1. 10009474 Canada Inc.
2. 1453350 Ontario Inc.
3. 9985247 Canada Inc.
4. Abic Investment (1959) Ltd.
5. Abic Ltd.
6. AbZ-Pharma GmbH
7. Actavis d.o.o. Belgrade
8. Actavis Dutch Holding B.V.
9. Actavis Elizabeth LLC
10. Actavis Finance LLC
11. Actavis Group PTC ehf.
12. Actavis Holdco US, Inc.
13. Actavis Kadian LLC
14. Actavis Laboratories FL, Inc.
15. Actavis Laboratories UT, Inc.
16. Actavis Limited
17. Actavis LLC
18. Actavis Mid Atlantic LLC
19. Actavis Pharma S. de R.L. de C.V.
20. Actavis Pharma, Inc.
21. Actavis Pharmaceuticals NJ, Inc.
22. Actavis Puerto Rico Holdings Inc.
23. Actavis South Atlantic LLC
24. Actavis Totowa LLC
25. Actavis Ukraine LLC
26. Actavis US Holding LLC
27. Anda Holdco Corp.
28. Anda Marketing, Inc.
29. Anda Pharmaceuticals, Inc.
30. Anda Puerto Rico Inc.
31. Anda Veterinary Supply, Inc.
32. Anda, Inc.
33. Andrx LLC
34. Anesta LLC
35. Arana Therapeutics, Inc.
36. Asaph II B.V.
37. Assia Chemical Industries Ltd.
38. Auspex Pharmaceuticals, Inc.
39. Balkanpharma Dupnitsa AD
40. Barr International Services, Inc.
41. Barr Laboratories, Inc.
42. Barr Pharmaceuticals, LLC
43. Cephalon (UK) Limited
44. Cephalon Australia (VIC) Pty Ltd
45. Cephalon Clinical Partners, LP
46. Cephalon Development Corporation
47. Cephalon LLC
48. CIMA Labs Inc.
49. Circa Pharmaceuticals West, Inc.
50. Cobalt Laboratories LLC
51. Copper Acquisition Corp.
52. Coventry Acquisition, LLC
53. Cupric Holding Co. LLC
54. Cybear, LLC
55. Doral Manufacturing, Inc.
56. East End Insurance, Ltd
57. FEI Products, LLC
58. Gecko Health Innovations, Inc.
59. GeminX Pharmaceuticals Canada, Inc
60. Genchem Pharma LLC
61. Goldline Laboratories, Inc.
62. Inmobiliaria Lemery, S.A. de C.V.
63. INSPIRE INCUBATOR, LIMITED
PARTNERSHIP
64. IVAX (Bermuda) Ltd.
65. IVAX Argentina S.A.
66. IVAX Far East, Inc.
67. IVAX Holdings C.I.
68. IVAX International B.V.
69. IVAX Laboratories Puerto Rico, Inc.
J-2
70. IVAX LLC
71. IVAX Pharmaceuticals B.V.
72. IVAX Pharmaceuticals Caribe, Inc.
73. IVAX Pharmaceuticals Mexico, S.A. de C.V.
74. IVAX Pharmaceuticals NV, LLC
75. IVAX Pharmaceuticals, LLC
76. IVAX Specialty Chemicals Sub, LLC
77. IVAX UK Limited
78. Kilburn B.V.
79. Laboratorio Chile, S.A.
80. Laboratorios Davur S.L.U.
81. Labrys Biologics, Inc.
82. Lemery S.A. de C.V.
83. Limited Liability Company “Teva Ukraine”
84. Maancirkel Holding B.V.
85. Marsam Pharmaceuticals LLC
86. Med All Enterprise Consulting (Shanghai)
Co.,Limited
87. Mepha Investigação, Desenvolvimento e
Fabricação Farmacêutica, Lda.
88. Mepha Pharma AG
89. Mepha Schweiz AG
90. Merckle GmbH
91. MicroDose Therapeutx, Inc.
92. MORIAH BIOTECHNOLOGY LTD
93. Norton (Waterford) Limited
94. Norton Healthcare (1998) Limited
95. Norton Healthcare Limited
96. Novopharm Holdings, Inc.
97. NT Pharma Canada Ltd.
98. Nupathe Inc.
99. Nuvelution TS Pharma, Inc.
100.Odyssey Pharmaceuticals, Inc.
101.Oncotest Teva Ltd
102.Orvet UK
103.Patient Services and Solutions, Inc.
104.Pharma de Espana, Inc.
105.Pharmachemie (Proprietary) Limited
106.Pharmachemie B.V.
107.PharmaPlantex Limited
108.Pharmatrade S.A.
109.PharmNovo LLC
110.Plantex Ltd.
111.PLIVA d.o.o. SARAJEVO
112.PLIVA HRVATSKA d.o.o.
113.PLIVA Ljubljana d.o.o.
114.Pliva Real Estate GmbH
115.PLIVA SKOPJE d.o.o.
116.PLIVA, Inc.
117.Plus Chemicals, branch of Teva
Pharmaceuticals International GmbH
118.PT Actavis Indonesia
119.Rakepoll Holding B.V.
120.ratiopharm - Comercio e Industria de
Produtos Farmaceuticos, Lda.
121.ratiopharm Arzneimittel Vertriebs-GmbH
122.ratiopharm España S.A.
123.ratiopharm GmbH
124.ratiopharm Immobilienverwaltung GmbH &
Co. KG
125.ratiopharm Kazakhstan LLP
126.Representaciones E Investigaciones Medicas
S.A. - also called RIMSA
127.Rise Healthcare Ltd
128.Royce Research and Development Limited
Partner I
129.Salomon, Levin & Elstein Ltd.
130.Sicor de México S.A. de C.V.
131.Sicor Inc.
132.Sicor Società Italiana Corticosteroidi S.r.l.
133.Sindan-Pharma Srl
134.TAGCO Incorporated
135.TAPI Puerto Rico, Inc.
136.Teva API B.V.
137.Teva API Inc.
138.TEVA API INDIA Private Limited
139.Teva API Japan LTD.
140.Teva API Services Mexico, S.de R.L.
de C.V.
141.Teva B.V.
142.Teva Biopharmaceuticals USA, Inc.
143.Teva Biotech GmbH
J-3
144.Teva Branded Pharmaceutical Products
R&D, Inc.
145.Teva Canada Innovation G.P. - S.E.N.C.
146.TEVA CANADA LIMITED / TEVA
CANADA LIMITEE
147.Teva Capital Services Switzerland, branch of
Teva Pharmaceuticals International GmbH
148.Teva Czech Industries s.r.o.
149.Teva Denmark A/S
150.Teva Digital Health, Inc.
151.Teva Farmaceutica Ltda
152.Teva Finance Holding B.V.
153.Teva Finance Services II B.V.
154.Teva Finance Services LLC
155.Teva Finland Oy
156.Teva Global Products Limited Partnership
157.Teva GmbH
158.Teva Health GmbH
159.Teva Healthcare India Private Limited
160.Teva Holdco US, Inc.
161.Teva Holdings GK
162.Teva Holdings Ltd.
163.Teva İlaçları Sanayi ve Ticaret Anonim
Şirketi
164.Teva India Private Limited
165.TEVA INVERSIONES Y
EXPORTACIONES SpA
166.Teva Investments (Pty) Ltd.
167.Teva Israel Ltd
168.Teva İstanbul İlaç San. Ve Tic. Ltd. Şti
169.Teva Italia S.r.l.
170.Teva Laboratoires
171.Teva Limited Liability Company
172.Teva Logistics Services B.V.
173.Teva Medical (Marketing) Ltd.
174.Teva Medical Ltd.
175.Teva Nechasim Ltd.
176.Teva Nederland B.V.
177.Teva Neuroscience, Inc.
178.Teva Norway AS (f.k.a. ratiopharm
Norway AS)
179.TEVA OPERATIONS POLAND SPÓŁKA z
OGRANICZONĄ
ODPOWIEDZIALNOŚCIĄ
180.Teva Parenteral Medicines, Inc.
181.TEVA PERU S.A.
182.Teva Pharma - Produtos Farmacêuticos Lda
183.Teva Pharma (MS) Pty Ltd
184.Teva Pharma (New Zealand) Limited
185.Teva Pharma AG
186.Teva Pharma Australia Pty Ltd
187.Teva Pharma B.V.
188.Teva Pharma Belgium N.V.
189.Teva Pharma EAD
190.Teva Pharma Holdings Limited
191.Teva Pharma Iceland
192.Teva Pharma S.L.U.
193.TEVA PHARMA UK LIMITED
194.Teva Pharmaceutical and Chemical
Industries India Private Limited
195.Teva Pharmaceutical Finance Company B.V.
196.Teva Pharmaceutical Finance Company LLC
197.Teva Pharmaceutical Finance IV B.V.
198.Teva Pharmaceutical Finance IV, LLC
199.Teva Pharmaceutical Finance Netherlands II
B.V.
200.Teva Pharmaceutical Finance Netherlands III
B.V.
201.Teva Pharmaceutical Finance Netherlands IV
B.V.
202.Teva Pharmaceutical Finance V B.V.
203.Teva Pharmaceutical Finance V, LLC
204.Teva Pharmaceutical Finance VI, LLC
205.Teva Pharmaceutical Industries Ltd.
206.Teva Pharmaceutical Information Consulting
(Shanghai) Co., Ltd.
207.Teva Pharmaceutical Investments
Singapore Pte. Ltd
208.Teva Pharmaceutical R&D LP
209.TEVA Pharmaceutical Works Private
Limited Company
210.Teva Pharmaceuticals Australia Pty Ltd
211.Teva Pharmaceuticals Colombia S.A.
212.Teva Pharmaceuticals CR, s.r.o.
J-4
213.Teva Pharmaceuticals Curacao N.V.
214.Teva Pharmaceuticals Europe B.V.
215.Teva Pharmaceuticals Finance
Netherlands B.V.
216.Teva Pharmaceuticals International GmbH
217.TEVA Pharmaceuticals Mexico S.A. de C.V.
218.Teva Pharmaceuticals Panama, S.A
219.Teva Pharmaceuticals Polska spółka z
ograniczoną odpowiedzialnością
220.Teva Pharmaceuticals S.R.L.
221.TEVA Pharmaceuticals Slovakia s.r.o.
222.Teva Pharmaceuticals USA, Inc.
223.Teva Pharmaceuticals, Inc.
224.Teva Puerto Rico LLC
225.Teva Respiratory, LLC
226.Teva Sales and Marketing, Inc.
227.Teva Santé SAS
228.Teva Sweden AB
229.Teva Takeda Pharma Ltd.
230.Teva Takeda Yakuhin Ltd.
231.Teva UK Holdings Limited
232.Teva UK Limited
233.TEVA Uruguay S.A.
234.Teva Women's Health, LLC
235.Tevamiri Limited
236.TEVAPHARM INDIA PRIVATE LTD.
237.TEVCO Incorporated
238.TPI U.S. Holdings, Inc.
239.Transpharm Logistik GmbH
240.UAB Teva Baltics
241.Valmed Pharmaceutical, Inc.
242.Watson Laboratories, Inc.
243.Watson Laboratories, Inc.
244.Watson Laboratories, LLC
245.Watson Management Corporation
K-1
Exhibit K
Subdivision and Special District Settlement Participation Form Governmental Entity State:
Authorized Official
Address 1:
Address 2:
City, State, Zip:
Phone:
Email:
The governmental entity identified above (“Governmental Entity”), in order to obtain and in consideration for the benefits provided to the Governmental Entity pursuant to the Agreement dated November 22, 2022 (“Teva Settlement”), and acting through the undersigned authorized official, hereby elects to participate in the Teva Settlement, release all Released Claims against all Released Entities, and agrees as follows.
1. The Governmental Entity is aware of and has reviewed the Teva Settlement, understands that all terms in this Election and Release have the meanings defined therein, and agrees that by this Election, the Governmental Entity elects to participate in the Teva Settlement as provided therein.
2. Following the execution of this Settlement Participation Form, the Governmental Entity shall comply with Section III.B of the Teva Settlement regarding Cessation of Litigation Activities.
3. The Governmental Entity shall, within 14 days of the Reference Date and prior to the filing of the Consent Judgment, file a request to dismiss with prejudice any Released Claims that it has filed. With respect to any Released Claims pending in In re National Prescription Opiate Litigation, MDL No. 2804, the Governmental Entity authorizes the Plaintiffs’ Executive Committee to execute and file on behalf of the Governmental Entity a Stipulation of Dismissal With Prejudice substantially in the form found at [website link to national settlement website to be provided].
4. The Governmental Entity agrees to the terms of the Teva Settlement pertaining to Subdivisions as defined therein.
5. By agreeing to the terms of the Teva Settlement and becoming a Releasor, the Governmental Entity is entitled to the benefits provided therein, including, if applicable, monetary payments beginning after the Effective Date.
6. The Governmental Entity agrees to use any monies it receives through the Teva Settlement solely for the purposes provided therein.
7. The Governmental Entity submits to the jurisdiction of the court in the Governmental Entity’s state where the Consent Judgment is filed for purposes limited to that court’s K-2
role as provided in, and for resolving disputes to the extent provided in, the Teva Settlement.
8. The Governmental Entity has the right to enforce the Teva Settlement as provided therein.
9. The Governmental Entity, as a Participating Subdivision or Participating Special District, hereby becomes a Releasor for all purposes in the Teva Settlement, including but not limited to all provisions of Section V (Release), and along with all departments, agencies, divisions, boards, commissions, districts, instrumentalities of any kind and attorneys, and any person in their official capacity elected or appointed to serve any of the foregoing and any agency, person, or other entity claiming by or through any of the foregoing, and any other entity identified in the definition of Releasor, provides for a release to the fullest extent of its authority. As a Releasor, the Governmental Entity hereby absolutely, unconditionally, and irrevocably covenants not to bring, file, or claim, or to cause, assist or permit to be brought, filed, or claimed, or to otherwise seek to establish liability for any Released Claims against any Released Entity in any forum whatsoever. The releases provided for in the Teva Settlement are intended by Released Entitles and the Governmental Entity to be broad and shall be interpreted so as to give the Released Entities the broadest possible bar against any liability relating in any way to Released Claims and extend to the full extent of the power of the Governmental Entity to release claims. The Teva Settlement shall be a complete bar to any Released Claim.
10. The Governmental Entity hereby takes on all rights and obligations of a Participating Subdivision or Participating Special District as set forth in the Teva Settlement.
11. In connection with the releases provided for in the Teva Settlement, each Governmental Entity expressly waives, releases, and forever discharges any and all provisions, rights, and benefits conferred by any law of any state or territory of the United States or other jurisdiction, or principle of common law, which is similar, comparable, or equivalent to § 1542 of the California Civil Code, which reads:
General Release; extent. A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.
A Releasor may hereafter discover facts other than or different from those which it knows, believes, or assumes to be true with respect to the Released Claims, but each Governmental Entity hereby expressly waives and fully, finally, and forever settles, releases and discharges, upon the Effective Date, any and all Released Claims that may exist as of such date but which Releasors do not know or suspect to exist, whether through ignorance, oversight, error, negligence or through no fault whatsoever, and which, if known, would materially affect the Governmental Entities’ decision to participate in the Teva Settlement.
K-3
12. Nothing herein is intended to modify in any way the terms of the Teva Settlement, to which Governmental Entity hereby agrees. To the extent this Election and Release is interpreted differently from the Teva Settlement in any respect, the Teva Settlement controls.
I have all necessary power and authorization to execute this Election and Release on behalf of the Governmental Entity.
Signature: __________________________
Name: __________________________
Title: __________________________
Date: __________________________
L-1
Exhibit L
Settlement Fund Administrator
[Plaintiffs to Add]
M-1
Exhibit M
Settlement Payment Schedule
EXHIBIT M-1: PAYMENT SCHEDULE (Excluding Product)
Payment Year Additional
Restitution
Amount & All
Attorneys’ Fees
& Costs Funds
Base Payments
(45%)
Incentives
A, B, & C
(maximum)
(48%)
Incentive D
Part 1
(maximum)
(3.5%)
Incentive D
Part 2
(maximum)
(3.5%)
Total
Abatement
Overall
Total
(Excluding
Product)
Year 1
2023: Effective
Date + 30 days
$65,834,268.30 $226,579,162.39 --- --- --- $226,579,162.39 $292,413,430.69 Year 2
July 15, 2024
$65,834,268.30 $108,757,997.98 $117,821,164.41 --- --- $226,579,162.39 $292,413,430.69 Year 3
July 15, 2025
$65,834,268.29 $108,757,997.98 $117,821,164.41 --- --- $226,579,162.39 $292,413,430.68 Year 4
July 15, 2026
$65,834,268.29 $88,139,294.18 $117,821,164.41 $20,618,703.80 --- $226,579,162.39 $292,413,430.68 Year 5
July 15, 2027
$65,834,268.29 $88,139,294.18 $117,821,164.41 $20,618,703.80 --- $226,579,162.39 $292,413,430.68 Year 6
July 15, 2028
$65,834,268.29 $88,139,294.17 $117,821,164.42 $20,618,703.80 --- $226,579,162.39 $292,413,430.68 Year 7
July 15, 2029
$88,139,294.16 $117,821,164.42 $10,309,351.90 $10,309,351.90 $226,579,162.38 $226,579,162.38 Year 8
July 15, 2030
$88,139,294.16 $117,821,164.42 $10,309,351.90 $10,309,351.90 $226,579,162.38 $226,579,162.38 Year 9
July 15, 2031
$88,139,294.16 $117,821,164.42 $10,309,351.90 $10,309,351.90 $226,579,162.38 $226,579,162.38 Year 10
July 15, 2032
$88,139,294.16 $117,821,164.42 $10,309,351.90 $10,309,351.90 $226,579,162.38 $226,579,162.38 Year 11
July 15, 2033
$88,139,294.16 $117,821,164.42 --- $20,618,703.80 $226,579,162.38 $226,579,162.38 Year 12 $88,139,294.16 $117,821,164.42 --- $20,618,703.80 $226,579,162.38 $226,579,162.38 M-2
July 15, 2034
Year 13
July 15, 2035
$88,139,294.16 $117,821,164.42 --- $20,618,703.80 $226,579,162.38 $226,579,162.38 Total $395,005,609.76 $1,325,488,100.00 $1,413,853,973.00 $103,093,519.00 $103,093,519.00 $2,945,529,111.00 $3,340,534,720.76 M-3
NOTES:
1. All figures for the base and incentive payments are maximum figures that reflect the following:
- The credits amount of $666,032,651 for prior settlements, including San Francisco, have already been applied. - An assumption that all Eligible States are Settling States. - An assumption that all incentives are earned.
2. The Additional Restitution Amount and the state and subdivision fees and costs amounts will be broken out into separate columns before the exhibit is finalized.
3. Any offsets under Section V.C for Non-Settling States would be deducted from the Base Payments and the maximum Incentive Payments (A, B & C and D) by subtracting from all payments the amount of the payment times the State Allocation Percentage assigned to each Non-Settling State in Exhibit F-2.
4. A schedule for Product is in Exhibit M-2 below. Settlement Product (and Settlement Product Cash Conversion Amount) are not included in this Exhibit M-1.
M-4
EXHIBIT M-2: PRODUCT PAYMENT SCHEDULE
Payment Year Settlement Product Maximum
(Valued at WAC)
Settlement Product
Cash Conversion Maximum
Year 1
2023: Effective Date
+ 30 days
--- ---
Year 2
July 15, 2024
$120,000,000.00 $20,000,000.00
Year 3
July 15, 2025
$120,000,000.00 $20,000,000.00
Year 4
July 15, 2026
$120,000,000.00 $20,000,000.00
Year 5
July 15, 2027
$120,000,000.00 $20,000,000.00
Year 6
July 15, 2028
$120,000,000.00 $20,000,000.00
Year 7
July 15, 2029
$120,000,000.00 $20,000,000.00
Year 8
July 15, 2030
$120,000,000.00 $20,000,000.00
Year 9
July 15, 2031
$120,000,000.00 $20,000,000.00
Year 10
July 15, 2032
$120,000,000.00 $20,000,000.00
Year 11
July 15, 2033
$120,000,000.00 $20,000,000.00
Year 12
July 15, 2034
--- $20,000,000.00
Year 13
July 15, 2035
--- $20,000,000.00
Total $1,200,000,000.00 $240,000,000.00
NOTE: The Product Payment Schedule is showing the maximum amount of product offered (valued at WAC), which assumes all states choose to accept their full allotment of Settlement Product, and the maximum available Settlement Product Cash Conversion Amount, which assumes all M-5
states fully convert the Settlement Product to cash payments. The purpose of the chart is to show the periods of time in which Settlement Product or Settlement Product Cash Conversion would be provided and the maximum amount of each per payment year. Individual Settling States will choose between Settlement Product and Settlement Product Cash Conversion (or a mix of both). The maximum amount of Settlement Product available to each Individual Settling State measured in quantity of kits per payment year is shown in Exhibit D, Schedule D-I. The deadlines in Exhibit D govern the Parties’ Settlement Product obligations related to forecasting, ordering, shipment, and delivery. This chart should not suggest any obligation of Teva to provide both the maximum amount of product and the maximum amount of cash conversion.
M-6
EXHIBIT M-3: PAYMENT SCHEDULE FOR FEE FUNDS, COST FUNDS AND ADDITIONAL RESTITUTION (Breakdown of Second Column in Exhibit M-1)
Payment
Year
Attorney Fee
and MDL Cost
Fund
State Cost Fund State Outside
Counsel Fee
Fund
Additional
Restitution
Amount
Total
(Shown in Ex. M1, 2nd Column)
Year 1
2023:
Effective
Date + 30
days
$55,215,837.93 $6,371,058.22 $2,123,686.08 $2,123,686.07 $65,834,268.30 Year 2
July 15, 2024
$55,215,837.93 --- $5,309,215.19 $5,309,215.18 $65,834,268.30 Year 3
July 15, 2025
$55,215,837.92 --- $5,309,215.19 $5,309,215.18 $65,834,268.29 Year 4
July 15, 2026
$55,215,837.92 --- $5,309,215.18 $5,309,215.19 $65,834,268.29 Year 5
July 15, 2027
$55,215,837.92 --- $5,309,215.18 $5,309,215.19 $65,834,268.29 Year 6
July 15, 2028
$55,215,837.92 --- $5,309,215.18 $5,309,215.19 $65,834,268.29 Total $331,295,027.54 $6,371,058.22 $28,669,762.00 $28,669,762.00 $395,005,609.76 N-1
Exhibit N
Additional Restitution Amount Allocation
Alabama 2.3544553964%
American Samoa 0.0252611439%
Arizona 3.5048272664%
Arkansas 1.3753411634%
California 14.6374841151%
Colorado 2.4514797691%
Connecticut 1.9088192709%
District of Columbia 0.2655292635%
Guam 0.0708707436%
Illinois 4.9075008432%
Indiana 3.2706871936%
Iowa 1.0945978299%
Kansas 1.1567892116%
Maine 0.7809353668%
Maryland 3.1138810201%
Massachusetts 3.3985744182%
Michigan 5.0191656318%
Minnesota 1.9139084896%
Missouri 2.9590263237%
Montana 0.4611170652%
N. Mariana Islands 0.0246470315%
Nebraska 0.6154478970%
New Hampshire 0.8534639430%
New Jersey 4.0647812071%
New York 7.9526836824%
North Carolina 4.7952508697%
North Dakota 0.2508461905%
Oregon 2.0273342550%
Pennsylvania 6.7692496373%
South Carolina 2.2710141754%
Tennessee 3.9659507168%
Utah 1.6917508641%
Vermont 0.3754597005%
Virgin Islands 0.0465728102%
Virginia 3.3639612508%
Washington 3.4211884061%
Wisconsin 2.5940380399%
Wyoming 0.2461077964%
O1
Exhibit O
Adoption of a State-Subdivision Agreement
A State-Subdivision Agreement shall be applied if it meets the requirements of Section VIII and is approved by the State and by the State’s Subdivisions as follows:
1. Requirements for Approval. A State-Subdivision Agreement shall be deemed as agreed to when it has been approved by the State and either (a) Subdivisions whose aggregate “Population Percentages,” determined as set forth below, total more than sixty percent (60%), or (b) Subdivisions whose aggregate Population Percentages total more than fifty percent (50%) provided that these Participating Subdivisions also represent fifteen percent (15%) or more of the State’s counties or parishes (or, in the case of Settling States whose counties and parishes do not function as local governments, 15% of or more of the Settling State’s non-county Subdivisions), by number.
2. Approval Authority. Approval by the State shall be by the Attorney General. Approval by a Subdivision shall be by the appropriate official or legislative body pursuant to the required procedures for that Subdivision to agree to a legally binding settlement.
3. Population Percentage Calculation. For purposes of this Exhibit O only, Population Percentages shall be determined as follows: For States with functional counties or parishes4the Population Percentage of each county or parish shall be deemed to be equal to (a) (1) two hundred percent (200%) of the population of such county or parish, minus (2) the aggregate population of all Primary Incorporated Municipalities located in such county or parish, divided by (b) two hundred percent (200%) of the State’s population. A “Primary Incorporated Municipality” means a city, town, village or other municipality incorporated under applicable state law with a population of at least 25,000 that is not located within another incorporated municipality. The Population Percentage of each Primary Incorporated Municipality shall be equal to its population (including the population of any incorporated or unincorporated municipality located therein) divided by two hundred percent (200%) of the State’s population; provided that the Population Percentage of a Primary Incorporated Municipality that is not located within a county shall be equal to two hundred percent (200%) of its population (including the population of any incorporated or unincorporated municipality located therein) divided by two hundred percent (200%) of the State’s population. For all States that do not have functional counties or parishes, the Population Percentage of each non-county Subdivision (including any incorporated or unincorporated municipality located therein), shall be equal to its population divided by the State’s population.
4. Preexisting Agreements and Statutory Provisions. A State may include with the notice to its Subdivisions an existing agreement, a proposed agreement, or statutory provisions regarding the distribution and use of settlement funds and have the acceptance of such an agreement or statutory provision be part of the requirements to be an Initial Participating Subdivision. 4 Certain states do not have counties or parishes that have functional governments, including:
Alaska, Connecticut, Massachusetts, Rhode Island, and Vermont.
O-1
5. Revised Agreements. A State-Subdivision Agreement that has been revised, supplemented, or refined shall be applied if it meets the requirements of Section VIII and is approved by the State and by the State’s Subdivisions pursuant to the terms above.
P-1
Exhibit P
Teva Injunctive Term Sheet
I. DEFINITIONS
A. “Cancer-Related Pain Care” shall mean care that provides relief from pain resulting from a patient’s active cancer or cancer treatment, as distinguished from treatment provided during remission.
B. “CDC Guideline Recommendations” shall mean the 12 enumerated Recommendations published by the U.S. Centers for Disease Control and Prevention (CDC) for the prescribing of opioid pain medication for patients 18 and older in primary care settings as part of its 2016 Guideline for Prescribing Opioids for Chronic Pain (CDC Guidelines), as updated or amended by the CDC.
C. “Downstream Customer Data” shall mean transaction information that Teva collects relating to its direct customers’ sales to Downstream Customers, including but not limited to chargeback data tied to Teva providing certain discounts, “867 data,” and IQVIA data.
D. “Downstream Customers” shall mean the customers to which Teva’s direct customers sell Teva product.
E. “End-of-Life Care” shall mean care for persons with a terminal illness or at high risk for dying in the near future in hospice care, hospitals, long-term care settings, or at home.
F. “Health Care Provider” shall mean any U.S.-based physician or U.S.-based health care practitioner who is licensed to provide health care services or to prescribe pharmaceutical products and any U.S.-based medical facility, practice, hospital, clinic or pharmacy.
G. “Host Institution” shall refer to the academic institution(s) selected by the Settling States to host and maintain the Public Document Repository, by, without limitation: maintaining control and security over documents in the Public Document Repository; providing an accessible user interface; and providing clear and transparent explanations of its procedures to the public.
H. “In-Kind Support” shall mean payment or assistance in the form of goods, commodities, services, or anything else of value.
I. “Investigator Sponsored Study” (ISS) shall mean a study in which an individual both initiates and conducts an investigation, and under whose immediate direction the investigational drug is administered or dispensed. In addition to the standard investigator responsibilities, the sponsor-investigator is also responsible for planning, conducting, and monitoring the study, managing data, preparing reports, and providing oversight, monitoring, and compliance with regulatory reporting requirements.
