance Committee. Prior to the Effective Date, GMS established a GMS Compliance Committee. The GMS Compliance Committee includes the GMS Compliance Officer and other members of GMS senior management necessary to meet the requirements of this Appendix. The GMS Compliance Officer shall co-chair the GMS Compliance Committee with the GMS President. The GMS Compliance Committee shall support the GMS Compliance Officer in fulfilling his/her responsibilities (e.g., shall assist in the analysis of the GMS’s cGMP risk areas and shall oversee monitoring of internal and external audits and investigations related to cGMP Requirements). The GMS Compliance Committee shall meet at least quarterly.

GSK shall report to OIG, in writing, any changes in the composition of the GMS Compliance Committee, or any actions or changes that would affect the GMS Compliance Committee’s ability to perform the duties necessary to meet the obligations in this Appendix, within 15 days after such a change.

3. Board of Directors Compliance Obligations. The Board shall be responsible for the oversight of matters related to compliance with cGMP Activities, applicable Federal health care program requirements, applicable FDA requirements, and the obligations of this Appendix.

The Board shall, at a minimum, be responsible for the following:

a. meeting at least quarterly to review and oversee GMS’s Compliance Program, including but not limited to the performance of the GMS Compliance Officer and other GMS compliance personnel;

b. for each Reporting Period of this Appendix, adopting a resolution, signed by each member of the Board summarizing its review and oversight of GMS’s compliance with cGMP Activities, applicable Federal health care program

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requirements, applicable FDA requirements, and the obligations of this Appendix.

At minimum, the resolution shall include the following language:

“The Board of Directors has made a reasonable inquiry into the operations of the GMS Compliance Program for the time period [insert time period], including the performance of the GMS Compliance Officer. The Board has concluded that, to the best of its knowledge, GSK has implemented an effective Compliance Program, including a program that is effective to meet applicable Federal health care program requirements, applicable FDA requirements, and the obligations of this Appendix D to the CIA.”

If the Board is unable to provide such a conclusion in the resolution, the Board shall include in the resolution a written explanation of the reasons why it is unable to provide the conclusion and the steps it is taking to implement an effective GMS Compliance Program.

GSK shall report to the OIG, in writing, any changes in the composition of the Board, or any actions or changes that would affect the Board’s ability to perform the duties necessary to meet the obligations in this Appendix, within 15 days after such change.

B. Written Standards

Code of Conduct. Prior to the Effective Date, GSK developed and adopted a written Code of Conduct (as described in Section III.B.1 of the CIA).

To the extent not already accomplished, within 120 days after the Effective Date, GSK shall distribute the Code of Conduct to each Manufacturing Covered Person who is a GSK employee and each Manufacturing Covered Person shall certify, in writing or electronically, that he or she has received, read, understood, and shall abide by the Code of Conduct. New Manufacturing Covered Persons shall receive the Code of Conduct and shall complete the required certification within 30 days after becoming a Manufacturing Covered Person or within 120 days after the Effective Date, whichever is later.

As provided in Section III.B of the CIA, GSK shall periodically review the Code of Conduct to determine if revisions are appropriate and shall make any necessary revisions based on such review. Any revised Code of Conduct shall be distributed to Manufacturing Covered Persons within 30 days to after any revisions are finalized. Each Manufacturing Covered Person shall certify, in writing or electronically, that he or she

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has received, read, understood, and shall abide by the revised Code of Conduct within 30 days after the distribution of the revised Code of Conduct.

1. Policies and Procedures. Prior to the execution of the CIA, GSK implemented written Policies and Procedures regarding the operation of its GMS Compliance Program. Within 120 days after the Effective Date, GMS shall implement written procedures regarding any additional Compliance Program requirements outlined in this Appendix D. To the extent not already accomplished, within 120 days after the Effective Date, GMS shall ensure that the Policies and Procedures address or shall continue to address:

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

b. disciplinary policies and procedures for violations of the Company’s Policies and Procedures, including policies relating to cGMP Activities and FDA requirements relating to cGMP Activities.

To the extent not already accomplished, within 120 days after the Effective Date, the Policies and Procedures shall be made available to all Manufacturing Covered Persons. Appropriate and knowledgeable staff shall be available to explain the Policies and Procedures.

At least annually (and more frequently, if appropriate), GSK shall assess and update the Policies and Procedures, as necessary. Within 30 days after the effective date of any revisions, any such revised Policies and Procedures shall be made available to all Manufacturing Covered Persons.

C. Training and Education

GSK represents that it provides training on a regular basis concerning a variety of topics directly related to cGMP Activities. The training required by this Appendix need not be separate and distinct from the regular training provided by GSK to Manufacturing Covered Persons. At GSK’s option, the training required by this Appendix may be integrated into the regular training provided by GSK.

1. General Training. Within 120 days after the Effective Date, GMS shall provide at least one hour of General Training to each Manufacturing Covered Person. This training, at a minimum, shall explain:

a. The requirements of this Appendix D to the CIA; and

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b. GMS’s Compliance Program, including the Company’s Code of Conduct.

New Manufacturing Covered Persons shall receive the General Training described above within 30 days after becoming a Manufacturing Covered Person or within 120 days after the Effective Date, whichever is later. After receiving the initial General Training described above, each Manufacturing Covered Person shall receive at least one hour of General Training during each subsequent Reporting Period.

Board Member Training. The training required by Section III.C.4 of the CIA shall include training on the obligations set forth in this Appendix.

2. Certification. Each individual who is required to receive training shall certify, in writing, or in electronic form, if applicable, that he or she has received the required training and the date upon which the training was completed. The GMS Compliance Officer (or designee) shall retain the certifications, along with all course materials.

3. Qualifications of Trainer. Persons providing the training shall be knowledgeable about the subject area, including about FDA requirements relating to cGMP Activities.

4. Update of Training. GMS shall review the content of each training program required by this Appendix annually and update the content of each training program, where appropriate, to reflect any material changes to cGMP requirements, changes to applicable Federal health care program requirements, FDA requirements, and any issues observed during internal audits.

5. Computer-based Training. GMS may provide the training required under this Appendix through appropriate computer-based training approaches. If GMS 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. All applicable requirements to provide a number of “hours” of training as set forth in this Section III.C. may be met with respect to computer-based training by providing the required number of “normative” hours as that term is used in the computer-based training industry.

D. cGMP Requirements

1. In addition to existing FDA authorities and remedies, GSK agrees to certain obligations under this Appendix relating to cGMP Requirements for GSK drug products and vaccines. These provisions are in addition to other remedies available to the FDA.

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2. If the Director of Compliance at FDA’s Center for Drug Evaluation and Research (CDER), or in the case of a vaccine, the Director of Compliance at FDA’s Center for Biologics Evaluation and Research (CBER) determines that a GSK facility (or facilities) manufacturing, processing, packing, or holding a GSK drug product or vaccine is not compliant with cGMP Requirements, FDA may so notify the OIG and recommend that OIG direct GSK to undertake a Specified Action as set forth below in section III.D.3 of this Appendix.

3. If, after reviewing FDA’s notification and recommendation, OIG agrees that GSK should be directed to undertake a Specified Action as set forth in section III.D.3 of this Appendix, OIG shall notify GSK in writing of its determination and direct GSK to undertake one or more of the following actions (Specified Actions):

a. Submit a report or information addressing the assertion of non-compliance to FDA and OIG within 10 days after the date of written notification from the OIG in accordance with the Notification provision in section III.D.4 below;

b. In the event that OIG and/or FDA request additional or follow-up information, GSK shall submit revised, modified, or expanded report(s) or plan(s) to FDA and OIG in accordance with time frames established by the OIG and FDA; and/or

c. Initiate a recall of the GSK drug product or vaccine in accordance with the instructions and time frames specified by OIG and FDA.

4. All notifications and reports required under this Section III.D 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 5527 330 Independence Avenue, S.W. Washington, DC 20201

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FDA Division of Manufacturing and Product Quality HFD-320 Center for Drug Evaluation and Research 10903 New Hampshire Avenue White Oak Bldg. 51 Silver Spring, MD 20993 GSK Guy Wingate Vice President - GMS Compliance Officer GlaxoSmithKline GSK House (Mailstop BNG-15) 980 Great West Road Brentford Middlesex TW8 9GS United Kingdom Paul Noll Vice President - Associate General Counsel Legal Operations - Global Manufacturing and Supply GlaxoSmithKline Five Moore Drive Ruvane Building - Mailstop E.3334 Research Triangle Park, NC 27709

5. Within 10 days after receiving notification from the OIG of a

Specified Action to be taken, GSK shall notify OIG and FDA in writing either:

a. that GSK is undertaking or has undertaken the Specified Action, in which event GSK also shall describe the Specified Action taken or to be taken and the schedule for completing the action; or

b. that GSK does not agree with the OIG’s determination that it failed to comply with cGMP Requirements and/or that the Specified Action is appropriate.

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6. If GSK notifies OIG and FDA that it does not agree with the determination that it failed to comply with cGMP Requirements or that the Specified Action is appropriate:

a. GSK shall explain in writing the basis for its disagreement; in so doing, GSK also may propose specific alternative actions and specific time frames to be substituted for the Specified Action required under this Section III.D.

b. FDA shall review GSK’s notification and thereafter, in writing, make a recommendation to OIG that OIG affirm, modify, or withdraw its proposed Specified Action.

7. Based on the advice of the FDA, OIG shall decide whether the determination that GSK failed to comply with cGMP Requirements and/or the proposed Specified Action shall be affirmed, modified, or withdrawn and shall provide written notice (Final Determination) to GSK of the Specified Action to be taken or of the withdrawal of the Specified Action. GSK shall, upon receipt of the notification of Final Determination, immediately implement the Final Determination.

8. GSK’s failure to implement that Specified Action shall be the basis for Stipulated Penalties and or Material Breach Penalties under Section X of the CIA.

E. Manufacturing Reportable Events

1. Definition of Manufacturing Reportable Event. For purposes of this Appendix, a “Manufacturing Reportable Event” means conduct related to a Covered Manufacturing Facility or Covered Product that involves:

a. a matter that a reasonable person would consider a probable violation of criminal, civil, or administrative laws applicable to cGMP Activities; or

b. the employment of or contracting with a Covered Person who

is an Ineligible Person as defined by Section III.G.1.a of the CIA;

A Manufacturing Reportable Event may be the result of an isolated event or

a series of occurrences. A Manufacturing Reportable Event does not include the following:

a. Field Alert Reports submitted to FDA and related correspondence;

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b. Observations contained in FDA 483 Reports, GSK’s responses to those observations and any related correspondence;

c. Drug Quality Reporting System (DQRS) reports submitted to FDA and any related correspondence;

d. Reports submitted to FDA relating to suspected or known counterfeit products and any related correspondence; and

e. GSK Annual Product Reports for marketed products submitted to FDA and any related correspondence.

2. Reporting of Manufacturing Reportable Events. If GSK determines (after a reasonable opportunity to conduct an appropriate review or investigation) through any means that there is a Manufacturing Reportable Event, GSK shall, notify OIG in writing, within 30 days after making the determination that the Reportable Event exists.

3. Manufacturing Reportable Events under Section III.E.1.a-b. For Manufacturing Reportable Events under Sections III.E.1.a-c, the report to OIG shall include:

a. a complete description of the Manufacturing Reportable Event, including the relevant facts and persons involved and the legal authorities implicated;

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

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

F. Reporting of Certain Events If GSK voluntarily initiates a recall of a Covered Product manufactured at and/or released by either a Covered Manufacturing Facility or other GSK manufacturing facility located in the United States and that has been distributed in the United States, GSK shall notify OIG in writing within 5 days after initiating the recall.

IV. CHANGES TO BUSINESS UNITS OR LOCATIONS

Change of Status of a Covered Manufacturing Facility. In the event that, after the Effective Date, a new GSK facility located in the United States other than, or in

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addition to, the Zebulon, North Carolina facility, manufacturers and/or releases for distribution in the United States Covered Products sold by GSK that are reimbursed by Federal health care programs, such facility may become a Covered Manufacturing Facility subject to the terms described below. As of the date that such new facility commences manufacture and/or release of a Covered Product, the Site Director, the Site Quality Director and all employees who are directly responsible for the release of Covered Products for distribution in the United States shall become Manufacturing Covered Persons. GSK shall have thirty (30) days to determine whether such new facility will continue to release Covered Products for distribution in the United States independently of the Zebulon, North Carolina facility. If, within the thirty (30) day period, GSK decides that such new facility will continue to release Covered Products independently of the Zebulon, North Carolina facility, then such facility shall become a Covered Manufacturing Facility and employees listed in Section II.C.1 of this Appendix shall be Manufacturing Covered Persons. If, within the thirty (30) day period, GSK determines that Covered Products manufactured at the new facility will be released under the supervision of the Zebulon, North Carolina facility, then such new facility shall not become a Covered Manufacturing Facility. In such event, the Site Director, the Site Quality Director and all employees at the facility who are directly responsible for authorizing the release of Covered Products for distribution in the United States shall be Manufacturing Covered Persons. GSK shall notify the OIG about the new Covered Manufacturing Facility in accordance with the timeframes specified in Section IV of the CIA.

V. IMPLEMENTATION AND ANNUAL REPORTS

A. Appendix Implementation Report. Within 150 days after the Effective Date, GSK shall submit a written report to OIG summarizing the status of its implementation of the requirements of this Appendix (Appendix D Implementation Report). The Appendix D Implementation Report shall, at a minimum, include:

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

2. the names and positions of the members of the GMS Compliance Committee required by Section III.A.2 of this Appendix;

3. the names of the members of the Board of Directors referenced in Section III.A.3 of this Appendix;

4. the number of individuals required to complete the Code of Conduct certification required by Section III.B.1 of this Appendix, the percentage of individuals

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who have completed such certification, and an explanation of any exceptions (the documentation supporting this information shall be available to OIG upon request);

5. a summary of all Policies and Procedures required by Section III.B of this Appendix (copies of the Policies and Procedures shall be made available to OIG upon request);

6. the following information regarding each type of training required by Section III.C of this Appendix:

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 made available to OIG upon request.

7. A description of GSK’s corporate structure as it relates to GMS and cGMP Activities; and

8. the certifications required by Section V.C of this Appendix.

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

Each Appendix Annual Report shall include, at a minimum:

1. Any change in the identity, position description, or other noncompliance job responsibilities of the GMS Compliance Officer, any changes in the membership of the GMS Compliance Committee, and any changes in the membership of the Board as described in Section III.A of this Appendix;

2. The Board resolution required by Section III.A.3 of this Appendix;

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

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4. A summary of any significant changes or amendments to the Policies and Procedures required by Section III.B of this Appendix and the reasons for such changes.

5. The following information regarding each type of training required by Section III.C of this Appendix:

a. a description of the initial and annual 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 complete the initial and annual training, the percentage of individuals who actually completed the initial and annual training, and an explanation of any exceptions.

A copy of all training materials and the documentation to support this information shall be made available to OIG upon request.

6. A copy of any recall notices issued during the Reporting Period by GSK for Covered Products sold in the United States, a description of GSK’s corrective action(s) taken related to the recall, and any further steps GSK plans to take related to the recall.

7. A summary of Manufacturing Reportable Events (as defined in Section III.E) identified during the Reporting Period and the status of any corrective action relating to each such Reportable Events;

8. A description of any changes to GSK’s corporate structure as reported pursuant to Section V.A.7 of this Appendix D and an identification of any Covered Manufacturing Facility, if any, in lieu of or in addition to the Zebulon facility;

9. The certifications required by Section V.C.

The first Appendix Annual Report shall be received by OIG no later than 60 days after the end of the first Reporting Period. Subsequent Appendix Annual Reports shall be received by OIG no later than the anniversary date of the due date of the first Appendix Annual Report.

C. Certifications. The Appendix Implementation Report and each Appendix Annual Report shall include a certification by the GMS Compliance Officer that:

1. to the best of his or her knowledge, except as otherwise described in the report, GMS is in compliance in all material respects with cGMP Requirements and all of the requirements of this CIA; and

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

D. Designation of Information. GSK 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. GSK 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 Appendix D shall be submitted to the following entities:

OIG: Administrative and Civil Remedies Branch Office of Counsel to the Inspector General Office of Inspector General U.S. Department of Health and Human Services Cohen Building, Room 5527 330 Independence Avenue, S.W. Washington, DC 20201 Telephone: 202.619.2078 Facsimile: 202.205.0604 GSK: Guy Wingate Vice President - GMS Compliance Officer GlaxoSmithKline GSK House (Mailstop BNG-15) 980 Great West Road Brentford Middlesex TW8 9GS United Kingdom Telephone: +44-1833-693330 Facsimile: +44-2080-476905

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Paul Noll Vice President - Associate General Counsel Legal Operations - Global Manufacturing and Supply GlaxoSmithKline Five Moore Drive Ruvane Building - Mailstop E.3334 Research Triangle Park, NC 27709 Telephone: (919) 483-2444 Facsimile: (919) 483-2881

Unless otherwise specified, all notifications and reports required by this Appendix

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. Upon request by OIG, GSK may be required to provide OIG with an electronic copy of each notification or report required by this Appendix to the CIA in searchable portable document format (pdf), in addition to a paper copy.

Appendix E to CIA for GlaxoSmithKline LLC

Executive Financial Recoupment Program

Executive Financial Recoupment Program. Through its Existing Commitments and the New Commitments to be implemented, GSK shall establish and maintain throughout the term of the CIA a financial recoupment program that puts at risk of forfeiture and recoupment an amount equivalent to up to 3 years of annual performance pay (i.e., annual bonus, plus long term incentives) for an executive who is discovered to have been involved in any significant misconduct (Executive Financial Recoupment Program). This financial recoupment program shall apply to Covered Executives, as defined below in Paragraph B, who are either current GSK employees or who are former GSK employees at the time of a Recoupment Determination. (A) Existing Commitments. The annual cash bonus for each GSK employee based in the United States and the United Kingdom is at risk of forfeiture in the event of employee misconduct that is discovered by GSK before the bonus is paid. In the event of misconduct by any GSK employee worldwide, GSK also has reserved the right and full discretion to void and forfeit any unvested share options and any unvested restricted share grants under the GSK Share Option Plan, Share Value Plan and Performance Share Plan (collectively, the “LTI Plans”). If GSK discovers any employee misconduct that would implicate the forfeitures described in this paragraph, it shall evaluate the situation and make a determination about whether any forfeiture, and the terms of such forfeiture, shall be implemented. (B) New Commitments. In addition to the compensation forfeiture provisions already in place with respect to annual bonuses and the LTI Plans, within 120 days after the Effective Date of the CIA, GSK shall modify and supplement its annual bonus plan and LTI Plan requirements (and any employment agreements, as appropriate) by imposing the following eligibility and repayment conditions on future bonuses and LTI Plan grants, as well as establishing the mandatory deferred annual bonus, tolling remedy, and additional remedies discussed below (collectively, “New Commitments”) to all members of GSK’s Corporate Executive Team (CET) and to any Vice Presidents and Senior Vice Presidents in Grades 0, 1, and 2 who are based in the United States (collectively “Covered Executives”). The New Commitments shall apply prospectively to Covered Executives beginning with the 2013 bonus plan year and LTI Plan grants. (i) Executive Bonus Eligibility and Repayment Conditions. GSK shall implement an eligibility and repayment condition on annual bonuses designed to survive both the payment of the bonus and the separation of a Covered Executive’s employment. This will allow GSK, as a consequence of a Triggering Event as defined below in Paragraph C, to pursue repayment from the Covered Executive of all or any portion of the bonus monies paid to the Covered Executive. To the extent permitted by

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controlling law, these bonus eligibility and repayment conditions will survive the payment of the Covered Executive’s bonus and the separation of the Covered Executive’s employment for a period of 3 years from the payment of the bonus for the plan year. Consistent with a Recoupment Determination, as defined below in Paragraph D, GSK shall endeavor to collect repayment of any bonus from the Covered Executive through reasonable and appropriate means according to the terms of its bonus plan (or executive contract, as the case may be), and to the extent permitted by controlling law of the relevant jurisdiction. If necessary to collect the repayment, GSK shall file suit against the Covered Executive unless good cause exists not to do so. For purposes of the Executive Financial Recoupment Program, good cause shall include, but not be limited to, a financial inability on the part of the Covered Executive to repay any recoupment amount or GSK’s inability to bring such a suit under the controlling law of the relevant jurisdiction. (ii) LTI Plans. Prior to the Effective Date, GSK implemented a recoupment process for Covered Executives’ unvested LTI share grants as discussed in Paragraph A (Existing Commitments) above. With respect to current GSK Covered Executives, GSK shall maintain these Existing Commitments and follow the Recoupment process and procedures established by the Recoupment Committee for the duration of the CIA. GSK shall also implement an eligibility and repayment condition on share grants made under LTI Plans designed to survive the separation of a Covered Executive’s employment. To the extent necessary, GSK shall implement an eligibility and repayment condition on grants made under the LTI Plans in order to clarify that, as a consequence of a Triggering Event, GSK may pursue repayment by a Covered Executive who is a former employee of all or any portion of the last 3 years’ worth of share option and restricted share grants that became vested and were paid during the Covered Executive’s last years of employment and following termination of employment. To the extent permitted by controlling law, these eligibility and repayment conditions shall survive vesting and payment for a period of 3 years from the Covered Executive’s employment termination date. In addition, GSK shall amend the vesting schedule in the LTI Plans so that Covered Executives who are “good leavers” (e.g., terminating employment due to retirement, death or disability) will no longer vest in, nor receive a distribution of, any unvested share options or restricted shares immediately following termination of employment; rather, these LTI Plan grants will only vest and be distributable after the first anniversary of the Covered Executive’s termination of employment. Consistent with a Recoupment Determination, GSK shall endeavor to collect repayment of these LTI Plan awards from the Covered Executive through reasonable and appropriate means and to the extent permitted by controlling law of the jurisdiction in which the Covered Executive works. If necessary to collect the

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repayment, GSK shall file suit against the Covered Executive unless good cause exists not to do so. (iii) Mandatory Deferred Annual Bonus. GSK shall establish a deferred compensation plan that requires the deferral of ten (10%) percent of a Covered Executive’s annual bonus (twenty-five (25%) percent, in the case of CET members) for a 3-year period that survives separation of the Covered Executive’s employment. Bonuses deferred under the plan shall be matched on a dollar-for-dollar basis by GSK. Consistent with a Recoupment Determination, all deferred bonuses, matching contributions and any related gains thereon are subject to forfeiture and voidance as a consequence of a Triggering Event. (iv) Tolling Remedy. To the extent permitting by controlling law, for the 3 years during which the bonus eligibility and repayment conditions exist, if GSK reasonably anticipates that a Triggering Event has occurred pursuant to Paragraph C, and GSK has recoupment rights remaining under Paragraphs B(i) and B(ii), GSK shall have the right to notify the Covered Executive that those rights shall be tolled and thereby extended for an additional 3 years or until the Recoupment Committee determines that a Triggering Event has not occurred, whichever is earlier, to the extent permitted by controlling law of the relevant jurisdiction. (v) Additional Remedies. If, after expiration of the time period specified in Paragraphs B(i)-(iii) above, the Recoupment Committee determines that a Triggering Event occurred, GSK shall make a determination as to whether to pursue available remedies (e.g., filing suit against the Covered Executive) existing under statute or common law to the extent available. (C) Definition of Triggering Events. The eligibility and repayment conditions described above shall be triggered upon a Recoupment Determination that finds: (i) significant misconduct (e.g., violation of a significant GSK policy, or regulation, or law) by the Covered Executive that, if discovered prior to payment, would have made the Covered Executive ineligible for an annual bonus, bonus deferral or LTI Plan grant in that plan year or subsequent plan years; or (ii) significant misconduct by subordinate employees in the business unit over which the Covered Executive had responsibility that does not constitute an isolated occurrence and which the Covered Executive knew or should have known was occurring that, if discovered prior to payment, would have made the Covered Executive and/or employees in question ineligible for an annual bonus, bonus deferral or LTI Plan grant in that plan year or subsequent plan years.

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(D) Administration of Recoupment Program. GSK shall engage in a standardized, formal process to determine, in its sole discretion, whether a Triggering Event has occurred, and, if so, the extent of bonus monies, LTI Plan grants and deferred compensation that will be subject to repayment or forfeiture by the Covered Executive, and the most appropriate method for securing recoupment of relevant monies previously paid to a Covered Executive. The findings and conclusions resulting from this process shall be referred to as the “Recoupment Determination”.

(i) Initiation. GSK shall initiate the Recoupment Determination process upon: (1) discovery of potential significant misconduct that may rise to the level of a Triggering Event, or (2) written notification by a United States federal government agency to the Senior Vice President for Governance, Ethics, and Assurance of GlaxoSmithKline PLC of a situation that may rise to the level of a Triggering Event and either occurred in the United States or gives rise to liability relating to Federal healthcare programs. This written notification shall either identify the Covered Executive(s) potentially at issue or provide information (e.g., a description of the alleged misconduct and the applicable time period) to allow GSK to identify the Covered Executive.

(ii) Recoupment Committee. The Recoupment Determination shall be made by a committee of senior executives headed by the Senior Vice President for Governance, Ethics, and Assurance of GlaxoSmithKline PLC (Recoupment Committee). With respect to members of the CET, a Recoupment Determination shall be subject to ratification by the Board of Directors (or appropriate committee thereof) of GlaxoSmithKline PLC.

(iii) Timeline for Recoupment Determination Process. GSK shall initiate the Recoupment Determination process within 30 days after discovery by GSK or notification, pursuant to Paragraph D(i), of a potential Triggering Event. Absent extraordinary reasons, GSK shall reach a Recoupment Determination within 90 days after initiation of the determination process.

In connection with making its Recoupment Determination, the Recoupment Committee or appropriate Delegate pursuant to implementing policies and procedures shall: i) undertake an appropriate and substantive review or investigation of the facts and circumstances associated with the Triggering Event or any written notifications about potential Triggering Events received pursuant to Paragraph D(i) above; ii) make written findings regarding the facts and circumstances associated with the Triggering Event and any written notifications about potential Triggering Events received pursuant to Paragraph D(i) above; and iii) set forth in writing its determinations (and the rationale for such determinations) about: 1) whether a Triggering Event occurred; 2) the extent of

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bonus monies, LTI Plan grants or deferred compensation that will be subject to forfeiture and/or repayment by the Covered Executive; 3) the means that will be followed to implement the forfeiture and/or secure the recoupment of performance pay from the Covered Executive; and 4) the timetables under which GSK will implement the forfeiture and/or attempt to recoup the performance pay. For purposes of this paragraph, a “Delegate” shall refer to the GSK personnel to whom the Recoupment Committee has delegated one or more of its required tasks in furtherance of the Executive Financial Recoupment Program.

(E) Reporting. The Recoupment Committee shall provide annual reports to the Board of Directors (or an appropriate committee thereof) of GlaxoSmithKline PLC about: i) the number and circumstances of any Triggering Events that occurred during the preceding year and any written notifications about potential Triggering Events received pursuant to Paragraph D(i) above; ii) a description of any Recoupment Determinations made during the preceding year (including any decision to require or not require forfeiture/recoupment from any Covered Executives, the amount and type of any forfeiture/recoupment, the means for collecting any recoupment and the rationale for such decisions); and iii) a description of the status of any forfeitures and/or recoupments required under prior Recoupment Determinations that were not fully completed in prior years. The Recoupment Committee shall also provide annual reports to the OIG about: i) the number and circumstances of any Triggering Events that occurred during the preceding year and any written notifications about potential Triggering Events received pursuant to Paragraph D(i) above; ii) a summary description of any Recoupment Determinations made during the preceding year (including any decision to require or not require forfeiture/recoupment from any Covered Executives, the amount and type of any forfeiture/recoupment, the method for collecting any recoupment, and the rationale for such decisions); and iii) a description of the status of any forfeitures and/or recoupments required under prior Recoupment Determinations that were not fully completed in prior years. GSK commits to maintaining all of the forfeiture and recoupment commitments set forth in Paragraphs A-E above for at least the duration of the CIA, absent agreement otherwise with the OIG.

. 12/1 14 A 1774 71

Main Receptif:m"· (61 i) 74lJ.:JJOO

By TELEF AX and Email 202· 778-5281

Geoffrey Hobart, Esq. Covington & Burling 1210 Pennsylvania Avenue, NW Washington, DC 20004-3401

U ATTORNV OFF C

U.S. Department of Justice

United States Attorney Dtstrtct of Massachusetts

United States Courthouse, Suite 9200 I CourthDIUI!I Way Basion, Massaclmse/ls 02 2 I 0

December 15, 2011

Re: QlaxoSmithKline: Tolling Agreement on Statute of Limitations

Dear Mr. Hobart:

itl001 00

This letter confirms and sets forth an agreement between the Office of the United States Attorney for the District of Massachusetts and your client, Smith.KlineBeecham Corporation d/b/a OlaxoSmithK.line, and all successors and assigns (hereinafter "GSK"). The terms of the agreement are as follows:

1. As you are aware1 this Office is presently conducting a joint criminal and civil investigation of your client, GSK, and its officers, employees and agents. That conduct includes, without limitation, allegations that GSK and certain of its officers, employees and agents, may have violated various federal criminal statutes, including but not limited to 18 U.S.C. §371 (conspiracy to defraud the United States), 42 U.S.C. §1320(a)-7(b) (criminal penalties for acts involving the Medicare and State health care programs), 18 U.S. C. § 1 001 (making false or fraudulent statements), 21 U.S.C. § 301, et seq. (Food Drug & Cosmetic Act)1 health care fraud offenses (e.g. 18 U.S.C. §§ 669, 1347, and 1035), certain civil statutes including but not limited to 31 U.S.C. § 3729 (civil False Claims Act); and certain administrative statutes such as 42 U.S.C. § 1320a·7 (exclusion) and 42 U.S.C. § 1320a-7a (civil monetary penalties) in connection with (a) GSK's distribution in interstate commerce of the Covered Drugs (as defmed in the HIPAA subpoena dated February 6, 2004) that were adulterated, misbranded and/or had not yet been approved for commercial distribution by the United States Food and Drug Administration ("FDA"); and (b) GSK's activities in connection with the distribution, sale, marketing~ approval, and promotion of the Covered Drugs, including its communications with the FDA about these subjects.

• 12/ / 011 14 0 FAX 81 74 8 1 U ATTORNYS OFF CE fiiD 00 0

In the course of our discussions, this Office has expressed its intention to afford you and your client the fullest opportunity to provide information to this Office which you deem relevant to matters relating to that investigation. In response, you have advised us that you intend to provide certain information to this Office, and that you wish such information be considered prior to a prosecution decision concerning potential criminal charges resulting from that investigation. You have advised this Office that you and members of your finn will require a further time period to prepare any materials and gather information for· presentation to this Office, and to consider and evaluate further information as may be provided by this Office. As a result, this Office and your client have agreed, as more fully set forth below, to toll the applicable statutes of limitations for the offenses described in paragraph one for the time period October 19, 2005 through September 15, 2012 for that conduct described in paragraph one.

3. This Office and your client, GSK, hereby agree that your client will not at any time jnterpose a statute of limitations defense or any constitutional claim based upon pre­indictment delay to any indictment or count thereof, or to any civil complaint or count thereof, or to any administrative action, which charges or alleges that your client committed any federal offense or violation related to the conduct described in paragraph one, that includes the time period October 19, 2005 to September 15, 2012 in the calculation of the limitations period. Nothing herein shall affect, or be construed as any waiver of, any applicable statute of limitations defenses that GSK may have with respect to the time period prior to and including October 19, 2005, and your client expressly reserves its right to raise any such defense, any provisions of this agreement notwithstanding, except to the extent that your client has waived certain statute of limitation defenses in any waiver agreement(s) with other United States Attomey1s Offices or the Department of Justice, which agreement(s) remain in effect.

4. Your client, GSK, enters into this agreement knowingly and voluntarily. GSK acknowledges that the statute of Hmitations and United States Constitution regarding prejudicial pre-indictment delay confers benefits on it, and it is not required to waive those benefits, and that GSK is doing so after consulting with you because GSK believes it is in its best interest to do so. GSK also acknowledges its understanding that it may be charged with the foregoing criminal offenses and civil and administrative violations and/or any other offenses or violations at any time prior to and including September 15, 2012. GSK further acknowledges its understanding that it may be charged with any offenses or violations not specifically described above, at any time during the relevant statute of limitations period.

5. This agreement relates only to the allegations described in paragraph one above and any charges or claims based on those allegations. This writing contains the entire agreement between this Office and your client concerning the statute of limitations with respect to these matters and can be modified or supplemented only by means of a writing signed by this Office and your client

15/2011 14:30 FAX 6177483871 US ATTORNVS OFFICE

If your client is wiHing to enter Into this agreement on the temts set forth above, GSK should indicate the srune by signing on the spaces provided below.

By:

Dated: Geoffre ~rt Covington . · urling Attorney for GSK

Elpidio Villareal, Senior Vice President, Global Litlgation GlaxoSmithKline LLC

Very truly yours,

CARMEN M. ORTIZ United S

Susan G. r ler Sara M .. Bloom Assistant U.S. Attorneys

Ill 003/003

Main Reception: (617) 748-3100

By e-mail and fax 202-778-5281

Geoffrey Hobart, Esq. Covington & Burling 1210 Pennsylvania Avenue, NW Washington, DC 20004-3401

U.S. Department of Justice

United States Attorney District <!f Massachusetts

United Stales Courthouse. Suite 9200 I Courthouse Way Boston, Massachusetts 022/0

September 21, 20 II

Re: GlaxoSmithKiine LLC- Avandia CV: Tolling Agreement on Statute of Limitations

Dear Mr. Hobart:

This letter confirms and sets forth an agreement between the Office of the United States Attorney for the District of Massachusetts and your client, GlasoSmithKline LLC, and all successors and assigns (hereinafter "GSK"). The terms of the agreement arc as follows:

I. As you are aware, this Office is presently conducting a joint criminal and civil investigation of your client, GSK, and its of11cers, employees and agents. That conduct includes, without limitation, allegations that GSK and certain of its officers, employees and agents, may have violated various federal criminal statutes, including but not limited to 18 U .S.C. §3 71 (conspiracy to defraud the United States), 18 U.S.C. § I 00 I (making false or fraudulent statements), 21 U.S.C. § 301, et seq. (Food Drug & Cosmetic Act), health care fraud offenses (e.g. 18 U.S.C. §§ 669, 1347, and 1 035), certain civil statutes including but not limited to 31 U.S.C. § 3729 (civil False Claims Act); and certain administrative statutes such as 42 U.S.C. § 1320a-7 (exclusion) and 42 U.S.C. § 1320a-7a (civil monetary penalties) in connection with (a) suppression of negative information about the cardiovascular risk of A vandia, (b) statements that minimized the cardiovascular risks of A vandia to physicians, the FDA, and others, and/or (c) efforts to prevent full and fair information about the cardiovascular risks of Avandia reaching the public, physicians, the FDA, and/or others.

2. In the course of our discussions, this Office has expressed its intention to afford you and your client the fullest opportunity to provide information to this Office which you deem relevant to matters relating to that investigation. In response, you have advised us that you intend to provide certain information to this Office, and that you wish such information be

considered prior to a prosecution decision concerning potential criminal charges resulting from that investigation. You have advised this Office that you and members ofyou1· firm will require a further time period to prepare any materials and gather information for presentation to this Office, and to consider and evaluate further information as may be provided by this Office. As a result, this Office and your client have agreed, as more fully set forth below, to toll the applicable statutes of limitations for the offenses described in paragn1ph one for the time period May 1, 2010 through October 1, 2012 for that conduct described in paragraph one.

3. This Office and your client, GSK, hereby agree that your client will not at any time interpose a statute of limitations defense or any constitutional claim based upon pre· indictment delay to any indictment or count thereof, Ol' to any civil complaint or count thereof, or to any administrative action, which charges or alleges that yol!l" client committed any federal offense or violation related to the conduct described in paragraph one, that includes the time period May I, 2010 to October I, 2012 in the calculation of the limitations period. Nothing herein shall affect, or be construed as any waiver of, any applicable statute of limitations defenses that GSK may have with respect to the time period prior to and including May 1, 2010, and your client expressly reserves its right to raise any such defense, any provisions of this agreement notwithstanding, except to the extent that your client has waived certain statute of limitation defenses in any waiver agreement(s) with other United States Attorney's Offices or the Department of Justice, which agreement(s) remain in effect.

4. Your client, GSK, enters into this agreement knowingly and voluntarily. GSK acknowledges that the statute of limitations and United States Constitution regarding prejudicial pre·indictment delay confers benefits on it, and it is not required to waive those benefits, and that GSK is doing so after consulting with you because GSK believes it is in its best interest to do so. GSK also acknowledges its understanding that it may be charged with the foregoing criminal offenses and civil and administrative violations and/or any other offenses or violations at any time prior to and including October l, 2012. GSK further acknowledges its understanding that it may be charged with any offenses or violations not specifically described above, at any time during the relevant statute of limitations period.

5. This agreement relates only to the allegations described in Paragraph one above and any charges or claims based on those allegations. This writing contains the entire agreement between this Office and your client and can be modified or supplemented only by means of a writing signed by this Office and your client.

I I I I I I

If your client is willing to enter into this agreement on the terms set forth above, GSK should indicate the same by signing on the spaces provided below and by initialing each page of this agreement. Please return an executed original to the undersigned by October 1, 2011.

Very truly yours,

CARMEN M. ORTIZ United States Attorney

By: is/ Susan Winkler Susan G. Winkler Assistant U.S. Attorney

\ \

Dated: "'}~?--I~ If Name: t';j p·,.fre> V,/[ ov~·/ Position: s v? ~ 6loLo..( Lt'J" .fw,.. GlaxoSmithKiine LLC

Assistant Attorney General

The Honorable Carmen Milagros Ortiz United States Attorney District of Massachusetts 1 Courthouse Way John Joseph Moakley Courthouse Boston, Massachusetts 02210

Attention: Susan Winkler Assistant United States Attorney

U.S. Department of Justice

Criminal Division

Washington, D. C. 20530

JUN - 5 2012

Re: Global Plea Agreement for GlaxoSmithKline LLC

Dear Ms. Ortiz:

This is in response to your request for authorization to enter into a global plea agreement with GlaxoSmithKline LLC.

I hereby approve the terms of the agreement, inclucling Paragraph 6, in which the United States agrees not to initiate further criminal proceeclings as set out therein.

You are authorized to make this approval a matter of record in this proceeding.

