Building an Effective [We Hope] Corporate Compliance Program Pragmatic Advice August 25, 2005 Roger W. Louis Chief Compliance Officer

2 Compliance: Some Etymology Regulatory –FDA/GMP/GCP Financial –SOX/SEC Legal –CMS/DOJ/OIG Commonalities & Differences –Sharing Best Practices –Establishing Systems & Processes Across Disciplines –Evolving Toward a Unified Field It’s All About Risk

3 Genzyme Corporate Compliance Program Established 1999 Initial Focus –$ in (Product Pricing & Price Reporting) –$ out (Financial Interaction with Health Care Professionals) Evolution –Antitrust –Privacy –Ad/prom –International –Sarbanes-Oxley –Ethics (Beyond the “Have to/Can’t do”) –Next???

4 What’s a Compliance Program & Why Have One? OIG Model Compliance Programs –Pharmaceuticals April Risk Management Device –OIG Risk Focus Drug Sampling Price Reporting Anti-kickback Evolution –False Claims Act PhRMA Guidelines –compliance will “substantially reduce risk of fraud and abuse”

5 The False Claims Act (“FCA”) Civil War Statute –Civil & Criminal Qui Tams (Whistleblowers) $11K per Claim & 3X$ Paid Huge Recoveries Creative Interpretations –That’s a claim! –Neurontin & FDA Ad/Prom Criminalizing off-label $430,000,000

6 FCA (cont.) What’s Next? Clinical Trials/GCP –Jim Sheehan comments FDA Risk Management Guidance –A floor, not a shield “Fraud on FDA & Fraud on the Public” GMP

7 Welcome to the Fun House State Level Activities –State Attorneys General; Spitzer et al –Legislation; e.g., California & the Phrma Code International –Proliferation of Enforcement Activities –FCPA Product Liability Exposure PR –Overdosed America: Broken promise of American Medicine-John Abramson –Bad Medicine-Jerome Kassirer –Powerful Medicines: The Benefits, Risks, and Costs of Prescription Drugs-Jerry Avorn –The Truth About Drug Companies- Marcia Angell SOX

8 Corporate Compliance Programs The OIG Elements & Other Pragmatisms Policy Development Training Investigations/Audits/Reviews & “Check-Ups” Hot/Help lines Compliance Committee Code of Conduct Find the Right Outside Counsel “Hire a Good CEO”

9 Compliance Committee “Seek help immediately!!!” Complexity & Consensus Patience & Persuasion Managing the Matrix

10 Compliance Committee OIG Guidance: “The company should expect its compliance committee members and compliance officer to demonstrate high integrity, good judgment, assertiveness, and an approachable demeanor, while eliciting the respect and trust of company employees. These interpersonal skills are as important as the professional experience of the compliance officer and each member of the compliance committee.”

11 Compliance Committee “Manage the white space on the Org Chart” Influence Without (Formal) Authority Substance With Style –“Selling the Program” Forests & Trees –And branches & twigs

12 Code of Conduct Building Buy-in –From bottom up… to top down –From business unit… to corporate wide

13 Developing a Code of Conduct Identify: –Subject matter –Constituents –Scope –Industry best practices –Ownership –Implementation strategies

14 Elements of a Code of Conduct Internal Business Relationships –Confidential Information Inside Information Document Retention –Employees Complaint Resolution Process –Regulatory Compliance –Health, Safety and Environmental External Business Relationships –Trust and Integrity –Competitive Practices Product Information and Pricing Antitrust Health Care Laws –Conflicts of Interest Financial Interests and Business Relationships Gifts, Entertainment and Favors –Continuing Disclosure and Accurate Business Records –International Business –Lawful and Ethical Behavior

15 Developing a Code of Conduct: Other Considerations Compliance with the Code as an element of performance review Failures to comply, subject to disciplinary actions Documentation of receipt of Code Implementation and follow-up – distribution

16 Conclusions Systems & Processes vs. Substance Coordination Integration Unified Risk Management –Which risks –Who watches –Everyone is No One –But Only One is Not Enough