COMPREHENSIVE COMPLIANCE PROGRAM
Emmaus Life Sciences, Inc. (Emmaus) is committed to the development and commercialization of innovative treatments and therapies primarily for rare diseases. Our commitment is driven by corporate values that focus on integrity, mutual respect and professionalism.
Building trust among our customers and peers is critical to our success. Accordingly, it is important that we conduct our business in compliance with all applicable legal and regulatory requirements. Our Corporate Code of Conduct (“Code of Conduct”) is a statement of our fundamental principles of business conduct and ethical standards. The Code of Conduct applies to all Emmaus employees and contractors. The Code of Conduct requires compliance with federal, state, and local laws and regulations wherever Emmaus conducts business. A copy of the Code of Conduct is available upon request.
In addition to the Code of Conduct, each Emmaus business sector has adopted policies and procedures designed to implement the general principles articulated in the Code of Conduct and in the Healthcare Compliance Program. These are corporate policies governing a broad range of topics. Included in this broad set of policies are specific policies and procedures that address the major risk areas discussed in the OIG Compliance Program Guidance for Pharmaceutical Manufacturers published by the U.S. Department of Health and Human Services, Office of Inspector General in May 2003 (hereinafter “OIG Compliance Guidance”). Our compliance policies are also intended to be consistent with the provisions of the Code on Interactions with Healthcare Professionals published by the Pharmaceutical Research and Manufacturers of America (“PhRMA Code”).
Recognizing that compliance is a fundamental value and key asset of the Company, Emmaus established a comprehensive healthcare compliance program that governs marketing, sales and medical information activities. Our Healthcare Compliance Program is consistent with the general principles of the OIG Guidance and the PhRMA Code. The OIG Guidance outlines seven elements that the OIG considers fundamental to establishing a comprehensive compliance program.
These elements include:
- Designation of a Compliance Officer and Compliance Committee;
- Implementation of written policies and procedures;
- Education and training programs for all employees;
- Developing effective lines of communication between the Compliance Officer and all employees through hotlines or other means;
- Conducting internal monitoring and auditing;
- Enforcing standards through disciplinary guidelines; and
- Responding promptly to detected problems and undertaking corrective action.
As provided for in the OIG Guidance, our program is tailored to the unique environment of the Company. Compliance is a dynamic concept. Emmaus is committed to reviewing and enhancing its program, at least annually, to meet evolving compliance needs.
Overview of the Healthcare Compliance Program
Compliance Officer and Compliance Committee
The Compliance Officer (“Compliance Officer”) is charged with overall responsibility for the effectiveness of the Healthcare Compliance Program. The Compliance Officer is responsible, either directly or through a designee, for reporting on a regular basis to the Board of Directors on the status of the Healthcare Compliance Program. Emmaus has a Compliance Committee consisting of representatives from selected functional areas of the Company which is available to assist and advise the Compliance Officer with the implementation of the Healthcare Compliance Program.
Written Policies and Procedures
The Emmaus Healthcare Compliance Program consists of written policies and procedures that provide requirements and restrictions on a range of activities by marketing, sales and medical affairs personnel to ensure that their activities meet legal requirements and high ethical standards. These policies, which are separate from and in addition to Emmaus corporate policies, apply to all employees when they are involved in the marketing or sale of pharmaceutical products.
Annual Spending Limit for California Healthcare Professionals
As part of its Healthcare Compliance Program, Emmaus adopted an annual spending limit for purposes of compliance with the requirements of California Health and Safety Code, Sections 119400-119402 (“California Code”). Copies of the Emmaus Healthcare Compliance Program may be obtained by contacting Emmaus at the following toll-free number: 877-420-6493. The declaration of compliance required by the California Code is available on this web page.
Emmaus established an annual limit not to exceed $300, in the aggregate, on non-monetary items or services including, for example, gifts, promotional materials, or items or activities that Emmaus may give or otherwise provide to an individual medical or health care professional in accordance with the OIG Compliance Guidance and with the PhRMA Code. This limit on non-monetary compensation includes educational or practice-related items and meals associated with informational presentations or discussions, which Emmaus employees are permitted to provide to healthcare professionals under its Healthcare Compliance Program policies.
Emmaus’ annual limit does not include the following: 1) drug samples given to physicians and health care professionals for free distribution to patients, 2) financial support for independent medical education programs, and financial support for health educational scholarships if the support is provided in a manner that conforms to the OIG Compliance Guidance and the PhRMA Code. Payments made for legitimate professional services provided by a health care or medical professional, including, but not limited to, consulting and other bona fide, commercially reasonable, and necessary services are exempt from the limit if the services are provided and paid at an amount that does not exceed the fair market value of the services rendered in accordance with and otherwise fully compliant with the OIG Compliance Guidance and the PhRMA Code.
Emmaus’ policy on the annual limit on non-monetary compensation has been communicated to employees in the Emmaus Sales & Marketing Section of the Company. Each employee is expected to comply with the annual limits and with the restrictions and limitations imposed by the Health Care Compliance Program in accordance with the OIG Compliance Guidance and the PhRMA Code.
