Our commitment in conducting business
VIVUS is committed to conducting its business ethically and in compliance with all applicable laws.
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VIVUS strives to conduct our business with high ethical standards. We expect our product suppliers to operate and adopt fair labor practices and in all cases to eliminate human trafficking, slavery, and illegal child labor in their workplace.
Verification: As a manufacturer of pharmaceutical products, VIVUS operates in a highly regulated industry. Our product suppliers are routinely audited by FDA and other regulatory agencies. VIVUS has existing procedures for assessing our product suppliers (procurement procedure, supplier selection process, and quality procedures) and is in the process of enhancing these procedures to include steps for evaluating whether our product suppliers comply with applicable laws related to eradication of human trafficking, slavery and illegal child labor. Our Supply Chain and Quality Assurance teams oversee these verification procedures.
Audits: In compliance with our quality procedures and FDA regulations, VIVUS conducts periodic announced audits of our product suppliers to evaluate their compliance with VIVUS’ policies and applicable legal and regulatory requirements. Whenever possible, VIVUS conducts these audits using its own personnel, although it has engaged independent third-party auditors in the past and reserves the right to use third party auditors in the future as appropriate, based on the then current business resource landscape. As part of the VIVUS audit protocol, each audit includes review of the product supplier’s training, experience and qualifications, adherence to legal and regulatory requirements, and evaluation of the supplier’s compliance with its and VIVUS’ quality systems. VIVUS’ current quality audit program does not specifically address human trafficking, slavery or illegal child labor as part of the auditing procedures for product suppliers. VIVUS does not have any future plan to include fair labor practices in our quality audit program; however, VIVUS intends to address fair labor practices in our supply contracts and procurement policies.
Certification: VIVUS has not adopted procedures that require product suppliers to certify that materials incorporated into products comply with the laws regarding human trafficking, slavery and illegal child labor in applicable countries. However, VIVUS is in the process of evaluating its procurement policies in this regard.
Accountability Standards: VIVUS is in the process of establishing internal accountability standards, procedures, and disciplinary actions for our employees and contractors in order to address and prevent any human trafficking, slavery and illegal child labor in its supply chain.
Training: VIVUS is in the process of evaluating the incorporation of training regarding human trafficking, slavery and illegal child labor to our annual quality system training programs for our employees and supply chain management.
To the best of our knowledge and based on a good faith understanding of the statutory requirements, VIVUS has established a Compliance Program that meets the requirements set forth in California Health & Safety Code, Sections 119400-119402 (“California Compliance Law”).
The California Compliance Law requires pharmaceutical companies to adopt a compliance program in accordance with the April 2003 publication “Compliance Program Guidance for Pharmaceutical Manufacturers” (“OIG Compliance Guidance”) developed by the United States Department of Health and Human Services Office of Inspector General (“OIG”) and policies for compliance with the January 2009 Pharmaceutical Research and Manufacturers of America (“PhRMA”) “Code on Interactions with Health Care Professionals” (“PhRMA Code”).
VIVUS has established a Compliance Program in accordance with the OIG Compliance Guidance and the PhRMA Code.
For purposes of compliance with the requirements of Section 119402 of the California Health and Safety Code, VIVUS has established an annual dollar limit on gifts, promotional materials or items or activities that VIVUS may provide to individual medical or health professionals in California. That annual aggregate dollar limit is $2,000.00 per medical or health professional. This limit represents a spending cap, not a goal or average. In many cases, the amount spent per physician may be substantially less than the cap amount. This annual dollar limit excludes items and activities that are exempt as provided by California Health and Safety Code Section 119402. These exemptions include drug samples given to physicians and health care professionals, financial support for continuing medical education forums, financial support for health educational scholarships and payments for legitimate professional services, and any meals or expenses associated with the provision of such services.
In conjunction with this certification, from time to time, through audits, our disclosure program, or otherwise, VIVUS may identify potential or actual violations of provisions of our compliance program, including the California Comprehensive Compliance Program and the annual limit on gifts to individual medical or health care professionals. In those instances, VIVUS will promptly investigate and respond appropriately to any violations consistent with our policies addressing noncompliance or misconduct, as described in the California Comprehensive Compliance Program.
