Compliance Program

InVivo Therapeutics has a well-established Compliance Program that reflects InVivo Therapeutics’s commitment to compliance with the laws and regulations that govern the medical device and pharmaceutical development, marketing and selling activities in the United States. InVivo Therapeutics’s Compliance Program also is consistent with the recommendations set forth in “Compliance Program Guidance for Pharmaceutical Manufacturers,” published by the Office of Inspector General, U.S. Department of Health and Human Services (the “HHS-OIG Guidance”) and the provisions of the Code on Interactions with Healthcare Professionals created by the Pharmaceutical Research and Manufacturers of America (“PhRMA Code”). The goal of InVivo Therapeutics’s Compliance Program has always been to maintain a culture that promotes the prevention, detection and resolution of potential violations of law or Company policy.

The fundamental elements of InVivo Therapeutics’s Compliance Program as it relates to development, sales and marketing activities in the United States are described below. InVivo Therapeutics’s Compliance Program is dynamic, involving regular assessment and adjustment to ensure the Program is responsive to the Company’s evolving business and associated compliance risks.

InVivo Therapeutics has the appropriate resources in place to support our commitment to compliance.

Engaging in sales and marketing activities in the United States we have establish compliance requirements to support InVivo Therapeutics’s business processes which creates a culture of compliance. Compliance audits work in cooperation with InVivo Therapeutics’s Chief Executive who has responsibility for corporate wide compliance. InVivo Therapeutics’s Chief Executive Officer reports to the Board of Directors, and periodically reports compliance status to the Company’s Board of Directors.

The development and distribution of written standards of conduct, as well as written policies, procedures and guidelines is a key element of InVivo Therapeutics’s Compliance Program.

• InVivo Therapeutics’s Code of Conduct is our universal statement of the values, standards and ethical principles that guide our daily operations. The Code of Conduct is available to all employees on the Company’s intranet and applies to everyone conducting business on behalf of InVivo Therapeutics.
• In addition to its Code of Conduct, InVivo Therapeutics has corporate policies, procedures and guidelines that outline the specific behaviors required for day-to-day operations and outline how InVivo Therapeutics employees are expected to conduct their activities. Among other things, these policies, procedures and guidelines address potential risk areas and identify ways to eliminate the risk. Areas discussed are InVivo Therapeutics-led promotional and educational programs; financial support of independent continuing medical education; scientific research grants; consulting arrangements with healthcare professionals; service agreements with customers; and the provision of grants in support of healthcare-related initiatives sponsored by professional societies, patient advocacy groups, trade associations, charitable entities and other organizations. InVivo Therapeutics’s policy relating to professional representative interactions with healthcare professionals provides that such interactions must focus on: providing current, accurate, and balanced information about InVivo Therapeutics research and products transmitting sound scientific and educational information, and supporting medical research and education. As a matter of policy, InVivo Therapeutics employees are prohibited from offering healthcare professionals items of personal benefit, such as tickets to sporting events, support for office social events, gift certificates to stores, golf outings or athletic equipment.
• Under InVivo Therapeutics policies, our personnel occasionally may provide healthcare professionals with approved educational or practice-related items that are not of substantial value. These materials are intended primarily to benefit patients and may include items such as medical textbooks, medical journals, or anatomical models. Items of minimal value may also be provided if they primarily are associated with a healthcare professional’s practice. For example, items such as pens, notepads and similar “reminder items” with company logos may be distributed in modest quantities. Policy measures are designed to ensure that these items are provided in accordance with the PhRMA Code and the HHS-OIG Guidance.
• InVivo Therapeutics policy also permits informational presentations and discussions by InVivo Therapeutics representatives or others speaking on InVivo Therapeutics’s behalf. These events provide high quality clinical, disease and drug therapy information, are in accordance with FDA regulations, and are specifically designed to provide the type of information practicing medical and health care professionals have indicated to InVivo Therapeutics that they need and find most useful in the treatment of their patients. In connection with such presentations or discussions, occasional meals may be offered to medical or health professionals provided the meals occur in a venue and manner conducive to informational communication. Policy measures are designed to ensure that these meals are provided in accordance with the PhRMA Code and the HHS-OIG Guidance.
• As required by California Health & Safety Code §§ 119400-119402, InVivo Therapeutics has established an annual dollar limit on educational or practice-related items, items of minimal value and meals which InVivo Therapeutics employees are permitted to provide to medical or health professionals in California under InVivo Therapeutics policy. As of July 1, 2005, the annual limit of $900 applies prospectively to educational or practice-related items, items of minimal value, and meals associated with informational presentations or discussions provided to medical or health professionals in California; and incorporates the limitations and definitions contained in the statute.
• InVivo Therapeutics’s annual dollar limit does not include samples given to physicians and healthcare professionals, financial support for continuing medical education forums, financial support for health educational scholarships and fair market value payments for legitimate professional services provided by healthcare or medical professionals. In addition, the annual dollar limit does not include reprints, printed advertising or promotional materials, and items provided for distribution to patients (e.g., patient-oriented health and disease management information).
• Some of the medical and health care professionals InVivo Therapeutics calls on have practices spanning multiple therapeutic categories in which InVivo Therapeutics has medicines and vaccines. InVivo Therapeutics’s research in development includes several products that are actively promoted by InVivo Therapeutics representatives. Because of the breadth of topic areas that are relevant to these practitioners, a larger number of discussions and informational presentations occur between these individuals and InVivo Therapeutics representatives. It is in recognition of these instances that InVivo Therapeutics’s annual upper limit on expenditures for medical and health care professionals is currently set at $900. The largest of these expenditures is meals associated with informational presentations and discussions. However, these expenditures also include the fair market value of educational and practice-related items provided to medical and health care professionals as set forth above.