P-2
J. “Lobby” and “Lobbying” shall have the same meaning as “lobbying activities” and “lobbying contacts” under the federal lobbying disclosure act, 2 U.S.C. § 1602 et seq., and any analogous state or local provisions governing the person or entity being lobbied. As used in this Agreement, “Lobby” and “Lobbying” include Lobbying directly or indirectly, through grantees or Third Parties.
K. “Opioid(s)” shall mean all naturally occurring, synthetic, or semisynthetic substances that interact with opioid receptors and act like opium.
L. “Opioid-Induced Side Effects Treatment Product” shall mean any pharmaceutical product that has been approved by the FDA and indicated for the treatment of Opioid-induced side effects. The term “Opioid-Induced Side Effects Treatment Product” shall not include products that treat opioid abuse, addiction or overdose, or respiratory depression.
M. “Opioid Product(s)” shall mean all current and future medications containing Opioids approved by the U.S. Food & Drug Administration (FDA) and listed by the DEA as Schedule II, III, or IV drugs pursuant to the federal Controlled Substances Act, including but not limited to buprenorphine, codeine, fentanyl, hydrocodone, hydromorphone, meperidine, methadone, morphine, oxycodone, oxymorphone, tapentadol, and tramadol.
The term “Opioid Products(s)” shall not include methadone, buprenorphine, and other substances when used exclusively to treat opioid abuse, addiction or overdose; raw materials and/or immediate precursors used in the manufacture or study of Opioids or Opioid Products, but only when such materials and/or immediate precursors are sold or marketed exclusively to DEA-licensed manufacturers or DEA-licensed researchers.
N. “OUD” shall mean opioid use disorder defined in the Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition (DSM–5), as updated or amended.
O. “Promote,” “Promoting,” and “Promotion” shall mean dissemination of information or other practices intended or that could be reasonably anticipated to (i) increase sales, prescriptions, or the utilization of prescription products in the United States, or (ii) that attempt to influence prescribing practices or formulary decisions in the United States.
These terms shall not include the provision of scientific information or data in response to unsolicited requests from Health Care Providers or payors as allowed in Section II. A. 2. (e)-(h).
P. “Qualified Researcher” shall mean any researcher holding a faculty appointment or research position at an institution of higher education, a research organization, a nonprofit organization, or a government agency.
Q. “Suspicious Order” shall have the same meaning as provided by the Controlled Substances Act, 21 U.S.C. §§ 801-904, and the regulations promulgated thereunder and analogous state laws and regulations.
R. “Teva” shall mean Teva Pharmaceutical Industries Ltd., Teva Pharmaceuticals USA, Inc., Cephalon, Inc., Watson Laboratories, Inc., Actavis LLC, and Actavis Pharma, Inc., f/k/a P-3
Watson Pharma Inc., and each of their parents, subsidiaries, predecessors, successors, affiliates, divisions, assigns, officers, directors, agents, employees and principals, but shall exclude Teva’s wholly owned distributor subsidiary, Anda, Inc. For the avoidance of doubt, Teva does not include entities or individuals controlled by or employed by separate and distinct legal entities that are not directly or indirectly owned by Teva.
S. “Teva Opioid Products” shall mean Vantrela ER and Opioid Products listed on Teva’s product catalog as of the Effective Date or that are added thereafter.
T. “Third Party” shall mean any person or entity other than Teva or a government entity.
U. “Treatment of Pain” shall mean the provision of therapeutic modalities to alleviate or reduce pain.
V. “Unbranded Information” shall mean any information that does not identify a specific product(s).
II. INJUNCTIVE RELIEF
A. Ban on Promotion
1. Teva shall not engage in the Promotion of Opioids or Opioid Products including, but not limited to, by:
a. Employing or contracting with sales representatives or other persons to Promote Opioids or Opioid Products to Health Care Providers or patients, or to persons that influence or determine the Opioid Products included in formularies;
b. Using speakers, key opinion leaders, thought leaders, lecturers, and/or speaking events for Promotion of Opioids or Opioid Products;
c. Sponsoring, or otherwise providing financial support or In-Kind Support to medical education programs relating to Opioids or Opioid Products;
d. Creating, sponsoring, operating, controlling, or otherwise providing financial support or In-Kind Support to any website, network, and/or social or other media account for the Promotion of Opioids or Opioid Products;
e. Creating, sponsoring, distributing, or otherwise providing financial support or In-Kind Support for materials Promoting Opioids or Opioid Products, including, but not limited to, P-4
brochures, newsletters, pamphlets, journals, books, and guides that Promote Opioids or Opioid Products;
f. Creating, sponsoring, or otherwise providing financial support or In-Kind Support for advertisements that Promote Opioids or Opioid Products, including, but not limited to, internet advertisements or similar content that Promote Opioids or Opioid Products, and providing hyperlinks or otherwise directing internet traffic to advertisements that Promote Opioids or Opioid Products; and
g. Engaging in Internet search engine optimization or other techniques designed to Promote Opioids or Opioid Products by improving rankings or making content appear among the top results in an Internet search or otherwise be more visible or more accessible to the public on the Internet.
2. Notwithstanding Section II.A.1 directly above, Teva may:
a. Maintain corporate websites;
b. Maintain a website for any Opioid Product that contains principally the following content: the FDA-approved package insert, medication guide, and labeling, and a statement directing patients or caregivers to speak with a licensed Health Care Provider;
c. Provide information or support the provision of information as expressly required by law or any state or federal government agency with jurisdiction in the State where the information is provided. Teva may, in relation to its expressly required participation in the TIRF REMS program, remain involved in the preparation of materials and training concerning the process for enrollment in the TIRF REMS program; d. Provide the following by mail, electronic mail, on or through Teva’s corporate or product websites or through other electronic or digital methods:
FDA-approved package insert, medication guide, approved labeling for Opioid Products or other prescribing information for Opioid Products that are published by a state or federal government agency with jurisdiction in the State where the information is provided;
e. Provide scientific and/or medical information in response to an unsolicited request by a Health Care Provider consistent with the standards set forth in the FDA’s Draft Guidance for Industry, Responding to Unsolicited Requests for Off-Label Information About Prescription Drugs and Medical Devices (Dec. 2011, as updated or amended by the FDA) and Guidance for Industry, Good Reprint Practices for the Distribution of Medical Journal Articles and P-5
Medical or Scientific Reference Publications on Unapproved New Uses of Approved Drugs and Approved or Cleared Medical Devices (Jan. 2009, as updated or amended by the FDA). However, Teva shall not provide the following publication in response to an unsolicited request by a Health Care Provider: Weinstein, SM, et al., Fentanyl buccal tablet for the treatment of breakthrough pain in opioid-tolerant patients with chronic cancer pain: a long-term, open-label safety study. Cancer; 2009;115:2571-2579. f. Provide a response to any unsolicited question or request from a patient or caregiver, directing the patient or caregiver to the FDA-approved labeling or to speak with a licensed Health Care Provider without describing the safety or effectiveness of Opioids or any Opioid Product (beyond directing the patient or caregiver to the label) or naming any specific provider or healthcare institution; or directing the patient or caregiver to speak with their insurance carrier regarding coverage of an Opioid Product; g. Provide Health Care Economic Information, as defined at 21 U.S.C. § 352(a), to a payor, formulary committee, or other similar entity with knowledge and expertise in the area of health care economic analysis consistent with standards set forth in the FDA’s Draft Questions and Answers Guidance for Industry and Review Staff, Drug and Device Manufacturer Communications With Payors, Formulary Committees, and Similar Entities (Jan. 2018), as updated or amended by the FDA; h. Provide information relating solely to the pricing and availability of any Opioid Product and negotiate contract and pricing terms with direct customers or Downstream Customers;
i. Sponsor or provide financial support or In-Kind Support for an accredited or approved continuing medical education program required by either an FDA-approved Risk Evaluation and Mitigation Strategy (REMS) program or other federal or state law or regulation applicable in the State where the information is provided through an independent Third Party, which shall be
responsible for the continuing medical education program’s content without the participation of Teva; and
j. Provide Unbranded Information in connection with managing pain in End-of-Life Care and/or Cancer-Related Pain Care relating to: the use of Opioids for managing such pain, as long as the Unbranded Information identifies Teva as the source of the information.
3. Teva shall not engage in the following specific Promotional activity relating to any Opioid-Induced Side Effects Treatment Product.
P-6
a. Employing or contracting with sales representatives or other persons to Promote Opioid-Induced Side Effects Treatment Products to Health Care Providers or patients;
b. Using speakers, key opinion leaders, thought leaders, lecturers, and/or speaking events for Promotion of Opioid-Induced Side Effects Treatment Products;
c. Sponsoring, or otherwise providing financial support or In-Kind Support to medical education programs relating to Opioid-Induced Side Effects Treatment Products;
d. Creating, sponsoring, or otherwise providing financial support or InKind Support for advertisements that Promote Opioid-Induced Side Effects Treatment Products, including, but not limited to, internet advertisements or similar content that Promote Opioid-Induced Side Effects Treatment Products, and providing hyperlinks or otherwise directing internet traffic to advertisements that Promote Opioid-Induced Side Effects Treatment Products; and
e. Engaging in any other Promotion of Opioid-Induced Side Effects Treatment Products in a manner that encourages the utilization of Opioids or Opioid Products or normalizes the use of Opioids or Opioid Products for chronic pain.
4. Notwithstanding Section II.A.3 directly above, Teva may engage in Promotional activity for Opioid-Induced Side Effects Treatment Products that have nonOpioid related indications, so long as such Promotion does not explicitly or implicitly associate such Opioid-Induced Side Effects Treatment Product with Opioids or Opioid Products, except for linking to the FDA label associated with such Opioid-Induced Side Effects Treatment Product.
5. Treatment of Pain.
a. Teva shall not, either through Teva or through Third Parties, Promote the Treatment of Pain in a manner that directly or indirectly encourages the utilization of Opioids or Opioid Products.
b. Teva shall not, either through Teva or through Third Parties, Promote the concept that pain is undertreated in a manner that directly or indirectly encourages the utilization of Opioids or Opioid Products. c. Teva shall not disseminate Unbranded Information, including Unbranded Information about a medical condition or disease state that contains links to branded information about Opioid Products or that generates data that Teva uses for Promotion of Opioids or Opioid Products.
P-7
6. To the extent that Teva engages in conduct permitted by Sections II.A.2 and A.4 above, Teva shall do so in a manner that is:
a. Consistent with the CDC Guideline Recommendations, as applicable; and
b. Truthful, non-misleading, accurate, non-deceptive, and does not omit any relevant information.
B. No Financial Reward or Discipline Based on Volume of Opioid Sales
1. Teva shall not provide financial incentives to its sales and marketing employees or discipline its sales and marketing employees based upon sales volume or sales quotas for Opioid Products. However, this provision shall not prohibit financial incentives based on overall company performance.
2. Teva shall not offer or pay any remuneration (including any kickback, bribe, or rebate) not subject to the Discount/Rebate Safe Harbor directly or indirectly, to or from any person in return for the prescribing, sale, use or distribution of Opioid Product.
3. Teva’s compensation policies and procedures shall be designed to ensure compliance with this Agreement and other legal requirements.
C. Ban on Funding/Grants to Third Parties.
1. Teva shall not directly or indirectly provide financial support or In-Kind Support to any Third Party that Promotes or is for education about Opioids, Opioid Products, the Treatment of Pain, or Opioid-Induced Side Effects Treatment Products, excluding financial support otherwise required by the Judgment or by a federal or state agency.
2. Teva shall not create, sponsor, provide financial support or In-Kind Support to, operate, or control any medical society or patient advocacy group relating to any Opioids, Opioid Products, Treatment of Pain, or Opioid-Induced Side Effects Treatment Product.
3. Teva shall not provide a direct link to any Third Party website or materials or otherwise distribute materials created by a Third Party relating to any Opioids, Opioid Products, the Treatment of Pain, or Opioid-Induced Side Effects Treatment Products.
4. The above prohibitions do not prevent Teva from engaging with Third Parties in connection with and consistent with the activities Teva is permitted to undertake pursuant to Sections II.A.2 and II.A.4.
P-8
5. Teva shall not use, assist, or employ any Third Party to engage in any activity that Teva itself would be prohibited from engaging in pursuant to this Agreement.
6. Teva shall not enter into any contract or agreement with any person or entity or otherwise attempt to influence any person or entity in such a manner that has the purpose or foreseeable effect of limiting the dissemination of information regarding the risks and side effects of using Opioids.
7. Teva shall not compensate or support Health Care Providers or organizations to advocate for formulary access or treatment guideline changes that would have the effect of increasing access to any Opioid Product by third-party payers, i.e., any entity, other than an individual, that pays or reimburses for the dispensing of prescription medicines, including, but not limited to, managed care organizations and pharmacy benefit managers.
8. No Board of Directors member, Executive Officer, or senior management-level employee of a United States Teva entity may serve as a director, board member, employee, agent, or officer of any entity that engages in Promotion relating to Opioids, Opioid Products, the Treatment of Pain, or Opioid-Induced Side Effects Treatment Products. For the avoidance of doubt, nothing in this provision shall preclude an officer or executive management-level employee of Teva from concurrently serving on the board of a hospital.
9. Teva shall play no role in appointing persons to the board, or hiring persons to the staff, of any entity that engages in Promotion relating to any Opioids, Opioid Products, the Treatment of Pain, or Opioid-Induced Side Effects Treatment Products.
10. For the avoidance of doubt:
a. Nothing in this Section II.C shall be construed or used to prohibit Teva from providing financial or In-Kind Support to:
i. universities, medical institutions, or hospitals, for the purpose of addressing, or providing education on (I) the treatment of OUD; (II) the prevention and treatment of opioid abuse, addiction, or overdose, including medication-assisted treatment for opioid addiction; and/or (III) rescue medications for opioid overdose; ii. the American Medical Association (AMA), the American Cancer Society (ACS) or any other medical society solely dedicated to cancer treatment; or
iii. broad based trade associations including, without limitation, PhRMA (Pharmaceutical Research and Manufacturers of
P-9
America), HDA (Healthcare Distribution Alliance), AAM
(Association for Accessible Medications), PCMA (Pharmaceutical Care Management Association), and NACDS (National
Association of Chain Drug Stores), or successor organizations to any of the foregoing.
11. Teva will be in compliance with Sections II.C.2 and II.C.3 with respect to support of an individual Third Party to the extent that the Independent Monitor determines that such support does not increase the risk of the inappropriate use of Opioids and that Teva has not acted for the purpose of increasing the use of Opioids.
12. The above prohibitions do not apply to the donation of product pursuant to any settlement agreements or resolutions to litigation and/or investigations.
13. Reference to any specific Third Party organization above shall in no way be construed as an approval or sanction by the States of such Third Party’s conduct or business practices.
D. Lobbying Restrictions.
1. Teva shall not Lobby for the enactment of any federal, state, or local legislation or promulgation of any rule or regulation that:
a. Encourages or requires Health Care Providers to prescribe Opioids or sanctions Health Care Providers for failing to prescribe Opioids or failing to treat pain with Opioids;
b. Would have the effect of limiting access to any non-Opioid alternative pain treatments; or
c. Pertains to the classification of any Opioid or Opioid Product as a scheduled drug under the Controlled Substances Act.
2. Teva shall not Lobby against the enactment of any provision within any federal, state, local legislation, rule, or regulation that supports:
a. The use of non-pharmacologic therapy and/or non-Opioid pharmacologic therapy to treat chronic pain over or instead of Opioid use, including but not limited to third party payment or reimbursement for such therapies;
b. The use and/or prescription of immediate release Opioids instead of extended release Opioids when Opioid use is initiated, including but not limited to third party reimbursement or payment for such prescriptions;
c. The prescribing of the lowest effective dose of an Opioid, including but not limited to third party reimbursement or payment for such prescription; P-10
d. The limitation of initial prescriptions of Opioids to treat acute pain; e. The prescribing and other means of distribution of naloxone to minimize the risk of overdose, including but not limited to third party reimbursement or payment for naloxone;
f. The use of urine testing before starting Opioid use and annual urine testing when Opioids are prescribed, including but not limited to third party reimbursement or payment for such testing;
g. Evidence-based treatment (such as using medication-assisted treatment with buprenorphine or methadone in combination with behavioral therapies) for OUD, including but not limited to third party reimbursement or payment for such treatment; or
h. The implementation or use of Opioid drug disposal systems.
3. Teva shall not Lobby against the enactment of any federal, state or local legislation or promulgation of any rule or regulation expanding the operation or use of PDMPs, including but not limited to provisions requiring Health Care Providers to review PDMPs when Opioid use is initiated and with every prescription thereafter.
4. Notwithstanding the foregoing restrictions in subparagraphs II.D.1-3, the following conduct is not restricted:
a. Challenging the enforcement of, or suing for declaratory or injunctive relief with respect to legislation, rules or regulations referred to in subparagraphs II.D.1;
b. Communications made by Teva in response to a statute, rule, regulation, or order requiring such communication;
c. Communications by a Teva representative appearing before a federal or state legislative or administrative body, committee, or subcommittee as result of a mandatory order or subpoena commanding that person to testify; or Responding, in a manner consistent with this Agreement, to an unsolicited request for the input on the passage of legislation or the promulgation of any rule or regulation when such request is submitted in writing specifically to Teva from a government entity directly involved in the passage of that legislation or promulgation of that rule or regulation;
d. Conduct permitted pursuant to Section II.C.10; or
e. Responding to requests from government agencies and/or participating in panels at the request of a government agency.
5. Teva shall require all of its officers and employees engaged in Lobbying to certify P-11
in writing to Teva that they are aware of and will fully comply with the provisions of this Exhibit P with respect to Lobbying.
E. Monitoring and Reporting of Off-Label Use of Transmucosal ImmediateRelease Fentanyl (TIRF) Products.
1. Teva shall monitor for off-label prescribing of its TIRF products in the United States, including analysis that utilizes prescription and patient diagnosis data, using the TIRF REMS program data accessible to Teva to determine:
a. the indication(s) or diagnoses for which the TIRF product was prescribed in the United States and whether those indications or diagnoses were on-label or offlabel; and b. use by opioid-intolerant patients in the United States.
2. Upon request of one of the following in a Settling State, Teva shall provide the requestor with the data and analysis described in Subsection II.E.1, to be used for law enforcement, counter-detailing, academic or medical research, or public health and other noncommercial purposes: State Attorney General or other law enforcement agency, State medical board, State board of pharmacy, Qualified Researchers, medical and pharmacy directors of health systems or clinics, medical associations, and other public health officials, including but not limited to city health authorities, county medical directors, and State public health authorities.
3. Teva shall provide the data and analysis described in Subsection II.E.1 in chart format, including breakdown of prescriptions by year, diagnosis, and county.
F. Ban on High Dose Opioids.
1. After any related commercial commitments existing on February 15, 2022 have expired, Teva shall not manufacture, promote, or distribute any oxycodone pill that exceeds 40 milligrams.
G. Ban on Prescription Savings Programs.
1. Teva shall not directly or indirectly offer any discounts, coupons, rebates, or other methods which have the effect of reducing or eliminating a patient’s co-payments or the cost of prescriptions (e.g., free trial prescriptions) for any Opioid Product. This does not preclude Teva from offering discounts, rebates, or other customary pricing adjustments to commercial partners for the non-retail sale of any Opioid Product, including providing discounts, coupons, rebates, or other methods for use by retail chain pharmacies, such as CVS, Walgreens, Rite Aid and the like, as well as contracting intermediaries, such as Buying Groups, Group Purchasing Organizations, and Pharmacy Benefit Managers.
2. Teva shall not directly or indirectly provide financial support to any Third Party that offers coupons, discounts, rebates or other methods which have the effect of reducing or P-12
eliminating a patient’s co-payments or the cost of prescriptions (e.g., free trial prescriptions) for any Opioid Product.
3. Teva shall not directly or indirectly assist patients, Health Care Providers, or pharmacies regarding the claims and/or prior authorization process required for third-party payers to approve claims involving any Opioid Product.
H. Monitoring and Reporting of Direct and Downstream Customers.
1. Teva shall operate an effective monitoring and reporting system in compliance with 21 C.F.R. § 1301.71(a), 21 C.F.R. §1301.74(b), 21 U.S.C. § 823(e) and Section 3292 of the SUPPORT for Patients and Communities Act, that shall include processes and procedures that:
a. Utilize all reasonably available transaction information to identify a Suspicious Order of an Opioid Product by a direct customer;
b. Utilize all reasonably available Downstream Customer Data to identify whether a Downstream Customer poses a material risk of diversion of an Opioid Product; c. Utilize all information Teva receives that bears upon a direct customer’s or a Downstream Customer’s diversion activity or potential for diversion activity, including reports by Teva’s employees, customers, Health Care Providers, law enforcement, state, tribal, or federal agencies, or the media; and d. Upon request (unless otherwise required by law), report to a State agency any direct customer or Downstream Customer in such agency’s State identified as part of the monitoring required by (a)-(c), above, and any customer relationship in such State terminated by Teva relating to diversion or potential for diversion.
These reports shall include the following information, to the extent known to Teva:
i. The identity of the downstream registrant and the direct customer(s) identified by Teva engaged in the controlled substance transaction(s), to include each registrant’s name, address, business type, and DEA registration number;
ii. The dates of reported distribution of controlled substances by direct customers to the downstream registrant during the relevant time period; iii. The drug name, drug family or NDC and dosage amounts reportedly distributed;
iv. The transaction or order number of the reported distribution; and v. A brief narrative providing a description of the circumstances leading to Teva’s conclusion that there is a risk of diversion.
P-13
2. Teva shall not provide to any direct customer an Opioid Product to fill an order identified as a Suspicious Order unless Teva’s DEA Compliance Department investigates and finds that the order is not suspicious.
3. Upon request, Teva shall provide full cooperation and assistance to any federal, state or local law enforcement investigations of potential diversion or suspicious circumstances involving Opioid Products, including criminal law enforcement agencies, drug control agencies, professional licensing boards, and Attorney General’s offices.
I. General Terms
1. To the extent that any provision in the Agreement between Teva and the States conflicts with federal or state law or regulation, the requirements of the law or regulation will prevail.
2. Teva shall not make any written or oral statement about Opioids or any Opioid Product that is unfair, false, misleading, deceptive or unconscionable. For purposes of this paragraph, “Opioid Product” shall also include methadone, buprenorphine, and other substances when used exclusively to treat opioid abuse, addiction, or overdose
3. Teva shall not represent that Opioids or any Opioid Product(s) have approvals, characteristics, uses, benefits, or qualities that they do not have. For purposes of this paragraph, “Opioid Product” shall also include methadone, buprenorphine and other substances when used exclusively to treat opioid abuse, addiction, or overdose.
4. For the avoidance of doubt, nothing in this Agreement is intended to or shall be construed to prohibit Teva in any way whatsoever from (a) taking legal or factual positions with regard to its Opioid Product(s) in defense of litigation or other legal proceedings or investigations, (b) communicating its positions and responding to media inquiries concerning litigation, investigations, reports, or other documents or proceedings relating to Teva or its Opioid Products, or (c) maintaining a website explaining its litigation positions and responding to allegations concerning its Opioid Products.
5. Upon the request of any Settling State Attorney General, Teva shall provide the requesting State Attorney General with copies of the following, within 30 days of the request:
a. Any litigation or civil or criminal law enforcement subpoenas or Civil Investigative Demands relating to Teva’s Opioid Product(s); and b. Warning or untitled letters issued by the FDA regarding Teva’s Opioid Product(s) and all correspondence between Teva and the FDA related to such letters.
6. Nothing contained herein shall prohibit Teva from divesting any Opioid or Opioid Product, in each case, including providing technical development services, transferring know-how and patents, and/or providing such other support services in connection therewith, provided P-14
that all provisions of this Exhibit P shall apply to any subsequent purchaser with respect to the divested Opioid or Opioid Product.
7. This Exhibit P applies to the manufacture, sales, Promotion, marketing and distribution by Teva within the United States and its territories or involving Health Care Providers.
8. For the avoidance of doubt, nothing in this Exhibit P is intended to prohibit or restrict Teva's Promotion of non-Opioid products that are approved for the Treatment of Pain (including Ajovy), including by providing educational or other information about such non-Opioid products or providing support or funding to Third Parties specifically to support the use of such non-Opioid products. Teva shall not be restricted from referencing current pain care treatments or treatment modalities for purposes of Promotion of such nonOpioid products so long as such reference does not Promote Opioids or Opioid Products. The exclusion from this Consent Judgment of non-Opioid products approved for the Treatment of Pain shall in no way be construed as an approval or a sanction by the States of Teva’s business practices with respect to any such non-Opioid product.
J. Compliance with All Laws and Regulations Relating to the Sale, Promotion, and Distribution of Any Opioid Product
1. Teva shall comply with all state laws and regulations that relate to the sale, promotion, distribution, and disposal of any Opioid Product, provided that nothing in this paragraph requires Teva to violate federal law or regulations, including but not limited to:
a. State Controlled Substances Act, including all guidance issued by applicable state regulator(s);
b. State Consumer Protection Laws and Unfair Trade Practices Acts; c. State laws and regulations related to opioid prescribing, distribution and disposal; and
d. State Specific Laws.
K. Compliance Deadlines.
1. Teva must be in full compliance with the provisions included in Exhibit P by the Effective Date.
L. Training
1. Teva shall provide regular training, at least once per year, to relevant employees on their obligations imposed by this Agreement.
P-15
III. CLINICAL DATA TRANSPARENCY
A. Data to Be Shared
1. Teva shall share the following clinical data through a third-party data archive that conforms to the requirements defined below to increase the transparency of its clinical research.
a. Teva shall make available all previously disclosed data and/or information regarding Teva Opioid Products;
b. Teva shall make available all previously unreleased data regarding Teva Opioid Products located in its possession, custody or control after a reasonably diligent search, for both approved and unapproved indications, including:
i. Full analyzable data set(s) (including individual participantlevel data de-identified by an independent biostatistician); ii. The clinical study report(s) redacted for commercial or personal identifying information;
iii. The full protocol(s) (including the initial version, final version, and all amendments); and
iv. Full statistical analysis plan(s) (including all amendments and documentation for additional work processes); and
c. Teva shall make available the above information for all studies for any new Teva Opioid Product or new indications within 6 months after regulatory approval or 18 months after study completion, whichever occurs later.
d. Data related to Investigator Sponsored Studies completed prior to the Effective Date are subject to the requirements in this Section III.A.1 if such data can be located in Teva’s possession, custody or control after a reasonably diligent search.
e. Data related to Investigator Sponsored Studies completed after the Effective Date are subject to the requirements of this Section III.A.1.
B. Third-Party Data Archive
1. Teva shall share the above information via a third-party data archive that makes clinical data available to Qualified Researchers with a bona fide scientific research proposal.
P-16
2. The data archive shall have a panel of reviewers with independent review authority to determine whether the researchers are qualified, whether a research application seeks data for bona fide scientific research, and whether a research proposal is complete.
3. The panel may exclude research proposals with a commercial interest.
C. Non Interference
1. Teva shall not interfere with decisions made by the staff or reviewers associated with the third-party data archive.
D. Data Use Agreement
1. Any data sharing agreement with a Qualified Researcher who receives shared data via the third-party data archive shall contain contact information for Teva’s pharmacovigilance staff. Every agreement shall require the lead Qualified Researcher to inform Teva’s pharmacovigilance staff within 24 hours of any determination that research findings could detrimentally impact the risk-benefit assessment regarding the product. The lead Qualified Researcher may also inform regulatory authorities of the safety signal impacting the risk-benefit assessment.
Teva’s pharmacovigilance staff shall take all necessary and appropriate steps upon receipt of such safety information, including but not limited to notifying regulatory authorities or the public.
E. Cost
1. Teva shall bear all costs for making data and/or information available.
IV. TERM
A. Unless addressed in Section IV.B below, each term of this Exhibit P shall apply for thirteen (13) years from the Effective Date.
B. The provisions of Section II.A (“Ban on Promotion”), Section II.I (“General Provisions”), and Section II.J (“Compliance with All Laws and Regulations Relating to the Sale, Promotion and Distribution of Any Opioid Product”) shall not be subject to any term.
V. DOCUMENT DISCLOSURE
A. Documents Subject to Public Disclosure
The following documents must be provided to each Settling State and are subject to public disclosure in perpetuity, except for the redactions authorized by section B:
1. All Teva-produced documents admitted as trial exhibits in In re Opioid Litigation, Index No. 400000/2017 (N.Y. Sup. Ct., Suffolk County), The City and County of P-17
San Francisco, California and the People of the State of California, acting by and through San Francisco City Attorney David Chiu v. Purdue Pharma L.P., et al., Case No. 3:18-cv-7591-CRB (N.D. Cal.), The State of West Virginia ex rel. Patrick Morrisey, Attorney General v. Teva Pharmaceutical Industries Ltd., et al., Civil Action No. 19-C-104 BNE (W. Va. Cir. Ct., Boone County), or The People of the State of California, acting by and through Santa Clara County Counsel James R.