Sincerely,

Mythili Raman Principal Deputy Assistant Attorney General

~~~~~~~~~~~~~~~~~~~~ilfiAI\fA!¥¥"FP'AATTRl· RIGHR€VAif'<m=~="·-~···~····~······~······~··-·~·······~····-~······~~~~~~

DEPUTY ASSISTANT ATTORNEY GENEIIAI. CRIMINAL DIVISION

ACKNOWLEDGMENT OF PLEA AGREEMENT

The Board of Managers of the LLC (the "Board") have authorized me to execute this Plea Agreement on behalf of GSK, and to take all such actions as may be necessary to cffcctnate this Plea Agreement. The Board has reviewed this Plea Agreement, the attached criminal Information, and the Civil Settlement Agreements, including all attachments, in their entirety and have discussed them fully in consultation with GSK's attorney. The Board acknowledges that these documents fully set forth GSK's agreement with the United States. The Board further states that no additional promises or representations have been made to GSK by any officials of the United States in connection with the disposition of this matter, other than those set forth in the Plea Agreement and the attached Civil Settlement Agreements.

Dated: Co / (;;; Y.. /\ ;:;;J

Elpidio Vi!Gui'eal Senior Vice President, Global Litigation GlaxoSmithK!ine LL ·

nnor Covington & Burling, LLP Counsel for GlaxoSmithK!ine LLC

GlaxoSmithKline LLC

Unanimous Consent of Managers

June 28, 2012

Pursuant to the limited liability company agreement of GlaxoSmithKline LLC (the "Company")

and Section 18-204 of the Limited Liability Company Act of the State of Delaware, the undersigned,

being all the members of the Board of Managers of the Company, hereby consent to the following actions

and direct that this written record thereof be filed with the Secretary of the Company.

WHEREAS, the federal government has been conducting three separate investigations into the Company's conduct (collectively, the "Investigations"): (!)an investigation into the Company's sales and marketing practices that was begun by the U.S. Attorney's office of Colorado in 2004 and later taken over by the U.S. Attorney's Office of Massachusetts; (2) the U.S. Department of Justice's investigation of possible inappropriate use of the nominal price exception under the Medicaid Rebate Program; and (3) the Department of Justice's investigation of the development and marketing of Avandia;

WHEREAS, the Board has consulted with legal counsel in connection with the Investigations;

WHEREAS, the Company's legal counsel has been negotiating a resolution ofthe Investigations;

WHEREAS, the Company's legal counsel has reported to the Board the terms and conditions of a proposed resolution of the Investigations;

WHEREAS, the Board has reviewed the Information and Plea Agreement related to the Investigations;

WHEREAS, the Board has reviewed and been advised of the contents of the proposed Federal Settlement Agreements, Corporate Integrity Agreement ("CIA"), and State Settlement Agreements (collectively, the "Settlement Agreements") related to the Investigations; and

WHEREAS, the Board aclmowledges that the Plea Agreement, CIA, and Settlement Agreements fully set forth the Company's agreement with the United States and the States and that no additional promises or representations have been made to the Company by any officials of the United States or the States in connection with the disposition of the Investigations, other than those set forth in these documents.

NOW, THEREFORE, in consideration of the premises and such other facts and circumstances as determined relevant or otherwise appropriate to consider in acting on the matter, be it:

RESOLVED, that the Company is hereby authorized and directed to enter into the Plea Agreement, CIA, and Settlement Agreements;

FURTHER RESOLVED, that the Company is authorized and directed to plead guilty to the charges specified in the Criminal Information;

FURTHER RESOLVED, that Officers of the Company, or their duly authorized representatives or attorneys, are hereby authorized and directed to take all actions and deliver any agreements, certificates and documents and instruments with respect to or contemplated by the matters set forth above, including, without limitation, the payment of all amounts, fees, costs and other expenses, necessary or appropriate to effectuate the purpose and intent of the foregoing resolutions and to effectuate and implement the resolutions contemplated hereby; and

FURTHER RESOLVED, that any actions taken by the Officers of the Company, or their duly authorized representatives or attorneys, prior to the adoption of this resolution, that are within the authority conferred hereby, are fully ratified, confirmed and approved as the acts and deeds of the Company.

Daniel J. Phelan

S. Mark Werner

- 2-

FURTHER RESOLVED, that Officers of the Company, or their duly authorized representatives or attorneys, are hereby authorized and directed to take all actions and deliver any agreements, certificates and documents and instruments with respect to or contemplated by the matters set fmth above, including, without limitation, the payment of all amounts, fees, costs and other expenses, necessary or appropriate to effectuate the purpose <md intent of the foregoing resolutions and to effectuate and implement the resolutions contemplated hereby; and

FURTHER RESOLVED, that any actions taken by the Officers of the Company, or their duly authorized representatives or attorneys, prior to the adoption of this resolution, that are within the authority conlcrred hereby, arc fuiiy ratified, confirmed and approved as the acts and deeds of the Company.

Deirdre P. Connelly

Adrian G. Rawcliffe

- 2-

!) J y,t " lljCWAfJ/ . ~~-Daniel J. Phelai'f

S. Mark Werner

SETTLEMENT AGREEMENT

This Settlement Agreement ("Agreement") is entered into among the United States of

America, acting through the United States Department of Justice and on behalf of the Office of

Inspector General of the United States Department of Health and Human Services ("OIG-HHS")

(collectively the "United States"), and GlaxoSmithKline LLC ("GSK" or "the company"),

through their authorized representatives. Collectively, all of the above will be referred to as "the

Parties."

RECITALS

A. GlaxoSmithKline LLC is a Delaware Limited Liability Company and an indirect

subsidiary of GlaxoSmithKline pic, a public limited company incorporated under English law

with headquarters in Brentford, England. At all relevant times, GSK and/or its predecessors,

including Glaxo, Inc. ("Glaxo"), Glaxo Wellcome, Inc. ("GW"), and SmithKline Beecham

Corporation ("SKB") (all of which are incorporated within the above term "GSK") had business

operations in Philadelphia, Pennsylvania, and Research Triangle Park, North Carolina. In 2000,

GW and SKB merged to form SmithKline Beecham Corporation d/b/a GlaxoSmithKline (now

known as GlaxoSmithKline LLC).

B. At all relevant times, GSK manufactured, distributed, and sold pharmaceutical

products in the United States.

C. At all relevant times, GSK participated in the Medicaid Drug Rebate Program, 42

U.S.C. § 1396r-8, which is part of the federal Medicaid Program, Title XIX ofthe Social

Security Act, 42 U.S.C. §§ 1396-1396v. Pursuant to the Medicaid Drug Rebate Program, GSK

entered into national rebate agreements with HHS, and GSK's covered outpatient drugs were

covered by state Medicaid plans that provided medical assistance for prescription drugs. Under

the Medicaid Drug Rebate Program and the rebate agreements with HHS, GSK agreed: (i) to

report quarterly to the Health Care Financing Administration, currently known as, and

hereinafter referred to as, the Centers for Medicare and Medicaid Services ("CMS"), the

Average Manufacturer Price ("AMP") for all its covered outpatient drugs and Best Price for its

single-source and innovator multiple-source covered outpatient drugs, as defined by 42 U.S.C.

§§ 1396r-8(k)(l) and 1396r-8(c)(l)(C); and (ii) to pay quarterly rebates to the states. For single­

source and innovator multiple source covered outpatient drugs, the quarterly rebates are based on

the product of (a) the units of each dosage form and strength paid for under the State Medicaid

plan during the rebate period as reported by the state, and (b) the greater of the difference

between the AMP and the Best Price, or a minimum rebate percentage of AMP, as further

described in 42 U.S.C. § 1396r-8(c)(l).

D. Under 42 U.S.C. § 1396r-8(c)(l)(C)(ii), the term "Best Price": (I) shall be

inclusive of cash discounts, free goods that are contingent on any purchase requirement, volume

discounts, and rebates (other than rebates under this section); (II) shall be determined without

regard to special packaging, labeling, or identifiers on the dosage form or product or package;

and (III) shall not take into account prices that are "merely nominal in amount." Under the

rebate agreement, the best price for a quarter shall be adjusted by the manufacturer if cumulative

discounts, rebates or other arrangements subsequently adjust the prices actually realized.

E. Under the rebate agreement, a "nominal price" is, for purposes of excluding

prices from the Best Price calculation, any price less than 1 0% of the AMP in the same quarter

for which the AMP is computed.

F. Under the rebate agreement, a "bundled sale" refers to the packaging of drugs of

different types where the condition of rebate or discount is that more than one drug type is

2

purchased, or where the resulting discount or rebate is greater than that which would have been

received had the drug products been purchased separately. For bundled sales, the allocation of

the discount is made proportionately to the dollar value of the units of each drug sold under the

bundled arrangement.

G. The 1996 Medicaid Drug Rebate Operational Training Guide states that "[t]he

key to identifying a bundled sale is that the sale is contingent on the purchase of another

product" and that "Bundled Sales will affect the AMP and BP calculations. The value of the

discounted or free product should be proportionately distributed among the other products in the

bundle."

H. The 200 I Medicaid Drug Rebate Operational Training Guide states that "[ t ]he

key to identifying a bundled sale is that the sale is contingent upon an additional purchase

requirement(s) of the retail purchaser (e.g. pharmacies, beneficiaries, etc.)" and that "Bundled

Sales will affect the AMP and BP calculations. The discounted or contingent drug product's

value is proportionately distributed among the other drug products in the bundle."

I. At all relevant times, GSK participated in the Drug Pricing Program, 42 U.S. C.

§ 256b, which is part of the Public Health Service ("PHS") Act, 42 U.S.C. §§ 201-300gg-92.

Pursuant to the Drug Pricing Program, GSK entered into agreements with HHS in connection

with the pricing of its drug products sold to entities such as AIDS drug purchasing assistance

programs, community health centers, and disproportionate share hospitals, as defined in 42

U.S.C. § 256b(a) (the "PHS entities"). Under the Drug Pricing Program, GSK agreed that the

amount the PHS entities would pay for their drug products would not exceed certain limits

derived in part from the AMPs and Best Prices reported by GSK to CMS for such drugs in the

previous calendar quarter, as further described in 42 U.S.C. § 256b(a).

3

J. The United States contends that it has certain civil claims against GSK, as

specified in Paragraph 2 of the Terms and Conditions section below, arising from the following

conduct during the time period from January 1, 1994, to December 31,2003 (hereinafter referred

to as the "Covered Conduct"):

1. The United States contends that GSK entered into contracts with hospitals,

universities, group purchasing organizations, managed care organizations, and other customers,

pursuant to which the customers received discounts and/or rebates on one or more GSK drugs

that appeared, on their face, to yield a purportedly nominal price, i.e., a price ofless than 10% of

the AMP for a drug, but which were contingent on the customer agreeing to meet one or more of

the following requirements for a drug with a different National Drug Code number: (a) pmchase

all of its requirements of a certain drug type or class of drug from GSK rather than from other

drug manufacturers, (b) pmchase a minimum quantity of a certain GSK product or products, (c)

maintain or achieve a minimum market share of a certain GSK product or products within a

therapeutic class of drugs, (d) place and/or keep a certain GSK product or products on formulary

and/or unrestricted in its institutions or systems, or (e) make a certain GSK product or products

the exclusive or preferred drug on a formulary within a particular therapeutic or multi-source

class of products available in its institutions or systems.

More specifically, GSK generally referred to such contracts as "committed

contracts" or "portfolio contracts." A 1991 internal GSK training document explained that, "[i]n

a committed contract (sometimes referred to as a bundle), pricing is contingent on all terms of

the contract. The purpose of a committed contract is to establish an agreement that an account

will use multiple [GSK] products and/or use exclusively [GSK] brands of [certain drug

products]. Further, the commitment may require the unrestricted availability of all forms of

4

[another drug product]. In return, the account receives better pricing level and/or rebates."

Another internal GSK document explained: "Portfolio adds value [by] pulling weaker products

on formulary that would otherwise have been excluded (achieved by increasing discounts on

stronger (levered) products) ... [and] minimizing discounts on a key product by giving

concessions on less important products."

The United States contends that, like other deep discounts, purportedly nominal

pricing on certain products included in these portfolio contracts was regarded by GSK as an

investment and a tool to guarantee contract compliance, consistent with the company's overall

portfolio approach to contracting.

11. The United States further contends that the GSK contracts described in paragraph

(i) above are "bundled sales" under the rebate agreements between GSK and HHS. As such, the

discounts and/or rebates on the drugs sold under those contracts should have been reallocated

among all drugs in the bundled sales, including those drugs sold at a price ofless than I 0% of

AMP, as required by the rebate agreements, in calculating and reporting to CMS quarterly AMP

and Best Price figures for the drugs, and that GSK did not reallocate those discounts and/or

rebates.

111. The United States further contends that if GSK had reallocated the discounts

and/or rebates as required under its rebate agreements, the effective prices on the purportedly

nominal-priced drugs in the bundled sales would, in some cases, have exceeded l 0% of AMP

and resulted in reportable Best Prices that were lower than the Best Prices GSK reported to CMS

for such drugs. Further, those reallocations would have lowered the effective prices for certain

other drugs included in the alleged bundled sales and would, in some cases, have resulted in

5

reportable Best Prices for one or more of those other drugs that were lower than the Best Prices

GSK reported to HHS for those drugs.

JV. The United States further contends that in failing to reallocate discounts and/or

rebates in bnndled sales that included purportedly nominal-priced drugs, GSK knowingly

reported false Best Prices to HHS and underpaid quarterly rebates to the states under the

Medicaid Drug Rebate Program, and knowingly overcharged the PHS entities under the Drug

Pricing Program. Such underpayment of quarterly rebates to the states caused the United States

to be overcharged for its quarterly contributions to the states for the Medicaid Program.

v. In some instances, GSK treated certain prices as nominal when, in fact, those

prices were contingent on other requirements and the United States contends they did not qualify

as nominal prices within the meaning of the rebate agreements. The United States contends that

if GSK had factored certain of the contingencies into the transactions and not treated those

transactions as nominal, GSK would have reported Best Prices that were lower than those that

they reported to HHS for such drugs. As a result, GSK knowingly reported false Best Prices to

HHS and underpaid quarterly rebates to the states under the Medicaid Drug Rebate Program, and

knowingly overcharged the PHS entities nnder the Drug Pricing Program. Such nnderpayment

of quarterly rebates to the states caused the United States to be overcharged for its quarterly

contributions to the states for the Medicaid Program.

K. The United States contends that, as a result of the Covered Conduct, GSK

knowingly made or caused to be made false claims or made or caused to be made false

statements material to false claims and/or obligations relating to the payment of rebates to the

Medicaid Program, Title XIX of the Social Security Act, 42 U.S.C. §§ l396-l396v, and thereby

also inflated the prices paid for certain drugs under the Drug Pricing Program, which is part of

6

the PHS Act, 42 U.S.C. § 201-300gg-92.

L. The United States also contends that it has certain administrative claims against

GSK as specified in Paragraph 3 below, for engaging in the Covered Conduct.

M. GSK will be entering into separate settlement agreements, described in Paragraph

l.b below (hereinafter referred to as the "Medicaid State Settlement Agreements") with certain

states and the District of Columbia in settlement of the Covered Conduct. States with which

GSK executes a Medicaid State Settlement Agreement in the form to which GSK and the

National Association of Medicaid Fraud Control Units ("NAMFCU") have agreed, or in a form

otherwise agreed to by GSK and an individual state, are referred to herein as "Medicaid

Participating States."

N. On such date as may be determined by the Court, GSK will enter a plea of guilty

pursuant to Fed. R. Crim. P. ll(c)(l)(c) (the "Plea Agreement") to an Information to be filed in

United States of America v. GlaxoSmithKline LLC, Criminal Action No. [to be assigned]

(District of Massachusetts) (the "Criminal Action") that will allege: (i) violations of Title 21,

United States Code, Sections 33l(a), 333(a)(l) and 352, namely, the introduction into interstate

commerce of the misbranded drugs Wellbutrin and Paxil, and (ii) a violation of Title 21, United

States Code, Sections 33l(e), 333(a)(l), and 355(k)(l), namely, that GSK failed to report data

relating to clinical experience, along with other data and information, regarding Avandia to the

Food and Drug Administration ("FDA") in mandatory reports, in violation of the Food, Drug and

Cosmetic Act ("FDCA").

0. This Agreement is made in compromise of disputed claims. This Agreement is

neither an admission of liability by GSK nor a concession by the United States that its claims are

not well founded. GSK expressly denies the allegations ofthe United States as set forth herein,

7

and denies that it has engaged in any wrongful conduct in connection with the Covered Conduct.

GSK further states that, neither this settlement, its execution, nor the performance of any

obligation under it, including any payment, nor the fact of the settlement, is intended to be, or

should be understood as, an admission of any fact or of any liability or wrongdoing, or other

expression reflecting on the merits of the dispute by GSK.

To avoid the delay, uncertainty, inconvenience, and expense of protracted litigation of

the above claims, and in consideration of the mutual promises and obligations ofthis Agreement,

the Parties reach a full and final settlement pursuant to the terms and conditions below:

TERMS AND CONDITIONS

I. GSK shall pay to the United States, the Medicaid Participating States, and the

PHS entities, collectively, the sum of Three Hundred Million Dollars ($300,000,000) plus

interest accrued thereon at a rate of 1.625% per annum from December I, 2011, to and including

the day before payment is made under this Agreement (the "Settlement Amount"). The

Settlement Amount shall constitute a debt immediately due and owing to the United States, the

Medicaid Participating States, and the PHS entities on the Effective Date of this Agreement.

The debt shall be discharged by payments to the United States, the Medicaid Participating States,

and the PHS entities as follows:

a. GSK shall pay to the United States the sum of $160,972,069 plus interest

accrued thereon at a rate of 1.625% per annum from December I, 2011, to and including the day

before payment is made under this Agreement (the "Federal Settlement Amount"). The Federal

Settlement Amount shall be paid by electronic funds transfer pursuant to written instructions to

be provided by the United States. GSK shall make this electronic funds transfer no later than

seven (7) business days after: (i) the Effective Date of this Agreement or (ii) the Court accepts a

8

Fed. R. Crim. P. ll(c)(l)(c) guilty plea as described in Preamble Paragraph N in connection with

the Criminal Action and imposes the agreed upon sentence, whichever occurs later.

b. GSK shall pay to the Medicaid Participating States the sum of

$118,792,931 plus interest accrued thereon at a rate of 1.625% per annum from December 1,

2011, to and including the day before payment is made under this Agreement (the "State

Settlement Amount"). The State Settlement Amount shall be paid by electronic funds transfer to

an interest bearing account in accordance with the written instructions from the NAMFCU

negotiating team pursuant to the terms and conditions agreed upon by GSK and the NAMFCU

negotiating team and as set forth in the Medicaid State Settlement Agreements that GSK will

enter into with the Medicaid Participating States.

c. GSK and the United States agree that GSK. shall pay the sum of

$20,235,000 plus interest accrued thereon at a rate of 1.625% per mmum from December 1,

2011, to and including the day before payment is made under this Agreement, as the PHS share

(the "PHS Amount") of the Settlement Amount. GSK. shall transfer the PHS Amount into a

segregated, interest-bearing bank account (the "PHS Account") no later than seven (7) business

days after: (i) the Effective Date of this Agreement or (ii) the Court accepts a Fed. R. Crim. P.

ll(c)(l)(c) guilty plea as described in Preamble Paragraph N in connection with the Criminal

Action and imposes the agreed upon sentence, whichever occurs later. Pursuant to the process

agreed to by the Parties in a separate letter, GSK. will use its best efforts to identify affected PHS

entities and the amounts they were overcharged as a result of the Covered Conduct. GSK. shall

disburse funds from the PHS Account pursuant to the terms set forth in the aforementioned

letter.

d. If GSK's agreed-upon guilty plea pursuant to Fed. R. Crim. P. ll(c)(l)(c)

9

in the Criminal Action described in Preamble Paragraph N is not accepted by the Court or the

Court does not impose the agreed-upon sentence for whatever reason, this Agreement shall be

null and void at the option of either the United States or GSK. If either the United States or GSK

exercises this option, which option shall be exercised by notifying all Parties, through counsel, in

writing within five (5) business days of the Court's decision, the Parties will not object and this

Agreement will be rescinded. If this Agreement is rescinded, GSK will not plead, argue or

otherwise raise any defenses under the theories of statute of limitations, laches, estoppel or

similar theories, to any civil or administrative claims, actions or proceedings arising from the

Covered Conduct that are brought by the United States within 90 calendar days of rescission,

unless such defenses were available to GSK prior to May 19, 2004.

2. Subject to the exceptions in Paragraph 4 (concerning excluded claims) below, in

consideration of the obligations ofGSK in this Agreement, and conditioned upon GSK's full

payment of the Settlement Amount, the United States releases GSK, together with its

predecessors, current and former parents, divisions, subsidiaries, successors, transferees, heirs,

and assigns, and their current and former directors, officers and employees, individually and

collectively, from any civil or administrative monetary claim the United States has or may have

for the Covered Conduct under the False Claims Act, 31 U.S.C. §§ 3729-3733; the Civil

Monetary Penalties Law, 42 U.S. C. §§ l320a-7a; the Program Fraud Civil Remedies Act, 31

U.S. C.§§ 3801-3812; the Medicaid Rebate Statute, 42 U.S.C. § l396r-8; the Drug Pricing

Program, 42 U.S.C. § 256b; any statutory provision applicable to the federally funded programs

in this Agreement creating a cause of action for civil damages or civil penalties for which the

Civil Division of the Department of Justice has actual and present authority to assert and

compromise pursuant to 28 C.F.R., Part 0, Subpart I,§ 0.45(d); and the common law theories of

10

payment by mistake, fraud, disgorgement, and unjust enrichment.

3. In consideration of the obligations of GSK in this Agreement and the Corporate

Integrity Agreement (CIA) entered into between OIG-HHS and GSK, and conditioned upon

GSK's full payment of the Settlement Amount, the OIG-HHS agrees to release and refrain from

instituting, directing, or maintaining any administrative action seeking exclusion from Medicare,

Medicaid, and other Federal health care programs (as defined in 42 U.S.C. § l320a-7b(f))

against GSK under 42 U.S. C. § l320a-7a (Civil Monetary Penalties Law) or 42 U.S.C. § 1320a-

7(b)(7) (permissive exclusion for fraud, kickbacks, and other prohibited activities) for the

Covered Conduct, except as reserved in Paragraph 4 (concerning excluded claims), below, and

as reserved in this Paragraph. The OIG-HHS expressly reserves all rights to comply with any

statutory obligations to exclude GSK from Medicare, Medicaid, and other Federal health care

programs under 42 U.S.C. § 1320a-7(a) (mandatory exclusion) based upon the Covered

Conduct. Nothing in this Paragraph precludes the OIG-HHS from taking action against entities

or persons, or for conduct and practices, for which claims have been reserved in Paragraph 4,

below.

4. Notwithstanding any term of this Agreement, the following claims of the United

States are specifically reserved and are not released:

a. Any civil, criminal, or administrative liability arising under Title 26, U.S.

Code (Internal Revenue Code);

b. Any criminal liability;

c. Except as explicitly stated in this Agreement, any administrative liability,

including mandatory exclusion from Federal health care programs;

d. Any liability to the United States (or its agencies) for any conduct other

II

than the Covered Conduct;

e. Any liability based upon obligations created by this Agreement;

f. Any liability for express or implied warranty claims or other claims for

defective or deficient products or services, including quality of goods and

services;

g. Any liability for failure to deliver goods or services due;

h. Any liability for personal injury or property damage or for other

consequential damages arising from the Covered Conduct; or

1. Any liability of individuals (including current or former directors, officers,

employees, or agents of GSK) who receive written notification that they

are the target of a criminal investigation, are criminally indicted or

charged, or are convicted, or who enter into a criminal plea agreement

related to the Covered Conduct.

5. GSK waives and shall not assert any defenses GSK may have to any criminal

prosecution or administrative action relating to the Covered Conduct that may be based in whole

or in part on a contention that, under the Double Jeopardy Clause in the Fifth Amendment of the

Constitution, or under the Excessive Fines Clause in the Eighth Amendment of the Constitution,

this Agreement bars a remedy sought in such criminal prosecution or administrative action.

Nothing in this paragraph or any other provision of this Agreement constitutes an agreement by

the United States conceming the characterization of the Settlement Amount for purposes of the

Internal Revenue laws, Title 26 of the United States Code.

6. GSK fully and finally releases the United States, its agencies, officers, agents,

employees, and servants, from any claims (including attorney's fees, costs, and expenses of

12

every kind and however denominated) that GSK has asserted, could have asserted, or may assert

in the future against the United States, and its agencies, employees, servants, and agents, related

to the Covered Conduct and the United States' investigation and prosecution thereof.

7. The Settlement Amount shall not be decreased as a result of the denial of claims

for payment now being withheld from payment by any federal or state payer related to the

Covered Conduct; and GSK agrees not to resubmit to any federal or state payer any previously

denied claims related to the Covered Conduct, and agrees not to appeal, or cause the appeal of,

any such denials of claims.

8. GSK agrees to the following:

a. Unallowable Costs Defined: All costs (as defined in the Federal Acquisition

Regulation, 48 C.F.R. § 31.205-47; and in Titles XVIII and XIX of the Social Security Act,

42 U.S.C. §§ 1395-1395kld(-l and 1396-l396w-5; and the regulations and official program

directives promulgated thereunder) incurred by or on behalf of GSK, its present or former

officers, directors, employees, shareholders, and agents in cmmection with:

( 1) the matters covered by this Agreement;

(2) the United States' audit(s) and civil investigation(s) of the matters covered

by this Agreement;

(3) GSK's investigation, defense, and corrective actions undertaken in

response to the United States' audit(s) and civil investigation(s) in

connection with the matters covered by this Agreement (including

attorney's fees);

( 4) the negotiation and performance of this Agreement or the Medicaid State

Settlement Agreements;

13

(5) the payments GSK makes to the United States or any State pursuant to this

Agreement or the Medicaid State Settlement Agreements; and

(6) the negotiation of, and obligations undertaken pursuant to the CIA to: (i)

retain an independent organization to perform annual reviews as described

in Section III of the CIA; and (ii) prepare and submit reports to OIG-HHS.

However, nothing in this paragraph 8.a.(6) that may apply to the

obligations undertaken pursuant to the CIA affects the status of costs that

are not allowable based on any other authority applicable to GSK;

are unallowable costs for government contracting purposes and under the Medicare Program,

Medicaid Program, TRICARE Program, and Federal Employees Health Benefits Program

(FEHBP) (hereinafter referred to as Unallowable Costs).

b. Future Treatment of Unallowable Costs: Unallowable Costs shall be separately

determined and accounted for by GSK, and GSK shall not charge such Unallowable Costs

directly or indirectly to any contracts with the United States or any State Medicaid program, or

seek payment for such Unallowable Costs through any cost report, cost statement, information

statement, or payment request submitted by GSK or any of its subsidiaries or affiliates to the

Medicare, Medicaid, TRICARE, or FEHBP Programs.

c. Treatment of Unallowable Costs Previously Submitted for Payment: GSK further

agrees that within 90 days of the Effective Date of this Agreement it shall identity to applicable

Medicare and TRICARE fiscal intermediaries, carriers, and/or contractors, and Medicaid and

FEHBP fiscal agents, any Unallowable Costs (as defined in this Paragraph) included in payments

previously sought from the United States, or any State Medicaid program, including, but not

limited to, payments sought in any cost reports, cost statements, information reports, or payment

14

requests already submitted by GSK or any of its subsidiaries or affiliates, and shall request, and

agree, that such cost reports, cost statements, information reports, or payment requests, even if

already settled, be adjusted to account for the effect of the inclusion ofthe unallowable costs.

GSK agrees that the United States, at a minimum, shall be entitled to recoup from GSK any

overpayment plus applicable interest and penalties as a result of the inclusion of such

Unallowable Costs on previously-submitted cost reports, information reports, cost statements, or

requests for payment.

Any payments due after the adjustments have been made shall be paid to the United

States pursuant to the direction of the Department of Justice and/or the affected agencies. The

United States reserves its rights to disagree with any calculations submitted by GSK or any of its

subsidiaries or affiliates on the effect of inclusion of Unallowable Costs (as defined in this

Paragraph) on GSK or any of its subsidiaries or affiliates' cost reports, cost statements, or

information reports.

d. Nothing in this Agreement shall constitute a waiver of the rights of the United

States to audit, examine, or re-examine GSK' s books and records to determine that no

Unallowable Costs have been claimed in accordance with the provisions of this Paragraph.

9. This Agreement is intended to be for the benefit of the Parties only. The Parties

do not release any claims against any other person or entity, except to the extent provided for in

Paragraph 2 above and Paragraph 10 below.

I 0. GSK agrees that it waives and shall not seek payment for any of the health care

billings covered by this Agreement from any health care beneficiaries or their parents, sponsors,

legally responsible individuals, or third party payors based upon the claims defined as Covered

Conduct.

15

11. GlaxoSmithKline LLC expressly warrants that it has reviewed its financial

situation and that it is currently solvent within the meaning of 11 U.S.C. §§ 547(b)(3) and

548(a)(l)(B)(ii)(I), and will remain solvent following payment of the Settlement Amount.

Further, the Parties warrant that, in evaluating whether to execute this Agreement, they (a) have

intended that the mutual promises, covenants and obligations set forth herein constitute a

contemporaneous exchange for new value given to GlaxoSmithKline LLC, within the meaning

of 11 U.S.C. § 547(c)(l); and (b) conclude that these mutual promises, covenants and obligations

do, in fact, constitute such a contemporaneous exchange. Further, the Parties, to the best of their

respective lmowledge individually, warrant that the mutual promises, covenants, and obligations

set forth herein are intended to and do, in fact, represent a reasonably equivalent exchange of

value that is not intended to hinder, delay, or defraud any entity to which GlaxoSmithKline LLC

was or became indebted to on or after the date of this transfer, within the meaning of 11 U.S.C.

§ 548(a)(l).

12. Each Party shall bear its own legal and other costs incurred in connection with

this matter, including the preparation and performance of this Agreement.

13. GSK represents that it freely and voluntarily enters into this Agreement without

any degree of duress or compulsion.

14. This Agreement is governed by the laws of the United States. The exclusive

jurisdiction and venue for any dispute relating to this Agreement is the United States District

Court for the District of Massachusetts, except that disputes arising under the CIA shall be

resolved exclusively under the dispute resolution provisions in the CIA.

15. For purposes of construing this Agreement, this Agreement shall be deemed to

have been drafted by all Parties to this Agreement and shall not, therefore, be construed against

16

any Party for that reason in any subsequent dispute.

16. This Agreement constitutes the complete agreement between the Parties. This

Agreement may not be amended except by written consent of the Parties.

17. The individuals signing this Agreement on behalf of GSK represent and warrant

that they are authorized by GSK to execute this Agreement. The United States' signatories

represent that they are signing this Agreement in their official capacities and they are authorized

to execute this Agreement.

18. This Agreement maybe executed in counterparts, each of which constitutes an

original and all of which constitute one and the same Agreement.

19. This Agreement is binding on GSK' s successors, transferees, heirs, and assigns.

20. GSK consents to the United States' disclosure of this Agreement, and information

about this Agreement, to the public.

17

21. This Agreement is effective on the date of signature of the last signatory to the

Agreement ("Effective Date of this Agreement"). Facsimiles of signatures shall constitute

acceptable, binding signatures for purposes of this Agreement.

DATED:

DATED:

THE UNITED STATES OF AMERICA

BY:

BY:

STUART F. DELERY ACTING ASSISTANT ATTORNEY GENERAL

JOYCE R. BRANDA JAMIE ANN Y A VELBERG JEFFREY A. TOLL LISA KATZ SAMUELS JENNIFER A. STALZER Attorneys Commercial Litigation Branch Civil Division United States Department of Justice

GREGORY E. DEMSKE Chief Counsel to the Inspector General Office of Inspector General United States Department of Health and Human Services

18

21. This Agreement is effective on the date of signature of the last signatory to the

Agreement ("Effective Date of this Agreement"). Facsimiles of signatures shall constitute

acceptable, binding signatures for purposes of this Agreement.

THE UNITED STATES OF AMERICA

DATED: "1/ '}..-[ t l.- BY:

DATED: __ _ BY:

STUART F. DELERY ACTING ASSISTANT ATTORNEY GENERAL

OYCE R..-o,~~JU, JAMIE YA VELBERG JEFFREY A. TOLL LISA KATZ SAMUELS JENNIFER A. STALZER Attorneys Commercial Litigation Branch Civil Division United States Department of Justice

GREGORY E. DEMSKE Chief Counsel to the Inspector General Office oflnspector General United States Department of Health and Human Services

18

21. This Agreement is effective on the date of signature of the last signatory to the

Agreement ("Effective Date of this Agreement"). Facsimiles of signatures shall constitute

acceptable, binding signatures for purposes of this Agreement.

DATED: ___ _

THE UNITED STATES OF AMERICA

BY:

STUART F. DELERY ACTJNG ASSISTANT ATTORNEY GENERAL

JOYCE R. BRANDA JAMIE ANN Y AVELBERG JEFFREY A. TOLL LISA KATZ SAMUELS JENNIFER A. STALZER Attorneys Commercial Litigation Branch Civil Division United States Department of Justice

BY: ~tJ~ ~.r GREC@RY EDE~) /Chief Counsel to the Inspector General

Office of Inspector General United States Department of Health and Human Services

18

GLAXOSMITHKLINE LLC

BY:

BY:

ELPIDIO VILLARREAL Senior Vice President Global Litigation GlaxoSmithKiine LLC

MARK D. SELTZER BRIAN K. FRENCH Nixon Peabody LLP Counsel for GlaxoSmithKiine LLC

TI~E~ -~._J_ <;:-Dechei1 LLP Counsel for GlaxoSmithKiine LLC

19

Main Reception: (6/7) 748-3100

Geoffrey E. Hobart Matthew J. O'Connor Covington & Burling LLP 1201 Pennsylvania Avenue, NW Washington, DC 20004-2401

Re: United States v. GlaxoSmithKline pic

Dear Counsel:

U.S. Department of Justice

Carmen M. Ortiz United States Attorney District of Massachusetts

John Joseph Moakley United States Courthouse

1 Courthouse Way Suite 9200 Boston, Massachusetts 02210

June 27, 2012

This letter ("Side Letter Agreement") will confirm that, in exchange for full performance of the Plea Agreement entered into by and among the United States of America, acting through the United States Attorney for the District of Massachusetts ("U.S. Attorney") and the Department of Justice (collectively referred to as "the United States") and your client, GlaxoSmithKline LLC ("GSK"), a copy of which Plea Agreement and related Information are attached hereto as Exhibits One and Two, and in exchange for certain other promises made herein between and among the United States and your client, GlaxoSmithKline plc, its direct and indirect subsidiaries (other than GSK) and its successors, the United States and GlaxoSmithKline pic hereby agree as follows:

1. No Criminal Prosecution of GlaxoSmithKline pic

The United States hereby declines prosecution of GlaxoSmithK!ine pic or any of its direct or indirect subsidiaries (other than GSK as set forth in the attached Plea Agreement and related Information) for conduct by or attributable to GlaxoSmithKline pic or any of its subsidiaries that:

(a) falls within the scope of the Information to which GSK is pleading guilty; or

(b) was either the subject of the grand jury investigation in the District of Massachusetts, or was known to the United States Attorney's Office for the District of Massachusetts or the Consumer Protection Branch of the Civil Division of the Department of Justice prior to the date of this agreement, relating to:

(i) GSK's sales, marketing and promotion of Imitrex, Lamie tal, Lotronex, Flo vent, Paxil, V altrex, Wellbutrin, and Zofran between January 1998 and December 2004;

(ii) GSK's sales, marketing and promotion of Advair between January 1998 and June 2010;

(iii) GSK's communications with and reporting to the Food and Drug Administration in cmmection with Advair, Paxil, and Wellbutrin between July 1998 and December 2004;

(iv) GSK's sales, marketing and promotion of Avandia, Avandamet, and Avandaryl between January 2000 and December 2010; and

(v) GSK's communications with and reporting to the Food and Drug Administration in connection with A vandia, Avandamet, and Avandaryl.

The United States does not decline criminal prosecution of GlaxoSmithKline pic or any of GlaxoSmithKline pic's related entities for any other conduct beyond that set forth above.

This Side Letter Agreement is not intended to and does not affect the criminal liability of any individual.

It is understood among the parties to this Side Letter Agreement that the United States' promise not to prosecute GlaxoSmithKline pic is dependent upon and subject to GSK fulfilling its material obligations in the Plea Agreement and in the related Civil Settlement Agreements attached hereto as Exhibits Three through Five. If GSK docs not fulfill its material obligations in the Plea Agreement and/or the Civil Settlement Agreements, GlaxoSmithKline pic agrees to waive any defenses regarding pre-indictment delay, statute of limitations, or Speedy Trial Act with respect to any and all criminal charges that could have been timely brought or pursued as of the date of this letter, as set forth above.

2. Who Is Bound By Agreement

With respect to matters set forth in Paragraph I, this Agreement is binding upon GlaxoSmithKline plc and the Office of the United States Attorney for the District of Massachusetts, the United States Attorney's Offices for each ofthe other 92 judicial districts of the United States, and the Consumer Protection Branch of the Department of Justice. The non­prosecution provisions in Paragraph 1 are also binding on the Criminal Division of the United States Department of Justice, with the exception of any investigations of GlaxoSmithKline plc or any of its subsidiaries that are or may be conducted in the future by the Fraud Section of the Criminal Division regarding possible violations of the Foreign Corrupt Practices Act and related offenses in connection with the sales and marketing of GlaxoSmithKline plc's or any of its subsidiaries' products to foreign customers, which investigations are specifically excluded from the release in Paragraph I. A copy of the letter to United States Attorney Carmen M. Ortiz from the Assistant Attorney General, Criminal Division, Department of Justice, authorizing this Agreement is attached as Exhibit Six. GlaxoSmithKline plc understands that this Agreement does not bind any state or local prosecutive authorities, the Tax Division of the U.S. Department of Justice or the Internal Revenue Service of the U.S. Department of the Treasury.

3. Complete Agreement

This Side Letter Agreement; the Plea Agreement and the three Civil Settlement Agreements with GSK attached hereto; the tolling agreement regarding Avandia dated September 21, 2011 attached as Exhibit Seven; and the tolling agreement regarding other drugs dated December 1, 2011 attached as Exhibit Eight are the complete and only agreements between the parties. No promises, agreements or conditions have been entered into other than those set forth or referred to in the above-identified documents. This agreement supersedes prior understandings, if any, of the parties, whether written or oral. This agreement cannot be modified other than in a written memorandum signed by the parties or on the record in court.

June 27, 2012 Page4

If this letter accurately reflects the agreement entered into between the United States and GlaxoSmithK!ine pic and if you are authorized to enter into this agreement on behalf of GlaxoSmithK!ine pic, please sign below and return the original of this letter to Assistant U.S. Attorneys Susan G. Winkler and Sara M. Bloom.

Very truly yours,

c~:~;:~~:;~ §tis UNITED STATES ATTORNEY DISTRICT OF MASSACHUSETTS

Sara Miron Bloom Susan G. Winkler Shannon T. Kelley Amanda Strachan Brian Perez-Dapple Assistant U.S. Attorneys

STUART F. DELERY ACTING ASSISTANT ATTORNEY GENERAL CIVIL DIVISION DEPARTMENT OF JUSTICE

Patrick J asperse Jill Furman Mark L. Josephs David Frank Timothy Finley Trial Attorneys Consumer Protection Branch U.S. Department of Justice

ACKNOWLEDGMENT OF AGREEMENT

I am authorized to execute this Side Letter Agreement on behalf of GlaxoSmithKline pic. GlaxoSmithKline pic has been advised of the contents of this Side Letter Agreement, the Plea Agreement and Civil Settlement Agreements with GSK and the criminal Information charging GSK, and has discussed them fully with its counsel. I am further authorized to aclmowledge on behalf of GlaxoSmithKline plc that these documents fully set forth the agreements made between G!axoSmithKline plc and the United States, and that no additional promises or representations have been made to GlaxoSmithKline pic by any officials of the United States Department of .Justice in connection with the disposition of this matter, other than those set f01th in those documents.

Dated:

Dated:

c~-·'-----------------r Elpidio Villarreal Senior Vice President, Global Litigation G!axoSmithKline LLC

SETTLEMENT AGREEMENT

This Settlement Agreement ("Agreement") is entered into by and among the United

States of America, acting through the United States Department of Justice and on behalf of the

Office of Inspector General ("OIG-HHS") of the United States Department of Health and

Human Services ("HHS"), the TRICARE Management Activity ("TMA"), the United States

Department of Veteran Affairs ("VA"), and the United States Office of Personnel Management

("OPM") (collectively the "United States"), and GlaxoSmithKline LLC ("GSK"), through their

authorized representatives. Collectively, all of the above will be referred to as "the Parties."

PREAMBLE

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

A. GlaxoSmithKline LLC is a Delaware limited liability company and an indirect

subsidiary of GlaxoSmithKline plc, a public limited company incorporated under English law

with headquarters in Brentford, England. At all relevant times, GSK developed, manufactured,

distributed, marketed and sold pharmaceutical products in the United States, including drugs

sold under the trade names Avandia, Avandamet, and Avandaryl (collectively, the "Covered

Drugs"), which were medications for treatment of Type 2 diabetes.

B. On such date as may be determined by the Court, GSK will enter a plea of guilty

pursuant to Fed. R. Crim. P. ll(c)(l)(C) (the "Plea Agreement") to an Information to be filed in

United States of America v. GlaxoSmithKline LLC, Criminal Action No. [to be assigned]

(District of Massachusetts) (the "Criminal Action") that will allege violations of Title 21, United

States Code, Sections 33l(a), 333(a)(l) and 352, namely, the introduction into interstate

commerce of the misbranded drugs Wellbutrin and Paxil, and a violation of Title 21, United

States Code, Sections 33l(e), 333(a)(l), and 355(k)(l), namely, that GSK failed to report data

relating to clinical experience, along with other data and information, regarding Avandia to the

Food and Drug Administration ("FDA") in mandatory reports, in violation of the Food, Drug and

Cosmetic Act ("FDCA").

C. GSK has entered into or will be entering into separate settlement agreements,

described in Paragraph I (b) below (hereinafter referred to as the "Medicaid State Settlement

Agreements") with certain states and the District of Columbia in settlement of the Covered

Conduct described in Preamble Paragraph E, below. States with which GSK executes a

Medicaid State Settlement Agreement in the form to which GSK and the N a tiona! Association of

Medicaid Fraud Control Units ("NAMFCU") Negotiating Team have agreed, or in a form

otherwise agreed to by GSK and an individual State, shall be defined as "Medicaid Participating

States."

D. The United States alleges that GSK caused claims for payment for the Covered

Drugs to be submitted to the Medicare Program, Title XVill of the Social Security Act, 42

U.S.C. §§ 1395-1395k:kk ("Medicare"); the Medicaid Program, Title XIX of the Social Security

Act, 42 U.S.C.§§ 1396-1396w-5 ("Medicaid"); the TRICARE program, 10 U.S.C. §§ 1071-

lllOb; the Federal Employees Health Benefits Program ("FEHBP"), 5 U.S.C.§§ 8901-8914; the

Federal Employees Compensation Act Program, 5 U.S.C. § 8101, et. seq.; and caused purchases

of the Covered Drugs by the Veterans Affairs Program, 38 U.S.C. § 1701-1743 (collectively, the

"Government Health Care Programs").

E. The United States contends that it and the Medicaid Participating States have

certain civil claims, as specified in Paragraph 2, below, against GSK for engaging in the

following conduct at certain times between January 2000 and December 2010 (hereinafter

referred to as the "Covered Conduct"):

(i) GSK promoted Avandia to physicians and other health care providers with

false and misleading representations about Avandia's lipid profile, effect on cardiovascular

biomarkers, and the overall safety of A vandia and as a result, GSK knowingly caused false or

fraudulent claims for Avandia to be submitted to, or caused purchases by, one or more of the

Government Health Care Programs. This alleged conduct included:

(a) GSK communicated messages to physicians regarding the effect of

A vandia on diabetics' lipid profiles that were based upon inadequate scientific data. At times

between 200 I and April 2005, GSK misleadingly represented that A vandia had a "positive lipid

profile," and trained its sales force to promote the positive lipid profile as one of three core

selling messages, despite having no well-controlled studies sufficient to establish those

representations. Moreover, those representations were inconsistent with the FDA-approved label

for Avandia which included information that Avandia was associated with statistically

significant increases in low density lipoprotein particles ("LDL" or the "bad" cholesterol), high

density lipoprotein particles ("HDL" or the "good" cholesterol), and total cholesterol. Lipid

information was particularly important for diabetics, a patient population that was at a

significantly increased risk of suffering from cardiac-related illnesses.

(b) GSK represented that use of A vandia resulted in more "light and

fluffy" or "buoyant" LDL, despite having no well-controlled studies sufficient to establish those

representations. At times between 2001 and April2005, GSK falsely stated in certain sales

brochures that data showing more buoyant LDL particles came from "a randomized, placebo­

controlled, pharmacodynamic study," when it did not; GSK also promoted the light and fluffy

LDL theory to physicians by bringing "popcorn lunches" to physicians' offices to highlight the

purported change in density of the LDL particles.

3

(c) In 2001, GSK conducted a small, randomized control trial of

Actos, a competitor diabetes drug, tbat suggested that treatment with Actos resulted in more

buoyant LDL particles. GSK did not publish this scientific data about Actos because it was

unhelpful to GSK's marketing message on lipids. In March 2001, a GSK Vice President,

Metabolism Therapeutic Area, North American Medical Affairs directed that the results of this

Actos study not be published, stating that the trial was done "way under the radar" and that

"[p ]er Sr Mgmt request, these data should not see the light of day to anyone outside of GSK."

When later concerned that Actos' manufacturer intended to publish new clinical trial results

regarding Actos' lipid profile, GSK, as part of the "lipid war games," again instructed sales

representatives to emphasize Avandia's purportedly favorable lipid profile with physicians.

(d) Some GSK sales aids also contained certain implied cardiovascular

claims for which GSK did not have adequate scientific support, such as the message that

Avandia may reduce cardiovascular risk by decreasing insulin resistance. That message was

inconsistent with the FDA approved label for Avandia which always contained a warning on

congestive heart failure associated with use of the drug, and later contained additional

cardiovascular warnings regarding use of the drug. From 2001 to 2005, GSK sponsored the

CardioA!liance, a program through which cardiologists gave speeches to other doctors about the

available A vandia data, including data suggesting cardiovascular benefits from A vandia therapy.

Some of the CardioAlliance materials included information about the relationship between

insulin resistance and cardiac risk factors and stated that A vandia has "beneficial effects on

cardiovascular risk factors" and the "potential to reduce cardiovascular disease" but failed to

disclose that GSK did not have cardiovascular outcome data for A vandia. In purpose and effect,

GSK paid cardiologists to influence endocrinologists and general practitioners to prescribe

4

Avandia on the suggestion that the drug may be cardioprotective, despite having no

cardiovascular outcome data regarding Avandia.

(ii) GSK made false and misleading representations about Avandia's lipid

profile, effect on cardiovascular biomarkers, and the overall safety of A vandia in labeling used

during the promotion of Avandia to physicians and other health care providers in violation of the

FDCA, 21 U.S.C. §§ 33l(a) and 352(a), and through the sale and distribution of a misbranded

product, GSK obtained proceeds and profits to which it was not entitled; and

(iii) GSK made false representations concerning the lipid profile, effect on

cardiovascular biomarkers, and the overall safety of A vandia to state Medicaid agencies on

which state Medicaid agencies relied to their detriment in making formulary and prior

authorization decisions.

The United States contends that engaging in the Covered Conduct gives rise to civil

liability under the False Claims Act, 31 U.S. C. §§ 3729-3733; the Food, Drug and Cosmetic Act,

21 U.S.C. § 301 et. gg.; or common law.

F. The United States also contends that it has certain administrative claims against

GSK as specified in Paragraphs 3 through 6, below, for engaging in the Covered Conduct.

G. This Agreement is made in compromise of disputed claims. This Agreement is

neither an admission of facts or liability by GSK. GSK expressly denies the allegations of the

United States as set forth herein that it engaged in any wrongful conduct in connection with the

Covered Conduct, except as to such admissions GSK makes in connection with the Plea

Agreement. This Agreement is not a concession by the United States that its claims are not well

founded. Neither is this Agreement, nor the performance of any obligation arising under it,

including any payment, nor the fact of settlement, intended to be, or shall be understood as, an

5

admission of liability or wrongdoing, or other expression reflecting the merits of the dispute by

GSK, except as set forth in this paragraph.

H. To avoid the delay, expense, inconvenience and uncertainty of protracted

litigation of these claims, the Parties desire to reach a final settlement as set forth below.

TERMS AND CONDITIONS

NOW, THEREFORE, in reliance on the representations contained herein and in

consideration of the mutual promises, covenants, and obligations in this Agreement, and for

good and valuable consideration, receipt of which is hereby aclmowledged, the Parties agree as

follows:

I. GSK agrees to pay to the United States and the Medicaid Participating States,

collectively, the sum of six hundred fifty seven million three hundred eighty seven thousand two

hundred dollars ($657,387,200), plus interest at the rate of 1.625% per annum from December I,

20 II, and continuing until and including the day before payment is made under this Agreement

(collectively, the "Settlement Amount"). The Settlement Amount shall constitute a debt

immediately due and owing to the United States and the Medicaid Participating States on the

Effective Date of this Agreement. This debt shall be discharged by payments to the United

States and the Medicaid Participating States, under the following terms and conditions:

(a) GSK shall pay to the United States the sum of five hundred eight million

one hundred sixty one thousand sixty three dollars ($508,161 ,063), plus interest accrued thereon

at the rate of 1.625% per annum from December I, 2011, continuing until and including the day

before payment is made ("Federal Settlement Amount"). The Federal Settlement Amount shall

be paid by electronic funds transfer pursuant to written instructions from the United States no

later than seven (7) business days after (i) this Agreement is fully executed by the Parties and

6

delivered to GSK's attorneys; or (ii) the Court accepts a Fed. R. Crim. P. ll(c)(l)(C) guilty plea

as described in Preamble Paragraph B in connection with the Criminal Action and imposes the

agreed upon sentence, whichever occurs later.

(b) GSK shall pay to the Medicaid Participating States the sum of one

hundred forty nine million two hundred twenty six thousand one hundred thirty seven dollars

($149,226,137), plus interest accrued thereon at the rate of 1.625% per annum from December

1, 2011, continuing until and including the day before payment is made ("Medicaid State

Settlement Amount"). The Medicaid State Settlement Amount shall be paid by electronic funds

transfer to an interest bearing account pursuant to written instructions from the NAMFCU

Negotiating Team and under the terms and conditions of the Medicaid State Settlement

Agreements that GSK will enter into with the Medicaid Participating States.

(c) IfGSK's agreed-upon guilty plea pursuant to Fed. R. Crim. P. ll(c)(l)(C)

in the Criminal Action described in Preamble Paragraph B is not accepted by the Court or the

Court does not impose the agreed-upon sentence for whatever reason, this Agreement shall be

null and void at the option of either the United States or GSK. If either the United States or GSK

exercises this option, which option shall be exercised by notifYing all Parties, through counsel, in

writing within five (5) business days of the Court's decision, the Parties will not object and this

Agreement will be rescinded. If this Agreement is rescinded, GSK will not plead, argue or

otherwise raise any defenses under the theories of statnte of limitations, laches, estoppel or

similar theories, to any civil or administrative claims, actions or proceedings arising from the

Covered Conduct that are brought by the United States within 90 calendar days of rescission,

unless such defenses were available to GSK prior to the effective date of this Agreement and

excluding time periods covered by the tolling agreement dated September 21,2011.

7

2. Subject to the exceptions in Paragraph 6 below (concerning excluded claims), in

consideration of the obligations ofGSK set forth in this Agreement, conditioned upon GSK's

payment in full of the Settlement Amount, the United States (on behalf of itself, its officers,

agencies, and departments) agrees to release GSK, together with its predecessors, current and

former parents, direct and indirect affiliates, divisions, subsidiaries, successors, transferees, and

assigns and their current and former directors, officers, and employees, individually and

collectively, from any civil or administrative monetary claim that the United States has or may

have for the Covered Conduct under the False Claims Act, 31 U.S.C. §§ 3729-3733; the Program

Fraud Civil Remedies Act, 31 U.S.C. §§ 3801-3812; the Civil Monetary Penalties Law, 42

U.S. C.§ 1320a-7a; the Food, Drug and Cosmetic Act, 21 U.S.C. § 301, et seq.; any statutory

provision creating a cause of action for civil damages or civil penalties for which the Civil

Division of the Department of Justice has actual and present authority to assert and compromise

pursuant to 28 C.F.R. Part 0, Subpart I, 0.45(d), and common law claims for fraud, payment by

mistake, breach of contract, disgorgement and unjust enrichment.

3. In consideration of the obligations of GSK in this Agreement and the Corporate

Integrity Agreement (CIA) entered into between OIG-HHS and GSK, and conditioned upon

GSK's full payment of the Settlement Amount, the OIG-HHS agrees to release and refrain from

instituting, directing, or maintaining any administrative action seeking exclusion from Medicare,

Medicaid, and other Federal health care programs (as defined in 42 U.S.C. § 1320a-7b(f))

against GSK under 42 U.S.C. § 1320a-7a (Civil Monetary Penalties Law) or under 42 U.S.C.

§ 1320a-7(b )(7) (permissive exclusion for fraud, kickbacks, and other prohibited activities) for

the Covered Conduct, or under 42 U.S.C. § 1320a-7(b)(l) based on GSK's agreement to plead

guilty to the charges set forth in the Information in the Criminal Action referenced in Paragraph

8

B above, except as reserved in Paragraph 6 (concerning excluded claims), below, and as reserved

in this Paragraph. The OIG-HHS expressly reserves all rights to comply with any statutory

obligations to exclude GSK from Medicare, Medicaid, and other Federal health care programs

under 42 U.S.C. § 1320a-7(a) (mandatory exclusion) based upon the Covered Conduct. Nothing

in this Paragraph precludes the OIG-HHS from taking action against entities or persons, or for

conduct and practices, for which claims have been reserved in Paragraph 6, below.

4. In consideration of the obligations of GSK set forth in this Agreement,

conditioned upon GSK's full payment of the Settlement Amount, TMA agrees to release and

refrain from instituting, directing, or maintaining any administrative action seeking exclusion or

suspension from the TRICARE Program against GSK under 32 C.F.R. § 199.9 for the Covered

Conduct, except as reserved in Paragraph 6 (concerning excluded claims), below, and as

reserved in this Paragraph. TMA expressly reserves authority to exclude GSK under 32 C.F.R.

§§ 199.9 (f)(l)(i)(A), (f)(l)(i)(B), and (f)(l)(iii), based upon the Covered Conduct. Nothing in

this Paragraph precludes TMA or the TRICARE Program from taking action against entities or

persons, or for conduct and practices, for which claims have been reserved in Paragraph 6,

below.

5. In consideration of the obligations ofGSK in this Agreement, conditioned upon

GSK's full payment of the Settlement Amount, OPM agrees to release and refrain from

instituting, directing, or maintaining any administrative action against GSK under 5 U.S.C.

§ 8902a or 5 C.F.R. Part 970 for the Covered Conduct, except as reserved in Paragraph 6

(concerning excluded claims), below, and except if excluded by the OIG-HHS pursuant to 42

U.S.C. § 1320a-7(a) or required by 5 U.S.C. § 8902a(b), or 5 C.F.R. Part 970. Nothing in this

9

Paragraph precludes OPM from taking action against entities or persons, or for conduct and

practices, for which claims have been reserved in Paragraph 6, below.

6. Notwithstanding any term of this Agreement, specifically reserved and excluded

from the scope and terms of this Agreement as to any entity or person are the following claims

ofthe United States:

(a) Any civil, criminal, or administrative liability arising under Title 26, U.S.

Code (Internal Revenue Code);

(b) Any criminal liability;

(c) Except as explicitly stated in this Agreement, any administrative liability,

including mandatory exclusion from Government Health Care programs;

(d) Any liability to the United States (or its agencies) for any conduct other

than the Covered Conduct;

(e) Any liability based upon such obligations as are created by this

Agreement;

(f) Any liability for express or implied warranty claims or other claims for

defective or deficient products and services, including quality of goods

and services;

(g) Any liability for personal injury or property damage or for other

consequential damages arising from the Covered Conduct;

(h) Any liability for failure to deliver items or services due; or

(i) Any liability of individuals (including current or former directors, officers,

employees, or agents of GSK) who receive written notification that they

are the target of a criminal investigation, are criminally indicted, charged,

10

or convicted, or who enter into a criminal plea agreement related to the

Covered Conduct.

7. GSK waives and shall not assert any defenses it may have to any criminal

prosecution or administrative action relating to the Covered Conduct that may be based in whole

or in part on a contention that under the Double Jeopardy Clause in the Fifth Amendment of the

Constitution, or under the Excessive Fines Clause in the Eighth Amendment of the Constitution,

this Agreement bars a remedy sought in such criminal prosecution or administrative action.

Nothing in this paragraph or any other provision of this Agreement constitutes an agreement by

the United States concerning the characterization of the Settlement Amount for purposes of the

Internal Revenue laws, Title 26 of the United States Code.

8. GSK fully and finally releases the United States, its agencies, employees,

servants, and agents from any claims (including attorneys' fees, costs, and expenses of every

kind and however denominated) which GSK has asserted, could have asserted, or may assert in

the future against the United States, its agencies, employees, servants, and agents, related to the

Covered Conduct or arising from the United States' investigation, settlement of this matter, and

prosecution of the Criminal Action.

9. The Settlement Amount shall not be decreased as a result of the denial of claims

for payment now being withheld from payment by any Medicare carrier or intermediary or any

state payer, related to the Covered Conduct; and GSK agrees not to resubmit to any Medicare

carrier or intermediary or any state payer any previously denied claims related to the Covered

Conduct, and agrees not to appeal any such denials of claims.

I 0. GSK agrees to the following:

II

(a) Unallowable Costs Defined: that all costs (as defined in the Federal

Acquisition Regulations (FAR) 48 C.F.R. § 31.205-47 and in Titles XVIII and XIX of the Social

Security Act, 42 U.S. C.§§ 1395-1395kkk and 1396-1396w-5, and the regulations and official

program directives promulgated thereunder) incurred by or on behalf of GSK, its present or

former officers, directors, employees, shareholders, and agents in connection with the following

shall be "Unallowable Costs" on goverrnnent contracts and under the Government Health Care

Programs:

( 1) the matters covered by this Agreement and the related Plea Agreement;

(2) the United States' audit and civil and criminal investigation of the matters

covered by this Agreement;

(3) GSK's investigation, defense, and any corrective actions undertaken in

response to the United States' audit and civil and criminal investigation in

connection with the matters covered by this Agreement (including

attorneys' fees);

( 4) the negotiation and performance of this Agreement, the Plea Agreement,

and the Medicaid State Settlement Agreements;

(5) the payments GSK makes to the United States or any State pursuant to this

Agreement, the Plea Agreement, or the Medicaid State Settlement

Agreements;

(6) the negotiation of, and obligations undertaken pursuant to the CIA to:

(i) retain an independent organization to perform annual reviews as

described in Section Ill of the CIA; and (ii) prepare and submit reports to

12

OIG-HHS. However, nothing in this paragraph 10.a.(6) that may apply to

the obligations undertaken pursuant to the CIA affects the status of costs

that are not allowable based on any other authority applicable to GSK.

(b) Future Treatment of Unallowable Costs: These Unallowable Costs shall

be separately determined and accounted for by GSK, and GSK shall not charge such

Unallowable Costs directly or indirectly to any contracts with the United States or any State

Medicaid Program, or seek payment for such Unallowable Costs through any cost report, cost

statement, information statement, or payment request submitted by GSK or any of its

subsidiaries or affiliates to the Medicare, Medicaid, TRICARE, or FEHBP Programs.

(c) Treatment of Unallowable Costs Previously Submitted for Payment: GSK

further agrees that within 90 days of the Effective Date of this Agreement, it shall identify to

applicable Medicare and TRICARE fiscal intermediaries, carriers, and/or contractors, and

Medicaid, and FEHBP fiscal agents, any Unallowable Costs (as defined in this Paragraph)

included in payments previously sought from the United States, or any State Medicaid Program,

including, but not limited to, payments sought in any cost reports, cost statements, information

reports, or payment requests already submitted by GSK or any of its subsidiaries or affiliates,

and shall request, and agree, that such cost reports, cost statements, information reports, or

payment requests, even if already settled, be adjusted to account for the effect of the inclusion of

the Unallowable Costs. GSK agrees that the United States, at a minimum, shall be entitled to

recoup from GSK any overpayment plus applicable interest and penalties as a result of the

inclusion of such Unallowable Costs on previously-submitted cost reports, information reports,

cost statements, or requests for payment.

13

Any payments due after the adjustments have been made shall be paid to the United

States pursuant to the direction of the Department of Justice, and/or the affected agencies. The

United States reserves its rights to disagree with any calculations submitted by GSK or any of its

subsidiaries or affiliates on the effect of inclusion of Unallowable Costs (as defined in this

Paragraph) on GSK's or any of its subsidiaries' or affiliates' cost reports, cost statements, or

information reports.

(d) Nothing in this Agreement shall constitute a waiver of the rights of the

United States to examine or reexamine GSK's books and records to determine that no

Unallowable Costs have been claimed in accordance with the provisions of this Paragraph.

II. This Agreement is intended to be for the benefit of the Parties only. The Parties

do not release any claims against any other person or entity, except to the extent provided for in

Paragraph 2 above or 12 below (waiver for beneficiaries paragraph).

12. GSK agrees that it waives and shall not seek payment for any of the health care

billings covered by this Agreement from any health care beneficiaries or their parents, sponsors,

legally responsible individuals, or third party payors based upon the claims defined as Covered

Conduct.

13. GSK expressly warrants that it has reviewed its financial situation and that it is

currently solvent within the meaning of II U.S.C. §§ 547(b)(3) and 548(a)(l)(B)(ii)(I), and will

remain solvent following payment of the Settlement Amount. Further, the Parties warrant that,

in evaluating whether to execute this Agreement, they (a) have intended that the mutual

promises, covenants and obligations set forth herein constitute a contemporaneous exchange for

new value given to GSK, within the meaning of II U.S. C. § 547(c)(l); and (b) conclude that

14

these mutual promises, covenants and obligations do, in fact, constitute such a contemporaneous

exchange. Further, the Parties warrant that the mutual promises, covenants, and obligations set

forth herein are intended to and do, in fact, represent a reasonably equivalent exchange of value

that is not intended to hinder, delay, or defraud any entity to which GSK was or became indebted

to on or after the date of this transfer, within the meaning of II U.S.C.§ 548(a)(1).

14. Each party shall bear its own legal and other costs incurred in connection with

this matter, including the preparation and performance of this Agreement.

15. The Parties each represent that this Agreement is freely and voluntarily entered

into without any degree of duress or compulsion.

16. This Agreement is governed by the laws of the United States. The Parties agree

that the exclusive jurisdiction and venue for any dispute arising between and among the Parties

under this Agreement shall be the United States District Court for the District of Massachusetts,

except that disputes arising under the CIA shall be resolved exclusively under the dispute

resolution provisions in the CIA.

17. For purposes of construction, this Agreement shall be deemed to have been

drafted by all Parties to this Agreement and shall not, therefore, be construed against any party

for that reason in any dispute.

18. This Agreement constitutes the complete agreement between the Parties with

respect to the issues covered by the Agreement. This Agreement may not be amended except by

written consent of all the Parties.

19. The individuals signing this Agreement on behalf of GSK represent and warrant

that they are authorized by GSK to execute this Agreement. The United States' signatories

15

represent that they are signing this Agreement in their official capacities and they are authorized

to execute this Agreement.

20. This Agreement may be executed in counterparts, each of which constitutes an

original and all of which shall constitute one and the same Agreement.

21. This Agreement is binding on GSK's successors, transferees, heirs and assigns.

22. All parties consent to the disclosure of this Agreement, and information about this

Agreement, to the public after the Effective Date.

23. This Agreement is effective on the date of signature of the last signatory to the

Agreement (Effective Date of this Agreement). Facsimiles or electronic versions of signatures

shall constitute acceptable, binding signatures for purposes of this Agreement.

By:

UNITED STATES OF AMERICA

CARMEN M. ORTIZ United States Attorney

~~~ ~1/-&0 SUSAN G. WINKLER SHANNON T. KELLEY BRIAN PEREZ-DAPLE Assistant United States Attorneys District of Massachusetts

Dated:

16

STUART F. DELERY Acting Assistant Attorney General

By: ID ·fu~~Jr-JOYCE R. BRANDA JAMIE ANN YA VELBERG CHARLES J. BIRO NATALIE A. PRIDDY Attorneys

By:

Co=ercial Litigation Branch, Civil Division United States Department of Justice

Dated: 7/ t( to I 'Z.

JILL FURMAN MARK L. JOSEPHS TIMOTHY T. FINLEY Attorneys Consumer Protection Branch, Civil Division United States Department of Justice

Dated:

17

By:

STUART F. DELERY Acting Assistant Attorney General

JOYCE R. BRANDA JAMIE ANN YAVELBERG CHARLES J. BJRO NATALIE A. PRIDDY Attorneys Commercial Litigation Branch, Civil Division United States Department of Justice

Dated:

By: ~Wv-z:t ~URMAN MARK L. JOSEPHS TIMOTHY T. FINLEY Attorneys Consumer Protection Branch, Civil Division United States Department of Justice

Dated: 7 (2 /ze.r 2._

17

By:

Chief Counsel to the Inspector General Office of Inspector General U.S. Department of Health and Human Services

Dated: G. i

18

By: PAUL J. H ."[IE General Counse TRICARE Management Activity United States Depmtmcnt of Defense

Dated: (p j;2c/ 1....--

Settlement- US/GSK (Avandia)

By:

By:

Assistant Director for Federal Employee Insurance Operations United States Office of Pers~mnel Management

Dated: (./.:J¥ 2..

.J. Oac.aA (~ hy ~~ - -i"DAVID COPE -/,.._~ ~y C. t.v-:,ff::-,. Debarring Official · C" <A f .f-., f--.._ "F.~~ .fv Office of the Assistant Inspector Ge'h'tra! for Legal AfTaYrs""" United States Office of Personnel Management

Dated: t;/2 (; j 1 2_

20

By:

GLAXOSMITHKLINE LLC

ELP!DIO VILLARREAL Senior Vice President, Global Litigation GlaxoSrnithKI inc LLC

. I , J/1 (} . By: . -:..iLU<J..~ I /1' '/JuMML

NINA M. GUSSACK/ SEANP.FAHEY

By:

Pepper Hamilton LLP 3000 Two Logan Square 1811

' & Arch Streets Philadelphia, PA 19103-2799 (215) 981-4000 Counsel to GlaxoSmithK!ine LLC

MATTHEW O'CONNOR Covington & Burling LLP 120 I Pennsylvania Avenue, N. W. Washington, D.C. 20004-2401 (202) 662-6000 Counsel to GlaxoSmithKline LLC

21

Dated: {~ 2 8 - ( 'L

Dated (;; · /-'(, / 2_./

Dated:

GlaxoSmithKline LLC Corporate Integrity Agreement

1

CORPORATE INTEGRITY AGREEMENT BETWEEN THE

OFFICE OF INSPECTOR GENERAL OF THE

DEPARTMENT OF HEALTH AND HUMAN SERVICES AND

GLAXOSMITHKLINE LLC

I. PREAMBLE

GlaxoSmithKline LLC (GSK) hereby enters into this Corporate Integrity Agreement (CIA) with the Office of Inspector General (OIG) of the United States Department of Health and Human Services (HHS) to promote compliance with the statutes, regulations, and written directives of Medicare, Medicaid, and all other Federal health care programs (as defined in 42 U.S.C. § 1320a-7b(f)) (Federal health care program requirements) and with the statutes, regulations, and written directives of the Food and Drug Administration (FDA requirements).

Contemporaneously with this CIA, GSK is entering into Settlement Agreements with the United States. GSK will also enter into settlement agreements with various States (State Settlement Agreements) and GSK’s agreement to this CIA is a condition precedent to those agreements. Effective October 26, 2010, GSK entered into a Settlement Agreement with the United States to resolve allegations regarding certain drugs manufactured at SB Pharmco’s Cidra, Puerto Rico facility.

Prior to the Effective Date of this CIA (as defined below), GSK and GSK

Affiliates (as defined below in Section II.C.10) established a worldwide voluntary compliance program designed to address the companies’ operations globally. In the United States, the compliance program is designed to address, among other things, compliance with Federal health care program and FDA requirements (Compliance Program).

GSK shall continue its Compliance Program throughout the term of this CIA and

shall do so in accordance with the terms set forth below. GSK may modify its Compliance Program as appropriate, but, at a minimum, GSK shall ensure that during the term of this CIA, it shall comply with the obligations set forth herein.

GlaxoSmithKline LLC Corporate Integrity Agreement

2

II. TERM AND SCOPE OF THE CIA

A. Unless otherwise specified, the period of the compliance obligations assumed

by GSK and its Affiliates under this CIA shall be five reporting periods, as defined below. The “Effective Date” shall be the date on which the final signatory of this CIA executes this CIA. The first Reporting Period shall be from the Effective Date through December 31, 2013. The second and subsequent Reporting Periods shall be from January 1 through December 31 of each of the subsequent four calendar years.

B. Sections VII, X, and XI shall expire no later than 120 days after OIG=s receipt

of: (1) GSK’s final Annual Report; or (2) any additional materials submitted by GSK pursuant to OIG=s request, whichever is later.

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

1. “Covered Persons” includes:

a. all owners of GlaxoSmithKline PLC who are natural persons (other than shareholders who: (1) have an ownership interest of less than 5% and (2) acquired the ownership interest through public trading or in connection with the operation of employee long term incentive plans) and all directors of GlaxoSmithKline PLC; b. all employees of GSK or any GSK Affiliate who are engaged in or supervise personnel who are engaged in any of the Covered Functions (as defined below in Section II.C.7); and c. contractors, subcontractors, agents and other persons (including, but not limited to, third party vendors who provide services relating to the Covered Functions) who perform any of the Covered Functions on behalf of GSK or any GSK Affiliate and who in that capacity either: (i) interact directly with health care professionals (HCPs), healthcare institutions (HCIs), or consumers; or (ii) perform activities, provide services, or create materials relating to the Covered Functions and those activities, services, or materials are not reviewed or supervised by a Covered Person prior to execution or dissemination.

GlaxoSmithKline LLC Corporate Integrity Agreement

3

Notwithstanding the above, the term Covered Persons does not include part-time or per diem employees, contractors, subcontractors, agents, and other persons who are not reasonably expected to work more than 160 hours per year, except that any such individuals shall become “Covered Persons” at the point when they work more than 160 hours during the calendar year.

2. “Relevant Covered Persons” includes all Covered Persons who engage

in Covered Functions or who supervise Covered Persons who engage in Covered Functions.

3. “Government Reimbursed Products” refers to all GSK prescription1

pharmaceutical products that are marketed or sold by GSK (including by its Pharma, Stiefel, Vaccines, and Oncology division) in the United States (or pursuant to contracts with the United States) that are reimbursed by Federal health care programs.

4. The term “Promotional Functions” includes: (a) the selling, detailing,

marketing, advertising, promoting, or branding of Government Reimbursed Products; and (b) the preparation or external dissemination of promotional materials or information about, or the provision of promotional services relating to, Government Reimbursed Products, including those functions relating to any applicable review committees, including GSK’s Copy Approval Team (CAT).

5. The term “Product Related Functions” includes: (a) the preparation or

external dissemination of non-promotional materials that are governed by Federal healthcare program and/or FDA requirements and distributed to HCPs and HCIs about Government Reimbursed Products, including those functions relating to GSK’s CAT or other applicable review committee(s) and activities by GSK’s North America Medical Affairs department (Medical Affairs); (b) contracting with HCPs and HCIs in the United States to conduct post-marketing clinical trials, investigator sponsored studies (ISSs), and other post-marketing studies relating to Government Reimbursed Products; (c) authorship, publication, and

1 GSK represents that its Consumer Healthcare business unit shall not market, detail, or otherwise promote prescription pharmaceutical products for the duration of the CIA. Should the Consumer Healthcare business unit begin to do so, it shall become subject to the terms of the CIA.

GlaxoSmithKline LLC Corporate Integrity Agreement

4

disclosure of articles or study results relating to post-marketing clinical trials and other post-marketing studies for Government Reimbursed Products (including studies of investigational and other uses and indications outside the currently approved uses and conditions of use); and (d) activities related to the submission of information about Government Reimbursed Products to compendia (such as DrugDex or other compendia of information about Government Reimbursed Products as defined below in Section III.B.3.t.)

6. The term “Payer Related Functions” refers to activities of GSK’s Policy, Payers and Vaccines (PPV) Unit and includes Promotional Functions and Product Related Functions as they relate to interactions between GSK and entities that provide a drug health benefit program for Government Reimbursed Products, including but not limited to government payers (e.g., Medicaid and Medicare) or individuals or entities under contract with or acting on behalf of government payers and commercial health plans (collectively referred to as “Payers”). Payer Related Functions also includes interactions with Payers related to formulary placement, supplemental rebate agreements, and other types of rebate agreements.

7. The term “Covered Functions” refers to “Promotional Functions,”

“Product Related Functions,” and “Payer Related Functions” collectively.

8. The term “Third Party Educational Activity” shall mean any scientific,

educational, or professional program, meeting, or event for HCPs conducted by a third party and supported by GSK, including but not limited to, continuing medical education (CME), disease awareness, or sponsorship of symposia at medical conferences.

9. The term “Third Party Personnel” shall mean employees of entities with

whom GSK currently has, or in the future does, enter into agreements to promote or co-promote a Government Reimbursed Product or to engage in joint promotional activities relating to such a product. GSK represents that: (1) the Third Party Personnel are employed by independent entities other than GSK; (2) GSK does not control Third Party Personnel; and (3) it would be commercially impracticable to

GlaxoSmithKline LLC Corporate Integrity Agreement

5

compel the compliance of Third Party Personnel with the requirements set forth in this CIA. GSK agrees to promote compliance by Third Party Personnel with Federal health care program requirements and FDA requirements by complying with the provisions set forth below in Sections III.B.2, V.A.8, and V.B.4 related to Third Party Personnel. Provided that GSK complies with the requirements of Sections III.B.2, V.A.8, and V.B.4, GSK shall not be required to fulfill the remaining CIA obligations that would otherwise apply to Third Party Personnel who meet the definition of Covered Persons.

10. The term “GSK Affiliate” shall mean GlaxoSmithKline PLC and any other entity (other than GlaxoSmithKline LLC) that is majority owned or controlled, directly or indirectly, by GlaxoSmithKline PLC and whose employees or contractors perform Covered Functions.

D. Appendix D to the CIA sets forth the obligations to which GSK and its Affiliates agree relating to manufacturing operations in connection with the settlement regarding the Cidra facility reference above in the Preamble. To the extent that certain general provisions and obligations are not specifically addressed in Appendix D, the terms of this CIA shall apply to CGMP Activities, Manufacturing Covered Persons, and to GSK and its Affiliates as specified herein.

III. CORPORATE INTEGRITY OBLIGATIONS

GSK shall establish and maintain a Compliance Program that includes the following elements:

A. Compliance Responsibilities of Certain GSK Employees and the Board of

Directors.

1. Compliance Officer. Prior to the Effective Date, GSK appointed an individual to serve as Vice President and Compliance Officer for its North America Pharma division (Compliance Officer). GSK shall maintain a Compliance Officer for the term of the CIA. During the term of this CIA, the Compliance Officer shall be authorized to oversee compliance with Federal health care program and FDA requirements and with the requirements of this CIA. The Compliance Officer is, and shall continue to 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

GlaxoSmithKline LLC Corporate Integrity Agreement

6

care program and FDA requirements. The Compliance Officer shall be a member of senior management of GSK, and shall report directly to the Senior Vice President for Governance, Ethics, and Assurance of GlaxoSmithKline PLC who, in turn, reports to the Chief Executive Officer of GlaxoSmithKline PLC. The Compliance Officer shall make periodic (at least quarterly) reports regarding compliance matters directly to the Board of GlaxoSmithKline PLC or any authorized committee thereof (hereinafter, “the Board”), and shall be authorized to report on such matters to the Board at any time. 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 GSK as well as for any reporting obligations created under this CIA. Any noncompliance job responsibilities of the Compliance Officer shall be limited and must not interfere with the Compliance Officer’s ability to perform the duties outlined in this CIA.

GSK shall report to OIG, in writing, any change in the identity 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 five days after such a change.

2. Compliance Committee. Prior to the Effective Date, GSK formed

compliance committee known as the NA Pharma Risk Management & Compliance Board (hereafter “Compliance Committee”) which, in conjunction with the Compliance Officer, assists in the implementation and enhancement of the Compliance Program. GSK shall continue the Compliance Committee during the term of this CIA. The Compliance Committee shall, at a minimum, include the Compliance Officer and other members of senior management necessary to meet the requirements of this CIA (e.g., senior executives of relevant departments, such as such as legal, Medical Affairs, regulatory affairs, sales, marketing, human resources, research and development, global manufacturing quality control, and operations.) In addition, GSK’s Audit function provides regular reports to the Compliance Committee. The Compliance Officer and the President of GSK shall co-chair the Compliance Committee. The Compliance Committee shall support the Compliance Officer in fulfilling his/her responsibilities (e.g., shall assist in the analysis of the GSK’s risk areas and shall oversee monitoring of internal and external compliance-related audits and investigations). The Compliance Committee shall meet at least quarterly.

GSK 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

GlaxoSmithKline LLC Corporate Integrity Agreement

7

Committee’s ability to perform the duties necessary to meet the obligations in this CIA, within 15 days after such a change.

3. Board of Directors Compliance Obligations. The Board shall be

responsible for the review and oversight of matters related to compliance with Federal health care program requirements, FDA requirements, and the obligations of this CIA. The Board shall, at a minimum, be responsible for the following:

a. The Board shall meet at least quarterly to review and oversee GSK’s Compliance Program, including but not limited to the performance of the Compliance Officer and other compliance personnel. The Board shall evaluate the effectiveness of the Compliance Program, including, at a minimum, by receiving updates about the activities of the Compliance Officer and other compliance personnel and updates about adoption and implementation of policies, procedures, and practices designed to ensure compliance with the requirements set forth in this CIA and with applicable Federal health care program and FDA requirements.

b. For each Reporting Period of the CIA, the Board shall adopt a

resolution, signed by each individual member of the Board, summarizing its review and oversight of GSK’s compliance with Federal health care program requirements, FDA requirements, and the obligations of this CIA.

At minimum, the resolution shall include the following language: “The Board of Directors has made a reasonable inquiry into the operations of

GSK’s Compliance Program as applicable to the CIA (including its Appendices) for the time period [insert time period], including the performance of the Compliance Officer and the compliance personnel who are Covered Persons under this CIA. The Board has concluded that, to the best of its knowledge, GSK has implemented an effective Compliance Program to meet Federal health care program requirements, FDA requirements, and the obligations of the CIA.”

If the Board is unable to provide such a conclusion in the resolution, the Board

shall include in the resolution a written explanation of the reasons why it is unable to provide the conclusion and the steps it is taking to implement an effective Compliance Program at GSK.

GlaxoSmithKline LLC Corporate Integrity Agreement

8

GSK shall report to OIG, in writing, any changes in the composition of the Board, or any actions or changes that would affect the Board's ability to perform the duties necessary to meet the obligations in this CIA, within 15 days after such a change.

4. Deputy Compliance Officers. Prior to the Effective Date, GSK

appointed Deputy Compliance Officers (DCOs) for each U.S. Pharma commercial business unit and for NA Pharma Medical Affairs, and GSK shall maintain the DCOs for the term of the CIA. Each DCO shall be a member of senior management of his/her respective business unit(s) and shall report directly to the Compliance Officer. The DCOs shall be responsible for working together with the Compliance Officer to oversee the development and implementation of policies, procedures, and practices designed to ensure business unit compliance with the requirements set forth in this CIA and with Federal health care program and FDA requirements. Any noncompliance job responsibilities of the DCOs shall be limited and shall not interfere with each DCO’s ability to perform the duties outline in this CIA.

5. Integrity Champions. Prior to the Effective Date, GSK implemented a

program through which indentified individuals serve as Integrity Champions within each U.S. Pharma commercial business unit. Each individual selected to be an Integrity Champion shall be at least a manager within his/her respective business unit, and the responsibilities undertaken as an Integrity Champion shall be in addition to the individuals’ existing management responsibilities. Integrity Champions shall be responsible for facilitating local implementation of, and adherence to, GSK policies and procedures, Federal health care program and FDA requirements, and the requirements of this CIA. Integrity Champions shall meet with their respective DCO on a regular basis. The performance of Integrity Champions, as such, will be a factor in their annual performance reviews.

6. Management Accountability and Certifications: In addition to the

responsibilities set forth in this CIA for all Covered Persons, certain GSK officers or employees (Certifying Employees) are specifically expected to monitor and oversee activities within their areas of authority and shall annually certify that the applicable business unit is compliant with applicable Federal health care program and FDA requirements and with the obligations of this CIA. These Certifying Employees shall include, at a minimum, the following: President, GSK; the heads of the U.S. Pharma commercial business units; Chairman, Research and Development; Vice President, Strategic, Planning and Operations; Senior Vice President, NA Medical Affairs; President, Pharmaceuticals Research and Development; President, Vaccines; and Vice

GlaxoSmithKline LLC Corporate Integrity Agreement

9

President, Stiefel North America Dermatology, and, to the extent that a business unit performs Covered Functions and is not covered by the certification of one of the above-listed individuals, such other executives, vice-presidents, and directors of business units as would be necessary to ensure that there is a Certifying Employee from each such business unit.

For each Reporting Period, each Certifying Employee shall sign a certification that

states: “I have been trained on and understand the compliance requirements and

responsibilities as they relate to [department or functional area], an area under my supervision. My job responsibilities include ensuring compliance with regard to the _____ [insert name of the department or functional area] with all applicable Federal health care program requirements, FDA requirements, obligations of the Corporate Integrity Agreement, and GSK policies, and I have taken steps to promote such compliance. To the best of my knowledge, except as otherwise described herein, the ______ [insert name of department or functional area] of GSK is in compliance with all applicable Federal health care program requirements, FDA requirements, and the obligations of the CIA. I understand that this certification is being provided to and relied upon by the United States.”

If any Certifying Employee is unable to provide such a conclusion in the

certification, the Certifying Employee shall provide a written explanation of the reasons why he or she is unable to provide the certification outlined above and the steps being taken to address the issue(s) identified in the certification.

B. Written Standards.

1. Code of Conduct. Prior to the Effective Date, GSK developed and

implemented a written Code of Conduct. Within 120 days after the Effective Date, GSK shall distribute the written Code of Conduct to all Covered Persons. GSK shall make adherence to the Code of Conduct an element in evaluating the performance of all employees who are Covered Persons. The Code of Conduct includes, or within 120 days after the Effective Date shall be revised to address the following:

a. GSK’s commitment to full compliance with all Federal health care program requirements and FDA requirements, including its

GlaxoSmithKline LLC Corporate Integrity Agreement

10

commitment to comply with all requirements relating to the Covered Functions;

b. GSK’s requirement that all of its Covered Persons shall be expected to comply with all applicable Federal health care program requirements, FDA Requirements, and with GSK’s own Policies and Procedures;

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

e. the right of all individuals to use the Disclosure Program described in Section III.F, and GSK’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 or electronically, that he or she has received, read, understood, and shall abide by the Code of Conduct. New Covered Persons shall receive the Code of Conduct and shall complete the required certification within 30 days after becoming a Covered Person or within 120 days after the Effective Date, whichever is later.

GSK shall periodically review the Code of Conduct to determine if revisions are appropriate and shall make any necessary revisions based on such review. Any revised Code of Conduct shall be distributed within 30 days after any revisions are finalized. Each Covered Person shall certify, in writing or electronically, that he or she has received, read, understood, and shall abide by the revised Code of Conduct within 30 days after the distribution of the revised Code of Conduct.

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2. Third Party Personnel. Within 120 days after the Effective Date and annually thereafter by the anniversary of the Effective Date, GSK shall send a letter to each entity employing Third Party Personnel. The letter shall describe GSK’s obligations under the CIA and its commitment to full compliance with all Federal health care program requirements and FDA requirements. The letter shall include a description of GSK’s Compliance Program. GSK shall attach a copy of its Code of Conduct to the letter and shall request the entity employing Third Party Personnel to either: (a) make a copy of GSK’s Code of Conduct and a description of GSK’s Compliance Program available to its employees who meet the definition of Third Party Personnel as set forth in Section II.C.9; or (b) represent to GSK that it has and enforces a substantially comparable set of code of conduct and Compliance Program for its employees who meet the definition of Third Party Personnel as set forth in Section II.C.9.

3. Policies and Procedures. To the extent not already accomplished, GSK

shall implement written policies and procedures regarding the operation of the Compliance Program and GSK’s compliance with Federal health care program and FDA requirements (Policies and Procedures). At a minimum, the Policies and Procedures must address the following:

a. the subjects relating to the Code of Conduct identified in Section

III.B.1;

b. appropriate ways to conduct Promotional Functions in compliance with all applicable Federal healthcare program requirements, including, but not limited to the Federal anti-kickback statute (codified at 42 U.S.C. § 1320a-7b(b)), and the False Claims Act (codified at 31 U.S.C. §§ 3729-3733) and in compliance with all applicable FDA requirements;

c. appropriate ways to conduct Product Related Functions in

compliance with all applicable Federal healthcare program requirements, including, but not limited to the Federal anti-kickback statute (codified at 42 U.S.C. § 1320a-7b(b)), and the False Claims Act (codified at 31 U.S.C. §§ 3729-3733) and in compliance with all applicable FDA requirements;

d. appropriate ways to conduct Payer Related Functions in compliance with all applicable Federal health care program

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requirements, including but not limited to the Federal anti-kickback statute (codified at 42 U.S.C. § 1320a-7b(b)); the False Claims Act (codified at 31 U.S.C. §§ 3729-3733); applicable FDA requirements; and applicable state laws. During the term of the CIA, the Policies and Procedures shall be consistent with GSK’s US Commercial Practices Policy regarding “Administration of Contracts with Payers.”

e. the materials and information that may be distributed by GSK

sales personnel about Government Reimbursed Products and the manner in which GSK sales personnel respond to requests for information about non-FDA approved (or “off-label”) uses of Government Reimbursed Products. These Policies and Procedures shall require that sales personnel may not engage in off-label promotion (directly or indirectly) and must refer all requests for information about off-label uses of Government Reimbursed Products to Medical Affairs;

f. the materials and information that may be distributed by GSK

personnel from the PPV Unit and the manner in which PPV personnel respond to requests for information about off-label uses of Government Reimbursed Products. These Policies and Procedures shall require that all requests for information about off-label uses of Government Reimbursed Products be referred to Medical Affairs (i.e., Medical Information Scientists (MISs), Medical Science Liaisons (MSLs), and/or Health Outcome Liaisons (HOLs));

g. the materials and information (including product information and

product dossiers about Government Reimbursed Products) that may be distributed by Medical Affairs and the mechanisms through, and manner in which, Medical Affairs receives and responds to requests for information from an HCP or another individual or entity about off-label uses of GSK’s Government Reimbursed Products; the form and content of information disseminated by GSK in response to such requests; and the internal review and approval process for the information disseminated. These Policies and Procedures shall require that

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GSK sales personnel obtain a signature from the medical professional who verbally requested the written information confirming what information was requested and the request was unsolicited. The Policies and Procedures shall include a requirement that Medical Affairs develop a database (“Inquiries Database”) to track all requests for information about Government Reimbursed Products to Medical Affairs. The Inquiries Database shall include the following items of information for each unique inquiry (Inquiry) received for information about GSK’s products: (1) date of Inquiry; (2) form of Inquiry (e.g., fax, phone, etc.); (3) name of the requesting HCP, HCI, or other individual or entity; (4) nature and topic of request (including exact language of the Inquiry if made in writing); (5) an evaluation of whether the Inquiry relates to information about an off-label use for the product; (6) nature/form of the response from GSK (including a record of the materials provided to the HCP or HCI in response to the request); and (7) the name of the GSK representative who called on or interacted with the HCP, customer, or HCI, if known;

h. the materials and information that may be distributed or made available by GSK through social media and/or through direct-to-consumer advertising. These policies and procedures shall be designed to ensure that GSK’s activities in this area and the information distributed or made available complies with all applicable Federal health care program and FDA requirements, and have been reviewed and approved by GSK before they are disseminated;

i. the manner and circumstances under which medical personnel

from Medical Affairs interact with or participate in meetings or events with HCPs or HCIs (either alone or with sales representatives or account executives) and the role of the medical personnel at such meetings or events, as well as how they handle responses to unsolicited requests about off-label indications of Government Reimbursed Products;

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j. the development, implementation, and review of target plans for

sales personnel and other GSK personnel who promote and sell Government Reimbursed Products (Target Plans). For each Government Reimbursed Product, the Policies and Procedures shall require that GSK review Target Plans for the product and the bases upon, and circumstances under which HCPs and HCIs belonging to specified medical specialties or types of clinical practice are included in, or excluded from, the Target Plans. The Policies and Procedures shall also require that GSK modify the Target Plans as necessary to ensure that GSK is promoting Government Reimbursed Products in a manner that complies with all applicable Federal health care program and FDA requirements. The Target Plan reviews shall occur at least annually and shall also occur each time when the FDA approves a new or additional indication for a Government Reimbursed Product;

k. the development, implementation, and review of policies and

procedures (including excluded specialties lists) for the distribution of samples of, or coupons or vouchers for, Government Reimbursed Products (collectively “Sample Distribution Policies and Procedures”). This shall include a review of the bases upon, and circumstances under, which HCPs and HCIs belonging to specified medical specialties or types of clinical practice may receive samples, coupons, or vouchers from GSK. GSK shall modify the Sample Distribution Policies and Procedures as necessary to ensure that GSK is promoting Government Reimbursed Products in a manner that complies with all applicable Federal health care program and FDA requirements;

l. consultant or other fee-for-service arrangements entered into with

HCPs or HCIs relating to Covered Functions (including, but not limited to speaker programs, speaker training programs, presentations, consultant task force meetings, advisory boards, and ad hoc advisory activities, and any other financial engagement or arrangement with an HCP or HCI) and all events

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and expenses relating to such engagements or arrangements. These Policies and Procedures shall be designed to ensure that the arrangements and related events are used for legitimate and lawful purposes in accordance with applicable Federal health care program and FDA requirements and shall include requirements about the content and circumstances of such arrangements and events. The Policies and Procedures shall require that compensation be based on fair market value, include caps on the total amount of payment that may be provided annually, and that HCPs who sit on formulary boards or develop clinical guidelines are required to disclose their relationship with GSK;

m. programs to educate sales personnel, including but not limited to

presentations by HCPs at sales meetings and experience-based learning activities, if any. These Policies and Procedures shall be designed to ensure that the programs are used for legitimate and lawful purposes in accordance with applicable Federal health care program and FDA requirements. The Policies shall include requirements about the content and circumstances of such arrangements and events;

n. sponsorship or funding of grants to healthcare-related

organizations and donations to community partners in the United States (including support of any educational programs they conduct for non-HCP audiences). These Policies and Procedures shall be designed to ensure that GSK’s funding and/or sponsorship complies with all applicable Federal health care program and FDA requirements. In addition, the Policies and Procedures continue to limit the situations in which GSK shall make grants and donations and shall state that GSK does not provide funding in order to influence the use of GSK products or services;

o. funding of, or participation in, any Third Party Educational

Activity as defined in Section II.C.8 above. These Policies and Procedures shall be designed to ensure that any GSK funding and/or sponsorship of such programs satisfies all applicable Federal health care program and FDA requirements. Prior to the

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Effective Date of the CIA, GSK implemented policies restricting funding for Third Party Educational Activity to a limited number of specific types of entities (i.e., academic medical centers and their affiliated teaching and patient care institutions and professional medical associations that represent HCPs responsible for the delivery of patient care). These Policies and Procedures prohibit funding for independent medical education by commercial providers. During the term of the CIA, the Policies and Procedures shall continue to require that GSK provide funding for Third Party Educational Activity in accordance with its Policies and Procedures and practices outlined in this Section III.B.3.o and below in Section III.M.4.

The Policies and Procedures shall also require that: (1) GSK disclose its financial support of the Third Party Educational Activity and, to the extent feasible consistent with subsection III.B.3.o.4 below, any financial relationships with faculty, speakers, or organizers at such Activity; (2) as a condition of funding, the third party shall agree to disclose GSK’s financial support of the Third Party Educational Activity and to require faculty, speakers, or organizers at such Activity to disclose any financial relationship with GSK; (3) the Third Party Educational Activity have an educational focus; (4) the content, organization, and operation of the Third Party Educational Activity (including the faculty, educational methods, materials, and venue) be independent of GSK’s control; (5) GSK support only Third Party Educational Activity that is non-promotional in tone/nature; and (6) GSK’s support of a Third Party Educational Activity shall be contingent on the provider’s commitment to provide information at the Third Party Educational Activity that is fair, balanced, accurate and not misleading;

p. review of promotional materials and information intended to be

disseminated outside GSK by appropriate qualified personnel (such as regulatory, medical, and/or legal personnel) in a manner designed to ensure that legal, regulatory, and medical concerns are properly addressed during GSK’s review and approval process and are elevated when appropriate. The Policies and

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Procedures shall be designed to ensure that such materials and information comply with all applicable Federal health care program and FDA requirements. The Policies and Procedures shall require that: (1) applicable review committees (including the overall Copy Approval Team (CAT) and the CAT for each product) review all promotional materials prior to the distribution or use of such materials; (2) GSK’s copy review and approval process ensure that FDA communications relevant to the product are considered and appropriately reflected in promotional materials and in a copy approval repository maintained by each CAT; and that (3) deviations from the standard review committee practices and protocols (including timetables for the submission of materials for review) shall be documented and referred for appropriate follow-up;

q. sponsorship, funding of, and disclosures relating to Product

Related Functions. These Policies and Procedures shall be designed to ensure that GSK’s funding, sponsorship, and disclosure complies with all applicable Federal health care program and FDA requirements;

r. compensation (including through salaries, bonuses, or other

means) for Covered Persons. These Policies and Procedures shall: (1) be designed to ensure that financial incentives do not inappropriately motivate such individuals to engage in improper promotion, sales, and marketing of GSK’s Government Reimbursed Products; and (2) include mechanisms, where appropriate, to exclude from incentive compensation sales that may indicate off-label promotion of Government Reimbursed Products. GSK represents that, prior to the Effective Date, it implemented a program in the United States to eliminate incentive compensative based on territory/individual level sales goals for prescriber-facing sales personnel (e.g., sales representatives) and their direct managers (Patient First Program). The Patient First Program is described in more detail below in Section III.H. GSK shall

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continue its Patient First Program, or a substantially equivalent program, during the term of the CIA.

s. GSK’s right to recoup or cause the forfeiture of annual performance pay of GSK employees and Covered Executives if certain triggering events relating to misconduct by the employees or executives occur;

t. the submission of information about any Government Reimbursed Product to any compendia such as Drugdex or other published source of information used in connection with the determination of coverage by a Federal health care program for the product (hereafter “Compendia”). This includes any initial submission of information to any Compendia and the submission of any additional, updated, supplemental, or changed information (e.g., any changes based on GSK’s discovery of erroneous or scientifically unsound information or data associated with the information in the Compendia.) The Policies and Procedures shall include a requirement that GSK conduct an annual review of all arrangements, processing fees, or other payments or financial support (if any) provided by GSK to any Compendia. GSK U.S. compliance personnel or other appropriately trained GSK personnel who are independent from the functional unit being reviewed shall be involved in this review;

u. sponsorship by GSK of human subject research of Government

Reimbursed Products (i.e., post-marketing clinical trials and post-marketing studies (collectively, “GSK-Sponsored Research”)), and support by GSK of investigator-sponsored studies of Government Reimbursed Products (ISSs) (collectively, GSK-Sponsored Research and ISSs shall be referred to as “Research”), including the decision to provide financial or other support for Research; the manner in which Research support is provided; the publication of information about the Research, including the publication of information about the Research results and trial outcomes, and uses made of publications relating to Research;

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Policies/Procedures regarding Sponsorship or Support of Studies Involving Government Reimbursed Products: GSK represents that it requires Research to be approved by its medical and/or research organizations. Under GSK’s current policies and procedures, sales, marketing, or other commercial personnel may not participate in the design, conduct, or publication of GSK-Sponsored Research, with limited exceptions relating to non-interventional health outcomes studies (for which a relevant GSK medical group has oversight). GSK also represents that its human subject research and any resulting publications are intended to foster increased understanding of scientific, clinical or medical issues. To the extent not already accomplished, GSK shall require as a condition of its funding that all researchers disclose in any publication of Research, GSK’s support and any financial interest the researcher may have in GSK.

Posting of Study Results and Protocols/Registry of Studies: GSK represents that, prior to the Effective Date, it developed a Clinical Study Register on which it posts, within a specified number of months from study completion and with rare exception, summary results from all GSK-Sponsored interventional Research studies of Government Reimbursed Products; and from GSK-Sponsored observational studies designed to inform the safety, efficacy or effectiveness, including cost-effectiveness, of Government Reimbursed Products; and from GSK-Sponsored meta-analyses and pooled analyses designed to inform appropriate, effective or safe use of Government Reimbursed Products. In addition, GSK posts summaries of its protocols for the studies and analyses described in the preceding sentence (including amendments that change the content of the summary) in its Register. GSK shall continue these practices throughout the term of the CIA. In addition, GSK represents that it has established policies, systems, and practices to publish results from and information about discontinued studies on its Clinical Register, including the fact that the study terminated early. GSK shall continue these practices throughout the term of the CIA.