Compliance Program Summary
Written Code of Conduct: The VIVUS Code of Conduct is a written commitment to ethical and compliance principles, policies and procedures that apply to all VIVUS management, employees and contractors. The VIVUS Code of Conduct is distributed to all employees and contractors upon commencement of their working relationship and whenever changes are made to the Code. An employee's obligations under our Code of Conduct include observance of all laws and regulations applicable to VIVUS as well as general ethical standards and applicable VIVUS policies and procedures.
Compliance Officer: Our compliance officer is responsible for developing, operating, and monitoring the compliance program. This individual is a Vice President or higher who reports regularly to Executive Management and an Executive Committee on matters relating to compliance. Our compliance officer also helps ensure that the compliance program is reasonably designed, implemented, and enforced so that the program is effective in preventing and detecting unlawful conduct and promotes a corporate culture that encourages ethical conduct and a commitment to compliance with the law.
Education and Training Program: VIVUS is committed to the implementation of effective compliance training programs for our employees. Our sales and marketing employees, as well as other employees who regularly interact with health care professionals, are trained on the requirements of OIG Guidance and the PhRMA Code as well as other federal, state and local regulations. Employee training and education programs increase awareness of the legal and ethical implications of abiding by our Code of Conduct and related policies, and making sound and ethical business decisions.
Communications and Complaint Reporting: VIVUS is committed to fostering effective lines of communication between management and employees. We have adopted confidentiality and non-retribution/non-retaliation policies. VIVUS expects its employees and officers to promptly report actual or suspected violations of our commercial operating practices. Compliance questions or reports of potential violations should be reported to the appropriate member of management but may also be directed to a compliance officer or our anonymous tip-line.
Auditing and Monitoring: VIVUS’ compliance program includes monitoring and auditing to assess compliance with applicable directives and guidelines. These audits are intended to identify potential or existing problem areas and to take corrective measures in an effort to prevent the recurrence of non-compliance. In accordance with the OIG Guidance, the nature, extent and frequency of compliance monitoring and auditing varies according to a number of factors, including new regulatory requirements, changes in business practices, and other considerations. Our compliance officer, or a designee, oversees the review of non-compliance reports and determine whether further investigation is necessary.
Response to Noncompliance or Misconduct: VIVUS responds promptly and impartially to questions, concerns, and reports of wrongdoing. We have implemented processes for the prompt and proper investigation of potential violations of our compliance program and development of an appropriate response to violations that is consistent with the level and frequency of the violation. Our Code of Conduct specifically prohibits retaliation against an individual arising from a good-faith report of a Code of Conduct, company policy, or integrity concern, and our investigations are handled as confidentially as possible.
This Code of Ethics and Business Conduct (the “Code”) applies to all employees and officers (each, an “Employee” and collectively, the “Employees”), of VIVUS LLC and its subsidiaries (collectively, the “Company”). All Employees are required to be familiar with the Code, comply with its provisions and report any suspected violations. Failure to follow the Code can result in discipline, up to and including termination. This Code does not apply to topics covered by other Company policies, and those other policies are the sole policies of the Company regarding those topics and all related matters.
The purpose of this Code is to:
- promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest;
- promote full, fair, accurate, timely and understandable disclosure in reports and documents that the Company may assist its parent company to file with, or submit to, the Securities and Exchange Commission (the "SEC") and in other public communications made by or on behalf of the Company;
- promote compliance with applicable governmental laws, rules and regulations;
- promote the protection of Company assets, including corporate opportunities and confidential information;
- promote fair dealing practices;
- deter wrongdoing; and
- ensure accountability for adherence to the Code.
All Employees should conduct their affairs honestly and strive to observe the highest standards of personal, professional and business ethics. Although the Code discusses some of the frequent ethical problems you might face, we recognize that no guide can adequately cover all of the ethical dilemmas or substitute for sound personal values and good judgment. However, we hope you will use this guide when you need help unraveling ethical problems. If you have additional questions about ethical issues or problems, you should contact the Company’s Chief Executive Officer or the Company’s confidential Ethics Hotline at 833-609-0611 or via our third-party website at vivus.ethicspoint.com.