Williams, Orange County District Attorney Tony Rackauckas, Los Angeles County Counsel Mary C. Wickham, and Oakland City Attorney Barbara J. Parker v.
Purdue Pharma L.P., et al., Case No. 30-2014-00725287-CU-BT-CXC (Cal.
Super. Ct., Orange County) and Oklahoma v. Purdue Pharma L.P., et al., No. CJ2017-816 (Cleveland Cty., Okla. Dist. Ct.), together with complete trial transcripts.
2. All Teva deposition transcripts and exhibits from or produced in the matters identified in section A.1, as well as in In re Nat’l Prescription Opiate Litig., No. 1:17-MD-2804 (N.D. Ohio).
3. All summary judgment filings, proposed findings of fact and law, and expert reports relating to the claims against Teva that were filed in the matters identified in section A.2 and A.3, together with related exhibits.
4. All documents, indices, and privilege logs produced in In re Nat’l Prescription Opiate Litig., No. 1:17-MD-2804 (N.D. Ohio) (“the MDL”) bearing the bates prefixes Acquired_Actavis and TEVA_MDL_A and produced on or before October 4, 2019, except personnel files produced on Jan. 16, 2019, Jan. 20, 2019, Feb. 8, 2019, and Aug. 10, 2019.
5. All documents provided under this provision must be provided in an appropriate electronic format with appropriate metadata.
B. Information That Teva May Redact
1. The following categories of information are exempt from public disclosure:
a. Information subject to trade secret protection. A “trade secret” is information, including a formula, pattern, compilation, program, device, method, technique or process, that (a) derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure and use; and (b) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. Even if the information falls within the definition, “trade secret” does not include information reflecting sales or promotional strategies, tactics, targeting, or data, or internal communications related to sales or promotion or information in documents dated more than five (5) years before the disclosure required by this section.
b. Confidential personal information. “Confidential personal information” means individual Social Security or tax identification numbers, personal financial account numbers, passport numbers, driver license numbers, home P-18
addresses, home telephone numbers, personal email addresses, and other personally identifiable information protected by law from disclosure. “Confidential personal information” does not include the names of Teva’s officers, directors, employees, consultants, agents, or attorneys or of prescribers or of officials of a government agency.
c. Information that is inappropriate for public disclosure because it is subject to personal privacy interests recognized by law (e.g., HIPAA), or contractual rights of third parties that Teva may not abrogate. d. Information regarding Teva employees’ personal matters unrelated to Teva, including emails produced by Teva custodians discussing vacation or sick leave, family, or other personal matters.
e. Information that is protected by the attorney–client or attorney work product privilege.
f. Financial documents designated as “Highly Confidential” or “Highly Confidential Information” under Case Management Order No. 2 in In re Nat’l Prescription Opiate Litig., No. 1:17-MD-2804 (N.D. Ohio) and produced in response to the April 3, 2019 Ruling Regarding Jurisdictional Discovery on Defendants Teva, and Mallinckrodt, including tax returns including all schedules and attachments, policies regarding accounting, and annual reports.
C. Redaction of Documents Containing Protected Information
1. Whenever a document contains information subject to a claim of exemption pursuant to section B, Teva will provide the document in redacted form. Such redactions must indicate that trade secret and/or private information, as appropriate, has been redacted. Redactions are limited to the minimum redactions possible, consistent with section B.
2. Teva must provide to each Settling State a log noting each document redacted. The log must also provide fields stating the basis for redacting the document, with sufficient detail to allow an assessment of the merits of the assertion. The log is subject to public disclosure in perpetuity. The log shall be provided by the production deadline.
3. In addition to the redacted documents, Teva shall, upon any Settling State’s request, also produce all documents identified in Section A above in unredacted form to such Settling State at the same time, but only to the extent the document was produced by Teva in an unredacted form in the underlying litigation, and only for the purpose of permitting a merits assessment and potential challenge of the redaction pursuant to section VII herein.
P-19
D. Public Disclosure Through a Document Repository
1. Each Settling State may publicly disclose all documents covered by this section through a public repository maintained by a governmental, non-profit, or academic institution. Each Settling State may specify the terms of any such repository’s use of those documents, including allowing the repository to index and make searchable all documents subject to public disclosure, including the metadata associated with those documents.
E. Timeline for Production
1. Teva shall produce all documents required by Section A within nine months from the Effective Date.
F. Support Payment
1. Within thirty (30) calendar days of the Effective Date, Teva will make one-time payments totaling $1,375,000 to the University of California, San Francisco Foundation (UCSF Foundation) and The Johns Hopkins University, to be used to support a public repository of documents subject to this section.
P-20
VI. INDEPENDENT MONITOR
A. Independent Monitor Committee
1. Within thirty (30) calendar days of the Effective Date, the Settling States shall designate a group of States to serve on an Independent Monitor Committee as the Settling States’ representatives in the administration of the relevant terms of these Independent Monitor provisions (hereinafter, “Independent Monitor Committee”).
B. Independent Monitor Selection and Engagement
1. Teva shall engage an Independent Monitor to review Teva’s compliance with this Exhibit P. The Independent Monitor shall have or shall employ or retain personnel who have appropriate qualifications and experience related to the pharmaceutical industry and the laws governing the manufacture, marketing and sale of pharmaceuticals and controlled substances and the applicable requirements of federal and state law. To the extent that additional expertise is required for the engagement, the Independent Monitor may retain the services of third-parties, after consultation with and input from Teva and the Independent Monitor Committee.
2. The Independent Monitor and any retained third-parties shall at all times act in good faith and with integrity and fairness towards all parties.
3. The parties have agreed that the initial Independent Monitor shall be Gil Soffer of Katten, Muchin Rosenman LLP
4. The Independent Monitor can be replaced upon agreement of the Independent Monitor Committee and Teva. If the parties so agree, the process for selecting a replacement Independent Monitor shall be the process described in paragraphs i-iii below. The provisions of this Exhibit P shall apply to any successor Independent Monitor. i. The Independent Monitor Committee and Teva will each identify the names of up to three (3) individuals, groups of individuals or firms as the pool of recommended candidates to serve as the Monitor, within (60) calendar days of the date the parties agree to replace the Monitor.
ii. The Independent Monitor Committee and Teva shall have the right to meet with and otherwise evaluate the candidates and conduct appropriate interviews of the personnel who are expected to work on the project. The following qualifications may be relevant considerations for the Independent Monitor Committee and Teva in evaluating candidates: (a) prior monitorship or oversight experience; (b) experience with federal health care and suspicious order monitoring laws, regulations, and programs; (c) experience with the pharmaceutical or health care industry; (d) access to sufficient resources to carry out the duties of the Monitor; and (e) experience with internal investigations or the investigative process.
P-21
iii. If the Independent Monitor Committee and Teva do not agree on the appointment of any of the candidates from the initial pool of recommendations, the Independent Monitor Committee and/or Teva may identify additional qualified candidates, as the timeline permits. However, in the event the parties fail to reach agreement on a Monitor within ninety (90) calendar days of the date the parties agree to replace the monitor, the Independent Monitor Committee shall appoint an Independent Monitor.
5. In the event that the Independent Monitor Committee and Teva do not agree to the dismissal of the Independent Monitor, either the Independent Monitor Committee (through one of the Settling States on the Independent Monitor Committee) or Teva may submit the question of the Independent Monitor’s dismissal to the court to which the Consent Judgment was presented in any Settling States on the Independent Monitor Committee, and the Independent Monitor shall only be dismissed if the court finds that there is Good Cause for dismissal. Good Cause for dismissal shall mean (a) a material and substantial breach of the terms of this Exhibit P by the Independent Monitor, including the failure to comply with the terms and limitations of this Exhibit P; (b) any act of dishonesty, misappropriation, embezzlement, intentional fraud, or similar conduct by the Independent Monitor; (c) any intentional act of bias or prejudice in favor or against either party by the Independent Monitor; or (d) conduct by the Independent Monitor that demonstrates unfitness to fulfill the functions of the Independent Monitor reasonably and competently. Good Cause shall not include disagreements with the decisions of the Independent Monitor pursuant to this Exhibit P, unless there is a clear pattern in the Independent Monitor’s decisions that demonstrates that the Independent Monitor has not been acting as an independent third party in rendering decisions.
C. Costs of the Independent Monitor
1. Teva shall pay all reasonable and necessary fees and costs of the Independent Monitor. Reasonable and necessary fees and costs shall be limited to those set out in the Independent Monitor work plan and contract, but in no event shall they exceed $1,000,000 per year, inclusive of fees and costs for any personnel or third-parties that the Independent Monitor engages or retains.
D. Term and Reporting Periods
1. The term of the Independent Monitor will be five (5) years from the Effective Date, divided into ten (10) six-month periods for purposes of the reviews and reporting described in Section VI.H (“Reporting Periods”).
2. The Independent Monitor shall be terminated and the oversight shall cease within thirty (30) calendar days of the Independent Monitor Committee receiving a certification from Teva that it has stopped selling Opioid Products for end-use consumption in the United States.
E. Independent Monitor’s Scope of Work
1. The Independent Monitor’s responsibilities shall encompass Teva’s ongoing compliance P-22
with the specific requirements of the Exhibit P as it relates to the following areas: (1) Promotion and sale of Opioids or Opioid Products; (2) Promotion of Opioid-Induced Side Effects Treatment Product; (3) Promotion relating to the Treatment of Pain; (4) Financial Reward or Discipline Based on Volume of Opioid Sales; (5) funding and grants to third parties concerning Opioids, Opioid Products, or the Treatment of Pain; (6) lobbying concerning Opioids, Opioid Products, or the Treatment of Pain; (7) Prescription Savings Programs for Opioid Products; (8) Monitoring and Reporting of Direct and Downstream Customers; (9) training concerning Teva’s obligations under Exhibit P (hereinafter referred to as the “Scope of Work”). The Independent Monitor’s Scope of Work and review applies to the manufacture, sales, Promotion, marketing and distribution by Teva within the United States and its territories or involving Health Care Providers. The Independent Monitor will report his or her findings as provided in Section VI.H below.
2. Within thirty (30) calendar days after the appointment of the Independent Monitor, the Independent Monitor Committee and Teva shall agree with the Independent Monitor on a work plan and contract. The work plan shall set forth in detail the manner in which the Independent Monitor will carry out his or her responsibilities under this Exhibit P, and the general scope of information that the Independent Monitor will seek to review in fulfilling the Independent Monitor’s Scope of Work. It is not intended that the Independent Monitor will conduct his or her own inquiry into the historical events that allegedly gave rise to this Consent Judgment or into matters beyond the scope of the Injunctive Terms of this Consent Judgment. The work plan shall also include all reasonable and necessary costs of the Independent Monitor, as well as a process by which Teva may challenge Independent Monitor costs as excessive, duplicative or unnecessary.
3. If the Independent Monitor, the Independent Monitor Committee and Teva fail to reach agreement on a work plan within the designated time frame, the Independent Monitor Committee shall determine a fair and reasonable work plan and contract in consultation with Teva and the Independent Monitor.
4. At least annually, and more frequently if appropriate, Teva and the Independent Monitor Committee will meet in person or virtually to discuss the work of the Independent Monitor and any suggestions, comments, or improvements Teva may wish to discuss with or propose to the Independent Monitor Committee, including with respect to the scope and costs of the work of the Independent Monitor, unless Teva and the Independent Monitor Committee believe such a meeting is unnecessary.
F. Independent Monitor Access to Information
1. In connection with its review of Teva’s compliance with the terms identified in Section VI.E above, the Independent Monitor shall be vested with reasonably broad discretion to review Teva’s compliance with the terms of Exhibit P covered by the Scope of Work, including access to documents and the right to interview employees, as is reasonably necessary to fulfill its duties under this Consent Judgment, with reasonable notice to Teva and without unreasonable interference in Teva’s or its employees’ ability to perform dayto-day operations. The Independent Monitor shall have all powers reasonable and necessary to efficiently and effectively discharge its responsibilities.
P-23
2. The Chief Compliance Officer of Teva shall serve as the primary point of contact for the Independent Monitor to facilitate the Independent Monitor's reasonable access to documents, materials, or employees necessary to review for compliance with Exhibit P.
The Independent Monitor shall make a good faith effort to leverage Teva’s existing compliance mechanisms when reviewing Teva’s compliance with the terms of Exhibit P identified in Section VI.E, above. The Independent Monitor shall communicate any request for documents, materials, or access to employees to the Chief Compliance Officer, but, subject to the terms hereof, is not prohibited from speaking with any other current or former employees of Teva. Teva shall not intimidate, harass, threaten, or penalize any employee or former employee for his or her cooperation with or assistance to the Independent Monitor.
3. If at any time the Independent Monitor reasonably believes that there is undue delay, resistance, interference, limitation, or denial of access to any records or to any employee deemed necessary by the Independent Monitor to implement or review compliance by Teva with the Injunctive Terms, the Independent Monitor may meet and confer with Teva’s Chief Compliance Officer. If the Independent Monitor cannot resolve such limitation or denial, it shall be immediately reported to the Independent Monitor Committee.
4. To the extent that any of the documents requested by the Independent Monitor contain material protected from disclosure by the attorney-client privilege or attorney work product doctrine, Teva may redact the privileged material before providing the documents to the Independent Monitor.
G. Settling States' Access to Independent Monitor
1. There shall be no limitation on the ability of the Independent Monitor to communicate at any time with Settling States regarding Teva’s conduct.
H. Independent Monitor Reports
1. Observations and Recommendations
i. To the extent that the reviews conducted by the Independent Monitor raise questions or concerns about particular decisions made or conduct engaged in by Teva regarding issues within the Scope of Work, the Independent Monitor may conduct interviews of personnel of Teva who were involved in the decisions or conduct at issue. If the Independent Monitor continues to have questions or concerns about particular decisions or conduct, after conducting interviews, the Independent Monitor shall include a description of the question or concern in the Final Report described below. If the Independent Monitor notes any areas for potential improvement regarding matters within the Scope of Work during the course of the reviews conducted pursuant to the Injunctive Relief Terms, the Independent Monitor shall include any such recommendations in the Final Report.
Collectively, any such questions, concerns or recommendations will be referred to as “Observations and Recommendations.”
P-24
2. Draft and Final Reports
i. No later than thirty (30) calendar days after the close of a Reporting Period and/or at any other time deemed reasonably necessary by the Independent Monitor, the Independent Monitor shall provide Teva with a draft report identifying and detailing any Potential Violations and the bases therefore (the “Draft Report”).
Potential Violations shall mean Teva’s failure to comply with the specific provisions of Exhibit P that the Independent Monitor is tasked with overseeing as set forth in the Scope of Work and work plan, as reasonably determined by the Independent Monitor and supported by documentation (where available).
Identification of Potential Violations in the Draft Report shall not be considered a breach of the Consent Judgment. Teva shall have the right to cure any Potential Violation, in accordance with the below provisions. The Draft Report will also contain detailed descriptions of any Observations and Recommendations. ii. Within thirty (30) calendar days of its receipt of the Draft Report, Teva will provide comments and responses to the Draft Report. Teva will, among other things:
(1) Respond to each Potential Violation, including, where appropriate, explaining why no violation occurred, or describing any corrective action taken (or to be taken) as a result of the findings made by the Independent Monitor, including, where appropriate, providing documentation supporting a relevant decision or additional context explaining the Potential Violation and why it occurred. (2) Respond to each Observation and Recommendation.
iii. Within thirty (30) calendar days of receipt of Teva’s comments and responses to the Draft Report, the Independent Monitor shall provide a final report (the "Final Report"). The Final Report shall be provided simultaneously to the Independent Monitor Committee and Teva. The Independent Monitor Committee may share the Final Report with any Settling State. The Independent Monitor shall provide the Independent Monitor Committee with a copy of any Draft Report that has been subsequently revised upon conferral with Teva and, upon request, the Independent Monitor Committee shall be granted access to any other Draft Reports. iv. The Final Report shall set forth:
(1) The Independent Monitor’s evaluation of Teva’s compliance with the provisions identified in Sections VI.E and VI.F above and the factual basis for the Independent Monitor’s conclusions, including whether a Potential Violation has occurred and an explanation of the nature of the Potential Violation.
(2) The Independent Monitor’s conclusion as to whether Teva has cured any Potential Violations. In the event that the Independent Monitor changes its initial determination after receiving Teva’s response, the Independent Monitor will report its initial determination and its revised determination in the Final Report in sufficient detail so that the Independent Monitor P-25
Committee can evaluate the basis for both determinations. The identification of uncured Potential Violations in the Final Report can be considered a breach of the Consent Judgment.
(3) The Final Report need not recite or describe comprehensively Teva’s history or compliance policies, procedures and practices, but rather may focus on those areas with respect to which the Independent Monitor wishes to make recommendations, if any, for improvement or which the Independent Monitor otherwise concludes merit particular attention.
(4) The Final Report shall include a listing of the Observations and Recommendations made by the Independent Monitor and responses of Teva. v. For the duration of the Independent Monitor’s term, the Settling States may take any action against Teva to enforce the Injunctive Relief terms within the Independent Monitor’s Scope of Work as identified in Section VI.E above upon receiving notice of an uncured Potential Violation in a Final Report. The Settling States are not required to abide by the procedures set forth in the Notice and Cure provision below with regard to such uncured Potential Violations. vi. For the duration of the Independent Monitor’s term, should a Settling State disagree with the Independent Monitor’s determination as to whether a Potential Violation has occurred or been cured under the Injunctive Relief terms within the Independent Monitor’s Scope of Work as identified in Section VI.E above, the Settling State shall meet and confer with the Independent Monitor, the Independent Monitor Committee, and Teva to express its concerns. Teva shall have a reasonable opportunity to explain why it believes it is in compliance with Exhibit P, to further explain the actions taken to cure the Potential Violation and/or to take additional corrective actions to address the state’s concerns. If, after engaging in this meet and confer process and affording Teva a reasonable opportunity to explain or take further action, the Settling State is not satisfied that the Potential Violation has been cured, it may take any action to enforce the terms of this Consent Judgment. vii. Notwithstanding Sections VI.H.2.v and VI.H.2.vi, the Settling States may take any action, including, but not limited to legal action to enforce compliance with the Consent Judgment, without delay if the Settling State believes that a threat to the health or safety of the public requires immediate action. viii. The Independent Monitor's reports and testimony may be used by the Settling States in any action or proceeding. No action or lack of action by the Settling States regarding information received from the Independent Monitor regarding Teva's conduct shall be considered affirmation, acceptance, or ratification of that conduct by the Settling States.
ix. Nothing in this Judgment limits the right of the Settling States to conduct investigations or examinations unrelated to the work of the Independent Monitor.
P-26
I. Confidentiality
1. Teva may designate materials and information that it believes contain trade secret or other commercially sensitive information as “Confidential.” Materials and information provided by Teva to the Independent Monitor that are designated “Confidential” (and any parts, portions, or derivations thereof) and shall not be disclosed or distributed to any person or entity other than those authorized by these provisions, subject to the provisions in Section VI.H.2.e.
2. All materials obtained from Teva by the Independent Monitor and in the Independent Monitor’s possession shall be returned to Teva or destroyed at the conclusion of the Independent Monitor’s term.
3. If any of the Settling States receive a request for disclosure of any material or information received by the Settling State from the Independent Monitor, pursuant to a subpoena, court order, data practices act, freedom of information act, public information act, public records act, or similar law (“Third Party Request”) the Attorney General shall notify Teva of the Third Party Request and the Confidential Information to be disclosed so that Teva may seek a protective order or otherwise challenge or object to the disclosure. Each of the Settling States agrees to provide Teva with at least ten (10) business days' advance notice before complying with any Third-Party Request for Confidential Information, except where state law requires a lesser period of advance notice.
J. Retention of Documents
1. Teva shall generate, retain and make readily available to any of the Settling States for inspection, upon reasonable notice and without the necessity of a subpoena or other legal process, all material records and documents reasonably necessary to document compliance with Exhibit P. Teva shall maintain these records and documents for a minimum of five (5) years after the Independent Monitor's last Final Report.
VII. ENFORCEMENT
A. For the purposes of resolving disputes with respect to compliance with Exhibit P, other than those addressed in Sections VI.H.2.v and VI.H.2.vi, should any of the Settling States have reason to believe that Teva has violated a provision of Exhibit P, then such Settling State shall notify Teva in writing of the specific objection, identify with particularity the provisions of Exhibit P that the practice appears to violate, and give Teva thirty (30) days to respond to the notification (“Response Period”).
B. Upon receipt of written notice from any of the Settling States, Teva shall provide a written response to the Settling State’s notification, containing either a statement explaining why Teva believes it is in compliance with Exhibit P, or a detailed explanation of how the alleged violation occurred and a statement explaining how and when Teva intends to remedy or has remedied the alleged violation. Teva may request a reasonable amount of additional time to cure any violation through such remedial measures (“Cure Period”) and the Settling State shall not unreasonably withhold approval of such request.
P-27
C. The Settling State may not take any action concerning the alleged violation of Exhibit P during the Response and Cure Periods. Nothing shall prevent the Settling State from agreeing in writing to provide Teva with additional time beyond the thirty (30) days to respond to the notice. However, the Settling State may take any action, including, but not limited to legal action to enforce compliance with the Consent Judgment, without delay if the Settling State believes that a threat to the health or safety of the public requires immediate action.
D. The Settling State may bring an action against Teva to enforce the terms of Exhibit P, but only after providing Teva an opportunity to respond to the notification and, if agreed upon, a period to cure any violation, as described above, or within any other period as agreed to by Teva and the Settling State.
E. Nothing in this Consent Judgment shall be interpreted to limit any Settling State’s Civil Investigative Demand (“CID”) or investigative subpoena authority, to the extent such authority exists under applicable state law.
F. Nothing herein shall be construed to exonerate any failure to comply with any provision of Exhibit P after the Effective Date, or to compromise the authority of any Settling State to take action for any failure to comply with Exhibit P.
Q-1
Exhibit Q
Anda Injunctive Relief
I. INTRODUCTION
A. Within ninety (90) days of the Effective Date unless otherwise set forth herein, Anda shall implement the injunctive relief terms set forth in Sections II through XIX (the “Injunctive Relief Terms”) in its Controlled Substance Monitoring Program (“CSMP”).
B. The Effective Date of these Injunctive Relief Terms shall be defined by Section I of the Settlement Agreement, dated as of November 22, 2022, which incorporates these Injunctive Relief Terms as Exhibit Q.
C. The parties acknowledge that agreement to the Injunctive Relief Terms does not constitute an admission that Anda’s existing CSMP does not comply with the requirements of law. Anda shall modify its CSMP as required by the Injunctive Relief Terms within ninety (90) days of the Effective Date.
D. The Parties acknowledge that Anda is predominantly a Secondary Source Distributor (as defined herein) to the Anda Customers, has in place a CSMP, and will develop a modified CSMP in accordance with this Agreement, that is tailored to the business of distributing products to Customers as a Secondary Source Distributor. The Parties acknowledge that the Anda CSMP may be different from the CSMPs implemented by other distributors, including other Primary or Secondary Source Distributors.
E. Primary Source Distributors and Secondary Source Distributors may use different analytical tools to identify and characterize Customers’ ordering patterns, order frequencies and order sizes, and deviations therefrom. Analytical tools and, where applicable, algorithms, adopted and implemented by any particular distributor are not dispositive of the appropriate methods and tools to be implemented by Anda or other distributors.
F. Nothing contained herein shall prohibit Anda from divesting any or all of its distribution operations provided that all provisions of this Injunctive Relief shall apply to any subsequent purchaser with respect to the divested operations.
II. TERM
A. The duration of the Injunctive Relief Terms contained in Sections IV through XVI shall be ten (10) years from the Effective Date.
III. DEFINITIONS
A. “Anda.” Anda, Inc. and Anda Pharmaceuticals, Inc. and each of their current and former parents, subsidiaries, predecessors, successors, affiliates, divisions, assigns, officers, directors, agents, employees and principals.
Q-2
B. “Audit Report.” As defined in Section XVIII.I.3.
C. “Big 3 Distributor Injunctive Terms.” Exhibit P of the Settlement Agreement, dated as of July 21, 2021, between McKesson Corporation, Cardinal Health, Inc., and AmerisourceBergen Corporation and certain States and subdivisions.
D. “Chain Customers.” Chain retail pharmacies that have centralized corporate headquarters and have multiple specific retail pharmacy locations from which Controlled Substances are dispensed to individual patients.
E. “Chief Diversion Control Officer.” As defined in Section IV.A.
F. “Clearinghouse.” The system established by Section XVII of the Big 3 Distributor Injunctive Terms.
G. “Clearinghouse Advisory Panel.” As defined in Section XVII.B.4 of the Big 3 Distributor Injunctive Terms.
H. “Controlled Substances.” Those substances designated under schedules II-V pursuant to the federal Controlled Substances Act and the laws and regulations of the Settling States that incorporate federal schedules II-V. For purposes of the requirements of the Injunctive Relief Terms, Gabapentin shall be treated as a Controlled Substance, except for purposes of Section XII for Customers located in States that do not regulate it as a controlled substance or similar designation (e.g., drug of concern).
I. “Corrective Action Plan.” As defined in Section XIX.B.7.b.
J. “CSMP.” As defined in Section I.A.
K. “CSMP Committee.” As defined in Section VI.A.
L. “Customers.” Refers collectively to current, or where applicable potential, Chain Customers and Independent Retail Pharmacy Customers. “Customers” do not include long-term care facilities, hospital pharmacies, and pharmacies that serve exclusively inpatient facilities.
M. “Data Security Event.” Refers to any compromise, or threat that gives rise to a reasonable likelihood of compromise, by unauthorized access or inadvertent disclosure impacting the confidentiality, integrity, or availability of Dispensing Data.
N. “Dispensing Data.” Includes, unless altered by the Clearinghouse Advisory Panel:
(i) unique patient IDs; (ii) patient zip codes; (iii) the dates prescriptions were dispensed; (iv) the NDC numbers of the drugs dispensed; (v) the quantities of drugs dispensed; (vi) the day’s supply of the drugs dispensed; (vii) the methods of payment for the drugs dispensed; (viii) the prescribers’ names; (ix) the prescribers’ NPI or Q-3
DEA numbers; and (x) the prescribers’ zip codes or addresses. The Clearinghouse will be solely responsible for collecting Dispensing Data.
O. “Draft Report.” As defined in Section XVIII.I.1.
P. “Effective Date.” As defined in Section I.B.
Q. “Highly Diverted Controlled Substances.” Includes: (i) oxycodone; (ii) hydrocodone; (iii) hydromorphone; (iv) tramadol; (v) oxymorphone; (vi) morphine; (vii) methadone; (viii) carisoprodol; (ix) alprazolam; and (x) fentanyl. Anda shall annually review this list to determine whether changes are appropriate and shall add Controlled Substances to the list of Highly Diverted Controlled Substances as needed based on information provided by the DEA and/or other sources related to drug diversion trends. Anda shall notify the State Compliance Review Committee and the Monitor of any additions to the list of Highly Diverted Controlled Substances. Access to Controlled Substances predominately used for MedicationAssisted Treatment shall be considered when making such additions.
R. “Independent Retail Pharmacy Customers.” Retail pharmacy locations that do not have centralized corporate headquarters and dispense Controlled Substances to individual patients.
S. “Injunctive Relief Terms.” As defined in Section I.A.
T. “Monitor.” As defined in Section XVIII.
U. “National Arbitration Panel.” As defined by Section I of the Settlement Agreement, dated as of November 22, 2022 which incorporates these Injunctive Relief Terms as Exhibit.
V. “NDC.” National Drug Code.
W. “Non-Controlled Substance.” Prescription medications that are not Controlled Substances.
X. “Notice of Potential Violation.” As defined in Section XIX.B.2.
Y. “Order.” A unique Customer request on a specific date for (i) a certain amount of a specific dosage form or strength of a Controlled Substance or (ii) multiple dosage forms and/or strengths of a Controlled Substance. For the purposes of this definition, each line item on a purchasing document or DEA Form 222 is a separate order, except that a group of line items either in the same drug family or DEA base code (based upon the structure of Anda’s CSMP) may be considered to be a single order.