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GSK represents that it registers summary results from all applicable GSK-sponsored clinical trials of GSK products and reports results of such clinical trials on the National Institutes of Health (NIH) sponsored website (www.clinicaltrials.gov) in compliance with all Federal requirements. GSK shall continue to comply with Federal requirements or other applicable requirements relating to the registration and results reporting of clinical studies throughout the term of this CIA. In addition, if there is a change in Federal requirements or other applicable requirements relating to registration and results reporting of clinical study information, GSK shall fully comply with such requirements. Publication of Study Results: GSK represents that it generally seeks publication of the results of all GSK-Sponsored interventional Research in peer-reviewed, searchable journals and imposes specified timeframes for the drafting and submission of manuscripts following completion of a study. For purposes of these publication requirements, GSK’s publication policy includes certain GSK-Sponsored observational Research studies and certain GSK-Sponsored meta-analyses and pooled analyses. In addition, GSK represents that it has established policies and “operating practices” governing scientific engagement, which included detailed directions regarding publications. Among other things, the operating practices require the implementation of data dissemination plans that establish prospective publication strategies for GSK-Sponsored Research and address requirements for appropriateness, accuracy, and balance in publications of GSK-Sponsored Research. In all publications about GSK-Sponsored Research, GSK shall acknowledge its role as the funding source. In addition, GSK represents that it has established policies, systems, and practices designed to ensure that adverse event data is properly reported to the FDA. In addition, GSK requires investigators to report study-related information and data,

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including data about adverse events before receiving final payment from GSK. The standards, policies, and practices described above shall hereafter be referred to collectively as the “Research and Publication Practices.” GSK shall maintain its Research and Publication Practices (or standards and practices substantially equivalent to those set forth above) for studies initiated or completed after the Effective Date for the term of the CIA. To the extent that GSK intends to materially change these Research and Publication Practices, it shall notify the OIG about the change 30 days in advance of the effective date of the change;

v. authorship of journal articles or other publications about GSK-

Sponsored Research or about therapeutic areas or disease states that may be treated with Government Reimbursed Products, including, but not limited to, the disclosure of any and all financial relationships between the author and GSK, the identification of all authors or contributors (including professional writers) associated with a given publication, and that research results be made available to each author or contributor.

Authorship Requirements: GSK represents that it requires all authors of journal articles about GSK-Sponsored Research to adhere to International Committee of Medical Journal Editors (ICMJE) requirements regarding authorship except when a particular journal requires an alternative procedure. In addition, GSK requires all authors of articles on GSK-Sponsored Research to disclose any GSK financial support for the study and any financial relationship with GSK (including any financial interest the author may have in GSK or a GSK product). In addition, GSK represents that individuals may be considered an “author” on a GSK publication of GSK-Sponsored Research only if the individual has made substantial contributions to the study and has given final approval to the version of the publication ultimately published.

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GSK shall require that its employees and medical writing contractors complete certain certification as to any GSK publication of GSK-Sponsored Research on which the individual is listed as an author or contributor. The standards, policies and practices described above shall be referred to collectively as “Authorship-Related Practices”; and

w. disciplinary policies and procedures for violations of GSK’s

Policies and Procedures, including policies relating to Federal health care program and FDA requirements.

To the extent not already accomplished, within 150 days after the Effective Date,

the Policies and Procedures shall be made available to all Covered Persons. Appropriate and knowledgeable staff shall be available to explain the Policies and Procedures.

At least annually (and more frequently, if appropriate), GSK shall assess and

update, as necessary, the Policies and Procedures. Within 30 days after the effective date of any revisions, any such revised Policies and Procedures shall be made available to all Covered Persons.

C. Training and Education.

1. General Training. To the extent not already accomplished, within 120 days after the Effective Date, GSK shall provide at least one hour of General Training to each Covered Person. This training, at a minimum, shall explain GSK’s:

a. CIA requirements; and

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

New Covered Persons shall receive the General Training described above within 30 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 in each subsequent Reporting Period.

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2. Specific Training. GSK shall provide annual training to each Relevant Covered Person relating to his or her specific job responsibilities. This training shall be known as Specific Training.

By December 31, 2012, each Relevant Covered Person engaged in Promotional Functions, Product Related Functions, or Payer Related Functions shall receive at least three hours of Specific Training in addition to the General Training required above.

For Relevant Covered Persons engaged in Promotional Functions or

Product Related Functions, this Specific Training shall include a discussion of:

a. all applicable Federal health care program requirements relating to Promotional Functions and to Product Related Functions;

b. all applicable FDA requirements relating to Promotional

Functions and to Product Related Functions;

c. all GSK Policies and Procedures and other requirements applicable to Promotional Functions and Product Related Functions;

d. the personal obligation of each individual involved in

Promotional Functions and Product Related Functions to comply with all applicable Federal health care program and FDA requirements and all other applicable legal requirements;

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

care program and FDA requirements; and f. examples of proper and improper practices related to Promotional

Functions and Product Related Functions.

For Relevant Covered Persons engaged in Payer Related Functions, this Specific Training shall include a discussion of topics a-f above, as well as:

g. all applicable Federal health care program requirements and FDA requirements relating to Payer Related Functions;

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h. GSK’s systems and processes applicable to Payer Related

Functions;

i. all GSK Policies and Procedures and other requirements applicable to Promotional Functions and Product Related Functions;

j. the personal obligation of each individual involved in Payer

Related Functions to ensure that all information provided or reported to Payers is complete, accurate and not misleading;

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

care program and FDA requirements; and

l. examples of proper and improper practices relating to Payer Related Functions.

New Relevant Covered Persons shall receive their Specific Training within 30

days after the beginning of their employment or becoming Relevant Covered Persons, or by December 31, 2012, whichever is later. A GSK employee who has completed the Specific Training shall oversee a new Relevant Covered Person’s work, to the extent that the work relates to any of the Covered 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 three hours of Specific Training in each subsequent Reporting Period.

3. Compliance Training for Management. By December 31, 2012, GSK

shall provide to managers of employees performing Covered Functions and supervisors of sales personnel (collectively “Management”) at least three hours of specialized compliance-related training applicable to the functional area of the manager (Management Compliance Training). This training shall address the responsibility of Management to promote compliance and to identify and mitigate compliance-related risks in their functional areas.

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New members of Management shall receive the Management Compliance Training within 30 days after becoming a member of Management or by December 31, 2012, whichever is later.

After receiving the initial Management Compliance Training described in

this Section, each Relevant Covered Person shall receive at least three hours of Specialized Compliance Training in each subsequent Reporting Period.

4. Board Member Training. Within 150 days after the Effective Date, GSK shall provide at least two hours of training to each member of the Board of Directors, in addition to the General Training. This training shall address the responsibilities of board members and corporate governance.

New members of the Board of Directors shall receive the Board Member

Training described above within 30 days after becoming a board member or within 120 days after the Effective Date, whichever is later.

5. Certification. Each Covered Person who is required to complete training

shall certify, in writing or in electronic form, if applicable, that he or she has received such training. The certification shall specify the type of training received and the date received. The Compliance Officer (or designee) shall retain these certifications, along with all course materials. These shall be made available to OIG, upon request.

6. Qualifications of Trainer. Persons responsible for providing the training

described above shall be knowledgeable about the subject area of the training, including about applicable Federal health care program and FDA requirements.

7. Update of Training. GSK shall review its training annually, and, where appropriate, shall update the training to reflect changes in Federal health care program requirements, FDA requirements, any issues discovered during internal audits or the IRO Reviews, the TRACER program (defined below in Section III.D), and any other relevant information.

8. Computer-based Training. GSK may provide the training required under this CIA through appropriate computer-based training approaches. If GSK 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. All applicable requirements to provide a number

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of “hours” of training as set forth in this Section III.C may be met with respect to computer-based training by providing the required number of “normative” hours as that term is used in the computer-based training industry.

D. Risk Assessment and Mitigation Process. GSK represents that prior to the Effective Date, GSK began to implement a

standardized process to allow GSK compliance, legal, and business unit leaders to assess and identify risks associated with Government Reimbursed Products that have field force support in the United States (GSK Products). This program is referred to as the Targeted Risk-based Analysis Compliance Evaluations and Review (TRACER) program and is described in more detail in Appendix C. TRACER involves an annual evaluation and mitigation of risks associated with the marketing of the GSK Products. GSK shall maintain a TRACER process for the duration of the CIA.

E. Review Procedures.

1. General Description.

a. Engagement of Independent Review Organization. Within 120 days after the Effective Date, GSK shall engage an entity (or entities), such as an accounting, auditing, or consulting firm (hereinafter “Independent Review Organization” or “IRO”), to perform reviews to assist GSK in assessing and evaluating its Covered Functions. More specifically, the IRO(s) shall conduct reviews that assess GSK’s systems, processes, policies, procedures, and practices relating to the Covered Functions (including Research and Publication Practices and Authorship-Related Practices) and the TRACER program (collectively “IRO Reviews”). The applicable requirements relating to the IRO are outlined in Appendix A to this CIA, which is incorporated by reference. Each IRO engaged by GSK shall have expertise in applicable Federal health care program and FDA requirements as may be appropriate to the Review for which the IRO is retained including expertise in the pharmaceutical industry with regard to risk identification and mitigation in relation to pharmaceutical product marketing and promotion. Each IRO shall assess, along with GSK,

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whether it can perform the engagement in a professionally independent and objective fashion, as appropriate to the nature of the review, taking into account any other business relationships or other engagements that may exist.

b. Frequency and Brief Description of Reviews. As set forth more fully in Appendices B and C, the IRO Reviews shall consist of three components: (1) Systems Reviews and Transactions Reviews relating to the Covered Functions; (2) Additional Items reviews; and (3) Systems Reviews and Transaction Reviews relating to the TRACER program. The Systems Reviews shall assess GSK’s systems, processes, policies, and procedures relating to the Covered Functions and the TRACER program. The IRO Reviews shall cover each of the six calendar years of the CIA. The first IRO Reporting Period shall cover the time from the Effective Date through December 31, 2012. The second through sixth IRO Reporting Periods shall cover, respectively, 2013 and each subsequent calendar year through 2017 (hereafter the “IRO Reporting Periods.”) If there are no material changes in GSK’s relevant systems, processes, policies, and procedures, the Systems Review shall be performed for the periods covering the second and fifth IRO Reporting Periods. If GSK materially changes its relevant systems, processes, policies, and procedures, the IRO shall perform Systems Reviews for the IRO Reporting Periods in which such changes were made in addition to conducting the Systems Reviews for the second and fifth IRO Reporting Periods, as set forth more fully in Appendices B and C. The IRO shall perform a limited Transactions Review for the first IRO Reporting Period as set forth more fully in Appendix B. For each of the remaining IRO Reporting Periods, the IRO shall perform full Transaction Reviews as set forth in Appendices B and C. The IRO(s) shall perform all components of each annual Transaction Review. In addition, the Transactions Reviews for the second through sixth IRO Reporting Periods shall also include a review of up to three

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additional areas or practices of GSK identified by the OIG in its discretion (hereafter “Additional Items”). For purposes of identifying the Additional Items to be included in the Transactions Review for a particular IRO Reporting Period, the OIG will consult with GSK and may consider internal audit work conducted by GSK, the Government Reimbursed Product portfolio, the nature and scope of GSK’s promotional practices and arrangements with HCPs and HCIs, and other information known to it. As set forth more fully in Appendix B, GSK may propose to the OIG that its internal audit(s) be partially substituted for one or more of the Additional Items that would otherwise be reviewed by the IRO as part of the Transactions Review. The OIG retains sole discretion over whether, and in what manner, to allow GSK’s internal audit work to be substituted for a portion of the Additional Items review conducted by the IRO. The OIG shall notify GSK of the nature and scope of the IRO review for each of the Additional Items not later than 150 days prior to the end of each applicable IRO Reporting Period. Prior to undertaking the review of the Additional Items, the IRO and/or GSK shall submit an audit work plan to the OIG for approval and the IRO shall conduct the review of the Additional Items based on a work plan approved by the OIG.

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

2. IRO Review Reports. The IRO shall prepare a report based upon each

IRO Review performed (IRO Review Report). Information to be included in each IRO Review Report is described in Appendices B and C.

3. Validation Review. In the event OIG has reason to believe that: (a) any

of GSK’s IRO Reviews fails to conform to the requirements of this CIA; or (b) the IRO’s findings or Review results are inaccurate, OIG may, at its sole discretion, conduct its own review to determine whether the applicable IRO Review complied with the requirements

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of the CIA and/or the findings or Review results are inaccurate (Validation Review). GSK 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 GSK’s final Annual Report shall be initiated no later than one year after GSK’s final submission (as described in Section II.B) is received by OIG.

Prior to initiating a Validation Review, OIG shall notify GSK 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, GSK may request a meeting with OIG to: (a) discuss the results of any IRO Review submissions or findings; (b) present any additional information to clarify the results of the IRO Review or to correct the inaccuracy of the IRO Review; and/or (c) propose alternatives to the proposed Validation Review. GSK agrees to provide any additional information as may be requested by OIG under this Section III.E.3 in an expedited manner. OIG will attempt in good faith to resolve any IRO Review issues with GSK prior to conducting a Validation Review. However, the final determination as to whether or not to proceed with a Validation Review shall be made at the sole discretion of OIG.

4. Independence and Objectivity Certification. The IRO shall include in its report(s) to GSK a certification that the IRO has: (a) evaluated its professional independence and objectivity with respect to the reviews conducted under this Section III.E; and (b) concluded that it is, in fact, independent and objective in accordance with the requirements specified in Appendix A.

F. Disclosure Program.

Prior to the GSK Effective Date, GSK and its Affiliates established a Disclosure

Program that includes a mechanism (the toll free “Integrity Helpline”) to enable individuals to disclose, to the Compliance Officer or some other person who is not in the disclosing individual’s chain of command, any identified issues or questions associated with GSK’s or a GSK Affiliate’s policies, conduct, practices, or procedures with respect to a Federal health care program or an FDA requirement (including as they relate to CGMP Activities) believed by the individual to be a potential violation of criminal, civil, or administrative law. The Integrity Helpline may be used by employees of third party suppliers that contract with GSK. GSK and its Affiliates publicize, and shall continue to appropriately publicize, the existence of the Disclosure Program and the Integrity Helpline (e.g., via periodic e-mails to employees, by posting the information in prominent common areas, or through references in the Code of Conduct and during training.)

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The Disclosure Program shall emphasize a nonretribution, non-retaliation policy and shall include a reporting mechanism for anonymous communications for which appropriate confidentiality shall be maintained. Upon receipt of a disclosure, the Compliance Officer (or designee) shall gather all relevant information from the disclosing individual. The Compliance Officer (or designee) shall make a preliminary, good faith inquiry into the allegations set forth in every disclosure to ensure that it obtains all necessary information to determine whether a further review should be conducted. For any disclosure that is sufficiently specific so that it reasonably: (1) permits a determination of the appropriateness of the alleged improper practice; and (2) provides an opportunity for taking corrective action, GSK and/or any applicable Affiliate shall conduct an internal review of the allegations set forth in the disclosure and ensure that proper follow-up is conducted.

GSK shall maintain, a disclosure log, which includes a record and summary of

each disclosure received (whether anonymous or not), the status of the respective internal reviews, and any corrective action taken in response to the internal reviews. This disclosure log shall be made available to OIG upon request. G. 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 scope of 42 U.S.C. § 1320a-7(a), but has not yet been excluded, debarred, suspended, or otherwise declared ineligible.

b. “Exclusion Lists” include:

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

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ii. the General Services Administration’s List of Parties Excluded from Federal Programs (available through the Internet at http://www.epls.gov).

2. Screening Requirements. GSK shall ensure that all prospective and

current Covered Persons and Manufacturing Covered Persons are not Ineligible Persons, by implementing the following screening requirements.

a. as part of the hiring or contracting process, GSK shall require all prospective and current Covered Persons and Manufacturing Covered Persons to disclose whether they are Ineligible Persons and shall screen potential Covered Persons and Manufacturing Covered Persons against the Exclusion Lists prior to engaging their services.

b. GSK shall screen all Covered Persons and Manufacturing Covered Persons against the Exclusion Lists within 120 days after the Effective Date and on an annual basis thereafter.

c. GSK shall maintain a policy requiring all Covered Persons and Manufacturing Covered Persons to disclose immediately any debarment, exclusion, suspension, or other event that makes that person an Ineligible Person.

Nothing in this Section III.G affects GSK’s responsibility to refrain from (and liability for) billing Federal health care programs for items or services furnished, ordered, or prescribed by excluded persons. GSK understands that items or services furnished by excluded persons are not payable by Federal health care programs and that GSK may be liable for overpayments and/or criminal, civil, and administrative sanctions for employing or contracting with an excluded person regardless of whether GSK meets the requirements of Section III.G.

3. Removal Requirement. If GSK has actual notice that a Covered Person or Manufacturing Covered Person has become an Ineligible Person, GSK shall remove such Covered Person or Manufacturing Covered Person from responsibility for, or involvement with, GSK’s business operations related to the Federal health care programs and shall remove such Covered Person or Manufacturing Covered Person from any position for which the Covered Person’s or Manufacturing Covered Person’s

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compensation or the items or services furnished, ordered, or prescribed by the Covered Person or Manufacturing Covered 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 Covered Person or Manufacturing Covered Person is reinstated into participation in the Federal health care programs.

4. Pending Charges and Proposed Exclusions. If GSK has actual notice

that a Covered Person or Manufacturing Covered Person is charged with a criminal offense that falls within the scope of 42 U.S.C. §§ 1320a-7(a), 1320a-7(b)(1)-(3), or is proposed for exclusion during the Covered Person’s or Manufacturing Covered Person’s employment or contract term, GSK shall take all appropriate actions to ensure that the responsibilities of that Covered Person or Manufacturing Covered Person have not and shall not adversely affect the quality of care rendered to any beneficiary, patient, or resident, or the accuracy of any claims submitted to any Federal health care program.

H. Employee and Executive Incentive Compensation and Recoupment Policies and Practices. Pursuant to its existing Patient First program, GSK agrees that it will not provide

financial reward (through compensation, including incentive compensation or otherwise) or discipline (through tangible employment action) its prescribing-customer-facing field sales professionals (pharmaceutical sales representatives) or their direct managers based upon the volume of sales of GSK products within a given employee’s own territory or the manager’s district. The Patient First program includes evaluations for sales representatives based on business acumen, customer engagement, and scientific knowledge about GSK’s products. GSK shall continue its Patient First Program, or a substantially equivalent program, during the term of this CIA. GSK commits to maintaining for at least the duration of the CIA, absent agreement otherwise with the OIG, the restrictions on such tangible employment decisions set forth in its Use of Territory/Individual Sales Data policy.

In addition, GSK shall establish and maintain throughout the term of this CIA a financial recoupment program that puts at risk of forfeiture and recoupment an amount equivalent to up to 3 years of annual performance pay (i.e., annual bonus, plus long term incentives) for an executive who is discovered to have been involved in any significant misconduct (Executive Financial Recoupment Program). This financial recoupment program shall apply to both covered executives who are either current GSK employees or who are former GSK employees at the time of a Recoupment Determination. The

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specific terms and conditions of the Executive Financial Recoupment Program are set forth in Appendix E. GSK commits to maintaining an Executive Financial Recoupment Program consistent with the terms of Appendix E for at least the duration of the CIA absent agreement otherwise by the OIG.

I. Notification of Government Investigation or Legal Proceedings.

Within 30 days after discovery, GSK shall notify OIG, in writing, of any ongoing investigation or legal proceeding known to GSK conducted or brought by a U.S.-based governmental entity or its agents involving an allegation that GSK or a GSK Affiliate has committed a crime or has engaged in fraudulent activities. This notification shall include a description of the allegation, the identity of the investigating or prosecuting agency, and the status of such investigation or legal proceeding. GSK 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.

J. Reportable Events.

1. Definition of Reportable Event. For purposes of this CIA, a “Reportable

Event” means anything that involves:

a. 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; b. a matter that a reasonable person would consider a probable violation of criminal, civil, or administrative laws applicable to any FDA requirements relating to the promotion of Government Reimbursed Products (including an FDA Warning Letter issued to GSK); c. the employment of or contracting with a Covered Person who is an Ineligible Person as defined by Section III.G.1.a; or d. the filing of a bankruptcy petition by GSK.

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A Reportable Event may be the result of an isolated event or a series of occurrences. A Reportable Event that meets the one of the definitions set forth above may arise from within the operations of GSK or any GSK Affiliate.

2. Reporting of Reportable Events. If GSK determines (after a reasonable

opportunity to conduct an appropriate review or investigation of the allegations) through any means that there is a Reportable Event, GSK shall notify OIG, in writing, within 30 days after making the determination that the Reportable Event exists.

3. Reportable Events under Sections III.J.1.a-c. For Reportable Events

under Sections III.J.1.a-c, the report to OIG shall include:

a. a complete description of the Reportable Event, including the relevant facts, persons involved, and legal and Federal health care program or FDA authorities implicated;

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

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

GSK shall not be required to report any Reportable Event which is the subject of an ongoing investigation or legal proceeding by a governmental entity or its agents previously disclosed under Section III.I above.

4. Reportable Events under Section III.J.1.d. For Reportable Events under

Section III.J.1.d, the report to the OIG shall include documentation of the bankruptcy filing and a description of any Federal health care program and/or FDA authorities implicated. K. Notification of Communications with FDA. Within 30 days after the date of any written report, correspondence, or communication between GSK and the FDA that materially discusses GSK’s or a Covered Person’s actual or potential unlawful or improper promotion of GSK’s products (including any improper dissemination of information about off-label indications), GSK shall provide a copy of the report, correspondence, or communication to the OIG. GSK shall also provide written notice to the OIG within 30 days after the resolution of any such disclosed off-label matter, and

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shall provide the OIG with a description of the findings and/or results of the matter, if any.

L. Field Force Monitoring and Review Efforts. To the extent not already accomplished, within 120 days after the Effective Date,

GSK shall establish a comprehensive Field Force Monitoring Program (FFMP) to evaluate and monitor its sales personnel’s interactions with HCPs and HCIs. The FFMP shall be a formalized process designed to directly and indirectly observe the appropriateness of sales personnel’s interactions with HCPs and HCIs and to identify potential off-label promotional activities or other improper conduct. As described in more detail below, the FFMP shall include: (1) a Speaker Monitoring Program; (2) direct field observations (Observations) of sales personnel; and (3) the monitoring and review of other records relating to sales personnel’s interactions with HCPs and HCIs (Records Reviews).

1. Speaker Program Activities. With regard to speaker programs, GSK shall maintain processes to require all speakers to complete training and enter written agreements that describe the scope of work to be performed, the speaker fees to be paid, and compliance obligations for the speakers (including requirements that the speaker may only use GSK approved materials and may not directly or indirectly promote the product for off-label uses.) GSK shall maintain a centralized electronic system through which all speaker programs are administered. This system shall establish controls regarding eligibility and qualifications of speakers and venues for the programs and require that speakers are paid according to a centrally managed, pre-set rate structure determined based on a fair-market value analysis conducted by GSK. GSK shall maintain a comprehensive list of speaker program attendees through its centralized system. In addition, GSK shall track and review the aggregate amount (including speaker fees, travel, and other expenses) paid to each speaker in connection with speaker programs conducted during each Reporting Period. GSK shall require certified evaluations by sales personnel regarding whether a speaker program complied with GSK requirements, and in the event of non-compliance, GSK shall require the identification of the policy violation and ensure appropriate follow up activity to address the violation.

To the extent not already accomplished, GSK shall institute a Speaker Monitoring

Program under which GSK compliance or other appropriately trained GSK personnel who are independent from the functional area being monitored (hereinafter “GSK Monitoring Personnel”) shall attend speaker programs during each Reporting Period and

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conduct live audits of the programs (Speaker Program Audits). For the first Reporting Period, GSK shall conduct live audits of 150 speaker programs and for the subsequent Reporting Periods, GSK shall conduct live audits of 75 speaker programs. The programs subject to Speaker Program Audits shall be selected both on a risk-based targeting approach and on a sampling approach. For each program reviewed, personnel conducting the Speaker Program Audits shall review slide materials and other materials used as part of the speaker program, speaker statements made during the program, and GSK representative activities during the program to assess whether the programs were conducted in a manner consistent with GSK’s Policies and Procedures. GSK shall maintain the controls around speaker programs as described above, and shall conduct its Speaker Program Audits as described above throughout the term of the CIA.

2. Observations. As a component of the FFMP, GSK Monitoring Personnel

shall conduct observations of field personnel (e.g., sales personnel, MSLs, HOLs, and account managers and directors from the PPV group) to assess whether the messages delivered and materials distributed to HCPs, HCIs, and others are consistent with applicable legal requirements and with GSK’s Policies and Procedures. These observations shall be full day ride-alongs with the field personnel (Observations), and each Observation shall consist of directly observing all meetings between field personnel and HCPs during the workday. The Observations shall be scheduled throughout the year, selected by GSK Monitoring Personnel both on a risk-based targeting approach and on a sampling approach, include each therapeutic area and actively promoted product, and be conducted across the United States. At the completion of each Observation, GSK Monitoring Personnel shall prepare a report which includes:

1) the identity of the field personnel; 2) the identity of the GSK Monitoring Personnel; 3) the date and duration of the Observation; 4) the product(s) promoted during the Observation; 5) an overall assessment of compliance with GSK policy; and 6) the identification of any potential off-label promotional activity or other

improper conduct by the field personnel.

GSK Monitoring Personnel shall conduct at least 50 Observations during the first Reporting Period, and shall conduct at least 25 Observations during the subsequent Reporting Periods.

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3. Records Reviews. As a component of the FFMP, GSK shall also review various types of records to assess sales personnel interactions with HCPs and HCIs in order to identify potential or actual compliance violations. For each Reporting Period, GSK shall develop and implement a plan for conducting Records Reviews associated with at least three Government Reimbursed Products and a sampling of the personnel supporting those products in regions across the country (as agreed with the OIG for each Reporting Period.) The OIG shall have the discretion to identify the three Government Reimbursed Products to be reviewed for each Reporting Period. The OIG will select the products based on information about GSK’s products provided by GSK, upon request by the OIG no later than 60 days prior to the beginning of the Reporting Period, and other information known to the OIG. If the OIG does not identify the Government Reimbursed Products to be reviewed within the first 30 days of the Reporting Period, GSK shall select the three products to be reviewed. These Records Reviews shall include the monitoring and review of: (1) records and systems relating to sales personnel interactions with HCPs and HCIs (including records from the electronic call reporting system used by sales personnel (which includes call notes), sales communications from managers, sample distribution records, and expense reports); (2) requests for medical information about, or inquiries relating to, Government Reimbursed Products; (3) message recall studies or other similar records (such as Verbatims) purporting to reflect the details of sales personnel interactions with HCPs and HCIs; (4) sales personnel e-mails and other electronic records; and (5) recorded results of the Observations of sales representatives and applicable notes or information from the sales personnel managers. 4. Reporting and Follow-up. Personnel conducting the Speaker Program Audits, Observations, and Records Reviews shall have access to all relevant records and information necessary to assess potential or actual compliance violations. Results from the FFMP audits, including the identification of potential violations of policies and/or legal requirements, shall be compiled and reported to the Compliance Officer (or compliance personnel designee) for review and follow-up as appropriate. In the event that a potential violation of GSK’s Policies and Procedures or of legal or compliance requirements, including but not limited to potential off-label promotion, is identified during any aspect of the FFMP, GSK shall investigate the incident consistent with established policies and procedures for the handling of investigations and shall take all necessary and appropriate responsive action (including disciplinary action) and corrective action, including the disclosure of Reportable Events pursuant to Section III.J above, if applicable. Any compliance issues identified during a Speaker Program Audit,

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Observation and/or Records Review and any corrective action shall be recorded in the files of the Compliance Officer (or compliance personnel designee). GSK shall include a summary of the FFMP and the results of the FFMP as part of each Annual Report. As part of each Annual Report, GSK also shall provide the OIG with copies of the Observation report for any instances in which it was determined that improper promotion occurred and a description of the action(s) that GSK took as a result of such determinations. GSK shall make the Observation reports for all other Observations available to the OIG upon request.

M. Monitoring of Non-Promotional Activities.

To the extent not already accomplished, within 120 days after the Effective Date GSK shall develop and implement a monitoring program for the following types of activities: (1) consultant arrangement activities; (2) research-related activities; (3) publication activities; and (4) medical education grants. This program shall be referred to as the Non-Promotional Monitoring Program.

1. Consultant Arrangement Activities. To the extent that GSK engages U.S.-based HCPs or HCIs for services that relate to Promotional Functions or to Product Related Functions other than for speaker programs, research-related activities, or publication activities (e.g., as a member of an advisory board or to attend consultant meetings), such HCPs or HCIs shall be referred to herein as Consultants. GSK shall require all Consultants to enter written agreements describing the scope of work to be performed, the fees to be paid, and compliance obligations for the Consultants. Consultants shall be paid according to a centrally managed, pre-set rate structure that is determined based on a fair-market value analysis conducted by GSK.

To the extent not already accomplished, within 120 days after the Effective Date,

GSK shall establish a process to develop annual budgeting plans that identify the business needs for, and the estimated numbers of, various Consultant engagements and activities to occur during the following year. The annual Consultant budgeting plans shall also identify the budgeted amounts to be spent on Consultant-related activities. GSK’s Monitoring Personnel shall be involved in the review and approval of such budgeting plans, including any subsequent modification of an approved plan. The purpose of this review shall be to ensure that Consultant arrangements and related events are used for legitimate purposes in accordance with applicable GSK Policies and Procedures.

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To the extent not already accomplished, within 120 days after the Effective Date, GSK shall establish a process to ensure that a needs assessment has been completed to justify the retention of a Consultant prior to the retention of the Consultant. The needs assessment shall identify the business need for the retention of the Consultant and provide specific details about the consulting arrangement (e.g., information about the numbers and qualifications of the HCPs or HCIs to be engaged, the agenda for the proposed meeting, and a description of the proposed work to be done and type of work product to be generated.) Any deviations from the Consultant budgeting plans shall be documented in the needs assessment form and shall be subject to review and approval by GSK Monitoring Personnel.

To the extent not already accomplished, within 120 days after the Effective Date,

GSK shall amend its policies and procedures in a manner designed to ensure that each Consultant performed the work for which the Consultant was engaged and that, as applicable, GSK received the work product generated by the Consultant.

Within 120 days after the Effective Date, GSK shall establish a Consultant

Monitoring Program through which it shall conduct audits for each Reporting Period (Consultant Program Audits) of at least 50 Consultant arrangements with HCPs for the first Reporting Period and 25 Consultant arrangements for subsequent Reporting Periods. The Consultant Monitoring Program shall review Consultant arrangements both on a risk-based targeting approach and on a sampling approach. GSK Monitoring Personnel conducting the Consultant Program Audits shall review needs assessment documents, consultant contracts, and materials relating to the program or work of the Consultant (including work product resulting from any program or event), in order to assess whether the programs and arrangements were conducted in a manner consistent with GSK’s Policies and Procedures. Results from the Consultant Program Audits, including the identification of potential violations of policies, shall be compiled and reported to the Compliance Officer (or compliance personnel designee) for review and follow-up as appropriate.

2. Research-Related Activities. To the extent that GSK engages or supports U.S.-

based HCPs or HCIs to conduct Research (as defined above in Section III.B.3.u), such HCPs and HCIs shall be referred to collectively as “Researchers”. GSK shall require all Researchers to enter written agreements describing the scope of the clinical research or other work to be performed, the fees to be paid or support to be given, and compliance obligations for the Researchers. Researchers retained to conduct Research shall be paid

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according to a centrally managed, pre-set rate structure that is determined based on a fair-market value analysis conducted by GSK.

To the extent not already accomplished, within 120 days after the Effective Date,

GSK shall establish an annual budgeting plan for Researchers that identifies the business or scientific need or scientific opportunity for, and the estimated numbers of, the various Researcher engagements and activities to occur during the year. The annual Researcher budgeting plan shall also identify the budgeted amounts to be spent on Researcher-related activities during the year. GSK Monitoring Personnel shall be involved in the review and approval of such budgeting plans, including any subsequent modification of an approved plan. The purpose of this review shall be to ensure that Research arrangements and related events are used for legitimate purposes in accordance with GSK Policies and Procedures.

To the extent not already accomplished, within 120 days after the Effective Date,

GSK shall establish a process to ensure that a needs assessment has been completed to justify the retention of the Researcher prior to the retention of the Researcher. The needs assessment shall identify the business or scientific need for the information to be provided by the Researcher and provide specific details about the research arrangement (including, for example, information about the numbers and qualifications of the HCPs or HCIs to be engaged, a description of the proposed research to be done (including the research protocol) and type of work product to be generated). Any deviations from the Researcher budgeting plans shall be documented in the needs assessment form (or elsewhere, as appropriate) and shall be subject to review and approval by GSK Monitoring Personnel.

To the extent not already accomplished, within 120 days after the Effective Date,

GSK shall amend its policies and procedures in a manner designed to ensure that each Researcher performed the work for which the Researcher was engaged.

Within 120 days after the Effective Date, GSK shall establish a Researcher

Monitoring Program through which it shall conduct audits for each Reporting Period (Researcher Program Audits). GSK shall review 20 Researcher arrangements with HCPs or HCIs for the first Reporting Period and 10 Researcher Arrangements for subsequent Reporting Periods. The Researcher Monitoring Program shall review Researcher arrangements both on a risk-based targeting approach and on a sampling approach. GSK Monitoring Personnel conducting the Researcher Program Audits shall review needs assessment documents, proposal and/or protocol documents, approval documents, contracts, and payments in order to assess whether the programs and arrangements were

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supported by GSK and performed by the Researchers in a manner consistent with GSK’s Policies and Procedures. Results from the Researcher Program Audits, including identification of potential violations of policies, shall be compiled and reported to the Compliance Officer (or compliance personnel designee) for review and follow-up as appropriate.

3. Publication Activities. GSK represents that it generally does not engage HCPs

or HCIs exclusively to produce articles or other publications relating to GSK-Sponsored Research, and that generally HCPs or HCIs who perform this work do so as part of an engagement for Research Related Activities. To the extent that, in connection with Research Related Activities, U.S.-based HCPs or HCIs produce articles or other publications relating to GSK-Sponsored Research (collectively “Publication Activities”) such HCPs or HCIs shall be referred to as Authors. GSK shall require all Authors to enter written agreements describing the terms of the arrangement between GSK and the Author and compliance obligations of the Authors. Authors shall be paid according to the centrally managed, pre-set rate structure that is established for Research Related Activities but will not be paid separately for authorship or other publication-specific activity (provided that GSK may reimburse travel expenses incurred to make public presentations of data from GSK-Sponsored Research Studies). If, in a departure from usual practice, GSK engages an HCP or HCI for a stand-alone project involving the production of an article or other publication relating to GSK-Sponsored Research (e.g., a review article summarizing research in a field that includes GSK-Sponsored Research), GSK will require a written agreement with the same compliance obligations as it requires of Author generally and will pay for the work according to the centrally managed, pre-set rate structure as applied to Consultants generally.

To the extent not already accomplished, within 120 days after the Effective Date,

GSK shall establish a process to develop annual plans that identify the business needs for and the estimated numbers of various Publication Activities (Publications Plans). The annual Publications Plan shall also identify the budgeted amounts to be spent on Publication Activities. GSK’s U.S. compliance personnel shall be involved in the review and approval of such annual Publications Plans, including any modification of an approved plan. The purpose of this review shall be to ensure that Publication Activities and related events are used for legitimate purposes in accordance with GSK Policies and Procedures.

To the extent not already accomplished, within 120 days after the Effective Date,

GSK shall establish a needs assessment process for Publication Activities. This process

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shall ensure that a needs assessment has been completed prior to the retention of an Author for a Publication Activity. The needs assessment shall provide specific details about Publication Activities to be performed (including a description of the proposed work to be done, type of work product to be generated, and the purpose for the work.) Any deviations from the Publications Plan shall be documented in the needs assessment form (or elsewhere, as appropriate) and shall be subject to review and approval by GSK Monitoring Personnel.

Within 120 days after the Effective Date, GSK shall establish a Publication

Monitoring Program through which it shall conduct audits for each Reporting Period of at least 50 Publication Activities for the first Reporting Period and 25 Publication Activities for subsequent Reporting Periods. The Publication Monitoring Program shall select publications for review both on a risk-based targeting approach and on a sampling approach. GSK Monitoring Personnel conducting the Publication Monitoring Program shall review needs assessment documents, proposal documents, approval documents, contracts, payments and materials relating to the Publication Activities (including work product resulting from the Activities), in order to assess whether the activities were conducted in a manner consistent with GSK’s Policies and Procedures. Results from the Publication Monitoring Programs, including the identification of potential violations of policies, shall be compiled and reported to the Compliance Officer (or compliance personnel designee) for review and follow-up as appropriate.

4. Medical Education Grant Activities. GSK represents that it provides

grants for medical education of HCPs on a limited basis and that it provides such grants only to educational providers (including academic medical centers, hospital or delivery systems, or professional medical associations that represent HCPs who deliver patient care) that satisfy pre-set criteria established by GSK. Potentially eligible educational providers are selected annually and invited to submit grant proposals for a future fiscal year. GSK represents that it does not provide funding to any commercial providers of medical education.

GSK’s Medical Affairs organization reviews the grant proposals from the potential

providers and makes recommendations for approval based on objective criteria, compliance policies and procedures, and budget availability. GSK represents that its commercial organization (including the sales and marketing departments) has no involvement in, or influence over, the review and approval of medical education grants. GSK shall continue the medical education grant process described above (or an equivalent process) throughout the term of the CIA, and shall notify the OIG in writing at

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least 60 days prior to the implementation of any new system subsequent to the Effective Date.

To the extent not already accomplished, within 120 days after the Effective Date,

GSK shall establish a Grants Monitoring Program through which it shall conduct audits for each Reporting Period of at least 10 medical education grants for the first Reporting Period and 5 medical education grants for subsequent Reporting Periods. The Grants Monitoring Program shall select grants for review both on a risk-based targeting approach and on a sampling approach. GSK Monitoring Personnel conducting the Grants Monitoring Program shall review proposal documents (including grant requests), approval documents, contracts, payments and materials relating to the grant office’s review of the requests, and documents and materials relating to the grants and any events or activities funded through the grants in order to assess whether the activities were conducted in a manner consistent with GSK’s Policies and Procedures. Results from the Grant Monitoring Programs, including the identification of potential violations of policies, shall be compiled and reported to the Compliance Officer (or compliance personnel designee) for review and follow-up as appropriate.

5. Follow Up Reviews and Reporting. In the event that a potential violation of GSK’s Policies and Procedures or of legal or compliance requirements, including but not limited to potential improper promotion, are identified during any aspect of the Non-Promotional Monitoring Program, GSK shall investigate the incident consistent with established Policies and Procedures for the handling of investigations and shall take all necessary and appropriate responsive action (including disciplinary action) and corrective action, including the disclosure of Reportable Events pursuant to Section III.J above, if applicable. Any compliance issues identified during any Non-Promotional Monitoring Program referenced above, and any corrective action, shall be recorded in the files of the U.S. Compliance Department. GSK shall include a summary of the Non-Promotional Monitoring Program and the results of the Non-Promotional Monitoring Program as part of each Annual Report. As part of each Annual Report, GSK also shall provide the OIG with descriptions of any instances identified through the Non-Promotional Monitoring Program in which it was determined that improper promotion of Government Reimbursed Products occurred or the activities violated GSK’s requirements or Policies and Procedures, and a description of the action(s) that GSK took as a result of such determinations. GSK shall make the documents relating to the Non-Promotional Monitoring Program available to the OIG upon request.

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N. Notices to Health Care Providers, Entities, Payers. Within 90 days after the Effective Date, GSK shall send, by first class mail, postage prepaid with delivery confirmation, a notice containing the language set forth below to all HCPs and HCIs that GSK currently details. This notice shall be dated and shall be signed by GSK’s President. The body of the letter shall state the following:

As you may be aware, GSK recently entered into a global civil, criminal, and administrative settlement with the United States and individual states in connection with the promotion and use of some of its products. This letter provides you with additional information about the settlement, explains GSK’s commitments going forward, and provides you with access to information about those commitments. In general terms, the Government alleged that GSK unlawfully promoted Wellbutrin, Paxil, Advair, Lamictal, and Zofran for uses not approved by the Food & Drug Administration (FDA) and that GSK engaged in other improper conduct relating to several of its other drugs including Avandia. To resolve these matters, GSK pled guilty to three misdemeanor criminal violations of the Federal Food, Drug & Cosmetic Act and agreed to pay a criminal fine of $1 billion. In addition, the Government alleged that GSK violated the False Claims Act and GSK entered into three civil settlements to resolve these allegations pursuant to which GSK agreed to pay $ 2 billion to the Federal Government and State Medicaid programs. More information about this settlement may be found at the following: [GSK shall include a link to the USAO, OCL, and GSK websites in the letter.] As part of the federal settlement, GSK also entered into a five-year corporate integrity agreement (CIA) with the Office of Inspector General of the U.S. Department of Health and Human Services. The CIA is available at http://oig.hhs.gov/fraud/cia/index.html. Under this agreement, GSK agreed to undertake certain obligations designed to promote compliance with Federal health care program and FDA requirements. We also agreed to notify healthcare providers about the settlement and inform them that they can report any questionable practices by GSK’s representatives to GSK’s Compliance Department or the FDA. GSK is fully committed to meeting the terms of the CIA and to sales and

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marketing practices that promote compliance. We have fundamentally changed our procedures for compliance, marketing and selling in the United States. For example, we now compensate our medical sales representatives based on the quality of service they deliver to customers, not on sales targets. Please call GSK at XXXX or visit us at [insert name of web link] if you have questions about the settlement referenced above or to report any instances in which you believe that a GSK representative inappropriately promoted a product or engaged in other questionable conduct. Alternatively, you may report any improper conduct associated with prescription drug marketing committed by a GSK representative to the FDA’s Office of Prescription Drug Promotion at 301-796-1200. You should direct medical questions or concerns about the products to XXXXX.

Within 90 days after the Effective Date, GSK shall send to all Payers with whom GSK currently has contracts or enters into contracts for formulary access or rebates (including all state Medicaid programs), by first class mail, postage prepaid with delivery confirmation, a notice containing the language set forth. This notice shall be dated and shall be signed by GSK’s President. The body of the letter shall state the following:

As you may be aware, GSK recently entered into a global civil, criminal, and administrative settlement with the United States and individual states in connection with the promotion and of some of its products. This letter provides you with additional information about the settlement, explains GSK’s commitments going forward, and provides you with access to information about those commitments. In general terms, the Government alleged that GSK unlawfully promoted Wellbutrin, Paxil, Advair, Lamictal, and Zofran for uses not approved by the Food & Drug Administration (FDA) and that GSK engaged in other improper conduct relating to several of its other drugs including Avandia. To resolve these matters, GSK pled guilty to three misdemeanor criminal violations of the Federal Food, Drug & Cosmetic Act (FDCA) and agreed to pay a criminal fine of $ 1 billion. In addition, the Government alleged that GSK violated the False Claims Act and GSK entered into three civil settlements to resolve these allegations pursuant to which GSK agreed to pay $ 2 billion to the Federal Government and State Medicaid programs.

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More information about this settlement may be found at the following: [GSK shall include a link to the USAO, OCL, and GSK websites in the letter.] As part of the federal settlement, GSK also entered into a five-year corporate integrity agreement (CIA) with the Office of Inspector General of the U.S. Department of Health and Human Services. The CIA is available at http://oig.hhs.gov/fraud/cia/index.html. Under this agreement, GSK agreed to undertake certain obligations designed to promote compliance with Federal health care program and FDA requirements. We also agreed to notify payers about the settlement and inform them that they can report any questionable practices by GSK’s representatives to GSK’s Compliance Department or the FDA. GSK is fully committed to meeting the terms of the CIA and to sales and marketing practices that promote compliance. We have fundamentally changed our procedures for compliance, marketing and selling in the United States. For example, we now compensate our medical sales representatives based on the quality of service they deliver to customers, not on sales targets. In addition, GSK is committed to promoting its products in a manner consistent with the FDA approved label for the product. GSK will pay rebates under applicable agreements (Rebates) involving a prior authorization or formulary requirement (a “Restriction”) in relation to the drugs at issue in this settlement, and will not reduce or alter its Rebates due to such a Restriction, provided that the Restriction: (1) does not limit any patient from receiving such drugs, including at the point of sale, for uses that are consistent with the FDA-approved label for each product; (2) is applied consistently across the therapeutic class; (3) is consistent with GSK’s policies, procedures and financial guidelines; and, (4) does not require the use of another manufacturer’s drug for a use that is not consistent with the FDA approved label for the other product. This paragraph shall not be interpreted to require GSK to contract or not to contract with any Payer. GSK shall administer its agreements with Payers in a manner consistent with the requirements of this paragraph, including agreeing to amend or modify applicable agreements to be consistent with this provision.

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Please call GSK at XXXX or visit us at [insert name of web link] if you have questions about the settlement referenced above or to report any instances in which you believe that a GSK representative inappropriately promoted a product or engaged in other questionable conduct. Alternatively, you may report any improper conduct associated with prescription drug marketing committed by a GSK representative to the FDA’s Office of Prescription Drug Promotion at 301-796-1200. You should direct medical questions or concerns about the products to XXXXX.

The Compliance Officer (or a designee) shall maintain a log of all calls and messages received in response to the notices. The log shall include a record and summary of each call and message received (whether anonymous or not), the status of the call or message, and any corrective action taken in response to the call or message. The log of all calls and messages received in response to the notices shall be made available to OIG upon request. As part of the Implementation Report and each Annual Report, GSK shall provide to the OIG a summary of the calls and messages received. O. Reporting of Physician Payments. Prior to the Effective Date, GSK began a voluntary Physician Payment Transparency Program through which GSK posted on its corporate website quarterly reports of payments to physicians for speaking and consulting fees. GSK shall continue to post such reports until the Annual Reporting requirements of Section III.O.1 take effect. 1. Reporting of Payment Information. Quarterly Reporting: On or before March 1, 2013, GSK shall post in a prominent position on its website an easily accessible and readily searchable listing of all U.S.-based physicians and Related Entities who or which received Payments (as defined in Section III.O.2) directly or indirectly from GSK during the fourth quarter of 2012 and the aggregate value of such Payments. Thereafter, 60 days after the end of each calendar quarter, GSK shall post on its website a report of the cumulative value of the Payments provided to each physician and Related Entity during the preceding calendar quarter.

Annual Reporting: On or before March 1, 2013, and 60 days after the end of each subsequent calendar year, GSK shall post on its website a report of the cumulative value

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of the Payments provided to all U.S.-based physicians and Related Entities directly or indirectly from GSK during the prior applicable calendar year. Each quarterly and annual report shall be easily accessible and readily searchable.

Each listing made pursuant to this Section III.O shall include a complete list of all individual physicians or Related Entities to whom or which GSK made Payments in the preceding quarter or year (as applicable). Each listing shall be arranged alphabetically according to the physicians’ last name or name of Related Entity. The Payment amounts in the lists shall be reported in the actual amount paid for all physicians or Related Entity on the listing. For each physician, the applicable listing shall include the following information: i) physician’s full name; ii) name of any Related Entities (if applicable); iii) city and state that the physician has provided to GSK for contact purposes; and (iv) the aggregate value of the payment(s) in the preceding quarter or year (as applicable). If payments for multiple physicians have been made to one Related Entity, the aggregate value of all payments to the Related Entity will be the reported amount.

2. Definitions and Miscellaneous Provisions.

(i) GSK shall continue to make each annual listing and the most recent quarterly listing of Payments available on its website during the term of the CIA. GSK shall retain and make available to OIG, upon request, all supporting documentation, correspondence, and records related to all applicable Payments and to the annual and/or quarterly listings of Payments. Nothing in this Section III.O affects the responsibility of GSK to comply with (or liability for noncompliance with) all applicable Federal health care program requirements and state laws as they relate to all applicable Payments made to physicians or Related Entity.

(ii) For purposes of Section III.O.1, “Payments” is defined to include all “payments or other transfers of value” as that term is defined in §1128G(e)(10) under Section 6002 of the Affordable Care Act and any regulations promulgated thereunder. The term Payments includes, by way of example, the types of payments or transfers of value enumerated in §1128G(a)(1)(A)(vi) of the Affordable Care Act. The term includes all payments or transfers of value made to Related Entities on behalf of, at the request of, for the benefit or use of, or under the name of a physician for whom GSK would otherwise report a Payment if made directly to the physician. The term Payments also includes any payments or transfers of value made, directly by GSK or by a vendor retained by GSK to a physician or Related Entity in connection with, or under the auspices of, a co-promotion arrangement.

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(iii) For purposes of its annual and quarterly website postings as described above, and only with regard to payments made pursuant to product research or development agreements and clinical investigations as set forth in § 1128G(c)(E) of the Affordable Care Act, GSK may delay the inclusion of such payments on its website listings consistent with § 1128G(c)(E) of the Act and any subsequent regulations promulgated thereunder.

(iv) The term “Payments” does not include transfers of value or other items that are not included in or are excluded from the definition of “payment” as set forth in § 1128G(e)(10) under Section 6002 of the Affordable Care Act and any regulations promulgated thereunder.

(v) For purposes of this Section III.O, the term “Related Entity” is defined to be any entity by or in which any physician receiving Payments is employed, has tenure, or has an ownership interest. P. Other Transparency/Disclosure Initiatives. GSK represents that it posts on its company website the following information with respect to both grants and charitable contributions in the United States: GSK shall continue to post (and provide updates to) the above-described information about grants and charitable contributions throughout the term of this CIA. GSK shall notify the OIG in writing at least 60 days prior to any change in the substance of its policies regarding the funding of grants and charitable contributions or posting of the above-referenced information relating to such funding. GSK shall require all Consultants to comply fully with all applicable disclosure obligations relating to their relationship with GSK that may be externally imposed on the Consultants based on their affiliation with formulary or P&T committees or committees associated with the development of treatment protocols or standards. GSK shall maintain this requirement throughout the term of this CIA. GSK represents that within 120 days after the Effective Date, GSK shall, if necessary, amend its policies relating to Consultants to explicitly state that GSK requires all Consultants to fully comply with all applicable disclosure obligations relating to their relationship with GSK that may be externally imposed on the Consultants based on their affiliation with formulary, P&T committees, or committees associated with the development of treatment protocols or standards or that are required by any HCI, medical committee, or other medical or scientific organization with which the Consultants are affiliated. In addition, for any

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amendment to its contracts with Consultants and in any new contracts with Consultants entered into after 150 days following the Effective Date, GSK shall include an explicit requirement that the Consultants fully comply with all applicable disclosure requirements, as referenced above in this paragraph. GSK shall continue these disclosure requirements throughout the term of this CIA. To the extent not already accomplished, within 120 days after the Effective Date, GSK shall post or make available information on its company website about FDA postmarketing commitments (PMCs). The GSK website or links included therein shall provide access to general information about the PMC process, descriptions of ongoing GSK studies, and information about the nature and status of the post-marketing commitments. GSK shall continue to post or make available the above-described information about PMCs on its website or links included therein throughout the term of this CIA. IV. CHANGES TO BUSINESS UNITS OR LOCATIONS

A. Change or Closure of Unit or Location. In the event that, after the Effective Date, GSK changes locations or closes a business unit or location related to or engaged in any of the Covered Functions or in CGMP Activities, GSK shall notify OIG of this fact as soon as possible, but no later than within 30 days after the date of change or closure of the location.

B. Purchase or Establishment of New Unit or Location. In the event that, after the

Effective Date, GSK purchases or establishes a new business unit or location related to or engaged in any of the Covered Functions or in cGMP Activities, GSK shall notify OIG no later than five days after the date that the purchase or establishment of the new business unit or location is publicly disclosed by GSK. This notification shall include the address of the new business unit or location, phone number, fax number, the location’s Federal health care program provider number and/or supplier number(s) (if applicable); and the name and address of each Federal health care program contractor to which GSK currently submits claims (if applicable). Each new business unit or location and all Covered Persons or Manufacturing Covered Persons at each new business unit or location shall be subject to the applicable requirements of this CIA.

C. Sale of Unit or Location. In the event that, after the Effective Date, GSK

proposes to sell any or all of its business units or locations that are subject to this CIA (including the terms of Appendix D), GSK shall notify OIG of the proposed sale at no

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later than five days after the sale is publicly disclosed by GSK. This notification shall include a description of the business unit or location to be sold, a brief description of the terms of the sale, and the name and contact information of the prospective purchaser. This CIA shall be binding on the purchaser of such business unit or location, unless otherwise determined and agreed to in writing by the OIG. V. IMPLEMENTATION AND ANNUAL REPORTS

A. Implementation Report. Within 150 days after the Effective Date, GSK shall submit a written report to OIG summarizing the status of its implementation of the requirements of this CIA (Implementation Report). The Implementation Report shall, at a minimum, include:

1. the name, address, phone number, and position description of the Compliance Officer required by Section III.A.1, 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.2;

3. the names of the members of the Board of Directors referenced in

Section III.A.3; 4. the names of the DCOs required by Section III.A.4; 5. the names and positions of the Certifying Employees required by Section

III.A.6; 6. a copy of GSK’s Code of Conduct required by Section III.B.1;

7. the number of individuals required to complete the Code of Conduct

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

8. (a) a copy of the letter (including all attachments) required by Section

II.C.9 and III.B.2 sent to each party employing Third Party Personnel; (b) a list of all existing co-promotion and other applicable agreements between GSK and the party

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employing Third Party Personnel; and (c) a description of each entity’s response to GSK’s letter;

9. a summary of all Policies and Procedures required by Section III.B.3 (a

copy of such Policies and Procedures shall be made available to OIG upon request);

10. 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 participate in General Training and Board Member Training, 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.2

11. the following information regarding the IRO(s): (a) identity, address,

and phone number; (b) a copy of the engagement letter; and (c) information to demonstrate that the IRO has the qualifications outlined in Appendix A; (d) a summary and description of any and all current and prior engagements and agreements between GSK and the IRO; and (e) a certification from the IRO regarding its professional independence and objectivity with respect to GSK;

12. a description of the Disclosure Program required by Section III.F;

13. a description of the process by which GSK fulfills the requirements of Section III.G regarding Ineligible Persons;

14. a certification by the Compliance Officer that the notices required by Section III.N was mailed to each HCP, HCI, and Payer, the number of HCPs, HCIs and

2 In Addition to the Implementation Report, GSK shall submit to OIG by January 30, 2013 a letter containing the information specified in Section V.A.10 as it pertains to Specific Training and Management Training as required by Section III.C.

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Payers to whom or which the notice was mailed, a sample copy of the notices required by Section III.N, and a summary of the calls or messages received in response to the notices;

15. a certification from the Compliance Officer that, if required under

Section III.O and to the best of his/her knowledge, information regarding Payments has been posted on GSK’s website as required by Section III.O;

16. a list of all of GSK’s locations (including locations and mailing addresses); the corresponding name under which each location is doing business; the corresponding phone numbers and fax numbers; each location’s Federal health care program provider number and/or supplier number(s) (if applicable); and the name and address of any each Federal health care program contractor to which GSK currently submits claims (if applicable);

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

18. the certifications required by Section V.D.

B. Annual Reports. GSK shall submit to OIG annually a report with respect to the status of, and findings regarding, GSK’s compliance activities for each of the five Reporting Periods (Annual Report). 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, the Board of Directors, the DCOs or the group of Certifying Employees described in Sections III.A.2-4 and 6;

2. a copy of the resolution by the Board required by Section III.A.3; 3. the number of individuals required to review GSK’s Code of Conduct

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

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4. (a) a copy of the letter (including all attachments) required by Section II.C.9 and III.B.2 sent to each party employing Third Party Personnel; (b) a list of all existing co-promotion and other applicable agreements between GSK and the party employing Third Party Personnel; and (c) a description of each entity’s response to GSK’s letter;

5. a summary of any significant changes or amendments to the Policies and

Procedures required by Section III.B, including any changes to the Research and Publication Practices and Authorship-Related Practices, and the reasons for such changes (e.g., change in applicable requirements);

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

a. a description of the initial and annual 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 complete each type of training specified in Section III.C, percentage of individuals who completed the training, 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. 7. a summary of any significant changes to the TRACER program required by Section III.D;

8. a complete copy of all reports prepared pursuant to Section III.E, and Appendices B-C along with a copy of the IRO’s engagement letters;

9. GSK’s response to the reports prepared pursuant to the reviews outlined in Section III.E and Appendices B-C, along with corrective action plan(s) related to any issues raised by the reports;

10. a summary and description of any and all current and prior

engagements and agreements between GSK and the IRO (if different from what was submitted as part of the Implementation Report);

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11. certifications from the IRO regarding its professional independence and

objectivity with respect to GSK; 12. a summary of the disclosures in the disclosure log required by Section

III.F that relate to Federal health care programs, FDA requirements (including CGMP Activities), or Government Reimbursed Products;

13. any changes to the process by which GSK fulfills the requirements of

Section III.G regarding Ineligible Persons; 14. a summary of any changes to GSK’s employee and executive incentive

compensation and recoupment programs required by Section III.H and Appendix E and the information regarding Triggering Events and Recoupment Determinations required to be reported pursuant to Section E of Appendix E;

15. a summary describing any ongoing investigation or legal proceeding required to have been reported pursuant to Section III.I. 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;

16. a summary of Reportable Events (as defined in Section III.J) identified

during the Reporting Period and the status of any corrective and preventative action relating to all such Reportable Events;

17. a summary describing any written communication with the FDA

required to have been reported pursuant to Section III.K. This summary shall include a description of the matter and the status of the matter;

18. a summary of the FFMP and the results of the FFMP required by

Section III.L, including copies of the Observation report for any instances in which it was determined that improper promotion occurred and a description of the action(s) that GSK took as a result of such determinations;

19. a summary of the Non-Promotional Monitoring Program and the results

of the program described in Section III.M, including detailed description of any identified instances in which it was determined that the activities violated GSK’s policies or that improper promotion of Government Reimbursed Products occurred and a description of

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the action(s) GSK took as a result of such determinations; 20. a summary of the calls and messages received in response to the notices

required by Section III.N and the disposition of those calls and messages; 21. a certification from the Compliance Officer that information regarding

Payments has been posted on GSK’s website as required by Section III.O; 22. a description of all changes to the most recently provided list of GSK’s

locations (including addresses) as required by Section V.A.16; the corresponding name under which each location is doing business; and the corresponding phone numbers and fax numbers;

23. a description of any additional, updated, supplemental or changed

information submitted to any Compendia in accordance with Section III.B.3.t; and a description of all arrangements, processing fees, and other payments or financial support (if any) with or made to any Compendia evaluated during the annual review described in Section III.B.3.t; and 24. the certifications required by Section V.D.

The first Annual Report shall be received by OIG no later than 60 days after the end of the first Reporting Period. Subsequent Annual Reports shall be received by OIG no later than the anniversary date of the due date of the first Annual Report.

C. IRO Initial Report. By March 1, 2013, GSK shall submit to OIG a report with

respect to the status of, and findings regarding, the IRO Reviews for the first IRO Reporting Period (IRO Initial Report).

The IRO Initial Report shall include at a minimum:

1. a complete copy of all reports prepared pursuant to Section III.E, and Appendix B along with a copy of the IRO’s engagement letters;

2. GSK’s response to the reports prepared pursuant to the reviews outlined in Section III.E and Appendix B, along with corrective action plan(s) related to any issues raised by the reports;

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3. a summary and description of any and all current and prior engagements and agreements between GSK and the IRO (if different from what was submitted as part of the Implementation Report);

4. certifications from the IRO regarding its professional independence and objectivity with respect to GSK;

D. Certifications. 1. Certifying Employees: In each Annual Report, GSK shall include the certifications of Certifying Employees as required by Section III.A.6;

2. Compliance Officer: In the Implementation Report, and each Annual Report, GSK shall include the following individual certification by the Compliance Officer: a. to the best of his or her knowledge, except as otherwise described in the report, GSK is in compliance with the requirements of this CIA;

b. 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;

c. to the best of his or her knowledge, GSK has complied with its obligations under the Settlement Agreement: (1) not to resubmit to any Federal health care program Payers any previously denied claims related to the Covered Conduct addressed in the Settlement Agreement, and not to appeal any such denials of claims; (2) not to charge to or otherwise seek payment from federal or state Payers for unallowable costs (as defined in the Settlement Agreement); and (3) to identify and adjust any past charges or claims for unallowable costs; d. GSK’s: (1) Policies and Procedures as referenced in Section III.B.3 above; (2) templates for standardized contracts and other similar documents; and (3) the training materials used for purposes of Section III.C all have been reviewed by competent legal counsel and have been found to be in compliance with all applicable Federal health care program and FDA requirements. In addition, GSK’s promotional materials containing claims or information about Government Reimbursed Products and other materials and information intended to be disseminated outside GSK have been reviewed

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by competent regulatory, medical, or, as appropriate, legal counsel in accordance with applicable Policies and Procedures to ensure that legal, medical, and regulatory concerns have been addressed by GSK and brought to the attention of the appropriate individuals when required, and that the materials and information when finally approved are in compliance with all applicable Federal health care program and FDA requirements. If the applicable legal requirements have not changed, after the initial review of the documents listed above, only material changes to the documents must be reviewed by competent legal counsel. The certification shall include a description of the document(s) reviewed and approximately when the review was completed. The documentation supporting this certification shall be available to OIG, upon request;

e. GSK’s Target Plans for Government Reimbursed Products were

reviewed at least once during the Reporting Period (consistent with Section III.B.3.j) and, for each product the Target Plans were found to be consistent with GSK’s policy objectives as referenced above in Section III.B.3.j; and

f. GSK has maintained an employee and executive incentive compensation

and recoupment program in accordance with the terms set forth above in Section III.H and Appendix E.

3. Certification for the IRO Initial Report: In the IRO Initial Report, GSK

shall include an individual certification by the Compliance Officer that he or she has reviewed the report and has made reasonable inquiry regarding its content and believes the information in the report is accurate and truthful.

E. Designation of Information. GSK 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. GSK shall refrain from identifying any information as exempt from disclosure if that information does not meet the criteria for exemption from disclosure under FOIA.

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VI. NOTIFICATIONS AND SUBMISSION OF REPORTS

Unless otherwise stated in writing after the Effective Date, all notifications and reports required under this CIA shall be submitted to the following entities:

OIG: Administrative and Civil Remedies Branch Office of Counsel to the Inspector General Office of Inspector General U.S. Department of Health and Human Services Cohen Building, Room 5527 330 Independence Avenue, S.W. Washington, DC 20201 Telephone: 202.619.2078 Facsimile: 202.205.0604

GSK: Michael L. Shaw Vice President & Compliance Officer North America Pharmaceuticals GlaxoSmithKline Three Franklin Plaza 200 N. 16th Street Philadelphia, PA 19102 Telephone: 215.751.7337 Facsimile: 215.751.7547

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. Upon request by OIG, GSK may be required to provide OIG with an electronic copy of each notification or report required by this CIA in searchable portable document format (pdf), either instead of or in addition to, a paper copy. 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 GSK’s or an applicable GSK Affiliate’s books, records, and other documents and supporting

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

VIII. DOCUMENT AND RECORD RETENTION

GSK and its Affiliates shall maintain for inspection all documents and records relating to reimbursement from the Federal health care programs and to compliance with this CIA (including Appendix D) until the end of 2018 (or longer if otherwise required by law) from the Effective Date.

IX. DISCLOSURES

Consistent with HHS’s FOIA procedures, set forth in 45 C.F.R. Part 5, OIG shall make a reasonable effort to notify GSK prior to any release by OIG of information submitted by GSK pursuant to its obligations under this CIA and identified upon submission by GSK as trade secrets, or information that is commercial or financial and privileged or confidential, under the FOIA rules. With respect to such releases, GSK shall have the rights set forth at 45 C.F.R. § 5.65(d). X. BREACH AND DEFAULT PROVISIONS GSK is expected to fully and timely comply with all of the CIA obligations.

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A. Stipulated Penalties for Failure to Comply with Certain Obligations. As a contractual remedy, GSK and OIG hereby agree that failure to comply with certain obligations as set forth in this CIA may lead to the imposition of the following monetary penalties (hereinafter referred to as “Stipulated Penalties”) in accordance with the following provisions.

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

a. a Compliance Officer;

b. a Compliance Committee; c. the Board compliance obligations, including the resolution from the Board; d. the management accountability and certification obligations;

e. a written Code of Conduct;

f. written Policies and Procedures; g. the training of Covered Persons, Relevant Covered Persons, Management, and Board Members; h. a TRACER program;

i. a Disclosure Program;

j. Ineligible Persons screening and removal requirements;

k. an employee and executive incentive compensation and recoupment program as required by Section III.H and Appendix E; l. notification of Government investigations or legal proceedings as required by Section III.I;

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m. reporting of Reportable Events as required in Section III.J; n. notification of written communications with FDA as required by Section III.K; o. a program for FFMP as required by Section III.L; p. a program for Non-Promotional Monitoring Program as required by Section III.M; q. notifications to HCPs, HCIs, and Payers as required by Section III.N; and r. posting of any Payments as required by Section III.O.

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 GSK fails to engage and use an IRO as required in Section III.E and Appendices A-C.

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 GSK fails to submit the Implementation Report or any Annual Report to OIG in accordance with the requirements of Section V of the CIA or of Appendix D 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 GSK fails to submit any IRO Review report (including the IRO Initial Report) in accordance with the requirements of Sections III.E and III.V and Appendices A-C.

5. A Stipulated Penalty of $2,500 (which shall begin to accrue on the day after the date the obligation became due) for each day GSK fails to establish and implement any of the following obligations as described in Section III of Appendix D:

a. a GMS Compliance Officer;

b. a GMS Compliance Committee; c. the Board compliance obligations, including the resolution from

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the Board;

d. a written Code of Conduct;

e. written Policies and Procedures; f. the training of Manufacturing Covered Persons; g. cGMP Requirements;

h. reporting of Manufacturing Reportable Events; or i. reporting of a recall under Section III.F of Appendix D.

6. A Stipulated Penalty of $1,500 for each day GSK or a GSK Affiliate

fails to grant access as required in Section VII. (This Stipulated Penalty shall begin to accrue on the date GSK or a GSK Affiliate fails to grant access.)

7. A Stipulated Penalty of $5,000 for each false certification submitted by

or on behalf of GSK as part of its Implementation Report, the IRO Initial Report, or any Annual Report, additional documentation to a report (as requested by the OIG), or otherwise required by this CIA.

8. A Stipulated Penalty of $10,000 for each day that GSK fails to timely

submit any report required under Section III.D.3.a or III.D.3.b of Appendix D. 9. A Stipulated Penalty of $10,000 for each lot of each Covered Product for

each day that GSK fails to initiate a recall for specified lots under Section III.D of Appendix D after receipt of a Final Determination.

10. A Stipulated Penalty of $10,000 for each lot of each Covered Product

for each day that GSK fails to complete a recall within a deadline established in the Final Determination for specified lots under Section III.D of Appendix D.

11. A Stipulated Penalty of $1,000 for each day GSK or a GSK Affiliate

fails to comply fully and adequately with any obligation of this CIA. OIG shall provide notice to GSK or a GSK Affiliate stating the specific grounds for its determination that GSK or a GSK Affiliate has failed to comply fully and adequately with the CIA

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obligation(s) at issue and steps GSK or a GSK Affiliate shall take to comply with the CIA. (This Stipulated Penalty shall begin to accrue 10 days after GSK or a GSK Affiliate 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- 10 of this Section.

B. Timely Written Requests for Extensions. GSK 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 GSK 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 GSK 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 GSK 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 GSK of: (a) GSK’s failure to comply; and (b) OIG’s exercise of its contractual right to demand payment of the Stipulated Penalties (this notification is referred to as the “Demand Letter”).

2. Response to Demand Letter. Within 10 days after the receipt of the

Demand Letter, GSK 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 GSK elects to request an ALJ hearing, the Stipulated Penalties shall continue to accrue until GSK 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.

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3. Form of Payment. Payment of the Stipulated Penalties shall be made by electronic funds transfer to an account specified by OIG in the Demand Letter.

4. Independence from Material Breach Determination. Except as set forth

in Section X.D.1.d, these provisions for payment of Stipulated Penalties shall not affect or otherwise set a standard for OIG’s decision that GSK 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 repeated or flagrant violation of the obligations under this CIA, including, but not limited to, the obligations addressed in Section X.A; b. a failure by GSK to report a Reportable Event and take corrective action as required in Section III.J of the CIA or Section III.E of Appendix D; c. a failure to engage and use an IRO in accordance with Section III.E and Appendices A-C;

d. a failure to respond to a Demand Letter concerning the payment of Stipulated Penalties in accordance with Section X.C; e. a failure of the Board to issue a resolution in accordance with Section III.A.3 of the CIA or Section III.A.3 of Appendix D. f. a failure by GSK to timely initiate a recall of Covered Products sold in the United States pursuant to a Final Determination made under Section III.D of Appendix D after receipt of a Final Determination; or g. a failure by GSK to timely complete a recall of Covered Products sold in the United States as required in the Final Determination after receipt of the Final Determination under Appendix D.