2. LEGAL COMPLIANCE
Obeying the law, both in letter and in spirit, is the foundation of this Code. Our success depends upon each Employee operating within legal guidelines and cooperating with local, national and international authorities. We expect Employees to understand the legal and regulatory requirements applicable to their groups and areas of responsibility. If you do have a question in the area of legal compliance, it is important that you not hesitate to seek answers pursuant to the procedures set forth in this Code.
Disregard of the law will not be tolerated. Violation of domestic or foreign laws, rules or regulations may subject an individual, as well as the Company, to civil and/or criminal penalties. You should be aware that Employee conduct and records, including emails, are subject to internal and external audits and to discovery by third parties in the event of a government investigation or civil litigation. It is in everyone’s best interest to know and comply with our legal obligations.
Our policy is to comply with all laws applicable to our business, including, but not limited to, health care regulatory, employment and workplace, securities, environmental, and antitrust laws, and the United States Foreign Corrupt Practices Act. Some of these laws and our related policies are highlighted below in separate sections of this Code.
3. HEALTH CARE LAWS, REGULATIONS AND GUIDANCE
The Company operates in a heavily regulated industry and is subject to a variety of legal and ethical standards. The Company is committed to operating in compliance with these laws and standards, which include the laws summarized below.
3.1 Pharmaceutical Product Regulation
VIVUS must comply with all laws and regulations governing the manufacture, testing, review and approval, shipment, storage, destruction, distribution, promotion and safety reporting of pharmaceutical products set forth by the Food and Drug Administration, the Drug Enforcement Administration, state and local authorities and, where appropriate, international laws. In conducting clinical trials of pharmaceutical products, the Company will comply with rules governing human subject protection, animal welfare, and public disclosure of applicable clinical trials. The Company also is subject to the Prescription Drug Marketing Act and other laws and regulations that govern pharmaceutical advertising and promotional practices. The Company’s commitment to develop and manufacture safe and effective products and legally and ethically promote their benefits to patients and their providers requires full compliance with all laws and regulations governing research, development, manufacturing, and sale of its products.
3.2 Anti-Kickback Laws
In the United States and in many other countries, the offering of anything of value as an inducement to purchase a pharmaceutical product may be a violation of law. Such laws prohibit offering or giving anything of value to health care professionals or other persons, with the intent to, directly or indirectly, implicitly or explicitly, influence or encourage the recipient to purchase, prescribe, refer, sell, or arrange for the purchase or sale of any Company product. Such conduct may be a violation of the U.S. federal health care programs’ Anti-Kickback Law and can lead to severe penalties, including criminal and/or civil fines for the Company and individual Employees, imprisonment of individuals, and possible exclusion of Company products from reimbursement under Medicare and Medicaid. Many states also have Anti-Kickback Laws that apply to items and services reimbursed under Medicaid and other state programs, and several states have Anti- Kickback Laws that apply to all items and services, even those not reimbursed under a government program.
The Company is committed to complying with these laws. Many elements of your interactions with physicians or other customers and the programs the Company offers need to be reviewed to ensure compliance with these complex laws. If you are involved in the marketing or sale of Company products, you should become familiar with the Company’s rules and policies in this area. Sales of Company products, and purchases of products and services of suppliers, may only be made on the basis of quality, price, and service, and never on the basis of giving or receiving payments, gifts, entertainment, or favors. No payment shall be approved or made with the agreement or understanding that any part of such payment is to be used for any purpose other than that described by documents supporting the payment.
3.3 False Claims
Numerous federal and state laws prohibit anyone from knowingly and willfully making or causing to be made any false statement or representation for the purpose of obtaining benefits or payments by government programs, commercial insurers, and other health care plans. A document can be false if it omits material information. These laws typically require that the person has actual knowledge that the information is false or is provided in deliberate ignorance or reckless disregard as to the truth or falsity of the information and no proof of specific intent to defraud is required. These laws also prohibit anyone from conspiring with another person to submit false claims. Thus, companies can be liable even if the false claims are submitted by another person. Violations of these laws can lead to fines, imprisonment, or exclusion from health care programs.
3.4 Other Applicable Laws
An increasing list of jurisdictions also have enacted laws that prohibit pharmaceutical manufacturers from providing certain economic benefits to health care practitioners, require pharmaceutical manufacturers to report certain marketing expenditures or product pricing information to state regulatory bodies, and/or require pharmaceutical manufacturers to adopt compliance programs consistent with industry guidance. The Company is committed to conducting business in compliance with these state requirements.