Z. “Pharmacy Customer Data.” Aggregated and/or non-aggregated data provided by the Customer for a 90-day period.
Q-4
1. To the extent feasible based on the functionality of a Customer’s pharmacy management system, Pharmacy Customer Data shall contain (or, in the case of non-aggregated data, shall be sufficient to determine) the following:
a) A list of the total number of prescriptions and dosage units for each NDC for all Controlled Substances and non-Controlled Substances; b) A list of the top five prescribers of each Highly Diverted Controlled Substance by dosage volume and the top ten prescribers of all Highly Diverted Controlled Substances combined by dosage volume. For each prescriber, the data shall include the following information:
(1) Number of prescriptions and doses prescribed for each Highly Diverted Controlled Substance NDC;
(2) Number of prescriptions for each unique dosage amount (number of pills per prescription) for each Highly Diverted Controlled Substance NDC; (3) Prescriber name, DEA registration number, and address; and (4) Medical practice/specialties, if available;
c) Information on whether the method of payment was cash for (a) Controlled Substances, and (b) non-Controlled Substances; and
d) Information on top ten patient residential areas by five-digit ZIP code prefix for filled Highly Diverted Controlled Substances by dosage volume, including number of prescriptions and doses for each Highly Diverted Controlled Substance NDC.
2. Anda is not required to obtain Pharmacy Customer Data for all Customers.
Pharmacy Customer Data only needs to be obtained under circumstances required by the Injunctive Relief Terms and the applicable CSMP policies and procedures. Anda’s CSMP policies and procedures shall describe the appropriate circumstances under which and methods to be used to obtain and analyze Pharmacy Customer Data.
3. Anda shall only collect, use, disclose or retain Pharmacy Customer Data consistent with applicable federal and state privacy and consumer protections laws. Anda shall not be required to collect, use, disclose or retain any data element that is prohibited by law or any element that would require notice to or consent from the party who is the subject of the data element, including, but not limited to, a third party (such as a prescriber) to permit collection, use, disclosure and/or retention of the data.
AA. “Primary Source Distributor.” With respect to any individual Customer, a distributor of pharmaceutical products who serves with respect to such Customer as the primary source of Controlled Substances to such Customer.
Q-5
BB. “Potential Violation.” As defined in Section XIX.B.1.
CC. “Reporting Periods.” As defined in Section XVIII.D.1.
DD. “Secondary Source Distributor.” With respect to any individual Customer, a distributor of pharmaceutical products who does not serve with respect to such Customer as the primary source of Controlled Substances to such Customer.
EE. “Settling State.” Means any Eligible State that has entered into the Settlement Agreement, dated as of November 22, 2022 which incorporates these Injunctive Relief Terms as Exhibit Q.
FF. “State Compliance Review Committee.” The initial State Compliance Review Committee members are representatives from the Attorneys General Offices of Connecticut, North Carolina, and Tennessee. The membership of the State Compliance Review Committee may be amended at the discretion of the Settling States.
GG. “Suspicious Orders.” As defined under federal law and regulation and the laws and regulations of the Settling States that incorporate the federal Controlled Substances Act. Suspicious Orders currently include, but are not limited to, orders of unusual size, orders deviating substantially from a normal pattern, and orders of unusual frequency.
HH. “Threshold.” The total volume of a particular drug family, DEA base code, or a particular formulation of a Controlled Substance that Anda shall allow a Customer to purchase in any particular period. This term may be reassessed during Phase 2-B of the Clearinghouse.
II. “Third Party Request.” A request from an entity other than Anda, a Settling State, or the Monitor pursuant to a subpoena, court order, data practices act, freedom of information act, public information act, public records act, or similar law.
JJ. “Top Prescriber.” A prescriber who, for a Customer, is either (i) among the top five (5) prescribers of each Highly Diverted Controlled Substance or (ii) among the top ten (10) prescribers of Highly Diverted Controlled Substances combined, as determined from the most recent Pharmacy Customer Data for that Customer.
IV. CSMP PERSONNEL
A. Anda shall establish or maintain the position of Chief Diversion Control Officer, or other appropriately titled position, to oversee Anda’s CSMP. The Chief Diversion Control Officer shall have appropriate experience regarding compliance with the laws and regulations concerning Controlled Substances, in particular laws and regulations requiring effective controls against the potential diversion of Controlled Substances. The Chief Diversion Control Officer shall report directly to either the Q-6
senior executive responsible for U.S. pharmaceutical distribution or the most senior legal officer at Anda.
B. The Chief Diversion Control Officer shall be responsible for the approval of material revisions to the CSMP.
C. The Chief Diversion Control Officer shall provide at least quarterly reports to the CSMP Committee regarding Anda’s operation of the CSMP, including the implementation of any changes to the CSMP required by these Injunctive Relief Terms.
D. Anda’s CSMP functions, including, but not limited to, the onboarding and approval of new Customers for the sale of Controlled Substances, setting and adjusting Customer Thresholds for Controlled Substances, terminating or suspending Customers, and submitting Suspicious Orders and other reports to Settling States (or the Clearinghouse, when operational), but excluding support necessary to perform these functions, shall be conducted exclusively by Anda’s CSMP personnel or qualified third-party consultants.
E. Staffing levels of Anda’s CSMP department shall be reviewed periodically, but at least on an annual basis, by Anda’s CSMP Committee. This review shall include consideration of relevant developments in technology, law, and regulations to ensure the necessary resources are in place to carry out the program in an effective manner.
F. Personnel in Anda’s CSMP department shall not report to individuals in Anda’s sales department, and sales personnel shall not be authorized to make decisions regarding the promotion, compensation, demotion, admonition, discipline, commendation, periodic performance reviews, hiring, or firing of CSMP personnel.
G. The CSMP policies and procedures shall be published in a form and location readily accessible to all CSMP personnel at Anda.
V. INDEPENDENCE
A. Anda’s sales personnel compensated with commissions shall not be compensated based on revenue or profitability targets or expectations for sales of Controlled Substances. However, Anda’s personnel may, as applicable, be compensated (including incentive compensation) based on formulas that include total sales for all of Anda’s products, including Controlled Substances. The compensation of sales personnel shall not include incentive compensation tied solely to sales of Controlled Substances.
B. For any Anda personnel who are compensated at least in part based on Customer sales, Anda shall ensure the compensation of such personnel is not decreased by a CSMP-related suspension or termination of a Customer or as a direct result of the reduction of sales of Controlled Substances to a Customer pursuant to the CSMP.
Q-7
C. Anda’s sales personnel shall not be authorized to make decisions regarding the implementation of CSMP policies and procedures, the design of the CSMP, the setting or adjustment of Thresholds, or other actions taken pursuant to the CSMP, except sales personnel must provide information regarding compliance issues to CSMP personnel promptly. Anda’s sales personnel are prohibited from interfering with, obstructing, or otherwise exerting control over any CSMP department decision-making.
D. Anda shall review its compensation and non-retaliation policies and, if necessary, modify and implement changes to those policies to effectuate the goals of, and incentivize compliance with, the CSMP.
E. Anda shall maintain a telephone, email, and/or web-based “hotline” to permit employees and/or Customers to anonymously report suspected diversion of Controlled Substances or violations of the CSMP, Anda company policy related to the distribution of Controlled Substances, or applicable law. Anda shall share the hotline contact information with their employees and Customers. Anda shall maintain all complaints made to the hotline, and document the determinations and bases for those determinations made in response to all complaints.
VI. OVERSIGHT
A. To the extent not already established, Anda shall establish a committee that includes senior executives with responsibility for legal, compliance, distribution and finance to provide oversight over its CSMP (the “CSMP Committee”). The Chief Diversion Control Officer shall be a member of the CSMP Committee. The CSMP Committee shall not include any employee(s) or person(s) performing any sales functions on behalf of Anda; provided that service on the CSMP Committee by any senior executives listed in this paragraph whose responsibilities may include, but are not limited to, management of sales functions shall not constitute a breach of the Injunctive Relief Terms.
B. Anda’s CSMP Committee shall have regular meetings during which the Chief Diversion Control Officer shall present to the CSMP Committee with respect to, and the CSMP Committee shall evaluate, among other things: (1) any material modifications and potential enhancements to the CSMP including, but not limited to, those relating to Customer due diligence and Suspicious Order monitoring and reporting; (2) any significant new national and regional diversion trends involving Controlled Substances; (3) Anda’s adherence to the CSMP policies and procedures, the Injunctive Relief Terms, and applicable laws and regulations governing the distribution of Controlled Substances; and (4) any technology, staffing, or other resource needs for the CSMP. The CSMP Committee shall have access to all CSMP reports. The CSMP Committee will review and approve the specific metrics used to identify the Red Flags set forth in Section VIII.
C. On a quarterly basis, Anda’s CSMP Committee shall send a written report to Anda’s Chief Executive, Chief Financial, and Chief Legal Officer, as well as its Board of Directors, addressing: (1) Anda’s substantial adherence to the CSMP policies and Q-8
procedures, the Injunctive Relief Terms, and applicable laws and regulations governing the distribution of Controlled Substances; (2) recommendations as appropriate about the allocation of resources to ensure the proper functioning of Anda’s CSMP; and (3) significant revisions to the CSMP. The Board of Directors or a committee thereof at Anda shall document in its minutes its review of the quarterly CSMP Committee reports.
D. To the extent not already established, the Board of Directors of Anda shall establish its own compliance committee (the “Board Compliance Committee”) to evaluate, at a minimum, and on a quarterly basis: (1) the CSMP Committee’s written reports; (2) Anda’s substantial adherence to the CSMP policies and procedures, the Injunctive Relief Terms, and applicable laws and regulations governing the distribution of Controlled Substances; (3) Anda’s code of conduct and any whistleblower reporting policies, including those prescribed by Section V.E; and (4) any significant regulatory and/or government enforcement matters within the review period relating to the distribution of Controlled Substances. Anda meets this requirement if it established, prior to the Effective Date, multiple committees of its Board of Directors that together have responsibilities outlined in this paragraph.
E. The Board Compliance Committee shall have the authority to: (1) require management of Anda to conduct audits on any CSMP or legal and regulatory concern pertaining to Controlled Substances distribution, and to update its full Board of Directors on those audits; (2) to commission studies, reviews, reports, or surveys to evaluate Anda’s CSMP performance; (3) request meetings with Anda’s management and CSMP staff; and (4) review the appointment, compensation, performance, and replacement of Anda’s Chief Diversion Control Officer.
VII. MANDATORY TRAINING
A. Anda shall require all new CSMP personnel to attend trainings on its CSMP, its obligations under the Injunctive Relief Terms, and its duties with respect to maintaining effective controls against potential diversion of Controlled Substances and reporting Suspicious Orders pursuant to state and federal laws and regulations prior to conducting any compliance activities for Anda without supervision.
B. Anda shall provide annual trainings to CSMP personnel on its CSMP, its obligations under the Injunctive Relief Terms, and its duties to maintain effective controls against potential diversion of Controlled Substances and report Suspicious Orders pursuant to state and federal laws and regulations.
C. On an annual basis, Anda shall test its CSMP personnel on their knowledge regarding its CSMP, its obligations under the Injunctive Relief Terms, and its duties to maintain effective controls against potential diversion of Controlled Substances and to report Suspicious Orders pursuant to state and federal laws and regulations.
D. Anda shall train all third-party compliance consultants (defined as non-employees who are expected to devote fifty percent (50%) or more of their time to performing work related to Anda’s CSMP, excluding information technology consultants not Q-9
engaged in substantive functions related to Anda’s CSMP) performing compliance functions for Anda in the same manner as Anda’s CSMP personnel.
E. At least every three (3) years in the case of existing employees, and within the first six (6) months of hiring new employees, Anda shall require operations, sales, and senior executive employees to attend trainings on its CSMP, its obligations under the Injunctive Relief Terms, the hotline established in Section V.E, and its duties to maintain effective controls against potential diversion of Controlled Substances and report Suspicious Orders pursuant to state and federal laws and regulations.
VIII. RED FLAGS
A. Within one hundred and twenty days (120) of the Effective Date, Anda shall, at a minimum, apply specific metrics to identify the potential Red Flags described in Section VIII.D with respect to Independent Retail Pharmacy Customers. For Chain Customers, the metrics used to identify the Red Flags described in Section VIII.D may be adjusted based on the specific business model and supplier relationships of the Chain Customer.
B. Anda shall evaluate and, if necessary, enhance or otherwise adjust the specific metrics it uses to identify Red Flags set forth in Section VIII.D.
C. Anda shall provide annually to the Monitor the specific metrics it uses to identify Red Flags as set forth in Section VIII.D. The Monitor shall review the metrics used to identify Red Flags as set forth in Section VIII.D to assess whether the metrics are reasonable. The Monitor may, at its discretion, suggest revisions to the metrics in the annual Audit Report as part of the Red Flags Review set forth in Section XVIII.G.3.f. Anda may rely on its specific metrics to comply with the requirements of Section VIII unless and until the Monitor proposes a revised metric in connection with Section XVIII.
D. For purposes of the Injunctive Relief Terms, “Red Flags” are defined as follows:
1. Ordering ratio of Highly Diverted Controlled Substances to nonControlled Substances: Analyze the ratio of the order volume of all Highly Diverted Controlled Substances to the order volume of all non-Controlled Substances to identify Customers with significant rates of ordering Highly Diverted Controlled Substances.
2. Ordering ratio of Highly Diverted Controlled Substance base codes or drug families to non-Controlled Substances: Analyze the ratio of the order volume of each Highly Diverted Controlled Substance base code or drug family to the total order volume of all non-Controlled Substances to identify Customers with significant rates of ordering each Highly Diverted Controlled Substance base code or drug family.
3. Excessive ordering growth of Controlled Substances: Analyze significant increases in the ordering volume of Controlled Substances using criteria to Q-10
identify customers that exhibit percentage growth of Controlled Substances substantially in excess of the percentage growth of non-Controlled Substances.
4. Unusual formulation ordering: Analyze ordering of Highly Diverted Controlled Substances to identify customers with significant ordering of high-risk formulations. High-risk formulations include, but are not limited to, 10mg hydrocodone, 8mg hydromorphone, 2mg alprazolam, singleingredient buprenorphine (i.e., buprenorphine without naloxone), and highly-abused formulations of oxycodone. On an annual basis (or as otherwise necessary), high-risk formulations of Highly Diverted Controlled Substances may be added, removed, or revised based on Anda’s assessment and regulatory guidance.
5. Out-of-area patients: Analyze Pharmacy Customer Data or Dispensing Data to assess volume of prescriptions for Highly Diverted Controlled Substances for out-of-area patients (based on number of miles traveled between a patient’s zip code and the pharmacy location, depending on the geographic area of interest) taking into consideration the percentage of outof-area patients for non-Controlled Substances.
6. Cash prescriptions: Analyze Pharmacy Customer Data or Dispensing Data to assess percentage of cash payments for purchases of Controlled Substances taking into consideration the percentage of cash payments for purchases of non-Controlled Substances.
7. Prescriber activity of Customers: Analyze Pharmacy Customer Data or Dispensing Data to identify Customers that are dispensing Highly Diverted Controlled Substance prescriptions for Top Prescribers as follows:
a) Top Prescribers representing a significant volume of dispensing where the prescriber’s practice location is in excess of 50 miles from the pharmacy (“out-of-area”), relative to the percentage of out-ofarea prescriptions for non-Controlled Substances. b) Top Prescribers representing prescriptions for the same Highly Diverted Controlled Substances in the same quantities and dosage forms indicative of pattern prescribing (e.g., a prescriber providing many patients with the same high-dose, high-quantity supply of 30mg oxycodone HCL prescription without attention to the varying medical needs of the prescriber’s patient population).
c) Top Prescribers where the top five (5) or fewer prescribers represent more than fifty percent (50%) of total prescriptions for Highly Diverted Controlled Substances during a specified period.
8. Public regulatory actions against Customers: Review information retrieved from companies that provide licensing and disciplinary history records (e.g., LexisNexis), and/or other public sources, including governmental entities, showing that the Customer, pharmacists working for that Customer, or the Customer’s Top Prescribers have been subject, in the last five (5) years, to professional disciplinary sanctions regarding the Q-11
dispensing or handling of Controlled Substances or law enforcement action related to Controlled Substances diversion. Continued licensing by a relevant state agency may be considered, but shall not be dispositive, in resolving the Red Flag. For Chain Customer locations, representations from each Chain Customer that it reviews its pharmacists’ licensing statuses annually and for the regulatory actions described in this paragraph has either (i) taken appropriate employment action, or (ii) disclosed the regulatory action to Anda, may be considered in resolving the Red Flag.
9. Customer termination data: Review information from Anda’s due diligence files and, when operable, from the Clearinghouse, subject to Section VIII.F, regarding Customers that have been terminated from ordering Controlled Substances by another distributor due to concerns regarding Controlled Substances.
E. For any Red Flag evaluation in Section VIII.D that may be performed using Pharmacy Customer Data or Dispensing Data, Anda will analyze the Red Flag using Pharmacy Customer Data, to the extent feasible based on the functionality of a Customer’s pharmacy management system, until Dispensing Data is collected and analyzed by the Clearinghouse as described in Section XVII. Until Dispensing Data is collected and analyzed by the Clearinghouse, Anda may satisfy the Red Flag evaluations in Sections VIII.D.5 through VIII.D.7 by engaging in considerations of out-of-area patients, cash payments for prescriptions and Top Prescribers without satisfying the specific requirements of Sections VIII.D.5 through VIII.D.7. In the event that the Clearinghouse is not collecting and analyzing Dispensing Data within two years of the Effective Date, Anda and the State Compliance Review Committee shall meet and confer to consider alternatives for the performance of the analysis required by Sections VIII.D.5 through VIII.D.7 using Pharmacy Customer Data.
F. The foregoing Red Flag evaluations may be performed by the Clearinghouse and reported to Anda.
G. Anda and the State Compliance Review Committee shall work in good faith to identify additional potential Red Flags that can be derived from the data analytics to be performed by the Clearinghouse.
IX. ONBOARDING
A. Anda, prior to initiating the sale of Controlled Substances to a potential Customer, a member of Anda’s CSMP department (or a qualified third-party compliance consultant trained on Anda’s CSMP) shall perform the following due diligence:
1. Interview the pharmacist-in-charge, either over the telephone, via videoconference, or in person. The interview shall include questions regarding the manner in which the potential Customer maintains effective controls against the potential diversion of Controlled Substances.
2. Obtain a “Pharmacy Questionnaire” completed by the owner and/or pharmacist-in-charge of the potential Customer. The Pharmacy Questionnaire shall require going-concern potential Customers to list their Q-12
top ten (10) prescribers for Highly Diverted Controlled Substances combined, along with the prescriber’s specialty, unless Anda is able to obtain this data otherwise. The Pharmacy Questionnaire shall also require disclosure of the identity of all other distributors that serve the potential Customer, and whether the potential Customer has been terminated or suspended from ordering Controlled Substances by another distributor and the reason for any termination or suspension. The Pharmacy Questionnaire shall request information that would allow Anda to identify Red Flags, including questions regarding the manner in which the potential Customer maintains effective controls against the potential diversion of Controlled Substances. A potential Customer’s responses to the Pharmacy Questionnaire shall be verified, to the extent applicable and practicable, against external sources (for example, the Clearinghouse, once operational, and Automation of Reports and Consolidated Orders System (“ARCOS”) data made available to Anda by the DEA). The Pharmacy Questionnaire shall be maintained by Anda in a database accessible to its CSMP personnel.
3. Complete a written onboarding report to be maintained in a database accessible to Anda’s CSMP personnel reflecting the findings of the interview and any site visit, the findings regarding the identification of and, if applicable, conclusion concerning any Red Flag associated with the pharmacy, as well as an analysis of the Pharmacy Questionnaire referenced in the preceding paragraph.
4. For going-concern potential Customers, review Pharmacy Customer Data to assist with the identification of any Red Flags.
5. Document whether the potential Customer or the pharmacist-in-charge has been subject to any professional disciplinary sanctions or law enforcement activity related to Controlled Substances dispensing, and, if so, the basis for that action. For Chain Customers, this provision shall apply to the potential specific pharmacies in question.
B. For Chain Customers, Anda may obtain the information in Section IX.A from a corporate representative of the Chain Customer.
C. In the event that Anda identifies one or more unresolved Red Flags or other information indicative of potential diversion of Controlled Substances through the onboarding process or otherwise, Anda shall refrain from selling Controlled Substances to the potential Customer pending additional due diligence. If following additional due diligence, Anda is unable to resolve the Red Flags or other information indicative of diversion, Anda shall not initiate the sale of Controlled Substances to the potential Customer and shall report the potential Customer consistent with Section XIV. If Anda determines that the potential Customer may be onboarded for the sale of Controlled Substances, Anda shall document the decision and the bases for its decision. Such a good faith determination, if Q-13
documented, shall not serve, without more, as the basis of a future claim of noncompliance with the Injunctive Relief Terms. For Chain Customers, these provisions shall apply to the potential specific pharmacies in question.
X. ONGOING DUE DILIGENCE
A. Anda shall periodically review its procedures and systems for detecting patterns or trends in Customer order data or other information used to evaluate whether a Customer is maintaining effective controls against diversion.
B. Anda shall conduct periodic proactive compliance reviews of its Customers’ performance in satisfying their corresponding responsibilities to maintain effective controls against the diversion of Controlled Substances.
C. Anda shall review ARCOS data made available to it by the DEA and, once operational, by the Clearinghouse, to assist with Customer specific due diligence.
For Chain Customers, this provision shall apply to the potential specific pharmacies in question.
D. Anda shall conduct due diligence as set forth in its CSMP policies and procedures in response to concerns of potential diversion of Controlled Substances at its Customers. For Chain Customers, these provisions shall apply to the specific pharmacies in question. The due diligence required by Anda’s CSMP policies and procedures may depend on the information or events at issue. The information or events raising concerns of potential diversion of Controlled Substances at a Customer include but are not limited to:
1. The discovery of one or more unresolved Red Flags;
2. The receipt of information directly from law enforcement or regulators concerning potential diversion of Controlled Substances at or by a Customer;
3. The receipt of information concerning the suspension or revocation of pharmacist’s DEA registration or state license related to potential diversion of Controlled Substances;
4. The receipt of reliable information through the hotline established in Section V.E concerning suspected diversion of Controlled Substances at the Customer;
5. The receipt of reliable information from another distributor concerning suspected diversion of Controlled Substances at the Customer; or
6. Receipt of other reliable information that the Customer is engaged in conduct indicative of diversion or is failing to adhere to its corresponding responsibility to prevent the diversion of Highly Diverted Controlled Substances.
E. On an annual basis, Anda shall obtain updated pharmacy questionnaires from one hundred (100) Customers to include the following:
Q-14
1. The top 25 Customers by combined volume of Highly Diverted Controlled Substances purchased from Anda measured as of the end of the relevant calendar year; and
2. Additional Customers selected as a representative sample of various geographic regions, customer types (Independent Retail Pharmacy Customers and Chain Customers), and distribution centers. Anda’s Chief Diversion Control Officer shall develop risk-based criteria for the sample selection.
F. Scope of Review
1. For reviews triggered by Section X.D, Anda shall conduct due diligence and obtain updated Pharmacy Customer Data or equivalent, or more comprehensive data from the Clearinghouse if needed, as set forth in its CSMP policies and procedures.
2. For questionnaires collected pursuant to Section X.E, Anda shall conduct a due diligence review consistent with Anda’s CSMP policies and procedures.
These annual diligence reviews shall be performed in addition to any of the diligence reviews performed under Section X.D, but may reasonably rely on reviews performed under Section X.D.
3. If Anda decides to terminate the Customer due to concerns regarding potential diversion of Controlled Substances, Anda shall promptly cease the sale of Controlled Substances to the Customer and report the Customer consistent with Section XIV. If Anda decides not to terminate the Customer, Anda shall document that determination and the basis therefor. Such a good faith determination, if documented, shall not, without more, serve as the basis of a future claim of non-compliance with the Injunctive Relief Terms.
XI. SITE VISITS
A. Anda shall conduct site visits, including unannounced site visits, where appropriate, of Customers, as necessary, as part of Customer due diligence.
B. During site visits, Anda’s CSMP personnel or qualified third-party compliance consultants shall interview the pharmacist-in-charge or other relevant Customer employees, if appropriate, about any potential Red Flags and the Customer’s maintenance of effective controls against the potential diversion of Controlled Substances.
C. Anda’s CSMP personnel or qualified third-party compliance consultants who conduct site visits shall document the findings of any site visit.
D. Site visit and all other compliance reports shall be maintained by Anda in a database accessible to all CSMP personnel.
Q-15
XII. THRESHOLDS
A. Anda shall use Thresholds to identify potentially Suspicious Orders of Controlled Substances from Customers.
B. Anda’s CSMP department shall be responsible for the oversight of the process for establishing and modifying Thresholds. The sales departments of Anda shall not have the authority to establish or adjust Thresholds for any Customer or participate in any decisions regarding establishment or adjustment of Thresholds.
C. Anda shall not provide Customers specific information about their Thresholds or how their Thresholds are calculated.
1. Threshold Setting
a) Anda shall primarily use model-based thresholds. For certain circumstances, Anda may apply a non-model threshold based on documented customer diligence and analysis.
b) Anda shall include in its Annual Threshold Analysis and Assessment Report (as required by Section XVIII.G.3.c) to the Monitor summary statistics regarding the use of non-model thresholds and such information shall be considered by the Monitor as part of its Threshold Setting Process Review in the annual Audit Report. c) For the purposes of establishing and maintaining Thresholds, Anda shall take into account the Controlled Substances diversion risk of each drug base code. The diversion risk of each base code should be defined and reassessed annually by Anda’s CSMP Committee and reviewed by the Monitor.
d) Anda shall establish Thresholds for new Customers prior to supplying those Customers with Controlled Substances and shall continue to have Thresholds in place at all times for each Customer to which it supplies Controlled Substances.
e) When ordering volume from other distributors becomes readily available from the Clearinghouse, Anda shall consider including such information as soon as reasonably practicable in establishing and maintaining Thresholds.
f) Anda shall incorporate the following guiding principles in establishing and maintaining Customer Thresholds, except when inapplicable to non-model Thresholds:
(1) Thresholds shall take into account the number of nonControlled Substance dosage units distributed to, dispensed and/or number of prescriptions dispensed by the Customer to assist with the determination of Customer size. As a general Q-16
matter, smaller customers should have lower Thresholds than larger customers.
(2) For the purposes of establishing and maintaining Thresholds, Anda shall use statistical models that are appropriate to the underlying data.
(3) For the purposes of establishing and maintaining Thresholds, Anda shall take into account a Customer’s ordering and/or dispensing history for a specified period of time.
(4) For the purposes of establishing and maintaining Thresholds, Anda shall take into account the ordering history of
Customers within similar geographic regions, or, where
appropriate for Chain Customers, ordering history within the chain.
(5) If appropriate, Thresholds may take into account the characteristics of Customers with similar business models. (a) A Customer’s statement that it employs a particular business model must be verified, to the extent
practicable, before that business model is taken into
account in establishing and maintaining a Customer’s
Threshold.
2. Threshold Auditing
a) Anda shall review their respective Customer Thresholds at least on an annual basis and modify them where appropriate.
b) Anda’s CSMP department shall annually evaluate its Threshold setting methodology and processes and its CSMP personnel’s performance in adhering to those policies.
3. Threshold Changes
a) Anda may increase or decrease a Customer Threshold as set forth in its CSMP policies and procedures, subject to Sections XII.C.3.b through XII.C.3.e.
b) Prior to approving any Threshold change request by a Customer, Anda shall conduct due diligence to determine whether an increase to the Threshold is warranted. This due diligence shall include obtaining from the Customer the basis for the Threshold change request, obtaining and reviewing Dispensing Data and/or Pharmacy Customer Data for the previous three (3) months for due diligence purposes, and, as needed, conducting an on-site visit to the Customer.
This Threshold change request diligence shall be conducted by Anda’s CSMP personnel.