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2. Notice of Material Breach and Intent to Exclude. The parties agree that

a material breach of this CIA by GSK constitutes an independent basis for GSK’s exclusion from participation in the Federal health care programs. Upon a determination by OIG that GSK has materially breached this CIA and that exclusion is the appropriate remedy, OIG shall notify GSK of: (a) GSK’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. GSK shall have 30 days from the date of receipt of

the Notice of Material Breach and Intent to Exclude to demonstrate to OIG’s satisfaction that:

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

4. Exclusion Letter. If, at the conclusion of the 30 day period, GSK fails to

satisfy the requirements of Section X.D.3, OIG may exclude GSK from participation in the Federal health care programs. OIG shall notify GSK in writing of its determination to exclude GSK (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 GSK’s receipt of the Exclusion Letter. The exclusion shall have national effect and shall also apply to all other Federal procurement and nonprocurement programs. Reinstatement to program participation is not automatic. After the end of the period of exclusion, GSK may apply for reinstatement by submitting a written request for reinstatement in accordance with the provisions at 42 C.F.R. §§ 1001.3001-.3004.

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E. Dispute Resolution 1. Review Rights. Upon OIG’s delivery to GSK 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, GSK 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 GSK was in full and timely compliance with the obligations of this CIA for which OIG demands payment; and (b) the period of noncompliance. GSK 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 GSK to pay Stipulated Penalties, such Stipulated Penalties shall become due and payable 20 days after the ALJ issues such a decision unless GSK requests review of the ALJ decision by the DAB. If the ALJ decision is properly appealed to the DAB and the DAB upholds the determination of OIG, the Stipulated Penalties shall become due and payable 20 days after the DAB issues its decision.

3. Exclusion Review. Notwithstanding any provision of Title 42 of the

United States Code or Title 42 of the Code of Federal Regulations, the only issues in a proceeding for exclusion based on a material breach of this CIA shall be:

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

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

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c. whether the alleged material breach could not have been cured within the 30-day period, but that: (i) GSK had begun to take action to cure the material breach within that period; (ii) GSK has pursued and is pursuing such action with due diligence; and (iii) GSK provided to OIG within that period a reasonable timetable for curing the material breach and GSK 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 GSK, only after a DAB decision in favor of OIG. GSK’s election of its contractual right to appeal to the DAB shall not abrogate OIG’s authority to exclude GSK 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 GSK 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. GSK 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 GSK, GSK shall be reinstated effective on the date of the original exclusion.

4. Finality of Decision. The review by an ALJ or DAB provided for above

shall not be considered to be an appeal right arising under any statutes or regulations. Consequently, the parties to this CIA agree that the DAB’s decision (or the ALJ’s decision if not appealed) shall be considered final for all purposes under this CIA.

XI. EFFECTIVE AND BINDING AGREEMENT

GSK and OIG agree as follows:

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

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

obtained on the CIA; C. This CIA constitutes the complete agreement between the parties and may not

be amended except by written consent of the parties to this CIA;

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D. The undersigned GSK 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.

E. This CIA may be executed in counterparts, each of which constitutes an

original and all of which constitute one and the same CIA. Facsimiles of signatures shall constitute acceptable, binding signatures for purposes of this CIA.

ON BEHALF OF GLAXOSMITHKLINE LLC

Pr stdent GlaxoSmithKline LLC

MICW£~ Vice President & Compliance Officer

North America Pharmaceuticals GlaxoSmithKline LLC

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DATE

DATE

DATE

ON BEHALF OF THE OFFICE OF INSPECTOR GENERAL OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES

" .,_./ - . -<"----·---·- .

GREGORY E. DEMSKE Chief Counsel to the Inspector General Office of Inspector General U. S. Department of Health and Human Services

MARY E. RIORDAN

Senior Counsel Office of Inspector General U. S. Department of Health and Human Services

CHRISTINA K. MCGARVEY

Senior Counsel Office of Inspector Genera] U.S. Department of Health and Human Services

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I ! DATE

DATE

DATE

ON BEHALF OF THE OFFICE OF INSPECTOR GENERAL

OF THE DEPARTMENT OF HEAL HI AND HUMAN SERVICES

GREGORY E. DEMSKE Chief Counsel to the Inspector General Office of Inspector General U.S. Department of Health and Human Services

MARY E. R IORDAN

Senior Counsel Office of Inspector General U.S. Department of Health and Human Services

CHRISTINA K. MCGARVEY

Senior Counsel Office of Inspector General U.S. Department of Health and Human Services

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DATE

DATE

fi~ 1~ :J_OtL 0 DATE

GlaxoSmithKline LLC Corporate Integrity Agreement Appendix A

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Appendix A to CIA for GlaxoSmithKline LLC

Independent Review Organization

This Appendix contains the requirements relating to the Independent Review Organization (IRO) required by Section III.E of the CIA. A. IRO Engagement.

GSK shall engage an IRO (or IRO(s)) 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 objective fashion, as set forth in Paragraph D. Within 30 days after OIG receives the information identified in Section V.A.11 of the CIA or any additional information submitted by GSK in response to a request by OIG, whichever is later, OIG will notify GSK if the IRO is unacceptable. Absent notification from OIG that the IRO is unacceptable, GSK may continue to engage the IRO.

If GSK engages a new IRO during the term of the CIA, this IRO shall also meet

the requirements of this Appendix. If a new IRO is engaged, GSK shall submit the information identified in Section V.A.11 of the CIA to OIG within 30 days of engagement of the IRO. Within 30 days after OIG receives this information or any additional information submitted by GSK at the request of OIG, whichever is later, OIG will notify GSK if the IRO is unacceptable. Absent notification from OIG that the IRO is unacceptable, GSK may continue to engage the IRO. B. IRO Qualifications. The IRO shall:

1. assign individuals to conduct the IRO Reviews who have expertise in the pharmaceutical industry and have expertise in applicable Federal health care program and FDA requirements that relate to the Covered IRO Functions, including expertise relating to: i) marketing and promotional activities associated with pharmaceutical products; ii) research regarding such products; and iii) publication, authorship, and disclosure activities associated with such research). The assigned individuals shall also be experienced in risk identification and mitigation in relation to pharmaceutical product marketing and promotion. The assigned individuals also shall be knowledgeable about the general requirements of the Federal health care programs under which GSK products are reimbursed;

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2. assign individuals to design and select the samples for the IRO Transactions Reviews who are knowledgeable about appropriate statistical sampling techniques; 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:

1. perform each component of each IRO Review in accordance with the specific requirements of the CIA;

2. follow all applicable Federal health care program and FDA requirements in making assessments in each IRO Review;

3. if in doubt of the application of a particular Federal health care program or FDA requirement, request clarification from the appropriate authority (e.g., CMS or FDA); 4. respond to all OIG inquiries in a prompt, objective, and factual manner; and

5. prepare timely, clear, well-written reports that include all the information required by Appendices B and C to the CIA.

D. Independence and Objectivity.

The IRO must perform the IRO Reviews in a professionally independent and objective fashion, as defined in the most recent Government Auditing Standards issued by the United States Government Accountability Office. E. IRO Removal/Termination.

1. GSK Termination of IRO. If GSK terminates its IRO or if the IRO withdraws from the engagement during the term of the CIA, GSK must submit a notice explaining its reasons for termination or the reason for withdrawal to OIG no later than 30 days after termination or withdrawal. GSK must engage a new IRO in accordance with Paragraph A of this Appendix and within 60 days of the termination or withdrawal of the IRO.

2. OIG Removal of IRO. In the event OIG has reason to believe that the IRO does

not possess the qualifications described in Paragraph B, is not independent and/or objective as set forth in Paragraph D, or has failed to carry out its responsibilities as

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described in Paragraph C, OIG may, at its sole discretion, require GSK to engage a new IRO in accordance with Paragraph A of this Appendix. GSK must engage a new IRO within 60 days of termination of the IRO. Prior to requiring GSK to engage a new IRO, OIG shall notify GSK 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, GSK may present additional information regarding the IRO’s qualifications, independence or performance of its responsibilities. OIG will attempt in good faith to resolve any differences regarding the IRO with GSK prior to requiring GSK to terminate the IRO. However, the final determination as to whether or not to require GSK to engage a new IRO shall be made at the sole discretion of OIG.

GlaxoSmithKline LLC Corporate Integrity Agreement Appendix B

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Appendix B to CIA for GlaxoSmithKline LLC

Independent Review Organization Reviews I. Covered Functions Review, General Description

As specified more fully below, GlaxoSmithKline (GSK) shall retain an Independent Review Organization (IRO) (or IROs) to perform reviews (IRO Reviews) to assist GSK in assessing and evaluating its systems, processes, policies, procedures, and practices related to certain of GSK's Covered Functions (collectively, “IRO Covered Functions”). The IRO Review shall consist of two components - a systems review (Systems Review) and a transactions review (Transactions Review) as described more fully below. GSK may engage, at its discretion, a single IRO to perform both components of the IRO Review provided that the entity has the necessary expertise and capabilities to perform both. If there are no material changes in GSK’s systems, processes, policies, and procedures relating to the Covered IRO Functions, the IRO shall perform the Systems Review for the second and fifth IRO Reporting Periods. If GSK materially changes its systems, processes, policies, and procedures relating to the Covered IRO Functions, the IRO shall perform a Systems Review for the IRO Reporting Period(s) in which such changes were made in addition to conducting the Review for the second and fifth IRO Reporting Periods. The additional Systems Review(s) shall consist of: 1) an identification of the material changes; 2) an assessment of whether other systems, processes, policies, and procedures previously reported did not materially change; and 3) a review of the systems, processes, policies, and procedures that materially changed. The IRO shall conduct the Transactions Review for each IRO Reporting Period of the CIA. II. IRO Systems Review A. Description of Reviewed Policies and Procedures

The Covered IRO Functions Systems Review shall be a review of GSK’s systems, processes, policies, and procedures (including the controls on those systems, processes, policies, and procedures) relating to certain of the Covered Functions. Where practical, GSK personnel may compile documentation, schedule and organize interviews, and undertake other efforts to assist the IRO in performing the Systems Review. The IRO is not required to undertake a de novo review of the information gathered or activities undertaken by GSK in accordance with the preceding sentence.

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Specifically, the IRO shall review GSK’s systems, processes, policies, and procedures associated with the following (hereafter “Reviewed Policies and Procedures”):

1) GSK’s systems, processes, policies, and procedures applicable to the manner in which GSK field personnel (including sales personnel, marketing personnel, MSLs, HOLs, and personnel from the PPV group) and personnel from the Medical Affairs department (including MISs) handle requests or inquiries relating to information about the uses of Government Reimbursed Products (including non-FDA-approved (i.e., off-label) uses of Government Reimbursed Products) and the dissemination of materials relating to the uses of these products. This review shall include:

a) the manner in which GSK sales personnel and PPV personnel

handle requests for information about off-label uses of Government Reimbursed Products (i.e., by referring all such requests to Medical Affairs personnel at GSK);

b) the manner in which Medical Affairs personnel, including

those at GSK’s headquarters, handle and respond to requests for information about off-label uses of Government Reimbursed Products (including tracking the requests and using pre-approved materials for purposes of responding to the request);

c) the form and content of information and materials related to

Government Reimbursed Products disseminated to physicians, pharmacists, or other health care professionals (collectively “HCPs”), and health care institutions (HCIs), Payers, and formulary decision-makers by GSK;

d) GSK's systems, processes, policies, and procedures (including

the Inquiries Database) to track requests to Medical Affairs for information about off-label uses of products and responses to those requests;

e) the manner in which GSK collects and supports information

reported in any systems used to track and respond to requests to Medical Affairs for Government Reimbursed Product information, including its Inquiries Database;

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f) the processes and procedures by which Medical Affairs, the

Compliance Officer, or other appropriate individuals within GSK identify situations in which it appears that off-label or other improper promotion may have occurred; and

g) GSK's processes and procedures for investigating,

documenting, resolving, and taking appropriate disciplinary action for potential situations involving improper promotion;

2) GSK’s systems, processes, policies, and procedures applicable to the manner and circumstances under which its Medical Affairs personnel (including MSLs, HOLs, or analogous personnel) participate in meetings or events with HCPs or HCIs (either alone or with sales representatives) regarding Government Reimbursed Products and the role of the Medical Affairs personnel at such meetings or events; 3) GSK’s systems, processes, policies, and procedures relating to GSK's internal review of promotional materials related to Government Reimbursed Products disseminated to HCPs, HCIs and Payers and individuals or entities (e.g.¸ PBMs) acting on behalf of HCPs, HCIs or government payers; 4) GSK's systems, policies, processes and procedures (the “Patient First Program”) relating to incentive compensation for Relevant Covered Persons who are prescriber-facing sales personnel and their direct managers, with regard to whether the systems, policies, processes, and procedures are designed to ensure that financial incentives do not inappropriately motivate such individuals to engage in the improper promotion, sales, and marketing of Government Reimbursed Products. This shall include a review of the bases upon which compensation is determined and the extent to which compensation is based on product performance. To the extent that GSK establishes different methods of compensation for different Government Reimbursed Products, the IRO shall review each type of compensation arrangement separately; 5) GSK’s systems, policies, processes and procedures relating to the Executive Financial Recoupment Program described in Section III.H of the CIA and in Appendix E;

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6) GSK’s systems, processes, policies, and procedures relating to the development and review of Target Plans (as defined in Section III.B.3.j of the CIA) for Government Reimbursed Products. This shall include a review of the bases upon which HCPs and HCIs belonging to specified medical specialties are included in, or excluded from, the Target Plans based on expected utilization of Government Reimbursed Products for FDA-approved uses or non-FDA-approved uses; 7) GSK’s systems, processes, policies, and procedures relating to Sample Distribution Policies and Procedures (as defined in Section III.B.3.k of the CIA). This shall include a review of the bases upon, and circumstances under, which HCPs and HCIs belonging to specified medical specialties or types of clinical practice may receive samples from GSK (including, separately, from GSK sales representatives and other GSK personnel or components). It shall also include a review of whether samples of Government Reimbursed Products are distributed by GSK through sales representatives or are distributed from a central location and the rationale for the manner of distribution; 8) GSK’s systems (including any centralized electronic systems), processes, policies, and procedures relating to speaker programs, speaker training programs, and all events and expenses relating to such engagements or arrangements; 9) GSK’s systems, processes, policies, and procedures relating to engagement of “Consultants” (as defined in Section III.M.1 of the CIA) and all events and expenses associated with such activities; 10) GSK’s systems, processes, policies, and procedures relating to GSK’s funding, directly or indirectly, of Third Party Educational Activities for HCPs (as defined in Section II.C.8 of the CIA) and all events and expenses relating to such activities; 11) GSK’s systems, processes, policies, and procedures relating to the submission of information about any Government Reimbursed Product to any compendia such as Drugdex or other published source of information used in connection with the determination of coverage by a Federal health care program for the product (“Compendia”). This includes any initial submission of information to any Compendia and the submission of any

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additional, updated, supplemental, or changed information, (e.g., any changes based on GSK's discovery of erroneous or scientifically unsound information or data associated with the information in the Compendia). The review shall also assess GSK's processes relating to its annual review of all arrangements, processing fees, or other payments or financial support (if any) provided to any Compendia; 12) GSK's systems, processes, policies, and procedures relating to Research and Publication Practices (as defined in Section III.B.3.u of the CIA), including the decision to provide financial or other support for such Research; the manner in which Research support is provided; the publication of information about the Research, including the publication of information about the Research results and trial outcomes, and uses made of publications relating to such research; 13) GSK's systems, processes, policies and procedures relating to authorship of any journal articles or other publications about GSK-Sponsored Research or about therapeutic areas or disease states that may be treated with Government Reimbursed Products, including, but not limited to, the disclosure of any and all financial relationships between the author and GSK, the identification of all authors or contributors (including professional writers, if any) associated with a given publication, and the scope and breadth of research results made available to each author or contributor;

14) GSK’s systems, policies, processes, and procedures applicable to the manner and circumstances under which GSK personnel (including sales personnel (if any), personnel from the PPV Unit, MSLs, HOLs, or analogous personnel) participate in meetings with Payers (as defined in Section II.C.6 of the CIA) regarding Government Reimbursed Products and the role of the GSK personnel at such meetings; and 15) the form and content of information and materials disseminated by GSK to Payers and GSK’s systems, policies, processes, and procedures relating to GSK's internal review and approval of information and materials related to Government Reimbursed Products disseminated to Payers by GSK.

B. IRO Systems Review Report

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The IRO shall prepare a report based upon each Systems Review. For each of the Reviewed Policies and Procedures identified in Section II.A above, the report shall include the following items: 1) a description of the documentation (including policies) reviewed and

any personnel interviewed; 2) a detailed description of GSK’s systems, policies, processes, and

procedures relating to the items identified in Sections II.A.1-15 above, including a general description of GSK’s control and accountability systems (e.g., documentation and approval requirements, and tracking mechanisms) and written policies regarding the Reviewed Policies and Procedures;

3) a description of the manner in which the control and accountability

systems and the written policies relating to the items identified in Sections II.A.1-15 above are made known or disseminated within GSK;

4) a detailed description of any system(s) used to track and respond to requests for information about Government Reimbursed Products (including the Inquiries Database);

5) findings and supporting rationale regarding any weaknesses in

GSK’s systems, processes, policies, and procedures relating to the Reviewed Policies and Procedures, if any; and

6) recommendations to improve any of the systems, policies, processes,

or procedures relating to the Reviewed Policies and Procedures, if any. III. IRO Transactions Review As described more fully below in Sections III.A-F, the Transactions Review for the second through sixth IRO Reporting Periods shall include: (1) a review of a sample of Inquiries reflected in the Inquiries Database; (2) a review of GSK’s Target Plans and GSK’s Target Plan review process; (3) a review of Sampling Events as defined below in Section III.C; (4) a review of records relating to a sample of the Payments that are reported by GSK pursuant to Section III.O of the CIA; (5) a review of Research and Publication Practices and Authorship-Related Practices; and (6) a review of up to three additional items identified by the OIG in accordance with Section III.E.1.b of the CIA

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(hereafter “Additional Items”). The IRO shall report on all aspects of its reviews in the Transactions Review Reports. For purposes of the Transactions Review for the first IRO Reporting Period, the Transactions Review shall include a review of Items 1-3 outlined in the preceding paragraph. The Transaction Review Report for the first IRO Reporting Period shall report on Items 1-3 in accordance with Section III.G below. A. Review of Inquiries and Inquiries Database

1) Description of Inquiries Database

As set forth in Section III.B.3.g of the CIA, GSK shall establish a database to track information relating to requests for information received by GSK about its Government Reimbursed Products (hereafter “Inquiries”). Specifically, GSK shall document and record all Inquiries received from HCPs or HCIs regarding Government Reimbursed Products in a database(s) (the “Inquiries Database”). GSK shall record in the Inquiries Database the following information for each Inquiry received: 1) date of Inquiry; 2) form of Inquiry (e.g., fax, phone, medical information request form); 3) name of requesting HCP or HCI or other individual or entity; 4) nature and topic of request (including exact language of the Inquiry if made in writing); 5) an evaluation of whether the Inquiry relates to information about an off-label indication for the product; 6) nature/form of the response from GSK (including a record of any materials provided in response to the request); and 7) the name of the GSK representative who called upon or interacted with the HCP or HCI.

2) Internal Review of Inquiries Database

On a semi-annual basis, the Compliance Officer or designee shall review the Inquiries Database and related information, as appropriate, and shall generate a report summarizing the items of information outlined in Section III.A.1 above for each Inquiry received during the preceding two quarters (“Inquiry Report”). The Compliance Officer or designee shall review the Inquiry Reports to assess whether the information contained in the report suggests that improper off-label promotion may have occurred in connection with any Inquiry(ies). If the Compliance Officer or designee, in consultation with other appropriate GSK personnel, suspects that improper off-label promotion may have occurred in connection with any Inquiry, the

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Compliance Officer or designee shall undertake a follow-up review of the Inquiry (Off-Label Review), make specific findings based on his/her Off-Label Review, and take all appropriate responsive action (including disciplinary action of the Covered Person and reporting of the conduct, including disclosing Reportable Events pursuant to Section III.J of the CIA, if applicable).

3) IRO Review of Inquiries Reflected in Inquiries Database The IRO shall select and review a random sample of 50 Inquiries from among the Inquiries reflected in the Inquiries Database for each Reporting Period. Forty of the Inquiries reviewed by the IRO shall be Inquiries for which GSK conducted an Off-Label Review, and the other ten shall be Inquiries for which GSK did not conduct an Off-Label Review. For each Inquiry reviewed, the IRO shall determine: a) Whether each item of information listed above in Section III.A.1 is

reflected in the Inquiries Database for each reviewed Inquiry; and b) For each Inquiry for which the Compliance Officer conducted an Off-

Label Review, the basis for suspecting that improper off-label promotion may have occurred; the steps undertaken as part of the Off-Label Review; the findings of the Compliance Officer as a result of the Off-Label Review; and any follow-up actions taken by GSK based on the Off-Label Review findings.

B. IRO Review of GSK’s Target Plans and Target Plan Review Process

The IRO shall conduct a review and assessment of GSK’s review of its Target Plans for Government Reimbursed Products as set forth in Section III.B.3.j of the CIA. GSK shall provide the IRO with: i) a list of Government Reimbursed Products promoted by GSK during the IRO Reporting Period; ii) information about the FDA-approved uses for each such product; and iii) the Target Plans for each such product. GSK shall also provide the IRO with information about the reviews of Target Plans that GSK conducted during the relevant IRO Reporting Period and any modifications to the Target Plans made as a result of GSK’s reviews.

For each Target Plan, the IRO shall select a sample of 50 of the HCPs and HCIs included on the Target Plan. For each Target Plan, the IRO shall compare the sampled HCPs and HCIs against the criteria (e.g., medical specialty or practice area) used by GSK

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in conducting its review and/or modifying the Target Plan. The IRO shall seek to determine whether GSK followed its criteria and Policies and Procedures in reviewing and modifying the Target Plan.

The IRO shall note any instances in which it appears that the sampled HCPs or

HCIs on a particular Target Plan are inconsistent with GSK’s criteria relating to the Target Plan and/or GSK’s Policies and Procedures. The IRO shall also note any instances in which it appears that GSK failed to follow its criteria or Policies and Procedures.

C. IRO Review of the Distribution of Samples of GSK Government Reimbursed Products

The IRO shall conduct a review and assessment of the distribution of samples of Government Reimbursed Products to HCPs and HCIs. GSK shall provide the IRO with: i) a list of Government Reimbursed Products for which GSK distributed samples during the IRO Reporting Period; ii) information about the FDA-approved uses for each such product; and iii) information about GSK’s Sample Distribution Policies and Procedures, including GSK’s exclusion lists showing which types of samples may not be distributed by sales personnel or other GSK personnel to HCPs and HCIs of particular medical specialties or types of clinical practices. GSK shall also provide the IRO with information about the reviews of Sample Distribution Policies and Procedures that GSK conducted during the IRO Reporting Period as set forth in Section III.B.3.k of the CIA and any modifications to the Sample Distribution Policies and Procedures or exclusion lists made as a result of GSK’s reviews.

For each Government Reimbursed Product for which GSK distributed samples during the IRO Reporting Period, the IRO shall randomly select a sample of 50 separate instances in which GSK provided samples of the product to HCPs or HCIs. Each such instance shall be known as a “Sampling Event.”

For each Sampling Event, the IRO shall review all documents and information

relating to the distribution of the sample to the HCP or HCI. The reviewed materials shall include materials about the following: 1) the quantity, dosage, and form of the GSK product provided to the HCP or HCI; 2) the identity and type of medical specialty or clinical practice of the HCP or HCI; 3) which individual GSK sales personnel or other GSK personnel provided the sample to the HCP or HCI; and 4) the manner and mechanism through which the sample was requested (e.g., sample request form, letter, or call to GSK).

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For each Sampling Event, the IRO shall evaluate whether the sample was provided to an HCP or HCI whose medical specialty or clinical practice is consistent with the uses of the Government Reimbursed Product approved by the FDA and whether the sample was distributed by an GSK representative in a manner consistent with GSK’s sample distribution policy for the product(s) provided during the Sampling Event. To the extent that a sample was provided to an HCP or HCI by a GSK representative other than a sales personnel, the IRO shall contact the HCP or HCI by letter. The letter shall request that the HCP or HCI: 1) verify that he/she/it received the quantity and type of samples identified by the IRO as the Sampling Event; 2) verify that he/she/it requested the samples provided during the Sampling Event; 3) explain or confirm its type of medical specialty or clinical practice; and 4) identify the basis for requesting the sample (e.g., conversations with a GSK sales representative, conversation with a GSK representative at headquarters, independent research, or knowledge of the HCP or HCI).

For each Sampling Event, the IRO shall compare the medical specialty and type of

clinical practice of the HCPs and HCIs that received the sample with uses of the Government Reimbursed Product approved by the FDA. The IRO shall note any instances in which it appears that the medical specialty or clinical practice of the HCPs or HCIs that received a sample during a Sampling Event were not consistent with the uses of the Government Reimbursed Product approved by the FDA. For each such situation, the IRO shall note the process followed by GSK in determining that it was appropriate to provide a sample to such HCP or HCI and the basis for such determination. The IRO shall also note any instances in which it appears that GSK failed to follow its Sample Distribution Policies and Procedures for the Government Reimbursed Product(s) provided during the Sampling Event.

D. IRO Review of Physician Payment Listings 1. Information Contained in Physician Payment Listings

For purposes of the IRO review as set forth in this Section III.D, each annual listing of physicians and Related Entities who received Payments (as defined in Section III.O of the CIA) from GSK shall be referred to as the “Physician Payment Listing” or “Listing.” For each physician and Related Entity, each Physician Payment Listing shall include the following information: i) physician’s full name; ii) name of Related Entity (if applicable); iii) city and state of the physician’s practice or the Related Entity; and (iv) the aggregate value of the Payment(s) in the preceding year(s).

For purposes of this IRO review, the term “Control Documents” shall include all

documents or electronic records associated with each Payment reflected in the Physician

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Payments Listing for a sampled physician and/or Related Entity. For example, the term “Control Documents” includes, but is not limited to, documents relating to the nature, purpose, and amount of all Payments reflected in the Listing; contracts relating to the Payment(s) reflected in the Listing; documents relating to the occurrence of Payment(s) reflected in the Listing; documents reflecting any work product generated in connection with the Payment(s); documents submitted by field personnel or headquarters personnel to request approval for the Payment(s); and business rationale or justification forms relating to the Payment(s). 2. Selection of Sample for Review

For each IRO Reporting Period, the OIG shall have the discretion to identify up to

50 physicians or Related Entities from the applicable Physician Payment Listing that will be subject to the IRO review described below. If the OIG elects to exercise this discretion, it shall notify the IRO at least 90 days prior to the end of the IRO Reporting Period, of the physicians and/or Related Entities subject to the IRO review. If the OIG elects not to exercise its discretion as described above, the IRO shall randomly select 50 physicians and/or Related Entities to be included in the review. For each selected physician and/or Related Entity, the IRO shall review the entry in the Physician Payment Listing and the Control Documents relating to Payments reflected in the Listing identified by the IRO as necessary and sufficient to validate the Payment information in the Listing.

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

For each physician and/or Related Entity selected as part of the sample, the IRO shall review the Control Documents identified by the IRO as necessary and sufficient to validate each Payment reflected in the Listing to evaluate the following:

a) Whether Control Documents are available relating to each

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

b) Whether the Control Documents were completed and

archived in accordance with the requirements set forth in GSK’s policies;

c) Whether the aggregate value of the Payment(s) as reflected in

the Listing for the sampled Physician is consistent with the

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value of the Payments(s) reflected in the Control Documents; and

d) Whether the Control Documents reflect that GSK’s policies

were followed in connection with Payment(s) reflected in the Listing (e.g., all required written approvals for the activity were obtained in accordance with GSK’s policies).

4. Identification of Material Errors and Additional Review

A Material Error is defined as any of the following:

a) A situation in which all required Control Documents relating to Payments reflected in the Listing for the sampled physician and/or Related Entity do not exist and:

i. no corrective action was initiated prior to the selection of

the sampled physicians and/or Related Entities; or

ii. the IRO cannot confirm that GSK otherwise followed its policies and procedures relating to the entry in the Listing for the sampled physician or Related Entity, including its policies and procedures relating to any Payment(s) reflected in the Listing; or

b) Information or data is omitted from key fields in the Control

Documents that prevents the IRO from assessing compliance with GSK’s policies and procedures, and the IRO cannot obtain this information or data from reviewing other Control Documents.

If a Control Document does not exist, but GSK has initiated corrective action prior

to the selection of the sampled physicians and/or Related Entities, or if a Control Document does not exist but the IRO can determine that GSK otherwise followed its policies and procedures with regard to each entry in the Listing for a sampled physician or Related Entity, the IRO shall consider such a situation to be an exception (rather than a Material Error) and the IRO shall report the situation as such. Similarly, the IRO shall note as exceptions any Control Documents for which non-material information or data is omitted.

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If the IRO identifies any Material Errors, the IRO shall conduct such Additional Review of the underlying Payment associated with the erroneous Control Documents as may be necessary to determine the root cause of the Material Errors. For example, the IRO may need to review additional documentation and/or conduct interviews with appropriate personnel to identify the root cause of the Material Error(s) discovered.

E. IRO Review of Research and Publications Practices and Authorship-Related Activities The IRO shall conduct a review and assessment of GSK’s Research and Publications Practices and Authorship-Related Activities as described in Sections III.B.3. u-v of the CIA. Review of Research Activities: GSK shall provide the IRO with a list of all Research activities (as defined in Section III.B.3.u of the CIA) that were “active” (as classified in GSK’s tracking system) during the IRO Reporting Period, and the IRO shall select a sample of 40 such activities, which sample shall include a review of each type of Research (i.e., GSK-Sponsored post-marketing clinical trials, other GSK-Sponsored post-marketing studies, and post-marketing investigator-sponsored studies (ISSs).) The IRO shall review samples of each type of Research in proportion to the relative number of each type of Research that occurred during the reporting period. GSK shall provide the IRO with documents relating to the Research activities sufficient for the IRO to conduct the reviews outlined below. For each sampled Research activity, the IRO will review whether: (i) the activity was approved consistent with GSK’s standards, policies, procedures and processes regarding sponsorship or support of Research, including obtaining required approval for the Research by GSK’s medical and/or research organizations and ensuring that the Research was conducted for the purpose of fostering increased understanding of scientific, clinical or medical issues; (ii) there is an executed written agreement with the Researcher that meets the requirements of GSK’s standards, policies and procedures and, among other things, requires the Researcher to disclose in any publication of Research, GSK’s support and any financial interest the researcher may have in GSK; and (iii) GSK’s sales, marketing, or other commercial personnel did not participate in the design, conduct, or publication of the Research activity except as permitted under the limited exceptions in GSK’s policies and procedures. Review of Publication Activities:

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GSK shall provide the IRO with a list of publication activities (as defined in Section III.M.3 of the CIA) that resulted in publication of data from GSK-Sponsored post-marketing clinical trials or post-marketing studies of Government Reimbursed Products that appeared during the IRO Reporting Period. The list will be broken down into two categories: (i) GSK-Sponsored post-marketing clinical trials, and (ii) other GSK-Sponsored post-marketing studies (e.g., observational studies, health outcomes studies, epidemiology studies, and meta-analyses and pooled analyses.) The IRO shall select a sample from each category for review, in proportion to the relative numbers in each category (collectively, “Reviewed Publication Activities”). The IRO shall review a total of 60 Reviewed Publication Activities. GSK shall provide the IRO with copies of the publications and documents and information relating to each of the Reviewed Publication Activities sufficient for the IRO to conduct the reviews outlined below. The IRO will assess each of the Reviewed Publication Activities to test whether the Reviewed Publication Activity was conducted in a manner consistent with GSK’s standards, policies, procedures and processes, including those that require: i) posting of summary results from all GSK-Sponsored post-marketing interventional research studies of Government Reimbursed Products on GSK’s Clinical Study Register within a specified periods of time; ii) posting of summaries of study protocols for such research studies in the GSK Clinical Study Register; iii) registration of summary results from applicable GSK-Sponsored clinical trials on the NIH sponsored website in compliance with all Federal requirements; iv) publication (or attempted publication) of the results of GSK-Sponsored post-marketing interventional Research studies in peer-reviewed journals within specified periods of times; and v) compliance with GSK’s operating practices regarding publications relating to GSK-Sponsored post-marketing interventional research studies of Government Reimbursed Products (including standards relating to appropriateness, accuracy, balance, and acknowledgement of GSK’s role as the funding source for the Research). Review of Authorship-Related Activities: For each of the Reviewed Publication Activities, the IRO shall also assess the activity to test whether the activity was conducted in a manner consistent with GSK’s standards, policies, procedures and processes relating to authorship, including those that require: i) authors of journal articles about GSK-Sponsored Research to adhere to ICMJE authorship requirements (except in instances in which a particular journal requires an alternative procedure); ii) authors of articles on GSK-Sponsored Research to disclose any GSK financial support for the study and any financial relationship with GSK; iii) authors of a GSK publication of GSK-Sponsored Research to make substantial contributions to the study and give final approval to the version of the publication ultimately published;

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and iv) certifications from employees and medical writing contractors as to any GSK publication of GSK-Sponsored Research on which the individual is listed as an author or contributor. F. IRO Review of Additional Items

As set forth in Section III.E.1.b of the CIA, for the second through sixth IRO Reporting Periods, the OIG at its discretion may identify up to three additional items for the IRO to review (hereafter “Additional Items”). No later than 150 days prior to the end of the applicable IRO Reporting Period, the OIG shall notify GSK of the nature and scope of the IRO review to be conducted for each of the Additional Items. Prior to undertaking the review of the Additional Items, the IRO and/or GSK shall submit an audit work plan to the OIG for approval and the IRO shall conduct the review of the Additional Items based on a work plan approved by the OIG. The IRO shall include information about its review of each Additional Item in the Transactions Review Report (including a description of the review conducted for each Additional Item; the IRO’s findings based on its review for each Additional Item; and the IRO’s recommendations for any changes in GSK’s systems, processes, policies, and procedures based on its review of each Additional Item).

GSK may propose to the OIG that its internal audit(s) be substituted, subject to the

Verification Review requirements set forth below, for one or more of the Additional Items that would otherwise be reviewed by the IRO for the applicable IRO Reporting Period. The OIG retains sole discretion over whether, and in what manner, to allow GSK’s internal audit work to be substituted for a portion of the Additional Items review conducted by the IRO.

In making its decision, the OIG agrees to consider, among other factors, the nature

and scope of GSK’s planned internal audit work, the results of the Transactions Review(s) during prior IRO Reporting Period(s), and GSK’s demonstrated audit capabilities to perform the proposed audit work internally. If the OIG denies GSK’s request to permit its internal audit work to be substituted for a portion of the IRO’s review of Additional Items in a given IRO Reporting Period, GSK shall engage the IRO to perform the Review as outlined in this Section III.

If the OIG agrees to permit certain of GSK’s internal audit work for a given IRO

Reporting Period to be substituted for a portion of Additional Items review, such internal work would be subject to verification by the IRO (Verification Review). In such an instance, the OIG would provide additional details about the scope of the Verification Review to be conducted by the IRO. However, for purposes of any Verification Review,

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the IRO shall review at least 20% of the sampling units reviewed by GSK in its internal audits. G. Transactions Review Report For each IRO Reporting Period, the IRO shall prepare a report based on its Transactions Review. The report shall include the following:

1) General Elements to Be Included in Report

a) Review Objectives: A clear statement of the objectives intended to be achieved by each part of the review;

b) Review Protocol: A detailed narrative description of the procedures performed and a description of the sampling unit and universe utilized in performing the procedures for each sample reviewed; and

c) Sources of Data: A full description of documentation and other information, if applicable, relied upon by the IRO in performing the Transactions Review.

2) Results to be Included in Report

Consistent with the scope of items reviewed by the IRO for the applicable IRO Reporting Period, the following results shall be included in each Transaction Review Report:

(Relating to the Review of Inquiries) a) in connection with the review of Inquiries, a description of each type

of sample unit reviewed, including the number of each type of sample units reviewed (e.g., the number of Inquiries) and an identification of the types of documents and information reviewed for the Inquiries;

b) for each Inquiry sample unit, the IRO shall summarize the

information about the Inquiry contained in the Inquiries Database;

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c) for each Inquiry sample unit, findings and supporting rationale as to whether: (i) each item of information listed in Section III.A.1 is reflected in the Inquiries Database; and (ii) for each Inquiry for which an Off-Label Review was conducted, the basis for suspecting that improper off-label promotion may have occurred; the steps undertaken as part of the Off-Label Review; the findings of the Compliance Officer as a result of the Off-Label Review; and any follow-up actions taken by GSK as a result of the Compliance Officer’s findings;

d) the findings and supporting rationale regarding any weaknesses in

GSK’s systems, processes, policies, procedures, and practices relating to the Inquiries, and the Inquiries Database, if any;

e) recommendations for improvement in GSK’s systems, processes, policies, procedures, and practices relating to the Inquiries and the Inquiries Database, if any;

(Relating to the Target Plan Reviews)

f) a list of the Government Reimbursed Products promoted by GSK

during the IRO Reporting Period and a summary of the FDA-approved uses for such products;

g) for each Government Reimbursed Product which was promoted

during the IRO Reporting Period: i) a description of the criteria used by GSK in developing or reviewing the Target Plans and for including or excluding specified types of HCPs or HCIs from the Target Plans; ii) a description of the review conducted by GSK of the Target Plans and an indication of whether GSK reviewed the Target Plans as required by Section III.B.3.j of the CIA; iii) a description of all instances for each Target Plan in which it appears that the HCPs and HCIs included on the Target Plan are inconsistent with GSK’s criteria relating to the Target Plan and/or GSK’s Policies and Procedures; and iv) a description of all instances in which it appears that GSK failed to follow its criteria or Policies and Procedures relating to Target Plans or the review of the Target Plans;

h) the findings and supporting rationale regarding any weaknesses in

GSK’s systems, processes, policies, procedures, and practices

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relating to GSK’s Target Plans or the review of the Target Plans, if any;

i) recommendations, if any, for changes in GSK’s systems, processes,

policies, procedures, and practices that would correct or address any weaknesses or deficiencies uncovered during the Transactions Review with respect to Target Plans or the review of the Target Plans;

(Relating to the Sampling Event Reviews)

j) for each Government Reimbursed Product distributed during the

IRO Reporting Period: i) a description of Sample Distribution Policies and Procedures (including whether sales representatives may provide samples for the product and, if so, to HCPs or HCIs of which medical specialty or type of clinical practice a sales representative may provide samples); ii) a detailed description of any instances in which it appears that the medical specialty or clinical practice of the HCPs or HCIs that received a sample during a Sampling Event was not consistent with the uses of the product approved by the FDA. This description shall include a description of the process followed by GSK in determining that it was appropriate to provide a sample to such HCP or HCI and the basis for such determination; and iii) a detailed description of any instances in which it appears that GSK failed to follow its Sample Distribution Policies and Procedures for the Government Reimbursed Product(s) provided during the Sampling Event;

k) the findings and supporting rationale regarding any weaknesses in GSK’s systems, processes, policies, procedures, and practices relating to GSK’s distribution of samples of Government Reimbursed Products, if any;

l) recommendations, if any, for changes in GSK’s systems, processes, policies, procedures, and practices that would correct or address any weaknesses or deficiencies uncovered during the Transactions Review with respect to the distribution of samples;

(Relating to the Physician Payment Listing Reviews)

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m) a description of the entries in the Physician Payment Listing for each physician or Related Entity sampled and a description of Control Documents reviewed in connection with each selected physician or Related Entity;

n) for each sampled physician or Related Entity, findings and supporting rationale as to whether: (i) all required Control Documents exist; (ii) each Control Document was completed in accordance with all of the requirements set forth in the applicable GSK policy; (iii) the aggregate value of the Payment(s) as reflected in the Listing for the sampled physician or entity is consistent with the value of the Payment(s) reflected in the Control Documents; (iv) each Control Document reflects that GSK’s policies were followed in connection with the underlying activity reflected in the document (e.g., all required approvals were obtained); and (v) disciplinary action was undertaken in those instances in which GSK policies were not followed;

o) for each sampled physician or Related Entity unit reviewed, an identification and description of all exceptions discovered. The report shall also describe those instances in which corrective action was initiated prior to the selection of the sampled physicians or Related Entities, including a description of the circumstances requiring corrective action and the nature of the corrective action;

p) if any Material Errors are discovered in any sample unit reviewed, a description of the error, the Additional Review procedures performed and a statement of findings as to the root cause(s) of the Material Error;

(Relating to the Review of Research and Publication Practices and Authorship-Related Activities)

q) a description of each sampled Research activity reviewed, including

an identification of the types of documents and information reviewed in connection with each sampled Research activity;

r) an assessment of whether, for each sampled Research activity: (i) the activity was approved consistent with GSK’s standards, policies, procedures and processes regarding sponsorship or support of Research; (ii) there is an executed written agreement with the

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Researcher that meets the requirements of GSK’s standards, policies and procedures; and (iii) GSK’s sales, marketing, or other commercial personnel did not participate in the design, conduct, or publication of the Research Activity except as permitted under GSK’s policies and procedures. If a sampled Research activity failed to meet GSK standards, policies, procedures and processes, an explanation of the deficiency;

s) a description of each Reviewed Publication Activity assessed by the IRO, including an identification of the types of documents and information reviewed in connection with each Reviewed Publication Activity;

t) an assessment of whether for each Reviewed Publication Activity; i) authors of journal articles about GSK-Sponsored Research adhered to ICMJE requirements; ii) authors of articles about GSK-Sponsored Research disclosed any GSK financial support for the study and any financial relationship with GSK; iii) authors of a GSK publication about GSK-Sponsored Research made substantial contributions to the study and gave final approval to the version of the publication ultimately published; and iv) GSK obtained certifications from employees, medical writing contractors, and outside authors as to any GSK publication of GSK-Sponsored Research on which the individual is listed as an author or contributor;

u) an assessment of whether for each Reviewed Publication Activity; i)

authors of journal articles about GSK-Sponsored Research adhered to ICMJE requirements; ii) authors of articles on GSK-Sponsored Research disclosed any GSK financial support for the study and any financial relationship with GSK; iii) authors of a GSK publication of GSK-Sponsored Research made substantial contributions to the study and gave final approval to the version of the publication ultimately published; and iv) GSK obtained certifications from employees, medical writing contractors, and outside authors as to any GSK publication of GSK-Sponsored Research on which the individual is listed as an author or contributor;

v) if any Reviewed Publication Activity failed to meet GSK standards, policies, procedures and processes, an explanation of the deficiency;

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w) the IRO’s findings and supporting rationale regarding any weaknesses or deficiencies in GSK’s systems, processes, policies, procedures, and practices relating to GSK’s Research and Publications Practices and Authorship-Related Activities, if any;

x) recommendations, if any, for changes in GSK’s systems, processes, policies, and procedures that would correct or address any weaknesses or deficiencies uncovered during the Transactions Review with respect to Research and Publications Practices and Authorship-Related Activities;

(Relating to the Review of Additional Items)

y) for each Additional Item reviewed, a description of the review conducted;

z) for each Additional Item reviewed, the IRO’s findings based on its review;

aa) for each Additional Item reviewed, the findings and supporting rationale regarding any weaknesses in GSK’s systems, processes, policies, procedures, and practices relating to the Additional Item, if any;

bb) for each Additional Item reviewed, recommendations, if any, for changes in GSK’s systems, processes, policies, and procedures that would correct or address any weaknesses or deficiencies uncovered during the review.

Appendix C to CIA for GlaxoSmithKline LLC

IRO Reviews of GSK’s Targeted Risk Analysis and Compliance Evaluation Review (TRACER) Program

I. General Description of TRACER program

GSK uses the Targeted Risk Analysis and Compliance Evaluation Review process (TRACER) as a tool to evaluate and mitigate promotional risks (hereinafter, “risks”) associated with all prescription Government Reimbursed Products that have field force support in the United States (GSK Products).

1. Risk Identification and Evaluation

As part of TRACER, risk information will be solicited from four key sources: (i) Copy Approval Teams; (ii) U.S. Pharma’s Monitoring Control Center of Excellence (CCoE); (iii) Deputy Compliance Officers (DCOs); and (iv) Legal department personnel.

Based on inputs from these sources, a relative risk ranking report will be produced for all GSK Products (Risk Evaluation Report). The Risk Evaluation Report will be presented to the leadership team of each U.S. Pharma commercial business unit (Leadership Team) and the U.S. Pharma Commercial Leadership Team (CLT) along with recommendations regarding which products may require enhanced risk mitigation plans.

The Risk Evaluation Report will also be used by the CCoE to inform the risk-based selection of products as required by the Field Force Monitoring Program described in CIA Section III.L.

2. Risk Mitigation Plans

Risk Mitigation Plans (RMPs) will be completed annually for all GSK Products. All RMPs will outline standard risk mitigation activities that will be performed and tracked for each GSK Product, regardless of the product’s relative risk ranking (Standard RMPs). Standard risk mitigation activities will consist of the monitoring activities to be conducted for each GSK Product in the upcoming year, such as monitoring of speaker programs, speaker training, advisory boards, sampling, verbatim reviews, medical information requests and ride-alongs with sales personnel.

Based on the Risk Evaluation Report, products may be selected for Enhanced RMPs by either (or both) the Leadership Teams and the CLT. These RMPs will include enhanced risk mitigation activities, in addition to the standard activities (Enhanced RMPs). Enhanced RMPs will consist of activities tailored to the risks identified during the risk ranking process. For example, such activities may include increased compliance

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messaging from Leadership Teams, modifications to or limitations of promotional programs, or enhanced training requirements.

All RMPs (whether Standard or Enhanced) will be developed by brand teams, in consultation with their respective DCOs and the CCoE, on an annual basis. Each RMP will specify the: (i) risk monitoring activities; (ii) metrics by which monitoring activities and results will be evaluated and/or measured; (iii) risk mitigation action items, if necessary; (iv) metrics by which risk mitigation activities and results will be evaluated and/or measured; (v) responsible individual(s); and (vi) expected date(s) of monitoring and/or action item completion. The RMPs will be reviewed and approved by the respective business unit Leadership Teams.

3. Risk Mitigation Plan Tracking

RMP activities (including risk monitoring activities, risk mitigation activities, and risk mitigation action items) will be tracked by the CCoE and reported using a Monitoring Dashboard which will identify risk monitoring and mitigation activities and track their progress on at least a quarterly basis. The status of the RMPs will be tracked and reported to Leadership Teams and compliance personnel on at least a quarterly basis. II. TRACER Reviews, General Description

A. As specified more fully below, GSK shall retain an IRO to assist GSK in assessing and evaluating its systems, processes, policies, procedures, and practices relating to the TRACER program (TRACER Review). The TRACER Review shall consist of two components - a systems review (TRACER Systems Review) and a transactions review (TRACER Transactions Review) as described more fully below. GSK may engage, at its discretion, a single IRO to perform both components of the TRACER Review provided that the entity has the necessary expertise and capabilities to perform both. B. If there are no material changes in GSK’s systems, processes, policies, and procedures relating to TRACER, the IRO shall perform the TRACER Systems review for the second and fifth IRO Reporting Periods. If GSK materially changes its systems, processes, policies, and procedures relating to TRACER, the IRO shall perform a TRACER Systems Review for the IRO Reporting Period(s) in which such changes were made in addition to conducting the Systems Review for the second and fifth IRO Reporting Periods. The additional TRACER Systems Review(s) shall consist of: (1) an identification of the material changes; (2) an assessment of whether other systems, processes, policies, and procedures previously reported did not materially change; and (3) a review of the systems, processes, policies, and procedures that materially changed. The IRO shall conduct the TRACER Transactions Review for second through sixth IRO Reporting Periods of the CIA.

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III. TRACER Systems Review A. The TRACER Systems review shall consist of the following:

1. A review of the processes by which GSK develops and evaluates Risk Evaluation Reports and develops Standard and Enhanced RMPs, including the sources of information (e.g., the individual personnel, departments or functional areas, and/or any systems involved) used to compile the Reports and RMPs; the types of underlying data and information that are considered or evaluated during the development of the Risk Evaluation Reports and the RMPs; and the timing for development of Risk Evaluation Reports and the RMPs (including modifications to the Reports or RMPs in the event of significant new developments);

2. An assessment of whether, in developing the Risk Evaluation Reports

and the RMPs: i) additional or different sources of information; ii) additional or different types of data or information; and iii) additional or different timing cycles should be utilized;

3. A review of the experience and background of the brand directors

responsible for development of the RMPs and an assessment of the completeness and appropriateness of the training, policies, procedures, standard operating procedures, and guidance such individuals receive regarding the development of the RMPs;

4. An assessment of whether the standard risk mitigation activities

(monitoring activities) included in RMPs are designed to: (i) adequately monitor all relevant identified risks; (ii) identify any actual problems that have occurred in connection with the identified potential risk; and/or (iii) ensure that the activity associated with an identified risk does not occur in the future;

5. An assessment of whether standard risk mitigation activities

(monitoring activities) that may be included in RMPs should be: (i) enhanced, revised, or refined; (ii) changed to include additional or different mitigation/monitoring options to be considered based upon specific identified risks; (iii) tracked and reviewed more frequently than prescribed by current policies to ensure that the options address all relevant risks for the specific products reviewed;

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6. An assessment of whether enhanced risk mitigation activities and risk mitigation action items (and options for such activities) included in Enhanced RMPs are designed to: (i) adequately address all relevant identified risks; (ii) identify any actual problems that have occurred in connection with the identified potential risk; and/or (iii) ensure that the activity associated with an identified risk does not occur in the future;

7. An assessment of whether enhanced risk mitigation activities that may

be included in RMPs should be: (i) enhanced, revised, or refined; (ii) changed to include additional or different mitigation/monitoring options to be considered based upon specific identified risks; (iii) tracked and reviewed more frequently than prescribed by current policies to ensure that the options address all relevant risks for the specific products reviewed; and

8. A review of the systems, policies, procedures, and processes (including

the Monitoring Dashboard and any narrative supplements) by which GSK tracks and manages RMP activities and an assessment of whether the systems, policies, procedures and processes ensure that the RMPs are appropriately implemented (including by identifying individuals responsible for the follow-up or action items).

B. The IRO shall prepare a report based upon each Systems Review performed (System Review Report). The Systems Review Report will include the IRO’s findings, recommendations, observations, and comments on items 1-8 above and, to the extent not otherwise addressed, an assessment of the following: (i) whether the Risk Evaluation Reports and RMPs identify and prioritize relevant risks; (ii) whether the risk monitoring activities, risk mitigation activities and any risk mitigation action items identified in RMPs address identified risks; (iii) whether sufficient controls exist to ensure that all risk mitigation steps (including monitoring activities and risk mitigation activities) are completed in accordance with the RMPs; iv) whether the options for risk monitoring activities and risk mitigation activities identified in the RMPs address and potentially mitigate identified risks; and (iv) whether sufficient controls exist to ensure that all agreed-upon risk monitoring activities and risk mitigation activities are completed in accordance with the RMPs. IV. TRACER Transactions Review A. At least thirty (30) days prior to the end of the second through sixth IRO Reporting Periods, GSK shall submit to OIG a list of all GSK Products for which RMPs were developed. GSK shall notify the OIG about which products had Standard RMPs and which products had Enhanced RMPs. Prior to the end of the applicable IRO

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Reporting Period, OIG shall select 3 GSK Products (each a “Selected Product” and together the “Selected Products”) to be reviewed in connection with the TRACER Transactions Review. B. For each IRO Reporting Period and for each Selected Product, the IRO shall conduct a review of: i) the applicable Risk Evaluation Report entry and RMP; ii) documents and materials related to the development of the RMP; and iii) documents and materials relating to the implementation of the RMP (including the Monitoring Dashboard and any supplements to the Scorecard). The IRO shall also interview the brand team director responsible for the development of the RMP and the individual(s) responsible for the implementation of the risk monitoring and risk mitigation activities specified in the RMP. The objective of the IRO shall be to: (i) understand the processes followed by GSK in developing the RMP for each Selected Product, including the underlying bases for GSK’s decision to develop either a Standard RMP or an Enhanced RMP for the Selected Product; (ii) determine whether, based on the information contained in the Risk Evaluation Report, an appropriate RMP (including as to the included risk monitoring activities, risk mitigation activities, and risk mitigation action items) was developed for the Selected Product; and (iii) assess GSK’s implementation and tracking of the implementation of the RMP for the Selected Product.

C. The IRO will prepare a report based on each TRACER Transactions Review performed (Transactions Review Report). The Transactions Review Report shall include the following:

1. an identification of the 3 Selected Products and a description of the

documents and information reviewed in connection with each Selected Product, including a description of whether the RMP for each Selected Product was a Standard RMP or an Enhanced RMP,

2. for each Selected Product, a description of: i) the process followed in

developing the RMP; and ii) the types of identified risks associated with the Selected Product;

3. for each Selected Product, an assessment of whether it was appropriate

for GSK to develop, as applicable, an Enhanced or a Standard, RMP for the product;

4. for each Selected Product, an assessment of whether, based on the

information contained in the Risk Evaluation Report, an appropriate RMP was developed for the Selected Product;

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5. for each Selected Product, a description of the expertise and

backgrounds of the brand directors who were responsible for the development of the RMP;

6. for each Selected Product, a description of the following items set forth

in the RMP: (i) risk monitoring activities; (ii) metrics by which the risk monitoring activities and results will be evaluated and/or measured; (iii) risk mitigation activities, including any risk mitigation action items; (iv) metrics by which the risk mitigation activities and results will be evaluated and/or measured; (v) responsible individual(s); (vi) expected date(s) of completion for each risk monitoring activity and risk mitigation activity; and (vii) if the RMP did not specify each of the items set forth above, a description of any deficiencies;

7. for each Selected Product, a description of whether risk monitoring

activities specified in the RMP were implemented and tracked in accordance with the RMP and GSK’s policies and procedures, and a description of any deficiencies;

8. for each Selected Product, a description of whether risk mitigation

activities (including any action items) specified in the RMP were implemented and tracked in accordance with the RMP and GSK’s policies and procedures, and a description of any deficiencies;

9. for each Selected Product a description of: (i) any recommendations

made by the IRO regarding the RMP or any risk monitoring activities and risk mitigation activities included in the RMP; (ii) whether, and in what manner, GSK implemented the recommendations from the IRO; and (iii) if GSK did not implement the IRO recommendations, a description of the rationale for GSK’s decision not to implement the recommendations; and

10. the IRO’s findings and supporting rationale regarding any weaknesses

or deficiencies in GSK’s systems, processes, policies, procedures, and practices relating to the TRACER program, if any; and recommendations, if any, for changes in GSK’s systems, processes, policies, procedures, and practices that would correct or address any weaknesses or deficiencies uncovered during the Transactions Review with respect to the TRACER program.

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Appendix D to CIA for GlaxoSmithKline LLC

Global Manufacturing and Supply-Related Provisions I. PREAMBLE

Prior to the Effective Date of the CIA (as defined below), GSK and its Affiliates established a voluntary compliance program applicable to the Global Manufacturing and Supply business unit (GMS Compliance Program). GMS has responsibility for the compliance function at the manufacturing facility located in Zebulon, North Carolina (Zebulon) and at manufacturing facilities worldwide. GMS employees at Zebulon are responsible for the release and post-release management of all Covered Products (defined below in Section II.C.3) distributed in the United States that are either manufactured at the Zebulon site or manufactured at other manufacturing facilities operated by GMS and located outside of the United States.

The GMS Compliance Program includes a GMS Compliance Officer and a GMS Compliance Committee. The GMS Compliance Program also includes a Code of Conduct (as described in Section III.B.1 of the CIA), written policies and procedures, educational and training initiatives, a Disclosure Program that allows for the confidential disclosure and investigation of potential compliance violations and disciplinary procedures, screening measures for Ineligible Persons, and internal auditing procedures. GSK shall continue the GMS Compliance Program throughout the term of this Appendix and shall do so in accordance with the terms set forth below. GSK may modify its GMS Compliance Program as appropriate, but, at a minimum, GSK shall ensure that during the term of this Appendix, it shall comply with the obligations set forth in this Appendix.

II. TERM AND SCOPE OF THIS APPENDIX

A. Unless otherwise specified, the period of the compliance obligations assumed by GSK and its Affiliates under this Appendix D shall be five reporting periods, as defined below. The “Effective Date” shall be the date on which the final signatory of the CIA executes the CIA. The first Reporting Period shall be from the Effective Date through December 31, 2013. The second and subsequent Reporting Periods shall be from January 1 through December 31 of each of the subsequent four calendar years.

B. Sections III.D of this Appendix to the CIA and sections VII, X, and XI of the CIA shall expire no later than 120 days after OIG’s receipt of: (1) GSK’s final Annual Report with respect to this Appendix; or (2) any additional materials submitted by GSK pursuant to OIG’s request, whichever is later.

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

1. “Manufacturing Covered Persons” includes:

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a. President, Global Manufacturing and Supply; b. All members of the GMS Executive Team; c. Senior Vice President of GMS Quality; d. All members of the Quality Executive Team (QET); e. All “above-site” employees with a direct reporting line into a

QET member, and whose responsibilities include managing GMS employees that directly support cGMP Activities at the Covered Manufacturing Facility(ies);

f. The Site Quality Director at the Covered Manufacturing Facility(ies);

g. All GSK employees at the Covered Manufacturing Facility(ies) who are engaged in cGMP Activities;

h. Senior Vice President of GMS Pharma Operations; i. All above-site employees with a direct reporting line to the

Senior Vice President of Pharma Operations whose responsibilities include managing manufacturing operations at the Covered Manufacturing Facility(ies);

j. With respect to GMS manufacturing facilities (other than a Covered Manufacturing Facility) located in the United States that manufacture and/or release drug products for distribution in the United States, the Site Director, the Site Quality Director, and any employee who is directly responsible for authorizing the release for distribution of drug products at such GMS manufacturing facilities;

k. With respect to GSK vaccines manufacturing facilities (other than a Covered Manufacturing Facility) located in the United States that manufacture and/or release vaccines for distribution in the United States, the Site Director, the Site Quality Director and any employee who is directly responsible for authorizing the release for distribution of vaccines at such vaccines manufacturing facilities;

l. Any GSK employee at a distribution center located in the United States that is operated by or on behalf of GSK who is directly responsible for authorizing the release for distribution of drug products or vaccines from such distribution center; and

m. Any contractor, subcontractor, agent or other person whose normal place of work is a Covered Manufacturing Facility(ies) and whose day-to-day responsibilities directly relate to cGMP Activities.

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Notwithstanding the above, this term does not include employees, contractors, subcontractors, agents, and other persons who are not reasonably expected to work more than 160 hours per calendar year, except that any such individuals shall become “Manufacturing Covered Persons” at the point when they work more than 160 hours during the calendar year.

2. “cGMP Activities” means activities directly related to ensuring compliance with current Good Manufacturing Practice (cGMP) requirements contained in the Federal Food, Drug, and Cosmetic Act and applicable regulations (collectively “cGMP Requirements”), to submitting cGMP-related reports and information to the FDA, and/or responding to FDA inspectional observations or other correspondence, including correspondence regarding cGMP Requirements.

3. “Covered Products” means prescription drug products sold by GSK that are reimbursed by a Federal health care program and that are manufactured at a GSK facility and released by a Covered Manufacturing Facility (as defined below in Section II.C.4) or any other GSK facility for distribution into the United States. Vaccines are not Covered Products.

4. “Covered Manufacturing Facility” means the GSK facility in Zebulon, North Carolina, and subject to Section IV.A, any other GSK facility that after the Effective Date of this CIA and Appendix, manufactures, or is responsible for the release of Covered Products in the United States.

III. CORPORATE INTEGRITY OBLIGATIONS

To the extent not accomplished prior to the Effective Date, GSK shall establish and maintain a GMS Compliance Program that includes the following elements:

A. Compliance Officer and GMS Compliance Committee

1. Compliance Officer. Prior to the Effective Date, GSK appointed an individual to serve as a Compliance Officer for its GMS business unit (GMS Compliance Officer) and GSK shall maintain a GMS Compliance Officer for the term of this Appendix. The GMS Compliance Officer shall be responsible for overseeing the development and implementation of policies, procedures, and practices designed to ensure compliance with the requirements set forth in this Appendix relating to cGMP Activities, with applicable Federal health care program requirements and applicable FDA requirements. The GMS Compliance Officer shall be a member of senior management of GMS, and shall report directly to the Senior Vice President for Governance, Ethics and Assurance of GlaxoSmithKline PLC, who, in turn reports to the Chief Executive Officer of GlaxoSmithKline PLC. The GMS Compliance Officer shall make periodic (at least quarterly) reports regarding GMS compliance matters related to this Appendix to the Board of Directors (or an authorized committee thereof) of GlaxoSmithKline PLC

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(hereinafter, “the Board”), and shall be authorized to report on such matters to the Board at any time. The GMS Compliance Officer shall not be or be subordinate to the General Counsel or Chief Financial Officer. The GMS Compliance Officer shall be responsible for oversight of the day-to-day compliance activities engaged in by GMS as well as for any reporting obligations created under this CIA. Any noncompliance job responsibilities of the GMS Compliance Officer shall be limited and must not interfere with the GMS Compliance Officer’s ability to perform the duties outlined in this CIA.

GSK shall report to OIG, in writing, any changes in the identity of the GMS Compliance Officer, or any actions or changes that would affect the GMS Compliance Officer’s ability to perform the duties necessary to meet the obligations in this Appendix, within 5 days after such a change.

2. GMS Compliance Committee. Prior to the Effective Date, GMS established a GMS Compliance Committee. The GMS Compliance Committee includes the GMS Compliance Officer and other members of GMS senior management necessary to meet the requirements of this Appendix. The GMS Compliance Officer shall co-chair the GMS Compliance Committee with the GMS President. The GMS Compliance Committee shall support the GMS Compliance Officer in fulfilling his/her responsibilities (e.g., shall assist in the analysis of the GMS’s cGMP risk areas and shall oversee monitoring of internal and external audits and investigations related to cGMP Requirements). The GMS Compliance Committee shall meet at least quarterly.

GSK shall report to OIG, in writing, any changes in the composition of the GMS Compliance Committee, or any actions or changes that would affect the GMS Compliance Committee’s ability to perform the duties necessary to meet the obligations in this Appendix, within 15 days after such a change.

3. Board of Directors Compliance Obligations. The Board shall be responsible for the oversight of matters related to compliance with cGMP Activities, applicable Federal health care program requirements, applicable FDA requirements, and the obligations of this Appendix.

The Board shall, at a minimum, be responsible for the following:

a. meeting at least quarterly to review and oversee GMS’s Compliance Program, including but not limited to the performance of the GMS Compliance Officer and other GMS compliance personnel;

b. for each Reporting Period of this Appendix, adopting a resolution, signed by each member of the Board summarizing its review and oversight of GMS’s compliance with cGMP Activities, applicable Federal health care program

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requirements, applicable FDA requirements, and the obligations of this Appendix.

At minimum, the resolution shall include the following language:

“The Board of Directors has made a reasonable inquiry into the operations of the GMS Compliance Program for the time period [insert time period], including the performance of the GMS Compliance Officer. The Board has concluded that, to the best of its knowledge, GSK has implemented an effective Compliance Program, including a program that is effective to meet applicable Federal health care program requirements, applicable FDA requirements, and the obligations of this Appendix D to the CIA.”

If the Board is unable to provide such a conclusion in the resolution, the Board shall include in the resolution a written explanation of the reasons why it is unable to provide the conclusion and the steps it is taking to implement an effective GMS Compliance Program.

GSK shall report to the OIG, in writing, any changes in the composition of the Board, or any actions or changes that would affect the Board’s ability to perform the duties necessary to meet the obligations in this Appendix, within 15 days after such change.

B. Written Standards

Code of Conduct. Prior to the Effective Date, GSK developed and adopted a written Code of Conduct (as described in Section III.B.1 of the CIA).

To the extent not already accomplished, within 120 days after the Effective Date, GSK shall distribute the Code of Conduct to each Manufacturing Covered Person who is a GSK employee and each Manufacturing Covered Person shall certify, in writing or electronically, that he or she has received, read, understood, and shall abide by the Code of Conduct. New Manufacturing Covered Persons shall receive the Code of Conduct and shall complete the required certification within 30 days after becoming a Manufacturing Covered Person or within 120 days after the Effective Date, whichever is later.

As provided in Section III.B of the CIA, GSK shall periodically review the Code of Conduct to determine if revisions are appropriate and shall make any necessary revisions based on such review. Any revised Code of Conduct shall be distributed to Manufacturing Covered Persons within 30 days to after any revisions are finalized. Each Manufacturing Covered Person shall certify, in writing or electronically, that he or she

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has received, read, understood, and shall abide by the revised Code of Conduct within 30 days after the distribution of the revised Code of Conduct.

1. Policies and Procedures. Prior to the execution of the CIA, GSK implemented written Policies and Procedures regarding the operation of its GMS Compliance Program. Within 120 days after the Effective Date, GMS shall implement written procedures regarding any additional Compliance Program requirements outlined in this Appendix D. To the extent not already accomplished, within 120 days after the Effective Date, GMS shall ensure that the Policies and Procedures address or shall continue to address:

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

b. disciplinary policies and procedures for violations of the Company’s Policies and Procedures, including policies relating to cGMP Activities and FDA requirements relating to cGMP Activities.

To the extent not already accomplished, within 120 days after the Effective Date, the Policies and Procedures shall be made available to all Manufacturing Covered Persons. Appropriate and knowledgeable staff shall be available to explain the Policies and Procedures.

At least annually (and more frequently, if appropriate), GSK shall assess and update the Policies and Procedures, as necessary. Within 30 days after the effective date of any revisions, any such revised Policies and Procedures shall be made available to all Manufacturing Covered Persons.

C. Training and Education

GSK represents that it provides training on a regular basis concerning a variety of topics directly related to cGMP Activities. The training required by this Appendix need not be separate and distinct from the regular training provided by GSK to Manufacturing Covered Persons. At GSK’s option, the training required by this Appendix may be integrated into the regular training provided by GSK.

1. General Training. Within 120 days after the Effective Date, GMS shall provide at least one hour of General Training to each Manufacturing Covered Person. This training, at a minimum, shall explain:

a. The requirements of this Appendix D to the CIA; and

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b. GMS’s Compliance Program, including the Company’s Code of Conduct.

New Manufacturing Covered Persons shall receive the General Training described above within 30 days after becoming a Manufacturing Covered Person or within 120 days after the Effective Date, whichever is later. After receiving the initial General Training described above, each Manufacturing Covered Person shall receive at least one hour of General Training during each subsequent Reporting Period.

Board Member Training. The training required by Section III.C.4 of the CIA shall include training on the obligations set forth in this Appendix.

2. Certification. Each individual who is required to receive training shall certify, in writing, or in electronic form, if applicable, that he or she has received the required training and the date upon which the training was completed. The GMS Compliance Officer (or designee) shall retain the certifications, along with all course materials.

3. Qualifications of Trainer. Persons providing the training shall be knowledgeable about the subject area, including about FDA requirements relating to cGMP Activities.

4. Update of Training. GMS shall review the content of each training program required by this Appendix annually and update the content of each training program, where appropriate, to reflect any material changes to cGMP requirements, changes to applicable Federal health care program requirements, FDA requirements, and any issues observed during internal audits.

5. Computer-based Training. GMS may provide the training required under this Appendix through appropriate computer-based training approaches. If GMS 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. All applicable requirements to provide a number of “hours” of training as set forth in this Section III.C. may be met with respect to computer-based training by providing the required number of “normative” hours as that term is used in the computer-based training industry.

D. cGMP Requirements

1. In addition to existing FDA authorities and remedies, GSK agrees to certain obligations under this Appendix relating to cGMP Requirements for GSK drug products and vaccines. These provisions are in addition to other remedies available to the FDA.

