Based on internal assessments completed August 23, 2017, Aytu BioScience, Inc. is in all material respects and to the best of its knowledge, in compliance with the Aytu BioScience California Comprehensive Compliance Program as well as requirements reflected and its good faith understanding of the California Health and Safety Code 119400-119402 for the calendar year of January 1, 2017 – December 31, 2017.  In addition, Aytu will continue to monitor for violations or non-compliance, and if such violations are identified, Aytu will investigate and respond promptly and in accordance with the California Comprehensive Compliance Program.

A copy of this guide can be obtained by calling 1-855-Aytu Bio, prompt 6.

  1. Introduction

As part of the Aytu BioScience, Inc. commitment to compliance and the laws and regulations that govern the pharmaceutical and device sales and marketing activities in the U.S., Aytu has developed the California Comprehensive Compliance Program.  The Aytu Compliance Program has been developed in accordance to the regulations set forth in the California Health and Safety Code, Section 119400-119402, “Compliance Program Guidance for Pharmaceutical Manufacturers”  published by the U.S. Department of Health and Human Services Office of Inspector General (OIG), “Code of Interactions with Healthcare Professionals” published by the Pharmaceutical Research and Manufactures of America (PhRMA), and the “Code of Ethics on Interactions with Health Care Professionals adopted by the Advanced Medical Technology Association (AdvaMed).

The Aytu Compliance Program is not static and will continue to change in accordance with the law.  Furthermore, the OIG guidance states that the policies within each pharmaceutical company should be tailored to the unique nature of the company itself.  Therefore, the Aytu Compliance Program has been tailored in accordance to its individual products both pharmaceutical and device.  The compliance standards for our pharmaceutical products will be in accordance to the standards stated within the “PhRMA Code of Interactions with Healthcare Professionals” and our device products will be regulated and trained based on the compliance standards stated within the “AdvaMed Code of Ethics on Interactions with Healthcare Professionals.”

The Aytu California Compliance Program is part of our internal, company compliance program.

  1. Compliance Officer

Our Compliance Officer acts as our Vice President of Technical Operations and thus manages a group of regulatory and quality professionals.  As part of our on-going commitment to compliance, our Compliance Officer has regular (quarterly) meetings with our Board members and works to oversee the training and implementation of our compliance program.

  1. Code of Business Conduct and Ethics

Our Code of Business Conduct and Ethics is distributed to all Aytu employees at the start of employment with the company and when any changes take place.  The Business Code of Conduct and Ethics is a universal statement that explains our values, ethical principles and will help to guide day to day operation.

In addition to the Code of Business Conduct and Ethics and Aytu policies and procedures, each Aytu field representative or any Aytu employee who has interactions with Health Care Professionals will receive an additional Compliance Manual aligned to their product.  The Device and Diagnostic Compliance Manual will reflect policies set up within the AdvaMed code and the Pharmaceutical Compliance Manual will be used for those responsible for sales and marketing as related to any Aytu Pharmaceutical drug product.

Under both the device and pharmaceutical compliance manuals, field based employees’ may offer items designed primarily for the education of patients or healthcare professional where permitted by law and as long as the items are not of substantial value nor have value outside of his/her professional responsibilities.  These items may include educational DVDs, Anatomical DVDs, or USBs with educational slides.

Aytu field employee interactions with healthcare and medical professionals must be focused on providing scientific and educational information, and supporting medical information.  The information must be accurate and not misleading, make claims about a product only when substantiated, reflect balance between risks and benefits, and be consistent with all FDA requirements governing such communications.  Additionally, Aytu field employees or Aytu appointed speakers may speak on behalf of Aytu.  The events focus on educating and informing other healthcare professionals about the benefits, risks and appropriate uses of Aytu products.  During these events/discussions, Aytu may provide meals of modest value as stated with the Aytu Compliance Manuals.

  1. Training and Education

Aytu is committed to the continued growth and education of its employees and those working on behalf of the company.  All employees are trained annually on all compliance policies as it relates to the function of their job and the laws that impact their daily interactions.  These training will commence upon the on-boarding of each employee and will occur upon any additional changes.  On-going training and certification will be made available and the Compliance Committee is responsible for completing on-going email and communication as reminders and continued education throughout the calendar year.

Training is reviewed, approved, and updated on an on-going basis to ensure that all information is clear and consistent with all laws and regulations.

  1. Communication – Hotline

Aytu encourages its employees to communicate openly with their direct supervisors or other appropriate personnel about observed illegal or unethical behavior or when in doubt of the best action in a particular situation. Any employee who suspects a violation of the Code of Ethics or any law or regulation, should bring the matter to the attention of the Chair of the Audit Committee or Outside Counsel as soon as possible. Aytu’s policy is to not allow retaliation for reports of misconduct by others made in good faith by employees.  Aytu employees are required to cooperate in all internal investigations of misconduct.

Also, Aytu employees may anonymously, submit a good-faith concern by phone at 1-844-Tell AYTU or by email at TellAytuBio@getintouch.com

  1. Audits

The Aytu Compliance Program includes ongoing monitoring and audits of all activities related to interactions with Healthcare and medical professionals of our employees.  Primarily, our management team is responsible for daily review and confirmation of compliance within their individual teams.  Through random audits and continued monitoring of resources used by our field associates and internal employees, we are able to review and track issues that should be investigated. The frequency of the audits varies specifically on changes in business practices and internal resources.

  1. Non-Compliance

Aytu audits and resulting information will be followed up on with the individual field employee promptly and violations will be addressed individually.  Violations will be reviewed and disciplinary action will be assessed internally and be consisted with internal policy.  Issues with non-compliance will be used to further assess any additional information that should be added or updated in our compliance program and will assist in evaluating needs for additional training and/or resources.

  1. Maximum Annual Limits

As stated in the California Health and Safety Code, Section 119400-119402, Aytu has established maximum annual limits for gifts, promotional materials, or items or activities that Aytu may provide to a California Healthcare or Medical Professional.  This limit is set to $2000 annually for educational items, product literature, and related Aytu items and are in accordance to Aytu Compliance policy and state and federal regulations.  Aytu employees are prohibited to provide or offer gifts, entertainment or entry to recreational events to any HCP or Health Care Organization employee.  Aytu acknowledges that a majority of health and medical professionals receive significantly less the $2000 maximum annual limit stated within the Comprehensive Compliance Policy.

The maximum annual limit does not include drug samples, samples of medical devices intended for free distribution to patients, as well as, financial support for continuing medical education nor financial support for health educational scholarships.

  1. Summary

Aytu is committed to the on-going compliance of its employees and associates working on behalf of the company.  The California Comprehensive Compliance Program is part of our overall training program which includes the “Compliance Program Guidance for Pharmaceutical Manufacturers”  published by the U.S. Department of Health and Human Services Office of Inspector General (OIG), “Code of Interactions with Healthcare Professionals” published by the Pharmaceutical Research and Manufactures of America (PhRMA), and the “Code of Ethics on Interactions with Health Care Professionals adopted by the Advanced Medical Technology Association (AdvaMed) as well as our internal policies and procedures which include but are not limited to the Aytu Device and Diagnostic Compliance Manual, the Aytu Pharmaceuticals Compliance Manual and the Aytu Code of Business Conduct and Ethics.

All materials listed within this document can be obtained by calling  1-855-AYTU BIO, prompt 6.