Q-17
c) Anda shall not proactively contact a Customer to suggest that the Customer request an increase to any of its Thresholds, to inform the Customer that its Orders-to-date are approaching its Thresholds or to recommend to the Customer the amount of a requested Threshold increase. It shall not be a violation of this paragraph to provide Chain Customer headquarters reporting on one or more individual Chain Customer pharmacy location(s) to support the anti-diversion efforts of the Chain Customer’s headquarters staff, and it shall not be a violation of this paragraph for Anda’s CSMP personnel to contact Customers to seek to understand a Customer’s ordering patterns. d) Anda’s Chief Diversion Control Officer may approve criteria for potential adjustments to Customer Thresholds to account for circumstances where the Thresholds produced by the ordinary operation of the statistical models require modification. Such circumstances include adjustments to account for seasonal ordering of certain Controlled Substances that are based on documented diligence and analysis, adjustments made to permit ordering of certain Controlled Substances during a declared national or state emergency (e.g., COVID-19 pandemic), IT errors, and data anomalies causing results that are inconsistent with the design of the statistical models. Anda shall include in its Annual Threshold Analysis and Assessment Report (as required by Section
XVIII.G.3.c) to the Monitor information regarding the use of this paragraph and such information shall be considered by the Monitor as part of its Threshold Setting Process Review in the annual Audit Report.
e) Any decision to raise a Customer’s Threshold in response to a request by a Customer to adjust its Threshold must be documented in a writing and state the reason(s) for the change. The decision must be consistent with Anda’s CSMP and documented appropriately.
XIII. SUSPICIOUS ORDER REPORTING AND NON-SHIPMENT
A. Anda shall report Suspicious Orders to the Settling States (“Suspicious Order Reports” or “SORs”), including those Settling States that do not currently require such SORs, at the election of the Settling State.
B. For the SORs required by the Injunctive Relief Terms, Anda shall report Orders that exceed a Threshold for Controlled Substances set pursuant to the processes in Section XII that are blocked and not shipped.
C. Anda shall not ship any Order that it (i) reports pursuant to Sections XIII.A or XIII.B, or (ii) would have been required to report pursuant to Sections XIII.A or XIII.B had the Settling State elected to receive SORs.
Q-18
D. In reporting Suspicious Orders to the Settling States, Anda shall file SORs in a standardized electronic format that is uniform among the Settling States and contains the following information fields:
1. Customer name;
2. Customer address;
3. DEA registration number;
4. State pharmacy license number;
5. Date of order;
6. NDC number;
7. Quantity;
8. Explanation for why the order is suspicious (up to 250 characters): Details that are order-specific regarding why an order was flagged as a Suspicious Order, including specific criteria used by Anda’s Threshold system (except phrases such as “order is of unusual size” without any additional detail are not acceptable); and
9. Name and contact information for a knowledgeable designee within Anda’s CSMP department to be a point of contact for the SORs.
E. On a quarterly basis, Anda shall provide a summary report to the Settling States that elect to receive it that provides the following information for the relevant quarter with respect to the top ten (10) Customers by volume for each Highly Diverted Controlled Substance base code that have placed a Suspicious Order for that base code, in that quarter (for Chain Customers, only individual pharmacies in the chain will considered for evaluation as a top ten (10) Customer):
1. The number of SORs submitted for that Customer by base code;
2. The Customer’s order volume by base code for the quarter for all Highly Diverted Controlled Substances;
3. The Customer’s order frequency by base code for the quarter for all Highly Diverted Controlled Substances;
4. For each Highly Diverted Controlled Substance base code, the ratio of the Customer’s order volume for that base code to the volume of all pharmaceutical orders for the quarter; and
5. The ratio of the Customer’s order volume of all Controlled Substances to the volume of all pharmaceutical orders for the quarter.
Q-19
F. Anda shall only be required to file a single, uniform, electronic form of SOR with any Settling State that receives SORs pursuant to these Injunctive Relief Terms. A Settling State retains the authority pursuant to applicable state law or relevant state agency authority to request additional information about a particular SOR.
G. It is the objective of the Settling States and Anda for Anda to provide SORs to Settling States that identify the same Suspicious Orders as reported to the DEA pursuant to the definition and requirements of the federal Controlled Substances Act and its regulations, although the fields of the SORs submitted to the Settling States as required by Section XIII may differ from the content required by the DEA. To the extent federal definitions and requirements materially change during the term of the Injunctive Relief Terms, Anda may be required to adjust the format and content of the SORs to meet these federal requirements. Anda and the State Compliance Review Committee will engage in good faith discussions regarding such adjustments.
H. It shall not be a violation of the Injunctive Relief Terms if Anda ships a Suspicious Order or fails to submit or transmit a SOR if:
1. The shipment of the Suspicious Order or failed SOR transmission was due to a computer error (data entry mistakes, coding errors, computer logic issues, software malfunctions, and other computer errors or IT failures); and
2. Anda reports the error, including a description of measures that will be taken to prevent recurrence of the error, to any affected Settling State, the State Compliance Review Committee, and the Monitor within five (5) business days of its discovery.
XIV. TERMINATED CUSTOMERS
A. Anda shall report to the Clearinghouse, once operational, within five (5) business days (or as otherwise required by state statute or regulation), Customers it has terminated from eligibility to receive Controlled Substances or refused to onboard for the sale of Controlled Substances due to concerns regarding the Customer’s ability to provide effective controls against the potential diversion of Controlled Substances following the Effective Date.
B. Anda shall report to the relevant Settling State(s), within five (5) business days (or as otherwise required by state statute or regulation) Customers located in such Settling States that it has terminated from eligibility to receive Controlled Substances or refused to onboard for the sale of Controlled Substances due to concerns regarding the Customer’s ability to provide effective controls against the potential diversion of Controlled Substances following the Effective Date. Such reports will be made in a uniform format. Anda and the State Compliance Review Committee shall use best efforts to agree on such uniform format for inclusion prior to the requirement taking effect.
Q-20
C. In determining whether a Customer should be terminated from eligibility to receive Controlled Substances, Anda shall apply factors set out in its CSMP policies and procedures, which shall include the following conduct by a Customer:
1. Has generated an excessive number of Suspicious Orders, which cannot otherwise be explained;
2. Has routinely demonstrated unresolved Red Flag activity;
3. Has continued to fill prescriptions for Highly Diverted Controlled Substances that raise Red Flags following Anda’s warning or communication about such practices;
4. Has failed to provide Pharmacy Customer Data or Dispensing Data in response to a request from Anda or otherwise refuses to cooperate with Anda’s CSMP after providing the Customer with a reasonable amount of time to respond to Anda’s requests;
5. Has been found to have made material omissions or false statements on a Pharmacy Questionnaire (the requirements for the contents of a Pharmacy Questionnaire are described in Section IX); or
6. Has been the subject of discipline by a State Board of Pharmacy within the past three (3) years or has had its owner(s) or pharmacist-in-charge subject to license probation or termination within the past five (5) years by a State Board of Pharmacy for matters related to Controlled Substances dispensing or a federal or state felony conviction.
D. Once the Clearinghouse has made Customer termination data available to Anda, Anda shall consider terminating Customers that have been terminated from eligibility to receive Controlled Substances by another distributor as a result of suspected diversion of Controlled Substances if the Customer is ordering only Controlled Substances from Anda. If Anda determines not to terminate Customers to which this paragraph applies, Anda shall document its decision-making. A good-faith decision to continue shipping Controlled Substances to Customers to which this paragraph applies, shall not serve, without more, as the basis of a future claim of non-compliance with the Injunctive Relief Terms.
E. For Chain Customers, the provisions in Section XIV.A-D shall apply to the specific pharmacies in question.
XV. EMERGENCIES
A. In the circumstances of declared national or state emergencies in which the healthcare community relies on Anda for critical medicines, medical supplies, products, and services, Anda may be required to temporarily modify its CSMP processes to meet the critical needs of the supply chain. These modifications may conflict with the requirements of the Injunctive Relief Terms.
Q-21
B. In the case of a declared national or state emergency, Anda shall be required to give notice to the State Compliance Review Committee of any temporary material changes to its CSMP processes which may conflict with the requirements of the Injunctive Relief Terms and specify the sections of the Injunctive Relief Terms which will be affected by the temporary change.
C. Anda shall document all temporary changes to their CSMP processes and appropriately document all customer-specific actions taken as a result of the declared national or state emergency.
D. Anda shall provide notice to the State Compliance Review Committee at the conclusion of the declared national or state emergency, or sooner, stating that the temporary CSMP processes put into place have been suspended.
E. Provided Anda complies with the provisions of Sections XV.A through XV.D, Anda will not face liability for any deviations from the requirements of the Injunctive Relief Terms taken in good faith to meet the critical needs of the supply chain in response to the declared national or state emergency. Nothing herein shall limit Settling States from pursuing claims against Anda based on deviations from the requirements of the Injunctive Relief Terms not taken in good faith to meet the critical needs of the supply chain in response to a declared national or state emergency.
XVI. COMPLIANCE WITH LAWS AND RECORDKEEPING
A. Anda acknowledge and agree that it must comply with applicable state and federal laws governing the distribution of Controlled Substances.
B. Good faith compliance with the Injunctive Relief Terms creates a presumption that Anda is acting reasonably and in the public interest with respect to Settling States’ existing laws requiring effective controls against diversion of Controlled Substances and with respect to the identification, reporting, and blocking of Suspicious Orders of Controlled Substances.
C. The requirements of the Injunctive Relief Terms are in addition to, and not in lieu of, any other requirements of state or federal law applicable to Controlled Substances distribution. Except as provided in Section XVI.D, nothing in the Injunctive Relief Terms shall be construed as relieving Anda of the obligation to comply with such laws, regulations, or rules. No provision of the Injunctive Relief Terms shall be deemed as permission for Anda to engage in any acts or practices prohibited by such laws, regulations, or rules.
D. In the event of a conflict between the requirements of the Injunctive Relief Terms and any other law, regulation, or requirement such that Anda cannot comply with the law without violating the Injunctive Relief Terms or being subject to adverse action, including fines and penalties, Anda shall document such conflicts and notify the State Compliance Review Committee and any affected Settling State the extent to which it will comply with the Injunctive Relief Terms in order to eliminate the conflict within thirty (30) days of Anda’s discovery of the conflict. Anda shall comply with the Injunctive Relief Terms to the fullest extent possible without violating the law.
Q-22
E. In the event of a change or modification of federal or state law governing the distribution of Controlled Substances that creates an actual or potential conflict with the Injunctive Relief Terms, Anda, any affected Settling State, or the State Compliance Review Committee may request that Anda, State Compliance Review Committee, and any affected Settling State meet and confer regarding the law change.
During the meet and confer, Anda, the State Compliance Review Committee, and any affected Settling State will address whether the change or modification in federal or state law requires an amendment to the Injunctive Relief Terms. In the event Anda, the State Compliance Review Committee, and any affected Settling State cannot agree on a resolution, and the dispute relates to whether the generally applicable Injunctive Relief Terms herein should be changed, Anda, the State Compliance Review Committee, or any affected Settling State may submit the question to the National Arbitration Panel. If the dispute relates to whether a change in an individual State’s law requires a modification of the Injunctive Relief Terms only with respect to that State, Anda, the State Compliance Review Committee, or any affected Settling State may seek resolution of the dispute pursuant to Section XIX. Maintenance of competition in the industry and the potential burden of inconsistent obligations on Anda shall be a relevant consideration in such resolution.
F. Recordkeeping: Anda shall retain records it is required to create pursuant to its obligations hereunder in an electronic or otherwise readily accessible format. The Settling States shall have the right to review records provided to the Monitor pursuant to Section XVIII. Nothing in the Injunctive Relief Terms prohibits a Settling State from issuing a lawful subpoena for records pursuant to an applicable law.
XVII. CLEARINGHOUSE
A. Starting ninety (90) days after the Effective Date, Anda shall participate in Phase 1 and Phase 2-A of the Clearinghouse.
B. Anda shall provide to the Clearinghouse and/or facilitate the Clearinghouse’s collection of the following:
1. Anda’s transaction data for Controlled Substances and non-Controlled Substances, specified at the NDC, date, quantity, and customer level.
2. Anda’s information on Customers that have been terminated and/or declined onboarding due to concerns regarding Controlled Substance dispensing following the Effective Date.
C. Anda shall comply with state and federal transactional and Suspicious Order reporting requirements related to Controlled Substances as follows:
1. Until such time as the Clearinghouse is able to provide transactional and Suspicious Order regulatory reporting to the states on behalf of Anda, Anda shall continue to file all required reports under state law and those reports required by these Injunctive Relief Terms.
2. Once the Clearinghouse is able to process and submit such reports, the Clearinghouse may process and submit those reports on behalf of Anda to Q-23
the states. At all times during Phase 1, Anda shall remain responsible for the identification of Suspicious Orders and will remain liable for a failure to submit transactional data or Suspicious Order reports required under state law or these Injunctive Relief Terms.
3. Anda may elect to fulfill its reporting obligations directly, rather than have the Clearinghouse assume the responsibility for the transmission of the various reports.
D. Anda shall receive information, analyses and reports from the Clearinghouse on the same basis as other distributors participating in Phase 1 and 2-A of the Clearinghouse.
1. Anda shall be permitted to use information obtained from the Clearinghouse for anti-diversion purposes, including the uses expressly contemplated by the Injunctive Relief Terms.
2. Anda shall ensure any data obtained from the Clearinghouse cannot be accessed by any of its parent’s business units, or their employees or agents, who are involved in manufacturing or marketing of pharmaceuticals or sales or distribution of pharmaceuticals they manufacture.
3. Anda shall not receive from the Clearinghouse information specific to another distributor. Notwithstanding the prior sentence, Anda may receive from the Clearinghouse blinded data reflecting total Orders (across all distributors) for a particular Customer, region, and/or state at the base code and NDC number level and all transactional data information.
4. Anda may use information it receives from the Clearinghouse only for the purposes of identifying, minimizing, or otherwise addressing the risk of Controlled Substances diversion. Anda shall not attempt to obtain revenue from this information.
5. Anda shall not sell (or obtain license fees for) data obtained from Clearinghouse to any third-parties. Nothing in the Injunctive Relief Terms shall prohibit Anda from using its own data, including data provided to Anda by third-parties other than the Clearinghouse, for any commercial purposes, including selling or licensing its data to third-parties.
E. Anda, in its sole discretion, may elect whether to participate in Phase 2-B of the Clearinghouse. CSMP functions that are assumed by the Clearinghouse during Phase 2-B will no longer be performed by Anda individually through its CSMPs. CSMP functions performed by the Clearinghouse during Phase 2-B will assist Anda to satisfy the applicable legal obligations of Anda. In the event that Anda elects not to participate in Phase 2-B, Anda shall have no obligation to implement the Clearinghouse’s determinations as to identification of Suspicious Orders and Suspicious Order reporting.
F. Liability Related to the Clearinghouse.
Q-24
1. Anda is entitled to rely upon information or data received from the Clearinghouse, whether in oral, written, or other form. Anda shall not have any liability (whether direct or indirect, in contract or tort or otherwise) to any party for or in connection with any action taken or not taken by the Clearinghouse. In addition, Anda shall not have any liability (whether direct or indirect, in contract or tort or otherwise) to any party for or in connection with any action taken or not taken by Anda based on incorrect, inaccurate, incomplete or otherwise erroneous information or data provided by the Clearinghouse, unless the information or data was incorrect, inaccurate, incomplete or otherwise erroneous because Anda itself provided incorrect, inaccurate, incomplete or otherwise erroneous data or information to the Clearinghouse.
2. Reports or analysis generated by the Clearinghouse may not be based on complete data due to a lack of participation by other distributors and pharmacies. As such, Anda shall not be held responsible for actions or inactions related to reports and analysis prepared by the Clearinghouse which may be based on incomplete data due to a lack of participation by other distributors and pharmacies.
3. Nothing in the Injunctive Relief Terms shall require Anda to indemnify or otherwise be responsible to pharmacy customers for any claims resulting from the provision of Dispensing Data to the Clearinghouse, including, but not limited to, claims related to any data breaches occurring with the data transmitted to or maintained by the Clearinghouse.
4. Anda and the Settling States shall not be liable for any breaches of any databases maintained by the Clearinghouse. This does not excuse the Clearinghouse or its vendor(s) from compliance with all state and federal laws and regulations governing (1) the protection of personal information and protected health information, or (2) notifications relating to Data Security Events.
5. The Clearinghouse’s performance of CSMP functions during Phase 2-B will not relieve Anda from its legal obligations unless (i) Anda and the State Compliance Review Committee jointly enter into a written agreement for the Clearinghouse to assume legal requirements during Phase 2-B; and (ii) all vendors and consultants working on the Clearinghouse agree in writing to assume such obligations.
G. Funding Obligations.
1. For a period of ten (10) years from the Effective Date, Anda will contribute to the cost of the operation of the Clearinghouse in an amount to be determined based on the financial and relative size of Anda compared to the three distributors initially participating in the Clearinghouse.
2. Anda shall engage with the three distributors initially participating in the Clearinghouse and the State Compliance Review Committee to determine Q-25
Anda’s required contribution. If Anda and the State Compliance Review Committee cannot reach an agreement on the amount of the contribution, the issue will be submitted to the National Arbitration Panel for resolution subject to the cap provided by Section XVII.G.4.
3. In the event that Anda elects not to participate in Phase 2-B, Anda shall have no obligation to fund future costs directly related to Phase 2-B of the Clearinghouse.
4. In no case shall Anda’s required contribution for Phase 1 and Phase 2-A during the first two (2) years of its participation in the Clearinghouse exceed $250,000 per year, nor shall it exceed $100,000 per year during its third through tenth years of participation.
5. Anda and the State Compliance Review Committee agree to engage in good faith discussions regarding potential continued operation and funding of the Clearinghouse following the initial ten (10) year period.
XVIII.MONITOR
A. Anda shall engage a Monitor to perform the reviews described in Section XVIII.G in a professionally independent and objective fashion. The Monitor shall employ or retain personnel who have appropriate qualifications related to the pharmaceutical industry and the laws governing the distribution of pharmaceuticals, the distribution of Controlled Substances, and the applicable requirements of federal and state law. The Monitor may also employ or retain personnel who have appropriate qualifications in the audit and review of sample documents in order to conduct the reviews described in Section XVIII.G. To the extent additional expertise is required for the engagement, the Monitor may retain the services of third-party consultants after consultation with and input from Anda and the State Compliance Review Committee.
B. The Monitor and any retained third-parties shall at all times act in good faith and with integrity and fairness towards all parties.
C. Monitor Selection and Engagement
1. The parties have agreed that the initial Monitor shall be Gil Soffer of Katten, Muchin Rosenman LLP.
2. The Monitor can be replaced upon agreement of the State Compliance Review Committee and Anda. If the parties so agree, the process for selecting a replacement Monitor shall be the process described in paragraphs i-iii below. The provisions of this Exhibit Qshall apply to any successor Monitor.
i. State Compliance Review Committee and Anda will each identify the names of up to three (3) individuals, groups of individuals or firms as the pool of recommended candidates to serve as the Monitor, within (60) calendar days of the date the parties agree to replace the Monitor.
Q-26
ii. The State Compliance Review Committee and Anda shall have the right to meet with and otherwise evaluate the candidates and conduct appropriate interviews of the personnel who are expected to work on the project. The following qualifications may be relevant considerations for the State Compliance Review Committee and Anda in evaluating candidates: (a) prior monitorship or oversight experience; (b) experience with applicable laws and regulations governing the distribution of Controlled Substances; (c) experience with the pharmaceutical; (d) access to sufficient resources to carry out the duties of the Monitor; and (e) experience with internal investigations or the investigative process. iii. If the State Compliance Review Committee and Anda do not agree on the appointment of any of the candidates from the initial pool of recommendations, State Compliance Review Committee and/or Anda may identify additional qualified candidates, as the timeline permits.
However, in the event the parties fail to reach agreement on a Monitor within ninety (90) calendar days of the date the parties agree to replace the monitor, the State Compliance Review Committee shall appoint a Monitor.
3. In the event that the State Compliance Review Committee and Anda do not agree to the dismissal of the Independent Monitor, either the State Compliance Review Committee (through one of the Settling States on the State Compliance Review Committee) or Anda may submit the question of the Monitor’s dismissal to the court to which the Consent Judgment was presented in any Settling States on the State Compliance Review Committee, and the Monitor shall only be dismissed if the court finds that there is Good Cause for dismissal. Good Cause for dismissal shall mean (a) a material and substantial breach of the terms of this Exhibit Q by the Monitor, including the failure to comply with the terms and limitations of this Exhibit Q; (b) any act of dishonesty, misappropriation, embezzlement, intentional fraud, or similar conduct by the Monitor; (c) any intentional act of bias or prejudice in favor or against either party by the Monitor; or (d) conduct by the Monitor that demonstrates unfitness to fulfill the functions of the Monitor reasonably and competently. Good Cause shall not include disagreements with the decisions of the Monitor pursuant to this Exhibit Q, unless there is a clear pattern in the Monitor’s decisions that demonstrates that the Independent Monitor has not been acting as an independent third party in rendering decisions.
4. Anda shall be responsible for the Monitor’s fees and costs directly related to its performance of the work specified by the Injunctive Relief Terms up to a limit of $300,000 per year. Should the Monitor require additional fees and costs to perform adequately the work specified in these Anda Injunctive Terms, the Monitor may request an increase in the budget to cover these unanticipated costs, and Anda will not unreasonably withhold approval of same. Further, to the extent there remains funds not yet expended under Teva’s monitor budget (Section VI.C. of Exhibit P of the Settlement Agreement), those may be used to cover these unanticipated costs at Teva’s discretion.
Q-27
D. Term and Reporting Periods
1. The term of the Monitor will be five (5) years from the date the Monitor is appointed, divided into one-year periods for purposes of the reviews and reporting described in Section XVIII (“Reporting Periods”). The Monitor may align Anda’s Reporting Periods with the reporting periods provided by the Big 3 Distributor Injunctive Relief Terms.
E. Monitor Access to Information
1. In connection with its reviews set forth in Section XVIII.G, the Monitor may request to interview employees with appropriate authority and responsibilities as necessary. In the event that Anda believes that the Monitor is requesting an unreasonable number of interviews or requesting interviews of employees who do not have relevant information to the reviews required by Section XVIII.G, Anda and State Compliance Review Committee shall meet and confer in good faith to resolve this issue.
2. The Chief Diversion Control Officer of Anda or a direct report of the Chief Diversion Control Officer shall serve as the primary point of contact for the Monitor to facilitate the Monitor’s access to documents, materials, or staff necessary to conduct the reviews specified in Section XVIII.G. The Monitor shall communicate any request for documents, materials, or access to staff to the Chief Diversion Control Officer or her designee.
3. If at any time the Monitor believes there is undue delay, resistance, interference, limitation, or denial of access to any records or to any employee or former employee deemed necessary by the Monitor to conduct the reviews specified in Section XVIII.G, the Monitor shall notify the Chief Diversion Control Officer of Anda and they shall meet and confer to resolve such issue.
If the Monitor believes that the matter was not resolved, the Monitor shall immediately report the issue to the State Compliance Review Committee.
4. To the extent any of the documents requested by the Monitor contain material protected from disclosure by any legal privilege, including the attorney-client privilege or attorney work product protections, Anda may redact such material before providing the documents to the Monitor, but must provide the Monitor with a privilege log describing the redacted information and identifying the basis for redaction.
5. Notwithstanding any other information referenced and produced pursuant to Section XVIII, the Monitor shall have access to, and Anda’s Chief Diversion Control Officer shall produce to the Monitor, any settlement agreements with government entities entered into after the Effective Date specifically concerning the requirements contained in the Injunctive Relief Terms and Anda’s distribution of Controlled Substances (as opposed to distribution of pharmaceutical products in general).
Q-28
F. Settling States’ Access to Monitor
1. Other than in connection with the initiation of a Notice of Potential Violation set forth in Section XIX.B.2, should the Monitor believe it needs to initiate communication with the State Compliance Review Committee regarding Anda’s compliance with the Injunctive Relief Terms, the Monitor’s communications should include the Chief Diversion Control Officer or counsel of Anda, regardless of the form of communication.
2. The State Compliance Review Committee shall have access to any settlement agreements produced to the Monitor pursuant to Section XVIII.E.5.
G. Reviews to be Conducted by the Monitor
1. There shall be two (2) types of reviews to be conducted by the Monitor:
a) Customer-specific reviews, as set forth in Section XVIII.G.2; and b) System reviews, as set forth in Section XVIII.G.3.
2. Customer-Specific Reviews
a) The following Customer-specific reviews will be conducted by the Monitor for each of the Reporting Periods:
(1) Threshold Change Request Review (“TCR Review”);
(2) Onboarding New Customer Review (“Onboarding Review”); (3) Ongoing Due Diligence Review (“Ongoing Diligence
Review”);
(4) Customer Termination Review (“Termination Review”); and (5) Orders that Exceed Thresholds but are Shipped Review (“Exceeded Threshold Review”).
b) Sample selection and audit periods for TCR Reviews, Onboarding Reviews, Ongoing Diligence Reviews, Termination Reviews, and Exceeded Threshold Reviews:
(1) For each Reporting Period, the Monitor will review a representative sample of files for the performance of the TCR Reviews, Onboarding Reviews, and Ongoing Diligence
Reviews. The Monitor shall select a sample representative of various geographic regions, customer types (Independent Retail Pharmacy Customers or Chain Customer), and
distribution centers.
(2) The Monitor will meet and confer with Anda to determine the appropriate audit period within each Reporting Period from which the samples will be selected (e.g. samples will be selected from the first six (6) months of a reporting period to Q-29
allow the Monitor time to perform its review during the remainder of the reporting period).
(3) Within thirty (30) calendar days following the close of the agreed-upon audit period, Anda (or the Clearinghouse once operational, if able to do so) will provide the Monitor with the following lists of relevant Customers for each type of review:
(a) A list of all Customers that requested at least one Threshold increase for a Highly Diverted Controlled
Substance during the relevant audit period, including
the number of such requests by each Customer;
(b) A list of all Customers that were onboarded during the relevant audit period and, during that period, ordered
and received Highly Diverted Controlled Substances;
(c) A list of all Customers that were the subject of an Ongoing Diligence Review during the relevant audit
period;
(d) A list of all Customers that, for reasons related to Controlled Substance regulatory compliance, were
terminated during the relevant audit period; and
(e) A list of all Orders for Highly Diverted Controlled Substances where a decision was made to ship the
Order even though the order exceeded the otherwise
applicable Threshold, with number of such shipped
orders.
(4) Within fifteen (15) calendar days of compiling this Customer information for sample selection, Anda shall propose a
reasonable number of customer files for each review to the Monitor.
(5) Within fifteen (15) calendar days of receiving the lists specified above from Anda, the Monitor shall choose
representative files to be reviewed from these lists. Each list will include the Customers’ zip code, geographic region, distribution center, and customer type (Independent Retail Pharmacy Customer or Chain Customer).
c) TCR Reviews
(1) For each Reporting Period, the Monitor shall conduct a TCR Review for a sample review of Customers who requested at least one Threshold increase for Highly Diverted Controlled Substances. For the TCR Reviews, the Monitor shall review the information contained in the files of the sample Customers Q-30
and determine whether the information reflects substantial compliance with the requirements of Section XII.C.3.
d) Onboarding Reviews
(1) For each Reporting Period, the Monitor shall conduct an Onboarding Review of a sample of Customers that were
onboarded during the applicable audit period and, during that period, ordered and received Highly Diverted Controlled Substances from Anda. For the Onboarding Reviews, the
Monitor shall review the information contained in the files of the sample Customers and determine whether the information reflects substantial compliance with the requirements of Section IX.
e) Ongoing Diligence Reviews
(1) For each Reporting Period, the Monitor shall conduct an Ongoing Diligence Review of a sample of Customers that were the subject of Anda’s Ongoing Diligence Review under
Section X during the relevant audit period. For the Ongoing Diligence Reviews, the Monitor shall review the information contained in the files of the sample of Customers and
determine whether the information reflects substantial
compliance with the requirements of Section X.
f) Termination Reviews
(1) For each Reporting Period, the Monitor shall conduct a review of a sample of Customers that were terminated by Anda during the audit period. For the Termination Reviews, the Monitor shall review the information contained in the files of the sample of Customers and determine whether the information reflects substantial compliance with the requirements of Section XIV.
g) Exceeded Threshold Review
(1) For each Reporting Period, the Monitor shall conduct a review of a sample of Orders for Highly Diverted Controlled
Substances where a decision was made by Anda to ship the Order even though the Order exceeded the applicable
Threshold. For the Exceeded Threshold Reviews, the Monitor shall review the information contained in the Customer files related to the Orders and determine whether the information reflects substantial compliance with the requirements of Section XIII.B.