3.5 PhRMA Code
In addition to the laws and regulations discussed above, a number of trade groups have issued standards governing pharmaceutical promotional and educational practices. The Pharmaceutical Research and Manufacturers of America (“PhRMA”) has issued the PhRMA Code on Interactions with Healthcare Professionals (the “PhRMA Code”), with which the member companies of PhRMA, of which the Company is one of them, have voluntarily agreed to comply.
4. INTERNATIONAL BUSINESS LAWS
In conducting our business, our Employees are expected to comply with the applicable laws in all countries to which they travel, in which they operate and where we otherwise do business, including laws prohibiting bribery, corruption or the conduct of business with specified individuals, companies or countries. The fact that, in some countries, certain laws are not enforced or that violation of those laws is not subject to public criticism will not be accepted as an excuse for noncompliance. In addition, we expect Employees to comply with U.S. laws, rules and regulations governing the conduct of business by its citizens and corporations outside the U.S.
These U.S. laws, rules and regulations, which extend to all our activities outside the U.S., include:
- The Foreign Corrupt Practices Act, which prohibits directly or indirectly giving anything of value to a government official to obtain or retain business or favorable treatment and requires the maintenance of accurate books of account, with all company transactions being properly recorded;
- U.S. Embargoes, which restrict or, in some cases, prohibit companies, their subsidiaries and their Employees from doing business with certain other countries identified on a list that changes periodically or specific companies or individuals;
- Export Controls, which restrict travel to designated countries or prohibit or restrict the export of goods, services and technology designated countries, denied persons or denied entities from the U.S. or the re-export of U.S. origin goods from the country of original destination to such designated countries, denied companies or denied entities; and
- Anti-boycott Compliance, which prohibits U.S. companies from taking any action that has the effect of furthering or supporting a restrictive trade practice or boycott that is fostered or imposed by a foreign country against a country friendly to the U.S. or against any U.S. person.
If you have a question as to whether an activity is restricted or prohibited, seek assistance pursuant to the procedures set forth in this Code before taking any action, including giving any verbal assurances that might be regulated by international laws.
5. CONFLICTS OF INTEREST
Employees must always act in the best interest of the Company when conducting Company business. A “conflict of interest” occurs when an individual’s private interest interferes with, or gives the appearance of interfering with, the individual’s ability to act in the best interests of the Company. Conflicts of interests also arise when an Employee, or a member of their family, receives improper personal benefits as a result of their position in the Company. Such conflicts of interests can undermine our business judgment and our responsibility to the Company and threaten the Company’s business and reputation. Potential and actual conflicts of interests should be discussed with the Compliance Officer or the Company’s Legal Department.
Examples of Potential Conflicts
Although no list can include every possible situation in which a conflict of interest could arise, the following are examples of situations that may, depending on the facts and circumstances, involve problematic conflicts of interests:
- Employment by (including consulting for) or service on the board of a competitor, collaborator or supplier or other service provider to the Company.
- Owning a significant financial interest in any entity that does business, seeks to do business or competes with us.
- Soliciting or accepting gifts, favors, loans or preferential treatment from any person or entity that does business or seeks to do business with us.
- Taking personal advantage of corporate opportunities.
- Engaging in outside employment, consulting or other activity which would conflict with the Company’s interest or which would reduce your efficiency in performing your Company duties.
- Conducting our business transactions with your family member or a business in which you have a significant financial interest when you have not disclosed such relationship or financial interest and received the Board of Managers’ approval of any such transaction.
- Exercising supervisory or other authority on behalf of the Company over a co-worker who is also a family member, unless such relationship has been disclosed and approved by the Compliance Officer or the Board of Managers.
Employees, other than members of the Board of Managers and executive officers, who have questions about a potential conflict of interest or who become aware of an actual or potential conflict should discuss the matter with and seek a determination and prior authorization or approval from, the Compliance Officer.
