SETTLEMENT AGREEMENT

This Settlement Agreement (“Agreement”) is entered into among the United States of

America, acting through the United States Department of Justice and on behalf of the Office of

Inspector General of the Department of Health and Human Services (“HHS-OIG”), and the

Defense Health Agency (DHA), acting on behalf of the TRICARE program (collectively, the

“United States”), Incyte Corporation, and Justin Dillon (“Relator”) (hereafter collectively

referred to as “the Parties”), through their authorized representatives.

RECITALS

A. Incyte Corporation (“Incyte”) is a biopharmaceutical corporation headquartered in

Wilmington, Delaware. Incyte manufactures and markets pharmaceutical products, including

Jakafi® (ruxolitinib). On November 16, 2011, the U.S. Food and Drug Administration (“FDA”)

approved Jakafi® to treat adults with intermediate or high-risk myelofibrosis (“MF”), including

primary MF, post-polycythemia vera MF, and post-essential thrombocythemia MF. On December

4, 2014, the FDA subsequently approved Jakafi® to treat adults with polycythemia vera (“PV”)

who have already had an inadequate response or are intolerant to hydroxyurea. Then, on May

24, 2019, the FDA approved Jakafi® to treat persons 12 years of age and older with steroid-

refractory acute graft-vs-host disease (“GVHD”).

B. On June 22, 2018, Relator filed a qui tam action in the United States District

Court for the Eastern District of Pennsylvania captioned United States ex rel. Dillon v. Incyte

Corporation, Civil Action No. 2:18-2642, pursuant to the qui tam provisions of the False Claims

Act, 31 U.S.C. § 3730(b) (the “Civil Action”). In his Second Amended Complaint filed on May

29, 2019, Relator alleges, among other things, that Incyte violated the Anti-Kickback Statute

(“AKS”), 42 U.S.C. § 1320a-7b, by paying the copays of patients for the drug Jakafi® through a

patient assistance foundation.

 C. The United States contends that Incyte submitted or caused to be submitted claims

for payment to the Medicare Program, Title XVIII of the Social Security Act, 42 U.S.C. §§

1395-1395lll (“Medicare”).

D. The United States contends that Incyte submitted or caused to be submitted claims

for payment to the TRICARE Program, 10 U.S.C. §§ 1071-1110b (“TRICARE”).

E. When a Medicare or TRICARE patient obtains a prescription drug covered by

Medicare Part D or TRICARE, the patient may be required to make a payment, which may take

the form of a “copayment,” “coinsurance,” or “deductible” (collectively “copays”). The AKS

prohibits pharmaceutical companies from paying remuneration to induce Medicare or TRICARE

beneficiaries to purchase, or their physicians to prescribe, drugs that are reimbursed by Medicare

or TRICARE.

F. Chronic Disease Fund (“CDF”) d/b/a Good Days, an entity claiming 501(c)(3)

status for tax purposes, operated funds that paid the copays of certain patients, including

Medicare patients.

G. The United States contends that it has certain civil claims, as specified in

Paragraph 3 below, against Incyte arising from the conduct described below (hereinafter referred

to as the “Covered Conduct”). Specifically, the United States alleges that, from November 16,

2011 through December 31, 2014, Incyte violated the AKS by using CDF as a conduit to pay the

copay obligations of certain Medicare and TRICARE patients taking Jakafi® who were not

diagnosed with MF, but were diagnosed with PV, GVHD, or leukemia (“ineligible patients”).

Before FDA approval of Jakafi® for MF, Incyte and CDF discussed creating a fund for MF

patients. On November 16, 2011, CDF opened a fund to assist only patients afflicted with MF.

Incyte was the sole donor. After the fund opened, Incyte managers pressured CDF, through

phone calls and emails, to provide economic assistance to Jakafi patients who did not have MF

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and thus were not eligible for assistance under the fund. Incyte’s contractor that managed the

Jakafi®-patient-support hotline assisted such ineligible patients with completing certain sections

of their applications that were submitted to CDF for assistance. As a result of the foregoing

conduct, the United States alleges that, by paying the copays for those ineligible patients through

its donations to CDF, Incyte knowingly caused false claims to be submitted to Medicare and

TRICARE for Jakafi® prescriptions to the ineligible patients.

H. This Agreement is neither an admission of liability by Incyte nor a concession by

the United States or Relator that their claims are not well-founded.

