INVENTING WITH PURPOSE CORPORATE RESPONSIBILITY REPORT (2018/2019) COMPLETE WEBSITE COPY AND DATA

NOVEMBER 2019 OUR PURPOSE | Overview

Our Purpose Overview

We have a legacy of saving and improving We live our core commitment to sustainable impact responsibility for using resources wisely and minimizing lives by creating sustainable impact. by managing our business responsibly, following our our environmental footprint. calling to find solutions for some of the world’s most Our approach to corporate responsibility is about the For more than a century, we have been inventing debilitating diseases, striving to reach those in need health, economic, social and environmental impact medicines and vaccines for many of the world’s most with our medicines and vaccines and helping to build we have on individuals and communities around the challenging diseases and we have built a company with robust, durable health systems worldwide through world. We hold ourselves accountable to our many the talent, tenacity and strength to take on some of the partnership, investment and innovation. stakeholders, including patients, employees, customers biggest threats to human and animal health. Operating responsibly as a business is and shareholders, whose perspectives help to define our Reflecting our commitment to managing environmental, corporate responsibility priorities. social and governance (ESG) issues, we continue to at the very heart of our ability to deliver focus our approach to corporate responsibility in four sustainable impact—driving long-term primary areas that are of greatest relevance to our value for our company and society. business and society. y Access to Health We cultivate innovation and excellence by building a diverse and inclusive global workforce, who are y Employees empowered to succeed, personally and professionally. y Environmental Sustainability We anchor ourselves and our partners to the y Ethics & Values highest ethical and business standards, and we take

Corporate Responsibility Report 2018/2019 2 OUR PURPOSE | Overview

Sustainable Development Goals Philanthropy (SDGs) Through our long history of philanthropy, we continue to demonstrate our commitment to sustainable impact. In addition to responding to the needs of stakeholders, Our philanthropic contributions, product donations and our corporate responsibility efforts also support the 17 employee volunteering efforts, help find solutions to key Sustainable Development Goals (“SDGs”) adopted by global health challenges and strengthen communities the United Nations in 2015 to help end poverty, protect where our employees live and work. the environment and ensure prosperity. Our program investments aim to support interventions We have joined global leaders to that have shown evidence of effectiveness in advancing address the goals on health and the quality of health services delivery, reducing health well-being, clean water, climate care disparities, fostering innovation in the delivery change, diversity and inclusion, of health care, and empowering patients as active responsible consumption and participants in managing their own health. Learn more production and others. about our approach to philanthropy. Our support of the SDGs is a testament to our company’s Total Philanthropy 125+ year legacy of inventing for life to create a healthier word for all. For more information, please visit our Sustainable Development Goals page. Sills-Based Volunteering $3.M

Product $2.8B Cash Grants Donations Contributions $.B $4M

Corporate Responsibility Report 2018/2019 3 OUR PURPOSE | Letter from Our CEO

Letter from Our CEO Environmental Sustainability and Ethics & Values. care systems. Working with more than 160 partners, It represents our commitment to widely recognized our programs have improved access to quality care and reporting frameworks that reflect key environmental, modern contraception for more than nine million women social and governance issues, and our support for in 48 countries. the 10 universally accepted principles of the UN I am proud that our investigational vaccine is being Global Compact. delivered and having an impact in areas of Central Our industry is facing some challenging headwinds, Africa affected by the Ebola virus. Some may say that but our commitment to corporate responsibility will investing to develop an Ebola vaccine doesn’t make good not waiver. The number of health care and drug pricing business sense, but I believe this is the kind of challenge reforms being considered is possibly at an all-time high. that MSD was designed to tackle. Health care costs, especially a patient’s out-of-pocket Corporate responsibility initiatives like MSD for costs, need to be addressed. We want to help find a Mothers and our investigative Ebola vaccine make us an sustainable solution, and we will continue to work with attractive employer for people who want to change the stakeholders and be transparent about our efforts. We world. And it adds to the sense of purpose that keeps have a history of responsible pricing and publicly disclose us going. information about our prices in the United States. This DISCLOSURES IN THIS SECTION includes our pledge not to increase our average net That purpose was captured by our modern-day founder, GRI 102-14 prices across our portfolio by more than the rate of George W. Merck, who said, “Medicine is for the people, inflation annually. not for the profits.” For me, only two metrics truly At MSD, we have been committed to our mission matter—how many people you help, and how much help Whatever may come, we remain steadfast in our focus of saving and improving lives for nearly 130 years. you give those people. on following the science to see where we can have the Over that time, we have been responsible for some greatest impact on patients’ lives. After all, R&D is Promoting enduring social good and securing business of the most significant scientific advancements and the main source of the biopharmaceutical industry’s success are inextricably linked. While there is always improvements in public health. value to society. As we look to the future, we’re more to do, I would like to thank all our employees, our Any one individual can make the scientific breakthrough making investments in our pipeline and manufacturing suppliers and our partners for the work they do every needed to discover a new medicine. I’m reminded of capability to help protect one billion more lives by 2030. day toward these goals. The activities highlighted in this our esteemed former colleague, Maurice Hilleman, report are a testament to the incredible impact they are the father of modern vaccines, whose centenary we Our industry is facing some challenging having all around the world. celebrate this year. However, it takes the infrastructure headwinds, but our commitment to Sincerely, of a company like MSD to translate invention into a corporate responsibility will not waiver. product that can help millions of people every day. Operating responsibly as a business is at the very heart We have a legacy of tackling urgent global health of our ability to do so. challenges. For example, MSD for Mothers, our global Kenneth C. Frazier Our 2018/2019 Corporate Responsibility Report initiative to reduce maternal mortality around the Chairman and Chief Executive Officer reviews our progress against our four key areas of world, empowers women to make informed choices; corporate responsibility: Access to Health, Employees, equips health care providers; and strengthens health

Corporate Responsibility Report 2018/2019 4 OUR PURPOSE | Our Business

Our Business

DISCLOSURES IN THIS SECTION Our businesses include pharmaceuticals, Products GRI 102-2 vaccines and animal health. We are a global health care company that delivers GRI 102-6 We continue to focus our research on conditions that innovative health solutions through our prescription represent some of today’s most significant health medicines, vaccines, biologic therapies and animal health We are inspired by a shared vision and products. View the list of products marketed in the mission to save and improve lives. challenges—like cancer, HIV, HPV, hepatitis C, cardio- metabolic disease, antibiotic-resistant infection and United States. RESOURCES Alzheimer’s disease, and we are on the front lines in the Prescription products fight against emerging global pandemics, such as Ebola. 10-K Product Pipeline Our core business is the discovery and development of We also devote extensive time and energy to increasing prescription medicines for diseases and conditions that access to medicines and vaccines through far-reaching impact millions of people. programs that donate and deliver our products to the Our Corporate Company Fact We invest billions of research dollars to find medicines people who need them. Website Sheet that can help improve lives. Today, our company has We’re applying our global more than 50 prescription products in key therapeutic With a steady focus on innovation and sound science, we reach, financial strength areas such as cardiovascular disease, respiratory work to deliver vaccines, medicines, and animal health and scientific excellence $42.3B disease, oncology, neuroscience, infectious disease, products that can help millions around the world. to doing more of what 2018 revenue immunology and women’s health. we’re passionate about: Our core product categories include diabetes, cancer, improving health and vaccines and hospital acute care. improving lives.

Corporate Responsibility Report 2018/2019 5 OUR PURPOSE | Our Business

We are a global health care company Senior leadership with a 125-year history of working to Our chairman and CEO, Ken Frazier, is accountable to make a difference. our company’s Board of Directors.

Vaccines Learn more about our Board members, including Vaccines are one of the greatest public health success committee charters and assignments. Our Executive stories in history, and our company has played its part in Committee manages the business. These top leaders, that story. representing diverse areas of the company, meet regularly to review progress against our company goals. We have been working to discover and develop vaccines View the list of Executive Committee members. for more than a century. Our unique vaccines have helped prevent a number of diseases, including some never thought to be preventable. Today, we remain Name dedicated to the complex business of researching and The company, Merck & Co., Inc., Kenilworth, N.J., producing vaccines. U.S.A., is known as MSD outside the United States and Canada and is listed on the New York Stock Exchange Animal Health under the symbol “MRK.” Our Animal Health business is a global leader in the research, development, manufacturing and sale of Visit our corporate website. veterinary medicines. Our Animal Health business offers a broad choice of vaccines, anti-infective and antiparasitic drugs, a complete range of fertility management products, pharmaceutical specialty products, innovative delivery solutions, performance technologies and value-added programs, such as pet recovery services and livestock data management tools.

Pipeline Our pipeline provides an overview of our late-stage clinical development programs and is updated quarterly. View the pipeline.

Corporate Responsibility Report 2018/2019 6 OUR PURPOSE | Economic Impact

Economic Impact through business solutions. At the most basic level of delivering integrated value, our principal economic contribution to society is made through the discovery, development, manufacturing and marketing of our products, which directly improve and maintain the health of individuals and communities around the world, helping them to lead more productive lives. For additional information about our business and economic performance, please see our Form 10-K for the year ended December 31, 2018.

DISCLOSURES IN THIS SECTION While it can be seen either as a way to improve corporate reputation or simply as a response to a GRI 102-7 GRI 201-1 moral imperative to do good, we believe that corporate responsibility is critical to our business success and can Long-term business success depends on provide us with new opportunities to create shared, or integrated, value—that is, addressing social issues making relevant, quality products through sustainable and ethical practices.