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2. If the Director of Compliance at FDA’s Center for Drug Evaluation and Research (CDER), or in the case of a vaccine, the Director of Compliance at FDA’s Center for Biologics Evaluation and Research (CBER) determines that a GSK facility (or facilities) manufacturing, processing, packing, or holding a GSK drug product or vaccine is not compliant with cGMP Requirements, FDA may so notify the OIG and recommend that OIG direct GSK to undertake a Specified Action as set forth below in section III.D.3 of this Appendix.

3. If, after reviewing FDA’s notification and recommendation, OIG agrees that GSK should be directed to undertake a Specified Action as set forth in section III.D.3 of this Appendix, OIG shall notify GSK in writing of its determination and direct GSK to undertake one or more of the following actions (Specified Actions):

a. Submit a report or information addressing the assertion of non-compliance to FDA and OIG within 10 days after the date of written notification from the OIG in accordance with the Notification provision in section III.D.4 below;

b. In the event that OIG and/or FDA request additional or follow-up information, GSK shall submit revised, modified, or expanded report(s) or plan(s) to FDA and OIG in accordance with time frames established by the OIG and FDA; and/or

c. Initiate a recall of the GSK drug product or vaccine in accordance with the instructions and time frames specified by OIG and FDA.

4. All notifications and reports required under this Section III.D 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 5527 330 Independence Avenue, S.W. Washington, DC 20201

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FDA Division of Manufacturing and Product Quality HFD-320 Center for Drug Evaluation and Research 10903 New Hampshire Avenue White Oak Bldg. 51 Silver Spring, MD 20993 GSK Guy Wingate Vice President - GMS Compliance Officer GlaxoSmithKline GSK House (Mailstop BNG-15) 980 Great West Road Brentford Middlesex TW8 9GS United Kingdom Paul Noll Vice President - Associate General Counsel Legal Operations - Global Manufacturing and Supply GlaxoSmithKline Five Moore Drive Ruvane Building - Mailstop E.3334 Research Triangle Park, NC 27709

5. Within 10 days after receiving notification from the OIG of a

Specified Action to be taken, GSK shall notify OIG and FDA in writing either:

a. that GSK is undertaking or has undertaken the Specified Action, in which event GSK also shall describe the Specified Action taken or to be taken and the schedule for completing the action; or

b. that GSK does not agree with the OIG’s determination that it failed to comply with cGMP Requirements and/or that the Specified Action is appropriate.

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6. If GSK notifies OIG and FDA that it does not agree with the determination that it failed to comply with cGMP Requirements or that the Specified Action is appropriate:

a. GSK shall explain in writing the basis for its disagreement; in so doing, GSK also may propose specific alternative actions and specific time frames to be substituted for the Specified Action required under this Section III.D.

b. FDA shall review GSK’s notification and thereafter, in writing, make a recommendation to OIG that OIG affirm, modify, or withdraw its proposed Specified Action.

7. Based on the advice of the FDA, OIG shall decide whether the determination that GSK failed to comply with cGMP Requirements and/or the proposed Specified Action shall be affirmed, modified, or withdrawn and shall provide written notice (Final Determination) to GSK of the Specified Action to be taken or of the withdrawal of the Specified Action. GSK shall, upon receipt of the notification of Final Determination, immediately implement the Final Determination.

8. GSK’s failure to implement that Specified Action shall be the basis for Stipulated Penalties and or Material Breach Penalties under Section X of the CIA.

E. Manufacturing Reportable Events

1. Definition of Manufacturing Reportable Event. For purposes of this Appendix, a “Manufacturing Reportable Event” means conduct related to a Covered Manufacturing Facility or Covered Product that involves:

a. a matter that a reasonable person would consider a probable violation of criminal, civil, or administrative laws applicable to cGMP Activities; or

b. the employment of or contracting with a Covered Person who

is an Ineligible Person as defined by Section III.G.1.a of the CIA;

A Manufacturing Reportable Event may be the result of an isolated event or

a series of occurrences. A Manufacturing Reportable Event does not include the following:

a. Field Alert Reports submitted to FDA and related correspondence;

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b. Observations contained in FDA 483 Reports, GSK’s responses to those observations and any related correspondence;

c. Drug Quality Reporting System (DQRS) reports submitted to FDA and any related correspondence;

d. Reports submitted to FDA relating to suspected or known counterfeit products and any related correspondence; and

e. GSK Annual Product Reports for marketed products submitted to FDA and any related correspondence.

2. Reporting of Manufacturing Reportable Events. If GSK determines (after a reasonable opportunity to conduct an appropriate review or investigation) through any means that there is a Manufacturing Reportable Event, GSK shall, notify OIG in writing, within 30 days after making the determination that the Reportable Event exists.

3. Manufacturing Reportable Events under Section III.E.1.a-b. For Manufacturing Reportable Events under Sections III.E.1.a-c, the report to OIG shall include:

a. a complete description of the Manufacturing Reportable Event, including the relevant facts and persons involved and the legal authorities implicated;

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

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

F. Reporting of Certain Events If GSK voluntarily initiates a recall of a Covered Product manufactured at and/or released by either a Covered Manufacturing Facility or other GSK manufacturing facility located in the United States and that has been distributed in the United States, GSK shall notify OIG in writing within 5 days after initiating the recall.

IV. CHANGES TO BUSINESS UNITS OR LOCATIONS

Change of Status of a Covered Manufacturing Facility. In the event that, after the Effective Date, a new GSK facility located in the United States other than, or in

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addition to, the Zebulon, North Carolina facility, manufacturers and/or releases for distribution in the United States Covered Products sold by GSK that are reimbursed by Federal health care programs, such facility may become a Covered Manufacturing Facility subject to the terms described below. As of the date that such new facility commences manufacture and/or release of a Covered Product, the Site Director, the Site Quality Director and all employees who are directly responsible for the release of Covered Products for distribution in the United States shall become Manufacturing Covered Persons. GSK shall have thirty (30) days to determine whether such new facility will continue to release Covered Products for distribution in the United States independently of the Zebulon, North Carolina facility. If, within the thirty (30) day period, GSK decides that such new facility will continue to release Covered Products independently of the Zebulon, North Carolina facility, then such facility shall become a Covered Manufacturing Facility and employees listed in Section II.C.1 of this Appendix shall be Manufacturing Covered Persons. If, within the thirty (30) day period, GSK determines that Covered Products manufactured at the new facility will be released under the supervision of the Zebulon, North Carolina facility, then such new facility shall not become a Covered Manufacturing Facility. In such event, the Site Director, the Site Quality Director and all employees at the facility who are directly responsible for authorizing the release of Covered Products for distribution in the United States shall be Manufacturing Covered Persons. GSK shall notify the OIG about the new Covered Manufacturing Facility in accordance with the timeframes specified in Section IV of the CIA.

V. IMPLEMENTATION AND ANNUAL REPORTS

A. Appendix Implementation Report. Within 150 days after the Effective Date, GSK shall submit a written report to OIG summarizing the status of its implementation of the requirements of this Appendix (Appendix D Implementation Report). The Appendix D Implementation Report shall, at a minimum, include:

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

2. the names and positions of the members of the GMS Compliance Committee required by Section III.A.2 of this Appendix;

3. the names of the members of the Board of Directors referenced in Section III.A.3 of this Appendix;

4. the number of individuals required to complete the Code of Conduct certification required by Section III.B.1 of this Appendix, the percentage of individuals

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who have completed such certification, and an explanation of any exceptions (the documentation supporting this information shall be available to OIG upon request);

5. a summary of all Policies and Procedures required by Section III.B of this Appendix (copies of the Policies and Procedures shall be made available to OIG upon request);

6. the following information regarding each type of training required by Section III.C of this Appendix:

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 made available to OIG upon request.

7. A description of GSK’s corporate structure as it relates to GMS and cGMP Activities; and

8. the certifications required by Section V.C of this Appendix.

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

Each Appendix Annual Report shall include, at a minimum:

1. Any change in the identity, position description, or other noncompliance job responsibilities of the GMS Compliance Officer, any changes in the membership of the GMS Compliance Committee, and any changes in the membership of the Board as described in Section III.A of this Appendix;

2. The Board resolution required by Section III.A.3 of this Appendix;

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

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4. A summary of any significant changes or amendments to the Policies and Procedures required by Section III.B of this Appendix and the reasons for such changes.

5. The following information regarding each type of training required by Section III.C of this Appendix:

a. a description of the initial and annual 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 complete the initial and annual training, the percentage of individuals who actually completed the initial and annual training, and an explanation of any exceptions.

A copy of all training materials and the documentation to support this information shall be made available to OIG upon request.

6. A copy of any recall notices issued during the Reporting Period by GSK for Covered Products sold in the United States, a description of GSK’s corrective action(s) taken related to the recall, and any further steps GSK plans to take related to the recall.

7. A summary of Manufacturing Reportable Events (as defined in Section III.E) identified during the Reporting Period and the status of any corrective action relating to each such Reportable Events;

8. A description of any changes to GSK’s corporate structure as reported pursuant to Section V.A.7 of this Appendix D and an identification of any Covered Manufacturing Facility, if any, in lieu of or in addition to the Zebulon facility;

9. The certifications required by Section V.C.

The first Appendix Annual Report shall be received by OIG no later than 60 days after the end of the first Reporting Period. Subsequent Appendix Annual Reports shall be received by OIG no later than the anniversary date of the due date of the first Appendix Annual Report.

C. Certifications. The Appendix Implementation Report and each Appendix Annual Report shall include a certification by the GMS Compliance Officer that:

1. to the best of his or her knowledge, except as otherwise described in the report, GMS is in compliance in all material respects with cGMP Requirements and all of the requirements of this CIA; and

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

D. Designation of Information. GSK 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. GSK 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 Appendix D shall be submitted to the following entities:

OIG: Administrative and Civil Remedies Branch Office of Counsel to the Inspector General Office of Inspector General U.S. Department of Health and Human Services Cohen Building, Room 5527 330 Independence Avenue, S.W. Washington, DC 20201 Telephone: 202.619.2078 Facsimile: 202.205.0604 GSK: Guy Wingate Vice President - GMS Compliance Officer GlaxoSmithKline GSK House (Mailstop BNG-15) 980 Great West Road Brentford Middlesex TW8 9GS United Kingdom Telephone: +44-1833-693330 Facsimile: +44-2080-476905

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Paul Noll Vice President - Associate General Counsel Legal Operations - Global Manufacturing and Supply GlaxoSmithKline Five Moore Drive Ruvane Building - Mailstop E.3334 Research Triangle Park, NC 27709 Telephone: (919) 483-2444 Facsimile: (919) 483-2881

Unless otherwise specified, all notifications and reports required by this Appendix

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. Upon request by OIG, GSK may be required to provide OIG with an electronic copy of each notification or report required by this Appendix to the CIA in searchable portable document format (pdf), in addition to a paper copy.

Appendix E to CIA for GlaxoSmithKline LLC

Executive Financial Recoupment Program

Executive Financial Recoupment Program. Through its Existing Commitments and the New Commitments to be implemented, GSK shall establish and maintain throughout the term of the CIA a financial recoupment program that puts at risk of forfeiture and recoupment an amount equivalent to up to 3 years of annual performance pay (i.e., annual bonus, plus long term incentives) for an executive who is discovered to have been involved in any significant misconduct (Executive Financial Recoupment Program). This financial recoupment program shall apply to Covered Executives, as defined below in Paragraph B, who are either current GSK employees or who are former GSK employees at the time of a Recoupment Determination. (A) Existing Commitments. The annual cash bonus for each GSK employee based in the United States and the United Kingdom is at risk of forfeiture in the event of employee misconduct that is discovered by GSK before the bonus is paid. In the event of misconduct by any GSK employee worldwide, GSK also has reserved the right and full discretion to void and forfeit any unvested share options and any unvested restricted share grants under the GSK Share Option Plan, Share Value Plan and Performance Share Plan (collectively, the “LTI Plans”). If GSK discovers any employee misconduct that would implicate the forfeitures described in this paragraph, it shall evaluate the situation and make a determination about whether any forfeiture, and the terms of such forfeiture, shall be implemented. (B) New Commitments. In addition to the compensation forfeiture provisions already in place with respect to annual bonuses and the LTI Plans, within 120 days after the Effective Date of the CIA, GSK shall modify and supplement its annual bonus plan and LTI Plan requirements (and any employment agreements, as appropriate) by imposing the following eligibility and repayment conditions on future bonuses and LTI Plan grants, as well as establishing the mandatory deferred annual bonus, tolling remedy, and additional remedies discussed below (collectively, “New Commitments”) to all members of GSK’s Corporate Executive Team (CET) and to any Vice Presidents and Senior Vice Presidents in Grades 0, 1, and 2 who are based in the United States (collectively “Covered Executives”). The New Commitments shall apply prospectively to Covered Executives beginning with the 2013 bonus plan year and LTI Plan grants. (i) Executive Bonus Eligibility and Repayment Conditions. GSK shall implement an eligibility and repayment condition on annual bonuses designed to survive both the payment of the bonus and the separation of a Covered Executive’s employment. This will allow GSK, as a consequence of a Triggering Event as defined below in Paragraph C, to pursue repayment from the Covered Executive of all or any portion of the bonus monies paid to the Covered Executive. To the extent permitted by

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controlling law, these bonus eligibility and repayment conditions will survive the payment of the Covered Executive’s bonus and the separation of the Covered Executive’s employment for a period of 3 years from the payment of the bonus for the plan year. Consistent with a Recoupment Determination, as defined below in Paragraph D, GSK shall endeavor to collect repayment of any bonus from the Covered Executive through reasonable and appropriate means according to the terms of its bonus plan (or executive contract, as the case may be), and to the extent permitted by controlling law of the relevant jurisdiction. If necessary to collect the repayment, GSK shall file suit against the Covered Executive unless good cause exists not to do so. For purposes of the Executive Financial Recoupment Program, good cause shall include, but not be limited to, a financial inability on the part of the Covered Executive to repay any recoupment amount or GSK’s inability to bring such a suit under the controlling law of the relevant jurisdiction. (ii) LTI Plans. Prior to the Effective Date, GSK implemented a recoupment process for Covered Executives’ unvested LTI share grants as discussed in Paragraph A (Existing Commitments) above. With respect to current GSK Covered Executives, GSK shall maintain these Existing Commitments and follow the Recoupment process and procedures established by the Recoupment Committee for the duration of the CIA. GSK shall also implement an eligibility and repayment condition on share grants made under LTI Plans designed to survive the separation of a Covered Executive’s employment. To the extent necessary, GSK shall implement an eligibility and repayment condition on grants made under the LTI Plans in order to clarify that, as a consequence of a Triggering Event, GSK may pursue repayment by a Covered Executive who is a former employee of all or any portion of the last 3 years’ worth of share option and restricted share grants that became vested and were paid during the Covered Executive’s last years of employment and following termination of employment. To the extent permitted by controlling law, these eligibility and repayment conditions shall survive vesting and payment for a period of 3 years from the Covered Executive’s employment termination date. In addition, GSK shall amend the vesting schedule in the LTI Plans so that Covered Executives who are “good leavers” (e.g., terminating employment due to retirement, death or disability) will no longer vest in, nor receive a distribution of, any unvested share options or restricted shares immediately following termination of employment; rather, these LTI Plan grants will only vest and be distributable after the first anniversary of the Covered Executive’s termination of employment. Consistent with a Recoupment Determination, GSK shall endeavor to collect repayment of these LTI Plan awards from the Covered Executive through reasonable and appropriate means and to the extent permitted by controlling law of the jurisdiction in which the Covered Executive works. If necessary to collect the

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repayment, GSK shall file suit against the Covered Executive unless good cause exists not to do so. (iii) Mandatory Deferred Annual Bonus. GSK shall establish a deferred compensation plan that requires the deferral of ten (10%) percent of a Covered Executive’s annual bonus (twenty-five (25%) percent, in the case of CET members) for a 3-year period that survives separation of the Covered Executive’s employment. Bonuses deferred under the plan shall be matched on a dollar-for-dollar basis by GSK. Consistent with a Recoupment Determination, all deferred bonuses, matching contributions and any related gains thereon are subject to forfeiture and voidance as a consequence of a Triggering Event. (iv) Tolling Remedy. To the extent permitting by controlling law, for the 3 years during which the bonus eligibility and repayment conditions exist, if GSK reasonably anticipates that a Triggering Event has occurred pursuant to Paragraph C, and GSK has recoupment rights remaining under Paragraphs B(i) and B(ii), GSK shall have the right to notify the Covered Executive that those rights shall be tolled and thereby extended for an additional 3 years or until the Recoupment Committee determines that a Triggering Event has not occurred, whichever is earlier, to the extent permitted by controlling law of the relevant jurisdiction. (v) Additional Remedies. If, after expiration of the time period specified in Paragraphs B(i)-(iii) above, the Recoupment Committee determines that a Triggering Event occurred, GSK shall make a determination as to whether to pursue available remedies (e.g., filing suit against the Covered Executive) existing under statute or common law to the extent available. (C) Definition of Triggering Events. The eligibility and repayment conditions described above shall be triggered upon a Recoupment Determination that finds: (i) significant misconduct (e.g., violation of a significant GSK policy, or regulation, or law) by the Covered Executive that, if discovered prior to payment, would have made the Covered Executive ineligible for an annual bonus, bonus deferral or LTI Plan grant in that plan year or subsequent plan years; or (ii) significant misconduct by subordinate employees in the business unit over which the Covered Executive had responsibility that does not constitute an isolated occurrence and which the Covered Executive knew or should have known was occurring that, if discovered prior to payment, would have made the Covered Executive and/or employees in question ineligible for an annual bonus, bonus deferral or LTI Plan grant in that plan year or subsequent plan years.

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(D) Administration of Recoupment Program. GSK shall engage in a standardized, formal process to determine, in its sole discretion, whether a Triggering Event has occurred, and, if so, the extent of bonus monies, LTI Plan grants and deferred compensation that will be subject to repayment or forfeiture by the Covered Executive, and the most appropriate method for securing recoupment of relevant monies previously paid to a Covered Executive. The findings and conclusions resulting from this process shall be referred to as the “Recoupment Determination”.

(i) Initiation. GSK shall initiate the Recoupment Determination process upon: (1) discovery of potential significant misconduct that may rise to the level of a Triggering Event, or (2) written notification by a United States federal government agency to the Senior Vice President for Governance, Ethics, and Assurance of GlaxoSmithKline PLC of a situation that may rise to the level of a Triggering Event and either occurred in the United States or gives rise to liability relating to Federal healthcare programs. This written notification shall either identify the Covered Executive(s) potentially at issue or provide information (e.g., a description of the alleged misconduct and the applicable time period) to allow GSK to identify the Covered Executive.

(ii) Recoupment Committee. The Recoupment Determination shall be made by a committee of senior executives headed by the Senior Vice President for Governance, Ethics, and Assurance of GlaxoSmithKline PLC (Recoupment Committee). With respect to members of the CET, a Recoupment Determination shall be subject to ratification by the Board of Directors (or appropriate committee thereof) of GlaxoSmithKline PLC.

(iii) Timeline for Recoupment Determination Process. GSK shall initiate the Recoupment Determination process within 30 days after discovery by GSK or notification, pursuant to Paragraph D(i), of a potential Triggering Event. Absent extraordinary reasons, GSK shall reach a Recoupment Determination within 90 days after initiation of the determination process.

In connection with making its Recoupment Determination, the Recoupment Committee or appropriate Delegate pursuant to implementing policies and procedures shall: i) undertake an appropriate and substantive review or investigation of the facts and circumstances associated with the Triggering Event or any written notifications about potential Triggering Events received pursuant to Paragraph D(i) above; ii) make written findings regarding the facts and circumstances associated with the Triggering Event and any written notifications about potential Triggering Events received pursuant to Paragraph D(i) above; and iii) set forth in writing its determinations (and the rationale for such determinations) about: 1) whether a Triggering Event occurred; 2) the extent of

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bonus monies, LTI Plan grants or deferred compensation that will be subject to forfeiture and/or repayment by the Covered Executive; 3) the means that will be followed to implement the forfeiture and/or secure the recoupment of performance pay from the Covered Executive; and 4) the timetables under which GSK will implement the forfeiture and/or attempt to recoup the performance pay. For purposes of this paragraph, a “Delegate” shall refer to the GSK personnel to whom the Recoupment Committee has delegated one or more of its required tasks in furtherance of the Executive Financial Recoupment Program.

(E) Reporting. The Recoupment Committee shall provide annual reports to the Board of Directors (or an appropriate committee thereof) of GlaxoSmithKline PLC about: i) the number and circumstances of any Triggering Events that occurred during the preceding year and any written notifications about potential Triggering Events received pursuant to Paragraph D(i) above; ii) a description of any Recoupment Determinations made during the preceding year (including any decision to require or not require forfeiture/recoupment from any Covered Executives, the amount and type of any forfeiture/recoupment, the means for collecting any recoupment and the rationale for such decisions); and iii) a description of the status of any forfeitures and/or recoupments required under prior Recoupment Determinations that were not fully completed in prior years. The Recoupment Committee shall also provide annual reports to the OIG about: i) the number and circumstances of any Triggering Events that occurred during the preceding year and any written notifications about potential Triggering Events received pursuant to Paragraph D(i) above; ii) a summary description of any Recoupment Determinations made during the preceding year (including any decision to require or not require forfeiture/recoupment from any Covered Executives, the amount and type of any forfeiture/recoupment, the method for collecting any recoupment, and the rationale for such decisions); and iii) a description of the status of any forfeitures and/or recoupments required under prior Recoupment Determinations that were not fully completed in prior years. GSK commits to maintaining all of the forfeiture and recoupment commitments set forth in Paragraphs A-E above for at least the duration of the CIA, absent agreement otherwise with the OIG.

SETTLEMENT AGREEMENT

This Settlement Agreement ("Agreement") is entered into among the United States of

America, acting through the United States Department of Justice and on behalf of the Office of

Inspector General of the United States Department of Health and Human Services ("OIG-HHS")

(collectively the "United States"), and GlaxoSmithKline LLC ("GSK" or "the company"),

through their authorized representatives. Collectively, all of the above will be referred to as "the

Parties."

RECITALS

A. GlaxoSmithKline LLC is a Delaware Limited Liability Company and an indirect

subsidiary of GlaxoSmithKline pic, a public limited company incorporated under English law

with headquarters in Brentford, England. At all relevant times, GSK and/or its predecessors,

including Glaxo, Inc. ("Glaxo"), Glaxo Wellcome, Inc. ("GW"), and SmithKline Beecham

Corporation ("SKB") (all of which are incorporated within the above term "GSK") had business

operations in Philadelphia, Pennsylvania, and Research Triangle Park, North Carolina. In 2000,

GW and SKB merged to form SmithKline Beecham Corporation d/b/a GlaxoSmithKline (now

known as GlaxoSmithKline LLC).

B. At all relevant times, GSK manufactured, distributed, and sold pharmaceutical

products in the United States.

C. At all relevant times, GSK participated in the Medicaid Drug Rebate Program, 42

U.S.C. § 1396r-8, which is part of the federal Medicaid Program, Title XIX ofthe Social

Security Act, 42 U.S.C. §§ 1396-1396v. Pursuant to the Medicaid Drug Rebate Program, GSK

entered into national rebate agreements with HHS, and GSK's covered outpatient drugs were

covered by state Medicaid plans that provided medical assistance for prescription drugs. Under

the Medicaid Drug Rebate Program and the rebate agreements with HHS, GSK agreed: (i) to

report quarterly to the Health Care Financing Administration, currently known as, and

hereinafter referred to as, the Centers for Medicare and Medicaid Services ("CMS"), the

Average Manufacturer Price ("AMP") for all its covered outpatient drugs and Best Price for its

single-source and innovator multiple-source covered outpatient drugs, as defined by 42 U.S.C.

§§ 1396r-8(k)(l) and 1396r-8(c)(l)(C); and (ii) to pay quarterly rebates to the states. For single­

source and innovator multiple source covered outpatient drugs, the quarterly rebates are based on

the product of (a) the units of each dosage form and strength paid for under the State Medicaid

plan during the rebate period as reported by the state, and (b) the greater of the difference

between the AMP and the Best Price, or a minimum rebate percentage of AMP, as further

described in 42 U.S.C. § 1396r-8(c)(l).

D. Under 42 U.S.C. § 1396r-8(c)(l)(C)(ii), the term "Best Price": (I) shall be

inclusive of cash discounts, free goods that are contingent on any purchase requirement, volume

discounts, and rebates (other than rebates under this section); (II) shall be determined without

regard to special packaging, labeling, or identifiers on the dosage form or product or package;

and (III) shall not take into account prices that are "merely nominal in amount." Under the

rebate agreement, the best price for a quarter shall be adjusted by the manufacturer if cumulative

discounts, rebates or other arrangements subsequently adjust the prices actually realized.

E. Under the rebate agreement, a "nominal price" is, for purposes of excluding

prices from the Best Price calculation, any price less than 1 0% of the AMP in the same quarter

for which the AMP is computed.

F. Under the rebate agreement, a "bundled sale" refers to the packaging of drugs of

different types where the condition of rebate or discount is that more than one drug type is

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purchased, or where the resulting discount or rebate is greater than that which would have been

received had the drug products been purchased separately. For bundled sales, the allocation of

the discount is made proportionately to the dollar value of the units of each drug sold under the

bundled arrangement.

G. The 1996 Medicaid Drug Rebate Operational Training Guide states that "[t]he

key to identifying a bundled sale is that the sale is contingent on the purchase of another

product" and that "Bundled Sales will affect the AMP and BP calculations. The value of the

discounted or free product should be proportionately distributed among the other products in the

bundle."

H. The 200 I Medicaid Drug Rebate Operational Training Guide states that "[ t ]he

key to identifying a bundled sale is that the sale is contingent upon an additional purchase

requirement(s) of the retail purchaser (e.g. pharmacies, beneficiaries, etc.)" and that "Bundled

Sales will affect the AMP and BP calculations. The discounted or contingent drug product's

value is proportionately distributed among the other drug products in the bundle."

I. At all relevant times, GSK participated in the Drug Pricing Program, 42 U.S. C.

§ 256b, which is part of the Public Health Service ("PHS") Act, 42 U.S.C. §§ 201-300gg-92.

Pursuant to the Drug Pricing Program, GSK entered into agreements with HHS in connection

with the pricing of its drug products sold to entities such as AIDS drug purchasing assistance

programs, community health centers, and disproportionate share hospitals, as defined in 42

U.S.C. § 256b(a) (the "PHS entities"). Under the Drug Pricing Program, GSK agreed that the

amount the PHS entities would pay for their drug products would not exceed certain limits

derived in part from the AMPs and Best Prices reported by GSK to CMS for such drugs in the

previous calendar quarter, as further described in 42 U.S.C. § 256b(a).

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J. The United States contends that it has certain civil claims against GSK, as

specified in Paragraph 2 of the Terms and Conditions section below, arising from the following

conduct during the time period from January 1, 1994, to December 31,2003 (hereinafter referred

to as the "Covered Conduct"):

1. The United States contends that GSK entered into contracts with hospitals,

universities, group purchasing organizations, managed care organizations, and other customers,

pursuant to which the customers received discounts and/or rebates on one or more GSK drugs

that appeared, on their face, to yield a purportedly nominal price, i.e., a price ofless than 10% of

the AMP for a drug, but which were contingent on the customer agreeing to meet one or more of

the following requirements for a drug with a different National Drug Code number: (a) pmchase

all of its requirements of a certain drug type or class of drug from GSK rather than from other

drug manufacturers, (b) pmchase a minimum quantity of a certain GSK product or products, (c)

maintain or achieve a minimum market share of a certain GSK product or products within a

therapeutic class of drugs, (d) place and/or keep a certain GSK product or products on formulary

and/or unrestricted in its institutions or systems, or (e) make a certain GSK product or products

the exclusive or preferred drug on a formulary within a particular therapeutic or multi-source

class of products available in its institutions or systems.

More specifically, GSK generally referred to such contracts as "committed

contracts" or "portfolio contracts." A 1991 internal GSK training document explained that, "[i]n

a committed contract (sometimes referred to as a bundle), pricing is contingent on all terms of

the contract. The purpose of a committed contract is to establish an agreement that an account

will use multiple [GSK] products and/or use exclusively [GSK] brands of [certain drug

products]. Further, the commitment may require the unrestricted availability of all forms of

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[another drug product]. In return, the account receives better pricing level and/or rebates."

Another internal GSK document explained: "Portfolio adds value [by] pulling weaker products

on formulary that would otherwise have been excluded (achieved by increasing discounts on

stronger (levered) products) ... [and] minimizing discounts on a key product by giving

concessions on less important products."

The United States contends that, like other deep discounts, purportedly nominal

pricing on certain products included in these portfolio contracts was regarded by GSK as an

investment and a tool to guarantee contract compliance, consistent with the company's overall

portfolio approach to contracting.

11. The United States further contends that the GSK contracts described in paragraph

(i) above are "bundled sales" under the rebate agreements between GSK and HHS. As such, the

discounts and/or rebates on the drugs sold under those contracts should have been reallocated

among all drugs in the bundled sales, including those drugs sold at a price ofless than I 0% of

AMP, as required by the rebate agreements, in calculating and reporting to CMS quarterly AMP

and Best Price figures for the drugs, and that GSK did not reallocate those discounts and/or

rebates.

111. The United States further contends that if GSK had reallocated the discounts

and/or rebates as required under its rebate agreements, the effective prices on the purportedly

nominal-priced drugs in the bundled sales would, in some cases, have exceeded l 0% of AMP

and resulted in reportable Best Prices that were lower than the Best Prices GSK reported to CMS

for such drugs. Further, those reallocations would have lowered the effective prices for certain

other drugs included in the alleged bundled sales and would, in some cases, have resulted in

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reportable Best Prices for one or more of those other drugs that were lower than the Best Prices

GSK reported to HHS for those drugs.

JV. The United States further contends that in failing to reallocate discounts and/or

rebates in bnndled sales that included purportedly nominal-priced drugs, GSK knowingly

reported false Best Prices to HHS and underpaid quarterly rebates to the states under the

Medicaid Drug Rebate Program, and knowingly overcharged the PHS entities under the Drug

Pricing Program. Such underpayment of quarterly rebates to the states caused the United States

to be overcharged for its quarterly contributions to the states for the Medicaid Program.

v. In some instances, GSK treated certain prices as nominal when, in fact, those

prices were contingent on other requirements and the United States contends they did not qualify

as nominal prices within the meaning of the rebate agreements. The United States contends that

if GSK had factored certain of the contingencies into the transactions and not treated those

transactions as nominal, GSK would have reported Best Prices that were lower than those that

they reported to HHS for such drugs. As a result, GSK knowingly reported false Best Prices to

HHS and underpaid quarterly rebates to the states under the Medicaid Drug Rebate Program, and

knowingly overcharged the PHS entities nnder the Drug Pricing Program. Such nnderpayment

of quarterly rebates to the states caused the United States to be overcharged for its quarterly

contributions to the states for the Medicaid Program.

K. The United States contends that, as a result of the Covered Conduct, GSK

knowingly made or caused to be made false claims or made or caused to be made false

statements material to false claims and/or obligations relating to the payment of rebates to the

Medicaid Program, Title XIX of the Social Security Act, 42 U.S.C. §§ l396-l396v, and thereby

also inflated the prices paid for certain drugs under the Drug Pricing Program, which is part of

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the PHS Act, 42 U.S.C. § 201-300gg-92.

L. The United States also contends that it has certain administrative claims against

GSK as specified in Paragraph 3 below, for engaging in the Covered Conduct.

M. GSK will be entering into separate settlement agreements, described in Paragraph

l.b below (hereinafter referred to as the "Medicaid State Settlement Agreements") with certain

states and the District of Columbia in settlement of the Covered Conduct. States with which

GSK executes a Medicaid State Settlement Agreement in the form to which GSK and the

National Association of Medicaid Fraud Control Units ("NAMFCU") have agreed, or in a form

otherwise agreed to by GSK and an individual state, are referred to herein as "Medicaid

Participating States."

N. On such date as may be determined by the Court, GSK will enter a plea of guilty

pursuant to Fed. R. Crim. P. ll(c)(l)(c) (the "Plea Agreement") to an Information to be filed in

United States of America v. GlaxoSmithKline LLC, Criminal Action No. [to be assigned]

(District of Massachusetts) (the "Criminal Action") that will allege: (i) violations of Title 21,

United States Code, Sections 33l(a), 333(a)(l) and 352, namely, the introduction into interstate

commerce of the misbranded drugs Wellbutrin and Paxil, and (ii) a violation of Title 21, United

States Code, Sections 33l(e), 333(a)(l), and 355(k)(l), namely, that GSK failed to report data

relating to clinical experience, along with other data and information, regarding Avandia to the

Food and Drug Administration ("FDA") in mandatory reports, in violation of the Food, Drug and

Cosmetic Act ("FDCA").

0. This Agreement is made in compromise of disputed claims. This Agreement is

neither an admission of liability by GSK nor a concession by the United States that its claims are

not well founded. GSK expressly denies the allegations ofthe United States as set forth herein,

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and denies that it has engaged in any wrongful conduct in connection with the Covered Conduct.

GSK further states that, neither this settlement, its execution, nor the performance of any

obligation under it, including any payment, nor the fact of the settlement, is intended to be, or

should be understood as, an admission of any fact or of any liability or wrongdoing, or other

expression reflecting on the merits of the dispute by GSK.

To avoid the delay, uncertainty, inconvenience, and expense of protracted litigation of

the above claims, and in consideration of the mutual promises and obligations ofthis Agreement,

the Parties reach a full and final settlement pursuant to the terms and conditions below:

TERMS AND CONDITIONS

I. GSK shall pay to the United States, the Medicaid Participating States, and the

PHS entities, collectively, the sum of Three Hundred Million Dollars ($300,000,000) plus

interest accrued thereon at a rate of 1.625% per annum from December I, 2011, to and including

the day before payment is made under this Agreement (the "Settlement Amount"). The

Settlement Amount shall constitute a debt immediately due and owing to the United States, the

Medicaid Participating States, and the PHS entities on the Effective Date of this Agreement.

The debt shall be discharged by payments to the United States, the Medicaid Participating States,

and the PHS entities as follows:

a. GSK shall pay to the United States the sum of $160,972,069 plus interest

accrued thereon at a rate of 1.625% per annum from December I, 2011, to and including the day

before payment is made under this Agreement (the "Federal Settlement Amount"). The Federal

Settlement Amount shall be paid by electronic funds transfer pursuant to written instructions to

be provided by the United States. GSK shall make this electronic funds transfer no later than

seven (7) business days after: (i) the Effective Date of this Agreement or (ii) the Court accepts a

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Fed. R. Crim. P. ll(c)(l)(c) guilty plea as described in Preamble Paragraph N in connection with

the Criminal Action and imposes the agreed upon sentence, whichever occurs later.

b. GSK shall pay to the Medicaid Participating States the sum of

$118,792,931 plus interest accrued thereon at a rate of 1.625% per annum from December 1,

2011, to and including the day before payment is made under this Agreement (the "State

Settlement Amount"). The State Settlement Amount shall be paid by electronic funds transfer to

an interest bearing account in accordance with the written instructions from the NAMFCU

negotiating team pursuant to the terms and conditions agreed upon by GSK and the NAMFCU

negotiating team and as set forth in the Medicaid State Settlement Agreements that GSK will

enter into with the Medicaid Participating States.

c. GSK and the United States agree that GSK. shall pay the sum of

$20,235,000 plus interest accrued thereon at a rate of 1.625% per mmum from December 1,

2011, to and including the day before payment is made under this Agreement, as the PHS share

(the "PHS Amount") of the Settlement Amount. GSK. shall transfer the PHS Amount into a

segregated, interest-bearing bank account (the "PHS Account") no later than seven (7) business

days after: (i) the Effective Date of this Agreement or (ii) the Court accepts a Fed. R. Crim. P.

ll(c)(l)(c) guilty plea as described in Preamble Paragraph N in connection with the Criminal

Action and imposes the agreed upon sentence, whichever occurs later. Pursuant to the process

agreed to by the Parties in a separate letter, GSK. will use its best efforts to identify affected PHS

entities and the amounts they were overcharged as a result of the Covered Conduct. GSK. shall

disburse funds from the PHS Account pursuant to the terms set forth in the aforementioned

letter.

d. If GSK's agreed-upon guilty plea pursuant to Fed. R. Crim. P. ll(c)(l)(c)

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in the Criminal Action described in Preamble Paragraph N is not accepted by the Court or the

Court does not impose the agreed-upon sentence for whatever reason, this Agreement shall be

null and void at the option of either the United States or GSK. If either the United States or GSK

exercises this option, which option shall be exercised by notifying all Parties, through counsel, in

writing within five (5) business days of the Court's decision, the Parties will not object and this

Agreement will be rescinded. If this Agreement is rescinded, GSK will not plead, argue or

otherwise raise any defenses under the theories of statute of limitations, laches, estoppel or

similar theories, to any civil or administrative claims, actions or proceedings arising from the

Covered Conduct that are brought by the United States within 90 calendar days of rescission,

unless such defenses were available to GSK prior to May 19, 2004.

2. Subject to the exceptions in Paragraph 4 (concerning excluded claims) below, in

consideration of the obligations ofGSK in this Agreement, and conditioned upon GSK's full

payment of the Settlement Amount, the United States releases GSK, together with its

predecessors, current and former parents, divisions, subsidiaries, successors, transferees, heirs,

and assigns, and their current and former directors, officers and employees, individually and

collectively, from any civil or administrative monetary claim the United States has or may have

for the Covered Conduct under the False Claims Act, 31 U.S.C. §§ 3729-3733; the Civil

Monetary Penalties Law, 42 U.S. C. §§ l320a-7a; the Program Fraud Civil Remedies Act, 31

U.S. C.§§ 3801-3812; the Medicaid Rebate Statute, 42 U.S.C. § l396r-8; the Drug Pricing

Program, 42 U.S.C. § 256b; any statutory provision applicable to the federally funded programs

in this Agreement creating a cause of action for civil damages or civil penalties for which the

Civil Division of the Department of Justice has actual and present authority to assert and

compromise pursuant to 28 C.F.R., Part 0, Subpart I,§ 0.45(d); and the common law theories of

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payment by mistake, fraud, disgorgement, and unjust enrichment.

3. In consideration of the obligations of GSK in this Agreement and the Corporate

Integrity Agreement (CIA) entered into between OIG-HHS and GSK, and conditioned upon

GSK's full payment of the Settlement Amount, the OIG-HHS agrees to release and refrain from

instituting, directing, or maintaining any administrative action seeking exclusion from Medicare,

Medicaid, and other Federal health care programs (as defined in 42 U.S.C. § l320a-7b(f))

against GSK under 42 U.S. C. § l320a-7a (Civil Monetary Penalties Law) or 42 U.S.C. § 1320a-

7(b)(7) (permissive exclusion for fraud, kickbacks, and other prohibited activities) for the

Covered Conduct, except as reserved in Paragraph 4 (concerning excluded claims), below, and

as reserved in this Paragraph. The OIG-HHS expressly reserves all rights to comply with any

statutory obligations to exclude GSK from Medicare, Medicaid, and other Federal health care

programs under 42 U.S.C. § 1320a-7(a) (mandatory exclusion) based upon the Covered

Conduct. Nothing in this Paragraph precludes the OIG-HHS from taking action against entities

or persons, or for conduct and practices, for which claims have been reserved in Paragraph 4,

below.

4. Notwithstanding any term of this Agreement, the following claims of the United

States are specifically reserved and are not released:

a. Any civil, criminal, or administrative liability arising under Title 26, U.S.

Code (Internal Revenue Code);

b. Any criminal liability;

c. Except as explicitly stated in this Agreement, any administrative liability,

including mandatory exclusion from Federal health care programs;

d. Any liability to the United States (or its agencies) for any conduct other

II

than the Covered Conduct;

e. Any liability based upon obligations created by this Agreement;

f. Any liability for express or implied warranty claims or other claims for

defective or deficient products or services, including quality of goods and

services;

g. Any liability for failure to deliver goods or services due;

h. Any liability for personal injury or property damage or for other

consequential damages arising from the Covered Conduct; or

1. Any liability of individuals (including current or former directors, officers,

employees, or agents of GSK) who receive written notification that they

are the target of a criminal investigation, are criminally indicted or

charged, or are convicted, or who enter into a criminal plea agreement

related to the Covered Conduct.

5. GSK waives and shall not assert any defenses GSK may have to any criminal

prosecution or administrative action relating to the Covered Conduct that may be based in whole

or in part on a contention that, under the Double Jeopardy Clause in the Fifth Amendment of the

Constitution, or under the Excessive Fines Clause in the Eighth Amendment of the Constitution,

this Agreement bars a remedy sought in such criminal prosecution or administrative action.

Nothing in this paragraph or any other provision of this Agreement constitutes an agreement by

the United States conceming the characterization of the Settlement Amount for purposes of the

Internal Revenue laws, Title 26 of the United States Code.

6. GSK fully and finally releases the United States, its agencies, officers, agents,

employees, and servants, from any claims (including attorney's fees, costs, and expenses of

12

every kind and however denominated) that GSK has asserted, could have asserted, or may assert

in the future against the United States, and its agencies, employees, servants, and agents, related

to the Covered Conduct and the United States' investigation and prosecution thereof.

7. The Settlement Amount shall not be decreased as a result of the denial of claims

for payment now being withheld from payment by any federal or state payer related to the

Covered Conduct; and GSK agrees not to resubmit to any federal or state payer any previously

denied claims related to the Covered Conduct, and agrees not to appeal, or cause the appeal of,

any such denials of claims.

8. GSK agrees to the following:

a. Unallowable Costs Defined: All costs (as defined in the Federal Acquisition

Regulation, 48 C.F.R. § 31.205-47; and in Titles XVIII and XIX of the Social Security Act,

42 U.S.C. §§ 1395-1395kld(-l and 1396-l396w-5; and the regulations and official program

directives promulgated thereunder) incurred by or on behalf of GSK, its present or former

officers, directors, employees, shareholders, and agents in cmmection with:

( 1) the matters covered by this Agreement;

(2) the United States' audit(s) and civil investigation(s) of the matters covered

by this Agreement;

(3) GSK's investigation, defense, and corrective actions undertaken in

response to the United States' audit(s) and civil investigation(s) in

connection with the matters covered by this Agreement (including

attorney's fees);

( 4) the negotiation and performance of this Agreement or the Medicaid State

Settlement Agreements;

13

(5) the payments GSK makes to the United States or any State pursuant to this

Agreement or the Medicaid State Settlement Agreements; and

(6) the negotiation of, and obligations undertaken pursuant to the CIA to: (i)

retain an independent organization to perform annual reviews as described

in Section III of the CIA; and (ii) prepare and submit reports to OIG-HHS.

However, nothing in this paragraph 8.a.(6) that may apply to the

obligations undertaken pursuant to the CIA affects the status of costs that

are not allowable based on any other authority applicable to GSK;

are unallowable costs for government contracting purposes and under the Medicare Program,

Medicaid Program, TRICARE Program, and Federal Employees Health Benefits Program

(FEHBP) (hereinafter referred to as Unallowable Costs).

b. Future Treatment of Unallowable Costs: Unallowable Costs shall be separately

determined and accounted for by GSK, and GSK shall not charge such Unallowable Costs

directly or indirectly to any contracts with the United States or any State Medicaid program, or

seek payment for such Unallowable Costs through any cost report, cost statement, information

statement, or payment request submitted by GSK or any of its subsidiaries or affiliates to the

Medicare, Medicaid, TRICARE, or FEHBP Programs.

c. Treatment of Unallowable Costs Previously Submitted for Payment: GSK further

agrees that within 90 days of the Effective Date of this Agreement it shall identity to applicable

Medicare and TRICARE fiscal intermediaries, carriers, and/or contractors, and Medicaid and

FEHBP fiscal agents, any Unallowable Costs (as defined in this Paragraph) included in payments

previously sought from the United States, or any State Medicaid program, including, but not

limited to, payments sought in any cost reports, cost statements, information reports, or payment

14

requests already submitted by GSK or any of its subsidiaries or affiliates, and shall request, and

agree, that such cost reports, cost statements, information reports, or payment requests, even if

already settled, be adjusted to account for the effect of the inclusion ofthe unallowable costs.

GSK agrees that the United States, at a minimum, shall be entitled to recoup from GSK any

overpayment plus applicable interest and penalties as a result of the inclusion of such

Unallowable Costs on previously-submitted cost reports, information reports, cost statements, or

requests for payment.

Any payments due after the adjustments have been made shall be paid to the United

States pursuant to the direction of the Department of Justice and/or the affected agencies. The

United States reserves its rights to disagree with any calculations submitted by GSK or any of its

subsidiaries or affiliates on the effect of inclusion of Unallowable Costs (as defined in this

Paragraph) on GSK or any of its subsidiaries or affiliates' cost reports, cost statements, or

information reports.

d. Nothing in this Agreement shall constitute a waiver of the rights of the United

States to audit, examine, or re-examine GSK' s books and records to determine that no

Unallowable Costs have been claimed in accordance with the provisions of this Paragraph.

9. This Agreement is intended to be for the benefit of the Parties only. The Parties

do not release any claims against any other person or entity, except to the extent provided for in

Paragraph 2 above and Paragraph 10 below.

I 0. GSK agrees that it waives and shall not seek payment for any of the health care

billings covered by this Agreement from any health care beneficiaries or their parents, sponsors,

legally responsible individuals, or third party payors based upon the claims defined as Covered

Conduct.

15

11. GlaxoSmithKline LLC expressly warrants that it has reviewed its financial

situation and that it is currently solvent within the meaning of 11 U.S.C. §§ 547(b)(3) and

548(a)(l)(B)(ii)(I), and will remain solvent following payment of the Settlement Amount.

Further, the Parties warrant that, in evaluating whether to execute this Agreement, they (a) have

intended that the mutual promises, covenants and obligations set forth herein constitute a

contemporaneous exchange for new value given to GlaxoSmithKline LLC, within the meaning

of 11 U.S.C. § 547(c)(l); and (b) conclude that these mutual promises, covenants and obligations

do, in fact, constitute such a contemporaneous exchange. Further, the Parties, to the best of their

respective lmowledge individually, warrant that the mutual promises, covenants, and obligations

set forth herein are intended to and do, in fact, represent a reasonably equivalent exchange of

value that is not intended to hinder, delay, or defraud any entity to which GlaxoSmithKline LLC

was or became indebted to on or after the date of this transfer, within the meaning of 11 U.S.C.

§ 548(a)(l).

12. Each Party shall bear its own legal and other costs incurred in connection with

this matter, including the preparation and performance of this Agreement.

13. GSK represents that it freely and voluntarily enters into this Agreement without

any degree of duress or compulsion.

14. This Agreement is governed by the laws of the United States. The exclusive

jurisdiction and venue for any dispute relating to this Agreement is the United States District

Court for the District of Massachusetts, except that disputes arising under the CIA shall be

resolved exclusively under the dispute resolution provisions in the CIA.

15. For purposes of construing this Agreement, this Agreement shall be deemed to

have been drafted by all Parties to this Agreement and shall not, therefore, be construed against

16

any Party for that reason in any subsequent dispute.

16. This Agreement constitutes the complete agreement between the Parties. This

Agreement may not be amended except by written consent of the Parties.

17. The individuals signing this Agreement on behalf of GSK represent and warrant

that they are authorized by GSK to execute this Agreement. The United States' signatories

represent that they are signing this Agreement in their official capacities and they are authorized

to execute this Agreement.

18. This Agreement maybe executed in counterparts, each of which constitutes an

original and all of which constitute one and the same Agreement.

19. This Agreement is binding on GSK' s successors, transferees, heirs, and assigns.

20. GSK consents to the United States' disclosure of this Agreement, and information

about this Agreement, to the public.

17

21. This Agreement is effective on the date of signature of the last signatory to the

Agreement ("Effective Date of this Agreement"). Facsimiles of signatures shall constitute

acceptable, binding signatures for purposes of this Agreement.

DATED:

DATED:

THE UNITED STATES OF AMERICA

BY:

BY:

STUART F. DELERY ACTING ASSISTANT ATTORNEY GENERAL

JOYCE R. BRANDA JAMIE ANN Y A VELBERG JEFFREY A. TOLL LISA KATZ SAMUELS JENNIFER A. STALZER Attorneys Commercial Litigation Branch Civil Division United States Department of Justice

GREGORY E. DEMSKE Chief Counsel to the Inspector General Office of Inspector General United States Department of Health and Human Services

18

21. This Agreement is effective on the date of signature of the last signatory to the

Agreement ("Effective Date of this Agreement"). Facsimiles of signatures shall constitute

acceptable, binding signatures for purposes of this Agreement.

THE UNITED STATES OF AMERICA

DATED: "1/ '}..-[ t l.- BY:

DATED: __ _ BY:

STUART F. DELERY ACTING ASSISTANT ATTORNEY GENERAL

OYCE R..-o,~~JU, JAMIE YA VELBERG JEFFREY A. TOLL LISA KATZ SAMUELS JENNIFER A. STALZER Attorneys Commercial Litigation Branch Civil Division United States Department of Justice

GREGORY E. DEMSKE Chief Counsel to the Inspector General Office oflnspector General United States Department of Health and Human Services

18

21. This Agreement is effective on the date of signature of the last signatory to the

Agreement ("Effective Date of this Agreement"). Facsimiles of signatures shall constitute

acceptable, binding signatures for purposes of this Agreement.

DATED: ___ _

THE UNITED STATES OF AMERICA

BY:

STUART F. DELERY ACTJNG ASSISTANT ATTORNEY GENERAL

JOYCE R. BRANDA JAMIE ANN Y AVELBERG JEFFREY A. TOLL LISA KATZ SAMUELS JENNIFER A. STALZER Attorneys Commercial Litigation Branch Civil Division United States Department of Justice

BY: ~tJ~ ~.r GREC@RY EDE~) /Chief Counsel to the Inspector General

Office of Inspector General United States Department of Health and Human Services

18

GLAXOSMITHKLINE LLC

BY:

BY:

ELPIDIO VILLARREAL Senior Vice President Global Litigation GlaxoSmithKiine LLC

MARK D. SELTZER BRIAN K. FRENCH Nixon Peabody LLP Counsel for GlaxoSmithKiine LLC

TI~E~ -~._J_ <;:-Dechei1 LLP Counsel for GlaxoSmithKiine LLC

19

SETTLEMENT AGREEMENT

This Settlement Agreement ("Agreement") is entered into by and among the United

States of America, acting through the United States Department of Justice on behalf of the

Office of Inspector General of the United States Department of Health and Human Services

("OIG-HHS"), the TRICARE Management Activity ("TMA"), the United States Department of

Veteran's Affairs ("VA"), and the United States Office ofPersonnel Management ("OPM")

(collectively the "United States"), Relators identified in the cases listed in Paragraph B ofthe

Preamble to this Agreement ("Relators"), and GlaxoSmithKline LLC ("GSK"), through their

authorized representatives. Collectively, all of the above will be referred to as "the Parties."

PREAMBLE

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

A. GlaxoSmithKline LLC is a Delaware limited liability company and an indirect

subsidiary of GlaxoSmithKline plc, a public limited company incorporated under English law

with headquarters in Brentford, England. At all relevant times, GSK developed, manufactured,

distributed, marketed and sold pharmaceutical products in the United States, including drugs

sold under the trade names ofPaxil, Wellbutrin, Advair, Lamictal, Zofran, Imitrex, Lotronex,

Flovent and Valtrex (collectively the "Covered Drugs").

B. The Relators listed herein have filed the following ill!! tam actions against GSK

(collectively the "Civil Actions"):

(1) United States et al. ex rel. Thorpe, et al. v. GSK et al., Civ. No. 11-10398 (D. Mass.);

(2) United States et al. ex rel. Gerahty, et al. v. GSK et al., Civ. No. 03-10641 (D. Mass.);

(3) United States ex rel. Graydon v. GSK et al., Civ. No. 11-10741 (D. Mass);

( 4) United States et al. ex rel. LaFauci v. GSK, Civ. No. 11-1 0921 (D. Mass.);

The United States filed a notice of intervention on January 14, 2011 and filed its Complaint-In­

Intervention on October 26, 2011 ("Complaint-in-Intervention").

C. On such date as may be determined by the Court, GSK will enter a plea of guilty

pursuant to Fed. R. Crim. P. 11 ( c )(1 )(C) (the "Plea Agreement") to an Information to be filed in

United States of America v. GlaxoSmithKline LLC., Criminal Action No. [to be assigned]

(District of Massachusetts) (the "Criminal Action") that will allege: (i) violations of Title 21,

United States Code, Sections 331(a), 333(a)(l) and 352, namely, the introduction into interstate

commerce of the misbranded drugs Wellbutrin and Paxil; and (ii) a violation of Title 21, United

States Code, Sections 331(e), 333(a)(l), and 355(k)(1), namely, that GSK failed to report data

relating to clinical experience, along with other data and information, regarding A vandia to the

Food and Drug Administration ("FDA") in mandatory reports, all in violation of the Food, Drug

and Cosmetic Act ("FDCA").

D. GSK has entered into or will be entering into separate settlement agreements,

described in Paragraph 1 (b) below (hereinafter referred to as the "Medicaid State Settlement

Agreements") with certain states and the District of Columbia in settlement ofthe Covered

Conduct. States with which GSK executes a Medicaid State Settlement Agreement in the form

to which GSK and the National Association of Medicaid Fraud Control Units ("NAMFCU")

Negotiating Team have agreed, or in a form otherwise agreed to by GSK and an individual State,

shall be defined as "Medicaid Participating States."

E. The United States alleges that GSK caused to be submitted claims for payment

for the Covered Drugs to the Medicare Program, Title XVIII of the Social Security Act, 42

U.S.C. §§1395-1395kkk ("Medicare"), and to the Medicaid Program, Title XIX of the Social

Security Act, 42 U.S.C. §§ 1396-1396w-5 ("Medicaid"). The United States further alleges that

2

GSK caused claims for payment for the Covered Drugs to be submitted to the TRICARE

program, 10 U.S.C. §§ 1071-1110b; the Federal Employees Health Benefits Program

("FEHBP"), 5 U.S.C. §§ 8901-8914; the Federal Employees Compensation Act Program, 5

U.S. C. § 8101, et seq; and caused purchases of the Covered Drugs by the Department of

Veterans' Affairs Programs, 38 U.S.C. §§ 1701-1743 (collectively, the "other Federal Health

Care Programs").

F. The United States contends that it and the Medicaid Participating States have

certain civil claims, as specified in Paragraph 2, below, against GSK for engaging in the conduct

set forth in the Complaint-in-Intervention and as described as follows (hereinafter referred to as

the "Covered Conduct"):

(1) Paxil: During the period January 1, 1998 through December 31,2003, GSK knowingly: (a) promoted the sale and use ofPaxil for conditions and for patients other than those for which its use was approved as safe and effective by the Food and Drug Administration ("FDA"), specifically for children and adolescents under the age of 18, and which uses were not medically-accepted indications as defined by 42 U.S.C. § 1396r-8(k)(6) for which the United States and state Medicaid programs provided coverage for Paxil; (b) made and/or disseminated unsubstantiated and/or false and/or misleading representations or statements about the safety and efficacy ofPaxil concerning the uses described in section (a) of this sub­paragraph, including concealing, omitting or failing to disclose material information about the safety and efficacy ofPaxil; and (c) offered and paid illegal remuneration to health care professionals to induce them to promote and prescribe Paxil, in violation of the Federal Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b). As a result ofthe foregoing conduct, GSK knowingly caused false or fraudulent claims for Paxil to be submitted to, or caused purchases by Medicaid and the other Federal Health Care Programs.

(2) Wellbutrin: During the period January 1, 1999 through December 31, 2003, GSK knowingly: (a) promoted the sale and use of Wellbutrin for conditions (including weight loss, the treatment of obesity, sexual dysfunction and in combination with other anti­depressants) and at dosages other than those for which its use was approved as safe and effective by the FDA, and some of which were not medically-accepted indications as defined by 42 U.S.C. §

3

1396r-8(k)(6) for which the United States and state Medicaid programs provided coverage for Wellbutrin; (b) made and/or disseminated unsubstantiated and/ or false and/ or misleading representations or statements about the safety and efficacy of Wellbutrin; and (c) offered and paid illegal remuneration to health care professionals to induce them to promote and prescribe Wellbutrin, in violation ofthe Federal Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b). As a result of the foregoing conduct, GSK knowingly caused false or fraudulent claims for Wellbutrin to be submitted to, or caused purchases by Medicaid and the other Federal Health Care Programs.

(3) Advair: During the period January 1, 2001 through June 30, 2010, GSK knowingly: (a) promoted the sale and use of Advair for conditions and dosing regimens other than those for which its use was approved as safe and effective by the FDA (including first line use for mild or all asthma, and for asthma previously treated by short-acting inhalers alone), and some of which were not medically-accepted indications as defined by 42 U.S.C. § 1396r-8(k)(6) for which the United States and state Medicaid programs provided coverage for Advair; (b) made and/or disseminated unsubstantiated and/or false and/or misleading representations or statements about the safety and efficacy of Advair (including that Advair was superior to the single component, inhaled corticosteroid alone, for patients previously treated by short -acting inhalers alone); and (c) offered and paid illegal remuneration to health care professionals to induce them to promote and prescribe Advair, in violation of the Federal Anti­Kickback Statute, 42 U.S.C. § 1320-7b(b ). As a result ofthe foregoing conduct, GSK knowingly caused false or fraudulent claims for Advair to be submitted to, or caused purchases by Medicaid, Medicare and the other Federal Health Care Programs.

( 4) Lamictal: During the period January 1, 1999 through December 31, 2003, GSK knowingly: (a) promoted the sale and use ofLamictal for a variety of conditions other than those for which its use was approved as safe and effective by the FDA (including bi-polar depression, neuropathic pain, and various other mental diseases), and some of which were not medically-accepted indications as defined by 42 U.S.C. § 1396r-8(k)(6) for which the United States and state Medicaid programs provided coverage for Lamictal; (b) made and/or disseminated unsubstantiated and/or false and/or misleading representations or statements about the safety and efficacy of Lamictal concerning the uses described in section (a) ofthis sub-paragraph; and (c) offered and paid illegal remuneration to health care professionals to induce them to promote and prescribe Lamictal, in violation of the Federal Anti-Kickback Statute, 42 U.S.C. § 1320-7b(b). As a result of the foregoing conduct, GSK knowingly caused

4

false or fraudulent claims for Lamictal to be submitted to, or caused purchases by Medicaid and the other Federal Health Care Programs.

(5) Zofran: During the period January 1, 2002 through December 31, 2004, GSK knowingly: (a) promoted the sale and use of Zofran for a variety of conditions other than those for which its use was approved as safe and effective by the FDA (including hyperemesis or pregnancy-related nausea), and some of which were not medically-accepted indications as defined by 42 U.S.C. § 1396r-8(k)(6) for which the United States and state Medicaid programs provided coverage for Zofran; (b) made and/or disseminated unsubstantiated and! or false representations or statements about the safety and efficacy of Zofran concerning the uses described in section (a) of this sub-paragraph; and (c) offered and paid illegal remuneration to health care professionals to induce them to promote and prescribe Zofran, in violation of the Federal Anti-Kickback Statute, 42 U.S.C. § 1320-7b(b). As a result ofthe foregoing conduct, GSK knowingly caused false or fraudulent claims for Zofran to be submitted to, or caused purchases by Medicaid and the other Federal Health Care Programs.

( 6) Imitrex, Lotronex, Flovent and Valtrex: From J anumy 1, 1999 through December 30, 2004, GSK paid illegal remuneration for speaker programs, mentorships, preceptorships, journal clubs, advisory boards (including Local and Regional Advisory Boards and Special Issues Boards), Reprint Mastery Trainings, and provided gifts (including entertainment, cash, travel and meals) to health care professionals to induce them to promote and prescribe the drugs Imitrex, Lotronex, Flo vent and V altrex, in violation of the Federal Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b). As a result of the foregoing conduct, GSK caused false claims to be submitted to, or caused purchases by Medicaid and certain other Federal Health Care Programs.

G. The United States also contends that it has certain administrative claims against

GSK as specified in Paragraphs 4 through 6, below, for engaging in the Covered Conduct.

H. This Agreement is made in eompromise of disputed claims. This Agreement is

neither a11 admission of facts or liability by GSK. GSK expressly denies the allegations of the

United States a11d the Relators as set forth herein and in the Civil Actions and the Complaint-In-

Intervention, and denies that it engaged in any wrongful conduct in connection with the Covered

Conduct, except as to such admissions GSK makes in connection with the Plea Agreement. This

5

Agreement is not a concession by the United States or the Relators that their claims are not well­

founded. Neither this Agreement, nor the performance of any obligation arising under it,

including any payment, nor the fact of settlement, is intended to be or shall be understood as, an

admission of liability or wrongdoing, or other expression reflecting on the merits of the dispute,

except as set forth in this Paragraph.

I. Relators claim entitlement under 31 U.S.C. § 3730(d) to a share of the proceeds

of this Settlement Agreement and to reasonable expenses, attorneys' fees and costs, among other

things. This agreement does not cover the claims of any Relator to a share of the proceeds or

their attorneys' fees, costs, and expenses under 31 U.S. C. § 3 73 0( d), and nothing in this

Agreement shall constitute evidence or an admission that any Relator has filed a valid qui tam

action under 31 U.S.C. § 3730 or is entitled to a share of the proceeds or attorneys' fees, costs,

and expenses under 31 U.S.C. §3730(d).

J. To avoid the delay, expense, inconvenience and uncertainty of protracted

litigation of these. claims, the Parties desire to reach a final settlement as set forth below.

TERMS AND CONDITIONS

NOW, THEREFORE, in reliance on the representations contained herein and in

consideration of the mutual promises, covenants, and obligations in this Agreement, and for

good and valuable eonsioeration, receipt of which is hereby acknowledged, the Parties agree as

follows:

1. GSK agrees to pay to the United States and the Medicaid Pruiicipating States,

collectively, the sum of one billion, forty-two million, six hundred twelve thousand, eight

hundred dollars ($ 1 ,042,612,800), plus interest at the rate of 1.625% per annum from December

1, 2011, and continuing until and including the day before payment is made under this

6

Agreement (collectively, the "Settlement Amount"). The Settlement Amount is allocated to the

drugs set forth in the Covered Conduct and at issue in the Civil Actions as follows:

Paxil:

W ellbutrin:

Advair-Asthma:

Advair-COPD July 2008 to June 2010:

Lamictal:

Zofran:

Kickbacks for Paxil, Wellbutrin, Advair, Lamictal, Zofran, Imitrex, Lotronex, Flovent, and Valtrex:

$52,622,130

$166,979,130

$686,049,841

$25,273,910

$54,729,862

$2,320,640

$54,637,287

The Settlement Amount shall constitute a debt inunediate1y due and owing to the United States

and the Medicaid Participating States on the Effective Date of this Agreement. This debt shall

be discharged by payments to the United States and the Medicaid Participating States, under the

following terms and conditions:

(a) GSK shall pay to the United States the sum of eight hundred thirty-two million,

four hundred eighty-five thousand, four hundred and thirty-six dollars ($832,485,436), plus

interest at the rate of 1.625% per annum from December 1, 2011, and continuing until and

including the day before payment is made under this Agreement (the "Federal Settlement

Amount"). The Federal Settlement Amount shall be paid by electronic funds transfer pursuant to

written instructions from the United States no later than seven (7) business days after (i) this

Agreement is fully executed by the Parties and delivered to GSK's attorneys; or (ii) the Court

accepts a Fed. R. Crim. P. 11(c)(l)(C) guilty plea as described in Preamble Paragraph C in

7

connection with the Criminal Action and imposes the agreed upon sentence, whichever occurs

later.

(b) GSK shall pay to the Medicaid Participating States the sum of two hundred and

ten million, one hundred and twenty-seven thousand, three hundred and sixty-four dollars

($210,127,364), plus interest at the rate ofl.625% per annum from December 1, 2011, and

continuing until and including the day before payment is made under this Agreement (the

"Medicaid State Settlement Amount"). The Medicaid State Settlement Amount shall be paid by

electronic funds transfer to an interest bearing account pursuant to written instructions from the

NAMFCU Negotiating Team and under the terms and conditions of the Medicaid State

Settlement Agreements that GSK will enter into with the Medicaid Participating States.

(c) If GSK' s agreed-upon guilty plea pursuant to Fed. R. Crim. P. 11 ( c )(1 )(C) in the

Criminal Action described in Preamble Paragraph Cis not accepted by the Court or the Court

does not impose the agreed-upon sentence for whatever reason, this Agreement shall be null and

void at the option of either the United States or GSK. If either the United States or GSK

exercises this option, which option shall be exercised by notifying all Parties, through counsel, in

writing within five (5) business days ofthe Court's decision, the Parties will not object and this

Agreement will be rescinded. If this Agreement is rescinded, GSK will not plead, argue or

otherwise raise any defenses under the theories of statute of limitations, laches, estoppel or

similar theories, to any civil or administrative claims, actions or proceedings arising from the

Covered Conduct that are brought by the United States within 90 calendar days of rescission,

except to the extent such defenses were available on the day on which the gill tam complaints

listed in Preamble Paragraph B, above, were filed.

8

2. Subject to the exceptions in Paragraph 7 below (concerning excluded claims), in

consideration ofthe obligations ofGSK set forth in this Agreement, conditioned upon GSK's

payment in full of the Settlement Amount, the United States (on behalf of itself, its officers,

agencies, and departments) agrees to release GSK, together with its predecessors, current and

former parents, direct and indirect affiliates, divisions, subsidiaries, successors, transferees and

assigns and their current and former directors, officers, and employees, individually and

collectively, from any civil or administrative monetary claim that the United States has or may

have for the Covered Conduct under the False Claims Act, 31 U.S.C. §§ 3729-3733; the Program

Fraud Civil Remedies Act, 31 U.S.C. §§ 3801-3812; the Civil Monetary Penalties Law, 42

U.S.C. § 1320a-7a; the Food, Drug and Cosmetic Act, 21 U.S.C. § 301, et seq.; any statutory

provision creating a cause of action for civil damages or civil penalties for which the Civil

Division of the Department of Justice has actual and present authority to assert and compromise

pursuant to 28 C.F.R. Part 0, Subpart I, 0.45(d) and common law claims for fraud, payment by

mistake, breach of contract, disgorgement and unjust emichment.

3. Conditioned upon the United States' receipt of the payments described in

Paragraph 1(a) above, and in consideration ofthe obligations ofGSK in this Agreement,

Relators, for themselves and for their heirs, successors, attorneys, agents, and assigns and any

other person or entity acting on their behalf or asserting their rights, release GSK together 'vith

its predecessors, and its current and former divisions, parents, direct and indirect affiliates,

divisions, subsidiaries, transferees, successors, and assigns, and all of their current and former

directors, officers, employees, representatives, servants, agents, consultants and attorneys,

individually and collectively, from any civil monetary claim the United States has or may have

under the False Claims Act, 31 U.S.C. §§ 3729-3733, for the Covered Conduct and from all

9

liability, claims, demands, actions or causes of action whatsoever, whether known or unknown,

fixed or contingent, in law or in equity, in contract or in tort, under any federal or state statute or

regulation, or in common law, that they, their heirs, successors, attorneys, agents and assigns

otherwise would have standing to bring as of the date of this Agreement, including any liability

to Relators arising from or relating to the claims Relator asserted or could have asserted in the

Civil Actions. Provided, however, that Relators and Relators' counsel do not release GSK for

any claims they may have for reasonable attorneys' fees, expenses and costs pursuant to 31

U.S.C. § 3730(d); or for any claims Relators may have pursuant to 31 U.S.C. § 3730(h).

4. In consideration ofthe obligations ofGSK in this Agreement and the Corporate

Integrity Agreement ("CIA") entered into between OIG-HHS and GSK, and conditioned upon

GSK's full payment of the Settlement Amount, the OIG-HHS agrees to release and refrain from

instituting, directing, or maintaining any administrative action seeking exclusion from Medicare,

Medicaid, and other Federal health care programs (as defined in 42 U.S.C. § 1320a-7b(f))

against GSK under 42 U.S.C. § 1320a-7a (Civil Monetary Penalties Law) or 42 U.S.C. § 1320a-

7(b )(7) (permissive exclusion for fraud, kickbacks, and other prohibited activities) for the

Covered Conduct, or against GSK under 42 U.S.C. § 1320a-7(b)(l) based on GSK's agreement

to plead guilty to the charges set forth in the Information in the Criminal Action referenced in

Paragraph C above, except as reserved in Paragraph 7 (concerning excluded claims), below, and

as reserved in: this Paragraph. The OIG-HHS expressly reserves all rights to comply with any

statutory obligations to exclude GSK from Medicare, Medicaid, and other Federal health care

programs under 42 U.S.C. § 1320a-7(a) (mandatory exclusion) based upon the Covered

Conduct. Nothing in this Paragraph precludes the OIG-HHS from taking action against entities

10

or persons, or for conduct and practices, for which claims have been reserved in Paragraph 7,

below.