I. Relator claims entitlement under 31 U.S.C. § 3730(d) to a share of the proceeds of

this Settlement Agreement and to Relator’s reasonable expenses, attorneys’ fees and costs.

To avoid the delay, uncertainty, inconvenience, and expense of protracted litigation of the

above claims, and in consideration of the mutual promises and obligations of this Agreement, the

Parties agree and covenant as follows:

TERMS AND CONDITIONS

1. Incyte shall pay to the United States twelve million, six hundred thousand dollars

($12,600,000.00), plus interest at a rate of 1.375% per annum accruing from March 18, 2021,

(“Settlement Amount”), of which $6.3 million is restitution, no later than 10 days after the

Effective Date of this Agreement by electronic funds transfer pursuant to written instructions to

be provided by the United States Attorney’s Office for the Eastern District of Pennsylvania.

2. Conditioned upon the United States receiving the Settlement Amount and as soon

as feasible after receipt, the United States shall pay $3,591,000, plus interest at a rate of 1.375%

per annum accruing from March 18, 2021, and continuing until the date of payment by Incyte to

the United States, to Relator by electronic funds transfer (Relator’s Share).

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 3. Subject to the exceptions in Paragraph 5 (concerning reserved claims) below, and

conditioned upon the United States’ receipt of the Settlement Amount plus interest due under

Paragraph 1, the United States releases Incyte, together with its current and former parent

corporations; direct and indirect subsidiaries; brother or sister corporations; divisions; current or

former corporate owners; and the corporate successors and assigns of any of them, from any civil

or administrative monetary claim the United States has for the Covered Conduct under the False

Claims Act, 31 U.S.C. §§ 3729-3733; the Civil Monetary Penalties Law, 42 U.S.C. § 1320a-7a;

the Program Fraud Civil Remedies Act, 31 U.S.C. §§ 3801-3812; or the common law theories of

payment by mistake, unjust enrichment, and fraud.

4. Subject to the exceptions in Paragraph 5 below, and upon the United States’

receipt of the Settlement Amount, Relator, for himself and for his heirs, successors, attorneys,

agents, and assigns, releases Incyte from any civil monetary claim the Relator has on behalf of

the United States for the Covered Conduct under the False Claims Act, 31 U.S.C. §§ 3729-3733.

5. Notwithstanding the releases given in Paragraph 3 of this Agreement, or any other

term of this Agreement, the following claims and rights of the United States are specifically

reserved and are not released:

a. Any liability arising under Title 26, U.S. Code (Internal Revenue Code);

b. Any criminal liability;

c. Except as explicitly stated in this Agreement, any administrative liability.

including mandatory or permissive exclusion from Federal health care

programs;

d. Any liability to the United States (or its agencies) for any conduct other

than the Covered Conduct;

e. Any liability based upon obligations created by this Agreement;

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 f. Any liability of individuals;

g. Any liability for express or implied warranty claims or other claims for

defective or deficient products or services, including quality of goods and

services;

h. Any liability for failure to deliver goods or services due; or

i. Any liability for personal injury or property damage or for other

consequential damages arising from the Covered Conduct.

6. Relator and his heirs, successors, attorneys, agents, and assigns shall not object to

this Agreement but agree and confirm that this Agreement is fair, adequate, and reasonable under

all the circumstances, pursuant to 31 U.S.C. § 3730(c)(2)(B). Conditioned upon Relator’s receipt

of the Relator’s Share, Relator and his heirs, successors, attorneys, agents, and assigns fully and

finally release, waive, and forever discharge the United States, its agencies, officers, agents,

employees, and servants, from any claims arising from the filing of the Civil Action or under 31

U.S.C. § 3730, and from any claims to a share of the proceeds of this Agreement and/or the Civil

Action.

7. Relator, for himself, and for his heirs, successors, attorneys, agents, and assigns,

releases Incyte, and its officers, agents, and employees, from any liability to Relator arising from

the filing of the Civil Action, or under 31 U.S.C. § 3730(d) for expenses or attorneys’ fees and

costs or under 31 U.S.C. § 3730(h) for retaliation. The Settlement Amount does not include any

payment for the alleged violation of the anti-retaliation provisions of the False Claims Act, 31

U.S.C. § 3730(h).