Q-31
3. Annual System Reviews:
a) The following system reviews will be conducted by the Monitor for each of the Reporting Periods:
(1) CSMP Review;
(2) Threshold Setting Process Review;
(3) Suspicious Orders and Suspicious Order Report Review; (4) Compensation Review;
(5) Red Flag Review; and
(6) Review of CSMP Integration with Clearinghouse.
b) CSMP Review
(1) For each Reporting Period, the Monitor shall conduct a review of the following materials from Anda:
(a) Current CSMP policies and procedures;
(b) Organizational charts for the departments that are
relevant to the CSMP organization;
(c) Logs and/or summaries of any reports received on the “hot line” required by Section V.E and the action or
response of Anda to any such reports;
(d) Copies of the quarterly reports provided by the Chief Diversion Control Officer to the CSMP Committee as
required by Section IV.C;
(e) Copies of the quarterly reports provided by the CSMP Committee to senior management and the Board of
Directors as required by Section VI.C; and
(f) Copies of the materials used for the training required by Section VII and lists of the attendees of the training. c) Threshold Setting Process Review:
(1) For each Reporting Period, Anda or its outside consultants shall prepare a summary report describing how its Thresholdsetting methodology for Independent Retail Pharmacy Customers and Chain Customers complies with Section XII (the “Annual Threshold Analysis and Assessment Report”).
Q-32
(2) For each Reporting Period, the Monitor shall review the Annual Threshold Analysis and Assessment Report, determine whether the information reflects substantial compliance with the requirements of Section XII, and include any Observations and Recommendations, as defined in Section XVIII.H, in its annual Audit Report.
d) Suspicious Orders and Suspicious Order Reporting Review:
(1) For each Reporting Period, Anda will provide the Monitor with a report containing summary metrics for the Suspicious Orders that were reported to the DEA and the Settling States (the “Suspicious Order Metrics Report”). In the Suspicious Order Metrics Report, Anda will also provide summary metrics for Orders of Highly Diverted Controlled Substances that
exceeded a Threshold but were still shipped.
(2) For each Reporting Period, the Monitor shall review the Suspicious Order Metrics Report, determine whether the
information reflects substantial compliance with the
requirements of Section XIII, and include any Observations and Recommendations in its annual Audit Report.
e) Compensation Reviews:
(1) For each Reporting Period, the Monitor will review
compensation-related policy documents for sales personnel.
The Monitor shall analyze those documents and determine whether the compensation policies of Anda comply with the requirements contained in Section V.
f) Red Flags Review:
(1) For each Reporting Period, the Monitor shall review the Red Flags defined in Section VIII and their incorporation into Anda’s policies and procedures. The Monitor shall determine whether the information reflects substantial compliance with the requirements of Section VIII and include any Observations and Recommendations, as called for by Section VIII.C, about those definitions in its annual Audit Report.
(g) Review of CSMP Integration with the Clearinghouse:
(1) For each Reporting Period, Anda shall prepare a report summarizing the status of Anda’s CSMP integration with the operation of the Clearinghouse (“Clearinghouse Integration Report”). The Monitor shall review Anda’s Clearinghouse Integration Report, determine whether the information reflects substantial compliance with the requirements of Section XVII, Q-33
and include any Observations and Recommendations in its annual Audit Report.
H. Observations and Recommendations:
1. If the Monitor notes any areas for potential improvement during the course of the reviews conducted pursuant to the Injunctive Relief Terms, the Monitor shall include any such recommendations in the Audit Report.
Collectively, any such questions, concerns or recommendations will be referred to as “Observations and Recommendations.”
I. Audit Reports:
1. No later than one hundred and twenty (120) calendar days prior to the end of a Reporting Period and/or at any other time deemed reasonably necessary by the Monitor, the Monitor shall provide Anda with a draft report detailing any instances of substantial noncompliance with the applicable provisions of the Injunctive Relief Terms from the reviews in Section XVIII.G (the “Draft Report”). The Draft Report will also describe any Observations and Recommendations.
2. Within thirty (30) calendar days of its receipt of the Draft Report, Anda will provide comments and responses to the Draft Report. Anda will, among other things:
a) Respond to each instance of substantial non-compliance, including, where appropriate, describing any corrective action taken (or to be taken).
b) Respond to each Observation and Recommendation.
3. Within thirty (30) calendar days of its receipt of Anda’s responses to the Draft Report, the Monitor shall provide a final report (the “Audit Report”) to Anda and the State Compliance Review Committee. The Monitor shall provide the State Compliance Review Committee with a copy of Anda’s response to the Draft Report.
4. No action or lack of action by the Settling States regarding information received from the Monitor concerning Anda’s conduct shall be considered affirmation, acceptance, or ratification of that conduct by the Settling States.
J. Confidentiality:
1. Materials and information provided by Anda to the Monitor that are designated “Confidential” (and any parts, portions, or derivations thereof) (the “Confidential Information”) will be kept confidential and not be shown, disclosed, or distributed to any other party, including any other distributor.
Q-34
2. The Monitor will not use materials or information received from Anda, or information or analysis developed using the Confidential Information of Anda, in its assessment of any other distributor. Because Anda operates pursuant to its own unique policies and procedures intended to comply with legal and other requirements of the Injunctive Relief Terms, the Monitor shall apply the standards of Anda to its reviews without preference to the practices or standards applied by any other distributor.
3. If any of the Settling States or the Monitor receive a request for disclosure of any material or information created or shared under the Injunctive Relief Terms, pursuant to a Third Party Request, the Settling State or the Monitor, respectively, shall notify Anda of the Third Party Request and the Confidential Information to be disclosed so that Anda may seek a protective order or otherwise challenge or object to the disclosure. The Settling State or the Monitor will provide Anda with at least ten (10) days’ advance notice before complying with any Third Party Request for Confidential Information, except where state law requires a lesser period of advance notice.
4. Nothing herein will be deemed to prevent any party from claiming any applicable exemption to the public information act, freedom of information act, public records act, or similar law.
XIX. ENFORCEMENT OF INJUNCTIVE RELIEF TERMS
A. State Compliance Review Committee:
1. Any Settling State may initiate a review of a Potential Violation consistent with the process set forth in Section XIX.
2. The State Compliance Review Committee shall assign the Monitor the responsibilities set forth in Sections XIX.B.3 through XIX.B.7, regarding review of a Potential Violation and an opportunity to cure, except with respect to matters requiring interpretation of the Injunctive Relief Terms subject to Section XIX.C.2. The objective of the Monitor shall be to facilitate a resolution among the parties, providing an opportunity to cure, as applicable, for the party against whom a Potential Violation has been alleged.
3. No less than six (6) months before the Monitor’s term expires pursuant to Section XVIII, the State Compliance Review Committee and Anda shall meet and confer in good faith to determine the parameters and processes for continued enforcement, consistent to the maximum extent possible with the provisions set forth in Section XIX, for the period after the Monitor’s term has ended. Absent agreement between the State Compliance Review Committee and Anda, all provisions set forth in Section XIX involving the Monitor are excused after the Monitor’s term has ended.
4. Should Anda allege in good faith that a Settling State or the Monitor has impaired the ability of Anda to meet the Injunctive Relief Terms, Anda may Q-35
request the State Compliance Review Committee to mediate any dispute in an effort to avoid the time and expense of litigation regarding interpretation and enforcement of the Injunctive Relief Terms.
B. Process for Review of Potential Violations and Opportunity to Cure:
1. Definition of “Potential Violation”: A Potential Violation occurs when Anda is alleged to not be in substantial compliance with (i) the Injunctive Relief Terms or (ii) a Corrective Action Plan adopted consistent with the process set forth in Section XIX.B.7.
2. Submission of Notice of Potential Violation. An allegation of a Potential Violation shall be submitted to the State Compliance Review Committee in writing by one or more Settling States (“Notice of Potential Violation” or “Notice”) and shall include the following to the extent practicable:
a) Specification of the particular Injunctive Relief Term(s) and/or Corrective Action Plan(s) implicated by the Potential Violation; b) Description of the Potential Violation with specificity; c) The reasoning for and, if available, any documentation supporting the allegation that a Potential Violation has occurred, including whether the Potential Violation is a matter identified by the Monitor in an Audit Report; and
d) Description of the time-sensitivity of the Potential Violation, if relevant.
3. Assignment to Monitor. The State Compliance Review Committee shall review every Notice. If the State Compliance Review Committee reasonably believes that further review is warranted, the State Compliance Review Committee shall forward the Notice to the Monitor. The Monitor shall ensure that Anda receives a copy of the Notice and a proposed schedule consistent with the process set forth in Sections XIX.B.4 and XIX.B.
4. Response to Notice of Potential Violation. Within thirty (30) days of receipt of the Notice of Potential Violation, Anda shall provide a written response to the referring Settling State(s), the Monitor, and the State Compliance Review Committee (collectively with Anda, the “parties to the Notice”)”. The response (a) shall set forth the reasons Anda believes that it is in substantial compliance with the relevant Injunctive Relief Term(s) and/or Corrective Action Plan(s), and (b) as applicable, shall explain efforts undertaken to cure the Potential Violation and a schedule for completing the efforts to cure.
5. Conference for Parties re Notice of Potential Violation. The parties to the Notice shall meet or otherwise confer regarding the Potential Violation. The parties and the Monitor shall make themselves available for such a meeting (which may at any party’s election be a virtual or technology-based Q-36
meeting), provided, however, that the meeting is not required to take place sooner than fifteen (15) days after a written response to the Notice of Potential Violation.
6. Process for Previously-Submitted Notices of Potential Violation. At the request of the parties to a Notice, the Monitor shall determine whether the Notice implicates the same or similar issues as a previously submitted Notice involving Anda or is a matter previously identified by the Monitor in an Audit Report involving Anda, and make an initial determination as to whether the issues needs to be addressed anew. The Monitor shall inform the Settling State and Anda of its determination within five (5) business days of receipt of the Notice. The Settling State and Anda shall have five (5) business days to object to the determination. If an objection is made, the Monitor shall respond to the objection within five (5) business days. If no objection is made, the party involved in the prior Notice may rely on the response to the previously submitted Notice or matter previously identified by the Monitor in an Audit Report and no further action shall be required.
7. Monitor Resolution of Potential Violation and Opportunity to Cure. Within thirty (30) days of the meeting pursuant to Section XIX.B.5, the Monitor, taking into consideration the submissions of the parties involved in the Notice and other information available to the Monitor, shall resolve the Notice as follows:
a) If the Monitor reasonably believes that a Potential Violation is not ongoing or has been substantially resolved as of thirty (30) days from the meeting pursuant to Section XIX.B.5, the Monitor shall provide written notice to the State Compliance Review Committee and the Settling State(s) and Anda.
b) If the Monitor reasonably believes that a Potential Violation is ongoing and has not been substantially resolved as of thirty (30) days from the meeting pursuant to Section XIX.B.5, the Monitor shall provide written notice to the State Compliance Review Committee and the Settling State(s) and Anda and request that Anda prepare, within thirty (30) days of the receipt of such written notice, a Corrective Action Plan to remedy such Potential Violation, including a reasonable period for implementation of such plan. The Monitor may extend the period of time to submit a Corrective Action Plan up to ninety (90) days based on a reasonable request by the affected party.
c) A Corrective Action Plan may address multiple Potential Violations, and an existing Corrective Action Plan may be amended to address additional Potential Violations.
d) Within ten (10) business days of submission of a Corrective Action Plan regarding a Potential Violation, the Monitor shall confer with Q-37
the State Compliance Review Committee and the Settling State(s) and Anda regarding the proposed Corrective Action Plan. The Monitor may recommend revisions in its discretion. The conference required by this paragraph may at any party’s election be a virtual or technology-based meeting.
(e) Within thirty (30) days of the conference in Section XIX.B.7.d, the Monitor shall advise the State Compliance Review Committee and the Settling State(s) and Anda whether the Monitor has adopted the proposed Corrective Action Plan or whether the Monitor has adopted it after making modifications. The Monitor shall also set forth a reasonable period for implementation of any such plan that has been adopted. Anda must begin to comply with the Corrective Action Plan within five (5) business days of receiving notice of the Corrective Action Plan has been adopted, unless it seeks review by the State Compliance Review Committee pursuant to Section XIX.C.1.
C. Enforcement Responsibilities of State Compliance Review Committee:
1. The Settling State(s) or Anda may request the State Compliance Review Committee to review the resolution (including a resolution pursuant to Section XIX.B.7.a) and/or Corrective Action Plan adopted by the Monitor regarding that Notice. Any such request must be made within five (5) business days of a resolution or adoption of a Corrective Action Plan by the Monitor.
The State Compliance Review Committee, taking into consideration the resolution by the Monitor, submissions of the Settling State(s) or Anda, and other information available to the Committee, shall within thirty (30) days of receipt of the request resolve the matter by written notice to the affected parties, which shall include the State Compliance Review Committee’s reasoning in reaching its resolution. The State Compliance Review Committee may agree, disagree, or modify any resolution or Corrective Action Plan that it reviews. If the Corrective Action Plan is affirmed or affirmed as amended by the State Compliance Review Committee, Anda must within five (5) business days begin to comply with the Corrective Action Plan.
2. The State Compliance Review Committee shall review any issues raised by a Notice regarding the interpretation of the Injunctive Relief Terms at the request of the Settling State(s), Anda, or the Monitor. Such a request may be made at any time after the Notice’s submission, and the request will not extend the timelines set forth in Sections XIX.B and XIX.C.1. The State Compliance Review Committee shall notify the Monitor, Settling State(s) and Anda of its determination. Settling States and Anda do not waive their rights to challenge the interpretation of the Injunctive Relief Terms by the State Compliance Review Committee in any subsequent proceeding pursuant to Section XIX.E.2.
3. The State Compliance Review Committee may, independent of a Notice of Potential Violation, review requests by a Monitor, Settling State, or Anda regarding the interpretation of the Injunctive Relief Terms. The State Q-38
Compliance Review Committee shall notify the Monitor and requesting party of its interpretation, including the State Compliance Review Committee’s reasoning in reaching its conclusion. Settling States and Anda do not waive their rights to challenge the interpretation of the Injunctive Relief Terms by the State Compliance Review Committee in any subsequent proceeding pursuant to Section XIX.E.2.
4. The State Compliance Review Committee shall make available to all Settling States and Anda any interpretation it issues pursuant to Sections XIX.C.2 and XIX.C.3.
D. Composition of State Compliance Review Committee:
1. A Settling State on the State Compliance Review Committee that is in active litigation with Anda, or in another potential conflict of interest involving compliance with Controlled Substances laws and regulations, may not serve on the State Compliance Review Committee, and the remaining Settling States on the State Compliance Review Committee shall within five (5) business days select an alternate Settling State as a replacement.
2. If the affected state on the State Compliance Review Committee disputes that it has a disqualifying active litigation or other conflict of interest, the determination of whether that state has a conflict disqualifying it from serving on the State Compliance Review Committee shall be made by the remaining states on the State Compliance Review Committee.
E. Enforcement Actions:
1. Any written notice or resolution by the State Compliance Review Committee regarding the matters set forth in Sections XIX.B and XIX.C shall provide the State Compliance Review Committee’s assessment of the matter but will not be an official opinion of any individual Settling State.
2. Following the issuance of a written notice or resolution of the State Compliance Review Committee pursuant to Section XIX.C, a Settling State or Anda may take whatever action it deems necessary related to the written notice or resolution issued by the State Compliance Review Committee, provided that the Settling State or Anda is either (a) the Settling State that sought review by the State Compliance Review Committee, or (b) Anda.
Such action may include but is not limited to bringing an action to enforce the settlement agreement, filing a new original action, or, the parties to a Notice attempting to negotiate a Corrective Action Plan directly with each other.
3. The Settling States agree that prior to taking any court or administrative action, other than an action that is necessary to address an immediate threat to the health, safety, or welfare of the citizens of the Settling State, or that a public emergency requiring immediate action exists, it will follow the process outlined in Sections XIX.B and XIX.C.
Q-39
4. A Settling State or Anda must bring a court or administrative action within six (6) months of any resolution of the State Compliance Review Committee, unless the alleged violation is also an independent violation of state or federal law, or an action that a Settling State concludes is necessary to address an immediate threat to the health, safety, or welfare of the citizens of the State, or that a public emergency requiring immediate action exists, in which cases, the applicable statute of limitations (if any) for sovereign actions shall apply.
R-1
Exhibit R
Agreement on Attorneys’ Fees, Expenses and Costs
This Agreement on Attorneys’ Fees, Expenses, and Costs (“Fee Agreement”) is entered between Teva, Allergan, and the Plaintiffs’ Executive Committee appointed in the multidistrict litigation in the Northern District of Ohio, In re National Prescription Opiate Litigation, No. 1:17- MD-2804 (“MDL PEC”), in connection with the Teva Global Opioid Settlement Agreement (“Teva Agreement”) and the Allergan Public Global Opioid Settlement Agreement (“Allergan Agreement”).
This Fee Agreement becomes effective on the Effective Date of the Teva Agreement and Allergan Agreement or the date that the Consent Judgments anticipated under the Teva Agreement and Allergan Agreement become final in 25 Settling States (whichever is later).
I. Definitions
A. This Fee Agreement incorporates all defined terms in the Teva Agreement and Allergan Agreement, unless otherwise defined herein, and shall be interpreted in a manner consistent with the Teva Agreement and Allergan Agreement.
B. “Allergan.” Allergan Finance, LLC (f/k/a Actavis, Inc., which, in turn, was f/k/a/ Watson Pharmaceuticals, Inc.) and Allergan Limited (f/k/a Allergan plc, which, in turn, was f/k/a Actavis plc). Allergan does not include Teva Pharmaceuticals Industries Ltd. (“Teva Ltd.”), Teva Pharmaceuticals USA, Inc. (“Teva USA”), Cephalon, Inc. (“Cephalon”), Actavis LLC (f/k/a Actavis Inc.) (“Actavis LLC”), Watson Laboratories, Inc. (“Watson”), Actavis Pharma, Inc. (f/k/a Watson Pharma, Inc.) (“Actavis Pharma”), Actavis Elizabeth LLC (“Actavis Elizabeth”), Actavis Kadian LLC (“Actavis Kadian”), Actavis Laboratories FL, Inc. (f/k/a Watson Laboratories, Inc. - Florida) (“Actavis Labs FL”), Actavis Laboratories UT, Inc. (f/k/a Watson Laboratories, Inc. - Utah) (“Actavis Labs UT”), Actavis Mid Atlantic LLC (“Actavis Mid”), Actavis South Atlantic LLC (“Actavis South”), Actavis Totowa LLC (“Actavis Totowa”), or Anda, Inc. (“Anda”).
C. “Applicant.” Any Attorney or MDL Participating Counsel who seeks an award of attorneys’ fees from the Attorney Fee Fund pursuant to the procedures established by the MDL Court and the Fee Panel.
D. “Attorney.” Any of the following retained through a legal contingency fee or hourly fee contract: a solo practitioner, multi-attorney law firm, or other legal representative of a Participating Subdivision or MDL Participating Counsel. This does not include Subdivision in-house attorneys.
E. “Attorney Fee Fund.” An account consisting of funds allocated to pay attorneys’ fees approved pursuant to Section III of this Fee Agreement established by Order of and under the ongoing jurisdiction of the MDL Court, as provided below.
F. “Common Benefit.” Work performed for the benefit of all Participating Subdivisions or Tribal Nations, including, but not limited to, pretrial matters, discovery, trial preparation, trial, settlement negotiations, and all other work that advances the interests of the Participating Subdivisions.
R-2
G. “Common Benefit Fund.” The sub fund of the Attorney Fee Fund described in subsection III.E.
H. “Contingency Fee Fund.” The sub fund of the Attorney Fee Fund described in subsection III.F.
I. “Cost and Expense Fund Administrator.” The administrator appointed by the MDL Court on August 12, 2021 (MDL Docket No. 3828), to administer the Cost Fund and its sub funds as provided in the Fee Agreement.
J. “Court Common Benefit Fund.” The Common Benefit Fund established by the MDL Court in its orders of July 22, 2021, MDL Docket No. 3794, and May 9, 2022, MDL Docket No. 4428.
K. “Fee Entitlement.” Any right, entitlement, or expectation, including but not limited to a fee contract, contingent fee contract, agreement, referral arrangement, co-counsel arrangement, State Back-Stop agreement, or any other arrangement by which counsel could receive compensation or other consideration. For the avoidance of doubt, the scope of Fee Entitlement under subparagraph III.G.3.a does not include any Attorneys’ fees associated with representation of a State.
L. “Fee Panel.” The three-person panel appointed by the MDL Court on August 12, 2021 (MDL Docket No. 3828), to administer and make recommendations for the allocation and distribution of the Attorney Fee Fund and its sub funds as provided in the Fee Agreement.
M. “Later Litigating State” means a State that first files a lawsuit bringing a Released Claim against a Released Entity after the Preliminary Agreement Date.
N. “MDL Court.” United States District Court for the Northern District of Ohio Eastern Division, Case No. 1:17-md-2804, Judge Dan Aaron Polster.
O. “MDL Direct Cost Fund.” The cost fund described in subparagraph II.A.3.a below.
P. “MDL Participating Counsel.” MDL Participating Counsel includes an attorney or firm authorized by MDL 2804 Lead Counsel to perform work for the Common Benefit of Participating Subdivisions. By way of example, it would include insurance counsel and appellant counsel.
Q. “MDL PEC.” The Plaintiffs’ Executive Committee appointed by the MDL Court.
R. “Non-Participating Litigating Subdivision.” A Litigating Subdivision that is not a Participating Subdivision.
S. “Non-Participating State.” A State that is not a Participating State.
R-3
T. “Participating Litigating Subdivision.” A Litigating Subdivision that is also a Participating Subdivision.
U. “Participation Agreement.” An agreement executed by an Attorney that acknowledges the obligation to pay an appropriate MDL Common Benefit Assessment.
V. “Qualified Tribal Representation.” Representation by an attorney of a Participating Tribal Government regarding Released Claims against Released Entities. Such counsel are eligible for Common Benefit Fee consideration. The Teva Tribal Global Settlement and the Allergan Tribal Global Settlement will provide for the contribution to the Common Benefit Fund as determined by the MDL Court.
W. “Qualifying Representation.” Legal services provided for representation of the MDL PEC or Participating Litigating Subdivision regarding Released Claims against Released Entities.
X. “State Back-Stop Agreement.” Any agreement by a Settling State and private counsel for Participating Subdivisions in that State (or legislation enacted in that State) to provide, adjust, or guarantee attorneys’ fees and costs, whether from the Attorney Fee Fund or any other source recognized in the agreement or legislation.1 Y. “Subdivision Cost and Expense Fund.” The fund created to pay approved Subdivision and Tribal Nations costs and expenses as set forth in subparagraph II.A.3.b.
Z. “Teva” means (i) Teva Pharmaceutical Industries Ltd. and (ii) all of its respective past and present direct or indirect parents, subsidiaries, divisions, affiliates, joint ventures, predecessors, successors, assigns, including but not limited to Teva Pharmaceuticals USA, Inc., the Actavis Generic Entities, and Anda Inc.
II. MDL Direct Cost Fund and Subdivision Cost and Expense Fund (“Cost Fund”) A. The total Cost Fund shall be $30 million dollars funded as set forth below.
1. Total cost to be paid by Teva in each of the relevant Payment Years2under this Agreement shall be up to the following amounts, subject to the provisions set forth below:
1 Nothing herein shall be understood to indicate approval for additional State Back-Stop Agreements or modifications of existing State Back-Stop Agreements.
2 Payment Year shall have the same meaning for Teva as set forth in the Teva Agreement and Teva Exhibits M-1 and M-3. Payment Year shall carry the same definition for Allergan as set forth in the Allergan Agreement and Allergan Exhibits M-1 and M-2.
R-4
Cost Fund
Payment
Year 1 $9,000,000.00
Payment
Year 2 $9,000,000.00
2. Total cost to be paid by Allergan in each of the relevant Payment Years under this Agreement shall be up to the following amounts, subject to the provisions set forth below:
Cost Fund
Payment
Year 1 $6,000,000.00
Payment
Year 2 $6,000,000.00
3. The Cost Fund shall be split into the MDL Direct Cost Fund and the Subdivision Cost and Expense Fund.
a. The MDL Direct Cost Fund shall be Seven Million Five Hundred Thousand Dollars ($7,500,000), payable 50% in Year One, and 50% in Year Two. The MDL Direct Cost Fund shall make payment without any delay to reimburse the MDL PEC for an agreed-to portion of the expenses incurred, provided the costs have been approved by the Cost and Expense Fund Administrator appointed by the Court. The MDL Direct Cost Fund will be paid directly to the MDL Opiate Capital Account. The Cost and Expense Fund Administrator may include costs incurred by the MDL PEC in furtherance of litigation, mediation, implementation, and management of the Settlements.
b. The Subdivision Cost and Expense Fund shall be Twenty-Two Million Five Hundred Thousand Dollars ($22,500,000), payable 50% in Year One and 50% in Year Two.
c. It is the intention of the Parties that the Cost Fund shall be administered by the Cost Fund and Expense Fund Administrator (MDL Docket No. 3828), who will be governed by the provisions of this Agreement and shall design the process and procedures for the allocation of costs pursuant to this Agreement and the MDL Court’s Order.
d. The costs of the Cost and Expense Fund Administrator shall be paid from the Cost Fund and allocated by the Cost and Expense Fund Administrator between the MDL Direct Cost Fund and the Subdivision Cost and Expense Fund to fairly charge each fund the cost incurred in implementing and supervising the specific fund.
e. The Cost and Expense Fund Administrator shall set the process and procedures for submission of and criteria for applications for payment of R-5
Subdivisions’ and Tribal Nations’ costs and expenses. The Cost and Expense Fund Administrator shall receive and evaluate applications from Participating Litigating Subdivisions and litigating Tribal Nations, whether filed in Federal Court or State Court, to seek reimbursement for eligible costs in pursuit of claims against Allergan or Teva. The process shall require a showing that the costs or expenses sought were reasonably incurred in furtherance of active litigation of a designated state or federal bellwether trial-set case, or Common Benefit. The Cost and Expense Fund Administrator shall require transparency from all applicants as to any other sources for compensating Attorneys for Subdivisions and Tribal Nations for costs incurred. If funds remain after the reimbursement of approved out-of-pocket costs, the Cost and Expense Fund Administrator may consider reasonable and appropriate payment for client time, costs, or expenses incurred by recognized trial bellwether plaintiffs. At the conclusion of the process, any funds not allocated by the Cost and Expense Fund Administrator shall be transferred to the Common Benefit Fund established in this Exhibit R.
4. In the event that States and Subdivisions enter into an additional global settlement with a party or parties other than Teva or Allergan that is (a) under the jurisdiction of the MDL Court in MDL No. 2804, (b) creates a separate cost fund, and (c) unless the parties agree to another date, such agreement has an effective date prior to June 30, 2023, the Cost and Expense Fund Administrator shall have the authority to aggregate the Cost Fund with the cost fund created under that global settlement agreement. The Cost and Expense Fund Administrator shall have the authority to address the appropriate procedures and required information to allow the costs to be funded from the appropriate cost fund or shared by two or more cost funds.
III. Attorney Fee Fund
A. An Attorney Fee Fund shall be paid in the following amounts and years:
Teva Shall Pay Allergan Shall Pay
Payment
Year 1 $ 46,215,837.93 $ 40,778,855.53
Payment
Year 2 $ 46,215,837.93 $ 40,778,855.53
Payment
Year 3 $ 55,215,837.92 $ 46,778,855.53
Payment
Year 4 $ 55,215,837.92 $ 46,778,855.53
Payment
Year 5 $ 55,215,837.92 $ 0.00
Payment
Year 6 $ 55,215,837.92 $ 0.00
R-6
B. The Attorney Fee Fund shall consist of the Contingency Fee Fund and the Common Benefit Fund.
1. It is the intention of the Parties that the Contingency Fee Fund and the Common Benefit Fund shall be administered by the Fee Panel (MDL Docket No. 3828), which will be governed by the provisions of this Fee Agreement and shall design the process and procedures for the allocation of fees pursuant to this Fee Agreement and the MDL Court’s Order.
C. The fees to be paid under this Fee Agreement are available for Attorneys engaged in Qualifying Representations and Qualified Tribal Representations only. Fees to be paid under this Fee Agreement are not available prior to the Effective Date of the Teva Agreement and Allergan Agreement or if the Teva Agreement does not proceed past Teva’s determination in subsection XI.A of the Teva Agreement or if the Allergan Agreement does not proceed past Allergan’s determination in subsection X.A of the Allergan Agreement. Fees to be paid under this Fee Agreement are not available for representation of States, Non-Participating Subdivisions or NonLitigating Subdivisions and are not available for representation of private hospitals, third-party payors, NAS claimants, personal injury/wrongful death claimants, or any entity other than Participating Litigating Subdivisions. In addition, fees under this Fee Agreement are not available for representation of any individual or entity in matters other than those claims against Released Entities, but may include a reasonable share of representations that involve development of facts for pursuit of opioid-related claims against multiple defendants in the pharmacy, manufacturing, and distribution chain.