5. In consideration of the obligations of GSK set forth in this Agreement,

conditioned upon GSK's full payment of the Settlement Amount, TMA agrees to release and

refrain from instituting, directing, or maintaining any administrative action seeking exclusion or

suspension from the TRICARE Program against GSK under 32 C.P.R. § 199.9 for the Covered

Conduct, except as reserved in Paragraph 7 (concerning excluded claims), below, and as

reserved in this Paragraph. TMA expressly reserves authority to exclude GSK under 32 C.P.R.

§§ 199.9 (f)(l)(i)(A), (f)(1)(i)(B), and (f)(1)(iii), based upon the Covered Conduct. Nothing in

this Paragraph precludes TMA or the TRICARE Program from taking action against entities or

persons, or for conduct and practices, for which claims have been reserved in Paragraph 7,

below.

6. In consideration ofthe obligations ofGSK in this Agreement, conditioned upon

GSK's full payment of the Settlement Amount, OPM agrees to release and refrain from

instituting, directing, or maintaining any administrative action against GSK under 5 U.S.C. §

8902a or 5 C.P.R. Part 970 for the Covered Conduct, except as reserved in Paragraph 7

(concerning excluded claims), below, and except if excluded by the OIG-HHS pursuant to 42

U.S.C. § 1320a-7(a) or required by 5 U.S.C. § 8902a(b), or 5 C.P.R. Part 970. Nothing in this

Paragraph precludes OPM from taking action against entities or persons, or for conduct and

practices, for which claims have been reserved in Paragraph 7, below.

11

7. Notwithstanding any term of this Agreement, specifically reserved and excluded

from the scope and terms of this Agreement as to any entity or person (including GSK and the

Relators) are the following claims of the United States:

(a) Any civil, criminal, or administrative liability arising under Title 26, U.S.

Code (Internal Revenue Code);

(b) Any criminal liability;

(c) Except as explicitly stated in this Agreement, any administrative liability,

including mandatory exclusion from Federal health care programs;

(d) Any liability to the United States (or its agencies) for any conduct other

than the Covered Conduct;

(e) Any liability based upon such obligations as are created by this

Agreement;

(f) Any liability for express or implied warranty claims or other claims for

defective or deficient products and services, including quality of goods

and services;

(g) Any liability for personal injury or property damage or for other

consequential damages arising from the Covered Conduct;

(h) Any liability for failure to deliver items or services due; or

(i) Any liability of individuals (including current or former directors, officers,

employees, or agents of GSK) who receive written notification that they

are the target of a criminal investigation, are criminally indicted or

charged, or are convicted, or who enter into a criminal plea agreement

related to the Covered Conduct.

12

8. (A) Each Relator and his/her respective heirs, successors, attorneys, agents,

and assigns agree not to object to this Agreement and agree and confirm that this Agreement and

the amounts set forth in Paragraph 1(a) are fair, adequate and reasonable under all the

circumstances, pursuant to 31 U.S.C. § 3730( c )(2)(B). Each Relator and his/her respective heirs,

successors, attorneys, agents, and assigns, expressly waives the opportunity for a hearing on any

objection to this agreement pursuant to 31 U.S.C. § 3730(C)(2)(B).

(B) Of the federal and states drug claims listed in Paragraphs 1(a), the following were

alleged in United States et al. ex rel. Thorpe, et al. v. GSK et al., Civ. No. 11-10398 (D. Mass.)

and/or United States et al. ex rel. Gerahty, et al. v. GSK et al., Civ. No. 03-10461 (D. Mass):

Paxil, Wellbutrin, Advair-Asthma, Lamictal, Zo:fran, Flovent, Imitrex, Lotronex, Valtrex, and

kickbacks. Of the federal and state drug claims listed in paragraph 1(a), Advair-COPD (July

2008-June 2010) was alleged in United States ex rel. Graydon v. GSK et al., Civ. No. 11-10741

(D. Mass) and United States et al. ex rel. La Fauci v. GSK, Civ. No. 11-10921 (D. Mass). The

Parties incorporate herein by reference the fairness, adequacy and reasonableness letters

executed by each Relator and their counsel. Nothing in this subparagraph (B) is intended to

address whether or to what extent any of the relators in these actions are entitled to a share of

any of the proceeds allocated to the federal and state drug claims listed in Paragraph l(a).

(C) All parties reserve all rights under the False Claims Act unless expressly waived

or released herein. This Agreement does not resolve or in any manner affect any claims the

United States has or may have against the Relators arising under Title 26, U.S. Code (Internal

Revenue Code), or any claims arising under this Agreement.

9. GSK waives and shall not assert any defenses it may have to any criminal

prosecution or administrative action relating to the Covered Conduct that may be based in whole

13

or in part on a contention that under the Double Jeopardy Clause in the Fifth Amendment of the

Constitution, or under the Excessive Fines Clause in the Eighth Amendment of the Constitution,

this Agreement bars a remedy sought in such criminal prosecution or administrative action.

Nothing in this paragraph or any other provision of this Agreement constitutes an agreement by

the United States concerning the characterization of the Settlement Amount for purposes of the

Internal Revenue laws, Title 26 of the United States Code.

10. GSK fully and finally releases the United States, its agencies, employees,

servants, and agents from any claims (including attorneys' fees, costs, and expenses of every

kind and however denominated) which GSK has asserted, could have asserted, or may assert in

the future against the United States, its agencies, employees, servants, and agents, related to the

Covered Conduct or arising from the United States' investigation and prosecution of the Civil

Actions and the Criminal Action.

11. Should this Agreement be challenged by any person as not fair, adequate or

reasonable pursuant to 31 U.S.C. § 3730(c)(2)(B), the Parties agree that they will take all

reasonable and necessary steps to defend this Agreement and the allocation set forth herein.

12. In consideration of the obligations of the Relators set forth in this Agreement,

GSK, on behalf of itself, its predecessors, and its current and former divisions, parents,

subsidiaries, agents, successors, assigns, and their current and former directors, officers and

employees, fully and finally release, waive, and forever discharge the Relators and their

respective heirs, successors, assigns, agents, and attomeys from any claims or allegations GSK

has asserted or could have asserted, arising from the Covered Conduct and from all liability,

claims, demands, actions or causes of action whatsoever, whether known or unknown, fixed or

contingent, in law or in equity, in contract or in tort, under any federal or state statute or

14

regulation, or in common law, that they, their heirs, successors, attorneys, agents and assigns

otherwise would have standing to bring as of the date of this Agreement, including any liability

to GSK arising from or relating to the claims Relator asserted or could have asserted in the Civil

Actions. Provided, however, that GSK expressly reserves any defenses or claims as to Relators'

and Relators' counsel's claims for reasonable attorneys' fees, expenses and costs pursuant to 31

U.S.C. § 3730(d) and as to any claims Relators may have pursuant to 31 U.S. C. § 3730(h), which

are reserved pursuant to Paragraph 3 above.

13. The Settlement Amount shall not be decreased as a result of the denial of claims

for payment now being withheld from payment by any Medicare carrier or intermediary or any

state payer, related to the Covered Conduct; and GSK agrees not to resubmit to any Medicare

carrier or intermediary or any state payer any previously denied claims related to the Covered

Conduct, and agrees not to appeal any such denials of claims.

14. GSK agrees to the following:

(a) Unallowable Costs Defined: that all costs (as defined in the Federal

Acquisition Regulations (FAR) 48 C.F.R. § 31.205-47 and in Titles XVIII and XIX ofthe Social

Security Act, 42 U.S. C. §§ 1395-1395kkk and 1396-1396w-5, and the regulations and official

program directives promulgated thereunder) incurred by or on behalf of GSK, its present or

former officers, directors, employees, shareholders, and agents in connection with the following

shall be "Unallowable Costs" on government contracts and under the Medicare and Medicaid

Programs and other Federal Health Care Programs:

(1) the matters covered by this Agreement and the related Plea Agreement;

15

(2) the United States' audit and civil and criminal investigation of the matters

covered by this Agreement;

(3) GSK's investigation, defense, and any corrective actions undertaken in

response to the United States' audit and civil and criminal investigation in

connection with the matters covered by this Agreement (including

attorneys' fees);

(4) the negotiation and performance of this Agreement, the Plea Agreement,

and the Medicaid State Settlement Agreements;

(5) the payments GSK makes to the United States or any State pursuant to this

Agreement, the Plea Agreement, or the Medicaid State Settlement

Agreements and any payments that GSK may make to Relators (including

costs and attomeys' fees);

(6) the negotiation of, and obligations undertaken pursuant to the CIA to:

(i) retain an independent review organization to perform annual reviews

as described in Section III of the CIA; and (ii) prepare and submit reports

to OIG-HHS. However, nothing in this paragraph 14 affects the status of

costs that are not allowable based on any other authority applicable to

GSK.

(b) Future Treatment_ofUnallowable Costs: These Unallowable Costs shall

be separately determined and accounted for by GSK, and GSK shall not charge such

Unallowable Costs directly or indirectly to any contracts with the United States or any State

Medicaid Program, or seek payment for such Unallowable Costs through any cost report, cost

16

statement, information statement, or payment request submitted by GSK or any of its

subsidiaries or affiliates to the Medicare, Medicaid, TRICARE, or FEHBP Programs.

(c) Treatment ofUnallowable Costs Previously Submitted for Payment: GSK

further agrees that within 90 days of the Effective Date of this Agreement, it shall identify to

applicable Medicare and TRICARE fiscal intermediaries, carriers, and/or contractors, and

Medicaid, and FEHBP fiscal agents, any Unallowable Costs (as defined in tlus Paragraph)

included in payments previously sought from the United States, or any State Medicaid Program,

including, but not limited to, payments sought in any cost reports, cost statements, information

reports, or payment requests already submitted by GSK or any of its subsidiaries or affiliates,

and shall request, and agree, that such cost reports, cost statements, information reports, or

payment requests, even if already se1tled, be adjusted to account for the eiTecl of the inclusion of

the Unallowable Costs. GSK agrees that the United States, at a minimum, shall be entitled to

recoup from GSK any overpayment plus applicable interest and penalties as a result of the

inclusion of such Unallowable Costs on previously-submitted cost reports, information reports,

cost statements, or requests for payment.

Any payments due after the adjustments have been made shall be paid to the

United States pursuant to the direction of the Department of Justice, and/or the affected agencies.

The United States reserves its rights to disagree with any calculations submitted by GSK or any

of its subsidiaries or affiliates on the effect of inclusion of Unallowable Costs (as defined in this

Paragraph) on GSK's or any of its subsidiaries' or aiTiliatcs' cost reports, cost statements, or

information reports.

17

(d) Nothing in this Agreement shall constitute a waiver of the rights of the

United States to audit, examine or reexamine GSK's books and records to determine that no

Unallowable Costs have been claimed in accordance with the provisions of this Paragraph.

15. This Agreement is intended to be for the benefit of the Parties only. The Parties

do not release any claims against any other person or entity, except to the extent provided for in

Paragraph 2 above and 16 below (waiver for beneficiaries paragraph).

16. GSK agrees that it waives and shall not seek payment for any of the health care

billings covered by this Agreement from any health care beneficiaries or their parents, sponsors,

legally responsible individuals, or third party payors based upon the claims defined as Covered

Conduct.

17 _ GSK expressly warrants that it has reviewed its financial situation and that it is

currently solvent within the meaning of 11 U.S.C. §§ 547(b)(3) and 548(a)(1)(B)(ii)(I), and will

remain solvent following payment of the Settlement Amount. Further, the Parties warrant that,

in evaluating whether to execute this Agreement, they (a) have intended that the mutual

promises, covenants and obligations set fmih herein constitute a contemporaneous exchange for

new value given to GSK, within the meaning of 11 U.S.C. § 547(c)(l); and (b) conclude that

these mutual promises, covenants and obligations do, in fact, constitute such a contemporaneous

exchange. Further, the Parties warrant that the mutual promises, covenants, and obligations set

forth herein are intended to and do, in fact, represent a reasonably equivalent exchange of value

that is not intended to hinder, delay, or defraud any entity to which GSK was or became indebted

to on or after the date of this transfer, within the meaning of 11 U.S.C. § 548(a)(1).

18. Within seven (7) business days following payment of the Settlement Amount, the

Parties shall seek dismissal of the Complaint-in-Intervention and each of the Civil Actions. Each

18

dismissal shall be with prejudice as to all claims of the United States and the Relators with the

exception of the following claims, if any, and over which the Court shall retain jurisdiction: (a)

Relators' claims for a share ofthe proceeds of the Civil Actions pursuant to 31 U.S.C. § 3730(d);

(b) Relators' claims against GSK for reasonable attorneys' fees, expenses, and costs pursuant to

31 U.S.C. § 3730(d); (c) Relators' claims against GSK under 31 U.S.C. § 3730(h); and (d)

Relators' claims against the States for Relators' Shares. This provision shall not limit the rights

of the United States to in any way challenge or contest claims under subsection (a) above,

including but not limited to challenging or contesting those claims under 31 U.S. C. § 3730(b)(5)

and/or 31 § U.S.C. 3730(e)(4), or as to GSK, to in any way challenge or contest claims under

subsection (b) and (c) above.

19. Each party shall bear its own legal and other costs incurred in connection with

this matter, including the preparation and performance of this Agreement, except Relators

reserve their rights against GSK to seek attorneys' fees, costs and expenses under 31 U.S.C. §

3730(d).

20. The Parties each represent that this Agreement is freely and voluntarily entered

into without any degree of duress or compulsion.

21. This Agreement is governed by the laws of the United States. The Parties agree

that the exclusive jurisdiction and venue for any dispute arising between and among the Parties

under this Agreement, including any issues regarding relators' share or payment of Relators'

attorneys' fees, expenses and costs, shall be the United States District Court for the District of

Massachusetts, except that disputes arising under the CIA shall be resolved exclusively under the

dispute resolution provisions in the CIA.

19

22. For purposes of construction, this Agreement shall be deemed to have been

drafted by all Parties to this Agreement and shall not, therefore, be construed against any party

for that reason in any dispute.

23. This Agreement including any documents incorporated by reference herein

constitutes the complete agreement between the Parties with respect to the issues covered by the

Agreement. This Agreement may not be amended except by written consent of all the Parties.

24. The individuals signing this Agreement on behalf of GSK represent and warrant

that they are authorized by GSK to execute this Agreement. The individuals signing this

Agreement on behalf of each Relator represent and warrant that they are authorized by that

Relator to execute this Agreement. The United States' signatories represent that they are signing

this Agreement in their official capacities and they are authorized to execute this Agreement.

25. This Agreement may be executed in counterparts, each of which constitutes an

original and all of which shall constitute one and the same Agreement.

27. This Agreement is binding on GSK's successors, transferees, heirs and assigns.

26. This Agreement is binding on Relators' successors, transferees, heirs, attorneys

and assigns.

27. All Parties consent to the disclosure of this Agreement, and information about this

Agreement, to the public after the Effective Date.

28. This Agreement is effective on the date of signature of the last signatory to the

Agreement (Effective Date of this Agreement). Facsimiles or electronic versions of signatures

shall constitute acceptable, binding signatures for purposes of this Agreement.

20

By:

UNITED STATES OF AMERICA

CARMEN M. ORTIZ

Assistant United States Attomeys District of Massachusetts

21

By:

United States Attorney John Walsh

EDWIN WINSTEAD Assistant United States Attorney District of Colorado

Dated: /T\A t>; .11

,2,0 /~

I

22

By:

By:

STUART F. DELERY Acting Assistant Attorney General

DANfE~Rso:L---JAMIE ANN YAVELBERG ANDY MAO BRIAN MCCABE DOUGLAS ROSENTHAL Attorneys Commercial Litigation Branch, Civil Division United States Department of Justice

JILLFURMANP I PATRICK JASPERSE DAVID FRANK Attorneys Consumer Protection Branch, Civil Division United States Department of Justice

23

nated: __ -hz,__/~-+-.i--<-'-~----

Dated: 7 f 2 / I L

tj,"f' ,. . ~ ' /~~ ~ By: I { ,,~,l Li<-<1-"Y~,~".,L'

l~ l 'GREGti)fy E. DEMSKtJ ;?';/ Chief Counsel to the Inspector General " Office of Cotmsel to the Inspector General

Office of Inspector General U.S. Department of Health and Human Services

24

Dated:

By: ~~~\k PAUL J. HU'l\TE General Coun;2t-TRICARE Management Activity United States Department of Defense

Dated: Co j ~""1-(\(}..

By: ~71~ SHIRL YR. P fl'TERSON . Assistant Director for Federal Employee Insurance Operations United States Office ofPersonnel Management

Dated: t.j~z.

J. DAVID COPE Debarring Official Office of the Assistant Inspector General for Legal Affairs United States Office of Personnel Management

Dateti:

By:

By:

GLAXOSMITHKLINE LLC

ELPIDIO VILLARREAL

Covington & Burling LLP Counsel to GlaxoSmitbKline LLC.

Dated:

Dated: {~6-~ ~

27

By:

By:

By:

RELATOR GREG THORPE

Dated: -------------------GREG THORPE

RELATOR BLAIR HAMRICK

Dated: -------------------BLAIR HAMRICK

BRIAN KENNEY

t~ ~:!::~ Dated _ __,.(;~-~ 11-/~d"--. _,._)/-+I_J_?-1 ..-;.;'"""~--M .. TAVYDEMING ~·· KENNEY & McCAFFE~TY, PC Counsel to RelatorJG_r~ Thorpe & Blair Hamrick

28

RELATOR GREG THORPE

By:~ GREGTRi>E

By:

By:

RELATORBLAIRHANGUCK

BLAIR HAMRICK

BRIAN KENNEY

BRIAN KENNEY M. TA VY DEMING KENNEY & McCAFFERTY, PC Counsel to Relators Greg Thorpe & Blair Hamrick

Dated: 6' / '{_ T /{L

Dated: ________ _

Dated: -------------

By:

By:

By:

RELATOR GREG THORPE

GREG THORPE

RELATOR BLAIR HAMRICK

"BLAIR HAMRICK

BRIAN KENNEY

BRIAN KENNEY M. TAVYDEMING KENNEY & McCAFFERTY, PC Counsel to Relators Greg Thorpe & Blair Hamrick

Dated: ________ _

Dated: {;~ C l. / (_

Dated: --------------

RELATORTHOMASGERAHTY

By: Dated: _________ _ THOMAS GERAHTY

RELATORMATTHEWBURKE

By:

By:

