NPC Comprehensive Compliance Program – State of California

I. INTRODUCTION

Novartis Pharmaceuticals Corporation (NPC) discovers, develops, and markets innovative products to cure diseases, to ease suffering, and to enhance the quality of life. As part of our commitment to deliver value to patients using our products, NPC has established and maintains an effective compliance program in accordance with federal, state, and industry regulations and guidelines including the "Compliance Program Guidance for Pharmaceutical Manufacturers," published by the Office of Inspector General, U.S. Department of Health and Human Services. We have dedicated significant time and resources to implementing a compliance program for NPC that includes a comprehensive framework of compliance controls throughout various segments of our commercial operations. Our compliance program is a representation of our commitment to the highest standards of corporate conduct.

Key elements of our Comprehensive Compliance Program include, but are not limited to:

• A Code of Employee Conduct that promotes the highest ethical and compliance principles that guide NPC's operations
• Extensive policies and procedures that address specific areas of government concern;
• Dedicated compliance oversight functions;
• Multi-faceted training and education programs;
• Multiple compliance communication mechanisms including an anonymous reporting system;
• Targeted monitoring and auditing;
• Well-publicized disciplinary guidelines
• A protocol for responding promptly to detected problems and implementing corrective action; and
• An operating compliance committee

II. Overview of NPC Compliance Program

1. Leadership and Structure.

Compliance Officer. NPC's Compliance Officer is Julie Kane, Vice President of Ethics and Compliance, who is charged with the responsibility for developing, operating, and monitoring the compliance program. The Compliance Officer reports directly to the President and Chief Executive Officer of Novartis Pharmaceuticals Corporation and has the authority to report to the Board of Directors. Our Compliance Officer has the ability to effectuate change within the organization and to exercise independent judgment.

2. Written Standards.

NPC has developed and distributed written compliance policies, procedures, and practices that guide the Company and the conduct of our employees in day-to-day commercial operations. These policies and procedures have been developed under the direction and supervision of our Compliance Officer, Commercial Compliance Committee, Healthcare Compliance Department, Legal Counsel, and management from various functional areas.

Code of Employee Conduct. The NPC Code of Employee Conduct is a written statement of ethical and compliance principles, policies, and procedures that all NPC management, employees, and contractors are expected to follow. The Code of Employee Conduct was designed to provide guidance on how to fulfill requirements of the Company's compliance program, resolve questions about the appropriateness of our conduct, and report possible violations of law or ethical principles. An employee's obligations under the Code of Employee Conduct include strict observance of all laws and regulations applicable to our Company (e.g., laws and regulations governing the Federal health care programs), ethical standards, and applicable NPC policies and procedures. [NPC Code of Employee Conduct is attached for reference]

Policies and Procedures. NPC has established policies and procedures to address a variety of potential risk areas, including the potential risk of liability under several fraud and abuse statutes and regulations. These policies and procedures are part of a comprehensive framework of compliance controls that exist throughout various segments of our organization. In particular, NPC developed and implemented significant policies and procedures to reduce and eliminate the potential risks identified by the HHS Office of Inspector General in its Compliance Program Guidance for Pharmaceutical Manufacturers and addressed in the Pharmaceutical Research and Manufacturers of America (PhRMA) Code on Interactions with Healthcare Professionals, including (1) data integrity pertaining to government reimbursement practices; (2) kickbacks and other illegal remuneration; and (3) compliance with laws regulating drug samples. In addition to incorporating policies and procedures that address specific risks related to pharmaceutical marketing and sales practices, NPC has established an annual spending limit for certain promotional activities in California in accordance with Cal. Health & Safety Code §119402.

California Annual Spend Limit. NPC's relationships with healthcare professionals are intended to benefit patients and to enhance the practice of medicine. Informational presentations and discussions by Company representatives and others speaking on behalf of NPC provide valuable scientific and educational benefits. In connection with such presentations or discussions, NPC may offer occasional meals and healthcare practice related items in accordance with the PhRMA Code on Interactions with Healthcare Professionals. The average medical or health professional in California receives less than $100 worth of promotional materials, healthcare practice items, and activities from NPC on an annual basis (as specific terms are defined by Cal. Health & Safety Code §119402).

