Federal Compliance

FEDERAL AND STATE LAWS CONCERNING FALSE CLAIMS AND STATEMENTS AND PROTECTIONS FOR THOSE WHO RAISE COMPLIANCE AND CERTAIN OTHER CONCERNS

Effective January 1, 2007, a new federal law requires any entity that receives or makes annual Medicaid payments of at least $5 million to establish written policies for all of its employees, contractors or agents, regarding certain laws, employee rights and company policies. Takeda is providing this notice to you as a result of this new law. See Section 6032 of the Deficit Reduction Omnibus Reconciliation Act ("DRA") of 2005 (Pub. L. No. 109-171) amended Section 1902(a) of the Social Security Act.

Takeda is committed to being a lawful, compliant, and ethical participant in the federal health care programs. Many federal and state laws have been created to prevent and help detect fraud, waste, and abuse in federal health care programs. The following is a summary of some of these federal and state laws.

FEDERAL FALSE CLAIMS ACT

The Federal False Claims Act prohibits knowingly presenting (or causing to be presented) to the federal government (the "Government") a false or fraudulent claim for payment or approval. Additionally, it prohibits knowingly making or using (or causing to be made or used) a false record or statement to get a false or fraudulent claim paid or approved by the Government or its agents, like a carrier, other claims processor, or state Medicaid program. The Attorney General must investigate possible false claims violations and may bring a civil action if he or she determines that a violation is occurring or has occurred. A person who violates the False Claims Act is liable for damages up to three times the amount the Government is defrauded plus mandatory penalties of $5,500 to $11,000 for each false claim submitted.

An entity, or employees acting on its behalf, "knowingly" makes a false statement or claim if it actually knows that the statement or claim is false or it acts in "deliberate ignorance" of, or with "reckless disregard" for, whether the statement or claim is actually true or not. A key element of a False Claims case is that someone knowingly did something wrong, not just made an innocent mistake or error.

The False Claims Act contains qui tam provisions. Qui tam is an abbreviation for a Latin phrase dating back to 13th century England, meaning a person who sues for the king as well as for himself. Under the Act's qui tam provisions, a person with evidence of fraud, also known as a relator, is authorized to file a case in federal court and, on behalf of the Government, sue persons engaged in the fraud and to share in any money the Government may recover.

When a qui tam complaint is filed, the case remains under seal (i.e., it may not be disclosed) for at least 60 days. This 60-day seal period may be extended upon request by the Government. It is not unusual for the seal period to last a number of years. During the seal period, the Government will investigate the allegations of violations of the False Claims Act.

If the Government intervenes and proceeds with the action, the Department of Justice has primary responsibility for pressing the case forward in court. If the Government declines to intervene, the relator has the right to conduct the action on his or her own and must bear the cost of the suit as it proceeds.

ADMINISTRATIVE REMEDIES

The Government also has other available mechanisms to address fraud and abuse, including administrative remedies such as recoupment of overpayments, program exclusions, and civil monetary penalties.

A person who makes a false claim or statement may be liable for a civil penalty for each such claim or statement, in addition to any other remedy available under law.

FALSE CLAIM

A person is liable for administrative penalties for making a false claim where, among other things, he or she submits or causes to be submitted a claim that he or she knows or should know is:

•False, fictitious, or fraudulent; or

•Contains or is accompanied by a written statement that puts forth a material fact that is false, fictitious, or fraudulent.

FALSE STATEMENT

Similar to the false claims liability, a person is liable for submitting a false statement, where, for instance, he or she submits or causes to be submitted a written statement that:

•He or she knows or should know puts forth a material fact that is false, fictitious, fraudulent or leaves out a material fact and is false, fictitious, or fraudulent due to the failure to include the material fact;

•In instances where a material fact is omitted, the person submitting the statement had a duty to present the fact; and

•The submission includes an express certification or affirmation that the contents of the submission are true and accurate.

In addition to civil penalties and other remedies, program exclusions prevent individuals or entities from participating in the applicable federal programs under various circumstances.

STATE LAWS

States have a variety of civil and criminal laws that may be used to control health care fraud and abuse. For instance, states may have a variety of laws in place to facilitate prosecution of Medicaid fraud, and some have established their own versions of a false claims act which offer certain protections for those raising concerns. States with false claims acts include: Arkansas, California, Delaware, the District of Columbia, Florida, Hawaii, Illinois, Indiana, Louisiana, Massachusetts, Michigan, Montana, Nevada, New Hampshire, New Mexico, Ohio, Tennessee, Texas, and Virginia. The list of States with false claims acts may not be exclusive. To learn more about the false claims act of any particular State, please visit the Centers for Medicare and Medicaid Services' Medicaid Fraud Statutes Web Site at www.cms.hhs.gov/apps/mfs/weblist.asp or, if you are a Takeda employee, you may visit Takeda's intranet Horizon. We incorporate the information from Takeda's website and CMS" website into this policy.

These statutes apply when a false claim is submitted to the state. Persons who violate these statutes may face substantial fines for each false claim submitted. Although most of these statutes are very similar to the Federal False Claims Act, some include provisions that diverge from the Federal False Claims Act, such as provisions imposing jurisdictional bars.

The Florida False Claims Act, for example, imposes liability on any person who engages in any one of a variety of actions that result in the submission of a false claim to the government for payment or approval, such as "knowingly present[ing] or caus[ing] to be presented to an officer or employee of an agency a false claim for payment or approval"; or "knowingly mak[ing], us[ing], or caus[ing] to be made or used a false record or statement to get a false or fraudulent claim paid or approved by an agency . . . ." Fla. Stat. Ann. ch. 68 § 68.082(2) (2006) An innocent mistake is a defense to a violation.

PROTECTIONS FOR THOSE RAISING CONCERNS

Those raising concerns regarding health care fraud and abuse may enjoy various protections against retaliation by their employers. The False Claims Act, for instance, provides a remedy for relators that are discharged, demoted, suspended, threatened, harassed, or otherwise discriminated against in retaliation for filing a False Claims Act suit. If a court finds a relator was terminated or otherwise retaliated against for filing a qui tam lawsuit, the employee is entitled to reinstatement at the same seniority level as if he or she had never left the company, in the case of a termination, and other relief.

TAKEDA POLICIES AND PROCEDURES

Takeda has various policies and procedures for detecting and preventing fraud, waste and abuse. These policies and procedures include Takeda's Corporate Ethics & Compliance Program Charter, Compliance Guidelines for Interactions with Healthcare Professionals and Customers, Code of Conduct and Compliance Helpline. Please visit www.tpna.com for more information. Takeda employees may also visit Takeda's intranet Horizon or contact the Office of Ethics & Compliance for more information.