8. Incyte fully and finally releases the United States, its agencies, officers, agents,

employees, and servants, from any claims (including attorneys’ fees, costs, and expenses of

every kind and however denominated) that Incyte has asserted, could have asserted, or may

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assert in the future against the United States, its agencies, officers, agents, employees, and

servants, related to the Covered Conduct or the United States’ investigation or prosecution

thereof.

9. Incyte fully and finally releases the Relator from any claims (including attorneys’

fees, costs, and expenses of every kind and however denominated) that Incyte has asserted, could

have asserted, or may assert in the future against the Relator, related to the allegations in the

Second Amended Complaint and the Relator’s investigation and prosecution thereof.

10. The Settlement Amount shall not be decreased as a result of the denial of claims

for payment now being withheld from payment by any Medicare contractor (e.g., Medicare

Administrative Contractor, fiscal intermediary, carrier) or any state payer, related to the Covered

Conduct; and Incyte agrees not to resubmit to any Medicare contractor or any state payer any

previously denied claims related to the Covered Conduct, agrees not to appeal any such denials

of claims, and agrees to withdraw any such pending appeals.

11. Incyte agrees to the following:

a. Unallowable Costs Defined: All costs (as defined in the Federal

Acquisition Regulation, 48 C.F.R. § 31.205-47; and in Titles XVIII and XIX of the Social

Security Act, 42 U.S.C. §§ 1395-1395lll and 1396-1396w-5; and the regulations and official

program directives promulgated thereunder) incurred by or on behalf of Incyte, its present or

former officers, directors, employees, shareholders, and agents in connection with:

(1) the matters covered by this Agreement;

(2) the United States’ audit(s) and civil investigation(s) of the matters covered

by this Agreement;

(3) Incyte’s investigation, defense, and corrective actions undertaken in

response to the United States’ audit(s) and civil investigation(s) in

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 connection with the matters covered by this Agreement (including

attorneys’ fees);

(4) the negotiation and performance of this Agreement; and

(5) the payment Incyte makes to the United States pursuant to this Agreement

and any payments that Incyte may make to Relator, including costs and

attorneys’ fees;

are unallowable costs for government contracting purposes and under the Medicare Program,

Medicaid Program, TRICARE Program, and Federal Employees Health Benefits Program

(FEHBP) (hereinafter referred to as Unallowable Costs).

b. Future Treatment of Unallowable Costs: Unallowable Costs shall be

separately determined and accounted for by Incyte, and Incyte shall not charge such Unallowable

Costs directly or indirectly to any contracts with the United States or any State Medicaid

program, or seek payment for such Unallowable Costs through any cost report, cost statement,

information statement, or payment request submitted by Incyte or any of its subsidiaries or

affiliates to the Medicare, Medicaid, TRICARE, or FEHBP Programs.

c. Treatment of Unallowable Costs Previously Submitted for Payment:

Incyte further agrees that within 90 days of the Effective Date of this Agreement it shall identify

to applicable Medicare and TRICARE fiscal intermediaries, carriers, and/or contractors, and

Medicaid and FEHBP fiscal agents, any Unallowable Costs (as defined in this paragraph)

included in payments previously sought from the United States, or any State Medicaid program,

including, but not limited to, payments sought in any cost reports, cost statements, information

reports, or payment requests already submitted by Incyte or any of its subsidiaries or affiliates,

and shall request, and agree, that such cost reports, cost statements, information reports, or

payment requests, even if already settled, be adjusted to account for the effect of the inclusion of

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the Unallowable Costs. Incyte agrees that the United States, at a minimum, shall be entitled to

recoup from Incyte any overpayment plus applicable interest and penalties as a result of the

inclusion of such Unallowable Costs on previously-submitted cost reports, information reports,

cost statements, or requests for payment.

Any payments due after the adjustments have been made shall be paid to the United

States pursuant to the direction of the Department of Justice and/or the affected agencies. The

United States reserves its rights to disagree with any calculations submitted by Incyte or any of

its subsidiaries or affiliates on the effect of inclusion of Unallowable Costs (as defined in this

paragraph) on Incyte or any of its subsidiaries or affiliates’ cost reports, cost statements, or

information reports.

d. Nothing in this Agreement shall constitute a waiver of the rights of the

United States to audit, examine, or re-examine Incyte’s books and records to determine that no

Unallowable Costs have been claimed in accordance with the provisions of this paragraph.