RESOURCES Performance

Investor Relations Financials FINANCIAL INFORMATION 2014 2015 2016 2017 2018

Sales (in millions) $42,237 $39,498 $39,807 $40,122 $42,294

Research and development expenses (in $7,290 $6,796 $10,261 $10,339 $9,752 Globalization and the expanding reach of firms during millions)1 the past decade have increased expectations that multinational enterprises will create more social value, Number of employees (approximate) 70,000 68,000 68,000 69,000 69,000 beyond just regulatory compliance and philanthropic Number of stockholders of record 142,000 135,500 129,500 121,700 115,800 contributions. Corporate responsibility has evolved to be an important element of the private sector’s response Annual cash dividend paid per share $1.77 $1.81 $1.85 $1.89 $1.99 to these expectations. Global tax expense as reported on income $5,349 $942 $718 $4,103 $2,508 statement (in millions)

1 Excludes restructuring and merger-related expenses. Corporate Responsibility Report 2018/2019 7 OUR PURPOSE | Corporate Governance

Corporate Governance While it is our company’s philosophy that the full Board should consider and act on matters of significance, these committees assist it in carrying out its responsibilities and provide greater focus in key areas:

1. The Audit Committee charter provides that its primary functions are to, among other things, oversee the company’s accounting and financial reporting processes, internal controls and audits, cybersecurity and to consult with management, the internal auditors and the independent registered public accounting firm (the independent auditors) on, among other items, matters related to the annual audit, the published financial statements and the accounting principles applied.

2. The Compensation and Benefits Committee charter provides that its primary functions are DISCLOSURES IN THIS SECTION The Board to, among other things, establish and maintain a GRI 102-18 GRI 102-22 GRI 102-26 The primary mission of our Board is to represent and competitive portfolio of executive compensation and GRI 102-21 GRI 102-23 protect the long-term interests of our company’s benefits programs designed to attract, motivate shareholders. The Board meets, at minimum, six times and retain executives on behalf of the company We believe good governance is integral to per year to provide strategic direction and to review our and to attract the talent necessary to execute the achieving long-term shareholder value. progress on a wide variety of measures. Company’s long-term strategic plan.

RESOURCES In overseeing the affairs of the company, including 3. The Governance Committee charter provides that our governance, the Board has established four its primary functions are to, among other things, Board Governance Governance Committee committees, each of which is composed solely of consider the size, composition and effectiveness Charter independent directors. The four committees are: of the Board and recommend individuals qualified Audit, Compensation and Benefits, Governance and to become directors. The Committee also reviews 2019 Proxy Research. All of our standing committees are governed social, political and economic trends that affect Statement by Board-approved charters, which are available on our our business, our Good Manufacturing Practice corporate website. compliance, including internal and external audits, We are committed to governance policies and practices our environmental, health and safety practices, that serve the interests of our company and its many our supply chain manufacturing strategy and stakeholders. In exercising our fiduciary duty to our governance, as well as our third-party sourcing shareholders, we take a long-term perspective on program, our business continuity plans and our shareholder value that takes into account our company’s privacy policies and practices. relationship with society as a whole and the interests of our many diverse stakeholders.

Corporate Responsibility Report 2018/2019 8 OUR PURPOSE | Corporate Governance

4. The Research Committee charter provides that its not discriminate against potential directors on the basis Board independence and primary functions are to, among other things, assist of gender, race, age, sexual orientation or ethnic and the Board in its oversight of matters pertaining national background and further provides that having a leadership to our strategies and operations for the research board composed of diverse individuals is an important Ken Frazier, our company’s chairman of the Board, and development of pharmaceutical products contributor to the Board’s overall effectiveness. president and chief executive officer, is the only and vaccines. From time to time and including in 2018, the Governance company executive serving on the Board. Leslie A. Additional information on our company’s standing Committee has retained independent search firms Brun serves as the Board’s independent lead director. committees can be found in our company’s 2019 Proxy to assist in identifying candidates that reflect its As lead director, Mr. Brun confers with management Statement (pages 20–22). director succession priorities, including these diversity on matters involving the Board and serves as a liaison objectives. At present, we have two members on our to shareholders on investor matters. Mr. Frazier is Our Board possesses broad expertise, skills, experience Board who represent members of underrepresented not a member of any of the Board’s committees; only and perspectives that facilitate the strong oversight ethnic groups. independent directors serve on those committees. and strategic direction required to govern the company’s business and strengthen and support senior The Governance Committee also considers The Board believes that the company and its management. recommendations for director candidates made by shareholders are well-served by the Board’s current shareholders and evaluates them using the same criteria leadership structure. The independent lead director In its regular discussions regarding Board composition— as for other candidates. The Board, along with the is appointed by the Board of Directors to a three-year and especially in conjunction with the annual Board and Governance Committee, takes into account, among term. Having an independent lead director vested with committee evaluations—the Governance Committee other things, the needs of the Board and the company key duties and responsibilities and four independent works with the Board to determine the appropriate in light of the overall composition of the Board, with a Board committees chaired by independent directors mix of professional experience, expertise, educational view toward achieving a balance of the skills, experience promotes strong independent oversight of the background and other qualifications that are particularly and attributes that are essential to the Board’s chairman and chief executive officer and the rest of our desirable for our directors to possess in light of our oversight role. management team. current and future business strategies. The Governance Committee uses this input in its planning and director For additional details on our Board’s leadership search process. structure, please see our company’s 2019 Proxy Statement (pages 15–16). The Governance Committee considers diversity as an important factor when identifying prospective nominees for our Board. In 2019, the Governance Committee recommended, and the full Board adopted, a formal diversity policy. The policy reflects the Board’s long-standing commitment to ensure that directors represent diverse perspectives and areas of expertise important to fostering the company’s business success. Our new diversity policy provides that the Board does

Corporate Responsibility Report 2018/2019 9 OUR PURPOSE | Corporate Governance

Corporate management Committee, oversee our company’s Ethics and Risk management Compliance Program. Our compliance program is Our company’s chairman and chief executive officer, designed to maintain a culture that promotes the The Board has two primary methods of overseeing Ken Frazier, is accountable to the Board. Our company’s prevention, detection and resolution of potential risk. The first method is through its Enterprise Risk Executive Committee, an internal management violations of law or company policies. The program is Management (ERM) process which allows for full committee of senior company executives chaired by Mr. dynamic, involving regular assessments to ensure that Board oversight of the most significant risks facing the Frazier, meets regularly to review our progress and to it is responsive to the company’s evolving business and company. The second is through the functioning of the attend to other matters affecting our company. associated compliance risks. Board committees. The Ethics and Compliance Office is led by the senior Management has established an ERM process to ensure Shareholder engagement vice president and chief ethics and compliance officer, a complete company-wide approach to evaluating risk over six distinct but overlapping core areas: We regularly communicate with our shareholders who reports directly to the chief executive officer to better understand their perspectives and have and provides regular quarterly updates to the Audit 1. Responsibility and Reputation: Risks that may established a shareholder engagement program that Committee of the Board of Directors on the state of impact the well-being of the company, its employees, is proactive and cross-functional. Throughout the ethics and compliance at our company. This reporting customers, patients, communities or reputation year, members of Investor Relations, the Office of the structure supports open communications with 2. Strategy: Macro risks that may impact our ability to Corporate Secretary, Human Resources, and the Office senior leadership and the Board regarding important achieve long-term business objectives of Corporate Responsibility, along with other subject- developments that relate to ethics and compliance. matter experts within the company, engage with 3. Operations: Risks in operations and cybersecurity that our shareholders to remain well-informed regarding Environment, health and may impact our ability to achieve business objectives their perspective on current issues and to address any 4. Compliance: Risks related to compliance with laws, questions or concerns. These teams serve as liaisons safety governance regulations and company values, ethics and policies between shareholders, members of senior management We are committed to full compliance with all and the Board. From time to time, our directors also environmental and employee health and safety laws 5. Reporting: Risks to maintaining accurate financial participate directly in these engagements. and regulations, to engaging with our stakeholders statements and timely, complete financial disclosures This open and constructive dialogue with our concerning these issues, and to actively identifying, 6. Safety: Risks to employee, patient or community shareholders has led us to make certain governance- understanding and addressing potential environmental, health and safety and compensation-related changes over the past few health and safety (EHS) risks. Our company’s Corporate Audit and Assurance Services years, including the adoption of proxy access, lowering Our Executive Committee has established the EHS group is accountable to the Audit Committee of the of the threshold required for shareholders to call Council to provide enterprise-wide leadership and Board of Directors for assessing the adequacy and special meetings and various changes in the design of governance of our EHS compliance and performance. effectiveness of the company’s control environment our long-term incentive plan. For additional details on In addition to a corporate EHS policy, we are continuing in relation to the aforementioned core areas. This shareholder engagement, please see our company’s to implement and sustain a robust compliance responsibility includes the appropriate management and 2019 Proxy Statement (page 24). management program that effectively oversees oversight of key company risks, in accordance with our and manages EHS issues affecting the company, in corporate policy on audit, control and risk management. Compliance order to meet our responsibilities and commitments and to improve our performance. Furthermore, the The goal of the ERM process is to provide an ongoing Our company’s Board of Directors and senior Governance Committee also has oversight over the review, implemented across the company and aligned management, including the company’s chief ethics company’s EHS practices as set forth in its charter. to company values and ethics, to identify and assess and compliance officer and the Corporate Compliance risk, and to monitor risk and agreed-upon mitigating action. Furthermore, if a risk transforms into an incident, the ERM process is utilized to provide an Corporate Responsibility Report 2018/2019 10 OUR PURPOSE | Corporate Governance