6. FAIR DEALING
We pride ourselves in competing aggressively. We strive to outperform our competition fairly and honestly. Advantages over our competitors are to be obtained through our superior performance and capabilities, not through unethical or illegal practices. Acquiring proprietary information from others through improper means, possessing trade secret information that was improperly obtained, or inducing improper disclosure of confidential information from past or present Employees of other companies is prohibited, even if motivated by an intention to advance our interests. These actions will hurt the Company’s reputation. If information is obtained by mistake that may constitute a trade secret or other confidential information of another business, or if you have any questions about the legality of proposed information gathering, you must consult the Company’s Compliance Officer.
You are expected to deal fairly with our collaborators, suppliers, Employees and anyone else with whom you have contact in the course of performing your job.
Employees involved in procurement have a special responsibility to adhere to principles of fair competition in the purchase of products and services by selecting suppliers based exclusively on normal commercial considerations, such as quality, cost, availability, service and reputation, and not on the receipt of personal favors.
7. GIFTS AND ENTERTAINMENT
Business gifts and entertainment are meant to create goodwill and sound working relationships and not to gain improper advantage with collaborators or facilitate approvals from government officials. The receipt and provision, as a normal business courtesy, of meals, gifts, or entertainment, while a common and acceptable practice in some industries, is subject to additional regulations and restrictions in the health care industry, particularly with respect to interactions between pharmaceutical companies and health care professionals, both at the Federal and State levels. In addition, many governmental agencies have policies that prohibit the receipt of even small gifts, even where the practice is widely considered “a way of doing business.” Employees should not accept gifts or entertainment that may reasonably be deemed to affect their judgment or actions in the performance of their duties. Our collaborators, suppliers and the public at large should know that our Employees’ judgment is not for sale.
Under some statutes, such as the U.S. Foreign Corrupt Practices Act, giving anything of value to a government official to obtain or retain business or favorable treatment is a criminal act subject to prosecution and conviction. Discuss with the Compliance Officer any proposed entertainment or gifts if you are uncertain about their appropriateness.
Providing loans to, or guarantees of obligations of, Employees or their family members will not be allowed without the prior written approval of the Board of Managers. The Company will not extend, maintain or arrange for any personal loan to or for any member of the Board of Managers or executive officer (or the equivalent thereof).
Each Employee who contributes in any way to the preparation or verification of the Company's financial statements and other financial information must ensure that the Company's books, records and accounts are accurately maintained. Each Employee must cooperate fully with the Company's Accounting Department, as well as the Company's independent public accountants and counsel.
10. PROTECTION AND PROPER USE OF COMPANY ASSETS
All Employees are expected to protect the Company’s assets and ensure their efficient use. Theft, carelessness and waste have a direct impact on our profitability. Company property, such as computer equipment and communication devices, is expected to be used only for Company business purposes, although incidental personal use may be permitted. You may not, however, use the corporate name, any trademark owned or associated with the Company or any letterhead stationery for any personal purpose without approval by the Chief Executive Officer or the Compliance Officer.
All data residing on or transmitted through our computing and communications facilities, including email and word processing documents, is the property of the Company and subject to inspection, retention and review by the Company, with or without an Employee’s or third party’s knowledge, consent or approval, in accordance with applicable law. Any misuse or suspected misuse of our assets must be immediately reported to authorized persons pursuant to the procedures set forth in this Code.
11. CONFIDENTIAL, PROPRIETARY INFORMATION
One of the Company’s most valuable assets is its confidential information. As an Employee of VIVUS, you will learn of, or have access to, information about the Company that is confidential and proprietary. You also may learn of information before that information is released to the general public. Employees who have received or have access to confidential information should take care to protect the confidentiality of this information. Confidential information includes non-public information that might be of use to competitors or harmful to the Company if disclosed, such as our databases, other scientific information, business plans and financial information. This information may be protected by patent, trade secret laws or confidentiality agreements.
In addition, because we interact with other companies and organizations, there may be times when you learn confidential information about other companies before that information has been made available to the public. You must treat this information in the same manner as you are required to treat our confidential and proprietary information. There may even be times when you must treat as confidential the fact that we have an interest in, or are involved with, another company.
Every Employee has a duty to refrain from disclosing to any person confidential or proprietary information about us or any other company learned in the course of employment here, until that information is disclosed to the public or otherwise authorized for disclosure, in each case through approved channels. This policy may require you to refrain from discussing confidential or proprietary information with outsiders and even with other Company Employees, unless those fellow Employees have a legitimate need to know the information in order to perform their job duties. Unauthorized use or distribution of this information could also be illegal and result in civil liability and/or criminal penalties.