12. This Agreement is intended to be for the benefit of the Parties only. The Parties

do not release any claims against any other person or entity, except to the extent provided for in

Paragraph 13 (waiver for beneficiaries paragraph), below.

13. Incyte agrees that it waives and shall not seek payment for any of the health care

billings covered by this Agreement from any health care beneficiaries or their parents, sponsors,

legally responsible individuals, or third party payors based upon the claims defined as Covered

Conduct.

14. Upon receipt of the payment described in Paragraph 1, above, the Parties shall

promptly sign and file in the Civil Action a Joint Stipulation of Dismissal of the Civil Action

pursuant to Rule 41(a)(1). As to the United States, the Civil Action will be dismissed with

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prejudice as to the Covered Conduct released in this Agreement, and without prejudice as to any

other claims. As to Relator, the Civil Action will be dismissed with prejudice as to all claims.

15. Each Party shall bear its own legal and other costs incurred in connection with

this matter, including the preparation and performance of this Agreement.

16. Each Party and signatory to this Agreement represents that it freely and

voluntarily enters into this Agreement without any degree of duress or compulsion.

17. This Agreement is governed by the laws of the United States. The exclusive

jurisdiction and venue for any dispute relating to this Agreement is the United States District

Court for the Eastern District of Pennsylvania. For purposes of construing this Agreement, this

Agreement shall be deemed to have been drafted by all Parties to this Agreement and shall not,

therefore, be construed against any Party for that reason in any subsequent dispute.

18. This Agreement constitutes the complete agreement between the Parties. This

Agreement may not be amended except by written consent of the Parties.

19. The undersigned counsel represent and warrant that they are fully authorized to

execute this Agreement on behalf of the persons and entities indicated below.

20. This Agreement may be executed in counterparts, each of which constitutes an

original and all of which constitute one and the same Agreement.

21. This Agreement is binding on Incyte’s successors, transferees, heirs, and assigns.

22. This Agreement is binding on Relator’s successors, transferees, heirs, and assigns.

23. All Parties consent to the United States’ disclosure of this Agreement, and

information about this Agreement, to the public.

24. This Agreement is effective on the date of signature of the last signatory to the

Agreement (“Effective Date of this Agreement”). Facsimiles and electronic transmissions of

signatures shall constitute acceptable, binding signatures for purposes of this Agreement.

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 THE UNITED STATES OF AMERICA
Digitally signed by LOUIS

LOU IS LAPPEN I1IT'},, 00'0

DATED: BY ",''."
-04'00'

JENN IFER ARBITTIER WILLIAMS

Acting United States Attorney
Eastern District of Pennsylvania

DATED:
tl, zt BY:
YB. VID
Chief, Civil Division
lvania

DATED: BY:
FULLMER
Civil Division
of Pennsylvania

DATED: 51412021 BY:

TTHEW E. K. HOWATT
Assistant United States Attorney
Eastern District of Pennsylvania

DATED: 5/412021
Pffii. KooB
Assistant United States Attorney
Eastern District of Pennsylvania

DATED: BY
JENNIFER CIHON
Senior Trial Counsel
United States Department of Justice

l0
 THE UNITED STATES OF AMERICA

DATED: BY: ______________________________

JENNIFER ARBITTIER WILLIAMS
Acting United States Attorney
Eastern District of Pennsylvania

DATED: BY: ______________________________

GREGORY B. DAVID
Chief, Civil Division
Eastern District of Pennsylvania

DATED: BY: ______________________________

CHARLENE KELLER FULLMER
Deputy Chief, Civil Division
Eastern District of Pennsylvania

DATED: BY: ______________________________

MATTHEW E. K. HOWATT
Assistant United States Attorney
Eastern District of Pennsylvania

DATED: BY: ______________________________

PAUL J. KOOB
Assistant United States Attorney
Eastern District of Pennsylvania

5/3/21
DATED: BY: ______________________________
JENNIFER CIHON
Senior Trial Counsel
United States Department of Justice

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 DEFENSE HEALTH AGENCY

BLEY.PAUL.NICHO Digitally signed by

BLEY.PAUL.NICHOLAS.1099873821
DATED: 04/27/2021 BY: ______________________________
LAS.1099873821 Date: 2021.04.27 16:52:11 -04'00'

SALVATORE M. MAIDA
for General Counsel
Defense Health Agency
United States Department of Defense

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