CALIFORNIA COMPLIANCE CERTIFICATION

Compliance Program

Adaptive has developed technology that is a highly accurate and sensitive method for detecting and quantifying MRD, or measurable residual disease, in lymphoid malignancies.  MRD refers to the small number of cancer cells that can remain in a patient’s body after treatment and may eventually cause recurrence of the disease.  Adaptive leverages the power of next-generation DNA sequencing (NGS) and offers a standardized, proven way to determine how treatment has impacted disease.  Adaptive Biotechnologies, its affiliates and subsidiaries (collectively, the “Company” or “Adaptive”) is committed to essential principles of good corporate conduct and integrity in all of its activities. Establishing and maintaining an effective Compliance Program is a key component of this commitment. The OIG Guidance outlines seven key elements of an effective compliance program. We have developed and implemented our Compliance Program to address each of these elements.

The purpose of our Compliance Program is to prevent and detect violations of law or company policy. The Company expects that its employees, contractors and agents will comply with out Code of Conduct and with the policies, procedures, guidelines, work instructions, and training established in support of the Code of Ethics and Business Conduct. If the Company becomes aware of violations of law or Company policy, we will investigate the matter and, where appropriate, take disciplinary action and implement corrective measures to prevent future violations.

The key components of the Company Compliance Program are described below, addressing each of seven elements of an effective compliance program as outlined in the OIG Guidance. As the OIG Guidance envisions, we have designed our Compliance Program to fit the size, resources, market position, and other unique aspects of our company. At Adaptive, we recognize that an effective compliance program must evolve and respond to the changing circumstances of the Company and its environment. To this end, we are committed to continuous quality improvement based on regular review, assessment, and development of the Compliance Program and the changing regulatory and business environment.

  1. Leadership and Structure

The Chief Compliance Officer is responsible for developing, overseeing, and monitoring the operation of the Company’s Compliance Program. In this role, the Compliance Officer has the authority to exercise appropriate professional judgment regarding the Compliance Program, and to develop and implement revisions and improvements as needed to maintain an effective Compliance Program. The Compliance Officer has independent reporting authority and responsibility to our Audit Committee of the Board of Directors for compliance-related matters.

  1. Written standards

Adaptive’s Code of Conduct (“Code”) is our statement of ethical and compliance principles that guide our daily operations. The Code establishes expectations that management, employees, contractors, and agents of the business are expected to follow, as well as standards to help ensure compliance with applicable laws and company policies. To emphasize the importance of the principles and guidelines contained in the Code, we require each of our employees to certify that he or she has read and agrees to abide by all of the Company’s policies and procedures.

In addition to the Code, Adaptive has developed and implemented policies, procedures, guidelines, work instructions, and other directives to, among other things, address potential risk areas for clinical laboratories, including those identified by the OIG Guidance. Our policies and procedures also help to ensure that the Company adheres to the AdvaMed Code of Ethics on Interactions with Health Care Professionals.

Annual Spending Limit

Adaptive also has established guidance regarding appropriate interactions with health care professionals. It is Adaptive’s policy to comply with the AdvaMed Code of Ethics on Interactions with Health Care Professionals, which includes limits on gifts, meals and other activities with health care professionals.

For purposes of complying with the California Health and Safety Code 119402, Adaptive has established, commencing April 5, 2019, a maximum annual aggregate dollar limit of $3,500 for gifts, promotional materials or activities provided to California health care professionals. This dollar limit represents a spending cap, not a goal or average, and typically the amount spent per physician is anticipated to be substantially less than this maximum amount. Waiver of the limit would require the approval of the Chief Compliance Officer.  However, as Adaptive is enrolled in Federal healthcare programs and is subject to Stark law, non-monetary compensation provided to a physician that orders Medicare-reimbursable tests from Adaptive must not exceed the threshold for that calendar year (i.e., $416 for 2019).

To attempt to assure that health care professionals (“HCP”) fully understand our products and services, Adaptive representatives may take time to explain the benefits and risks associated with them, as well as the relevant clinical efficacy studies, where appropriate. Some of these informational and educational presentations may take place over the course of a modest meal to avoid taking HCPs away from important time with their patients.