effective response and business continuity plans are In 2019, shareholders continued their strong support Safety monitoring in place. If the ERM process identifies a material risk, of our executive compensation programs, with 93 it will be elevated through our CEO and our company’s percent of the votes cast for approval of the “say on pay” Our Global Clinical and Pharmacovigilance organization Executive Committee to the full Board of Directors for proposal at the 2019 Annual Meeting of Shareholders. collects, medically reviews and evaluates and reports its consideration. The Board believes that the voting results demonstrate adverse experiences to global health authorities our shareholders’ support of the philosophy, strategy in compliance with global regulatory reporting The Audit Committee periodically reviews the ERM and objectives of our executive compensation requirements. The global product safety teams within process to ensure that it is robust and functioning programs. Furthermore, we continue to engage in direct our research laboratories are responsible for monitoring effectively. The Audit Committee oversees our constructive dialogue with our shareholders regarding the evolving safety profile of our medicines and vaccines. company’s risk management program relating to our executive compensation programs and policies to In parallel, at the country level, local Pharmacovigilance cybersecurity; however, the full Board participates ensure that investors understand how these programs teams at our subsidiaries worldwide are responsible in periodic reviews and discussion dedicated to our and policies support our long-term strategic objectives. for ensuring that adverse experience information is company’s cyber risks, threats and protections. collected and reported to our global product safety staff Additional information on our company’s executive For additional details on risk management, please see at headquarters and to local regulatory authorities. compensation programs, policies and practices can our company’s 2019 Proxy Statement (pages 19–20). be found in our company’s 2019 Proxy Statement (pages 42–56). Corporate responsibility Disclosure governance We are committed to a policy of full, accurate and timely Governance of our research agenda We are committed to governance policies and practices disclosure of all material information in order to keep The Research Leadership Team, headed by the president that serve the interests of the company and its shareholders and the investing public informed about of our company’s research laboratories, develops the shareholders. Our reporting and governance structure is the company’s business and operations. Accordingly, divisional strategy, allocates resources, and manages an integral part of this commitment. we have established a corporate disclosure policy that the research and development portfolio. The Research articulates the standards, processes and governance The Board Governance Committee has responsibility Leadership Team is made up of the heads of functional for the company’s disclosure practices. Pursuant for overseeing the company’s corporate responsibility areas within our research laboratories. Each area to the policy, our Disclosure Committee oversees and public policy issues. Additional information on the provides expert support of our medicine and vaccine the company’s disclosure practices and disclosure Governance Committee’s responsibilities can be found in candidates during the discovery and development obligations. our company’s 2019 Proxy Statement (page 22) or in its process. Furthermore, the Research Committee assists committee charter available on our corporate website. the Board in its oversight responsibilities to ensure Executive compensation compliance with the highest standards of scientific The Office of Corporate Responsibility integrity in the conduct of our company’s research and The Office of Corporate Responsibility is responsible Our company’s compensation programs are designed to development as set forth in its charter. for raising the visibility of corporate responsibility align the interests of our executives with the interests issues and activities across the company and fosters of our shareholders. Each year, the Board of Directors connections across business units and functional areas considers the outcome of shareholder advisory votes on to integrate our corporate responsibility principles into executive compensation when making decisions relating business policies, strategies and practices, including to the compensation of the company’s executive the ERM process, and brings the voice of external officers, including the chief executive officer, and to our stakeholders into decision-making processes. executive compensation program and policies. The Office of Corporate Responsibility also coordinates the development, implementation and communication of our global approach and, with strategic guidance from

Corporate Responsibility Report 2018/2019 11 OUR PURPOSE | Corporate Governance

the Public Policy and Responsibility Council (PPRC), Executive Committee and the Board Governance Performance Committee, is responsible for publishing the annual CORPORATE GOVERNANCE 2014 2015 2016 2017 2018 corporate responsibility report. If you have further questions, you may contact the Office of Corporate Independent directors on the Board 11 13 12 12 12 Responsibility. Percentage of Board members who are independent 92% 93% 92% 92% 92% The Public Policy and Responsibility Council (PPRC) Separate chairman of the Board and CEO1 No No No No No The PPRC is a high-level forum for strategic input and guidance on our social business investments, Lead independent director Yes Yes Yes Yes Yes corporate responsibility approach and public policy Independent audit committee Yes Yes Yes Yes Yes issues and positions. The diverse, cross-functional membership of the PPRC provides vision, leadership Independent compensation and benefits committee Yes Yes Yes Yes Yes and cross-divisional input and alignment on policy Independent governance committee Yes Yes Yes Yes Yes and responsibility strategy, issues and initiatives. 1 Specifically, the company’s PPRC enables policy and Number of Board meetings scheduled or held 8 8 8 8 6 corporate responsibility issue identification and debate; Shareholder support of the advisory vote on executive 96% 95% 94% 95% 95% makes decisions on policy and corporate responsibility compensation issues or makes recommendations to the Executive 1 Meetings held in person or via telephone. Committee, as necessary; informs policy and corporate responsibility strategy; and reviews performance and reporting against defined objectives. Overall, the PPRC promotes further integration of corporate responsibility and policy considerations into our business activities.

The Corporate Responsibility Report Working Group The members of the Corporate Responsibility Report Working Group, a diverse selection of employees from all divisions of the company, serve as subject matter experts in their respective areas and work closely with the Office of Corporate Responsibility to help set goals and develop metrics that support and measure our overall corporate responsibility strategy and objectives. Individual members have been chosen to be active advocates for corporate responsibility within their respective areas.

Corporate Responsibility Report 2018/2019 12 OUR PURPOSE | Public Policy

Public Policy Government proposals to regulate the health care system may directly affect our business and our incentives for pharmaceutical innovation. Important policy initiatives can also increase patient access to medicines and vaccines and to health care insurance coverage—particularly for patients in disadvantaged communities and regions. Consequently, the company has chosen to help inform the debate on these issues in the U.S. and other countries. Our participation in the political process is guided by the following principles: y Improve patient access to health care, including medicines and vaccines y Encourage innovation by protecting intellectual property rights, advocating for government support DISCLOSURES IN THIS SECTION to medicines, vaccines and health care. We believe of basic research, and supporting efficient and this engagement is fundamental to our understanding effective regulatory systems, among other issues GRI 102-13 of—and response to—society’s expectations of our GRI 415-1 Our company’s Executive Committee has overall company. Our engagement with stakeholders guides governing responsibility for our public policy strategy, our business strategy and decisions, and strengthens We are committed to participating as guided by the Governance Committee of the Board stakeholders’ understanding of—and trust in— of Directors. Our Global Public Policy Leadership Team constructively and responsibly in the our business. political process, and to providing leads the development and communication of policy The company’s advocacy priorities are presented positions on major issues. Statements summarizing our clarifying analysis and information regularly to the members of our Executive Committee position on key public policy issues are posted on our regarding the issues that affect our and the Governance Committee of the Board of corporate headquarters’ website. Directors, with periodic updates throughout the year. business and patient care. We engage in public policy debates primarily by RESOURCES We recognize that our outreach can help highlight and communicating information to government officials address important issues, leveraging the expertise and policy makers in both Washington, D.C. and state Public Policy Statements of our stakeholders to develop sustainable solutions capitals across the U.S. and in the capitals of foreign to such challenges as disease, lack of education, governments where we operate. environmental challenges and corruption. We continue Our U.S. Federal Policy and Global Government to pioneer far-reaching programs and partnerships, the A major element of our corporate responsibility Relations office in Washington, D.C., is responsible for results of which demonstrate that more can be achieved approach is our public policy advocacy work and our advocacy activities with the U.S. Congress and other by working together than by individual stakeholders outreach to stakeholders at the federal, state and bodies of the federal government and with foreign working alone—and that we can make a sustainable global levels. We advocate for public policies that foster embassies. Advocacy at the state level is managed by difference. research into innovative medicines and improve access our State Government Affairs & Policy organization.