Although NPC has low promotional spend on average (<$100 per licensed medical or health professional) in California and comprehensive controls to address specific risks related to pharmaceutical marketing and sales practices, NPC has established a specific annual dollar limit of $3,000 per medical or health professional in California on promotional materials, healthcare practice items, and activities in accordance with Cal. Health & Safety Code §119402. This amount represents a maximum limit that takes into account a variety of factors, including our Company's specific situation with multiple field forces of representatives that present to medical or health professionals regarding a diverse portfolio of products as well as the capabilities of current information systems that capture promotional spend-related data. Based upon historical data, NPC anticipates very few, if any, medical or health professionals will reach the established annual spend limit. In addition to our continual review of the Comprehensive Compliance Program, NPC will assess the spend limit on at least an annual basis and will identify and adjust the Program to meet any operational or practical issues related to complying with this new requirement as well as any new legislative requirements. Consistent with similar pharmaceutical marketing laws (e.g., Vermont, Maine, D.C.), certain items (e.g., plastic pens, small post notepads) or activities (e.g., in-office food or beverage provided on an occasional basis) of limited value (less than $25) will not be included in NPC's annual dollar limit. The current spend limit will be in effect for the period of January 1, 2008, through December 31, 2008.

3. Education and Training.

NPC educates and trains employees on the facets of our compliance program through programs developed and conducted by compliance and legal professionals. Our education and training covers a variety of laws and regulations that impact the way we conduct business. Our live and computer-based programs include, but are not limited to, meaningful discussion of the application and consequences of the False Claims Act, Anti-Kickback Statute, OIG Compliance Program Guidance, PhRMA Code on Interactions with Healthcare Professionals, as well as other applicable federal, state, and industry rules and guidelines. NPC regularly reviews and updates its training programs, and identifies additional areas of training on an "as needed" basis.

4. Internal Lines of Communication.

NPC is committed to fostering dialogue between management and employees. Our goal is that all employees, whether seeking answers to questions or reporting potential instances of fraud and abuse, will know who to turn to for a meaningful response and should be able to do so without fear of retribution. To that end, we have adopted open-door, confidentiality, and non-retaliation policies.

As part of its commitment to ethical and legal behavior, NPC requires its employees to report any actual or suspected violations of law or ethical standards so that they can be appropriately investigated and addressed. Employees can raise their concerns in a number of ways including with an appropriate member of management, through our Human Resources, Legal, Security, Business Practices, or Ethics and Compliance Departments, or by calling our toll-free, 24-hour, anonymous AlertLine. Further information on our AlertLine and non-retaliation policies can be found in our Code of Employee Conduct.

5. Auditing and Monitoring.

NPC's compliance program includes activities to monitor, audit, and evaluate compliance with the Company's policies and procedures. NPC's approach includes targeted monitoring and auditing based on identified and prioritized risk areas. In accordance with the OIG Compliance Program Guidance, the nature of NPC's 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.

6. Enforcing Standards Through Discipline.

Adherence to the Code of Employee Conduct is a condition of employment at NPC. Any violation of an employee's obligations under the Code of Employee Conduct can subject an employee to serious disciplinary measures, including possible termination of employment. An employee's obligations under the Code of Employee Conduct include strict observance of all laws and regulations applicable to our Company (e.g., laws and regulations governing the Federal health care programs), ethical standards, and applicable NPC policies and procedures. Although each situation is considered on a case-by-case basis, NPC undertakes significant efforts to ensure consistent and appropriate disciplinary action is taken in response to violations.

7. Responding to Detected Problems.

As part of our compliance program, NPC has an established a comprehensive internal investigation and corrective action protocol to ensure that timely, complete, and objective investigations are conducted in response to allegations regarding the NPC Code of Employee Conduct and applicable policies. In accordance with the OIG Compliance Program Guidance, the exact nature and level of thoroughness of the internal investigation will vary according to the circumstances. Upon conclusion of an internal investigation, corrective action and preventative measures are determined and implemented as appropriate.

III. CLOSING

NPC is dedicated to the maintenance and ongoing assessment required of an effective compliance program. In addition to our continual review the Comprehensive Compliance Program, NPC will assess the spend limit on at least an annual basis and will identify and adjust the Program to meet any operational or practical issues related to complying with this new requirement as well as any new legislative requirements. The current spend limit will be in effect for the period of January 1, 2008, through December 31, 2008.

Questions regarding NPC's Comprehensive Compliance Program or NPC's Code of Employee Conduct can be directed to 1-800-524-0266.