MATTHEWB~- I rf

~~~ Dated: & / 2-& /I Z----~~~-y~----

ERIKA KELTON Phillips & Cohen Counsel to Relators Thomas Gerahty and Matthew Burke

29

RELATOR THOMAS GERAHTY

By~~~ Dated:_----'=6~/2_(;'---~..__z_a_;_-:2-_

RELATOR MATTHEW BURKE

By: Dated: -------------------MATTHEW BURKE

By tfiVr ~ tt0th E KELTON

Dated: & (~b } VJ {? I I

Phillips & Cohen Counsel to Relators Thomas Gerahty and Matthew Burke

29

2012-06-27 08:34

By;

By:

LOIS C GRAYDON 8563095174 >> Grant & Eisenhofer

RELATOR LOIS GRAYDON'

LOlSGRA ON

REUBEN GUTTMAN Grant & Eisenhofer, P A Counsel to Relator Lois Graydon

Dated:. ___ 0___c_/f_J..__,:,....~~.J.-ct_._., _2....

p 1/1

By:

!··

l .

RELATOR l\i[fCI.IAEL LAFAUCI

ffi~off-~~

DAVID~NE ROBERT A.MAGNANIN1

·Stone &.MagnaniniLLP · Counsel to RetatotMi.chael LaFauci

.·· /

31

Main Reception: (6/7) 748-3100

Geoffrey E. Hobart Matthew J. O'Connor Covington & Burling LLP 1201 Pennsylvania Avenue, NW Washington, DC 20004-2401

Re: United States v. GlaxoSmithKline pic

Dear Counsel:

U.S. Department of Justice

Carmen M. Ortiz United States Attorney District of Massachusetts

John Joseph Moakley United States Courthouse

1 Courthouse Way Suite 9200 Boston, Massachusetts 02210

June 27, 2012

This letter ("Side Letter Agreement") will confirm that, in exchange for full performance of the Plea Agreement entered into by and among the United States of America, acting through the United States Attorney for the District of Massachusetts ("U.S. Attorney") and the Department of Justice (collectively referred to as "the United States") and your client, GlaxoSmithKline LLC ("GSK"), a copy of which Plea Agreement and related Information are attached hereto as Exhibits One and Two, and in exchange for certain other promises made herein between and among the United States and your client, GlaxoSmithKline plc, its direct and indirect subsidiaries (other than GSK) and its successors, the United States and GlaxoSmithKline pic hereby agree as follows:

1. No Criminal Prosecution of GlaxoSmithKline pic

The United States hereby declines prosecution of GlaxoSmithK!ine pic or any of its direct or indirect subsidiaries (other than GSK as set forth in the attached Plea Agreement and related Information) for conduct by or attributable to GlaxoSmithKline pic or any of its subsidiaries that:

(a) falls within the scope of the Information to which GSK is pleading guilty; or

(b) was either the subject of the grand jury investigation in the District of Massachusetts, or was known to the United States Attorney's Office for the District of Massachusetts or the Consumer Protection Branch of the Civil Division of the Department of Justice prior to the date of this agreement, relating to:

(i) GSK's sales, marketing and promotion of Imitrex, Lamie tal, Lotronex, Flo vent, Paxil, V altrex, Wellbutrin, and Zofran between January 1998 and December 2004;

(ii) GSK's sales, marketing and promotion of Advair between January 1998 and June 2010;

(iii) GSK's communications with and reporting to the Food and Drug Administration in cmmection with Advair, Paxil, and Wellbutrin between July 1998 and December 2004;

(iv) GSK's sales, marketing and promotion of Avandia, Avandamet, and Avandaryl between January 2000 and December 2010; and

(v) GSK's communications with and reporting to the Food and Drug Administration in connection with A vandia, Avandamet, and Avandaryl.

The United States does not decline criminal prosecution of GlaxoSmithKline pic or any of GlaxoSmithKline pic's related entities for any other conduct beyond that set forth above.

This Side Letter Agreement is not intended to and does not affect the criminal liability of any individual.

It is understood among the parties to this Side Letter Agreement that the United States' promise not to prosecute GlaxoSmithKline pic is dependent upon and subject to GSK fulfilling its material obligations in the Plea Agreement and in the related Civil Settlement Agreements attached hereto as Exhibits Three through Five. If GSK docs not fulfill its material obligations in the Plea Agreement and/or the Civil Settlement Agreements, GlaxoSmithKline pic agrees to waive any defenses regarding pre-indictment delay, statute of limitations, or Speedy Trial Act with respect to any and all criminal charges that could have been timely brought or pursued as of the date of this letter, as set forth above.

2. Who Is Bound By Agreement

With respect to matters set forth in Paragraph I, this Agreement is binding upon GlaxoSmithKline plc and the Office of the United States Attorney for the District of Massachusetts, the United States Attorney's Offices for each ofthe other 92 judicial districts of the United States, and the Consumer Protection Branch of the Department of Justice. The non­prosecution provisions in Paragraph 1 are also binding on the Criminal Division of the United States Department of Justice, with the exception of any investigations of GlaxoSmithKline plc or any of its subsidiaries that are or may be conducted in the future by the Fraud Section of the Criminal Division regarding possible violations of the Foreign Corrupt Practices Act and related offenses in connection with the sales and marketing of GlaxoSmithKline plc's or any of its subsidiaries' products to foreign customers, which investigations are specifically excluded from the release in Paragraph I. A copy of the letter to United States Attorney Carmen M. Ortiz from the Assistant Attorney General, Criminal Division, Department of Justice, authorizing this Agreement is attached as Exhibit Six. GlaxoSmithKline plc understands that this Agreement does not bind any state or local prosecutive authorities, the Tax Division of the U.S. Department of Justice or the Internal Revenue Service of the U.S. Department of the Treasury.

3. Complete Agreement

This Side Letter Agreement; the Plea Agreement and the three Civil Settlement Agreements with GSK attached hereto; the tolling agreement regarding Avandia dated September 21, 2011 attached as Exhibit Seven; and the tolling agreement regarding other drugs dated December 1, 2011 attached as Exhibit Eight are the complete and only agreements between the parties. No promises, agreements or conditions have been entered into other than those set forth or referred to in the above-identified documents. This agreement supersedes prior understandings, if any, of the parties, whether written or oral. This agreement cannot be modified other than in a written memorandum signed by the parties or on the record in court.

June 27, 2012 Page4

If this letter accurately reflects the agreement entered into between the United States and GlaxoSmithK!ine pic and if you are authorized to enter into this agreement on behalf of GlaxoSmithK!ine pic, please sign below and return the original of this letter to Assistant U.S. Attorneys Susan G. Winkler and Sara M. Bloom.

Very truly yours,

c~:~;:~~:;~ §tis UNITED STATES ATTORNEY DISTRICT OF MASSACHUSETTS

Sara Miron Bloom Susan G. Winkler Shannon T. Kelley Amanda Strachan Brian Perez-Dapple Assistant U.S. Attorneys

STUART F. DELERY ACTING ASSISTANT ATTORNEY GENERAL CIVIL DIVISION DEPARTMENT OF JUSTICE

Patrick J asperse Jill Furman Mark L. Josephs David Frank Timothy Finley Trial Attorneys Consumer Protection Branch U.S. Department of Justice

ACKNOWLEDGMENT OF AGREEMENT

I am authorized to execute this Side Letter Agreement on behalf of GlaxoSmithKline pic. GlaxoSmithKline pic has been advised of the contents of this Side Letter Agreement, the Plea Agreement and Civil Settlement Agreements with GSK and the criminal Information charging GSK, and has discussed them fully with its counsel. I am further authorized to aclmowledge on behalf of GlaxoSmithKline plc that these documents fully set forth the agreements made between G!axoSmithKline plc and the United States, and that no additional promises or representations have been made to GlaxoSmithKline pic by any officials of the United States Department of .Justice in connection with the disposition of this matter, other than those set f01th in those documents.

Dated:

Dated:

c~-·'-----------------r Elpidio Villarreal Senior Vice President, Global Litigation G!axoSmithKline LLC

Main Reception: {617) 748-3100

Geoffrey E. Hobart Matthew J. O'Connor Covington & Burling, LLP 1201 Pennsylvania Avenue, N.W. Washington, D.C. 20004-2401

U.S. Department of Justice

Carmen M. Ortiz United States Attorney District of Massachusetts

John Joseph Moakley United States Courthouse

1 Courthouse Way Suite 9200 Boston, Massachusetts 02210

June 27, 2012

Re: United States v. GlaxoSmithKline LLC

Dear Counsel:

This letter sets forth the Agreement between the United States Attorney for the District of Massachusetts ("the U.S. Attorney") and the United States Department of Justice ("collectively, the "United States") and your client, GlaxoSmithKline LLC ("GSK"), in the above-referenced case. The Agreement is as follows:

1. Change of Plea

At the earliest practicable date, GSK shall waive indictment and plead guilty to a three-count Information attached to this Agreement as Exhibit A. Count One charges GSK with delivery into interstate commerce of a misbranded drug, Paxil, in violation of21 U.S.C. §§ 331(a), 333(a)(1) and 352(a). Count Two charges GSK with delivery into interstate commerce of a misbranded drug, Wellbutrin, in violation of21 U.S. C.§§ 331(a), 333(a)(1), and 352(f). Count Three charges GSK with failure to report data relating to clinical experience, along with other data and information, regarding Avandia to the FDA as required by law, in violation of21 U.S.C. §§ 331(e), 333(a)(1), and 355(k)(l). GSK expressly and unequivocally admits that it committed the crimes charged in the Information, and is in fact guilty of those offenses. GSK also agrees to waive venue, to waive any applicable statute of limitations, and to waive any legal or procedural defects in the Information.

2. Penalties

GSK faces the following maximum penalties with respect to the counts of conviction:

a. Count One (21 U.S.C. §§ 33l(a), 333(a)(l), 352(a) regarding Paxil):

1. A fine of$200,000, or twice the gross gain derived from the offense or twice the gross loss to a person other than the defendant, whichever is greater. See 18 U.S.C. §§ 3571(c)(5) and (d). Given GSK's gross gain from the offense in Count One was $99,855,000, the maximum possible fine in connection with this Count is $199,710,000;

ii. A term of probation of not more than five (5) years. See 18 U.S.C. § 356l(c)(2);

iii. Restitution to any victims of the offense. See 18 U.S.C. § 3563; and

IV. A mandatory special assessment of$125. See 18 U.S.C. § 3013(a)(l)(B)(iii).

b. Count Two (21 U.S.C. §§ 33l(a), 333(a)(l), 352(f) regarding Wellbutrin):

1. A fine of $200,000, or twice the gross gain derived from the offense or twice the gross loss to a person other than the defendant, whichever is greater. See 18 U.S. C.§§ 357l(c)(5) and (d). Given GSK's gross gain from the offense in Count Two was $346,521,000, the maximum possible fine in connection with this Count is $693,042,000;

n. A term of probation of not more than five (5) years. See 18 U.S.C. § 356l(c)(2);

iii. Restitution to any victims of the offense. See 18 U.S.C. § 3563; and

IV. A mandatory special assessment of$125. See 18 U.S.C. § 3013(a)(l)(B)(iii).

c. Count Three (21 U.S.C. §§ 331(e), 333(a)(l), 355(k)(l) regarding Avandia):

1. A fine of $200,000, or twice the gross gain derived from the offense or twice the gross loss to a person other than the defendant, whichever is greater. See 18 U.S.C. §§ 357l(c)(5) and (d). Given GSK's gross gain from the offense in Count Three was $151,633,000, the maximum possible fine in connection with this Count is $303,266,000;

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11. A term of probation of not more than five (5) years. See 18 U.S.C. § 356l(c)(2);

111. Restitution to any victims of the offense. See 18 U.S. C. § 3563; and

IV. A mandatory special assessment of$125. See 18 U.S.C. § 3013(a)(l)(B)(iii).

3. Fed. R. Crim. P. ll(c)(l)(C) Plea

This plea agreement is made pursuant to Fed. R. Crim. P. ll(c)(l)(C), and GSK's plea will be tendered pursuant to that provision. In accordance with Fed. R. Crim. P. 11 ( c )(1 )(C), if the District Court ("Court") accepts this plea agreement, the Court must include the agreed disposition in the judgment. If the Court rejects any aspect of this plea agreement or fails to impose a sentence consistent herewith, this Agreement shall be null and void at the option of either the United States or GSK, with the exception of Paragraph 12 (Waiver of Defenses) which shall remain in full effect. GSK expressly understands that it may not withdraw its plea of guilty unless the Court rejects this Agreement under Fed. R. Crim. P. ll(c)(5) or fails to impose a sentence consistent herewith.

GSK may seek sentencing by the District Court immediately following the Rule 11 plea hearing. The United States does not object to the Court proceeding to sentence GSK immediately following the Rule 11 plea hearing or in the absence of a Presentence Report in this case. GSK understands that the decision whether to proceed immediately following the plea hearing with the sentencing proceeding, and to do so without a Presentence Report, is exclusively that of the United States District Court.

4. Sentencing Guidelines

The parties agree that while the fine provisions of the United States Sentencing Guidelines ("U.S. S. G.") do not apply to organizational defendants for misdemeanor violations of the Food, Drug and Cosmetic Act, see U.S.S.G. § 8C2.1, the agreed upon fine is consonant with those guidelines and takes into account GSK's conduct under 18 U.S.C. §§ 3553 and 3572, as follows:

a. The parties agree that the base fine is $598,009,000 in that such amount was the reasonably estimated pecuniary gain to the organization from the offenses See U.S.S.G. §§ 8C2.4(a), 8C2.3;

b. Pursuant to U.S.S.G. § 8C2.5, the culpability score is eight (8), which is determined as follows:

1. Base culpability score is five (5) pursuant to U.S.S. G. § 8C2.5(a);

n. Add five (5) points pursuant to U.S.S.G. § 8C2.5(b)(l)(A); and

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111. Deduct two (2) points for GSK's full cooperation and acceptance of responsibility for its criminal conduct pursuant to U.S.S.G. § 8C2.5(g)(2).

c. Pursuant to U.S.S.G. § 8C2.6, the appropriatemultiplierrange associated with a culpability score of eight (8) is 1.6 to 3.2; and

d. Thus, the advisory Guideline Fine Range is $956,814,400 to $1,196,018,000. See U.S.S.G. §§ 8C2.7(a), (b); 18 U.S.C. §§ 3571(c), (d).

The U.S. Attorney may, at her sole option, be released from her commitments under this Agreement, including, but not limited to, her agreement that Paragraph 5 constitutes the appropriate disposition of this case, if at any time between GSK's execution of this Agreement and sentencing, GSK:

(a) Fails to admit a complete factual basis for the plea;

(b) Fails to truthfully admit its conduct in the offenses of conviction;

(c) Falsely denies, or frivolously contests, relevant conduct for which GSK is accountable under U.S.S.G. § IBI.3;

(d) Gives false or misleading testimony in any proceeding relating to the criminal conduct charged in this case and any relevant conduct for which GSK is accountable under U.S.S.G. § IBI.3;

(e) Engages in acts which form a basis for finding that GSK has obstructed or impeded the administration of justice under U.S.S.G. § 3Cl.l;

(f) Commits a crime; or

(g) Attempts to withdraw its guilty plea.

5. Agreed Disposition

Pursuant to Fed. R. Crim. P. 11(c)(1)(C), the United States and GSK agree that the appropriate disposition of this case is as follows, and will result in imposition of a reasonable sentence that is sufficient, but not greater than necessary, taking into consideration all of the factors set forth in 18 U.S.C. §§ 3553(a) and 3572:

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a. a criminal fine in the amount of$956,814,400 to be imposed as follows:

I. Count One: $159,768,000

11. Count Two: $554,433,600

111. Count Three: $242,612,800

GSK shall pay this fine within one week of the date of sentencing;

b. a mandatory special assessment in the amount of $375 pursuant to 18 U.S.C. § 3013;

c. forfeiture in the amount of$43,185,600 to be paid within one week of the date of sentencing;

d. The United States agrees that it will not seek a separate restitution order as to GSK as part of the resolution of the Information and the Parties agree that the appropriate resolution of this case does not include a restitution order for the following reasons:

1. Counts One and Two: In light of the pending civil actions, including United States et al. ex rei. Thorpe, et al. v. GSK eta!., Civ. No. 11-10398 (D. Mass.), and the Civil Settlement Agreement between GSK and the United States and others (which is being signed contemporaneously with this Plea Agreement, and is attached hereto as Exhibit B), which requires payment of$! ,042,612,800 plus interest from December 1, 2011, the parties agree that the complication and prolongation of the sentencing process that would result from an attempt to fashion a restitution order outweighs the need to provide restitution to the non-federal victims, if any, in this case, given that numerous unknown individuals and insurance companies purchased Paxil and Wellbutrin, that many of those persons and companies have obtained restitution in private actions, and that tracing reimbursements to the various unknown insurance companies and patients and determining the apportionment of payment pertaining to the products at issue would be extraordinarily difficult, if not impossible. See, 18 U.S.C. § 3663(a)(3); Cf 18 U.S.C. § 3663(a)(l)(B)(ii).

11. Count Three: No identifiable economic loss appears to have been suffered by the federal Food and Drug Administration ("FDA"), and the parties were unable to determine any economic loss to others directly and proximately caused by this offense of conviction in this case. In addition, in light of the Civil Settlement Agreement between

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the United States and GSK (being signed contemporaneously with this Plea Agreement, and attached hereto as Exhibit C) which requires the payment of $657,387,200, plus interest from December I, 2011, the parties agree that the complication and prolongation of the sentencing process that would result from an attempt to fashion a restitution order outweighs the need to provide restitution to any non-federal victims in this case if any such victims exist given that establishing causation of loss to others by the delay in providing this particular information to the FDA would be extraordinarily difficult, if not impossible. Cf 18 U.S.C. § 3663(a)(l)(B)(ii).

e. The United States agrees that it will not seek a term of probation in light of (i) the Compliance Measures and Certifications attached hereto as Addendum A; and (ii) the Corporate Integrity Agreement entered into between GSK and the Office of Inspector General of the Department ofHealth and Human Services, attached as Exhibit D.

6. No Further Prosecution of GSK

Pursuant to Fed. R. Crim. P. ll(c)(l)(A), the United States agrees that, other than the charges in the attached Information, it shall not further prosecute GSK for any additional federal criminal charges with respect to the conduct covered by the Information, conduct that was the subject of the grand jury investigation in the District ofMassachusetts, or facts currently known to the United States regarding:

(a) GSK's sales, marketing and promotion of Imitrex, Lamictal, Lotronex, Flovent, Paxil, Valtrex, Wellbutrin, and Zofran between January 1998 and December 2004;

(b) GSK's sales, marketing and promotion of Advair between January 1998 and June 2010;

(c) GSK's communications with and reporting to the FDA in connection with Advair, Paxil, and Wellbutrin between July 1998 and December 2004;

(d) GSK's sales, marketing and promotion of Avandia, Avandamet, and Avandaryl between January 2000 and December 2010; and

(e) GSK's communications with and reporting to the FDA in connection with Avandia, Avandamet, and Avandaryl.

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This declination is expressly contingent upon:

(I) the guilty plea ofGSK to the attached Information being accepted by the Court and not withdrawn or otherwise challenged; and

(2) GSK's performance of all of its obligations as set forth in this Agreement and the attached Civil Settlement Agreements.

IfGSK's guilty plea is not accepted by the Court or is withdrawn for any reason, or ifGSK should fail to perform any obligation under this Agreement or the Civil Settlement Agreements, this declination of prosecution shall be null and void.

The United States expressly reserves the right to prosecute any individual, including but not limited to present and former officers, directors, employees, and agents of GSK, in connection with the conduct encompassed by this plea agreement, within the scope of the grand jury investigation, or known to the United States.

7. Payment of Mandatory Special Assessment

GSK shall pay the mandatory special assessment to the Clerk of the Court on or before the date of sentencing.

8. Waiver of Right to Appeal and to Bring Other Challenge

a. GSK has conferred with its attorneys and understands that it has the right to challenge its convictions in the United States Court of Appeals for the First Circuit ("direct appeal"). GSK waives any right it has to challenge its conviction on direct appeal or in any future proceeding;

b. GSK has conferred with its attorneys and understands that defendants ordinarily have a right to appeal their sentences and may sometimes challenge their sentences in future proceedings. GSK understands, however, that once the Court accepts this Rule 11 ( c )(1 )(C) plea agreement, the Court is bound by the parties' agreed-upon sentence. GSK may not contest the agreed-upon sentence in an appeal or challenge the sentence in a future proceeding in federal court. Similarly, the Court has no authority to modify an agreed-upon sentence under 18 U.S.C. § 3582(c), even if the Sentencing Guidelines are later modified in a way that appears favorable to GSK. Given that a defendant who agrees to a specific sentence cannot later challenge it, and also because GSK desires to obtain the benefits of this Agreement, GSK agrees that it will not challenge the sentence imposed in an appeal or other future proceeding. GSK also agrees that it will not seek to challenge the sentence in an appeal or future proceeding even if the Court rejects one or more positions advocated by any party at sentencing; and

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c. The United States agrees that it will not appeal the imposition by the Court of the sentence agreed to by the parties as set out in Paragraph 5, even if the Court rejects one or more positions advocated by a party at sentencing.

9. Probation Department Not Bound By Agreement

The sentencing disposition agreed upon by the parties and their respective calculations under the Sentencing Guidelines are not binding upon the United States Probation Office.

10. Forfeiture

GSK will forfeit to the United States assets subject to forfeiture pursuant to 21 U.S. C. § 334 and 28 U.S.C. § 246l(c) as a result of its guilty plea.

GSK admits that the value of the quantities ofPaxil and Wellbutrin that were misbranded and distributed in violation of2l U.S.C. § 331, totaled at least $43,185,600 in United States currency. GSK acknowledges and agrees that the quantities of Paxil and Wellbutrin which were misbranded and distributed in violation of2l U.S.C. § 331 cannot be located upon exercise of due diligence, or have been transferred or sold to, or deposited with, a third party, placed beyond the jurisdiction of the Court, substantially diminished in value, or commingled with other property which cannot be divided without difficulty. Accordingly, GSK agrees that the United States is entitled to forfeit as "substitute assets" any other assets of GSK up to the value of the now missing directly forfeitable assets.

GSK agrees that, no later than one week after sentencing, it shall remit the amount of $43,185,600 in United States currency to the United States Marshals Service pursuant to wire instructions provided by the United States Attorney's Office. GSK and the United States agree that this payment shall satisfy any and all forfeiture obligations that GSK may have as a result of its guilty plea.

Forfeiture of substitute assets shall not be deemed an alteration of GSK's sentence. The forfeitures set forth herein shall not satisfy or offset any fine, restitution, cost of imprisonment, or other penalty imposed upon GSK, nor shall the forfeiture be used to offset GSK's tax liability or any other debt owed to the United States.

GSK agrees to consent to the entry of orders of forfeiture for the $43,185,600 in United States currency, and waives the requirements of Federal Rules of Criminal Procedure 32.2 and 43(a) regarding the notice of the forfeiture in the charging instrument, entry of a preliminary order of forfeiture, announcement of the forfeiture at sentencing, and incorporation of the forfeiture in the judgment. GSK acknowledges that it understands that the forfeiture of assets is part of the sentence that may be imposed in this case and waives any failure by the Court to advise it of this, pursuant to Rule ll(b)(l)(J), at the time the guilty plea is accepted.

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In addition to all other waivers or releases set forth in this Agreement, GSK hereby waives any and all claims arising from or relating to the forfeitures set forth in this section, including, without limitation, any claims arising under the Double Jeopardy Clause of the Fifth Amendment, or the Excessive Fines Clause of the Eighth Amendment, to the United States Constitution, or any other provision of state or federal law.

The United States District Court for the District of Massachusetts shall retain jurisdiction to enforce the provisions of this section.

11. Civil and Administrative Liability

By entering into this Agreement, the United States does not compromise any civil or administrative liability, including but not limited to any False Claims Act or tax liability, which GSK may have incurred or may incur as a result of its conduct and its plea of guilty to the attached Information.

GSK's civil liability to the United States in connection with certain of the matters under investigation by the United States is resolved in the attached Civil Settlement Agreements, according to the terms set forth in those Agreements.

12. Waiver of Defenses

IfGSK's guilty plea is not accepted by the Court for whatever reason, ifGSK's guilty plea is later withdrawn or otherwise successfully challenged by GSK for whatever reason, or if GSK breaches this Agreement, GSK hereby waives, and agrees it will not interpose, any defense to any charges brought against it which GSK might otherwise have under the Constitution for pre-indictment delay, any statute of limitations, or the Speedy Trial Act, except any such defense that GSK may already have for (a) conduct occurring before October 19, 2000, as further described in the parties' tolling agreement dated December 1, 2011, and attached hereto as Exhibit E; and (b) conduct occurring before May 1, 2010, as further described in the parties' tolling agreement dated September 21, 2011, attached hereto as Exhibit F. This waiver is effective provided that charges are filed within six months of the date on which such guilty plea is rejected, withdrawn, or successfully challenged, or a breach is declared by the United States.

13. Breach of Agreement

If the United States determines that GSK has failed to comply with any material provision of this Agreement (which shall not include a failure to comply with the provisions in Addendum A, any alleged breach of which is governed solely by the terms of Addendum A), the United States may, at its sole option, be released from its commitments under this Agreement in its entirety by notifying GSK, through counsel or otherwise, in writing. The United States may also pursue all remedies available under the law, even if it elects not to be released from its commitments under this

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Agreement. GSK recognizes that no such breach by GSK of an obligation under this Agreement shall be grounds for withdrawal of its guilty plea. GSK understands that should it breach any material provision of this Agreement, the United States will have the right to use against GSK before any grand jury, at any trial or hearing, or for sentencing purposes, any statements which may be made by GSK, and any information, materials, documents or objects which may be provided by it to the government subsequent to this Agreement, without any limitation.

GSK understands and agrees that this Rule II (c)(! )(C) plea agreement and its agreed upon criminal disposition:

a. are wholly dependant upon GSK's timely compliance with the material provisions of the attached Civil Settlement Agreements; and

b. failure by GSK to comply fully with the material terms of this Agreement (which, as described above, shall not include a breach of the provisions of Addendum A) or the attached Civil Settlement Agreements will constitute a breach of this Agreement.

In the event GSK at any time hereafter breaches any material provision of this Agreement (other than a failure to comply with the provisions in Addendum A, which, as described above, shall not constitute a breach of this Agreement), GSK understands that (I) the United States will as of the date of that breach be relieved of any obligations it may have in this Agreement and the attached Civil Settlement Agreements, including but not limited to the promise not to further prosecute GSK as set forth in this Agreement; and (2) GSK will not be relieved of its obligation to make the payments set forth in this Agreement and the attached Civil Settlement Agreements, nor will it be entitled to return of any monies already paid. Moreover, in the event of a material breach of this Agreement, GSK understands and agrees that the United States may pursue any and all charges that might otherwise have been brought but for this Agreement, and GSK hereby waives, and agrees it will not interpose, any defense to any charges brought against it which it might otherwise have under the Constitution for pre-indictment delay, any statute oflimitations, or the Speedy Trial Act, except any such defense that GSK may already have for conduct occurring before October 19, 2000 as further described in the tolling agreement attached as Exhibit E, and for conduct occurring before May 1, 2010, as further described in the tolling agreement attached as Exhibit F.

Any breach of the provisions of Addendum A shall not constitute a breach of this Agreement and shall be resolved solely under the breach provision of that Addendum.

14. Who Is Bound By Agreement

With respect to matters set forth in Paragraph 6, this Agreement is binding upon GSK and the Office ofthe United States Attorney for the District of Massachusetts, the United States Attorney's Offices for each ofthe other 92 judicial districts of the United States, and the Consumer Protection Branch of the Civil Division of the Department of Justice. The non-prosecution provisions in Paragraph 6 are also binding on the Criminal Division of the United States Department of Justice, with the exception of any investigations of GSK that are or may be conducted in the future by the

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Fraud Section of the Criminal Division regarding possible violations of the Foreign Corrupt Practices Act and related offenses in connection with the sales and marketing of GSK's products to foreign customers, which investigations are specifically excluded from the release in Paragraph 6. A copy of the letter to United States Attorney Carmen M. Ortiz from the Assistant Attorney General, Criminal Division, Department of Justice, authorizing this Agreement is attached as Exhibit G. GSK understands that this Agreement does not bind any state or local prosecutive authorities, the Tax Division of the U.S. Department of Justice or the Internal Revenue Service of the U.S. Department of the Treasury.

15. Corporate Authorization

GSK' s acknowledgment of this Agreement and execution of this Agreement on behalf of the limited liability company is attached as Exhibit H. GSK shall provide to the U.S. Attorney and the Court a certified copy of a resolution of the governing authority of GSK, affirming that it has authority to enter into the Plea Agreement and has (l) reviewed the Information in this case and the proposed Plea Agreement; (2) consulted with legal counsel in connection with the matter; (3) authorized execution of the proposed Plea Agreement; (4) authorized GSK to plead guilty to the charge specified in the Information; and ( 5) authorized the corporate officer identified below to execute the Plea Agreement and all other documents necessary to carry out the provisions of the Plea Agreement. A copy of the resolution is attached as Exhibit I. GSK agrees that either a duly authorized corporate officer or a duly authorized attorney for GSK, at the discretion of the Court, shall appear on behalf of GSK and enter the guilty plea and will also appear for the imposition of sentence.

16. Complete Agreement

This Agreement and the attachments hereto, together with an additional Civil Settlement Agreement and attachments thereto that is set forth as Exhibit J (civil agreement regarding pricing), and the side letter with GlaxoSmithKline plc (attached as Exhibit K), set forth the complete and only agreement between the parties relating to the disposition of this case and are the complete and only agreements between the parties. No promises, agreements, or conditions have been entered into other than those set forth or referred to in the above-identified documents. This Agreement supersedes prior understandings, if any, of the parties, whether written or oral. This Agreement cannot be modified other than in a written memorandum signed by the parties or on the record in court.

If this letter accurately reflects the Agreement between the United States and your client, GSK, please have the authorized representative of GSK sign the Acknowledgment of Agreement below. Please also sign below as Witness. Return the original of this letter to Assistant U.S. Attorneys Sara

ll

Miron Bloom and Susan G. Winkler of the United States Attorney's Office for the District of Massachusetts.

Very truly yours,

t~/)/11~f<- \11 &i,L / CARMENM. ORTIZ Z/ UNITED STATES ATTORNEY DISTRICT OF MASSACHUSETTS

Sara Miron Bloom Susan G. Winkler Shannon T. Kelley Amanda Strachan Brian Perez-Dapple Assistant U.S. Attorneys

STUART F. DELERY ACTING ASSISTANT ATTORNEY GENERAL CIVIL DIVISION DEPARTMENT OF JUSTICE

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Patrick Jasperse Jill Furman Mark L. Josephs David Frank Timothy Finley Trial Attorneys Consumer Protection Branch U.S. Department of Justice

ADDENDUM A

COMPLIANCE MEASURES AND CERTIFICATIONS

GlaxoSmithKline LLC ("GSK") agrees that, prior to entering its plea of gnilty, it has instituted and will maintain policies and procedures to prevent further violations of the Federal Food, Drug and Cosmetic Act ("FDCA") in its sales, marketing and promotion of prescription pharmaceutical products, and specifically for at least five years following entry of the plea, will do the following:

I. COMPLIANCE MEASURES

A. Compensation and Incentives Not Based on Sales

GSK will maintain policies and procedures that shall (I) be designed to ensure that financial incentives do not inappropriately motivate prescriber-facing field sales professionals or their direct managers to engage in improper promotion, sales, and marketing ofGSK's prescription pharmaceutical products; and (2) include mechanisms, where appropriate to exclude from incentive compensation sales that may indicate off-label promotion of prescription pharmaceutical products. These policies and procedures are collectively referred to as the "Patient First Program." Pursuant to the Patient First Program, which GSK has already implemented, GSK shall not provide financial reward (through compensation, including incentive compensation or otherwise) or discipline (through tangible employment action) to its prescriber-facing field sales professionals or their direct managers based upon the volume of sales of GSK products within a given employee's own territory or the manager's district. Instead, GSK will evaluate its sales representatives based on business acumen, customer engagement, and scientific lmowledge about GSK's products.

B. Full, Fair and Accurate Reporting of Scientific Data

For at least the next five years, GSK will continue to maintain standards, policies and practices (consistent with GSK' s Policy 408) regarding full, fair, and accurate reporting and transparency in scientific data in the following ways:

(l) GSK will, in relation to GSK-sponsored studies of prescription pharmaceutical products, publicly disclose: (a) at the time of primary publication of a human research study, the full clinical study protocol (with the removal of any personally identifiable information), (b) a protocol summary before enrollment begins and after completion of the study, a summary of primary and secondary efficacy endpoints, and safety results for interventional human subject research studies (in which participants are administered medical care, medicinal products, and/or medical/scientific procedures as described in a research protocol), (c) a

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summary protocol and, after completion, a summary of the results for observational studies designed to inform safety, efficacy, or effectiveness (including cost-effectiveness); and (d) a protocol summary or plan for analysis and, after completion, a summary of results for meta-analyses and pooled analyses designed to inform appropriate, effective, or safe use.

(2) GSK will register summary results from all applicable GSK-sponsored clinical trials of GSK prescription pharmaceutical products, and report results of such clinical trials on the National Institutes of Health sponsored website (www.clinicaltrials.gov) in compliance with all federal requirements, and any changes to those requirements.

(3) GSK will seek to publish the results ofGSK-sponsored research studies, certain GSK-sponsored observational research studies and certain GSK­sponsored meta-analyses and pooled analyses, in peer-reviewed, searchable journals. GSK will also continue its operating practices that require, among other requirements, implementation of data dissemination plans that establish prospective publication strategies for GSK-sponsored research and address requirements for appropriateness, accuracy, and balance in publications of GSK-sponsored research. In all publications about GSK-sponsored research, GSK shall acknowledge its role as the funding source.

(4) GSK will require all GSK-sponsored research to be approved by its medical and/or research organizations. GSK will maintain its current policy that no sales, marketing or other commercial personnel may participate in the design, conduct, or publication of GSK-sponsored research, with limited exceptions relating to non-interventional health outcome studies (for which a relevant GSK medical group has oversight). GSK will continue to assure its human subject research and resulting publications are intended to foster increased understanding of scientific, clinical or medical issues.

(5) GSK will require as a condition of its funding that all researchers disclose in any publication of GSK-sponsored research GSK's support and any financial interest the researcher may have in GSK (including any interest in any GSK prescription pharmaceutical product). GSK will require all authors of journal articles about GSK-sponsored research to adhere to International Committee of Medical Journal Editors (ICMJE) requirements regarding authorship except when a journal requires an alternative procedure.

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( 6) GSK will, by September 1, 2012, require that its employees and medical writing contractors complete, and GSK will maintain for ten years, as to any publication regarding GSK-sponsored research on which the employee or contractor is listed as an author, a certification that the publication provides a fair, accurate, and balanced summary of the GSK-sponsored research.

(7) GSK will require that a person will be represented as an "author" on any GSK publication of GSK -sponsored research only if he or she has made substantial contributions to the study and has final approval of the version to be published.

(8) GSK will properly report adverse event data to the FDA. GSK will maintain policies and procedures designed to ensure that all periodic reports to the FDA contain all required information and data regarding clinical studies. GSK will require investigators to report study-related information and data, including data about adverse events before

receiving final payment from GSK.

C. Payer Related Obligations

For a period of at least five years from the entry of the plea, GSK will adopt and maintain policies and procedures governing its strategies and practices in contracting, Payer negotiations and interactions, providing of discounts and rebates, and interactions relating to formularies and co-pay status and amounts ("Payer-Related Functions"), which policies shall provide that GSK will perform these functions in compliance with all applicable laws and federal and state health care program requirements, and shall be consistent with GSK U.S. Commercial Practices Policy regarding "Administration of Contracts with Payers."

D. No Sales and Marketing Role in Independent Medical Edncation

GSK will maintain policies that prohibit commercial involvement in independent medical education ("IME") programs, while also ensuring that this programming is focused on genuine educational need and scientific development. GSK will require that the content, organization, and operation of the IME program (including the faculty, educational methods, materials, and venue) be independent ofGSK's control. GSK's commercial organization (including the sales and marketing departments) will have no involvement in, or influence over, the review and approval of independent medical education grants.

E. Require Confirmation That Requests for Information Were Unsolicited

GSK will maintain its policy that prohibits sales personnel from engaging in off-label promotion (directly or indirectly) and requiring sales personnel to refer all requests for

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information about off-label uses to Medical Affairs personnel. GSK will require sales personnel to obtain a signature from the medical professional who verbally requested written information regarding off-label uses in order to confirm the infonnation requested and that the request was unsolicited.

H. NOTIFICATION OF SETTLEMENT

Within ninety (90) days of the public announcement of the settlement, GSK will send a letter to health care providers that GSK currently details regarding the products at issue in this resolution, the terms of the resolution, and a link to a website that will contain all of the relevant public resolution documents relating to this matter.

Within ninety (90) days of the public announcement of the settlement, GSK will send a letter to all payers with whom GSK currently has contracts or enters into contracts for formulary access or rebates (including all state Medicaid programs) regarding the products at issue in this resolution, the terms of the resolution, and a linlc to a website that will contain all of the relevant public resolution documents relating to this matter.

III. CERTIFICATIONS AND REPORTING TO THE UNITED STATES

In addition to any commitment to provide any certifications and reports to other government agencies or entities, GSK shall provide the following reports and certifications to the United States Department of Justice for a period of five years commencing on the date of sentencing. The certifications and reports shall be sent to:

and

Chief, Health Care Fraud Unit U.S. Attorney's Office One Courthouse Way, Suite 9200 Boston, MA 02210

Director, Consumer Protection Branch Civil Division Department of Justice 450 S'h Street, NW Washington, DC 20530

A. Annual GSK's U.S. President Certification

The President of GSK's North America Pharma division ("GSK's U.S. President") shall conduct a review of the effectiveness of GSK's Compliance Program as it relates to the marketing, promotion, and sale of prescription pharmaceutical products during the preceding year. The first review period shall run from the date of sentencing through December 31,2013. Thereafter, the reviews will be conducted on an annual basis. Based on his or her review, GSK's

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U.S. President shall submit to the United States a signed certification stating that, to the best of his or her knowledge, during the period [insert time period]: (1) GSK's Compliance Program continued to include the compliance policies and procedures set forth in the section of this Addendum entitled "COMPLIANCE MEASURES," and (2) to the extent that a Reportable Incident (as that term is defined below) has been determined to have occurred, GSK has fully complied with the Reportable Incident reporting requirements of this Addendum. The certification by GSK's U.S. President shall summarize the review described above that he or she conducted to provide the required certification. IfGSK's U.S. President is unable to provide any part of this certification regarding GSK's compliance, he or she shall provide an explanation of why he or she is unable to provide such certification. This certification shall be provided within 60 calendar days following the end of each review period.

B. Annual Board of Directors Resolution

The Board of Directors of GlaxoSmithK!ine pic, or a designated Committee thereof (the "Board"), shall conduct a review of the effectiveness of GSK' s Compliance Program as it relates to the marketing, promotion, and sale of prescription pharmaceutical products. This review shall be conducted on an annual basis and shall include, but not be limited to, updates and reports by GSK's Compliance Officer and other compliance personnel. The Board shall evaluate the effectiveness of the Compliance Program, including, among other means, by receiving updates about the activities of the Compliance Officer and other compliance personnel and updates about adoption and implementation of policies, procedures, and practices designed to ensure compliance with applicable Federal health care program and FDA requirements. The first review will cover the time period from the date of sentencing through December 31, 2013. Thereafter the reviews will be conducted on an annual basis. Based on its review, the Board shall submit to the United States a resolution that summarizes its review and oversight of GSK's compliance with Federal health care program requirements and FDA requirements and, at a minimum, includes the following language:

The Board of Directors has made a reasonable inquiry into the operations of GSK's Compliance Program for the time period [insert time period], including the performance of the Compliance Officer and the compliance personnel who are Covered Persons under the Corporate Integrity Agreement ("CIA") between GSK and the Office of Inspector General of the United States Department of Health and Human Services ("OIG-HHS"). The Board has concluded that, to the best of its knowledge, GSK has implemented an effective Compliance Program to meet Federal health care program requirements, FDA requirements, and the requirements of the Addendum to the Plea Agreement.

If the Board is unable to provide any part of this statement, it shall include in the resolution an explanation of the reasons why it is unable to provide such a statement about the effectiveness of GSK's Compliance Program. This resolution shall be provided within 60 calendar days following the end of each review period.

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C. Reportable Incidents

Fifteen days after the end of each calendar quarter (that is, by January 15 for the calendar quarter ending December 31, April 15 for the calendar quarter ending March 31, July 15 for the calendar quarter ending June 30, and October 15 for the calendar quarter ending September 30) GSK shall submit a report to the United States in writing stating whether any Reportable Incidents have been determined to have occurred during the preceding calendar quarter, and providing updated information about Reportable Incidents that occurred during any other calendar quarters. A Reportable Incident is any matter that a reasonable person would consider a probable violation of the FDCA, 21 U.S.C. §§ 33l(a) or (k), related to the misbranding of a prescription pharmaceutical product within the meaning of21 U.S.C. § 352; and/or a probable violation of21 U.S.C. §§ 33l(e) and 355(k) related to the failure to provide required reports for prescription pharmaceutical products, including reports of data relating to clinical experience and other information as required by the FDA. A Reportable Incident may be the result of an isolated event or a series of occurrences. The written report to the United States shall include: (i) a complete description of the Reportable Incident, including the relevant facts, identity of persons involved, and legal authorities implicated; (ii) a description of GSK's actions taken to investigate and correct the Reportable Incident; and (iii) a description of any further steps GSK plans to take to address the Reportable Incident and prevent it from recurring. Any Reportable Incident determined to have occurred by GSK shall be promptly reported to the President of GSK's North America Pharma division. The first calendar quarter for which a report shall be due nnder this Paragraph is the quarter ending December 31,2012.

D. SEC Filings

Within seven (7) days of filing, GSK shall submit copies of each Securities and Exchange Commission Form 6-K.

E. DEFINITIONS

For the purpose of this addendum, the following terms shall have the following meaning:

1. The term "certification" shall mean a statement sworn to under the pains and penalties of perjury and which shall set forth that the representations contained therein may be provided to, relied upon and material to the government of the United States, and that a knowing false statement could result in criminal or civil liability for the signatory.

2. The term "Compliance Officer" refers to the Vice President and Compliance Officer for GSK's North America Pharma division. For at least the term of this Addendum, the Compliance Officer shall be a member of GSK' s senior management of the North America Pharma division and GSK's U.S. Compliance Committee. Not later than thirty

6

(30) days after the date of sentencing, GSK shall notify the United States in writing of the name of the Compliance Officer and provide a written description of that person's responsibilities with respect to complying with the FDCA and FDA's regulations and guidance documents relating to the marketing, promotion, and sale of prescription pharmaceutical products. GSK shall, in writing, report to the United States any changes in the identity of or any material changes in the position and responsibilities of the Chief Compliance Officer within fifteen (15) days of any such change.

3. The term "U.S. Compliance Committee" refers to the North America Pharma Risk Management & Compliance Board which, in conjunction with the Compliance Officer, assists in the implementation and enhancement of the Compliance Program. For at least the term of this Addendum, this committee shall, at a minimum, include the Chief Compliance Officer and other members of North America Pharma division senior management with responsibilities concerning the marketing, promotion, and sale ofGSK's prescription pharmaceutical products. Not later than thirty (30) days after the date of sentencing, GSK shall notify the United States in writing of the names of the members of the U.S. Compliance Committee and provide a written description of their responsibilities with respect to complying with the FDCA and FDA's regulations and guidance documents relating to the marketing, promotion, and sale of prescription pharmaceutical products. GSK shall, in writing, report to the United States any changes in the composition of the U.S. Compliance Committee. This report shall be provided within fifteen (15) days of any such change.

4. The term "Compliance Program" refers to the policies, procedures, practices, and other measures that GSK has established or will establish to address regulatory compliance issues relating to the marketing, promotion and sale of prescription pharmaceutical products, including GSK's compliance with FDCA and FDA regulations and guidance documents.

5. The term "prescription pharmaceutical products" means drugs marketed, promoted, or sold in the United States and intended for use by humans which must be used under the supervision of a practitioner licensed by law to administer such drugs. 21 U.S.C. § 353(b)(l).

6. The term "Payers" refers to entities that provide a drug health benefit program for prescription pharmaceutical products, including but not limited to government payers (e.g., Medicaid and Medicare) or individuals or entities under contract with or acting on behalf of government payers and commercial health plans.

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IV. BREACH OF THIS ADDENDUM

GSK recognizes that each of the terms in this Addendum constitutes a material term of this Addendum. As a contractual remedy, GSK and the United States agree that failure to comply with the obligations set forth in this Addendum may lead to the imposition of the following monetary penalties (hereafter referred to as "Stipulated Penalties") in accord with the following provisions.

A. A Stipulated Penalty of $20,000 per day for each day GSK (1) fails to maintain each of the compliance measures set forth in Subsection I, above (if more than one compliance measure fails to be maintained, the Stipulated Penalty will apply separately to each compliance measure); or (2) fails to timely supply any of the certifications or reports required in Subsection III, above. With regard to the certifications and reports, the Stipulated Penalty will begin to accrue on the day after the date the obligation was due, subject to the provisions for extension of time for compliance and the opportunity to cure set forth below.

B. GSK may submit a timely written request for an extension of time to provide any certification or report required in Subsection III. A written request is timely if received by the Chief of the Healthcare Fraud Unit for the U.S. Attorney's Office for the District of Massachusetts at least five business days prior to the date by which the certification or report is due. Timely requests for extension will not be unreasonably denied. If an extension of time is granted in writing, Stipulated Penalties shall not accrue until one day after GSK fails to meet the revised deadline. If not granted, Stipulated Penalties shall not begin to accrue until three business days after GSK receives the United States' written denial of such request or the original due date, whichever is later.

C. Upon the United States' sole reasonable determination that GSK has failed to comply with any of the obligations described herein, the United States shall notify GSK in writing ofGSK's failure to comply and the United States' exercise of its contractual right to demand payment of the Stipulated Penalties (the "Demand Letter"). The Demand Letter shall set forth: (i) the provision breached; (ii) the date of the breach; (iii) a description of the breach sufficient to permit GSK to cure (as described below); and (iv) the amount of Stipulated Penalties claimed by the United States as of the date of the Demand Letter. Within fourteen (14) days after receipt of the Demand Letter, or such other period as the United States may agree in writing, GSK shall cure the breach to the United States' reasonable satisfaction ("Cure Period"). If GSK cures the breach within the Cure Period, no Stipulated Penalties shall be due. If GSK fails to cure the breach during the Cure Period, Stipulated Penalties calculated from the date of breach to the date of payment shall be immediately payable to the United States. The Stipulated

8

Penalties shall be paid by electronic fund transfer according to wire instructions that will be provided by the United States. A joint reasonable determination by the United States Attorney for the District of Massachusetts and the Assistant Attorney General for the Civil Division regarding GSK's failure to comply with any of the obligations described herein will be final and non-appealable. GSK agrees that the United States District Court for the District of Massachusetts shall have jurisdiction over any action to collect such a penalty.

9

UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS

Crim. No. UNITED STATES OF AMERICA

v. Violations: 21 U.S.C. §§ 331(a} ,333(a} (1}, 352 (Misbranding}

GLAXOSMITHKLINE LLC

Defendant 21 U.S.C. §§ 331(e} ,333 (a} (1}, 355 (k} (1} (Failure to Report Data to FDA}

INFORMATION

The United States Attorney charges that:

GENERAL ALLEGATIONS

At all times material hereto, unless otherwise alleged:

1. From 1999 through 2003, GLAXOSMITHKLINE LLC or entities

for which it is the corporate successor (hereinafter "GSK"}

promoted the sale of its drugs Paxil and Wellbutrin for uses

other than those approved as safe and effective by the Food and

Drug Administration ("FDA"}. Specifically, GSK

a. promoted Paxil for children and adolescents, and

b. promoted Wellbutrin for weight loss, the treatment

of sexual dysfunction, substance addictions, Attention Deficit

Hyperactivity Disorders, among other unapproved uses.

2. From 2001 through September 2007, GSK failed to report

data relating to clinical experience and other data and

information as required by law, regarding Avandia, a diabetes

medication, to the FDA.

The Defendant

3. Defendant GSK was a pharmaceutical company originally

organized as a corporation under the laws of Pennsylvania, and

later converted to a Delaware Limited Liability Company,

GlaxoSmithKline LLC. GSK's operational headquarters were in

Philadelphia, Pennsylvania, and Research Triangle Park, North

Carolina. GSK manufactured, distributed, and sold pharmaceutical

drugs for human use, including for sale and use in Massachusetts.

The FDA and the FDCA

4. The FDA was the federal agency of the United States

responsible for protecting the health and safety of the public.

The FDA was responsible for enforcing the Food, Drug, and

Cosmetic Act ("FDCA") and ensuring, among other things, that

drugs intended for use in humans were safe and effective for

their intended uses and that the labeling of such drugs contained

true and accurate information.

5. With certain limited exceptions not pertinent here, a

drug could not be distributed in interstate commerce without FDA

approval. To gain FDA approval, data from adequate and well­

controlled clinical studies had to demonstrate that the drug

would be safe and effective for a particular use. As part of the

approval process, the FDA had to approve the drug's labeling,

2

which was required to set forth detailed information about the

drug, including the approved medical conditions of use, dosages,

and patient population(s).

6. Once the FDA found a drug to be safe and effective for

a particular use and approved it for that use, doctors were free

to exercise their medical judgment to prescribe the drug for

other, unapproved (or "off-label") uses.

7. Under the FDCA, however, the manufacturer could not

lawfully market and promote the drug for off-label uses.

8. The FDCA provided that a drug was misbranded if, among

other things, "its labeling is false or misleading in any

particular." 21 U.S.C. § 352(a). Labeling includes written,

printed, or graphic information on or accompanying a drug,

including information that explains the uses of the drug and is

used in connection with the sale of the drug, whether or not it

physically accompanies the drug when distributed. False and

misleading safety and efficacy claims in a drug's labeling

rendered the drug misbranded.

9. The FDCA also provided that a drug was misbranded if

its labeling did not bear "adequate directions for use." 21

u.s.c. § 352(f) (1). As the phrase was used in the FDCA and its

regulations, "adequate directions for use" meant directions under

which a layperson could use a drug safely and effectively for the

3

purposes for which it was intended. 21 C.F.R. § 201.5. A

prescription drug, by definition, could not bear adequate

directions for use by a layperson, but an FDA-approved

prescription drug, bearing the FDA-approved labeling, could be

exempt from the adequate directions for use requirement if it met

a number of conditions, including that it was sold only for an

FDA-approved use. A prescription drug that was marketed for

unapproved, off-label uses would not qualify for this exemption

and therefore was misbranded. 21 C.F.R. § 201.100.

10. The FDCA prohibited causing the introduction or

delivery for introduction into interstate commerce of, or

introducing or delivering for introduction into interstate

commerce, any drug that was misbranded. 21 U.S.C. § 331(a)

4

COUNT ONE - PAXIL

(Distribution of a Misbranded Drug: False and Misleading Labeling: 21 U.S.C. §§ 33l(a}, 333 (a} (1}, & 352 (a})

11. The allegations contained in paragraphs 1 and 3

through 10 are realleged and incorporated herein as if set forth

in full.

GSK'S OFF-LABEL PROMOTION OF PAXIL FOR CHILDREN AND ADOLESCENTS

12. GSK manufactured, distributed, and sold the

prescription drug Paxil for human use. Paxil was GSK's trade

name for the drug paroxetine hydrochloride. Paxil was part of a

class of drugs known as selective serotonin reuptake inhibitors

( "SSRis") .

13. In December 1992, the FDA approved Paxil to treat

depression in adults. The FDA subsequently approved Paxil for

other uses in adults.

14. The FDA never approved Paxil for any purpose for

patients under age 18 ("children and adolescents").

15. GSK promoted the use of Paxil to doctors through a

sales force of approximately 1,900 sales representatives who made

personal visits ("sales calls") to doctors to encourage those

doctors to prescribe Paxil to their patients.

16. GSK sales representatives wrote •call notes" to

document what happened during their sales calls with doctors.

5

Once sales representatives entered their call notes into GSK's

computer system, the call notes could be read by the sales

representatives' colleagues and supervisors.

17. Paxil became one of the 10 top-selling drugs in the

United States and for a time the most commonly prescribed SSRI.

Paxil sales in the United States surpassed $1.8 billion per year

in 2001 and 2002.

Placebo-Controlled Clinical Trials

18. The safety and efficacy of pharmaceutical drugs were

tested in clinical trials or studies.

19. In a "placebo-controlled" clinical study, one group of

patients was treated with the drug being studied and another

group of patients received a placebo. A placebo looked like the

drug that was being studied, but contained no active ingredient.

20. In a "double-blinded" clinical study, neither the

patient nor the treating doctor knew whether the patient was

receiving the drug being studied or a placebo.

21. In a placebo-controlled clinical study, the efficacy of

a drug was measured by primary and secondary "endpoints" that

typically were identified before the study began in a protocol

prepared by the sponsor of the study. The primary endpoint or

endpoints were the main measures of whether the drug worked. The

secondary endpoints contained additional measures to assess the

6

drug's efficacy.

22. At the end of the study, the study was "unblinded" and

the results on the endpoints of patients who had received the

drug being studied were compared to the results on the endpoints

of the patients who received a placebo.

23. In determining whether a study had demonstrated a

drug's efficacy, the FDA typically looked at whether there was a

statistically significant difference on the primary endpoints

between the patients in the study who received the drug being

studied and patients in the study who received a placebo.

Three Clinical Studies Failed to Establish Paxil's Efficacy for Treating Depression in Children and Adolescents

24. Between 1994 and 2001, GSK conducted three placebo-

controlled clinical studies that studied Paxil's safety and

efficacy in treating depression in children and adolescents.

These studies were known as Study 329, Study 377, and Study 701.

25. Study 329 compared the efficacy of Paxil and a second

drug, imipramine, to placebo in treating depression in patients

age 12 to 18. Imipramine was part of a class of drugs known as

tricyclic antidepressants ("TCAs"). The acute phase of Study 329

began in April 1994 and ended in May 1997. GSK's internal

clinical report summarizing the results of Study 329 was issued

on November 24, 1998.

7

26. Paxil failed to demonstrate efficacy on Study 329's two

primary endpoints. Paxil also failed to demonstrate efficacy on

the five secondary endpoints identified in Study 329's protocol.

Paxil demonstrated efficacy on four other secondary endpoints

that were not identified in the protocol, but that were

identified as secondary endpoints by the clinical investigators

before Study 329's results were unblinded.

27. Study 377 compared the efficacy of Paxil to placebo in

treating depression in patients age 13 to 18. Study 377 began in

April 1995 and was completed in May 1998. GSK's internal

clinical report summarizing the results of Study 377 was issued

on November 19, 1998.

28. Paxil failed to demonstrate efficacy on any of the

primary or secondary endpoints in Study 377.

29. Study 701 compared the efficacy of Paxil to placebo in

treating depression in patients age 7 to 17. Study 701 began in

March 2000 and ended in January 2001. GSK's internal clinical

report summarizing the results of Study 701 was issued on July

30, 2001.

30. Paxil failed to demonstrate efficacy on any of the

primary or secondary endpoints in Study 701.

8

GSK Helped Write and Approved a Medical Journal Article Which Stated that Study 329 Demonstrated that Paxil Was Effective in

Treating Depression in Adolescents

31. GSK hired a contractor to help write an article about

the results of Study 329. The contractor wrote the first draft

of the article based on GSK's internal final clinical report on

Study 329. The contractor then incorporated into subsequent

drafts of the article revisions made by the clinical

investigators and a GSK employee involved in the study.

32. The article about Study 329 was published in July 2001

in the Journal of the American Academy of Child and Adolescent

Psychiatry ("JAACAP"). The article listed 22 authors, including

20 clinical investigators who were not GSK employees and two GSK

employees. In addition, the contractor was identified as having

provided "editorial assistance." GSK and the authors approved

the article before it was submitted to JAACAP.

33. The JAACAP article identified Study 329's two primary

endpoints. The JAACAP article also listed five secondary

endpoints "that were declared a priori." Three of these five

secondary endpoints were not identified before the study began,

but had been identified as secondary endpoints by the clinical

investigators before Study 329's results were unblinded.

Elsewhere, the article contained a chart that showed the results

of eight endpoints. The chart did not indicate which endpoints

9

were primary, which endpoints were identified as secondary in the

protocol before the study began, and which endpoints had been

added after the study had begun but before the results were

unblinded.

34. The JAACAP article was false and misleading. Although

the article's text identified the two primary endpoints and the

article's chart reported the results on those endpoints, the

article never explicitly stated that Study 329 failed to

demonstrate efficacy on either of its two primary endpoints. The

article at one point inaccurately stated that Paxil "separated

statistically from placebo" on a primary endpoint. The article

also did not explicitly state that Paxil failed to demonstrate

efficacy on all of the secondary endpoints that had been

identified in the protocol.

35. The JAACAP article presented the results of Study 329

as favorable, based on Paxil having demonstrated efficacy on the

four secondary endpoints that were not identified in the protocol

and which were added after the study had begun but before the

results were unblinded. The JAACAP article's abstract stated

that Paxil "is generally well tolerated and effective for major

depression in adolescents." The JAACAP article's conclusion

stated that "[t]he findings of this study provide evidence of the

efficacy and safety of the SSRI, [Paxil], in the treatment of

10

adolescent depression."

36. The article disclosed that serious adverse events

("SAEs") were experienced by 11 patients in Study 329 who

received Paxil, five patients who received imipramine, and two

patients who received the placebo. An earlier draft of the

article stated that of the 11 SAEs experienced by Paxil patients,

"worsening depression, emotional lability, headache, and

hostility were considered related or possibly related to

treatment." A GSK employee suggested that the contractor change

this section of the article. The revised version printed in

JAACAP stated: "Of the 11 patients [who had serious adverse

events while taking Paxil], only headache (1 patient) was

considered by the treating investigator to be related to [Paxil]

treatment. 11

GSK Used the Article in JAACAP to Promote Paxil for Children and Adolescents

37. The contractor hired by GSK to help prepare the medical

journal article provided drafts of the article to the head of

GSK's Paxil marketing team.

38. On or about August 16, 2001, GSK's Paxil marketing team

sent a copy of the JAACAP article to all of the approximately

1,900 GSK sales representatives who sold Paxil. A cover

memorandum summarizing the article (the "GSK Cover Memo") stated

11

in bold type:

This 'cutting-edge,' landmark study is the first to compare efficacy of an SSRI and a TCA with placebo in the treatment of major depression in adolescents. Paxil demonstrates REMARKABLE Efficacy and Safety in the treatment of adolescent depression.

39. The GSK Cover Memo also stated:

In conclusion, the findings of this study provide evidence of the efficacy and safety of Paxil in the treatment of adolescent depression. Here's another example of GlaxoSmithKline's commitment to Psychiatry by bringing forth •cutting edge" scientific data. Paxil is truly a REMARKABLE product that continues to demonstrate efficacy, even in this understudied population.

40. The GSK Cover Memo did not disclose that Paxil failed

to demonstrate efficacy on the protocol-defined primary and

secondary endpoints of the same study. The GSK Cover Memo also

did not disclose that GSK had completed two other studies that

also did not demonstrate that Paxil was effective in treating

depression in children and adolescents.

41. The GSK Cover Memo did not state that Paxil was not

approved for the treatment of children and adolescents. The GSK

Cover Memo stated that the article was for sales representatives'

information only and should not be used with or distributed to

doctors, and both the Cover Memo and the article were stamped

"FOR REPRESENTATIVES' INFORMATION ONLY."

42. Some GSK sales representatives used the JAACAP article

12

to urge doctors to prescribe Paxil to treat depression in

children and adolescents.

GSK Did Not Publicize the Results of Studies 377 and 701

43. GSK learned the results of Study 377 in 1998 and the

results of Study 701 in 2001. Paxil failed to demonstrate

efficacy on any of the endpoints in either study.

44. GSK did not hire a contractor to help write medical

journal articles about the results of Studies 377 and 701, as it

had with Study 329.

45. GSK did not inform its sales representatives about the

results of Studies 377 and 701.

Safety Issues

46. After GSK provided to the FDA the results of Studies

329, 377, and 701, as well as additional statistical analyses

performed by GSK, some of which suggested a possible increased

suicidality associated with Paxil use in patients under age 18,

the FDA conducted a broad inquiry into the safety of Paxil, other

SSRis, and other antidepressants to treat depression in patients

under age 18.

47. On or about June 19, 2003, the FDA recommended that

Paxil not be used to treat depression in patients under age 18.

48. On or about October 27, 2003, the FDA stated that

antidepressants should be used only with caution to treat

13

depression in patients under age 18.

49. On or about October 15, 2004, the FDA required all

antidepressants, including Paxil, to include on their labels a

"black box warning• stating that antidepressants increased the

risk of suicidal thinking and behavior in short-term studies in

patients under age 18.

GSK Provided Sales Representatives With Other Information Which Was Used to Promote the Use of Paxil in Children and Adolescents

50. In 1999, GSK created a 150-person neuroscience

specialty sales force to promote Paxil to psychiatrists. On or

about September 28, 1999, GSK paid a child psychiatrist, whose

research primarily dealt with patients under age 18, to speak at

the launch meeting of GSK's neuroscience specialty sales force.

According to a subsequent internal GSK newsletter reporting on

the event, this child psychiatrist discussed the results of Study

329 and said that GSK had a •window of opportunity.• According

to the internal GSK newsletter, this child psychiatrist told the

neuroscience sales representatives that, as a result of Study

329, "We can say that paroxetine has both efficacy and safety

data for treating depression in adolescents.•

51. On or about February 14, 2001, GSK sent a copy of a

medical journal article about the use of Paxil for adolescent

obsessive compulsive disorder ("OCD") to all of the approximately

14

1,900 GSK sales representatives who sold Paxil. An accompanying

memorandum summarizing the article stated: "This study suggests

that Paxil is an effective short-term treatment for OCD in

children [and] adolescents (aged 9-15 years) and has fewer AE's

[adverse events]." The memorandum stated that the information

was for sales representatives' information only and should not be

used with or distributed to doctors.

52. From 2000 to 2002, some GSK sales representatives used

information provided by GSK to urge doctors to use Paxil to treat

children and adolescents with depression, OCD, and other

psychiatric conditions.

GSK Used Paxil Forum Events to Promote Paxil for Children and Adolescents

53. GSK held eight "Paxil Forum" events at resorts in

Puerto Rico, Hawaii, and California in 2000 and 2001. GSK

invited psychiatrists who prescribed large amounts of SSRis to

attend the events. Each of GSK's approximately 150 neuroscience

sales representatives could attend up to two of the events per

year, and each representative could invite up to two different

psychiatrists to each event. The 3-day Paxil Forum events

included presentations about Paxil and other topics. The events

also included dinners and recreational activities such as deep

sea fishing, kayaking, snorkeling, sailing, horseback riding,

15

balloon rides, and golf. GSK paid for the psychiatrists' air

fare, lodging, meals, recreational activities, and provided to

each of them an honorarium of $750. The Paxil marketing team

organized, attended, and participated in the Paxil Forum events.

54. GSK paid a leading child psychiatrist to speak at four

of the eight Paxil Forum events in 2000 and 2001. At each of

these four Paxil Forum events, this child psychiatrist encouraged

other doctors to use SSRis to treat depression and social anxiety

disorder in patients under age 18. This child psychiatrist

claimed that patients treated with Paxil in Study 329 showed

"significantly greater improvement" than patients who received

the placebo.

55. To promote the use of Paxil in children and

adolescents, some GSK sales representatives purposely invited

psychiatrists with a significant percentage of patients under age

18 to attend the Paxil Forum events at which the child

psychiatrist recommended the use of SSRis for children and

adolescents.

56. Following the Paxil Forum events, some GSK sales

representatives gave doctors during sales calls copies of the

slides shown during the Paxil Forum events by the child

psychiatrist referenced in Paragraph 52 above. The slides

reported only select, favorable results from Study 329. The

16

slides did not report the unfavorable results from Study 329 or

other studies of Paxil's efficacy in treating depression in

children and adolescents. The slides also did not state that the

FDA had not approved the use of Paxil in patients under age 18.

The slides distributed by the GSK sales representatives were

false and misleading.

57. GSK monitored the prescriptions written by

psychiatrists who attended the Paxil Forum events in 2000 to

determine whether the events increased Paxil's market share. GSK

concluded that the Paxil Forum events in 2000 "had a significant

impact on Paxil market share in the months after attendance."

GSK found that the percentage of Paxil prescriptions relative to

other SSRI prescriptions prescribed by psychiatrists who attended

the Paxil Forum events in 2000 increased when compared to the

percentage prescribed by psychiatrists who had not attended the

Paxil Forum events. Individual GSK sales representatives

continued to monitor whether psychiatrists who attended the Paxil

Forum events in 2001 increased their Paxil prescriptions after

attending the events.

GSK Used Dinner Programs to Promote the Use of Paxil in Children and Adolescents

58. GSK sponsored dinner programs, lunch programs, spa

programs, and similar activities to promote the use of Paxil in

17

children and adolescents. At such events, GSK paid a speaker to

talk to an audience of doctors. GSK paid for the meal or spa

treatment for the doctors who attended. These events were

approved in advance by GSK's district sales managers and by GSK's

speakers bureau.

GSK Used Samples to Promote the Use of Paxil in Children and Adolescents

59. GSK provided each sales representative with a list of

doctors on whom the sales representatives should make sales

calls. The lists specified how frequently sales representatives

should make sales calls on each doctor. Sales representatives

were required to call most frequently on doctors who prescribed

the most SSRis.

60. GSK encouraged its sales representatives to give

doctors free Paxil samples during the sales calls. GSK's purpose

in distributing free samples was to allow doctors to start

patients on Paxil, with the hope that the patient would be

shifted to a paid Paxil prescription if the treatment was

successful.

61. Beginning in or around August 2003, GSK began

attempting to remove from its Paxil call lists doctors who

exclusively treated patients under age 18. This process

continued until at least on or about May 11, 2005. Thus, prior

18

to in or around August 2003, GSK required its sales

representatives to make sales calls on, and encouraged its sales

representatives to provide Paxil samples to, doctors who treated

only patients under age 18. There was no FDA-approved use for

Paxil in patients under age 18.

DISTRIBUTION OF PAXIL

62. Throughout the relevant time period of the above­

described actions, GSK distributed Paxil in Massachusetts and

elsewhere and held Paxil for sale in Massachusetts and elsewhere.

DISTRIBUTION OF MISBRANDED PAXIL

63. From on or about April 3, 1998, through in or around

the end of August 2003, in the District of Massachusetts, and

elsewhere, defendant

GlaxoSmithKline LLC

did introduce and cause the introduction into interstate

commerce, directly and indirectly, into Massachusetts and

elsewhere from outside of Massachusetts, Paxil, a drug within the

meaning of the FDCA, 21 U.S.C. § 321(g}, that was misbranded, in

that its labeling was false and misleading.

All in violation of 21 U.S.C. §§ 331(a}, 333 (a} (1}, and

352 (a} .

19

COUNT TWO - WELLBUTRIN

(Distribution of a Misbranded Drug: Inadequate Directions for Use 21 u.s. c. §§ 331 (a), 333 (a) (1) & 352 (f) (1))

64. The allegations contained in paragraphs 1 and 3 through

10 are realleged and incorporated herein as if set forth in full.

GSK'S PROMOTION OF WELLBUTRIN FOR UNAPPROVED USES

65. GSK manufactured, distributed, and sold the

prescription drug Wellbutrin for human use. Wellbutrin was GSK's

trade name for the drug bupropion hydrochloride.

66. At all times relevant to the Information, Wellbutrin

was approved by the FDA only as a treatment for major depressive

disorder in adults age 18 or older.

67. From 1999 to 2003, Wellbutrin was not approved for any

use other than to treat major depressive disorder in adults.

68. To increase its profits from Wellbutrin, from in or

about 1999 through 2003, GSK promoted the sale and use of

Wellbutrin for a variety of uses for which GSK had not received

FDA approval including:

a. for weight loss and the treatment of obesity;

b. to treat sexual dysfunction;

c. as an "add-on" drug to treat the side effects of other antidepressant medications, including weight gain and sexual dysfunction;

d. to treat Attention Deficit Hyperactivity Disorder ("ADHD") and other attention disorders;

20

e. to treat addiction to drugs, alcohol, or gambling;

f. to treat other mental diseases such as anxiety and bipolar disorder;

g. to treat patients under age 18; and

h. with dosing regimens different than those in the

label.

69. GSK encouraged sales representatives to provide

messages about off-label uses of Wellbutrin during one-on-one

sales calls with doctors.

70. GSK sales representatives sometimes referred to

Wellbutrin as "the happy, horny, skinny pill" as a way to remind

doctors of the unapproved uses for Wellbutrin that they were

promoting.

71. GSK used speaker programs to spread off-label

information about Wellbutrin to doctors. GSK trained and paid

doctors to speak to other doctors at hundreds of promotional

events per year that were organized by GSK's sales

representatives. At many of these events, speakers recommended

the use of Wellubutrin for unapproved uses. Some of these

speakers also made additional false and misleading claims about

Wellbutrin's safety and efficacy for approved and unapproved

uses.

72. Two of GSK's most frequently used speakers, who each

21

spoke more than 800 times and were each paid more than $1.5

million by GSK from 2000 to 2003, recommended Wellbutrin for a

wide variety of unapproved uses, including for weight loss, to

treat sexual dysfunction, to treat ADHD and other attention

disorders, and even for patients with bulimia or who were

abruptly discontinuing alcohol (both of which were specifically

contraindicated in Wellbutrin's labeling).

73. GSK paid doctors to attend lavish meetings in places

such as Jamaica and Bermuda during which GSK provided off-label

information about Wellbutrin in a manner to encourage doctors to

write Wellbutrin prescriptions for unapproved uses of the drug.

GSK tried to disguise the promotional nature of these meetings by

characterizing them as "speaker training" meetings.

74. GSK paid doctors to attend "Local Advisory Boards,"

"Regional Advisory Boards," and Special Issues Boards" during

many of which GSK provided information about unapproved uses of

Wellbutrin.

75. GSK called these meetings "advisory board" or

"consultant" meetings to create the pretense that GSK was

gathering information and feedback from the doctors. In fact,

there generally was little consulting provided by the doctors

during these meetings and GSK made no real effort to capture and

disseminate the advice it supposedly obtained.

22

76. GSK held such sham advisory board meetings repeatedly

and frequently, sometimes holding more than one such meeting on

the same day in the same city or hotel, with similar off-label

agendas for many events, and the same speakers.

77. GSK also sponsored extensive continuing medical

education ("CME") programs for doctors during which off-label

information about Wellbutrin was disseminated. Although CME

programs were ostensibly independent, in certain CME programs,

GSK influenced the content and frequently selected the location

and the speakers and invited many of the attendees, and GSK in

some instances determined how much the speaker was paid.

78. GSK's sales representatives frequently arranged for the

speakers at CME programs to be the same doctors who spoke most

frequently at GSK's Wellbutrin promotional events. In some

instances, GSK's sales representatives knew that these speakers

would deliver at the CME programs the same off-label information

they provided during promotional programs.

79. GSK sales representatives distributed and played for

doctors certain purportedly independent CME materials in the form

of audiocassettes or DVDs that GSK had funded and/or prepared and

which contained messages about unapproved uses of Wellbutrin.

23

DISTRIBUTION OF WELLBUTRIN

80. Throughout the relevant time period of the above­

described actions, GSK distributed Wellbutrin in Massachusetts

and elsewhere and held Wellbutrin for sale in Massachusetts and

elsewhere.

DISTRIBUTION OF MISBRANDED WELLBUTRIN

81. From in or about January 1999 through in or about

December 2003, in the District of Massachusetts, and elsewhere,

defendant

GlaxoSmithKline LLC

did introduce and cause the introduction into interstate

commerce, directly and indirectly, into Massachusetts and

elsewhere, from outside of Massachusetts, Wellbutrin, a drug

within the meaning of the FDCA, 21 U.S.C. § 32l(g), which was

intended for use for the treatment of sexual dysfunction, for

weight loss, addiction, ADHD, and as an add-on to other

antidepressant drugs and for other conditions and which was

misbranded within the meaning of 21 U.S.C. § 352(f) (1), in that

its labeling lacked adequate directions for such uses.

All in violation of 21 U.S.C. §§ 331(a), 333(a) (1), and

352 (f) (1).

24

COUNT THREE - AVANDIA

(Failure to Report Data to FDA: 21 U.S.C. §§ 33l(e), 333 (a) (1) & 355 (k) (1))

82. The allegations in paragraphs 2 through 4 are realleged

and incorporated by reference herein.

REQUIRED REPORTING OF INFORMATION REGARDING DRUGS TO THE FDA

83. Under the FDCA, the term "drug" included articles that

(1) were intended for use in the diagnosis, cure, mitigation,

treatment, or prevention of disease in humans; and (2) were

intended to affect the structure or any function of the human

body. 21 u.s. c. § 321 (g) (1) (B) and (C).

84. A drug was a ''new drug" if it was, in part, "not

generally recognized, among experts qualified by scientific

training and experience to evaluate the safety and effectiveness

of drugs, as safe and effective for use under the conditions

prescribed, recommended, or suggested in the labeling thereof

" 21 u.s.c. § 321 (p) (1). To be lawfully introduced into

interstate commerce, new drugs required an approved marketing or

investigational application. 21 U.S.C. §§ 331(d) and 355.

Approved marketing or investigational applications included New

Drug Applications ("NDAs"). 21 U.S.C. § 355.

85. To obtain FDA approval of an NDA, the sponsor was

required to demonstrate, to FDA's satisfaction, that the drug was

25

both safe and effective for each of its claimed uses. 21 U.S.C.

§ 355(b). Toward this end, the NDA sponsor was required to

provide, to the satisfaction of FDA, substantial evidence,

including data generated in adequate and well-controlled clinical

investigations, that demonstrated that the drug was safe and

effective when used in accordance with the proposed labeling for

its intended uses. 21 U.S.C. § 355(d). An NDA sponsor was not

permitted to promote or market the drug until the FDA had

approved the NDA.

86. Once the NDA had been approved, the holder of the NDA

was required to provide the FDA certain periodic reports of data

relating to clinical experience to permit the FDA to determine,

among other things, whether grounds for withdrawal of the NDA

existed based upon clinical experience showing that the drug was

unsafe for use under the conditions of use for which it was

approved. 21 U.S.C. §§ 355(k) (1), (e). These periodic reports

of data were intended to provide the FDA an overview of all

safety-related information learned by the holder of the NDA

during that quarter or year, and thereby facilitate the FDA's

ability to spot drug safety trends.

87. Among other reporting, the holder of the NDA was

required to submit to the FDA certain reports regarding

postmarketing adverse drugs experiences. 21 C.F.R. § 314.80.

26

These reports were required to include, among other information,

''a history of actions taken since the last report because of

adverse drug experiences (for example, labeling changes or

studies initiated)." 21 C.F.R. § 314.80 (c) (2) (ii) (c).

88. Also among other reporting, the holder of the NDA was

required to file an Annual Report each year regarding the

approved drug. 21 C.F.R. § 314.81(b) (2). Among other

information required to be included in the Annual Report was a

"status report of each postmarketing study of the drug product

concerning clinical safety, clinical efficacy, clinical

pharmacology, and nonclinical toxicology that is required by the

FDA . . " 21 C.F.R. § 314.81(b) (2) (vii); and a "status report

of any postmarketing study not included under paragraph

(b) (2) (vii) of this section that is being performed by, or on

behalf of, the applicant." 21 C.F.R. § 314.81(b) (2) (viii).

89. At all times material to this Information, it was a

crime, in violation of Title 21 United States Code, Section

331 (e) to fail to make reports required by Section 355 (k) (1),

including reports of data relating to clinical experience, and

other data and information, as necessary for the FDA to determine

whether the NDA approval should be withdrawn or suspended for any

reason set forth in Section 355(e).

27

DEVELOPMENT OF AND STUDIES REGARDING AVANDIA

90. One of the prescription drugs that was developed by GSK

was Avandia (rosiglitazone maleate), a diabetes medication.

Avandia was one of a class of drugs known as thiazolidediones

that were designed to increase insulin sensitivity. The FDA

approved the NDA application for Avandia in May 1999.

Thereafter, GSK promoted, sold, and distributed Avandia into

interstate commerce in the United States, including within the

District of Massachusetts.

91. In 2001, GSK initiated two separate studies at the

request of European regulatory authorities as postmarketing

commitments to further evaluate the cardiovascular safety of

Avandia. Those two studies were known as Study 211 and RECORD.

A. The GSK protocol for Study 211 indicated that this

study was initiated because "rosiglitazone (like other

thiazolidnediones) causes a mild increase in plasma volume. An

increase in plasma volume might aggravate existing cardiac

failure unless appropriate diuretic therapy is initiated .

This study will investigate the effect of rosiglitazone in

addition to background anti-diabetic therapy on cardiac structure

and function and cardiovascular morbidity and mortality in type 2

diabetic patients with pre-existing CHF [congestive heart

failure[(NYHA grade I/II). "

28

B. The GSK protocol for RECORD indicated that this

study was initiated because rosiglitazone "also increases body

weight (albeit without altering known weight-associated

cardiovascular risk factors), has a multifactoral effect on

lipids (some effects putatively beneficial, some putatively

adverse) , and leads to a modest increase in plasma volume .

There is a need formally to evaluate long term cardiovascular

outcome, both for those who receive the most widely used oral

combination therapy (sulphonylurea (SU) plus metformin (MET), and

for those who are given rosiglitazone in addition to their first­

line therapy (metformin or SU) ."

92. In its 2001 Periodic Report for Avandia, GSK did not

notify the FDA of the initiation of Study 211 and RECORD, despite

the regulatory requirement that each periodic report contain "a

history of actions taken since the last report because of adverse

drug experiences (for example, labeling changes or studies

initiated)." 21 C.F.R. § 314.80(c) (2) (i) (c).

93. Moreover, in each of its Annual Reports for Avandia

between 2001 and 2007, GSK did not provide the FDA with a status

report on certain postmarketing studies being performed by, or on

behalf of, GSK, despite the regulatory requirement to provide

that information in 21 C.F.R. § 314.81(b) (2) (viii). Some of the

studies that were omitted from certain of those Annual Reports

29

included Study 211, RECORD, and APPROACH, all of which involved

cardiovascular safety issues.

94. Additionally, in its 2007 Annual Report for Avandia

that was submitted to the FDA, GSK did not provide the FDA with a

status report of the post-marketing study, ADOPT, which concerned

clinical efficacy, despite the regulatory requirement to provide

that information in 21 C.F.R. § 314.81(b) (2) (vii).

FAILURE TO MAKE REQUIRED REPORTING TO FDA

95. Beginning in or about 2001 and continuing until in or

about September 2007, in the District of Maryland and elsewhere,

the defendant,

GLAXOSMITHKLINE LLC

did fail to make required reporting of data relating to clinical

experience and other data and information regarding Avandia, as

required by law, to the United States Food and Drug

Administration.

All in violation of 21 U.S .C. §§331 (e), 333 (a) (1), and

355 (k) (1).

30

FORFEITURE ALLEGATIONS

(21 U.S.C. §§ 334, 853 and 28 U.S.C. § 2461(c}}

96. Upon conviction of one or more of the offenses charged

in Counts One and Two of this Information, defendant

GlaxoSmithKline LLC

shall forfeit to the United States pursuant to 21 U.S.C. § 334

and 28 U.S.C. § 2461(c}, any quantities of Paxil that between

April 3, 1998 and the end of August 2003, and any quantities of

Wellbutrin that between January 1999 and December 2003, were

introduced into interstate commerce in violation of 21 U.S.C. §§

331 (a} and 352 (a) and 352 (f) (1).

97. If any of the property subject to forfeiture, as a

result of any act or omission of the defendant:

a. cannot be located upon the exercise of due

diligence;

b. has been transferred or sold to, or deposited

with, a third party;

c. has been placed beyond the jurisdiction of the

court;

d. has been substantially diminished in value; or

e. has been commingled with other property which

cannot be divided without difficulty;

31

it is the intent of the United States, pursuant to 21 U.S.C. §

853(p), incorporated by reference in 28 U.S.C. § 2461(c), to seek

forfeiture of any other property of the defendant up to the value

of the property subject to forfeiture, that is $43,185,600.

All pursuant to 21 U.S.C. §§ 334 and 853, and 28 u.s.c. §

2461(c), and Rule 32.2 of the Federal Rules of Criminal

Procedure.

By:

Date: July 2, 2012

CARMEN M. ORTIZ

Shannon T. Kelley Amanda Strachan Brian Perez-Dapple Assistant u.s. Attorneys United States Attorney's Office District of Massachusetts

STUART F. DELERY ACTING ASSISTANT ATTORNEY GENERAL U.S. DEPARTMENT OF JUSTICE

Patrick Jasperse Jill Furman Mark Josephs David Frank Timothy Finley Trial Attorneys Consumer Protection Branch u.s. Department of Justice

32

it is the intent of the United States, pursuant to 21 u.s.c. §

853(p), incorporated by reference in 28 u.s.c. § 246l(c), to seek

forfeiture of any other property of the defendant up to the value

of the property subject to forfeiture, that is $43,185,600.

All pursuant to 21 u.s.c. §§ 334 and 853, and 28 u.s.c. §

2461(c), and Rule 32.2 of the Federal Rules of Criminal

Procedure.

By:

By:

Date: July 2, 2012

CARMEN M. ORTIZ UNITED STATES ATTORNEY

Sara Miron Bloom

Susan G. Winkler Shannon T. Kelley Amanda Strachan Brian Perez-Dapple Assistant U.S. Attorneys United States Attorney's Office District of Massachusetts

STUART F. DELERY ACTING ASSISTANT ATTORNEY GENERAL

r~;=Tz~~-Patrick Jasperse ~~ Jill Furman Mark Josephs David Frank Timothy Finley Trial Attorneys Consumer Protection Branch U.S. Department of Justice

32

SETTLEMENT AGREEMENT

This Settlement Agreement ("Agreement") is entered into by and among the United

States of America, acting through the United States Department of Justice on behalf of the

Office of Inspector General of the United States Department of Health and Human Services

("OIG-HHS"), the TRICARE Management Activity ("TMA"), the United States Department of

Veteran's Affairs ("VA"), and the United States Office ofPersonnel Management ("OPM")

(collectively the "United States"), Relators identified in the cases listed in Paragraph B ofthe

Preamble to this Agreement ("Relators"), and GlaxoSmithKline LLC ("GSK"), through their

authorized representatives. Collectively, all of the above will be referred to as "the Parties."

PREAMBLE

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

A. GlaxoSmithKline LLC is a Delaware limited liability company and an indirect

subsidiary of GlaxoSmithKline plc, a public limited company incorporated under English law

with headquarters in Brentford, England. At all relevant times, GSK developed, manufactured,

distributed, marketed and sold pharmaceutical products in the United States, including drugs

sold under the trade names ofPaxil, Wellbutrin, Advair, Lamictal, Zofran, Imitrex, Lotronex,

Flovent and Valtrex (collectively the "Covered Drugs").

B. The Relators listed herein have filed the following ill!! tam actions against GSK

(collectively the "Civil Actions"):

(1) United States et al. ex rel. Thorpe, et al. v. GSK et al., Civ. No. 11-10398 (D. Mass.);

(2) United States et al. ex rel. Gerahty, et al. v. GSK et al., Civ. No. 03-10641 (D. Mass.);

(3) United States ex rel. Graydon v. GSK et al., Civ. No. 11-10741 (D. Mass);

( 4) United States et al. ex rel. LaFauci v. GSK, Civ. No. 11-1 0921 (D. Mass.);

The United States filed a notice of intervention on January 14, 2011 and filed its Complaint-In­

Intervention on October 26, 2011 ("Complaint-in-Intervention").

C. On such date as may be determined by the Court, GSK will enter a plea of guilty

pursuant to Fed. R. Crim. P. 11 ( c )(1 )(C) (the "Plea Agreement") to an Information to be filed in

United States of America v. GlaxoSmithKline LLC., Criminal Action No. [to be assigned]

(District of Massachusetts) (the "Criminal Action") that will allege: (i) violations of Title 21,

United States Code, Sections 331(a), 333(a)(l) and 352, namely, the introduction into interstate

commerce of the misbranded drugs Wellbutrin and Paxil; and (ii) a violation of Title 21, United

States Code, Sections 331(e), 333(a)(l), and 355(k)(1), namely, that GSK failed to report data

relating to clinical experience, along with other data and information, regarding A vandia to the

Food and Drug Administration ("FDA") in mandatory reports, all in violation of the Food, Drug

and Cosmetic Act ("FDCA").

D. GSK has entered into or will be entering into separate settlement agreements,

described in Paragraph 1 (b) below (hereinafter referred to as the "Medicaid State Settlement

Agreements") with certain states and the District of Columbia in settlement ofthe Covered

Conduct. States with which GSK executes a Medicaid State Settlement Agreement in the form

to which GSK and the National Association of Medicaid Fraud Control Units ("NAMFCU")

Negotiating Team have agreed, or in a form otherwise agreed to by GSK and an individual State,

shall be defined as "Medicaid Participating States."

E. The United States alleges that GSK caused to be submitted claims for payment

for the Covered Drugs to the Medicare Program, Title XVIII of the Social Security Act, 42

U.S.C. §§1395-1395kkk ("Medicare"), and to the Medicaid Program, Title XIX of the Social

Security Act, 42 U.S.C. §§ 1396-1396w-5 ("Medicaid"). The United States further alleges that

2

GSK caused claims for payment for the Covered Drugs to be submitted to the TRICARE

program, 10 U.S.C. §§ 1071-1110b; the Federal Employees Health Benefits Program

("FEHBP"), 5 U.S.C. §§ 8901-8914; the Federal Employees Compensation Act Program, 5

U.S. C. § 8101, et seq; and caused purchases of the Covered Drugs by the Department of

Veterans' Affairs Programs, 38 U.S.C. §§ 1701-1743 (collectively, the "other Federal Health

Care Programs").

F. The United States contends that it and the Medicaid Participating States have

certain civil claims, as specified in Paragraph 2, below, against GSK for engaging in the conduct

set forth in the Complaint-in-Intervention and as described as follows (hereinafter referred to as

the "Covered Conduct"):

(1) Paxil: During the period January 1, 1998 through December 31,2003, GSK knowingly: (a) promoted the sale and use ofPaxil for conditions and for patients other than those for which its use was approved as safe and effective by the Food and Drug Administration ("FDA"), specifically for children and adolescents under the age of 18, and which uses were not medically-accepted indications as defined by 42 U.S.C. § 1396r-8(k)(6) for which the United States and state Medicaid programs provided coverage for Paxil; (b) made and/or disseminated unsubstantiated and/or false and/or misleading representations or statements about the safety and efficacy ofPaxil concerning the uses described in section (a) of this sub­paragraph, including concealing, omitting or failing to disclose material information about the safety and efficacy ofPaxil; and (c) offered and paid illegal remuneration to health care professionals to induce them to promote and prescribe Paxil, in violation of the Federal Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b). As a result ofthe foregoing conduct, GSK knowingly caused false or fraudulent claims for Paxil to be submitted to, or caused purchases by Medicaid and the other Federal Health Care Programs.

(2) Wellbutrin: During the period January 1, 1999 through December 31, 2003, GSK knowingly: (a) promoted the sale and use of Wellbutrin for conditions (including weight loss, the treatment of obesity, sexual dysfunction and in combination with other anti­depressants) and at dosages other than those for which its use was approved as safe and effective by the FDA, and some of which were not medically-accepted indications as defined by 42 U.S.C. §

3

1396r-8(k)(6) for which the United States and state Medicaid programs provided coverage for Wellbutrin; (b) made and/or disseminated unsubstantiated and/ or false and/ or misleading representations or statements about the safety and efficacy of Wellbutrin; and (c) offered and paid illegal remuneration to health care professionals to induce them to promote and prescribe Wellbutrin, in violation ofthe Federal Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b). As a result of the foregoing conduct, GSK knowingly caused false or fraudulent claims for Wellbutrin to be submitted to, or caused purchases by Medicaid and the other Federal Health Care Programs.

(3) Advair: During the period January 1, 2001 through June 30, 2010, GSK knowingly: (a) promoted the sale and use of Advair for conditions and dosing regimens other than those for which its use was approved as safe and effective by the FDA (including first line use for mild or all asthma, and for asthma previously treated by short-acting inhalers alone), and some of which were not medically-accepted indications as defined by 42 U.S.C. § 1396r-8(k)(6) for which the United States and state Medicaid programs provided coverage for Advair; (b) made and/or disseminated unsubstantiated and/or false and/or misleading representations or statements about the safety and efficacy of Advair (including that Advair was superior to the single component, inhaled corticosteroid alone, for patients previously treated by short -acting inhalers alone); and (c) offered and paid illegal remuneration to health care professionals to induce them to promote and prescribe Advair, in violation of the Federal Anti­Kickback Statute, 42 U.S.C. § 1320-7b(b ). As a result ofthe foregoing conduct, GSK knowingly caused false or fraudulent claims for Advair to be submitted to, or caused purchases by Medicaid, Medicare and the other Federal Health Care Programs.

( 4) Lamictal: During the period January 1, 1999 through December 31, 2003, GSK knowingly: (a) promoted the sale and use ofLamictal for a variety of conditions other than those for which its use was approved as safe and effective by the FDA (including bi-polar depression, neuropathic pain, and various other mental diseases), and some of which were not medically-accepted indications as defined by 42 U.S.C. § 1396r-8(k)(6) for which the United States and state Medicaid programs provided coverage for Lamictal; (b) made and/or disseminated unsubstantiated and/or false and/or misleading representations or statements about the safety and efficacy of Lamictal concerning the uses described in section (a) ofthis sub-paragraph; and (c) offered and paid illegal remuneration to health care professionals to induce them to promote and prescribe Lamictal, in violation of the Federal Anti-Kickback Statute, 42 U.S.C. § 1320-7b(b). As a result of the foregoing conduct, GSK knowingly caused

4

false or fraudulent claims for Lamictal to be submitted to, or caused purchases by Medicaid and the other Federal Health Care Programs.

(5) Zofran: During the period January 1, 2002 through December 31, 2004, GSK knowingly: (a) promoted the sale and use of Zofran for a variety of conditions other than those for which its use was approved as safe and effective by the FDA (including hyperemesis or pregnancy-related nausea), and some of which were not medically-accepted indications as defined by 42 U.S.C. § 1396r-8(k)(6) for which the United States and state Medicaid programs provided coverage for Zofran; (b) made and/or disseminated unsubstantiated and! or false representations or statements about the safety and efficacy of Zofran concerning the uses described in section (a) of this sub-paragraph; and (c) offered and paid illegal remuneration to health care professionals to induce them to promote and prescribe Zofran, in violation of the Federal Anti-Kickback Statute, 42 U.S.C. § 1320-7b(b). As a result ofthe foregoing conduct, GSK knowingly caused false or fraudulent claims for Zofran to be submitted to, or caused purchases by Medicaid and the other Federal Health Care Programs.

( 6) Imitrex, Lotronex, Flovent and Valtrex: From J anumy 1, 1999 through December 30, 2004, GSK paid illegal remuneration for speaker programs, mentorships, preceptorships, journal clubs, advisory boards (including Local and Regional Advisory Boards and Special Issues Boards), Reprint Mastery Trainings, and provided gifts (including entertainment, cash, travel and meals) to health care professionals to induce them to promote and prescribe the drugs Imitrex, Lotronex, Flo vent and V altrex, in violation of the Federal Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b). As a result of the foregoing conduct, GSK caused false claims to be submitted to, or caused purchases by Medicaid and certain other Federal Health Care Programs.

G. The United States also contends that it has certain administrative claims against

GSK as specified in Paragraphs 4 through 6, below, for engaging in the Covered Conduct.

H. This Agreement is made in eompromise of disputed claims. This Agreement is

neither a11 admission of facts or liability by GSK. GSK expressly denies the allegations of the

United States a11d the Relators as set forth herein and in the Civil Actions and the Complaint-In-

Intervention, and denies that it engaged in any wrongful conduct in connection with the Covered

Conduct, except as to such admissions GSK makes in connection with the Plea Agreement. This

5

Agreement is not a concession by the United States or the Relators that their claims are not well­

founded. Neither this Agreement, nor the performance of any obligation arising under it,

including any payment, nor the fact of settlement, is intended to be or shall be understood as, an

admission of liability or wrongdoing, or other expression reflecting on the merits of the dispute,

except as set forth in this Paragraph.

I. Relators claim entitlement under 31 U.S.C. § 3730(d) to a share of the proceeds

of this Settlement Agreement and to reasonable expenses, attorneys' fees and costs, among other

things. This agreement does not cover the claims of any Relator to a share of the proceeds or

their attorneys' fees, costs, and expenses under 31 U.S. C. § 3 73 0( d), and nothing in this

Agreement shall constitute evidence or an admission that any Relator has filed a valid qui tam

action under 31 U.S.C. § 3730 or is entitled to a share of the proceeds or attorneys' fees, costs,

and expenses under 31 U.S.C. §3730(d).

J. To avoid the delay, expense, inconvenience and uncertainty of protracted

litigation of these. claims, the Parties desire to reach a final settlement as set forth below.

TERMS AND CONDITIONS

NOW, THEREFORE, in reliance on the representations contained herein and in

consideration of the mutual promises, covenants, and obligations in this Agreement, and for

good and valuable eonsioeration, receipt of which is hereby acknowledged, the Parties agree as

follows:

1. GSK agrees to pay to the United States and the Medicaid Pruiicipating States,

collectively, the sum of one billion, forty-two million, six hundred twelve thousand, eight

hundred dollars ($ 1 ,042,612,800), plus interest at the rate of 1.625% per annum from December

1, 2011, and continuing until and including the day before payment is made under this

6

Agreement (collectively, the "Settlement Amount"). The Settlement Amount is allocated to the

drugs set forth in the Covered Conduct and at issue in the Civil Actions as follows:

Paxil:

W ellbutrin:

Advair-Asthma:

Advair-COPD July 2008 to June 2010:

Lamictal:

Zofran:

Kickbacks for Paxil, Wellbutrin, Advair, Lamictal, Zofran, Imitrex, Lotronex, Flovent, and Valtrex:

$52,622,130

$166,979,130

$686,049,841

$25,273,910

$54,729,862

$2,320,640

$54,637,287

The Settlement Amount shall constitute a debt inunediate1y due and owing to the United States

and the Medicaid Participating States on the Effective Date of this Agreement. This debt shall

be discharged by payments to the United States and the Medicaid Participating States, under the

following terms and conditions:

(a) GSK shall pay to the United States the sum of eight hundred thirty-two million,

four hundred eighty-five thousand, four hundred and thirty-six dollars ($832,485,436), plus

interest at the rate of 1.625% per annum from December 1, 2011, and continuing until and

including the day before payment is made under this Agreement (the "Federal Settlement

Amount"). The Federal Settlement Amount shall be paid by electronic funds transfer pursuant to

written instructions from the United States no later than seven (7) business days after (i) this

Agreement is fully executed by the Parties and delivered to GSK's attorneys; or (ii) the Court

accepts a Fed. R. Crim. P. 11(c)(l)(C) guilty plea as described in Preamble Paragraph C in

7

connection with the Criminal Action and imposes the agreed upon sentence, whichever occurs

later.

(b) GSK shall pay to the Medicaid Participating States the sum of two hundred and

ten million, one hundred and twenty-seven thousand, three hundred and sixty-four dollars

($210,127,364), plus interest at the rate ofl.625% per annum from December 1, 2011, and

continuing until and including the day before payment is made under this Agreement (the

"Medicaid State Settlement Amount"). The Medicaid State Settlement Amount shall be paid by

electronic funds transfer to an interest bearing account pursuant to written instructions from the

NAMFCU Negotiating Team and under the terms and conditions of the Medicaid State

Settlement Agreements that GSK will enter into with the Medicaid Participating States.

(c) If GSK' s agreed-upon guilty plea pursuant to Fed. R. Crim. P. 11 ( c )(1 )(C) in the

Criminal Action described in Preamble Paragraph Cis not accepted by the Court or the Court

does not impose the agreed-upon sentence for whatever reason, this Agreement shall be null and

void at the option of either the United States or GSK. If either the United States or GSK

exercises this option, which option shall be exercised by notifying all Parties, through counsel, in

writing within five (5) business days ofthe Court's decision, the Parties will not object and this

Agreement will be rescinded. If this Agreement is rescinded, GSK will not plead, argue or

otherwise raise any defenses under the theories of statute of limitations, laches, estoppel or

similar theories, to any civil or administrative claims, actions or proceedings arising from the

Covered Conduct that are brought by the United States within 90 calendar days of rescission,

except to the extent such defenses were available on the day on which the gill tam complaints

listed in Preamble Paragraph B, above, were filed.

8

2. Subject to the exceptions in Paragraph 7 below (concerning excluded claims), in

consideration ofthe obligations ofGSK set forth in this Agreement, conditioned upon GSK's

payment in full of the Settlement Amount, the United States (on behalf of itself, its officers,

agencies, and departments) agrees to release GSK, together with its predecessors, current and

former parents, direct and indirect affiliates, divisions, subsidiaries, successors, transferees and

assigns and their current and former directors, officers, and employees, individually and

collectively, from any civil or administrative monetary claim that the United States has or may

have for the Covered Conduct under the False Claims Act, 31 U.S.C. §§ 3729-3733; the Program

Fraud Civil Remedies Act, 31 U.S.C. §§ 3801-3812; the Civil Monetary Penalties Law, 42

U.S.C. § 1320a-7a; the Food, Drug and Cosmetic Act, 21 U.S.C. § 301, et seq.; any statutory

provision creating a cause of action for civil damages or civil penalties for which the Civil

Division of the Department of Justice has actual and present authority to assert and compromise

pursuant to 28 C.F.R. Part 0, Subpart I, 0.45(d) and common law claims for fraud, payment by

mistake, breach of contract, disgorgement and unjust emichment.

3. Conditioned upon the United States' receipt of the payments described in

Paragraph 1(a) above, and in consideration ofthe obligations ofGSK in this Agreement,

Relators, for themselves and for their heirs, successors, attorneys, agents, and assigns and any

other person or entity acting on their behalf or asserting their rights, release GSK together 'vith

its predecessors, and its current and former divisions, parents, direct and indirect affiliates,

divisions, subsidiaries, transferees, successors, and assigns, and all of their current and former

directors, officers, employees, representatives, servants, agents, consultants and attorneys,

individually and collectively, from any civil monetary claim the United States has or may have

under the False Claims Act, 31 U.S.C. §§ 3729-3733, for the Covered Conduct and from all

9

liability, claims, demands, actions or causes of action whatsoever, whether known or unknown,

fixed or contingent, in law or in equity, in contract or in tort, under any federal or state statute or

regulation, or in common law, that they, their heirs, successors, attorneys, agents and assigns

otherwise would have standing to bring as of the date of this Agreement, including any liability

to Relators arising from or relating to the claims Relator asserted or could have asserted in the

Civil Actions. Provided, however, that Relators and Relators' counsel do not release GSK for

any claims they may have for reasonable attorneys' fees, expenses and costs pursuant to 31

U.S.C. § 3730(d); or for any claims Relators may have pursuant to 31 U.S.C. § 3730(h).

4. In consideration ofthe obligations ofGSK in this Agreement and the Corporate

Integrity Agreement ("CIA") entered into between OIG-HHS and GSK, and conditioned upon

GSK's full payment of the Settlement Amount, the OIG-HHS agrees to release and refrain from

instituting, directing, or maintaining any administrative action seeking exclusion from Medicare,

Medicaid, and other Federal health care programs (as defined in 42 U.S.C. § 1320a-7b(f))

against GSK under 42 U.S.C. § 1320a-7a (Civil Monetary Penalties Law) or 42 U.S.C. § 1320a-

7(b )(7) (permissive exclusion for fraud, kickbacks, and other prohibited activities) for the

Covered Conduct, or against GSK under 42 U.S.C. § 1320a-7(b)(l) based on GSK's agreement

to plead guilty to the charges set forth in the Information in the Criminal Action referenced in

Paragraph C above, except as reserved in Paragraph 7 (concerning excluded claims), below, and

as reserved in: this Paragraph. The OIG-HHS expressly reserves all rights to comply with any

statutory obligations to exclude GSK from Medicare, Medicaid, and other Federal health care

programs under 42 U.S.C. § 1320a-7(a) (mandatory exclusion) based upon the Covered

Conduct. Nothing in this Paragraph precludes the OIG-HHS from taking action against entities

10

or persons, or for conduct and practices, for which claims have been reserved in Paragraph 7,

below.

5. In consideration of the obligations of GSK set forth in this Agreement,

conditioned upon GSK's full payment of the Settlement Amount, TMA agrees to release and

refrain from instituting, directing, or maintaining any administrative action seeking exclusion or

suspension from the TRICARE Program against GSK under 32 C.P.R. § 199.9 for the Covered

Conduct, except as reserved in Paragraph 7 (concerning excluded claims), below, and as

reserved in this Paragraph. TMA expressly reserves authority to exclude GSK under 32 C.P.R.

§§ 199.9 (f)(l)(i)(A), (f)(1)(i)(B), and (f)(1)(iii), based upon the Covered Conduct. Nothing in

this Paragraph precludes TMA or the TRICARE Program from taking action against entities or

persons, or for conduct and practices, for which claims have been reserved in Paragraph 7,

below.

6. In consideration ofthe obligations ofGSK in this Agreement, conditioned upon

GSK's full payment of the Settlement Amount, OPM agrees to release and refrain from

instituting, directing, or maintaining any administrative action against GSK under 5 U.S.C. §

8902a or 5 C.P.R. Part 970 for the Covered Conduct, except as reserved in Paragraph 7

(concerning excluded claims), below, and except if excluded by the OIG-HHS pursuant to 42

U.S.C. § 1320a-7(a) or required by 5 U.S.C. § 8902a(b), or 5 C.P.R. Part 970. Nothing in this

Paragraph precludes OPM from taking action against entities or persons, or for conduct and

practices, for which claims have been reserved in Paragraph 7, below.

11

7. Notwithstanding any term of this Agreement, specifically reserved and excluded

from the scope and terms of this Agreement as to any entity or person (including GSK and the

Relators) are the following claims of the United States:

(a) Any civil, criminal, or administrative liability arising under Title 26, U.S.

Code (Internal Revenue Code);

(b) Any criminal liability;

(c) Except as explicitly stated in this Agreement, any administrative liability,

including mandatory exclusion from Federal health care programs;

(d) Any liability to the United States (or its agencies) for any conduct other

than the Covered Conduct;

(e) Any liability based upon such obligations as are created by this

Agreement;

(f) Any liability for express or implied warranty claims or other claims for

defective or deficient products and services, including quality of goods

and services;

(g) Any liability for personal injury or property damage or for other

consequential damages arising from the Covered Conduct;

(h) Any liability for failure to deliver items or services due; or

(i) Any liability of individuals (including current or former directors, officers,

employees, or agents of GSK) who receive written notification that they

are the target of a criminal investigation, are criminally indicted or

charged, or are convicted, or who enter into a criminal plea agreement

related to the Covered Conduct.

12

8. (A) Each Relator and his/her respective heirs, successors, attorneys, agents,

and assigns agree not to object to this Agreement and agree and confirm that this Agreement and

the amounts set forth in Paragraph 1(a) are fair, adequate and reasonable under all the

circumstances, pursuant to 31 U.S.C. § 3730( c )(2)(B). Each Relator and his/her respective heirs,

successors, attorneys, agents, and assigns, expressly waives the opportunity for a hearing on any

objection to this agreement pursuant to 31 U.S.C. § 3730(C)(2)(B).

(B) Of the federal and states drug claims listed in Paragraphs 1(a), the following were

alleged in United States et al. ex rel. Thorpe, et al. v. GSK et al., Civ. No. 11-10398 (D. Mass.)

and/or United States et al. ex rel. Gerahty, et al. v. GSK et al., Civ. No. 03-10461 (D. Mass):

Paxil, Wellbutrin, Advair-Asthma, Lamictal, Zo:fran, Flovent, Imitrex, Lotronex, Valtrex, and

kickbacks. Of the federal and state drug claims listed in paragraph 1(a), Advair-COPD (July

2008-June 2010) was alleged in United States ex rel. Graydon v. GSK et al., Civ. No. 11-10741

(D. Mass) and United States et al. ex rel. La Fauci v. GSK, Civ. No. 11-10921 (D. Mass). The

Parties incorporate herein by reference the fairness, adequacy and reasonableness letters

executed by each Relator and their counsel. Nothing in this subparagraph (B) is intended to

address whether or to what extent any of the relators in these actions are entitled to a share of

any of the proceeds allocated to the federal and state drug claims listed in Paragraph l(a).

(C) All parties reserve all rights under the False Claims Act unless expressly waived

or released herein. This Agreement does not resolve or in any manner affect any claims the

United States has or may have against the Relators arising under Title 26, U.S. Code (Internal

Revenue Code), or any claims arising under this Agreement.

9. GSK waives and shall not assert any defenses it may have to any criminal

prosecution or administrative action relating to the Covered Conduct that may be based in whole

13

or in part on a contention that under the Double Jeopardy Clause in the Fifth Amendment of the

Constitution, or under the Excessive Fines Clause in the Eighth Amendment of the Constitution,

this Agreement bars a remedy sought in such criminal prosecution or administrative action.

Nothing in this paragraph or any other provision of this Agreement constitutes an agreement by

the United States concerning the characterization of the Settlement Amount for purposes of the

Internal Revenue laws, Title 26 of the United States Code.

10. GSK fully and finally releases the United States, its agencies, employees,

servants, and agents from any claims (including attorneys' fees, costs, and expenses of every

kind and however denominated) which GSK has asserted, could have asserted, or may assert in

the future against the United States, its agencies, employees, servants, and agents, related to the

Covered Conduct or arising from the United States' investigation and prosecution of the Civil

Actions and the Criminal Action.

11. Should this Agreement be challenged by any person as not fair, adequate or

reasonable pursuant to 31 U.S.C. § 3730(c)(2)(B), the Parties agree that they will take all

reasonable and necessary steps to defend this Agreement and the allocation set forth herein.

12. In consideration of the obligations of the Relators set forth in this Agreement,

GSK, on behalf of itself, its predecessors, and its current and former divisions, parents,

subsidiaries, agents, successors, assigns, and their current and former directors, officers and

employees, fully and finally release, waive, and forever discharge the Relators and their

respective heirs, successors, assigns, agents, and attomeys from any claims or allegations GSK

has asserted or could have asserted, arising from the Covered Conduct and from all liability,

claims, demands, actions or causes of action whatsoever, whether known or unknown, fixed or

contingent, in law or in equity, in contract or in tort, under any federal or state statute or

14

regulation, or in common law, that they, their heirs, successors, attorneys, agents and assigns

otherwise would have standing to bring as of the date of this Agreement, including any liability

to GSK arising from or relating to the claims Relator asserted or could have asserted in the Civil

Actions. Provided, however, that GSK expressly reserves any defenses or claims as to Relators'

and Relators' counsel's claims for reasonable attorneys' fees, expenses and costs pursuant to 31

U.S.C. § 3730(d) and as to any claims Relators may have pursuant to 31 U.S. C. § 3730(h), which

are reserved pursuant to Paragraph 3 above.

13. The Settlement Amount shall not be decreased as a result of the denial of claims

for payment now being withheld from payment by any Medicare carrier or intermediary or any

state payer, related to the Covered Conduct; and GSK agrees not to resubmit to any Medicare

carrier or intermediary or any state payer any previously denied claims related to the Covered

Conduct, and agrees not to appeal any such denials of claims.

14. GSK agrees to the following:

(a) Unallowable Costs Defined: that all costs (as defined in the Federal

Acquisition Regulations (FAR) 48 C.F.R. § 31.205-47 and in Titles XVIII and XIX ofthe Social

Security Act, 42 U.S. C. §§ 1395-1395kkk and 1396-1396w-5, and the regulations and official

program directives promulgated thereunder) incurred by or on behalf of GSK, its present or

former officers, directors, employees, shareholders, and agents in connection with the following

shall be "Unallowable Costs" on government contracts and under the Medicare and Medicaid

Programs and other Federal Health Care Programs:

(1) the matters covered by this Agreement and the related Plea Agreement;

15

(2) the United States' audit and civil and criminal investigation of the matters

covered by this Agreement;

(3) GSK's investigation, defense, and any corrective actions undertaken in

response to the United States' audit and civil and criminal investigation in

connection with the matters covered by this Agreement (including

attorneys' fees);

(4) the negotiation and performance of this Agreement, the Plea Agreement,

and the Medicaid State Settlement Agreements;

(5) the payments GSK makes to the United States or any State pursuant to this

Agreement, the Plea Agreement, or the Medicaid State Settlement

Agreements and any payments that GSK may make to Relators (including

costs and attomeys' fees);

(6) the negotiation of, and obligations undertaken pursuant to the CIA to:

(i) retain an independent review organization to perform annual reviews

as described in Section III of the CIA; and (ii) prepare and submit reports

to OIG-HHS. However, nothing in this paragraph 14 affects the status of

costs that are not allowable based on any other authority applicable to

GSK.

(b) Future Treatment_ofUnallowable Costs: These Unallowable Costs shall

be separately determined and accounted for by GSK, and GSK shall not charge such

Unallowable Costs directly or indirectly to any contracts with the United States or any State

Medicaid Program, or seek payment for such Unallowable Costs through any cost report, cost

16

statement, information statement, or payment request submitted by GSK or any of its

subsidiaries or affiliates to the Medicare, Medicaid, TRICARE, or FEHBP Programs.

(c) Treatment ofUnallowable Costs Previously Submitted for Payment: GSK

further agrees that within 90 days of the Effective Date of this Agreement, it shall identify to

applicable Medicare and TRICARE fiscal intermediaries, carriers, and/or contractors, and

Medicaid, and FEHBP fiscal agents, any Unallowable Costs (as defined in tlus Paragraph)

included in payments previously sought from the United States, or any State Medicaid Program,

including, but not limited to, payments sought in any cost reports, cost statements, information

reports, or payment requests already submitted by GSK or any of its subsidiaries or affiliates,

and shall request, and agree, that such cost reports, cost statements, information reports, or

payment requests, even if already se1tled, be adjusted to account for the eiTecl of the inclusion of

the Unallowable Costs. GSK agrees that the United States, at a minimum, shall be entitled to

recoup from GSK any overpayment plus applicable interest and penalties as a result of the

inclusion of such Unallowable Costs on previously-submitted cost reports, information reports,

cost statements, or requests for payment.

Any payments due after the adjustments have been made shall be paid to the

United States pursuant to the direction of the Department of Justice, and/or the affected agencies.

The United States reserves its rights to disagree with any calculations submitted by GSK or any

of its subsidiaries or affiliates on the effect of inclusion of Unallowable Costs (as defined in this

Paragraph) on GSK's or any of its subsidiaries' or aiTiliatcs' cost reports, cost statements, or

information reports.

17

(d) Nothing in this Agreement shall constitute a waiver of the rights of the

United States to audit, examine or reexamine GSK's books and records to determine that no

Unallowable Costs have been claimed in accordance with the provisions of this Paragraph.

15. This Agreement is intended to be for the benefit of the Parties only. The Parties

do not release any claims against any other person or entity, except to the extent provided for in

Paragraph 2 above and 16 below (waiver for beneficiaries paragraph).

16. GSK agrees that it waives and shall not seek payment for any of the health care

billings covered by this Agreement from any health care beneficiaries or their parents, sponsors,

legally responsible individuals, or third party payors based upon the claims defined as Covered

Conduct.

17 _ GSK expressly warrants that it has reviewed its financial situation and that it is

currently solvent within the meaning of 11 U.S.C. §§ 547(b)(3) and 548(a)(1)(B)(ii)(I), and will

remain solvent following payment of the Settlement Amount. Further, the Parties warrant that,

in evaluating whether to execute this Agreement, they (a) have intended that the mutual

promises, covenants and obligations set fmih herein constitute a contemporaneous exchange for

new value given to GSK, within the meaning of 11 U.S.C. § 547(c)(l); and (b) conclude that

these mutual promises, covenants and obligations do, in fact, constitute such a contemporaneous

exchange. Further, the Parties warrant that the mutual promises, covenants, and obligations set

forth herein are intended to and do, in fact, represent a reasonably equivalent exchange of value

that is not intended to hinder, delay, or defraud any entity to which GSK was or became indebted

to on or after the date of this transfer, within the meaning of 11 U.S.C. § 548(a)(1).

18. Within seven (7) business days following payment of the Settlement Amount, the

Parties shall seek dismissal of the Complaint-in-Intervention and each of the Civil Actions. Each

18

dismissal shall be with prejudice as to all claims of the United States and the Relators with the

exception of the following claims, if any, and over which the Court shall retain jurisdiction: (a)

Relators' claims for a share ofthe proceeds of the Civil Actions pursuant to 31 U.S.C. § 3730(d);

(b) Relators' claims against GSK for reasonable attorneys' fees, expenses, and costs pursuant to

31 U.S.C. § 3730(d); (c) Relators' claims against GSK under 31 U.S.C. § 3730(h); and (d)

Relators' claims against the States for Relators' Shares. This provision shall not limit the rights

of the United States to in any way challenge or contest claims under subsection (a) above,

including but not limited to challenging or contesting those claims under 31 U.S. C. § 3730(b)(5)

and/or 31 § U.S.C. 3730(e)(4), or as to GSK, to in any way challenge or contest claims under

subsection (b) and (c) above.

19. Each party shall bear its own legal and other costs incurred in connection with

this matter, including the preparation and performance of this Agreement, except Relators

reserve their rights against GSK to seek attorneys' fees, costs and expenses under 31 U.S.C. §

3730(d).

20. The Parties each represent that this Agreement is freely and voluntarily entered

into without any degree of duress or compulsion.

21. This Agreement is governed by the laws of the United States. The Parties agree

that the exclusive jurisdiction and venue for any dispute arising between and among the Parties

under this Agreement, including any issues regarding relators' share or payment of Relators'

attorneys' fees, expenses and costs, shall be the United States District Court for the District of

Massachusetts, except that disputes arising under the CIA shall be resolved exclusively under the

dispute resolution provisions in the CIA.

19

22. For purposes of construction, this Agreement shall be deemed to have been

drafted by all Parties to this Agreement and shall not, therefore, be construed against any party

for that reason in any dispute.

23. This Agreement including any documents incorporated by reference herein

constitutes the complete agreement between the Parties with respect to the issues covered by the

Agreement. This Agreement may not be amended except by written consent of all the Parties.

24. The individuals signing this Agreement on behalf of GSK represent and warrant

that they are authorized by GSK to execute this Agreement. The individuals signing this

Agreement on behalf of each Relator represent and warrant that they are authorized by that

Relator to execute this Agreement. The United States' signatories represent that they are signing

this Agreement in their official capacities and they are authorized to execute this Agreement.

25. This Agreement may be executed in counterparts, each of which constitutes an

original and all of which shall constitute one and the same Agreement.

27. This Agreement is binding on GSK's successors, transferees, heirs and assigns.

26. This Agreement is binding on Relators' successors, transferees, heirs, attorneys

and assigns.

27. All Parties consent to the disclosure of this Agreement, and information about this

Agreement, to the public after the Effective Date.

28. This Agreement is effective on the date of signature of the last signatory to the

Agreement (Effective Date of this Agreement). Facsimiles or electronic versions of signatures

shall constitute acceptable, binding signatures for purposes of this Agreement.

20

By:

UNITED STATES OF AMERICA

CARMEN M. ORTIZ

Assistant United States Attomeys District of Massachusetts

21

By:

United States Attorney John Walsh

EDWIN WINSTEAD Assistant United States Attorney District of Colorado

Dated: /T\A t>; .11

,2,0 /~

I

22

By:

By:

STUART F. DELERY Acting Assistant Attorney General

DANfE~Rso:L---JAMIE ANN YAVELBERG ANDY MAO BRIAN MCCABE DOUGLAS ROSENTHAL Attorneys Commercial Litigation Branch, Civil Division United States Department of Justice

JILLFURMANP I PATRICK JASPERSE DAVID FRANK Attorneys Consumer Protection Branch, Civil Division United States Department of Justice

23

nated: __ -hz,__/~-+-.i--<-'-~----

Dated: 7 f 2 / I L

tj,"f' ,. . ~ ' /~~ ~ By: I { ,,~,l Li<-<1-"Y~,~".,L'

l~ l 'GREGti)fy E. DEMSKtJ ;?';/ Chief Counsel to the Inspector General " Office of Cotmsel to the Inspector General

Office of Inspector General U.S. Department of Health and Human Services

24

Dated:

By: ~~~\k PAUL J. HU'l\TE General Coun;2t-TRICARE Management Activity United States Department of Defense

Dated: Co j ~""1-(\(}..

By: ~71~ SHIRL YR. P fl'TERSON . Assistant Director for Federal Employee Insurance Operations United States Office ofPersonnel Management

Dated: t.j~z.

J. DAVID COPE Debarring Official Office of the Assistant Inspector General for Legal Affairs United States Office of Personnel Management

Dateti:

By:

By:

GLAXOSMITHKLINE LLC

ELPIDIO VILLARREAL

Covington & Burling LLP Counsel to GlaxoSmitbKline LLC.

Dated:

Dated: {~6-~ ~

27

By:

By:

By:

RELATOR GREG THORPE

Dated: -------------------GREG THORPE

RELATOR BLAIR HAMRICK

Dated: -------------------BLAIR HAMRICK

BRIAN KENNEY

t~ ~:!::~ Dated _ __,.(;~-~ 11-/~d"--. _,._)/-+I_J_?-1 ..-;.;'"""~--M .. TAVYDEMING ~·· KENNEY & McCAFFE~TY, PC Counsel to RelatorJG_r~ Thorpe & Blair Hamrick

28

RELATOR GREG THORPE

By:~ GREGTRi>E

By:

By:

RELATORBLAIRHANGUCK

BLAIR HAMRICK

BRIAN KENNEY

BRIAN KENNEY M. TA VY DEMING KENNEY & McCAFFERTY, PC Counsel to Relators Greg Thorpe & Blair Hamrick

Dated: 6' / '{_ T /{L

Dated: ________ _

Dated: -------------

By:

By:

By:

RELATOR GREG THORPE

GREG THORPE

RELATOR BLAIR HAMRICK

"BLAIR HAMRICK

BRIAN KENNEY

BRIAN KENNEY M. TAVYDEMING KENNEY & McCAFFERTY, PC Counsel to Relators Greg Thorpe & Blair Hamrick

Dated: ________ _

Dated: {;~ C l. / (_

Dated: --------------

RELATORTHOMASGERAHTY

By: Dated: _________ _ THOMAS GERAHTY

RELATORMATTHEWBURKE

By:

By:

MATTHEWB~- I rf

~~~ Dated: & / 2-& /I Z----~~~-y~----

ERIKA KELTON Phillips & Cohen Counsel to Relators Thomas Gerahty and Matthew Burke

29

RELATOR THOMAS GERAHTY

By~~~ Dated:_----'=6~/2_(;'---~..__z_a_;_-:2-_

RELATOR MATTHEW BURKE

By: Dated: -------------------MATTHEW BURKE

By tfiVr ~ tt0th E KELTON

Dated: & (~b } VJ {? I I

Phillips & Cohen Counsel to Relators Thomas Gerahty and Matthew Burke

29

2012-06-27 08:34

By;

By:

LOIS C GRAYDON 8563095174 >> Grant & Eisenhofer

RELATOR LOIS GRAYDON'

LOlSGRA ON

REUBEN GUTTMAN Grant & Eisenhofer, P A Counsel to Relator Lois Graydon

Dated:. ___ 0___c_/f_J..__,:,....~~.J.-ct_._., _2....

p 1/1

By:

!··

l .