Corporate Responsibility Report 2018/2019 13 OUR PURPOSE | Public Policy

Additionally, outside of the U.S., advocacy activities are In the U.S., in compliance with the Lobbying Disclosure y Standards for health technology assessment and managed at the country level or local level, with support Act we file quarterly reports with the U.S. Congress health literacy from regional and Global Policy staff. disclosing the issues we are lobbying about and the y Science-based policies for biological medicines amount of money spent each quarter. These reports To assist in our advocacy and policy analysis work, our incorporate the expenses associated with lobbying the company and our affiliates contract with a range of federal government, including those incurred by our Political contributions private firms specializing in U.S. and global government U.S. Federal Policy and Government Relations office, affairs advocacy. These firms employ government Where permitted by law in the U.S., Canada, Japan and the portion of our trade association dues associated affairs consultants with expertise on issues of and Australia, our company makes corporate political with federal lobbying. importance to our company. Our U.S. Action Network contributions. also informs our U.S.-based employees and retirees Our U.S. employees can participate in the political about important legislative issues and serves as a Our top lobbying issues process by joining a nonpartisan political action conduit through which they can communicate with their In the U.S. in 2018, the top issues at the federal level for committee through which they can pool their financial representatives in Congress. which our company lobbied were: resources to support federal and state candidates. All of our employees must abide by our global corporate Except for administrative expenses, our Political y Defense of Medicare Part B Code of Conduct, “Our Values and Standards,” which Action Committee (PAC) is funded completely by applies to our interactions with government officials y Defense of Medicare Part D voluntary contributions from eligible employees. The and to advocacy activities on public policy issues. This y The 340B drug pricing program PAC supports legislators from both major parties who code is intended to ensure that all information provided understand and appreciate our work to discover and In the U.S. in 2018, our company lobbied at the state to government entities is complete and accurate to develop medicines and to make them available to the level for these key issues: the best of an employee’s knowledge and belief. In the patients who need them. U.S., we also comply with important federal and state y Drug price transparency and price controls In addition to our corporate policy governing corporate lobbying-registration and disclosure laws. y Market-based solutions for access to innovative and PAC contributions, we have developed Principles Our corporate policy on ethical business practices pharmaceutical, vaccine and biologic products Governing Corporate and Political Action Committee includes guidelines conforming to the U.S. anti-kickback y Support for a strong immunization infrastructure Spending. These principles are modeled on provisions in the Model Code for Spending, established by the Center laws and Foreign Corrupt Practices Act, making clear y Removal of legislative and regulatory restrictions for for Corporate Political Accountability, and are intended that no illegal payments of any kind (monetary or animal health products otherwise) are to be offered or made to individuals or to promote corporate accountability. y Maintaining a strong business environment for U.S. entities—including local, state or federal government operations in the states Our Contributions Committee approves the budgets or political party officials or candidates in the U.S.; for PAC and corporate political contributions and y Product stewardship/take-back of unused medicines government or political party officials or candidates provides oversight over such spending. The Committee of any other nation; or officials of public international In Europe in 2018, our advocacy focused on: is chaired by our Senior Vice President and Corporate organizations—at any time or under any circumstances. Secretary and includes senior managers representing y Fostering a framework for a sound pricing and different divisions and corporate functions. The Senior To improve access to information about our advocacy procurement regime in and across diverse EU member Vice President and Corporate Secretary reviews and activities, we disclose costs associated with lobbying in state economies the EU and the U.S. For more information, please see approves all political contributions. y Support for government vaccination, hepatitis and our 2018 reporting to the EU Transparency Register. diabetes programs To ensure compliance with our company policy and Costs reflect the pro rata salary costs of MSD staff federal and state law, outside legal counsel provides y Launch dialogue for sustainable models to fund future and the proportion of employee time and outsourcing ongoing guidance to our company on its political cancer care spent on initiatives involving interest representation to activities and required disclosure. We also perform European institutions. periodic audits to assess and enforce compliance Corporate Responsibility Report 2018/2019 14 OUR PURPOSE | Public Policy

with our policy governing our corporate and PAC y Corporate and PAC contributions made within the important, are not directly material to our mission. contributions, and we require those individuals who U.S. during 2018. With representatives on the boards and committees recommend corporate political contributions in the of industry groups and trade associations, we can voice Outside legal counsel conducted a thorough review of U.S. to certify their knowledge of and adherence to our questions or concerns we may have about policy or all proposed contributions to ensure that they were corporate Policy and Principles Governing Corporate related activities. We may even recuse ourselves from permitted under state law. Final approval was provided Political and Political Action Committee Contributions. related trade association or industry group activities by the Corporate Secretary. when appropriate. As required by our company policy and procedures, our We also provide grants to organizations whose role is Senior Vice President and Corporate Secretary sends a The Corporate Secretary sends an annual report to our to represent elected officials in support of public policy report twice a year on the company’s corporate political company’s Board of Directors on trade association dues advocacy. State Government Affairs & Policy reviews contributions to the Board of Directors. The report greater than $25,000 that were spent in the previous its grants and corporate memberships on an annual discloses every contribution, including the name of each year on lobbying and political activity in the U.S. The basis to decide which of them may be considered for the candidate, committee or event contributed to and the Governance Committee of the Board of Directors has upcoming calendar year, considering budget constraints amount disbursed. It also includes all trade association ongoing oversight of the company’s membership in and policy priorities. We disclose all public policy grants dues spent on lobbying and political activity in the U.S. trade associations and grassroots lobbying activities. as part of our general grants disclosure. that are greater than $25,000. Our contributions, For a list of industry and trade groups of which we are a policies and practices are reviewed and overseen by the The only other countries in which we provide corporate member, and our trade association dues (those greater Governance Committee of the Board of Directors. contributions to candidates or political parties are than $25,000) that are used for political purposes. Canada and Australia. These contributions are subject We are also highly transparent with the public. We post to the same policies and governance procedures Through our top three trade associations (listed below), our corporate political and PAC contributions in the discussed above. we engaged on the following policy issues in 2018: U.S. categorized by state, candidate and amount to this website semiannually. y Contributions made in Australia during 2018 y Pharmaceutical Research and Manufacturers of y Archived corporate political contribution reports America (PhRMA): Defend the Medicare Part D program, Defend the Medicare Part B program, the Our corporate political 340 Drug Discount Program, Defend Intellectual contributions Industry associations Property Rights and government pricing reforms in Japan and Canada In 2018, we contributed a total of $901,300 to support Our company is a member of numerous industry and the campaigns of 521 candidates for state-level offices trade groups. We work with these groups because they y U.S. Chamber of Commerce: Defend Intellectual in 23 states plus the District of Columbia. We also represent the pharmaceutical industry and business Property Rights supported state legislative leadership committees of community in debates led by governments and other y Biotechnology Industry Organization (BIO): Defend both parties, industry-affiliated PACs, and national stakeholders, and because they help the industry reach the Medicare Part D program, Defend the Medicare organizations representing elected state officials consensus on policy issues. Part B program, the 340 Drug Discount Program and that meet periodically to discuss policy issues. Our When our trade associations actively lobby on our core Defend Intellectual Property Rights representatives involved in state-government-affairs business issues, we seek to align their positions with our activities made the recommendations for specific own. There are times, however, when we may not share contributions based on the budget and priorities the views of our peers or associations—both on issues approved by the Contributions Committee. that are central to our business and on those that, while

Corporate Responsibility Report 2018/2019 15 ACCESS TO HEALTH | Overview

Access to Health Overview

Millions of people are living longer, more vaccines and quality health care, thereby reaching more to information and political uncertainty. We recognize productive lives than ever before thanks, patients in need and reducing the burden of disease that we have a role to play—in partnership with other around the world. In response, we refer to our company- key stakeholders—in helping to ensure our products are in part, to better health care and access wide Access to Health Guiding Principles to inform our accessible and affordable to those in need. Additionally, to innovative medicines and vaccines. approach across markets and therapeutic areas. We are our industry is being called on to provide greater However, more progress is needed to committed to reviewing these principles to ensure we transparency on the impact of access strategies and ensure greater access to health around continue to adequately fulfill our commitment to access initiatives. by focusing on the most critical issues. the world. Therefore, we developed a Statement of Principles to Recognizing the significant access barriers that exist guide our worldwide approach to access to health and RESOURCES within sub-Saharan African countries, we additionally to transparently report on the impact of our strategy Key Initiatives Universal are committed to a specific set of principles to guide our against these principles. The principles were most Health Coverage strategy in the region. Our access strategy is responsive recently updated in 2014. Measuring how we’re doing Declaration to internationally recognized standards and priorities. is a challenging but important component of our access strategy, as it enables us to demonstrate and report on As a global biopharmaceutical company, our role, first our progress in implementing our Access Principles and and foremost, is to discover, develop and provide Access to Health Guiding to measure the effectiveness of our efforts. innovative products and services that save and Principles Recognizing the need to continuously update our improve lives. Barriers to access and quality of care exist in many parts strategy and associated principles, we will be conducting In addition to this core mission, we have the ability of the world, including weak health infrastructure, a a strategic reevaluation of these principles and and the responsibility to improve access to medicines, lack of trained health care professionals, limited access corresponding key performance indicators (KPIs) in

Corporate Responsibility Report 2018/2019 16 ACCESS TO HEALTH | Overview

late 2019/early 2020. Our objective is to ensure that we to launch and scale up their National Immunization significant population health improvements. We work are continuing to fulfill our commitment to access as Programs in 2018 with a follow-up investment in across different business units to develop sustainable a core company value by focusing on the most critical advocacy, mobilization and training health care models of population health management and high- issues, and that we are measuring and reporting on our workers. In 2019 we plan to assist the launch and scaling impact initiatives to improve population outcomes at progress and performance in a meaningful way. up of national programs in Malawi, Zambia, Kenya scale, with a focus on reducing disparities, building and Cameroon. capacity and skills and measuring impact. Institutional Business Africa (IBA) Principles Integrating social and business Aligning with global goals and Recognizing the significant health needs and barriers value standards to access in Africa, we have a group dedicated to To further embed access strategies in our business, in Over the last several decades, the development of new ensuring access to medicines in the region, called the 2017 we launched the Shared Value Toolkit, an internal medical innovations coupled with greater access to Institutional Business Africa (IBA) unit. IBA consists of a resource to enhance our focus on using business medicines and vaccines has contributed significantly dedicated team of public health and medical specialists solutions to address social issues of importance to to reductions in death and disability from preventable based across sub-Saharan Africa that fosters strategic customers and stakeholders. diseases and to increased life expectancy around collaborations and provides policy and technical the world. However, much more progress is needed Using lenses such as our CR materiality matrix and guidance to countries focused on the areas of family to fully address the global burden of disease and to the UN Sustainable Development Goals, the Shared planning and vaccines to achieve sustainable benefits for promote equitable access to life-saving health services Value Toolkit complements existing planning and people and communities in Africa. and products. strategy tools as a way to encourage the exploration IBA is guided by four important principles, represented and deployment of business solutions that can address Our commitments and efforts that contribute to our by the abbreviation PASS: health-related social concerns and other development access strategy align with international goals and challenges. In 2018, we continued to deploy the Toolkit standards, including the UN Sustainable Development P: Public health outcomes, guided by leading global throughout the company to enable the creation of Goals (SDGs) and the UN Universal Declaration of alliances focused on reproductive health (RHSC, integrated business and social impact. Human Rights. FP2020) and immunizations (GAVI), aligned with country public health goals Promoting global public health SDG 3—Ensure healthy lives and promote A: Affordability, focusing on economic levels and well-being for all at all ages—most closely optimization of available funding Beyond addressing access to health care and products, aligns with our core business and our we recognize that improving population health is an S: Sustainability for countries, ensuring that a long- overarching goal for many health care stakeholders: commitment to access to health. term perspective is in place for country programs using countries, payers and providers who are seeking our products In addition to our efforts to advance targets under SDG better prevention, population health management 3, our commitment to access includes respecting and S: Sustainability for our business, ensuring that we can and community interventions to protect and promoting health as a universal human right, as defined maintain our commitment to long-term partnerships promote health. by the United Nations Universal Declaration of Human that leverage our innovative products and services Because of our unique and differentiated reach, and Rights and the International Covenant on Economic, Our IBA approach continues to help expand patient our science and capabilities that can be leveraged in Social and Cultural Rights. access. For example, we supported Ethiopia and Senegal collaboration with partners, we are able to contribute to