Training and Education
An important component of the Healthcare Compliance Program is the training program that communicates the Company’s expectations concerning the ethical and legal obligation of Emmaus personnel. Our Code of Conduct and corporate policies and procedures are distributed to employees. The Compliance Officer oversees the content for the Code of Conduct and the Healthcare Compliance Program training and the process to ensure it remains relevant and current.
All Company personnel are required to complete annual training in compliance and the Code of Conduct. In addition, all Emmaus Sales & Marketing employees are required to complete training on the Healthcare Compliance Program as a condition of their employment. These employees also undergo periodic re-training and remedial training if needed. New field-based hires and existing field-based employees receive training and undergo an assessment to ensure compliance with federal laws and regulations and with the Emmaus Healthcare Compliance Program. After this initial training, periodic training of field-based employees is scheduled as needed on relevant policies. Field-based employees also receive training specific to the state law requirements of their service areas.
All employees engaged in marketing, sales and medical information activities at the Company’s headquarters receive training and undergo assessments. This training is designed to ensure compliance with federal and state laws, the Emmaus Healthcare Compliance Program, and with the Company Code of Conduct. From time to time, more specific compliance training is provided to employees at the Company’s headquarters consistent with their roles and responsibilities within the Company.
Reporting Mechanisms/Internal Lines of Communication
As part of our compliance culture, each employee is expected to ensure that Emmaus’ standards of conduct are met. It is expected that employees will seek compliance guidance from their managers when it is needed and that employees will report information concerning a good faith belief of possible misconduct.
Emmaus has a process that enables employees to report a good faith belief of suspected misconduct or any compliance issue through e-mail or via a toll-free hotline that permits employees to report in a confidential fashion. Company policies prohibit retaliation or retribution of any kind following the good faith reporting of suspected misconduct or a compliance issue.
Raising a concern under this policy will have no impact on any aspect of an employee’s employment. All employees will continue to be held to the performance and policy standards that generally apply to Emmaus employees. It is expected that employees will not use this policy for improper purposes such as attempting to avoid accountability for the performance and policy standards that apply generally to Emmaus’ employees.
Monitoring and Auditing
Consistent with its compliance commitment, Emmaus adopted monitoring and auditing processes to detect and investigate suspected breaches of its policies. Emmaus will take appropriate disciplinary action, including dismissal, where appropriate, when behavior inconsistent with the Company’s commitment to high ethical standards is detected.
The auditing plan is two-fold and includes assessments focused on specific risk areas to evaluate whether the Healthcare Compliance Program policies and procedures are being followed. In addition, an annual review of the Healthcare Compliance Program is conducted to evaluate internal risk, business practices, and new regulatory requirements.
Enforcing Standards through Disciplinary Guidelines
Employees are expected to comply with the Healthcare Compliance Program, Code of Conduct, Company policies and procedures and applicable law and regulations. The Code of Conduct makes it clear to all employees that, when an employee’s conduct or behavior violates the standards and expectations set by Emmaus, appropriate disciplinary action, up to and including dismissal, may be taken. Each reported violation is handled on a case-by-case basis based on the specific facts presented. Emmaus will undertake disciplinary action when appropriate to address inappropriate conduct.
Addressing Misconduct and Developing Corrective Action
As recognized in the OIG Guidance, the implementation of a compliance program cannot guarantee that improper employee conduct will be entirely eliminated. Nonetheless, it is our expectation that employees will comply with the Company’s Code of Conduct and the policies established in support of our Code. In the event that Emmaus becomes aware of violations of law or Company policy, we will investigate the matter and, where appropriate, take disciplinary action and implement corrective measures to prevent future violations.
Annual Declaration of Compliance
The California Health and Safety Code, Section 119402(e), requires that pharmaceutical companies declare annually in writing that the company is in compliance with the California Code and with the company’s comprehensive compliance program. The California Code further requires each pharmaceutical company to make its Corporate Compliance Program and its annual written declaration of compliance available to the public on the pharmaceutical company’s web site. The California Code also requires that the pharmaceutical company provide a toll free telephone number where a copy or copies of both of these documents may be obtained.
Based on Emmaus Medical’s good faith understanding of the statutory requirements, Emmaus Medical believes that its Corporate Compliance Program meets the requirements of the Health and Safety Code §§19400-119402. The Emmaus Medical Corporate Compliance Program was designed in accordance with the principles published by the U.S. Department of Health and Human Services, Office of Inspector General in May 2003 as the OIG Compliance Guidance and is also consistent with the provisions of the PhRMA Code published by the Pharmaceutical Research and Manufacturers of America in July 2002 and revised in July 2008. To obtain a copy of the Corporate Compliance Program and a written declaration of the compliance, please call 1.877.420.6493 Emmaus Medical believes it complies with its Corporate Compliance Program in all materials aspects.
Dated: January 2011