RELATOR l\i[fCI.IAEL LAFAUCI

ffi~off-~~

DAVID~NE ROBERT A.MAGNANIN1

·Stone &.MagnaniniLLP · Counsel to RetatotMi.chael LaFauci

.·· /

31

SETTLEMENT AGREEMENT

This Settlement Agreement ("Agreement") is entered into by and among the United

States of America, acting through the United States Department of Justice and on behalf of the

Office of Inspector General ("OIG-HHS") of the United States Department of Health and

Human Services ("HHS"), the TRICARE Management Activity ("TMA"), the United States

Department of Veteran Affairs ("VA"), and the United States Office of Personnel Management

("OPM") (collectively the "United States"), and GlaxoSmithKline LLC ("GSK"), through their

authorized representatives. Collectively, all of the above will be referred to as "the Parties."

PREAMBLE

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

A. GlaxoSmithKline LLC is a Delaware limited liability company and an indirect

subsidiary of GlaxoSmithKline plc, a public limited company incorporated under English law

with headquarters in Brentford, England. At all relevant times, GSK developed, manufactured,

distributed, marketed and sold pharmaceutical products in the United States, including drugs

sold under the trade names Avandia, Avandamet, and Avandaryl (collectively, the "Covered

Drugs"), which were medications for treatment of Type 2 diabetes.

B. On such date as may be determined by the Court, GSK will enter a plea of guilty

pursuant to Fed. R. Crim. P. ll(c)(l)(C) (the "Plea Agreement") to an Information to be filed in

United States of America v. GlaxoSmithKline LLC, Criminal Action No. [to be assigned]

(District of Massachusetts) (the "Criminal Action") that will allege violations of Title 21, United

States Code, Sections 33l(a), 333(a)(l) and 352, namely, the introduction into interstate

commerce of the misbranded drugs Wellbutrin and Paxil, and a violation of Title 21, United

States Code, Sections 33l(e), 333(a)(l), and 355(k)(l), namely, that GSK failed to report data

relating to clinical experience, along with other data and information, regarding Avandia to the

Food and Drug Administration ("FDA") in mandatory reports, in violation of the Food, Drug and

Cosmetic Act ("FDCA").

C. GSK has entered into or will be entering into separate settlement agreements,

described in Paragraph I (b) below (hereinafter referred to as the "Medicaid State Settlement

Agreements") with certain states and the District of Columbia in settlement of the Covered

Conduct described in Preamble Paragraph E, below. States with which GSK executes a

Medicaid State Settlement Agreement in the form to which GSK and the N a tiona! Association of

Medicaid Fraud Control Units ("NAMFCU") Negotiating Team have agreed, or in a form

otherwise agreed to by GSK and an individual State, shall be defined as "Medicaid Participating

States."

D. The United States alleges that GSK caused claims for payment for the Covered

Drugs to be submitted to the Medicare Program, Title XVill of the Social Security Act, 42

U.S.C. §§ 1395-1395k:kk ("Medicare"); the Medicaid Program, Title XIX of the Social Security

Act, 42 U.S.C.§§ 1396-1396w-5 ("Medicaid"); the TRICARE program, 10 U.S.C. §§ 1071-

lllOb; the Federal Employees Health Benefits Program ("FEHBP"), 5 U.S.C.§§ 8901-8914; the

Federal Employees Compensation Act Program, 5 U.S.C. § 8101, et. seq.; and caused purchases

of the Covered Drugs by the Veterans Affairs Program, 38 U.S.C. § 1701-1743 (collectively, the

"Government Health Care Programs").

E. The United States contends that it and the Medicaid Participating States have

certain civil claims, as specified in Paragraph 2, below, against GSK for engaging in the

following conduct at certain times between January 2000 and December 2010 (hereinafter

referred to as the "Covered Conduct"):

(i) GSK promoted Avandia to physicians and other health care providers with

false and misleading representations about Avandia's lipid profile, effect on cardiovascular

biomarkers, and the overall safety of A vandia and as a result, GSK knowingly caused false or

fraudulent claims for Avandia to be submitted to, or caused purchases by, one or more of the

Government Health Care Programs. This alleged conduct included:

(a) GSK communicated messages to physicians regarding the effect of

A vandia on diabetics' lipid profiles that were based upon inadequate scientific data. At times

between 200 I and April 2005, GSK misleadingly represented that A vandia had a "positive lipid

profile," and trained its sales force to promote the positive lipid profile as one of three core

selling messages, despite having no well-controlled studies sufficient to establish those

representations. Moreover, those representations were inconsistent with the FDA-approved label

for Avandia which included information that Avandia was associated with statistically

significant increases in low density lipoprotein particles ("LDL" or the "bad" cholesterol), high

density lipoprotein particles ("HDL" or the "good" cholesterol), and total cholesterol. Lipid

information was particularly important for diabetics, a patient population that was at a

significantly increased risk of suffering from cardiac-related illnesses.

(b) GSK represented that use of A vandia resulted in more "light and

fluffy" or "buoyant" LDL, despite having no well-controlled studies sufficient to establish those

representations. At times between 2001 and April2005, GSK falsely stated in certain sales

brochures that data showing more buoyant LDL particles came from "a randomized, placebo­

controlled, pharmacodynamic study," when it did not; GSK also promoted the light and fluffy

LDL theory to physicians by bringing "popcorn lunches" to physicians' offices to highlight the

purported change in density of the LDL particles.

3

(c) In 2001, GSK conducted a small, randomized control trial of

Actos, a competitor diabetes drug, tbat suggested that treatment with Actos resulted in more

buoyant LDL particles. GSK did not publish this scientific data about Actos because it was

unhelpful to GSK's marketing message on lipids. In March 2001, a GSK Vice President,

Metabolism Therapeutic Area, North American Medical Affairs directed that the results of this

Actos study not be published, stating that the trial was done "way under the radar" and that

"[p ]er Sr Mgmt request, these data should not see the light of day to anyone outside of GSK."

When later concerned that Actos' manufacturer intended to publish new clinical trial results

regarding Actos' lipid profile, GSK, as part of the "lipid war games," again instructed sales

representatives to emphasize Avandia's purportedly favorable lipid profile with physicians.

(d) Some GSK sales aids also contained certain implied cardiovascular

claims for which GSK did not have adequate scientific support, such as the message that

Avandia may reduce cardiovascular risk by decreasing insulin resistance. That message was

inconsistent with the FDA approved label for Avandia which always contained a warning on

congestive heart failure associated with use of the drug, and later contained additional

cardiovascular warnings regarding use of the drug. From 2001 to 2005, GSK sponsored the

CardioA!liance, a program through which cardiologists gave speeches to other doctors about the

available A vandia data, including data suggesting cardiovascular benefits from A vandia therapy.

Some of the CardioAlliance materials included information about the relationship between

insulin resistance and cardiac risk factors and stated that A vandia has "beneficial effects on

cardiovascular risk factors" and the "potential to reduce cardiovascular disease" but failed to

disclose that GSK did not have cardiovascular outcome data for A vandia. In purpose and effect,

GSK paid cardiologists to influence endocrinologists and general practitioners to prescribe

4

Avandia on the suggestion that the drug may be cardioprotective, despite having no

cardiovascular outcome data regarding Avandia.

(ii) GSK made false and misleading representations about Avandia's lipid

profile, effect on cardiovascular biomarkers, and the overall safety of A vandia in labeling used

during the promotion of Avandia to physicians and other health care providers in violation of the

FDCA, 21 U.S.C. §§ 33l(a) and 352(a), and through the sale and distribution of a misbranded

product, GSK obtained proceeds and profits to which it was not entitled; and

(iii) GSK made false representations concerning the lipid profile, effect on

cardiovascular biomarkers, and the overall safety of A vandia to state Medicaid agencies on

which state Medicaid agencies relied to their detriment in making formulary and prior

authorization decisions.

The United States contends that engaging in the Covered Conduct gives rise to civil

liability under the False Claims Act, 31 U.S. C. §§ 3729-3733; the Food, Drug and Cosmetic Act,

21 U.S.C. § 301 et. gg.; or common law.

F. The United States also contends that it has certain administrative claims against

GSK as specified in Paragraphs 3 through 6, below, for engaging in the Covered Conduct.

G. This Agreement is made in compromise of disputed claims. This Agreement is

neither an admission of facts or liability by GSK. GSK expressly denies the allegations of the

United States as set forth herein that it engaged in any wrongful conduct in connection with the

Covered Conduct, except as to such admissions GSK makes in connection with the Plea

Agreement. This Agreement is not a concession by the United States that its claims are not well

founded. Neither is this Agreement, nor the performance of any obligation arising under it,

including any payment, nor the fact of settlement, intended to be, or shall be understood as, an

5

admission of liability or wrongdoing, or other expression reflecting the merits of the dispute by

GSK, except as set forth in this paragraph.

H. To avoid the delay, expense, inconvenience and uncertainty of protracted

litigation of these claims, the Parties desire to reach a final settlement as set forth below.

TERMS AND CONDITIONS

NOW, THEREFORE, in reliance on the representations contained herein and in

consideration of the mutual promises, covenants, and obligations in this Agreement, and for

good and valuable consideration, receipt of which is hereby aclmowledged, the Parties agree as

follows:

I. GSK agrees to pay to the United States and the Medicaid Participating States,

collectively, the sum of six hundred fifty seven million three hundred eighty seven thousand two

hundred dollars ($657,387,200), plus interest at the rate of 1.625% per annum from December I,

20 II, and continuing until and including the day before payment is made under this Agreement

(collectively, the "Settlement Amount"). The Settlement Amount shall constitute a debt

immediately due and owing to the United States and the Medicaid Participating States on the

Effective Date of this Agreement. This debt shall be discharged by payments to the United

States and the Medicaid Participating States, under the following terms and conditions:

(a) GSK shall pay to the United States the sum of five hundred eight million

one hundred sixty one thousand sixty three dollars ($508,161 ,063), plus interest accrued thereon

at the rate of 1.625% per annum from December I, 2011, continuing until and including the day

before payment is made ("Federal Settlement Amount"). The Federal Settlement Amount shall

be paid by electronic funds transfer pursuant to written instructions from the United States no

later than seven (7) business days after (i) this Agreement is fully executed by the Parties and

6

delivered to GSK's attorneys; or (ii) the Court accepts a Fed. R. Crim. P. ll(c)(l)(C) guilty plea

as described in Preamble Paragraph B in connection with the Criminal Action and imposes the

agreed upon sentence, whichever occurs later.

(b) GSK shall pay to the Medicaid Participating States the sum of one

hundred forty nine million two hundred twenty six thousand one hundred thirty seven dollars

($149,226,137), plus interest accrued thereon at the rate of 1.625% per annum from December

1, 2011, continuing until and including the day before payment is made ("Medicaid State

Settlement Amount"). The Medicaid State Settlement Amount shall be paid by electronic funds

transfer to an interest bearing account pursuant to written instructions from the NAMFCU

Negotiating Team and under the terms and conditions of the Medicaid State Settlement

Agreements that GSK will enter into with the Medicaid Participating States.

(c) IfGSK's agreed-upon guilty plea pursuant to Fed. R. Crim. P. ll(c)(l)(C)

in the Criminal Action described in Preamble Paragraph B is not accepted by the Court or the

Court does not impose the agreed-upon sentence for whatever reason, this Agreement shall be

null and void at the option of either the United States or GSK. If either the United States or GSK

exercises this option, which option shall be exercised by notifYing all Parties, through counsel, in

writing within five (5) business days of the Court's decision, the Parties will not object and this

Agreement will be rescinded. If this Agreement is rescinded, GSK will not plead, argue or

otherwise raise any defenses under the theories of statnte of limitations, laches, estoppel or

similar theories, to any civil or administrative claims, actions or proceedings arising from the

Covered Conduct that are brought by the United States within 90 calendar days of rescission,

unless such defenses were available to GSK prior to the effective date of this Agreement and

excluding time periods covered by the tolling agreement dated September 21,2011.

7

2. Subject to the exceptions in Paragraph 6 below (concerning excluded claims), in

consideration of the obligations ofGSK set forth in this Agreement, conditioned upon GSK's

payment in full of the Settlement Amount, the United States (on behalf of itself, its officers,

agencies, and departments) agrees to release GSK, together with its predecessors, current and

former parents, direct and indirect affiliates, divisions, subsidiaries, successors, transferees, and

assigns and their current and former directors, officers, and employees, individually and

collectively, from any civil or administrative monetary claim that the United States has or may

have for the Covered Conduct under the False Claims Act, 31 U.S.C. §§ 3729-3733; the Program

Fraud Civil Remedies Act, 31 U.S.C. §§ 3801-3812; the Civil Monetary Penalties Law, 42

U.S. C.§ 1320a-7a; the Food, Drug and Cosmetic Act, 21 U.S.C. § 301, et seq.; any statutory

provision creating a cause of action for civil damages or civil penalties for which the Civil

Division of the Department of Justice has actual and present authority to assert and compromise

pursuant to 28 C.F.R. Part 0, Subpart I, 0.45(d), and common law claims for fraud, payment by

mistake, breach of contract, disgorgement and unjust enrichment.

3. In consideration of the obligations of GSK in this Agreement and the Corporate

Integrity Agreement (CIA) entered into between OIG-HHS and GSK, and conditioned upon

GSK's full payment of the Settlement Amount, the OIG-HHS agrees to release and refrain from

instituting, directing, or maintaining any administrative action seeking exclusion from Medicare,

Medicaid, and other Federal health care programs (as defined in 42 U.S.C. § 1320a-7b(f))

against GSK under 42 U.S.C. § 1320a-7a (Civil Monetary Penalties Law) or under 42 U.S.C.

§ 1320a-7(b )(7) (permissive exclusion for fraud, kickbacks, and other prohibited activities) for

the Covered Conduct, or under 42 U.S.C. § 1320a-7(b)(l) based on GSK's agreement to plead

guilty to the charges set forth in the Information in the Criminal Action referenced in Paragraph

8

B above, except as reserved in Paragraph 6 (concerning excluded claims), below, and as reserved

in this Paragraph. The OIG-HHS expressly reserves all rights to comply with any statutory

obligations to exclude GSK from Medicare, Medicaid, and other Federal health care programs

under 42 U.S.C. § 1320a-7(a) (mandatory exclusion) based upon the Covered Conduct. Nothing

in this Paragraph precludes the OIG-HHS from taking action against entities or persons, or for

conduct and practices, for which claims have been reserved in Paragraph 6, below.

4. In consideration of the obligations of GSK set forth in this Agreement,

conditioned upon GSK's full payment of the Settlement Amount, TMA agrees to release and

refrain from instituting, directing, or maintaining any administrative action seeking exclusion or

suspension from the TRICARE Program against GSK under 32 C.F.R. § 199.9 for the Covered

Conduct, except as reserved in Paragraph 6 (concerning excluded claims), below, and as

reserved in this Paragraph. TMA expressly reserves authority to exclude GSK under 32 C.F.R.

§§ 199.9 (f)(l)(i)(A), (f)(l)(i)(B), and (f)(l)(iii), based upon the Covered Conduct. Nothing in

this Paragraph precludes TMA or the TRICARE Program from taking action against entities or

persons, or for conduct and practices, for which claims have been reserved in Paragraph 6,

below.

5. In consideration of the obligations ofGSK in this Agreement, conditioned upon

GSK's full payment of the Settlement Amount, OPM agrees to release and refrain from

instituting, directing, or maintaining any administrative action against GSK under 5 U.S.C.

§ 8902a or 5 C.F.R. Part 970 for the Covered Conduct, except as reserved in Paragraph 6

(concerning excluded claims), below, and except if excluded by the OIG-HHS pursuant to 42

U.S.C. § 1320a-7(a) or required by 5 U.S.C. § 8902a(b), or 5 C.F.R. Part 970. Nothing in this

9

Paragraph precludes OPM from taking action against entities or persons, or for conduct and

practices, for which claims have been reserved in Paragraph 6, below.

6. Notwithstanding any term of this Agreement, specifically reserved and excluded

from the scope and terms of this Agreement as to any entity or person are the following claims

ofthe United States:

(a) Any civil, criminal, or administrative liability arising under Title 26, U.S.

Code (Internal Revenue Code);

(b) Any criminal liability;

(c) Except as explicitly stated in this Agreement, any administrative liability,

including mandatory exclusion from Government Health Care programs;

(d) Any liability to the United States (or its agencies) for any conduct other

than the Covered Conduct;

(e) Any liability based upon such obligations as are created by this

Agreement;

(f) Any liability for express or implied warranty claims or other claims for

defective or deficient products and services, including quality of goods

and services;

(g) Any liability for personal injury or property damage or for other

consequential damages arising from the Covered Conduct;

(h) Any liability for failure to deliver items or services due; or

(i) Any liability of individuals (including current or former directors, officers,

employees, or agents of GSK) who receive written notification that they

are the target of a criminal investigation, are criminally indicted, charged,

10

or convicted, or who enter into a criminal plea agreement related to the

Covered Conduct.

7. GSK waives and shall not assert any defenses it may have to any criminal

prosecution or administrative action relating to the Covered Conduct that may be based in whole

or in part on a contention that under the Double Jeopardy Clause in the Fifth Amendment of the

Constitution, or under the Excessive Fines Clause in the Eighth Amendment of the Constitution,

this Agreement bars a remedy sought in such criminal prosecution or administrative action.

Nothing in this paragraph or any other provision of this Agreement constitutes an agreement by

the United States concerning the characterization of the Settlement Amount for purposes of the

Internal Revenue laws, Title 26 of the United States Code.

8. GSK fully and finally releases the United States, its agencies, employees,

servants, and agents from any claims (including attorneys' fees, costs, and expenses of every

kind and however denominated) which GSK has asserted, could have asserted, or may assert in

the future against the United States, its agencies, employees, servants, and agents, related to the

Covered Conduct or arising from the United States' investigation, settlement of this matter, and

prosecution of the Criminal Action.

9. The Settlement Amount shall not be decreased as a result of the denial of claims

for payment now being withheld from payment by any Medicare carrier or intermediary or any

state payer, related to the Covered Conduct; and GSK agrees not to resubmit to any Medicare

carrier or intermediary or any state payer any previously denied claims related to the Covered

Conduct, and agrees not to appeal any such denials of claims.

I 0. GSK agrees to the following:

II

(a) Unallowable Costs Defined: that all costs (as defined in the Federal

Acquisition Regulations (FAR) 48 C.F.R. § 31.205-47 and in Titles XVIII and XIX of the Social

Security Act, 42 U.S. C.§§ 1395-1395kkk and 1396-1396w-5, and the regulations and official

program directives promulgated thereunder) incurred by or on behalf of GSK, its present or

former officers, directors, employees, shareholders, and agents in connection with the following

shall be "Unallowable Costs" on goverrnnent contracts and under the Government Health Care

Programs:

( 1) the matters covered by this Agreement and the related Plea Agreement;

(2) the United States' audit and civil and criminal investigation of the matters

covered by this Agreement;

(3) GSK's investigation, defense, and any corrective actions undertaken in

response to the United States' audit and civil and criminal investigation in

connection with the matters covered by this Agreement (including

attorneys' fees);

( 4) the negotiation and performance of this Agreement, the Plea Agreement,

and the Medicaid State Settlement Agreements;

(5) the payments GSK makes to the United States or any State pursuant to this

Agreement, the Plea Agreement, or the Medicaid State Settlement

Agreements;

(6) the negotiation of, and obligations undertaken pursuant to the CIA to:

(i) retain an independent organization to perform annual reviews as

described in Section Ill of the CIA; and (ii) prepare and submit reports to

12

OIG-HHS. However, nothing in this paragraph 10.a.(6) that may apply to

the obligations undertaken pursuant to the CIA affects the status of costs

that are not allowable based on any other authority applicable to GSK.

(b) Future Treatment of Unallowable Costs: These Unallowable Costs shall

be separately determined and accounted for by GSK, and GSK shall not charge such

Unallowable Costs directly or indirectly to any contracts with the United States or any State

Medicaid Program, or seek payment for such Unallowable Costs through any cost report, cost

statement, information statement, or payment request submitted by GSK or any of its

subsidiaries or affiliates to the Medicare, Medicaid, TRICARE, or FEHBP Programs.

(c) Treatment of Unallowable Costs Previously Submitted for Payment: GSK

further agrees that within 90 days of the Effective Date of this Agreement, it shall identify to

applicable Medicare and TRICARE fiscal intermediaries, carriers, and/or contractors, and

Medicaid, and FEHBP fiscal agents, any Unallowable Costs (as defined in this Paragraph)

included in payments previously sought from the United States, or any State Medicaid Program,

including, but not limited to, payments sought in any cost reports, cost statements, information

reports, or payment requests already submitted by GSK or any of its subsidiaries or affiliates,

and shall request, and agree, that such cost reports, cost statements, information reports, or

payment requests, even if already settled, be adjusted to account for the effect of the inclusion of

the Unallowable Costs. GSK agrees that the United States, at a minimum, shall be entitled to

recoup from GSK any overpayment plus applicable interest and penalties as a result of the

inclusion of such Unallowable Costs on previously-submitted cost reports, information reports,

cost statements, or requests for payment.

13

Any payments due after the adjustments have been made shall be paid to the United

States pursuant to the direction of the Department of Justice, and/or the affected agencies. The

United States reserves its rights to disagree with any calculations submitted by GSK or any of its

subsidiaries or affiliates on the effect of inclusion of Unallowable Costs (as defined in this

Paragraph) on GSK's or any of its subsidiaries' or affiliates' cost reports, cost statements, or

information reports.

(d) Nothing in this Agreement shall constitute a waiver of the rights of the

United States to examine or reexamine GSK's books and records to determine that no

Unallowable Costs have been claimed in accordance with the provisions of this Paragraph.

II. This Agreement is intended to be for the benefit of the Parties only. The Parties

do not release any claims against any other person or entity, except to the extent provided for in

Paragraph 2 above or 12 below (waiver for beneficiaries paragraph).

12. GSK agrees that it waives and shall not seek payment for any of the health care

billings covered by this Agreement from any health care beneficiaries or their parents, sponsors,

legally responsible individuals, or third party payors based upon the claims defined as Covered

Conduct.

13. GSK expressly warrants that it has reviewed its financial situation and that it is

currently solvent within the meaning of II U.S.C. §§ 547(b)(3) and 548(a)(l)(B)(ii)(I), and will

remain solvent following payment of the Settlement Amount. Further, the Parties warrant that,

in evaluating whether to execute this Agreement, they (a) have intended that the mutual

promises, covenants and obligations set forth herein constitute a contemporaneous exchange for

new value given to GSK, within the meaning of II U.S. C. § 547(c)(l); and (b) conclude that

14

these mutual promises, covenants and obligations do, in fact, constitute such a contemporaneous

exchange. Further, the Parties warrant that the mutual promises, covenants, and obligations set

forth herein are intended to and do, in fact, represent a reasonably equivalent exchange of value

that is not intended to hinder, delay, or defraud any entity to which GSK was or became indebted

to on or after the date of this transfer, within the meaning of II U.S.C.§ 548(a)(1).

14. Each party shall bear its own legal and other costs incurred in connection with

this matter, including the preparation and performance of this Agreement.

15. The Parties each represent that this Agreement is freely and voluntarily entered

into without any degree of duress or compulsion.

16. This Agreement is governed by the laws of the United States. The Parties agree

that the exclusive jurisdiction and venue for any dispute arising between and among the Parties

under this Agreement shall be the United States District Court for the District of Massachusetts,

except that disputes arising under the CIA shall be resolved exclusively under the dispute

resolution provisions in the CIA.

17. For purposes of construction, this Agreement shall be deemed to have been

drafted by all Parties to this Agreement and shall not, therefore, be construed against any party

for that reason in any dispute.

18. This Agreement constitutes the complete agreement between the Parties with

respect to the issues covered by the Agreement. This Agreement may not be amended except by

written consent of all the Parties.

19. The individuals signing this Agreement on behalf of GSK represent and warrant

that they are authorized by GSK to execute this Agreement. The United States' signatories

15

represent that they are signing this Agreement in their official capacities and they are authorized

to execute this Agreement.

20. This Agreement may be executed in counterparts, each of which constitutes an

original and all of which shall constitute one and the same Agreement.

21. This Agreement is binding on GSK's successors, transferees, heirs and assigns.

22. All parties consent to the disclosure of this Agreement, and information about this

Agreement, to the public after the Effective Date.

23. This Agreement is effective on the date of signature of the last signatory to the

Agreement (Effective Date of this Agreement). Facsimiles or electronic versions of signatures

shall constitute acceptable, binding signatures for purposes of this Agreement.

By:

UNITED STATES OF AMERICA

CARMEN M. ORTIZ United States Attorney

~~~ ~1/-&0 SUSAN G. WINKLER SHANNON T. KELLEY BRIAN PEREZ-DAPLE Assistant United States Attorneys District of Massachusetts

Dated:

16

STUART F. DELERY Acting Assistant Attorney General

By: ID ·fu~~Jr-JOYCE R. BRANDA JAMIE ANN YA VELBERG CHARLES J. BIRO NATALIE A. PRIDDY Attorneys

By:

Co=ercial Litigation Branch, Civil Division United States Department of Justice

Dated: 7/ t( to I 'Z.

JILL FURMAN MARK L. JOSEPHS TIMOTHY T. FINLEY Attorneys Consumer Protection Branch, Civil Division United States Department of Justice

Dated:

17

By:

STUART F. DELERY Acting Assistant Attorney General

JOYCE R. BRANDA JAMIE ANN YAVELBERG CHARLES J. BJRO NATALIE A. PRIDDY Attorneys Commercial Litigation Branch, Civil Division United States Department of Justice

Dated:

By: ~Wv-z:t ~URMAN MARK L. JOSEPHS TIMOTHY T. FINLEY Attorneys Consumer Protection Branch, Civil Division United States Department of Justice

Dated: 7 (2 /ze.r 2._

17

By:

Chief Counsel to the Inspector General Office of Inspector General U.S. Department of Health and Human Services

Dated: G. i

18

By: PAUL J. H ."[IE General Counse TRICARE Management Activity United States Depmtmcnt of Defense

Dated: (p j;2c/ 1....--

Settlement- US/GSK (Avandia)

By:

By:

Assistant Director for Federal Employee Insurance Operations United States Office of Pers~mnel Management

Dated: (./.:J¥ 2..

.J. Oac.aA (~ hy ~~ - -i"DAVID COPE -/,.._~ ~y C. t.v-:,ff::-,. Debarring Official · C" <A f .f-., f--.._ "F.~~ .fv Office of the Assistant Inspector Ge'h'tra! for Legal AfTaYrs""" United States Office of Personnel Management

Dated: t;/2 (; j 1 2_

20

By:

GLAXOSMITHKLINE LLC

ELP!DIO VILLARREAL Senior Vice President, Global Litigation GlaxoSrnithKI inc LLC

. I , J/1 (} . By: . -:..iLU<J..~ I /1' '/JuMML

NINA M. GUSSACK/ SEANP.FAHEY

By:

Pepper Hamilton LLP 3000 Two Logan Square 1811

' & Arch Streets Philadelphia, PA 19103-2799 (215) 981-4000 Counsel to GlaxoSmithK!ine LLC

MATTHEW O'CONNOR Covington & Burling LLP 120 I Pennsylvania Avenue, N. W. Washington, D.C. 20004-2401 (202) 662-6000 Counsel to GlaxoSmithKline LLC

21

Dated: {~ 2 8 - ( 'L

Dated (;; · /-'(, / 2_./

Dated:

SETTLEMENT AGREEMENT

This Settlement Agreement ("Agreement") is entered into among the United States of

America, acting through the United States Department of Justice and on behalf of the Office of

Inspector General of the United States Department of Health and Human Services ("OIG-HHS")

(collectively the "United States"), and GlaxoSmithKline LLC ("GSK" or "the company"),

through their authorized representatives. Collectively, all of the above will be referred to as "the

Parties."

RECITALS

A. GlaxoSmithKline LLC is a Delaware Limited Liability Company and an indirect

subsidiary of GlaxoSmithKline pic, a public limited company incorporated under English law

with headquarters in Brentford, England. At all relevant times, GSK and/or its predecessors,

including Glaxo, Inc. ("Glaxo"), Glaxo Wellcome, Inc. ("GW"), and SmithKline Beecham

Corporation ("SKB") (all of which are incorporated within the above term "GSK") had business

operations in Philadelphia, Pennsylvania, and Research Triangle Park, North Carolina. In 2000,

GW and SKB merged to form SmithKline Beecham Corporation d/b/a GlaxoSmithKline (now

known as GlaxoSmithKline LLC).

B. At all relevant times, GSK manufactured, distributed, and sold pharmaceutical

products in the United States.

C. At all relevant times, GSK participated in the Medicaid Drug Rebate Program, 42

U.S.C. § 1396r-8, which is part of the federal Medicaid Program, Title XIX ofthe Social

Security Act, 42 U.S.C. §§ 1396-1396v. Pursuant to the Medicaid Drug Rebate Program, GSK

entered into national rebate agreements with HHS, and GSK's covered outpatient drugs were

covered by state Medicaid plans that provided medical assistance for prescription drugs. Under

the Medicaid Drug Rebate Program and the rebate agreements with HHS, GSK agreed: (i) to

report quarterly to the Health Care Financing Administration, currently known as, and

hereinafter referred to as, the Centers for Medicare and Medicaid Services ("CMS"), the

Average Manufacturer Price ("AMP") for all its covered outpatient drugs and Best Price for its

single-source and innovator multiple-source covered outpatient drugs, as defined by 42 U.S.C.

§§ 1396r-8(k)(l) and 1396r-8(c)(l)(C); and (ii) to pay quarterly rebates to the states. For single­

source and innovator multiple source covered outpatient drugs, the quarterly rebates are based on

the product of (a) the units of each dosage form and strength paid for under the State Medicaid

plan during the rebate period as reported by the state, and (b) the greater of the difference

between the AMP and the Best Price, or a minimum rebate percentage of AMP, as further

described in 42 U.S.C. § 1396r-8(c)(l).

D. Under 42 U.S.C. § 1396r-8(c)(l)(C)(ii), the term "Best Price": (I) shall be

inclusive of cash discounts, free goods that are contingent on any purchase requirement, volume

discounts, and rebates (other than rebates under this section); (II) shall be determined without

regard to special packaging, labeling, or identifiers on the dosage form or product or package;

and (III) shall not take into account prices that are "merely nominal in amount." Under the

rebate agreement, the best price for a quarter shall be adjusted by the manufacturer if cumulative

discounts, rebates or other arrangements subsequently adjust the prices actually realized.

E. Under the rebate agreement, a "nominal price" is, for purposes of excluding

prices from the Best Price calculation, any price less than 1 0% of the AMP in the same quarter

for which the AMP is computed.

F. Under the rebate agreement, a "bundled sale" refers to the packaging of drugs of

different types where the condition of rebate or discount is that more than one drug type is

2

purchased, or where the resulting discount or rebate is greater than that which would have been

received had the drug products been purchased separately. For bundled sales, the allocation of

the discount is made proportionately to the dollar value of the units of each drug sold under the

bundled arrangement.

G. The 1996 Medicaid Drug Rebate Operational Training Guide states that "[t]he

key to identifying a bundled sale is that the sale is contingent on the purchase of another

product" and that "Bundled Sales will affect the AMP and BP calculations. The value of the

discounted or free product should be proportionately distributed among the other products in the

bundle."

H. The 200 I Medicaid Drug Rebate Operational Training Guide states that "[ t ]he

key to identifying a bundled sale is that the sale is contingent upon an additional purchase

requirement(s) of the retail purchaser (e.g. pharmacies, beneficiaries, etc.)" and that "Bundled

Sales will affect the AMP and BP calculations. The discounted or contingent drug product's

value is proportionately distributed among the other drug products in the bundle."

I. At all relevant times, GSK participated in the Drug Pricing Program, 42 U.S. C.

§ 256b, which is part of the Public Health Service ("PHS") Act, 42 U.S.C. §§ 201-300gg-92.

Pursuant to the Drug Pricing Program, GSK entered into agreements with HHS in connection

with the pricing of its drug products sold to entities such as AIDS drug purchasing assistance

programs, community health centers, and disproportionate share hospitals, as defined in 42

U.S.C. § 256b(a) (the "PHS entities"). Under the Drug Pricing Program, GSK agreed that the

amount the PHS entities would pay for their drug products would not exceed certain limits

derived in part from the AMPs and Best Prices reported by GSK to CMS for such drugs in the

previous calendar quarter, as further described in 42 U.S.C. § 256b(a).

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J. The United States contends that it has certain civil claims against GSK, as

specified in Paragraph 2 of the Terms and Conditions section below, arising from the following

conduct during the time period from January 1, 1994, to December 31,2003 (hereinafter referred

to as the "Covered Conduct"):

1. The United States contends that GSK entered into contracts with hospitals,

universities, group purchasing organizations, managed care organizations, and other customers,

pursuant to which the customers received discounts and/or rebates on one or more GSK drugs

that appeared, on their face, to yield a purportedly nominal price, i.e., a price ofless than 10% of

the AMP for a drug, but which were contingent on the customer agreeing to meet one or more of

the following requirements for a drug with a different National Drug Code number: (a) pmchase

all of its requirements of a certain drug type or class of drug from GSK rather than from other

drug manufacturers, (b) pmchase a minimum quantity of a certain GSK product or products, (c)

maintain or achieve a minimum market share of a certain GSK product or products within a

therapeutic class of drugs, (d) place and/or keep a certain GSK product or products on formulary

and/or unrestricted in its institutions or systems, or (e) make a certain GSK product or products

the exclusive or preferred drug on a formulary within a particular therapeutic or multi-source

class of products available in its institutions or systems.

More specifically, GSK generally referred to such contracts as "committed

contracts" or "portfolio contracts." A 1991 internal GSK training document explained that, "[i]n

a committed contract (sometimes referred to as a bundle), pricing is contingent on all terms of

the contract. The purpose of a committed contract is to establish an agreement that an account

will use multiple [GSK] products and/or use exclusively [GSK] brands of [certain drug

products]. Further, the commitment may require the unrestricted availability of all forms of

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[another drug product]. In return, the account receives better pricing level and/or rebates."

Another internal GSK document explained: "Portfolio adds value [by] pulling weaker products

on formulary that would otherwise have been excluded (achieved by increasing discounts on

stronger (levered) products) ... [and] minimizing discounts on a key product by giving

concessions on less important products."

The United States contends that, like other deep discounts, purportedly nominal

pricing on certain products included in these portfolio contracts was regarded by GSK as an

investment and a tool to guarantee contract compliance, consistent with the company's overall

portfolio approach to contracting.

11. The United States further contends that the GSK contracts described in paragraph

(i) above are "bundled sales" under the rebate agreements between GSK and HHS. As such, the

discounts and/or rebates on the drugs sold under those contracts should have been reallocated

among all drugs in the bundled sales, including those drugs sold at a price ofless than I 0% of

AMP, as required by the rebate agreements, in calculating and reporting to CMS quarterly AMP

and Best Price figures for the drugs, and that GSK did not reallocate those discounts and/or

rebates.

111. The United States further contends that if GSK had reallocated the discounts

and/or rebates as required under its rebate agreements, the effective prices on the purportedly

nominal-priced drugs in the bundled sales would, in some cases, have exceeded l 0% of AMP

and resulted in reportable Best Prices that were lower than the Best Prices GSK reported to CMS

for such drugs. Further, those reallocations would have lowered the effective prices for certain

other drugs included in the alleged bundled sales and would, in some cases, have resulted in

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reportable Best Prices for one or more of those other drugs that were lower than the Best Prices

GSK reported to HHS for those drugs.

JV. The United States further contends that in failing to reallocate discounts and/or

rebates in bnndled sales that included purportedly nominal-priced drugs, GSK knowingly

reported false Best Prices to HHS and underpaid quarterly rebates to the states under the

Medicaid Drug Rebate Program, and knowingly overcharged the PHS entities under the Drug

Pricing Program. Such underpayment of quarterly rebates to the states caused the United States

to be overcharged for its quarterly contributions to the states for the Medicaid Program.

v. In some instances, GSK treated certain prices as nominal when, in fact, those

prices were contingent on other requirements and the United States contends they did not qualify

as nominal prices within the meaning of the rebate agreements. The United States contends that

if GSK had factored certain of the contingencies into the transactions and not treated those

transactions as nominal, GSK would have reported Best Prices that were lower than those that

they reported to HHS for such drugs. As a result, GSK knowingly reported false Best Prices to

HHS and underpaid quarterly rebates to the states under the Medicaid Drug Rebate Program, and

knowingly overcharged the PHS entities nnder the Drug Pricing Program. Such nnderpayment

of quarterly rebates to the states caused the United States to be overcharged for its quarterly

contributions to the states for the Medicaid Program.

K. The United States contends that, as a result of the Covered Conduct, GSK

knowingly made or caused to be made false claims or made or caused to be made false

statements material to false claims and/or obligations relating to the payment of rebates to the

Medicaid Program, Title XIX of the Social Security Act, 42 U.S.C. §§ l396-l396v, and thereby

also inflated the prices paid for certain drugs under the Drug Pricing Program, which is part of

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the PHS Act, 42 U.S.C. § 201-300gg-92.

L. The United States also contends that it has certain administrative claims against

GSK as specified in Paragraph 3 below, for engaging in the Covered Conduct.

M. GSK will be entering into separate settlement agreements, described in Paragraph

l.b below (hereinafter referred to as the "Medicaid State Settlement Agreements") with certain

states and the District of Columbia in settlement of the Covered Conduct. States with which

GSK executes a Medicaid State Settlement Agreement in the form to which GSK and the

National Association of Medicaid Fraud Control Units ("NAMFCU") have agreed, or in a form

otherwise agreed to by GSK and an individual state, are referred to herein as "Medicaid

Participating States."

N. On such date as may be determined by the Court, GSK will enter a plea of guilty

pursuant to Fed. R. Crim. P. ll(c)(l)(c) (the "Plea Agreement") to an Information to be filed in

United States of America v. GlaxoSmithKline LLC, Criminal Action No. [to be assigned]

(District of Massachusetts) (the "Criminal Action") that will allege: (i) violations of Title 21,

United States Code, Sections 33l(a), 333(a)(l) and 352, namely, the introduction into interstate

commerce of the misbranded drugs Wellbutrin and Paxil, and (ii) a violation of Title 21, United

States Code, Sections 33l(e), 333(a)(l), and 355(k)(l), namely, that GSK failed to report data

relating to clinical experience, along with other data and information, regarding Avandia to the

Food and Drug Administration ("FDA") in mandatory reports, in violation of the Food, Drug and

Cosmetic Act ("FDCA").

0. This Agreement is made in compromise of disputed claims. This Agreement is

neither an admission of liability by GSK nor a concession by the United States that its claims are

not well founded. GSK expressly denies the allegations ofthe United States as set forth herein,

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and denies that it has engaged in any wrongful conduct in connection with the Covered Conduct.

GSK further states that, neither this settlement, its execution, nor the performance of any

obligation under it, including any payment, nor the fact of the settlement, is intended to be, or

should be understood as, an admission of any fact or of any liability or wrongdoing, or other

expression reflecting on the merits of the dispute by GSK.

To avoid the delay, uncertainty, inconvenience, and expense of protracted litigation of

the above claims, and in consideration of the mutual promises and obligations ofthis Agreement,

the Parties reach a full and final settlement pursuant to the terms and conditions below:

TERMS AND CONDITIONS

I. GSK shall pay to the United States, the Medicaid Participating States, and the

PHS entities, collectively, the sum of Three Hundred Million Dollars ($300,000,000) plus

interest accrued thereon at a rate of 1.625% per annum from December I, 2011, to and including

the day before payment is made under this Agreement (the "Settlement Amount"). The

Settlement Amount shall constitute a debt immediately due and owing to the United States, the

Medicaid Participating States, and the PHS entities on the Effective Date of this Agreement.

The debt shall be discharged by payments to the United States, the Medicaid Participating States,

and the PHS entities as follows:

a. GSK shall pay to the United States the sum of $160,972,069 plus interest

accrued thereon at a rate of 1.625% per annum from December I, 2011, to and including the day

before payment is made under this Agreement (the "Federal Settlement Amount"). The Federal

Settlement Amount shall be paid by electronic funds transfer pursuant to written instructions to

be provided by the United States. GSK shall make this electronic funds transfer no later than

seven (7) business days after: (i) the Effective Date of this Agreement or (ii) the Court accepts a

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Fed. R. Crim. P. ll(c)(l)(c) guilty plea as described in Preamble Paragraph N in connection with

the Criminal Action and imposes the agreed upon sentence, whichever occurs later.

b. GSK shall pay to the Medicaid Participating States the sum of

$118,792,931 plus interest accrued thereon at a rate of 1.625% per annum from December 1,

2011, to and including the day before payment is made under this Agreement (the "State

Settlement Amount"). The State Settlement Amount shall be paid by electronic funds transfer to

an interest bearing account in accordance with the written instructions from the NAMFCU

negotiating team pursuant to the terms and conditions agreed upon by GSK and the NAMFCU

negotiating team and as set forth in the Medicaid State Settlement Agreements that GSK will

enter into with the Medicaid Participating States.

c. GSK and the United States agree that GSK. shall pay the sum of

$20,235,000 plus interest accrued thereon at a rate of 1.625% per mmum from December 1,

2011, to and including the day before payment is made under this Agreement, as the PHS share

(the "PHS Amount") of the Settlement Amount. GSK. shall transfer the PHS Amount into a

segregated, interest-bearing bank account (the "PHS Account") no later than seven (7) business

days after: (i) the Effective Date of this Agreement or (ii) the Court accepts a Fed. R. Crim. P.

ll(c)(l)(c) guilty plea as described in Preamble Paragraph N in connection with the Criminal

Action and imposes the agreed upon sentence, whichever occurs later. Pursuant to the process

agreed to by the Parties in a separate letter, GSK. will use its best efforts to identify affected PHS

entities and the amounts they were overcharged as a result of the Covered Conduct. GSK. shall

disburse funds from the PHS Account pursuant to the terms set forth in the aforementioned

letter.

d. If GSK's agreed-upon guilty plea pursuant to Fed. R. Crim. P. ll(c)(l)(c)

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in the Criminal Action described in Preamble Paragraph N is not accepted by the Court or the

Court does not impose the agreed-upon sentence for whatever reason, this Agreement shall be

null and void at the option of either the United States or GSK. If either the United States or GSK

exercises this option, which option shall be exercised by notifying all Parties, through counsel, in

writing within five (5) business days of the Court's decision, the Parties will not object and this

Agreement will be rescinded. If this Agreement is rescinded, GSK will not plead, argue or

otherwise raise any defenses under the theories of statute of limitations, laches, estoppel or

similar theories, to any civil or administrative claims, actions or proceedings arising from the

Covered Conduct that are brought by the United States within 90 calendar days of rescission,

unless such defenses were available to GSK prior to May 19, 2004.

2. Subject to the exceptions in Paragraph 4 (concerning excluded claims) below, in

consideration of the obligations ofGSK in this Agreement, and conditioned upon GSK's full

payment of the Settlement Amount, the United States releases GSK, together with its

predecessors, current and former parents, divisions, subsidiaries, successors, transferees, heirs,

and assigns, and their current and former directors, officers and employees, individually and

collectively, from any civil or administrative monetary claim the United States has or may have

for the Covered Conduct under the False Claims Act, 31 U.S.C. §§ 3729-3733; the Civil

Monetary Penalties Law, 42 U.S. C. §§ l320a-7a; the Program Fraud Civil Remedies Act, 31

U.S. C.§§ 3801-3812; the Medicaid Rebate Statute, 42 U.S.C. § l396r-8; the Drug Pricing

Program, 42 U.S.C. § 256b; any statutory provision applicable to the federally funded programs

in this Agreement creating a cause of action for civil damages or civil penalties for which the

Civil Division of the Department of Justice has actual and present authority to assert and

compromise pursuant to 28 C.F.R., Part 0, Subpart I,§ 0.45(d); and the common law theories of

10

payment by mistake, fraud, disgorgement, and unjust enrichment.

3. In consideration of the obligations of GSK in this Agreement and the Corporate

Integrity Agreement (CIA) entered into between OIG-HHS and GSK, and conditioned upon

GSK's full payment of the Settlement Amount, the OIG-HHS agrees to release and refrain from

instituting, directing, or maintaining any administrative action seeking exclusion from Medicare,

Medicaid, and other Federal health care programs (as defined in 42 U.S.C. § l320a-7b(f))

against GSK under 42 U.S. C. § l320a-7a (Civil Monetary Penalties Law) or 42 U.S.C. § 1320a-

7(b)(7) (permissive exclusion for fraud, kickbacks, and other prohibited activities) for the

Covered Conduct, except as reserved in Paragraph 4 (concerning excluded claims), below, and

as reserved in this Paragraph. The OIG-HHS expressly reserves all rights to comply with any

statutory obligations to exclude GSK from Medicare, Medicaid, and other Federal health care

programs under 42 U.S.C. § 1320a-7(a) (mandatory exclusion) based upon the Covered

Conduct. Nothing in this Paragraph precludes the OIG-HHS from taking action against entities

or persons, or for conduct and practices, for which claims have been reserved in Paragraph 4,

below.

4. Notwithstanding any term of this Agreement, the following claims of the United

States are specifically reserved and are not released:

a. Any civil, criminal, or administrative liability arising under Title 26, U.S.

Code (Internal Revenue Code);

b. Any criminal liability;

c. Except as explicitly stated in this Agreement, any administrative liability,

including mandatory exclusion from Federal health care programs;

d. Any liability to the United States (or its agencies) for any conduct other

II

than the Covered Conduct;

e. Any liability based upon obligations created by this Agreement;

f. Any liability for express or implied warranty claims or other claims for

defective or deficient products or services, including quality of goods and

services;

g. Any liability for failure to deliver goods or services due;

h. Any liability for personal injury or property damage or for other

consequential damages arising from the Covered Conduct; or

1. Any liability of individuals (including current or former directors, officers,

employees, or agents of GSK) who receive written notification that they

are the target of a criminal investigation, are criminally indicted or

charged, or are convicted, or who enter into a criminal plea agreement

related to the Covered Conduct.

5. GSK waives and shall not assert any defenses GSK may have to any criminal

prosecution or administrative action relating to the Covered Conduct that may be based in whole

or in part on a contention that, under the Double Jeopardy Clause in the Fifth Amendment of the

Constitution, or under the Excessive Fines Clause in the Eighth Amendment of the Constitution,

this Agreement bars a remedy sought in such criminal prosecution or administrative action.

Nothing in this paragraph or any other provision of this Agreement constitutes an agreement by

the United States conceming the characterization of the Settlement Amount for purposes of the

Internal Revenue laws, Title 26 of the United States Code.

6. GSK fully and finally releases the United States, its agencies, officers, agents,

employees, and servants, from any claims (including attorney's fees, costs, and expenses of

12

every kind and however denominated) that GSK has asserted, could have asserted, or may assert

in the future against the United States, and its agencies, employees, servants, and agents, related

to the Covered Conduct and the United States' investigation and prosecution thereof.

7. The Settlement Amount shall not be decreased as a result of the denial of claims

for payment now being withheld from payment by any federal or state payer related to the

Covered Conduct; and GSK agrees not to resubmit to any federal or state payer any previously

denied claims related to the Covered Conduct, and agrees not to appeal, or cause the appeal of,

any such denials of claims.

8. GSK agrees to the following:

a. Unallowable Costs Defined: All costs (as defined in the Federal Acquisition

Regulation, 48 C.F.R. § 31.205-47; and in Titles XVIII and XIX of the Social Security Act,

42 U.S.C. §§ 1395-1395kld(-l and 1396-l396w-5; and the regulations and official program

directives promulgated thereunder) incurred by or on behalf of GSK, its present or former

officers, directors, employees, shareholders, and agents in cmmection with:

( 1) the matters covered by this Agreement;

(2) the United States' audit(s) and civil investigation(s) of the matters covered

by this Agreement;

(3) GSK's investigation, defense, and corrective actions undertaken in

response to the United States' audit(s) and civil investigation(s) in

connection with the matters covered by this Agreement (including

attorney's fees);

( 4) the negotiation and performance of this Agreement or the Medicaid State

Settlement Agreements;

13

(5) the payments GSK makes to the United States or any State pursuant to this

Agreement or the Medicaid State Settlement Agreements; and

(6) the negotiation of, and obligations undertaken pursuant to the CIA to: (i)

retain an independent organization to perform annual reviews as described

in Section III of the CIA; and (ii) prepare and submit reports to OIG-HHS.

However, nothing in this paragraph 8.a.(6) that may apply to the

obligations undertaken pursuant to the CIA affects the status of costs that

are not allowable based on any other authority applicable to GSK;

are unallowable costs for government contracting purposes and under the Medicare Program,

Medicaid Program, TRICARE Program, and Federal Employees Health Benefits Program

(FEHBP) (hereinafter referred to as Unallowable Costs).

b. Future Treatment of Unallowable Costs: Unallowable Costs shall be separately

determined and accounted for by GSK, and GSK shall not charge such Unallowable Costs

directly or indirectly to any contracts with the United States or any State Medicaid program, or

seek payment for such Unallowable Costs through any cost report, cost statement, information

statement, or payment request submitted by GSK or any of its subsidiaries or affiliates to the

Medicare, Medicaid, TRICARE, or FEHBP Programs.

c. Treatment of Unallowable Costs Previously Submitted for Payment: GSK further

agrees that within 90 days of the Effective Date of this Agreement it shall identity to applicable

Medicare and TRICARE fiscal intermediaries, carriers, and/or contractors, and Medicaid and

FEHBP fiscal agents, any Unallowable Costs (as defined in this Paragraph) included in payments

previously sought from the United States, or any State Medicaid program, including, but not

limited to, payments sought in any cost reports, cost statements, information reports, or payment

14

requests already submitted by GSK or any of its subsidiaries or affiliates, and shall request, and

agree, that such cost reports, cost statements, information reports, or payment requests, even if

already settled, be adjusted to account for the effect of the inclusion ofthe unallowable costs.

GSK agrees that the United States, at a minimum, shall be entitled to recoup from GSK any

overpayment plus applicable interest and penalties as a result of the inclusion of such

Unallowable Costs on previously-submitted cost reports, information reports, cost statements, or

requests for payment.

Any payments due after the adjustments have been made shall be paid to the United

States pursuant to the direction of the Department of Justice and/or the affected agencies. The

United States reserves its rights to disagree with any calculations submitted by GSK or any of its

subsidiaries or affiliates on the effect of inclusion of Unallowable Costs (as defined in this

Paragraph) on GSK or any of its subsidiaries or affiliates' cost reports, cost statements, or

information reports.

d. Nothing in this Agreement shall constitute a waiver of the rights of the United

States to audit, examine, or re-examine GSK' s books and records to determine that no

Unallowable Costs have been claimed in accordance with the provisions of this Paragraph.

9. This Agreement is intended to be for the benefit of the Parties only. The Parties

do not release any claims against any other person or entity, except to the extent provided for in

Paragraph 2 above and Paragraph 10 below.

I 0. GSK agrees that it waives and shall not seek payment for any of the health care

billings covered by this Agreement from any health care beneficiaries or their parents, sponsors,

legally responsible individuals, or third party payors based upon the claims defined as Covered

Conduct.

15

11. GlaxoSmithKline LLC expressly warrants that it has reviewed its financial

situation and that it is currently solvent within the meaning of 11 U.S.C. §§ 547(b)(3) and

548(a)(l)(B)(ii)(I), and will remain solvent following payment of the Settlement Amount.

Further, the Parties warrant that, in evaluating whether to execute this Agreement, they (a) have

intended that the mutual promises, covenants and obligations set forth herein constitute a

contemporaneous exchange for new value given to GlaxoSmithKline LLC, within the meaning

of 11 U.S.C. § 547(c)(l); and (b) conclude that these mutual promises, covenants and obligations

do, in fact, constitute such a contemporaneous exchange. Further, the Parties, to the best of their

respective lmowledge individually, warrant that the mutual promises, covenants, and obligations

set forth herein are intended to and do, in fact, represent a reasonably equivalent exchange of

value that is not intended to hinder, delay, or defraud any entity to which GlaxoSmithKline LLC

was or became indebted to on or after the date of this transfer, within the meaning of 11 U.S.C.

§ 548(a)(l).

12. Each Party shall bear its own legal and other costs incurred in connection with

this matter, including the preparation and performance of this Agreement.

13. GSK represents that it freely and voluntarily enters into this Agreement without

any degree of duress or compulsion.

14. This Agreement is governed by the laws of the United States. The exclusive

jurisdiction and venue for any dispute relating to this Agreement is the United States District

Court for the District of Massachusetts, except that disputes arising under the CIA shall be

resolved exclusively under the dispute resolution provisions in the CIA.

15. For purposes of construing this Agreement, this Agreement shall be deemed to

have been drafted by all Parties to this Agreement and shall not, therefore, be construed against

16

any Party for that reason in any subsequent dispute.

16. This Agreement constitutes the complete agreement between the Parties. This

Agreement may not be amended except by written consent of the Parties.

17. The individuals signing this Agreement on behalf of GSK represent and warrant

that they are authorized by GSK to execute this Agreement. The United States' signatories

represent that they are signing this Agreement in their official capacities and they are authorized

to execute this Agreement.

18. This Agreement maybe executed in counterparts, each of which constitutes an

original and all of which constitute one and the same Agreement.

19. This Agreement is binding on GSK' s successors, transferees, heirs, and assigns.

20. GSK consents to the United States' disclosure of this Agreement, and information

about this Agreement, to the public.

17

21. This Agreement is effective on the date of signature of the last signatory to the

Agreement ("Effective Date of this Agreement"). Facsimiles of signatures shall constitute

acceptable, binding signatures for purposes of this Agreement.

DATED:

DATED:

THE UNITED STATES OF AMERICA

BY:

BY:

STUART F. DELERY ACTING ASSISTANT ATTORNEY GENERAL

JOYCE R. BRANDA JAMIE ANN Y A VELBERG JEFFREY A. TOLL LISA KATZ SAMUELS JENNIFER A. STALZER Attorneys Commercial Litigation Branch Civil Division United States Department of Justice

GREGORY E. DEMSKE Chief Counsel to the Inspector General Office of Inspector General United States Department of Health and Human Services

18

21. This Agreement is effective on the date of signature of the last signatory to the

Agreement ("Effective Date of this Agreement"). Facsimiles of signatures shall constitute

acceptable, binding signatures for purposes of this Agreement.

THE UNITED STATES OF AMERICA

DATED: "1/ '}..-[ t l.- BY:

DATED: __ _ BY:

STUART F. DELERY ACTING ASSISTANT ATTORNEY GENERAL

OYCE R..-o,~~JU, JAMIE YA VELBERG JEFFREY A. TOLL LISA KATZ SAMUELS JENNIFER A. STALZER Attorneys Commercial Litigation Branch Civil Division United States Department of Justice

GREGORY E. DEMSKE Chief Counsel to the Inspector General Office oflnspector General United States Department of Health and Human Services

18

21. This Agreement is effective on the date of signature of the last signatory to the

Agreement ("Effective Date of this Agreement"). Facsimiles of signatures shall constitute

acceptable, binding signatures for purposes of this Agreement.

DATED: ___ _

THE UNITED STATES OF AMERICA

BY:

STUART F. DELERY ACTJNG ASSISTANT ATTORNEY GENERAL

JOYCE R. BRANDA JAMIE ANN Y AVELBERG JEFFREY A. TOLL LISA KATZ SAMUELS JENNIFER A. STALZER Attorneys Commercial Litigation Branch Civil Division United States Department of Justice

BY: ~tJ~ ~.r GREC@RY EDE~) /Chief Counsel to the Inspector General

Office of Inspector General United States Department of Health and Human Services

18

GLAXOSMITHKLINE LLC

BY:

BY:

ELPIDIO VILLARREAL Senior Vice President Global Litigation GlaxoSmithKiine LLC

MARK D. SELTZER BRIAN K. FRENCH Nixon Peabody LLP Counsel for GlaxoSmithKiine LLC

TI~E~ -~._J_ <;:-Dechei1 LLP Counsel for GlaxoSmithKiine LLC

19

Assistant Attorney General

The Honorable Carmen Milagros Ortiz United States Attorney District of Massachusetts 1 Courthouse Way John Joseph Moakley Courthouse Boston, Massachusetts 02210

Attention: Susan Winkler

U.S. Department of Justice

Criminal Division

Washington, D.C. 20530

February 3, 2012

Assistant United States Attorney

Re: Global Side Letter Agreement with GlaxoSmithKline pic

Dear Ms. Ortiz:

This is in response to your request for authorization to enter into a Side Letter Agreement with GlaxoSmithKline plc.

I hereby approve the terms of the agreement, including Paragraph 1, in which the United States agrees not to initiate further criminal proceedings as set out therein.

Sincerely,

~Pez_·~ Mary Patrice Brown Deputy Assistant Attorney General Criminal Division

Main Reception: (617) 748-3100

By e-mail and fax 202-778-5281

Geoffrey Hobart, Esq. Covington & Burling 1210 Pennsylvania Avenue, NW Washington, DC 20004-3401

U.S. Department of Justice

United States Attorney District <!f Massachusetts

United Stales Courthouse. Suite 9200 I Courthouse Way Boston, Massachusetts 022/0

September 21, 20 II

Re: GlaxoSmithKiine LLC- Avandia CV: Tolling Agreement on Statute of Limitations

Dear Mr. Hobart:

This letter confirms and sets forth an agreement between the Office of the United States Attorney for the District of Massachusetts and your client, GlasoSmithKline LLC, and all successors and assigns (hereinafter "GSK"). The terms of the agreement arc as follows:

I. As you are aware, this Office is presently conducting a joint criminal and civil investigation of your client, GSK, and its of11cers, employees and agents. That conduct includes, without limitation, allegations that GSK and certain of its officers, employees and agents, may have violated various federal criminal statutes, including but not limited to 18 U .S.C. §3 71 (conspiracy to defraud the United States), 18 U.S.C. § I 00 I (making false or fraudulent statements), 21 U.S.C. § 301, et seq. (Food Drug & Cosmetic Act), health care fraud offenses (e.g. 18 U.S.C. §§ 669, 1347, and 1 035), certain civil statutes including but not limited to 31 U.S.C. § 3729 (civil False Claims Act); and certain administrative statutes such as 42 U.S.C. § 1320a-7 (exclusion) and 42 U.S.C. § 1320a-7a (civil monetary penalties) in connection with (a) suppression of negative information about the cardiovascular risk of A vandia, (b) statements that minimized the cardiovascular risks of A vandia to physicians, the FDA, and others, and/or (c) efforts to prevent full and fair information about the cardiovascular risks of Avandia reaching the public, physicians, the FDA, and/or others.

2. In the course of our discussions, this Office has expressed its intention to afford you and your client the fullest opportunity to provide information to this Office which you deem relevant to matters relating to that investigation. In response, you have advised us that you intend to provide certain information to this Office, and that you wish such information be

considered prior to a prosecution decision concerning potential criminal charges resulting from that investigation. You have advised this Office that you and members ofyou1· firm will require a further time period to prepare any materials and gather information for presentation to this Office, and to consider and evaluate further information as may be provided by this Office. As a result, this Office and your client have agreed, as more fully set forth below, to toll the applicable statutes of limitations for the offenses described in paragn1ph one for the time period May 1, 2010 through October 1, 2012 for that conduct described in paragraph one.

3. This Office and your client, GSK, hereby agree that your client will not at any time interpose a statute of limitations defense or any constitutional claim based upon pre· indictment delay to any indictment or count thereof, Ol' to any civil complaint or count thereof, or to any administrative action, which charges or alleges that yol!l" client committed any federal offense or violation related to the conduct described in paragraph one, that includes the time period May I, 2010 to October I, 2012 in the calculation of the limitations period. Nothing herein shall affect, or be construed as any waiver of, any applicable statute of limitations defenses that GSK may have with respect to the time period prior to and including May 1, 2010, and your client expressly reserves its right to raise any such defense, any provisions of this agreement notwithstanding, except to the extent that your client has waived certain statute of limitation defenses in any waiver agreement(s) with other United States Attorney's Offices or the Department of Justice, which agreement(s) remain in effect.

4. Your client, GSK, enters into this agreement knowingly and voluntarily. GSK acknowledges that the statute of limitations and United States Constitution regarding prejudicial pre·indictment delay confers benefits on it, and it is not required to waive those benefits, and that GSK is doing so after consulting with you because GSK believes it is in its best interest to do so. GSK also acknowledges its understanding that it may be charged with the foregoing criminal offenses and civil and administrative violations and/or any other offenses or violations at any time prior to and including October l, 2012. GSK further acknowledges its understanding that it may be charged with any offenses or violations not specifically described above, at any time during the relevant statute of limitations period.

5. This agreement relates only to the allegations described in Paragraph one above and any charges or claims based on those allegations. This writing contains the entire agreement between this Office and your client and can be modified or supplemented only by means of a writing signed by this Office and your client.

I I I I I I

If your client is willing to enter into this agreement on the terms set forth above, GSK should indicate the same by signing on the spaces provided below and by initialing each page of this agreement. Please return an executed original to the undersigned by October 1, 2011.

Very truly yours,

CARMEN M. ORTIZ United States Attorney

By: is/ Susan Winkler Susan G. Winkler Assistant U.S. Attorney

\ \

Dated: "'}~?--I~ If Name: t';j p·,.fre> V,/[ ov~·/ Position: s v? ~ 6loLo..( Lt'J" .fw,.. GlaxoSmithKiine LLC

. 12/1 14 A 1774 71

Main Receptif:m"· (61 i) 74lJ.:JJOO

By TELEF AX and Email 202· 778-5281

Geoffrey Hobart, Esq. Covington & Burling 1210 Pennsylvania Avenue, NW Washington, DC 20004-3401

U ATTORNV OFF C

U.S. Department of Justice

United States Attorney Dtstrtct of Massachusetts

United States Courthouse, Suite 9200 I CourthDIUI!I Way Basion, Massaclmse/ls 02 2 I 0

December 15, 2011

Re: QlaxoSmithKline: Tolling Agreement on Statute of Limitations

Dear Mr. Hobart:

itl001 00

This letter confirms and sets forth an agreement between the Office of the United States Attorney for the District of Massachusetts and your client, Smith.KlineBeecham Corporation d/b/a OlaxoSmithK.line, and all successors and assigns (hereinafter "GSK"). The terms of the agreement are as follows:

1. As you are aware1 this Office is presently conducting a joint criminal and civil investigation of your client, GSK, and its officers, employees and agents. That conduct includes, without limitation, allegations that GSK and certain of its officers, employees and agents, may have violated various federal criminal statutes, including but not limited to 18 U.S.C. §371 (conspiracy to defraud the United States), 42 U.S.C. §1320(a)-7(b) (criminal penalties for acts involving the Medicare and State health care programs), 18 U.S. C. § 1 001 (making false or fraudulent statements), 21 U.S.C. § 301, et seq. (Food Drug & Cosmetic Act)1 health care fraud offenses (e.g. 18 U.S.C. §§ 669, 1347, and 1035), certain civil statutes including but not limited to 31 U.S.C. § 3729 (civil False Claims Act); and certain administrative statutes such as 42 U.S.C. § 1320a·7 (exclusion) and 42 U.S.C. § 1320a-7a (civil monetary penalties) in connection with (a) GSK's distribution in interstate commerce of the Covered Drugs (as defmed in the HIPAA subpoena dated February 6, 2004) that were adulterated, misbranded and/or had not yet been approved for commercial distribution by the United States Food and Drug Administration ("FDA"); and (b) GSK's activities in connection with the distribution, sale, marketing~ approval, and promotion of the Covered Drugs, including its communications with the FDA about these subjects.

• 12/ / 011 14 0 FAX 81 74 8 1 U ATTORNYS OFF CE fiiD 00 0

In the course of our discussions, this Office has expressed its intention to afford you and your client the fullest opportunity to provide information to this Office which you deem relevant to matters relating to that investigation. In response, you have advised us that you intend to provide certain information to this Office, and that you wish such information be considered prior to a prosecution decision concerning potential criminal charges resulting from that investigation. You have advised this Office that you and members of your finn will require a further time period to prepare any materials and gather information for· presentation to this Office, and to consider and evaluate further information as may be provided by this Office. As a result, this Office and your client have agreed, as more fully set forth below, to toll the applicable statutes of limitations for the offenses described in paragraph one for the time period October 19, 2005 through September 15, 2012 for that conduct described in paragraph one.

3. This Office and your client, GSK, hereby agree that your client will not at any time jnterpose a statute of limitations defense or any constitutional claim based upon pre­indictment delay to any indictment or count thereof, or to any civil complaint or count thereof, or to any administrative action, which charges or alleges that your client committed any federal offense or violation related to the conduct described in paragraph one, that includes the time period October 19, 2005 to September 15, 2012 in the calculation of the limitations period. Nothing herein shall affect, or be construed as any waiver of, any applicable statute of limitations defenses that GSK may have with respect to the time period prior to and including October 19, 2005, and your client expressly reserves its right to raise any such defense, any provisions of this agreement notwithstanding, except to the extent that your client has waived certain statute of limitation defenses in any waiver agreement(s) with other United States Attomey1s Offices or the Department of Justice, which agreement(s) remain in effect.

4. Your client, GSK, enters into this agreement knowingly and voluntarily. GSK acknowledges that the statute of Hmitations and United States Constitution regarding prejudicial pre-indictment delay confers benefits on it, and it is not required to waive those benefits, and that GSK is doing so after consulting with you because GSK believes it is in its best interest to do so. GSK also acknowledges its understanding that it may be charged with the foregoing criminal offenses and civil and administrative violations and/or any other offenses or violations at any time prior to and including September 15, 2012. GSK further acknowledges its understanding that it may be charged with any offenses or violations not specifically described above, at any time during the relevant statute of limitations period.

5. This agreement relates only to the allegations described in paragraph one above and any charges or claims based on those allegations. This writing contains the entire agreement between this Office and your client concerning the statute of limitations with respect to these matters and can be modified or supplemented only by means of a writing signed by this Office and your client

15/2011 14:30 FAX 6177483871 US ATTORNVS OFFICE

If your client is wiHing to enter Into this agreement on the temts set forth above, GSK should indicate the srune by signing on the spaces provided below.

By:

Dated: Geoffre ~rt Covington . · urling Attorney for GSK

Elpidio Villareal, Senior Vice President, Global Litlgation GlaxoSmithKline LLC

Very truly yours,

CARMEN M. ORTIZ United S

Susan G. r ler Sara M .. Bloom Assistant U.S. Attorneys

Ill 003/003