Corporate Responsibility Report 2018/2019 17 ACCESS TO HEALTH | Overview

While the primary responsibility for managing a health In addition, we are helping to improve access to system that ensures the health of its citizens resides new medicines and vaccines, address deep-rooted with government, pharmaceutical companies have a and multifaceted barriers to access, and, through substantial role to play in working with governments partnerships and public policy, advocate for health care to ensure the health of their citizens. As we pursue our capacity strengthening in ways that are aligned with our core mission of inventing, developing and delivering business mission and core capabilities. medicines and vaccines, we have an ethical duty to support governments in their efforts to protect the right to health by “doing no harm.” We do this in a number of ways, including: y Monitoring and reporting on the safety of our products y Providing health care workers and consumers with important information on the benefits and side effects of our products y Safeguarding the health, safety and privacy of patients involved in our clinical trials

Corporate Responsibility Report 2018/2019 18 ACCESS TO HEALTH | Research & Development

Research & Development

DISCLOSURES IN THIS SECTION in 2017, $10.3 billion in 2016, and $6.8 billion in 2015 We are committed to advancing the most promising (which included restructuring costs and acquisition- and research and clinical development strategies to bring SDG 3 divestiture-related costs in all years). forward new medicines and vaccines that will make a SDG 9 meaningful difference in patients’ lives. The talent of our scientists, combined with scientific For more than a century, our company has and technological advances that enable the rapid been inventing medicines and vaccines invention of expanding classes of therapeutics and Pediatric R&D higher resolution translational medicine studies, are for many of the world’s most challenging To address unmet medical needs in children, we include transforming the way we conduct research. diseases. We embrace our responsibility pediatric development programs in the company’s to address the health needs of patients We have strategically located discovery centers in new drug and vaccine development strategies as regions with active biomedical research communities appropriate. and society by inventing for life through including South San Francisco, California, Boston and We rely on an internal Pediatric Development world-class science. Cambridge, Massachusetts and London, UK. These Committee that pools pediatric expertise across centers allow us to recruit talented local scientists and disciplines and therapeutic areas to review and RESOURCES facilitate collaboration with local academic institutions provide input into pediatric development of our drugs Explore Our Pipeline and companies. These discovery sites complement and and vaccines. The Committee serves as a Center of connect with our strong research and development Excellence within our company to consult on pediatric capabilities and expertise based at our New Jersey and development issues and pediatric policy questions. Pennsylvania sites. We are committed to addressing unmet medical needs through innovative research and development (R&D). Our pipeline programs are prioritized based on medical R&D expenses were $9.8 billion in 2018, $10.3 billion need, scientific opportunity and commercial potential.

Corporate Responsibility Report 2018/2019 19 ACCESS TO HEALTH | Research & Development

Our pipeline Compliance research conferences—such as selected Gordon Research Conferences, an international forum in which We prioritize our R&D efforts on advancing The stated objective of the Compliance Committee researchers discuss advances in biologic, chemical and candidates that we believe represent the next areas of Charter within our research laboratories is to physical science. breakthrough science that will make a difference and ensure ongoing compliance with applicable laws and deliver value for patients, physicians and payers. requirements in all business areas through appropriate management structure, processes and training. Public-private research partnerships Our products and research priorities are aligned with the current and projected global burden of disease In order to manage compliance, the Compliance We recognize that individuals or companies cannot (GBD) as defined by the World Health Organization Committee is composed of members of the Research successfully develop drugs single-handedly. Most (WHO), as well as with the increasing need for new Leadership Team. As a result, compliance efforts cases of true innovation come from robust and honest therapies targeted at diseases such as cancer, HIV/AIDS, encompass the entire division and go beyond simply collaboration among individuals and organizations with Alzheimer’s disease and antibiotic-resistant infections, addressing the conduct of clinical trials. diverse backgrounds and capabilities, brought together as well as in disease prevention through vaccine by the idea of changing the course of human health. The Compliance Committee also promotes ethical development. science and provides guidance to our employees within As part of our R&D strategy, we pursue opportunities Our research pipeline illustrates the progress of our the research organization on our company’s standards to establish external alliances that complement our R&D efforts. An update on our R&D activities can be and corporate policies, as well as necessary education internal research capabilities, including research found in our Form 10-K or on our corporate website. related to specific requirements applicable to the collaborations and licensing agreements for preclinical research community. and clinical therapeutic candidates that have the potential to drive both near- and long-term growth. Global Burden of Disease External collaboration As defined by the GBD 2010 Visualization tools Drug discovery collaborations developed by the Institute for Health Metrics and We support academic and community-based physicians Evaluation (IHME), the diseases that we address rank and researchers in expanding clinical and scientific One recently completed project, DRIVE-AB (Driving high on the list of worldwide causes of death. Our knowledge, and in improving understanding of the reinvestment in research and development for antibiotics research into vaccines and infectious diseases addresses appropriate use of our products. and advocating their responsible use) brought together major burdens of disease that are prevalent in all a consortium of 23 partners including pharmaceutical Our Investigator Studies Program exemplifies our countries, and our preventive treatments could have the companies, academic institutions and public health efforts to advance science and improve patient care. greatest impact in the developing world, where health organizations, to develop new economic models and Through this program, we provide medicines, vaccines care infrastructure is weak or nonexistent. recommendations to promote antibiotic innovation and and/or funding for peer-reviewed research that is the sustainable use of the resulting, novel antibiotics. Considering our pipeline and the list of products we initiated, designed, implemented and sponsored currently market, we estimate that our company is by external investigators. This program fosters seeking to address 88 percent of the top 20 global collaboration with researchers throughout the world Industry consortia burdens of disease as defined by the IHME, excluding who are active in emerging research areas of interest We also collaborate with external researchers and other road injury, self-harm and preterm birth complications. and has established a track record for scientific members of the biopharmaceutical industry through exchange through presentations and the publication of participation in selected scientific consortia. Consortia Our current pipeline and findings in peer-reviewed journals. are an important mechanism by which researchers can list of marketed products are We are active participants within the scientific work together in a precompetitive manner to address aligned with major global community providing support to many professional complex scientific challenges common to all parties. burdens of disease. associations. In addition to promoting dialogue Please visit our Business Development & Licensing site and the exchange of ideas in research, we sponsor to learn more.

Corporate Responsibility Report 2018/2019 20 ACCESS TO HEALTH | Research & Development

Performance

RESEARCH & DEVELOPMENT 2014 2015 2016 2017 2018

Research and development expenses (in billions) $7.3 $6.8 $10.3 $10.3 $9.8

Employees involved in research activities 11,400 11,900 12,300 12,700 14,500

New products approved1 7 2 3 4 2

Products in the pipeline and under regulatory review 33 31 39 26 24

Top 20 global burdens of illness addressed by our products 88% 88% 88% 88% 88% and pipeline2

Established significant external licenses and collaborations 35 64 57 55 64

Filed U.S. patent applications 125 185 195 190 127

1 Candidates in our company’s research pipeline or under regulatory review as reported in the United States Securities and Exchange Commission Form 10-K, filed on February 27, 2019. Approval of new products only. This does not include approvals for supplemental indications. When candidates attain regulatory approval, they are removed from this pipeline view. 2 As defined by the Institute for Health Metrics and Evaluation (IHME) using GBD 2015 data.

Corporate Responsibility Report 2018/2019 21 ACCESS TO HEALTH | Product & Patient Safety

Product & Patient Safety

DISCLOSURES IN THIS SECTION implementation of medical policies (including those Practices (GLP), Good Clinical Practices (GCP), Good related to data transparency and the sharing of clinical Pharmacovigilance Practice (GVP), Technology Vendor GRI 416-1 SDG 17 GRI 417-1 data), and has responsibility for the design, execution and Processes (TVP) and Global Medical Affairs (GMA). and implementation of pre-registration expanded We recognize that when people take our access (“compassionate use”) programs. Clinical safety and risk medicines and vaccines they must have Our company’s Global Clinical Safety and management confidence in their efficacy and safety. Pharmacovigilance (GCSP) function manages a global system for the collection, review and reporting of Clinical Safety and Risk Management (CSRM) leads Our company’s medicines and vaccines are widely tested adverse experience (AE) reports received by our the Risk Management & Safety (RMS) teams for all before they are approved for marketing. This testing is company worldwide, and for the continuous assessment products, from the beginning of Phase 2b through governed by a comprehensive regulatory scheme and of product safety. Our company’s chief safety the end of the product life cycle. CSRM is responsible by our research policies. We assess the safety of our officer holds overall responsibility for the safety of for the development of a proactive clinical safety risk- products in rigorous nonclinical and clinical trials prior our products. management strategy, including the Risk Management to seeking regulatory approval. Following approval of Plan, which is a regulatory requirement in many our drugs, vaccines or devices, the company continues countries for marketed drugs and vaccines. to monitor their safety profiles. Learn more about our Safety and quality assurance clinical trials. MRL Quality Assurance (QA) provides independent Product safety Our company’s chief medical officer holds overall oversight to assure subject safety and research responsibility for the benefit/risk of our pipeline and integrity throughout the drug development life cycle. We rigorously study our products, and work with marketed products, provides medical oversight for The scope of the MRL QA oversight function includes regulators and health care professionals over many all clinical programs, supervises the development and Animal Welfare, Clinical Supply, Good Laboratory years to characterize their safety profiles. Initially,