You should also take care not to inadvertently disclose confidential information. Materials that contain confidential information, such as memos, lab or other notebooks, computer disks and laptop computers, should be stored securely. Unauthorized posting or discussion of any information concerning our business, information or prospects on the Internet is prohibited. You may not discuss our business, information or prospects in any “chat room,” regardless of whether you use your own name or a pseudonym. Be cautious when discussing sensitive information in public places like elevators, airports, restaurants and “quasi-public” areas within the Company, such as the lobby.
Confidential information may be disclosed to others only when disclosure is authorized by the Company or legally mandated. The obligation to preserve confidential information is ongoing, even after termination of employment.
Employees should understand that waivers or exceptions to this Code will be granted only under exceptional circumstances. A waiver of this Code for any executive officer or member of the Board of Managers may be made only by the Board of Managers and must be disclosed in accordance with applicable law and exchange requirements.
13. WHISTLEBLOWER POLICY: REPORTING OF ANY ILLEGAL OR UNETHICAL BEHAVIOR
Any Employee who is aware of any illegal or unethical behavior or who believes that an applicable law, rule or regulation or this Code has been violated, or who has a concern about the Company’s accounting practices, internal controls or auditing matters, must promptly report the matter in accordance with this Whistleblower Policy. Employees should take care to report violations to a person who they believe is not involved in the matter giving rise to the violation. All reports of violations will be promptly investigated in accordance with this Whistleblower Policy and, if appropriate, remedied, and, if legally required, promptly reported to the proper governmental authority.
An Employee is expected to raise any concern with Employee’s supervisor or manager. Alternatively, an Employee may contact the Company’s Chief Executive Officer. Any questions relating to interpretation or application of the Code or policies, should be directed to the Company’s Chief Executive Officer. If an Employee is uncomfortable discussing a matter with their supervisor or the Chief Executive Officer, the Employee should call the Company Ethics Hotline at 833-609-0611 or via our third-party website at vivus.ethicspoint.com.
Employees will be expected to cooperate in assuring that violations of the Code are promptly addressed. The Company has a policy of protecting the confidentiality of those making reports of possible misconduct to the maximum extent possible, consistent with the requirements necessary to conduct an effective investigation, and the law. In no event will there be any retaliation against someone for reporting an activity that they in good faith believe to be a violation of any law, rule, regulation, or this Code. Any supervisor or other Employee intimidating or imposing sanctions on an Employee for reporting a matter will be disciplined up to and including termination.
Employees should know that it is a crime to retaliate against a person, including with respect to their employment, for providing truthful information to a law enforcement officer relating to the possible commission of any offense. Employees who believe that they have been retaliated against by the Company, its Employees, contractors, subcontractors or agents, for providing information to or assisting in an investigation conducted by a law enforcement agency, Congress or a person with supervisory authority over the Employee (or another Employee who has the authority to investigate or terminate misconduct) in connection with conduct that the Employee reasonably believes constitutes a violation of any criminal fraud statutes or any rule or regulation of the Securities and Exchange Commission, may file a complaint with the Secretary of Labor, or in federal court if the Secretary does not take action in a timely manner.
14. RESPONDING TO IMPROPER CONDUCT
The Company will promptly investigate any complaint and will discipline any employee who retaliates against you for making a good faith report of any suspected or actual violation of this Code. If an Employee violates the Company's Code, they will be subject to disciplinary action. Supervisors and managers of a disciplined Employee may also be subject to disciplinary action for their failure to properly oversee an Employee’s conduct, or for retaliation against an Employee who reports a violation(s) or cooperates in an investigation of a reported violation(s).
The Company’s response to misconduct will depend upon a number of factors including whether the improper behavior involved illegal conduct. Disciplinary action may include, but is not limited to, reprimands and warnings, probation, suspension, demotion, reassignment, reduction in salary or immediate termination. Employees should be aware that certain actions and omissions prohibited by the Code might be crimes that could lead to individual criminal prosecution and, upon conviction, to fines and imprisonment.