On occasion, Adaptive does provide medically-relevant and patient-oriented items to HCPs that conform to the AdvaMed Code. Some examples include anatomical models, patient education charts and information that is useful for patients in understanding or managing their condition and/or treatment.

  1. Education and Training of Adaptive Staff

Education and training are essential to effectively communicating our standards and requirements to our personnel and enabling them to perform in accordance. All personnel are provided training on Adaptive’s Code and on the compliance-related policies, procedures, guidelines, and work instructions applicable to their job functions. We maintain and monitor training records to help ensure all personnel have received required training. Education and training are critical elements of our Compliance Program, specifically with regards to training personnel on their legal and ethical obligations under applicable state and federal health care program requirements.

  1. Internal Lines of Communication

Adaptive is committed to fostering an active and healthy dialogue between management and employees regarding ethical and compliance-related matters. Company personnel are encouraged to seek answers to compliance-related questions and are provided with guidance on how to access compliance-related information, including how to report potential compliance violations. Adaptive understands that its personnel must not just know how to access compliance-related resources, they must feel comfortable doing so without fear of retaliation. The Company has adopted policies and procedures that strongly encourage all personnel to report potential suspected compliance violations. These policies and procedures include measures intended to ensure that good faith reports will not subject the person making the report to retaliation by Adaptive or its personnel. The Company has established an online tool to report potential compliance violations (EthicsPoint), which can be found at https://adaptivebiotech.navexglobal.com. Information about EthicsPoint is given to all personnel as part of new hire orientation, continuing compliance training, and is made available on our intranet site. Please also see the Company’s Code of Conduct which contains information on the report of suspected violations.

  1. Auditing and Monitoring

The Company’s Compliance Program includes compliance-related monitoring and auditing functions to help evaluate on-going compliance with our compliance-related policies and procedures. Consistent with the OIG Guidance, we take a number of factors into consideration when determining the nature, extent, and frequency of our compliance monitoring and auditing activities. New legal requirements, developments in business practices, and similar considerations may result in new or revised compliance-related monitoring or auditing programs. We review our monitoring and auditing activities on a regular basis to help ensure that significant compliance-related risks are appropriately addressed.

  1. Responding to Potential Violations

Adaptive maintains policies and procedures for addressing potential compliance-related violations. These help ensure that relevant facts and circumstances are understood and considered in connection with all enforcement and disciplinary activities. These policies and procedures are intended to help ensure that appropriate and consistent action is employed to address inappropriate conduct and deter future violations.

  1. Corrective Action Procedures

Adaptive works on an on-going basis to help ensure compliance with state and federal health care laws, as well as with our internal compliance-related policies and procedures. We believe that our Compliance Program increases the likelihood of preventing or identifying unlawful and unethical behavior. We recognize, however, that even an effective compliance program will not prevent all violations. Our Compliance Program, therefore, requires the Company to respond promptly to potential violations of law or Company policy, take appropriate disciplinary action, assess whether the violation may be due to gaps in our policies, procedures, practices, or internal controls, and take appropriate corrective action to prevent or limit future violations.

Declaration

As part of Adaptive’s continuing commitment to corporate compliance, Adaptive declares that, to the best of its knowledge, and based on a good faith understanding of the statutory requirements of California Health and Safety Code sections 119400 and 119402, it has adopted a Comprehensive Compliance Program as mandated by this California law. As of the date of this declaration, Adaptive believes it is in compliance with its Compliance Program in all material respects.

Consistent with Adaptive’s understanding of the California statute, this declaration is limited to those activities undertaken by Adaptive that are directed to California. Adaptive makes this declaration, in good faith, in the absence of clarifying regulations or guidance from the State of California. This declaration reflects our consideration of the OIG Guidance, which gives broad discretion to manufacturers in the development, design, and definition of the scope of compliance programs.

Copies of this declaration and the Compliance Program may be obtained by calling corporate headquarters at (855) 466-8667.

Dated: April 5, 2019

 

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