Corporate Responsibility Report 2018/2019 22 ACCESS TO HEALTH | Product & Patient Safety

test candidates are evaluated in the laboratory. If Adverse experience reporting global regulations or local regulatory authorities, for as they pass stringent laboratory tests, the candidates long as we develop and market a product, for submission move into next-stage testing in animals. Only a few Global Pharmacovigilance manages a global system to regulatory authorities. candidates ever make it that far. If the candidate makes for the collection, evaluation and reporting of Employees responsible for reporting and monitoring it through the animal-testing stage, we then begin adverse experience (AE) reports received by our adverse experiences undergo rigorous training. New clinical development, during which multiple studies are company worldwide. employees within our research laboratories and Human conducted over several years. Although regulations vary by country, most countries Health division, including all contract personnel, Clinical testing initially involves the detailed analysis of require drug manufacturers to promptly review AE undergo training on our AE policies when they join the effects of a test agent in small numbers of people information they receive from any source, domestic the company and annually thereafter. Individuals including evaluation of dose levels. In subsequent trials, or foreign, relating to the use of their products. dealing with clinical research and safety analysis and the safety and efficacy of a therapeutic candidate are Manufacturers are also required to have written communication undergo further specialized training. All rigorously evaluated in increasingly large clinical studies. procedures in place for evaluating and reporting adverse other employees are trained in AE reporting procedures If the clinical studies provide evidence of benefit which experiences. as part of our Code of Conduct training. outweigh the risks, we submit extensive documentation Reporting an “adverse experience” in the U.S. and data to regulators in a product-licensing application. To speak with one of our health care Active safety monitoring of our products continues after professionals about our company’s To speak with one of our health care professionals about our company’s products, or to report an adverse approval, including, in certain instances, through post- products, or to report an adverse marketing studies. If we identify safety issues following experience with a specific product, please call our a product’s approval, we work closely with regulatory experience with a specific product, please company’s National Service Center at 800-444-2080 authorities to promptly and appropriately communicate call our company’s National Service in the U.S. The Center can assist you Monday through with health care professionals and patients. Center at 800-444-2080 in the U.S., Friday from 8 a.m. to 7 p.m., Eastern Time. Mon–Fri, 8am–7pm ET. Communicating about product risks In accordance with global regulatory reporting The label in our product packaging contains information requirements, we have a written procedure and Initiatives on possible side effects and, if appropriate, how to avoid associated training to provide personnel worldwide SafetyMatters Initiative some potential health problems. We include contact (including all contractors) with a consistent and The goal of our company’s SafetyMatters Initiative is to details on our corporate website for patients, caregivers thorough process for identifying and reporting AEs explore and implement the appropriate use of emerging and health professionals to report adverse experiences occurring in association with the use of our products. technologies and methods for the identification and in the United States. Outside the United States, adverse Additional detail is provided in procedures covering the evaluation of health outcomes of interest, and to further events are reported in accordance with any additional reporting of AEs originating in clinical studies and those improve post-licensure monitoring and evaluation of our local country laws and practices. associated with the use of marketed products, and the marketed products. A cornerstone of SafetyMatters is analysis of these events for safety issues. Adherence Depending on label changes and their context, we may the proactive development and utilization, as needed, to these procedures ensures timely and accurate determine, in consultation with regulatory authorities, of disease cohorts (i.e., groups of patients identified monitoring of the safety profile of our investigational that more extensive communications are appropriate. as having specific conditions of interest) based on data and marketed products globally. In such cases, we work with regulatory authorities to contained in large medical claims and electronic health- record databases licensed by our company. contact health care professionals in a timely manner, so In addition to the submission of individual AE reports that they can communicate these findings to patients to regulatory authorities in accordance with global and As of April 1, 2019, our company’s Pharmacoepidemiology through appropriate mechanisms. Contacting health local timelines, we also produce both development and and Database Research Unit had successfully created care professionals might include “Dear Health Care post-marketing aggregate safety reports as required by and utilized 30 SafetyMatters disease cohorts in Provider” letters and media statements.

Corporate Responsibility Report 2018/2019 23 ACCESS TO HEALTH | Product & Patient Safety

18 product-specific areas. The proactive development of Innovation in Medical Evidence Development and Our company supports IMEDS by providing an annual these cohorts greatly facilitates our ability to effectively Surveillance (IMEDS) grant as a founding member to support its mission as and promptly respond to many internal or external The IMEDS program is a public-private partnership well as through representation on the IMEDS Steering inquiries about the epidemiology of these diseases and within the Reagan-Udall Foundation for the Food and Committee. In 2018, we signed a Confidentiality their treatment. Drug Administration (FDA). The aims of IMEDS are to Disclosure Agreement (CDA) with IMEDS to explore the use of the FDA Sentinel Data System for a safety study, Product Label Reviews advance the science and tools necessary to support post-marketing evidence generation on regulated and we are now conducting a feasibility assessment. We The ongoing oversight and monitoring of our product products, including safety surveillance and evaluations, will continue to explore synergies and linkages between labels are a major focus of our safety efforts. Our label and to facilitate the utilization of a robust secondary IMEDS and our own SafetyMatters Initiative to establish review teams monitor information on our products and electronic health care data platform for generating standards for the use of modern epidemiology data work with our product RMS teams to develop or update better evidence on the safety and effectiveness of sources and analytic techniques for evaluating product product labeling. We regularly communicate relevant regulated products in post-market settings. Partners safety in observational claims and electronic health- information to regulatory authorities worldwide. in IMEDS include the FDA, pharmaceutical companies, record databases. academia and patient organizations.

Corporate Responsibility Report 2018/2019 24 ACCESS TO HEALTH | Clinical Research

Clinical Research

We conduct clinical trials worldwide submit regulatory filings for marketing approval with minorities, women and children, in our clinical trials in to evaluate the safety and efficacy of the appropriate regulatory agencies around the world to all regions of the world. As a result, we strive to obtain have the product candidate approved for marketing. information among diverse populations, ensuring a our products. thorough evaluation of the safety and efficacy of our In accordance with our public policy position statement, medicines and vaccines. These efforts allow us to seek RESOURCES all investigational studies in human subjects are regulatory approvals throughout the world and thereby conducted in a manner consistent with laws, regulations Public Policy Clinical Trials offer our medicines globally to patients who need them. Position Statement: Website and guidelines for the protection of human subjects, Clinical Trial Ethics including those issued by the International Council for Harmonisation Good Clinical Practice (ICH GCP). Clinical trials However, individual country regulations and guidelines Pharmacokinetics refers to what the body does to the Our company is committed to the timely registration should remain the primary determinant of specific drug, while pharmacodynamics refers to what the drug of clinical trial information and the disclosure of trial requirements for the conduct of medical research. does to the body. If initial testing of these is favorable, results—regardless of their outcome. additional, larger studies are initiated to determine the effectiveness of an investigational compound in the In keeping with the trend in the We comply with all applicable laws and regulations affected population, to define appropriate dosing for the pharmaceutical industry, more than half associated with the registration of clinical trials in compound and to identify any adverse effects that could of the patients participating in our clinical publicly accessible registries and subsequent posting limit the compound’s usefulness. of the results from these trials. We have put into place trials are enrolled outside the U.S., in the processes necessary for compliance with the Food If data from the Phase 2 trials are satisfactory, more than 50 countries. and Drug Administration Amendments Act of 2007 companies will invest in large-scale Phase 3 trials to and the European Clinical Trial Directive 2001/20/EC, rigorously evaluate the compound’s safety and efficacy. We have a commitment, where appropriate, to including those related to clinical trial registration and Upon satisfactory completion of those trials, companies the study of diverse patient populations, including posting results.