D. Attorney Fee Fund and Sub Funds.
1. There shall be a split of the Attorney Fee Fund into the Contingency Fee Fund and the Common Benefit Fund. The split shall be 40% to the Contingency Fee Fund and 60% to the Common Benefit Fund.
2. In no event shall Teva or Allergan be required to pay more into the Attorney Fee Fund in any Payment Year than the maximum amount specified for that Payment Year in subsection III.A., which amounts are reflected in Exhibit M to the Teva Agreement and Allergan Agreement. The amounts allocated to the Contingency Fee Fund and the Common Benefit Fund set by the Fee Panel shall be subject to the reductions and offsets set forth below.
3. Awards of fees from the Contingency Fee Fund shall be available to Attorneys with Qualifying Representations of Participating Litigating Subdivisions eligible to receive an allocation under the Teva Agreement and Allergan Agreement, as set forth in Exhibits F-2 and G to the Teva Agreement and Exhibits F and G to the Allergan Agreement, and shall be made applying the Mathematical Model attached as Exhibit “A” to this Fee Agreement. The collection of the data and calculations for the Mathematical Model has been a cooperative effort among private counsel for a large number of Litigating Subdivisions. The analysis has been spearheaded by Joseph Tann and Andrew Arnold. The Fee Panel is R-7
encouraged to continue working with those counsel in application of the Model.
The Fee Panel shall oversee the application of the Model and resolve any questions or disputes concerning the eligibility of a Counsel to participate as required in subsection III.G. The Panel is empowered to hear disputes concerning and ensure the accuracy of the mathematical calculation.
4. As to awards from the Contingency Fee Fund, there shall be no right of appeal.
5. Any appeal of an award of the Fee Panel from the Common Benefit Fund will be made to the MDL Court and be reviewed under an abuse of discretion standard.
E. Common Benefit Fund (60% of the Attorney Fee Fund).
1. Funds in the Attorney Fee Fund shall be allocated to the Common Benefit Fund according to the schedule set forth below, subject to the adjustments described in paragraph III.E.6. The payments are to be made on the following yearly schedule, subject to the adjustments set forth below:
Teva Shall Pay Allergan Shall Pay
Payment
Year 1 $ 27,729,502.76 $ 24,467,313.32
Payment
Year 2 $ 27,729,502.76 $ 24,467,313.32
Payment
Year 3 $ 33,129,502.75 $ 28,067,313.32
Payment
Year 4 $ 33,129,502.75 $ 28,067,313.32
Payment
Year 5 $ 33,129,502.75 $ 0.00
Payment
Year 6 $ 33,129,502.75 $ 0.00
2. The Common Benefit Fund shall be available to compensate Attorneys engaged in Qualifying Representations of Participating Litigating Subdivisions and Qualified Tribal Representation of Tribal Participating Governments who:
a. have performed work for the Common Benefit of all Participating Subdivisions and/or Tribal Nations consistent with the provisions to the guidelines established by Judge Polster set forth in MDL 2804 and the May 1, 2018 Order, under docket number 358, which is incorporated herein by reference; and
b. satisfy the eligibility criteria set forth in subsection III.G.
3. For purposes of Common Benefit Fund distribution, Attorneys representing Tribal Nations litigating against Teva or Allergan have also reached a settlement for Released Claims with Teva and Allergan. These settlements shall be the subject of separate agreements with Teva and Allergan. Attorneys representing R-8
Tribal Nations are eligible for Common Benefit consideration, provided such agreements with Teva and Allergan became effective under their terms. Such Attorneys must meet the eligibility criteria in subsection III.G.
4. For purposes of Common Benefit Fund distribution, MDL Participating Counsel not engaged in Qualifying Representations of Participating Litigating Subdivisions but who performed work for the Common Benefit pursuant to authorization from the MDL Co-Leads and meet the eligibility criteria in subsection III.G shall be eligible.
5. The Common Benefit Fund shall be overseen by the Fee Panel, which shall determine the allocation of funds to eligible Attorneys consistent with this Fee Agreement and the May 1, 2018 Order.
6. In assessing the benefits that an Applicant has conferred to Participating Subdivisions (including non-Litigating Subdivisions) and/or Tribes for purposes of any compensation decision, the Fee Panel shall give significant weight to the extent to which (i) the Applicant and his or her clients have contributed to increasing (or reducing) the Initial Participation in the Teva Agreement or the Allergan Agreement, and (ii) the Applicant and his or her clients have contributed to increasing (or reducing) the amounts achieved under Incentive Payments A-D through participation in the Teva Agreement, including the Teva Tribal Agreement, or the Allergan Agreement, including the Allergan Tribal Agreement. The Fee Panel shall also consider additional fee recoveries the Applicant may potentially obtain, including, but not limited to, from attorney fee funds under other settlement agreements, State Back-Stop Agreements, representations of States or Tribal Nations, representations of other clients in opioids-related matters, or through the representation of Subdivision clients, whether they participated in the Teva Agreement or Allergan Agreement or not.
It is the intent of this provision to recognize that the goal of the Teva Agreement and Allergan Agreement is to provide for maximum participation by the Subdivisions, maximum abatement funding for all Subdivisions nationally, and the maximum peace for Released Entities. Therefore, representing one or more Non-Participating States or Non-Participating Subdivisions does not further the goal of the Teva Agreement or Allergan Agreement, and should not be considered Common Benefit because it does not increase funds available to Participating Subdivisions’ abatement programs. Representing one or more Later Litigating States or Later Litigating Subdivisions is antithetical to the Teva Settlement and the Allergan Agreement and detracts from Common Benefit. The Fee Panel shall consider this concept of “common detriment” set forth in this paragraph in all of its decision making with respect to the allocation of the Attorney Fee Fund among Applicants, as well as, in its discretion, any offsets provided to Teva or Allergan as set forth in subsection III.H. The Fee Panel shall consider the totality of the Applicant’s Participating Litigating Subdivisions as compared to the Applicant’s Non-Participating Litigating Subdivisions; the Parties recognize that, although the goal is for 100% participation, Applicants with a greater number of clients have a greater probability of having one or more Non-Participating Litigating Subdivisions. As used in this paragraph, “client” or R-9
“representing” a Subdivision shall include any Litigating Subdivision as to which the Applicant has a Fee Entitlement.
7. As set forth in subsection III.H, the Fee Panel must consider the factors described in paragraph III.E.6 to determine how and whether to reduce the amounts to be paid by Teva or Allergan under this Fee Agreement and to determine how to allocate funds among Applicants. They may also, at their discretion, consider other factors. Any reduction in payment obligation or credit to be given Teva or Allergan in this Fee Agreement shall be applied against the last Payment Year for that defendant and working backwards. Any reduction to an Applicant not credited to Teva or Allergan shall be allocated to attorneys whose Litigating Subdivision clients participated in the settlement by the Initial Participation Date.
8. The MDL PEC will seek, and the Attorneys General for Settling States, Teva, and Allergan, will not oppose, a Common Benefit Fee Order requiring an assessment of 7.5% on the gross recovery (by judgment or settlement) of any Non-Participating Subdivision that is subject to the federal court jurisdiction, represented by a MDL PEC firm, represented by any Attorney receiving fees from the Common Benefit Fund, represented by any Attorney that signed a Participation Agreement or paid in a case otherwise under the jurisdiction of the MDL Court.
9. If Teva and Allergan agree to go forward with their respective Agreements under subsections XI.A and X.A of their Agreements, they shall pay the full Common Benefit (60%) Fee into the Common Benefit Fund without regard to the number of Settling States or Participating Subdivisions. Should Teva and/or Allergan pay a judgment to, or settle with, a Non-Participating State or a Non-Participating Litigating Subdivision subsequent to the Reference Date, and such settlement or judgment results in a common benefit fee assessment paid into the Common Benefit Fund or the Court Common Benefit Fund, the following shall apply:
a. Teva or Allergan shall be credited dollar-for-dollar for the amount paid for the fee assessment up to 7.5% of the abatement amount derived from the application of the State Global Allocation Percentage as set forth in Exhibit F-1 or the abatement amount derived from the application of the Subdivision and Special District Allocation Percentage as set forth in Exhibit G that the Non-Participating State or Non-Participating Litigating Subdivision would have received if it had participated in the Settlement Agreement; b. Except as set forth below in subparagraph III.E.9.c, for any settlement or judgment that meets the requirements of paragraph III.E.9 that exceeds the abatement amount derived from the application of the State Global Allocation Percentage as set forth in Exhibit F-1 or the abatement amount derived from the application of the Subdivision and Special District Allocation Percentage as set forth in Exhibit G, no credits shall be taken against Teva or Allergan’s obligation to make payments into the Common Benefit Fund for that portion of the settlement or judgment in excess of the abatement amount derived from the application of the State Global Allocation Percentage as set forth in Exhibit R-10
F-1 or the abatement amount derived from the application of the Subdivision and Special District Allocation Percentage as set forth in Exhibit G; c. For any settlement or judgment that meets the requirements of paragraph III.E.9 that exceeds the abatement amount derived from the application of the State Global Allocation Percentage as set forth in Exhibit F-1 or the abatement amount derived from the application of the Subdivision and Special District Allocation Percentage as set forth in Exhibit G that the Later Litigating State or Later Litigating Subdivision would have received if it had participated in the Settlement Agreement, where the Later Litigating State or Later Litigating Subdivision is represented by any member of the MDL PEC or that member’s law firm, Teva or Allergan shall be credited dollar-for-dollar for the full amount of the 7.5% common benefit fee assessment paid into the Common Benefit Fund or the Court Common Benefit Fund;
d. If a credit is made to Allergan or Teva pursuant to subparagraph III.E.9.c., then that amount shall be calculated as a direct reduction to any common benefit fee award made under this Fee Agreement to the MDL PEC firm(s) that represented the Later Litigating State or Later Litigating Subdivision; e. Any credits shall be taken first against Teva’s or Allergan’s payment to the Common Benefit Fund in Teva’s or Allergan’s respective final Payment Year as set forth in paragraph III.E.1 (for Teva Year 6; for Allergan Year 4), up to the full amount of Teva’s or Allergan’s final year payment obligation, then from the next-to-final Payment Year’s payment obligation, and so on; f. Teva and Allergan shall not be entitled to any credits against the Common Benefit Fund for settlements or judgments paid after Teva’s or Allergan’s final fee Payment Year.
F. Contingency Fee Fund (40% of the Attorney Fee Fund).
1. Funds from the Attorney Fee Fund shall be allocated to the Contingency Fee Fund on the following yearly schedule, subject to the adjustments set forth below:
Teva Shall Pay Allergan Shall Pay
Payment
Year 1 $ 18,486,335.17 $ 16,311,542.21
Payment
Year 2 $ 18,486,335.17 $ 16,311,542.21
Payment
Year 3 $ 22,086,335.17 $ 18,711,542.21
Payment
Year 4 $ 22,086,335.17 $ 18,711,542.21
Payment
Year 5 $ 22,086,335.17 $ 0.00
Payment
Year 6 $ 22,086,335.17 $ 0.00
R-11
2. The Contingency Fee Fund shall be available to compensate Attorneys engaged in Qualifying Representations of Participating Litigating Subdivisions that meet the criteria set forth in subsection III.G.
a. The Contingency Fee Fund shall be available to Attorneys who represent Litigating Subdivisions that are Participating Subdivisions, whether their actions are filed in state or federal court, and meet the eligibility criteria of subsection III.G.
b. Participation in the Contingency Fee Fund by counsel that have a case that is not subject to the jurisdiction of the MDL Court shall not create, provide, or waive jurisdiction of the MDL Court over that Litigating Subdivision, that case or Attorneys, other than to oversee the fairness of the distribution process, and enforcement of this Fee Agreement.
c. Under the terms of the Teva Agreement and Allergan Agreement Litigating Subdivisions must become a Participating Litigating Subdivision under both Agreements to be eligible to participate. Therefore, Exhibit R applies jointly to Teva and Allergan with the Attorneys’ Fee Fund and MDL Cost Fund to include the combined payment from Teva and Allergan.
3. Teva and/or Allergan shall each be entitled to a pro-rata reduction to their own portion of the Contingency Fee Fund payment(s) in accordance with subsection III.F.4., unless, by the Payment Date for the Initial Year Payment, (i) 41 states are Settling States for Teva or 43 states are Settling States for Allergan, (ii) 98% of all Litigating Subdivisions are Participating Subdivisions and/or Subdivisions Subject to a Bar, Case-Specific Resolution, and, (iii) 97% of all Non-Litigating Subdivisions with Populations over 10,000 as listed in Exhibit I are Participating Subdivisions and/or Subdivisions Subject to a Bar, Case-Specific Resolution, in which case no offset shall be applied.
4. If the participation conditions in paragraph III.F.3 are not met, then the amounts owed by Teva and/or Allergan to the Contingency Fee Fund shall be reduced as follows:
a. For Non-Settling States, the Contingency Fee Fund payments shall first be reduced by the amounts identified by the Fee Panel, pursuant to paragraph III.H.7, that would have been owed to counsel for Litigating Subdivisions in Non-Settling States, had those States and those Litigating Subdivisions been Settling States and Participating Subdivisions.
b. Following the calculation in subparagraph III.F.4.a., the Contingency Fee Fund payments shall be reduced to reflect the non-joinder of Litigating Subdivisions in Settling States by subtracting the amounts identified by the Fee Panel, pursuant to paragraph III.H.7, that would have been owed to counsel for Non-Participating Litigating Subdivisions in Settling States had such Litigating Subdivisions been Participating Subdivisions.
R-12
5. In the event that after the date of the Settlement Agreement Teva, prior to the Effective Date of the Teva Agreement, or Allergan, prior to the Effective Date of the Allergan Agreement, settles with any Litigating Subdivision that would have been eligible to participate in the defendant’s Agreement, and, under such settlement agreement pays attorneys’ fees, the Fee Panel shall treat those Litigating Subdivisions as Participating Litigating Subdivisions and, applying the same criteria applicable to all Attorneys for Participating Litigating Subdivisions, determine what amount they would have been paid from the Contingency Fee Fund if they had become Participating Subdivisions under the Teva Agreement or the Allergan Agreement without such prior settlement. That sum, rather than being paid to the Attorney for the previously settling Litigating Subdivision, shall be credited and/or returned to Teva or Allergan as if determined under (a)(ii) above, except that such credit shall not be greater than the amount paid to the Attorneys under the Litigating Subdivision’s prior settlement agreement and credits apply equally over the Fee Payment Years.
6. During the period between the Preliminary Agreement Date and the Effective Date, the MDL PEC, as well as Litigating Subdivisions’ Attorneys, shall make best efforts to cease litigation activity against Teva and Allergan, including by jointly seeking stays or severance of claims against Teva and Allergan, where feasible, or postponements if a motion to stay or sever is not feasible or is denied, so long as such actions are not otherwise detrimental to the Litigating Subdivision.
G. Eligibility.
1. It is the intention of all parties participating in the Fee Panel process that there should be total transparency to the Fee Panel and to all fund participants. In connection with the process to be developed by the Fee Panel, any and all monies in attorney’s fees received or awarded, including prior or future Contingency Fees, Common Benefit Fees, referral fees, expenses paid, promises for payment, or any other Fee Entitlement, to any Applicant in any opioid litigation shall be disclosed to the Fee Panel as a condition of participating in the Attorney Fee Fund and prior to an award from the Fee Panel. Any payment, expectation of payment or perceived entitlement to participate in a State Back-Stop Agreement or any other agreement reached with a Settling State or any Subdivision or any other source regarding payment of fees must be disclosed to the Fee Panel. Similarly, any right to payment from any other fund, for example a fund for payment to lawyers representing Settling States or Tribal Nations or Subdivisions shall be disclosed to the Fee Panel. Because it is anticipated that there will be multiple firms listed on contingent fee agreements with Litigating Subdivisions, the Fee Panel shall establish procedures, with input from Attorneys for Participating Litigating Subdivisions, for who should petition for fees from such groups and to whom the fee shall be paid and thereafter distributed to co-counsel in accordance with applicable agreements. For the avoidance of doubt, all Attorneys that are part of such groups must meet the eligibility criteria in paragraph III.G.3, must be subject to the criteria set forth in subsection III.C, and must be disclosed to the Fee Panel.
R-13
2. An Applicant may apply for and recover attorneys’ fees from the Common Benefit Fund, the Contingency Fee Fund, and any fund created by a past or future State Back-Stop Agreement, provided the Applicant satisfies the requirements relevant to each such fund and requirements for disclosure to the Fee Panel.
3. An Attorney may not receive any payment from the Attorney Fee Fund (which includes both the Contingency Fee Fund and the Common Benefit Fund) unless the following eligibility criteria are met and annually certified by the Attorney:
a. The Attorney must expressly waive the enforcement against the Litigating Subdivision client of all Fee Entitlements (other than under State BackStop Agreements) arising out of or related to any or all Qualifying Representations of any Participating Litigating Subdivision prior to applying for attorneys’ fees from the Attorney Fee Fund. All applications for attorneys’ fees under this Fee Agreement shall include an affirmation by the Attorney of such waiver and notice to the client(s) of such waiver.
Such waiver shall not preclude the Attorney from submitting such Fee Entitlements to the Fee Panel as a factor for consideration in allocating payments from the Attorney Fee Fund or in connection with a State BackStop Agreement. For the avoidance of doubt, no Attorney may recover fees under this Fee Agreement unless the Attorney expressly agrees not to enforce Fee Entitlements as to each and every Participating Litigating Subdivision represented by that Attorney, but such Attorneys may participate in and receive funds from a State Back-Stop Agreement. b. The Attorney must represent that s/he has no present intent to represent or participate in the representation of any Later Litigating Subdivision or Later Litigating State with respect to Released Claims against Released Entities.
c. The Attorney must represent that s/he has not and will not engage in any advertising or solicitation related to Released Claims against Released Entities where such advertising or solicitation relates to a representation of a Subdivision eligible to be a Participating Subdivision after the Reference Date unless the Attorney is recommending participation in the Agreement.
d. The Attorney must represent s/he will not charge or accept any referral fees for any Released Claims brought against Released Entities by Later Litigating Subdivisions or Later Litigating States. This representation shall not prohibit Attorneys from receiving allocated shares of any future common benefit assessments arising out of settlements or judgments with Later Litigating Subdivisions or Later Litigating States that are the result of the MDL Court’s Common Benefit order.
e. The Attorney may not have and must represent that s/he does not have a Fee Entitlement related to a Later Litigating Subdivision or Later Litigating State, other than a potential Common Benefit Fee.
R-14
f. The Attorney must fully disclose the participation, or the anticipation of participation, in any agreement with a Settling State or Participating Subdivision concerning fees arising out of or related to the Teva Agreement or Allergan Agreement, including any fees paid or anticipated to be paid or any State Back-Stop Agreement.
g. The Attorney must identify for the Fee Panel whether s/he utilized state litigation work product or MDL work product, including but not limited to ARCOS data, document repositories, experts developed in the MDL, trial transcripts, or deposition transcripts. The Attorney must identify whether s/he signed the MDL Participation Agreement.
h. Any Attorney who applies for fees from one or both Funds must represent that, having exercised his/her independent judgment, s/he believes the Teva Agreement and the Allergan Agreement to be fair and will make or has made best efforts to recommend both Agreements to his or her Subdivision clients in Settling States. For avoidance of doubt, each Attorney is expected to exercise his or her independent judgment in the best interest of each client individually before determining whether to recommend joining the settlement. All applications for attorneys’ fees or costs under this subsection shall include an affirmation by the Attorney in compliance with the foregoing subparagraphs.
4. No Attorney receiving fees under this Fee Agreement may apply for or recover from the Attorney Fee Fund fees arising from representing a Non-Participating Subdivision except Common Benefit Fees as described in paragraph III.E.2. All applications for attorneys’ fees under this subsection shall include an affirmation by the Attorney of compliance with this paragraph.
5. An Attorney who has filed an application under this subsection and received an award of attorneys’ fees shall provide a certification of compliance with the requirements of this Fee Agreement annually during the years upon which they are still entitled to receive attorneys’ fee payments under this Agreement. This certification will be done as directed by the Panel.
6. If, at any time, the Attorney is unable to make the representations set forth in this subsection, such representations become untrue, or the Attorney falsely represents compliance with the eligibility criteria, the Attorney shall cease to be eligible to receive funds from the Attorney Fee Fund until further review by the Fee Panel of the Attorney’s eligibility under and compliance with this subsection.
7. If an Attorney has a Fee Entitlement with a Later Litigating Subdivision or Later Litigating State or otherwise becomes unable to reaffirm compliance with the eligibility criteria set forth above, the Attorney shall notify the Fee Panel. For the avoidance of doubt, any Attorney who undertakes any new representation of, or has a Fee Entitlement with, a Later Litigating Subdivision or Later Litigating State shall be prohibited from receiving any future funds from the Attorney Fee Fund.
R-15
If an Attorney fails to notify the Fee Panel of such Fee Entitlement with a Later Litigating Subdivision or Later Litigating State, the Attorney shall be required to refund amounts previously paid. The Fee Panel shall notify Teva and Allergan when it receives notification.
8. To the extent an Attorney who has received compensation from the Attorney Fee Fund based on Qualifying Representations of Participating Litigating Subdivisions under the Teva Agreement or the Allergan Agreement, represents a Later Litigating Subdivision or Later Litigating State, such Attorney shall be obligated to refund such amounts received as compensation from the Attorney Fee Fund to Teva or Allergan. Teva, Allergan, or such Attorney may bring any dispute as to whether such Attorney shall be obligated to refund such amounts received from the Attorney Fee Fund to Allergan or Teva to the Fee Panel. Nothing herein shall require a multi-attorney law firm that has received compensation from the Attorney Fee Fund to refund such amounts if an attorney of the firm that is no longer affiliated with such law firm, after such departure, represents a Later Litigating Subdivision or Later Litigating State, provided that (a) neither the law firm nor any of its other attorneys have any contractual or financial arrangement regarding, stand to benefit directly or indirectly from, or directly or indirectly provide financial or other support of any kind to, the former attorney’s representation of the Later Litigating Subdivision or Later Litigating State and (b) if the former attorney was a partner or owner of the multi-attorney law firm at the time that the law firm received compensation from the Attorney Fee Fund, the former attorney shall be obligated to refund such amounts as the former attorney earned as a result of the compensation that the law firm received from the Attorney Fee Fund.
9. In the event that an Attorney is deemed ineligible by the Fee Panel (whether based on its initial application or subsequent recertification), the Fee Panel shall provide notice to the Attorney and give the Attorney 30 days to provide additional information such that the Fee Panel could re-consider the Attorney’s eligibility.
10. To the extent that an Attorney has a Fee Entitlement with a Participating Subdivision and is authorized to bring Released Claims against Released Entities, but such authorization is, in scope, less broad than the category of Released Claims set forth in the Teva Agreement or Allergan Agreement, such Attorney may participate fully in both the Contingency Fee Fund and the Common Benefit Fund, without any reduction imposed by the Fee Panel due to the scope of the authorization, so long as the Participating Subdivision fully releases all Released Claims against Released Entities.
11. Attorneys applying to the Attorney Fee Fund knowingly and expressly agree to be bound by the decisions of the Fee Panel, subject to the limited appeal rights set forth in this Fee Agreement, and waive the ability to assert the lack of enforceability of the allocation reached through the procedures outlined herein.
12. Applicants are under an ongoing obligation to inform the Fee Panel in writing of any additional fees earned, expected, or received related to any Opioid litigation throughout the period of the Fee Panel’s operation.
R-16
H. Calculation of Amounts Due.
1. The Fee Panel shall be solely responsible for determining the amount of fees to be paid to each Applicant. None of the Released Entities shall have any responsibility, obligation, or liability of any kind whatsoever with respect to how attorneys’ fees are calculated under this subsection, except that the Fee Panel may receive information from Teva or Allergan as to (a) the identity of Participating, Non-Participating, Litigating, Later Litigating, and Non-Litigating Subdivisions; (b) the impact of non-participation by a Litigating Subdivision as is relevant to the Fee Panel’s determination in paragraph III.E.6; and (c) such other information as Teva or Allergan may voluntarily elect to provide.
2. The Fee Panel shall establish procedures for making determinations under this Fee Agreement consistent with this Fee Agreement and orders of the MDL Court.
Such procedures may include submission of documentary and/or other evidence, interviews with Applicants and/or other counsel (including counsel for Teva and Allergan) that the Fee Panel deems appropriate, and/or other means of creating a record upon which fee awards will be based.
3. In making determinations under this Fee Agreement, the Fee Panel must apply the eligibility criteria set forth in subsection III.G of this Fee Agreement and the criteria set forth in paragraph III.E.2. In addition, the Fee Panel will give consideration in regard to Common Benefit Fund awards to the Johnson factors, as well as the following factors (which factors may be applied and given relative weight in the Fee Panel’s discretion):
a. The Applicant’s contemporaneously recorded time and labor dedicated to Qualifying Representations along with the Applicant’s financial commitment to such Qualifying Representations. Claimed “time” will not be automatically accepted by the Fee Panel but will be critically reviewed and given substantially more weight and consideration if such time was subject to the audit process described in any Pretrial Order(s) governing the collection of common benefit time;
b. The novelty, time, and complexity of the Qualifying Representations; c. The skill requisite to perform legal services properly and undesirability of the case;
d. The preclusion of other employment by the Applicant due to time dedicated to Qualifying Representations;
e. The Common Benefit, if any, alleged to have been conferred by the Applicant and whether such Common Benefit work product by that Applicant was used by others in parallel litigations against Released Entities whether within or outside the MDL, provided that any Applicant claiming that s/he substantially benefited cases other than those in which s/he entered an appearance as R-17
counsel must substantiate such claims by proffering factual support, such as proper supporting affidavits or other documents as determined by the Fee Panel with input from Attorneys for Participating Litigating Subdivisions; f. Any “common detriment,” as set forth in paragraph III.E.6. g. Any contingent fee agreement or other Fee Entitlement with Participating Subdivisions, enforcement of which, except for State Back-Stop Agreements, are waived in conjunction with the application, the nature and extent of any work for those Participating Subdivisions, whether such Participating Subdivisions actively litigated and, if so, the nature and procedural history of such case(s);
h. The experience, reputation, and ability of the Applicant; i. Whether the Applicant’s clients brought Released Claims against Released Entities;
j. The status of discovery in cases primarily handled by the Applicant; k. The nature of any work by the Applicant on “bellwether” cases or cases that were similarly active in litigation;
l. Any pressure points successfully asserted by the Applicant in cases against Teva or Allergan or any risk for Teva or Allergan created by the Applicant in cases against them;
m. Any risk for defendants created by Applicants in cases against Teva or Allergan;
n. Successful and unsuccessful motion practice in cases worked on by the Applicant;
o. The date of filing of any cases filed by the Applicant; p. Obtaining consolidation of the litigation in the Applicant’s jurisdiction; q. The number and population of entities represented by the Applicant and the fees that would have been awarded under extinguished contingent fee arrangements;
r. Whether the Applicant’s clients brought claims against Teva or Allergan; s. Whether the Applicant has had a leadership role in the litigation, whether in state or federal court;
t. Whether the Applicant has had a leadership role in any negotiations aimed at resolving the litigation;
R-18
u. Whether the Applicant’s cases have survived motions to dismiss; v. The extent to which the Applicant contributed to the work product used for the common benefit of opioids litigants, including, without limitation, work on ARCOS data, Prescription Data Monitoring Programs, IQVIA data, depositions, document production and analysis experts, motions, briefs and pleadings, trial preparations, and trials;
w. The extent to which litigation was done prior to and contributed to completion of settlement negotiations, as distinct from litigation that was done litigating after the announcement of the Teva Agreement or Allergan Agreement, such latter litigation both being of less value and potentially resulting a common detriment to the settlement process; and
x. Any other factors that the Fee Panel finds to be appropriate to consider after input from Applicants to the Attorney Fee Fund.
4. In the event that States and Subdivisions enter into an additional global settlement with a party or parties other than Teva or Allergan that is (a) under the jurisdiction of the MDL Court in MDL No. 2804, (b) creates a separate common benefit fund to be administered by the Fee Panel, and (c) unless the parties agree to another date, such agreement has an effective date prior to June 30, 2023, the Fee Panel may:
a. Consolidate the Common Benefit approval process to include evaluation of all Common Benefit Applications for all settlements entered after November 14, 2022;
b. Determine the fair and equitable allocation of the Aggregate Common Benefit Fees that come after November 14, 2022;
c. Give consideration to the amount and timing of each settlement, including the amount and timing of Common Benefit Fees;
d. The Fee Panel shall abide by the applicable Attorney Fee Agreement in each of the Settlements in Allocating the Common Benefit Fees provided for in the Settlement; and
e. Be guided in their work by the Orders of the Court related to Fees and Costs.