Another critical element of our Compliance Program is the education and training of our employees on their legal and ethical obligations under InVivo Therapeutics policy and the laws, regulations and guidelines that govern pharmaceutical marketing and selling activities in the United States.

• InVivo Therapeutics is committed to taking all necessary steps to effectively communicate our standards and procedures to all affected personnel. InVivo Therapeutics’s Code of Conduct, corporate policies, procedures and guidelines are available to employees at all times through the InVivo Therapeutics intranet. All InVivo Therapeutics sales and marketing employees are required to participate in training as a condition of their employment. In addition, these employees will undergo periodic re-training and remedial training programs as necessary. The training process is overseen by distinct training departments.
• The following training plan applies to all field based employees. New hires receive testing and certification on InVivo Therapeutics’s Field Policy Letters and general sales and product training. This includes training to ensure compliance with federal laws and regulations that relate to pharmaceutical and medical device sales and marketing such as the Anti-Kickback Statute, the Prescription Drug Marketing Act, and FDA drug promotion regulations. After initial training, there is periodic training aimed at recertifying field based employees on relevant policies. Field-based employees in geographies with state or other region-specific legal or regulatory requirements also receive training specific to the local requirements.
• The content for all training is evaluated and updated periodically to ensure it remains relevant and current.

InVivo Therapeutics strives to provide a work environment that encourages employees to communicate openly with management about all types of workplace issues. Accordingly, as a matter of policy, employees are encouraged to bring workplace issues of any type to the attention of management without fear of retaliation or recrimination. To support this concept, InVivo Therapeutics has established the following resources:

• InVivo Therapeutics encourages employees, as a first step, to seek out an immediate supervisor or manager to discuss workplace issues. If the matter is not successfully resolved, an employee may pursue the issue with his/her next level of management or Human Resources.
• InVivo Therapeutics also has a confidential outside telephone line made available to all employees who wish to anonymously raise concerns about potential unethical or illegal behavior or violations of InVivo Therapeutics policies. This telephone line is operated by an independent firm who will forward reported concerns to the InVivo Therapeutics Office of Ethics for response or investigation. The telephone line is available 24 hours a day, 7 days a week.

InVivo Therapeutics’s Compliance Program includes monitoring, auditing, and ongoing evaluation regarding compliance with the company’s policies and procedures. In accordance with the HHS-OIG Guidance, the nature of our reviews as well as the extent and frequency of our compliance monitoring and auditing varies according to a variety of factors, including new regulatory requirements, changes in business practices, and other considerations. Results of auditing, monitoring and evaluation are, as appropriate, followed up on specifically, incorporated in training and communications strategies and considered when making choices in connection with ongoing general management of the business.
The primary responsibility for oversight is with line management. To assist managers with this responsibility, InVivo Therapeutics provides them with reports from tracking and oversight systems that capture key compliance indicators to aid them in monitoring compliance with company policy and investigating any potential violations of policy. Management oversight is supplemented by audits.
InVivo Therapeutics utilizes a combination of up-front planning, and periodic tracking and monitoring to comply with the annual dollar limit established pursuant to California Health & Safety Code §§ 119400-119402. At periodic sales planning meetings, representatives are allocated an amount of resources that they may use with physicians identified as Multi-Therapeutic Category Practitioners, as described in Section 2 above, throughout the year. Adherence to the plan will then be monitored on an on-going basis.

InVivo Therapeutics is committed to hiring a workforce whose actions will reflect a high degree of integrity and ethics, recognizing that the ability to excel depends on the integrity, knowledge and skills of our people. Accordingly, the Company invests significant resources in identifying and hiring highly qualified and skilled individuals. In addition, prior to allowing the individual to commence employment with the Company, InVivo Therapeutics performs a drug screening and background investigation of the individual. The background investigation includes verification of employment history, and education. InVivo Therapeutics also performs a criminal background investigation that searches for any felony or misdemeanor on both a county and federal level. If deemed appropriate to the position, checks also will be conducted of professional certifications and licenses, motor vehicle records and credit history.

A Compliance Program increases the likelihood of preventing, or at least identifying unlawful and unethical behavior. However, HHS-OIG recognizes that even an effective Compliance Program may not prevent all violations. As such, our Compliance Program requires the company to respond promptly to potential violations of law or company policy, and take appropriate disciplinary action. Specifically, InVivo Therapeutics’s Compliance Program includes a clearly defined violations process that sets out the potential consequences of violating the law or company policy. Although each situation is considered on a case-by-case basis, InVivo Therapeutics policy requires that consistent and appropriate disciplinary action be taken to address inappropriate conduct and deter future violations. InVivo Therapeutics also assesses whether identified violations are in part due to gaps in our policies, practices, or internal controls, and if so, takes appropriate action to prevent future violations.
InVivo Therapeutics plans to continue its practice of ongoing refinements to it Compliance Program to take into account its business needs, including needs arising as a result of new product introductions. InVivo Therapeutics’s Comprehensive Compliance Program will be updated to reflect such changes as necessary.