Corporate Responsibility Report 2018/2019 25 ACCESS TO HEALTH | Clinical Research

Registration provides patients and physicians with For many years, our company has been committed to author team. Our Protocol Transparency Initiative, a information about clinical trials that are open and are publishing the results of hypothesis-testing trials in voluntary practice of providing the clinical study protocol recruiting patients. The registration of trials and posting the peer-reviewed medical literature. Our Publication to biomedical journals upon submission of a manuscript of results after trials are completed enable medical Guidelines have been in place since 2003 and are posted reporting clinical trial results, allows journal editors and researchers to have timely information about our online, with periodic updates to incorporate any changes peer reviewers to use this protocol in their evaluation medicines and vaccines. in good publication practices for industry-sponsored of the manuscript for publication. If the journal accepts clinical trials. These guidelines describe our commitment the manuscript, we then allow the journal—at its sole Clinical Trial Registration to publishing complete, balanced and accurate discretion—to post key sections of the protocol on its We believe that clinical trial registries serve an important information about the results of our registered clinical website when the manuscript is published. function for patients and their health care providers trials, regardless of their outcome. by enabling them to learn about and gain access to Access to Our Clinical Trial Data relevant clinical trials of experimental treatments or How we work with external investigators for our clinical In addition to disclosing the results of clinical trials, preventive agents. We continually assess changing trials to produce high-quality manuscripts is also we respond to requests from external researchers to global requirements for clinical trial registration and outlined in our Publication Guidelines. We adhere to share our clinical trial data. We have multiple clinical trial update our clinical processes and practices to make sure the International Committee of Medical Journal Editors databases that are of high value to the external clinical the company is compliant with them. (ICMJE) recommendations for authorship, requiring research community. We evaluate each request based that authors meet all of the following criteria: on criteria that balance the need to advance science For those who analyze, report or publish the results with the need to protect intellectual property and of clinical trials, a clinical trial registry also provides y Make substantial contributions to study conception confidential information. Our evaluations comply with information on trials in progress and the ability to and design, or to acquisition, analysis or interpretation applicable privacy and data-protection laws, rules and track such trials over the course of development. of data for the work regulations. We are committed to the PhRMA/EFPIA We register clinical trials at trial initiation in patients y Draft the article or revise it critically for important Principles for Responsible Clinical Trial Data Sharing. of investigational and marketed products, in which intellectual content treatment is assigned, that we sponsor and conduct on y Give final approval of the version to be published Learn more about our policies and perspectives on www.clinicaltrials.gov, www.clinicaltrialsregister.eu and data sharing: y Be accountable for all aspects of the work in ensuring www.encepp.eu. that questions related to the accuracy or integrity of y Procedure on Access to Clinical Trial Data Disclosure of Clinical Trial Results any part of the work are appropriately investigated y Procedure on CSR Synopsis Posting and resolved Our company has long been committed to sharing the y External Scientific Review Board (ESRB) Charter results of our clinical trials, regardless of their outcome, Our company adheres to the authorship criteria of Scientific and medical researchers who wish to submit a in a timely manner. If a clinical trial of a marketed respected biomedical journals if their criteria differ proposal for access to our data may send an inquiry. product is terminated early for safety reasons, we will from those of the ICMJE. In addition, individuals who do promptly disclose medically important information not meet the criteria for authorship, but who provide Clinical Trial Designs to regulatory authorities and the public, update support, are recognized in acknowledgments when All of our clinical trials are designed, conducted the status on clinical trials.gov within 30 days, and the manuscript is published. Our staff or the contract and monitored in accordance with the same global submit a manuscript to a journal (or post a summary writers we hire may facilitate the development of a standards, whether they take place in the U.S. or online) within 12 months after the last patient’s last manuscript when the lead author provides oversight and elsewhere around the world. visit occurs. If the trial was terminated for efficacy direction in those cases; the efforts of the writers will reasons, the results will be disclosed within 12 months then be acknowledged in the publication. We consider many factors when we design a clinical trial: after the last patient’s last visit occurs. Summaries of y Our questions and objectives: Clinical study designs terminated trials will provide information about patient We also adhere to ICMJE or journal-specific guidelines vary according to the specific objectives of the study. disposition, safety and adverse experiences, as well as for disclosure of potential conflicts of interest, including For example, the design of a study to assess the an explanation as to why the trial was terminated early. both financial and nonfinancial conflicts, for the full

Corporate Responsibility Report 2018/2019 26 ACCESS TO HEALTH | Clinical Research

efficacy of a medicine in treating a particular condition We seek input from local clinical investigators and (ERCs). We require assurance that patients involved in is different from that of one seeking to determine external consultants with specific, relevant experience trials, and/or their legal representatives, understand the optimal dose of a medicine in a particular group when designing our clinical trials. For clinical trials in the procedures and the use and disclosure of personal of people. Phase 2, studies are monitored on an ongoing basis by health information, the use of biological samples and y Statistical appropriateness and feasibility of the clinical director and study team. the risks/benefits involved in a clinical study. A consent form, approved by both our company and the IRB/ERC conducting the study: To make sure that trial results When appropriate, an internal standing Data- and translated into a language familiar to the study are statistically meaningful, it is necessary before Monitoring Committee (DMC) of our research subject, must be carefully reviewed and signed by all the trial begins to determine the number of patients laboratories’ senior managers reviews unblinded data participants to document that their participation in the needed to participate. It is also necessary to assess from ongoing trials in a pre-specified, scientifically study is voluntary and informed. the feasibility of successfully conducting the trial. acceptable manner. The goals of the DMC are to y Acceptability of the trial design by regulatory protect the safety of trial participants and assess Informed consent is obtained prior to the initiation of agencies: When necessary, our Research Laboratories whether the risk-benefit profile is favorable. The DMC’s any clinical study procedures, including those performed consult with regulatory agencies on design issues. recommendations are communicated internally to solely to determine eligibility for participation in the y Ethical perspectives: We enable patient diversity relevant scientists and can be distributed externally trial. In accordance with General Data Protection in our clinical trials to broaden the knowledge of the to clinical investigators, review boards or regulatory Regulation (GDPR) requirements, patients are also safety and efficacy of a new drug across different agencies, as appropriate. permitted to withdraw consent at any time and their information is then discarded. In circumstances in which patient populations. For all Phase 3 and other clinical trials intended to support patients receive payment or reimbursement for trial All of our company studies, regardless of the study registration, studies are monitored by the clinical director participation, the compensation is appropriate for the design, use a standard format: and study team. In addition, if unblinded data will need cost and inconvenience incurred and is clearly outlined in to be monitored to ensure patient safety or to make y The study objectives and endpoints (i.e., the consent form for full transparency. decisions about continuing a study, a DMC composed measurements) must be clearly stated before the of external experts independent of our company is The consent procedures conform to applicable legal study begins assembled to review and make recommendations to us statutes and government regulations concerning y The hypothesis or scientific question being asked by about the further conduct of the study. research in human subjects and the privacy and security the study must be clearly defined of medical information. If a prospective study participant In addition, it is our policy to establish scientific advisory y A plan for the analysis of the data must be developed cannot read the consent form, a patient advocate may committees composed of both external scientific before the trial begins, and finalized before the trial read it, with consent documented and witnessed. leaders and our own scientists. With the participation is completed of these committees, we can obtain expert advice on In accordance with ICH GCP guidelines, trial sponsors The benefits of this format include strengthening the the design of a trial, provide for transparent review and should appoint clinical trial monitors who are trained scientific credibility and regulatory acceptability of discussion of data and foster a collaborative approach to to monitor the trial adequately. Accordingly, ICH GCP the results and ensuring the timely data analysis and the publication and presentation of findings. training is mandatory for all of our clinical research publication of results. associates (CRAs) who monitor clinical trials, as well We also have established a companywide, global as for all contract research organizations (CROs) that Clinical Trial Site Monitoring, Design, Conduct approach for assessing clinical safety by implementing monitor clinical trials on behalf of our company. and Oversight internal organ-specific safety boards to support In addition to complying with our company’s global the evaluation and management of organ-specific CRAs monitoring on behalf of our company will visit sites standards, the conduct of our clinical trials adheres to safety issues. throughout the study to ensure that: the International Council for Harmonisation Good Clinical All protocols and related documents are reviewed and y The principal investigator and site staff are qualified Practice (ICH GCP) standards and to the principles that approved by external and independent Institutional and have adequate facilities and equipment to conduct have their origin in the Declaration of Helsinki. Review Boards (IRBs) or Ethical Review Committees clinical research throughout the duration of the study

Corporate Responsibility Report 2018/2019 27 ACCESS TO HEALTH | Clinical Research

y Site staff are adequately trained on the protocol, y Therapeutic indications that draw on a CRO’s specific studies after the product is approved. A study could be procedures and equipment development expertise in areas where our company required for multiple reasons, such as obtaining further y Site staff adhere to protocol requirements, sponsor’s does not have specific development execution information on the safety of the product. We work development procedures (DPs) and ICH guidelines experience (this is infrequent, given our breadth closely with regulatory authorities to design a study that and depth) will fulfill the specific requirement. y Clinical supplies are stored and dispensed, per protocol y Regulatory file documents are accurate and When engaging a CRO, we perform rigorous capability Epidemiological studies: We have a long history maintained per ICH guidelines and sponsor’s DPs assessments to ensure that the CRO has procedures, of working closely with external experts in infrastructure and expertise that are adequate to ensure Pharmacoepidemiology to understand the types of y Source documentation, including drug accountability compliance with Good Clinical Practice (GCP) standards patients utilizing our products, as well as to examine the logs, is maintained per ALCOAC (Attributable, and are aligned with our own Code of Conduct. effectiveness and safety profiles of many of our marketed Legible, Contemporaneous, Original, Accurate and products as they are used in clinical practice in health care Complete) guidelines Due diligence is performed and the appropriate systems based in several different populations. y Subject safety is maintained through review of source remediation (if any) activities are implemented on documentation, including drug accountability logs CROs previously working for a company that is then Pregnancy registries: For some products, we have acquired by our company. Clinical trial teams within our systems of active data collection that can facilitate the y Data reported to the sponsor are accurate and company oversee the studies being run by CROs, and early detection of teratogenicity, or interactions that reported per sponsor requirements periodic audits are performed on CROs with which we alter normal embryonic development, and other serious Protecting Personal Health Information do business. If and when we identify violations of the adverse experiences in patients who, inadvertently or We are a member of the International Pharmaceutical contract or GCP standards, we work with the CRO on a purposefully, use a particular drug during pregnancy. & Medical Device Privacy Consortium (IPMPC), corrective action plan. Useful information about the effects of exposure in pregnancy can best be obtained by the careful collection an association of research-based pharmaceutical If improvements are not made within a defined and analysis of post-marketing surveillance data. companies formed in 2002 that has worldwide period of time, or if repeat violations are noted and Reports of the aggregate data in each registry are responsibility for the protection of personal health unsatisfactorily remediated, we will limit and possibly updated annually and shared with regulatory authorities. information and other types of personal data. We have cease future award opportunities with the CRO until been actively involved in the IPMPC since 2006, in order the issues have been fully remediated. Importantly, our Post-Marketing Safety Studies to engage in a constructive dialogue with European expectations of the performance of CROs we engage We monitor the use and safety of our products, and we data-protection authorities and other regulators on with are no different from the expectations we have of have a long history of conducting post-marketing safety privacy standards for biomedical research. our internally managed projects. studies to examine our products as they are used in Contract Research Organizations clinical practice. Our company’s primary clinical trial operating model Post-marketing We also work closely with external experts in includes the use of contract research organizations We regularly monitor the effectiveness and safety Pharmacoepidemiology and drug utilization to examine (CROs) on a limited basis. The use of CROs is generally profiles of our marketed products and conduct formal the utilization and safety of our marketed products reserved for circumstances such as: post-marketing studies to evaluate signals of serious as they are used in health care systems based in y A company acquisition that includes clinical trial work safety concerns about our products, including those several populations. These include Kaiser-Permanente already outsourced to CROs requested by regulatory agencies. (KP) Southern California, KP Northern California, UnitedHealthcare, Pennsylvania and New Jersey y Clinical trial work that requires a large, rapid and global We conduct several types of studies after approval, as Medicare, Harvard Pilgrim Health Care, Nordic Country deployment of resources for a finite period of time appropriate: Registries, the Clinical Practice Research Database and y A need for access to development markets that fall Commitments to regulatory authorities: For some Mayo Clinic Olmsted County, Minnesota. outside our company’s own development footprint products, regulatory authorities require companies to To see select post-marketing safety studies, please visit conduct additional interventional or non-interventional the page on our transparency disclosures. Corporate Responsibility Report 2018/2019 28 ACCESS TO HEALTH | Clinical Research