5. The Fee Panel shall develop procedures for receiving a single application, which may be updated or amended based on new information (such as participation by additional Litigating Subdivisions) from each Applicant seeking compensation from each sub fund of the Attorney Fee Fund pursuant to processes and procedures developed by the Fee Panel, which shall not be inconsistent with this Fee Agreement. Any request for attorneys’ fees not included on the single application or through the updating/amendment process designed by the Fee Panel R-19
shall be deemed waived. For purposes of transparency and to permit the Fee Panel to conduct its work, the application from each Applicant shall, at a minimum, require each Applicant to:
a. Identify all Litigating Subdivisions for which s/he is seeking payment from the Attorney Fee Fund;
b. Identify all Subdivisions in both Settling and Non-Settling States (and, where applicable, Tribal Nations) with respect to which s/he has a Fee Entitlement with respect to Relevant Claims against Released Entities, and identify all cocounsel in such cases; c. Identify which of those Subdivisions are Participating Subdivisions and which are not (with similar information for Tribal Nations, where applicable); d. Specify the specific fund or funds within the Attorney Fee Fund from which the Attorney is seeking compensation;
e. Demonstrate his or her eligibility for compensation from the relevant sub funds within the Attorney Fee Fund pursuant to the criteria set forth for the relevant sub fund;
f. Identify any and all Fee Entitlements from representations of States, Tribal Nations, or other plaintiffs related to Released Claims against Released Entities or in opioids-related matters;
g. Notwithstanding “a-f” above, the Panel may consider a supplemental application if the Applicant shows good cause why circumstances exist that will lead to consideration for additional Common Benefit award. Examples would include, but are not limited to, an Applicant having Non-Participating Litigating Subdivision clients that subsequently become Participating Subdivisions, a Bar Date passes that increases participation or the Participation Tier, or an Allocation Agreement is reached.
6. With respect to the Common Benefit Fund, the Fee Panel shall (subject to any applicable MDL Court Order):
a. Review the applications of all Applicants seeking compensation from the Common Benefit Fund, including determining eligibility for each Applicant as set forth in subsection III.G.
b. Reduce, on an annual basis, Teva’s or Allergan’s payment obligations, as set forth in paragraph III.E.7. The Panel shall inform Teva or Allergan, and the MDL PEC of all such amounts and adjust payment obligations accordingly. c. Using criteria set forth in subsections III.E and III.H, allocate amounts from the Common Benefit Fund to eligible Applicants, including payment amounts for each Payment Year. In making such allocations, the Panel shall apply the R-20
principles set forth in paragraph III.E.6 and shall allocate any reduction in the payments specified in paragraph III.E.7 to the amounts paid to Applicants with a Common Benefit Fee Entitlement.
7. With respect to the Contingency Fee Fund, the Fee Panel shall:
a. Review the applications of all Attorneys seeking compensation from the Litigating Subdivision Fee Fund, including determining eligibility for each Attorney as set forth in subsection III.G.
b. Apply the Mathematical Model in Exhibit A.
c. Use such allocations to reduce on an annual basis the payment obligations of Teva or Allergan to the Attorney Fee Fund as set forth in paragraph III.F.4, and distributions therefrom, and inform Teva or Allergan and the MDL PEC of all such adjustments.
8. To the extent that there is a dispute about the calculations of the Fee Panel related to the amounts that Teva or Allergan is required to pay (including application of any reductions or offsets under this Fee Agreement), such disputes shall be presented to the Fee Panel and any disputed funds be paid into/held in escrow.
The Fee Panel shall resolve such disputes expeditiously, with either Party having the right to seek review from the MDL Court.
9. For purposes of determination of fee or cost awards, allocations, reductions, and possible reversions under this Fee Agreement, unless specified otherwise a Subdivision will be considered a Non-Participating Subdivision if it is not a Participating Subdivision as of the deadline for the application for the fee at issue (or, if the determination does not involve a specific application, the date on which the record for such determination closes).
10. In the event that the Fee Panel, through the use of the Mathematical Model set forth in Exhibit A, allocates funds from the Contingency Fee Fund for an Attorney based on a Qualifying Representation of a Participating Litigating Subdivision and that Subdivision is in a Settling State in which the Consent Judgment has not been approved, such funds shall be placed into escrow until the Consent Judgment is approved, after which time they shall be released.
I. Miscellaneous.
1. The Fee Panel shall charge an hourly rate approved by the Court. The PreEffective Date costs associated with the Cost and Expense Fund Administrator shall be paid from funds in the Cost Fund. Post-Effective Date, the cost of the Fee Panel shall be charged against the applicable Fee Fund based on allocation by the Fee Panel and shall not be otherwise funded by Teva and Allergan.
2. The MDL PEC shall provide to Teva and Allergan information they have that identifies Attorneys who represent Litigating Subdivisions who are not R-21
Participating Subdivisions and who have an obligation to pay a common benefit assessment, either due to the MDL Court’s orders or pursuant to a Participation Agreement.
3. Participating Subdivisions agree to instruct their counsel to treat information, work product and expert materials as confidential under Rule 1.6 of the ABA Model Rules of Professional Conduct. Accordingly, an Attorney shall not share information or work product with, or experts or materials to, non-participants (other than the Attorney’s own current clients or their lawyers, consultants, experts or other representatives or agents). However, nothing herein shall prevent MDL Leadership or PEC Counsel from fulfilling their obligations in any MDL and the MDL Court Order.
IV. Miscellaneous
A. Termination. If the Teva Agreement or Allergan Agreement does not proceed past the Reference Date, whether because Teva and Allergan do not determine to proceed or for any other reason, this Fee Agreement shall be null and void, neither Teva nor Allergan shall have any obligation to make any payments under this Fee Agreement other than Fee Panel costs advanced, and Teva, Allergan, and the PEC shall take such steps as are necessary to restore the status quo ante.
B. MDL Court Consideration. This Fee Agreement shall be attached as an exhibit to the Teva Agreement and Allergan Agreement. This Fee Agreement shall also be submitted by Teva, Allergan, and the MDL PEC to the MDL Court for approval pursuant to the motion and order that shall be attached, prior to the Preliminary Agreement Date of the Agreements, as Exhibit B.
1. In the event that the MDL Court, through an order, makes any change to the amounts potentially to be paid by Teva and Allergan under this Fee Agreement, makes any change to the Fee Panel’s consideration of the factors set forth in paragraph III.E.6, or any other material change to the draft Order attached as part of Exhibit B or the terms of this Fee Agreement, Teva, Allergan, and the MDL PEC shall meet and confer concerning such changes.
2. If Teva, Allergan, and the MDL PEC are unable to reach agreement and revisions to this Fee Agreement, this Fee Agreement shall be null and void, Teva and Allergan shall have no obligation to make any payments under this Fee Agreement, and Teva, Allergan, and the MDL PEC shall take such steps as are necessary to restore the status quo ante.
C. Amendment. Once the MDL Court has entered an order implementing this Fee Agreement, this Fee Agreement can only be amended by (1) written agreement of Teva, Allergan, and the MDL PEC and (2) approval by the MDL Court.
D. Jurisdiction and Enforcement. The MDL Court shall have exclusive and ongoing jurisdiction over the enforcement and implementation of this Fee Agreement as set forth herein. The MDL PEC shall be the Authorized Party to enforce this Fee R-22
Agreement, as to the payment obligations of Teva and Allergan as set forth in this subsection and as to Attorneys making application to the Funds under this Fee Agreement. Solely for purposes of assessing or allocating common benefit fees, the MDL Court will continue to have jurisdiction over the work product developed in the MDL Court by and under the direction of the MDL PEC with respect to claims against Teva or Allergan, including data and documents, depositions, expert reports, briefs and pleadings; and the MDL Court’s protective orders, management orders, and other decisions regarding such discovery and other work product, including but not limited to, conditions on its use, will continue in full force and effect. Nothing in this subsection authorizes the MDL Court to act contrary to this Agreement or provides the MDL Court with jurisdiction over the Teva Agreement or Allergan Agreement.
S-1
EXHIBIT S
Agreement on the State Outside Counsel Fee Fund
for Manufacturer Settlements
1. Definitions.
a. “Manufacturer” means any of Teva and Allergan, and “Manufacturers” means all of the foregoing.
b. “Multistate Manufacturer Settlement Agreement” means This Settlement Agreement along with the separate settlement of opioids-related claims among 30 or more states and the other Manufacturer.
c. “This Settlement Agreement” means the settlement agreement between the Settling States and the Manufacturer to which this Agreement is attached as an Exhibit.
d. “Settling Manufacturer” means the Manufacturer that is a party to This Settlement Agreement.
e. “Settling States” has the meaning given such term in the relevant Multistate Manufacturer Settlement Agreement.
2. Creation of a State Outside Counsel Manufacturers Fee Fund. The Settling States have agreed to the creation of a state outside counsel fee fund to pay reasonable attorneys’ fees of Settling States which have retained outside counsel in connection with litigation against one or more Manufacturers (such fund, the “State Outside Counsel Manufacturers Fee Fund”).
3. State Outside Counsel Manufacturers Fee Fund Administration. The State Outside Counsel Manufacturers Fee Fund shall be administered separately from any other funds for the payment of attorneys fees or costs in connection with This Settlement Agreement, including any common benefit fund, contingency fee fund for subdivision counsel, state cost fund, or MDL expense fund. If necessary, a committee of Attorneys General shall be convened to oversee the State Outside Counsel Manufacturers Fee Fund (the “Manufacturers Fee Fund Committee”). The Manufacturers Fee Fund Committee shall be appointed by the Settling State Members of the Enforcement Committee and shall be comprised solely of Attorneys General of Settling States that engaged outside counsel to pursue litigation against one or more Manufacturers. The Settlement Fund Administrator (the “Fee Fund Administrator”) shall administer the State Outside Counsel Manufacturers Fee Fund according to this Exhibit and, if convened, the guidelines and directives of the Manufacturers Fee Fund Committee.
4. State Outside Counsel Manufacturers Fee Eligibility. a. To receive any amount from the State Outside Counsel Manufacturers Fee Fund, both of the following must be true:
1. an outside counsel to a Settling State must have filed and maintained S-2
an action in the name of a Settling State or its Attorney General against a Manufacturer in a state or federal court as of November 1, 2022; and
2. the State must become a Settling State for each Multistate Manufacturer Settlement Agreement for which it is eligible. b. No Settling State (or its outside counsel) shall receive funds from both the State Outside Counsel Manufacturers Fee Fund and any “Additional Restitution Amount” as may be provided for in This Settlement Agreement. c. In addition to the eligibility criteria set forth in Paragraph 4.a, above, and for the avoidance of doubt, only Settling States under This Settlement Agreement are eligible to receive any funds paid into the State Outside Counsel Manufacturers Fee Fund as a result of This Settlement Agreement.
5. State Outside Counsel Manufacturers Fee Fund Amount. The Settling Manufacturer shall pay funds into the State Outside Counsel Manufacturers Fee Fund in an amount equal to, and on the schedule identified in, Exhibit M (the “Contribution”). The Settling Manufacturer’s Contribution shall be subject to a reduction as described in Paragraph 8, below.
6. State Outside Counsel Manufacturers Fee Fund Availability and Calculation of Amount.
a. The State Outside Counsel Manufacturers Fee Fund shall be available to compensate private outside counsel for Settling State Attorneys General for approved fees arising out of representation of the Settling State pursuant to the schedule attached to this agreement as Schedule I (the “Fee Schedule”). b. The Fee Schedule is intended to reflect the fee calculation in subparagraphs 6.c and 6.d, below (the “Fee Calculation”). Subject to adjustments required by Paragraph 8, below, in the event of any discrepancy between the Fee Schedule and the Fee Calculation, the Fee Schedule shall control. Each Settling State, by becoming a Participating State in This Settlement Agreement, agrees that the Fee Schedule reflects the Fee Calculation and waives any right to contest the accuracy of the Fee Schedule, absent manifest error, the exclusion of a Settling State, or the inclusion of a Non-Settling State. The version of the Fee Schedule reflecting any necessary adjustments shall be the “Final Fee Schedule.”
c. Except as provided in Paragraph 6.d, below, fees shall be aggregated across the Multistate Manufacturer Settlement Agreements and be calculated by adding two components: (a) a fixed amount consisting of fifty percent (50%) of the amount of remediation funds allocated to a Settling State and its Subdivisions pursuant to the Multistate Manufacturer Settlement Agreements multiplied by
4.5% (or, if lower, the applicable contingency fee percentage in the Settling State’s outside counsel contract); and (b) a proportional percentage of the S-3
remaining fee due under that Settling State’s contract with its outside counsel assuming that fifty percent (50%) of the Settling State’s recovery is allocable to a Settling State (rather than allocable to the Settling State’s Participating Subdivisions) so that the fees of all eligible Settling States (minus the fixed amount that would have been allocated to any Non-Settling States had they become Settling States) exhausts the State Outside Counsel Manufacturers Fee Fund. The proportional share percentage will be the same for each Settling State included in the State Outside Counsel Manufacturers Fee Fund. Except as set forth in Paragraph 6.d, fees shall be split proportionally among each Multistate Manufacturer Settlement Agreement, as set forth on the Fee Schedule.
d. Notwithstanding the foregoing, fees for the State of Oklahoma, if it becomes a Settling State under the Multistate Manufacturer Settlement Agreement with Allergan, shall be limited to Oklahoma’s share of the State Outside Counsel Manufacturers Fee Fund derived from Allergan’s Contribution. Oklahoma’s share of the State Outside Counsel Manufacturers Fee Fund derived from Teva’s Contribution shall be reallocated proportionally among the other Settling States eligible to receive payments from the State Outside Counsel Manufacturer Fee Fund.
e. All amounts paid will be less the following:
1. Any costs or fees of the Fee Fund Administrator. The Fee Schedule reflects a holdback amount of $50,000 for such administrative expenses of the Fee Fund Administrator, the remainder of which shall be disbursed proportionally to States receiving monies from the State Outside Counsel Manufacturers Fee Fund at the conclusion of such administration.
7. Payment by the Fee Fund Administrator.
a. The Fee Fund Administrator shall hold the Contribution in escrow until the earlier of (1) both Multistate Manufacturer Settlement Agreements become effective or (2) when instructed by the Settling State Members of the Enforcement Committee.
b. Subject to eligibility pursuant to Paragraph 4, above, a Settling State’s outside counsel may receive funds from the State Outside Counsel Manufacturers Fee Fund in the following scenarios (“Payment Scenarios”):
1. The Settling State’s outside counsel agrees that the amount listed for such state on the Final Fee Schedule either satisfies in full or exceeds the amounts owed to all such Settling State’s outside counsel and such counsel has provided written notice waiving all entitlement to additional fee in respect of any Multistate Manufacturer Settlement S-4
Agreement.
2. The Settling State and its outside counsel enter into a signed writing establishing the amount owed to the counsel, which includes an agreement on the payment of the amount listed for such state on the Final Fee Schedule and waives any right of the State or its outside counsel to additional amounts from the State Outside Counsel Manufacturers Fee Fund.
3. A final judgment is entered that is no longer appealable, which judgement adjudicates the amount owed to the Settling State’s counsel in respect of This Settlement Agreement and directs the Manufacturers Fee Fund Committee how to pay the amount listed on the Final Fee Schedule for such State.
If no Payment Scenario is applicable with respect to a Settling State, then the Settling State’s share shall be placed in an interest-bearing escrow account (less reasonable expenses of the Fee Fund Administrator) and held unless and until a Payment Scenario is applicable.
c. Upon the applicability of a Payment Scenario 1 with respect to a Settling State, the Fee Fund Administrator shall pay that Settling State’s outside counsel the amount identified on the Final Fee Schedule for such state or such lesser amount that satisfies the Settling State’s obligation to its outside counsel in full. Any remaining allocation to such State shall be paid to the Settling State.
d. Upon the applicability of a Payment Scenario 2 or 3 with respect to a Settling State, the Fee Fund Administrator shall release monies from the State Outside Counsel Manufacturers Fee Fund in either the amount held by the Fee Fund Administrator, if the amount of the agreement or judgment is equal to or more than the amount held, or the amount indicated in the agreement or in the final judgment, if the amount in the agreement or judgment is less than the amount held.
e. Nothing herein, including the amounts listed in Paragraph 6 above or on any Fee Schedule, shall prevent a Settling State from arguing in any proceeding with its outside counsel that (i) its recovery was less than fifty percent (50%) of the recovery in the settlement agreement down to and including fifteen percent (15%) of the total recovery; (ii) any payment should be discounted by an appropriate discount rate commensurate to the risk of the settlement agreement and the timeline that the Settling State is receiving its payments; (iii) the settlement amount should be lower because the amount a Settling State receives was reduced because such Settling State’s outside counsel failed to obtain joinder from a Settling State’s Subdivision(s) that the outside counsel also represented; or (iv) any S-5
limitation placed by the Settling Manufacturer bars payment of a higher fee to outside counsel.
f. In the event the amount due to the Settling State’s outside counsel from an escrow account is less than the total amount of funds escrowed on the account of the Settling State, the balance shall be paid to the Settling State. In no event, other than a State becoming a Non-Settling State, shall funds revert to a Manufacturer.
8. Non-Settling States; Reversion and Redistribution. Amounts owed by the Settling Manufacturer to the State Outside Counsel Manufacturers Fee Fund shall be reduced by amounts allocated to the fixed amount for such State under This Settlement Agreement in the event that a listed State becomes a Non-Settling State. The payments for the other Settling States reflected in the Fee Schedule shall be adjusted by the Fee Fund Administrator to reflect a recalculated proportional percentage under the Fee Calculation.
9. Interpretation.
a. This Agreement shall be an Exhibit to each Multistate Manufacturer Settlement Agreement and shall include the Fee Schedule setting forth the presumptive payment calculations for each eligible Settling State. By joining This Settlement Agreement, each State agrees on the presumptive accuracy of the Fee Schedule, absent manifest error, the inclusion of a Non-Settling State, or the exclusion of a Settling State. b. It is the intent of all parties that the State Outside Counsel Manufacturers Fee Fund function in a similar manner, with similar calculations and mechanics, as the “State Outside Counsel Fee Fund” established in Exhibit S of that certain settlement agreement dated as of July 21, 2021 setting forth the terms of settlement between and among McKesson Corporation, Cardinal Health, Inc., and AmerisourceBergen Corporation, on the one hand, and certain settling states and certain participating subdivisions, on the other hand.
S-1
Schedule I to Exhibit S
Fee Schedule
State
Total Fee Allergan Share Teva Share
Alaska $1,252,625.36 $424,966.99 $827,658.36
Delaware $2,194,254.56 $744,425.11 $1,449,829.45
Georgia $6,557,324.06 $2,224,644.65 $4,332,679.41
Hawaii $1,272,349.43 $431,658.60 $840,690.83
Idaho $1,413,869.58 $479,670.88 $934,198.70
Kentucky $5,087,998.16 $1,726,159.60 $3,361,838.56
Mississippi $1,737,202.53 $589,365.16 $1,147,837.38
Nevada
$6,279,564.47 $2,130,411.64 $4,149,152.83
New Mexico
$5,218,189.24 $1,770,328.36 $3,447,860.88
Ohio $6,831,882.94 $2,317,791.78 $4,514,091.16
Oklahoma $1,470,349.73 $1,470,349.73 $-
Puerto Rico $4,823,581.25 $1,636,453.24 $3,187,128.01
South Dakota $673,251.45 $228,408.00 $444,843.46
Admin Expense
Holdbacks
$18,047.03 $31,952.97
Total $16,192,680.76 $28,669,762.00
T-1
Exhibit T
Agreement on the Joint State Cost Fund
1. Definitions.
a. “Opioids Defendant” means Teva, Allergan, or such other defendant in opioids-related litigation that enters into a Multistate Settlement after November 1, 2022, and “Opioids Defendants” means all of the foregoing. b. “Multistate Settlement” means this Settlement Agreement along with any other settlement of opioids-related claims among 30 or more states and an Opioids Defendant.
c. “Settlement Agreement” means the settlement agreement between the Settling States and the Opioids Defendant to which this Agreement is attached as an Exhibit.
d. “Settling Opioids Defendant” means the Opioids Defendant that is a party to the Settlement Agreement.
e. “Settling States” has the meaning given such term in the Settlement Agreement.
2. Creation of a State Cost Fund. The Settling Opioids Defendant and the Settling States agree to the creation of a fund to pay costs and expenses associated with litigation and investigations related to the opioids litigation (such fund, the “State Cost Fund”). The State Cost Fund shall be administered separately from any other funds for the payment of attorneys fees or costs in connection with the Settlement Agreement, including any common benefit fund, contingency fee fund for subdivision counsel, subdivision cost fund, or MDL expense fund.
However, the State Cost Fund shall be administered jointly with similar “State Cost Funds” created in other Multistate Settlements after November 1, 2022; any state cost funds jointly administered in this manner shall be referred to as the “Joint State Cost Fund.” To the extent permissible and feasible, the Joint State Cost Fund may also be jointly administered with any fund for reimbursement of states’ litigation and investigation costs established by a bankruptcy plan, including the Mallinckrodt bankruptcy plan, any plans that may emerge from the bankruptcies of Purdue and Endo, and any similar bankruptcies of opioids defendants. To the extent feasible, the Joint State Cost Fund may also be jointly administered with the State Cost Funds established pursuant to the Distributors Multistate Settlement and the Janssen Multistate Settlement.
3. State Cost Fund Amount. The Settling Opioids Defendant shall pay into the State Cost Fund in the amount listed on, and on the schedule set forth in, Exhibit M (the “Settling Opioids Defendant’s Contribution”) for the purpose paying States’ costs and expenses associated with to the opioid litigation.
T-2
4. Joint State Cost Fund Committee. A committee of Attorneys General or their designated representatives (such committee, the “Joint State Cost Fund Committee”) shall oversee the Joint State Cost Fund. The committee shall be appointed by the Settling State Members of the Enforcement Committee, who shall aim to (i) have equal representation between states that retained contingency fee outside counsel and states that did not retain contingency fee outside counsel with respect to opioids-related litigation, and (ii) maintain consistency of committee membership across state cost funds that compose the Joint State Cost Fund. The Settling State Members of the Enforcement Committee may by majority vote add to or change the composition of the Joint State Cost Fund Committee.
5. Joint State Cost Fund Administrator.
a. The Joint State Cost Fund Committee may select an administrator (the “Joint State Cost Fund Administrator”), who shall administer the Joint State Cost Fund and direct payments to Settling States according to the guidelines and directives of the Joint State Cost Fund Committee. While the expenses of the Joint State Cost Fund Administrator shall be reimbursable pursuant to the principles and guidelines listed below, the Joint State Cost Fund Administrator shall first rely on any separate funds that may be set aside for such purpose in any Multistate Settlement.
b. The Joint State Cost Fund Administrator shall be responsible, under the direction and supervision of the Joint State Cost Fund Committee, for receiving and reviewing applications for reimbursement from the Joint State Cost Fund. This may include the creation of an audit process to ensure the integrity of submissions, as well as reimbursement rules to incentivize accurate submissions.
6. State Cost Fund Guidelines and Principles.
a. Monies in the State Cost Fund shall be released without any delay to reimburse Settling States for documented costs incurred or paid in connection with litigation and investigation related to the opioid litigation. b. In allocating the Joint State Cost Fund, the Joint State Cost Fund Committee shall seek to comply with the following principles:
1. Each State Cost Fund should be used to reimburse costs incurred by States that are Settling States in the Multistate Settlement from which funds are paid. (However, the foregoing sentence does not preclude a Non-Settling State that joins a separate Multistate Settlement from participating in the Joint State Cost Fund with respect to contributions made by other Opioids Defendants.)
2. Funds in any State Cost Fund shall be primarily used to reimburse T-3
costs incurred prior to the date on which the relevant Multistate Settlement was first made available for participation to eligible States. Regardless of other factors considered in prioritizing payments, all costs incurred prior to January 1, 2023, shall be paid before any costs incurred after that date are paid.
3. The Joint State Cost Fund shall prioritize the reimbursement of the following over reimbursement of any State’s litigation or investigation costs:
• the reasonable costs of the Joint State Cost Fund
Administrator;
• repayment of National Association of Attorneys General grants made in connection with opioid investigations and litigation, without regard to when the grants were made; • repayment of state-attributable costs of any mediator in connection with negotiations of a Multistate Settlement;
4. The Joint State Cost Fund shall seek to prioritize costs in the following order:
• litigation-related costs; then
• investigation-related costs; then
• settlement and negotiation related costs; then
• cost shares.
5. Costs incurred by a State’s outside counsel that the State is contractually obligated to reimburse shall be treated as costs incurred by a State.
6. As between similar categories of costs (e.g., defendant-specific litigation-related costs), the Joint State Cost Fund shall first reimburse costs incurred by a State’s outside counsel that the State is contractually obligated to reimburse out of its recovery, and then reimburse costs directly incurred by States.
7. The Joint State Cost Fund shall be available to reimburse only those costs which have not yet been reimbursed to a State from any other source, including any other fund set aside in a Multistate Settlement or bankruptcy plan for the reimbursement of costs or any individual T-4
state settlements.
8. The Joint State Cost Fund should not reimburse expenses that are expected to be reimbursed from another source, such as a bankruptcy debtor, unless such expected reimbursements do not come to fruition within a reasonable amount of time. This includes cost shares paid by states.
9. When coordinating among different state cost funds that each could be used to reimburse a given expense, the Joint State Cost Fund Committee may set guidelines to equitably distribute
reimbursements across all state cost funds in a manner that prioritizes costs unlikely to be otherwise reimbursed to a similarly situated State.
10. The Joint State Cost Fund may deny reimbursement of costs, on either an individual basis or a categorical basis, that a supermajority (75%+) of the Joint State Cost Fund Committee determines to be unreasonable.
11. After all costs identified in the foregoing have been reimbursed, the remaining funds in the Joint State Cost Fund shall be distributed to states in proportion to their allocation of remediation payments in the Mallinckrodt bankruptcy plan. Such distribution shall be treated as a reimbursement for States’ unenumerated costs of administering the Multistate Settlements and no subdivision shares shall be carved out of such disbursement, nor shall any attorney’s fees be assessed against such distribution (unless individually agreed to by a State). c. In applying the foregoing principles, the Joint State Cost Fund Committee shall have the discretion to vary their application in order to ensure equity among similarly situated states and to facilitate the ease and speed of administering the Joint State Cost Fund. The Joint State Cost Fund Committee may also apply percentages to approximate costs attributable to a particular Opioids Defendant (or categories of Opioids Defendants) in a manner that seeks to treat similarly situated states equitably. d. The Joint State Cost Fund Committee shall establish guidelines for the submission and approval of expenses eligible for reimbursement from the Joint State Cost Fund, which guidelines may be coordinated and consolidated with any similar cost funds in other state opioid settlements for purposes of joint administration and efficiency.
e. Unless waived by the Joint State Cost Fund Committee, the Joint State Cost T-5
Fund Administrator shall, in accordance with such guidelines, receive from Settling States records sufficient to demonstrate the incurrence and payment of each expense.
f. Where the Joint State Cost Fund Committee determines by a supermajority vote (75%+) that outside counsel for a Settling State has failed to exercise reasonable diligence in reviewing submitted costs for allowability, and such failure has resulted in the reimbursement of unallowed costs to such outside counsel, the Committee shall have the discretion to reduce or recover payments made to such outside counsel in an amount calculated to incentivize the exercise of reasonable diligence.
7. State Undertakings. Each State submitting for reimbursement of costs from the Joint State Cost Fund agrees:
a. to only submit costs allowable under this Joint State Cost Fund Agreement; b. to provide all back-up documentation that may be requested with respect to any submitted cost and to make itself available for any questions related to such costs;
c. to exercise reasonable diligence to ensure that all submitted costs are allowable under (i) this Joint State Cost Fund Agreement, (ii) the State’s contract with its outside counsel, if relevant, (iii) state law, and (iv) the policies and procedures applicable to the State’s retention of outside counsel, if relevant; and
d. to promptly return any excess payments made to the State or its outside counsel from the Joint State Cost Fund, including payments made for costs that were reimbursed from another source or are not allowable hereunder.