Performance

NUMBER OF NEW PRODUCT & DEVICE REGISTRATIONS 2014 2015 2016 2017 2018

Asia Pacific 31 43 38 34 40

Central & Eastern Europe, Middle East & Africa 63 49 54 55 39

European Economic Area 22 22 8 11 12

The Americas 52 39 40 39 30

United States 8 3 3 4 3

GCP/PV INSPECTIONS1 2014 2015 2016 2017 2018

GCP/PV inspections by regulatory agencies of the company or 0 0 – 0 0 clinical trial investigators that led to significant fines, penalties, warning letters or product seizures

1 Complete response letter received for Januvia (sitagliptin; MK-0431) in 2016.

PHASE II–V CLINICAL TRIALS PATIENTS BY REGION 2014 2015 2016 2017 2018

Asia Pacific 49% 21% 25% 15% 22%

Central & Eastern Europe, Middle East & Africa 7% 7% 12% 7% 7%

European Economic Area 21% 22% 36% 43% 21%

The Americas 7% 5% 10% 6% 9%

United States 16% 46% 17% 29% 41%

TRIAL DISCLOSURE ACTIVITIES 2014 2015 2016 2017 2018

Manuscripts of clinical trial results and related papers 146 216 152 133 153 submitted to peer-reviewed journals

Number of GCP/PV inspections conducted by regulatory 99 119 103 128 96 agencies worldwide

Corporate Responsibility Report 2018/2019 29 ACCESS TO HEALTH | Ethical Treatment of Animals

Ethical Treatment of Animals

Laboratory animal research is To promote our commitment, we Animal research oversight indispensable to the discovery and subscribe to the 3 Rs—replacement, Animal research is highly regulated and monitored development of innovative medicines reduction and refinement—for by health authorities. Internally, it is the focus of our that treat and prevent disease. animal-based research. Quality Assurance (QA) Animal Welfare department, which includes a comprehensive, risk-based audit and Our company is dedicated to the ethical and responsible The care and use of laboratory animals in biomedical oversight program designed to ensure that the Animal treatment of all animals used in the development of research is highly regulated. In general, the regulations Care and Use Program at each research site meets medicines and vaccines. Decisions regarding animal govern housing, feeding, veterinary care and research relevant local standards and is in compliance with all care, use and welfare are made by balancing scientific project review conducted by the Institutional Animal applicable legal requirements covering animal research. knowledge and regulatory requirements with Care and Use Committee (IACUC)/Ethical Review consideration of ethical and societal values. Committee (ERC), as well as unannounced government Additionally, all relevant sites have active and engaged inspections. Our animal facilities are staffed with IACUCs or ERCs who review, approve and monitor It is important to note that a large variety of nonanimal research studies. The committee membership (in vitro, or test tube) studies are performed at our veterinarians and animal care technicians trained and certified as research animal experts. In our research includes veterinarians and scientists knowledgeable in company prior to or instead of animal studies. Research animal-based research and, often, nonscientists and animals are used only to address important scientific laboratories, 96 percent of the research animals are rodents. community members. Committees review proposed questions or to fulfill a regulatory requirement. animal studies and animal care facilities and investigate, Animals involved in research within our company’s as appropriate, any research-animal welfare concerns. research laboratories are all bred specifically for research purposes.

Corporate Responsibility Report 2018/2019 30 ACCESS TO HEALTH | Ethical Treatment of Animals

The IACUCs/ERCs regularly communicate with and Our scientists whose work involves research animals Replacement, reduction and provide status reports to our company’s institutional are trained to perform the duties required. Training officials regarding animal welfare compliance. includes review of regulations and policies, instruction refinement on how to search for animal research alternatives, For some diseases, genetically modified (transgenic) We are committed to the philosophy of using the explanation of the role of the IACUCs/ERCs and training animals are important to model disease processes best scientific methodologies and animal alternatives on how to raise concerns about misconduct. Qualified and are a powerful tool in our company’s search for whenever possible or permissible by law. To veterinarians work with the scientific staff to consult treatments and cures. We are responsible for ensuring promote this commitment, we subscribe to the on and assist with all animal-related research projects. that all recombinant DNA research conducted at 3 Rs—replacement, reduction and refinement—for Our company places a high value on its animal welfare or sponsored by our company is compliant with the animal-based research. stewardship responsibility; violation of these policies National Institutes of Health (NIH) Guidelines for is grounds for employee disciplinary action, up to and Replacement: Using nonanimal systems or less- Research Involving Recombinant DNA. This includes including dismissal. sentient species (e.g., cell cultures, computer modeling, oversight by institutional biosafety committees and bacterial assays, and fly or worm models). Our scientists such work is always conducted in accordance with local have access to specialized software that searches the laws and regulations. Contract research organizations scientific literature for viable alternatives to animal Global policies and guidelines governing appropriate All agreements with contract laboratories include terms research. In addition, the company employs information animal research practices are in place and are kept up to regarding our company’s expectations for animal care specialists in our research library, trained by the Animal date. These standards for the care and use of animals and use as well as regulatory compliance. We perform Welfare Information Center of the U.S. National in studies meet or exceed applicable local, national and due diligence on and monitor contract laboratories Agricultural Library, to assist our scientists in identifying international laws and regulations. that perform animal studies on our behalf to ensure potential animal alternatives. We also have extensive that our company’s expectations for animal care and in vitro expertise and investments, including an in y U.S. regulations and annual inspection results use, and regulatory compliance are met. Additionally, vitro department that develops and utilizes nonanimal y European Directive 2010/63/EU on the protection of animal research conducted at contract laboratories research methods (cell cultures) in the discovery and animals used for scientific purposes is subject to protocol review by our IACUC/ERC or an development of new medicines and therapies, and experts in computer modeling and simulation. As further evidence of our commitment to the highest equivalent committee. Noncompliance with regulations level of animal care, our research sites voluntarily secure or standards can lead to termination of the relationship. Reduction: Using the minimum number of research a third-party review and accreditation of our animal animals necessary to obtain valid scientific data. research programs and facilities by the Association for Support for animal science and Sophisticated animal models that yield precise data, Assessment and Accreditation of Laboratory Animal such as telemetric monitoring models that monitor Care International (AAALAC International), an external, research animal well-being ECG and blood pressure, reduce the number of animals independent organization. We advocate for the development of best practices needed. In addition to state-of-the-art data collection and dissemination of information by supporting and and sharing systems, we have statisticians on staff who As of the end of 2018, all of participating with nongovernmental organizations to advise on study design and analysis in order to minimize our MRL research facilities are foster a greater understanding of biomedical research, the number of animals included in a study. accredited by AAALAC International. advancements in research-animal science and the development of alternatives to animal use.

Corporate Responsibility Report 2018/2019 31 ACCESS TO HEALTH | Ethical Treatment of Animals

Refinement: Minimizing distress or discomfort. Our methodology and to aggressively seek scientifically valid Internal animal alternative award scientists conduct extensive literature reviews to 3-R approaches to animal research. As an example of choose the best scientific models and design the most the third R, refinement, we have created a world-class Since 1994, in support of the 3-R philosophy, we have effective studies. When animals are required for a imaging department that allows scientists to view presented an Animal Alternative Award annually to the study, anesthetics, analgesics and tranquilizers are used cancers and other pathologic diseases in animals and team or teams of our company’s scientists that develop whenever possible to minimize or eliminate potential monitor the long-term effectiveness of new treatments new techniques to support the alternative principle and pain or distress. in a noninvasive manner. In addition, we have voluntarily publish their work to share innovations with the greater made the decision not to use chimpanzees (nor to fund scientific community. Our company’s Animal Welfare group collects, their use directly or indirectly in studies by external promotes and internally disseminates information on research partners) in biomedical research in the the principles and practice of the 3 Rs. Training on the foreseeable future. 3 Rs is part of staff orientation for animal research. It is our responsibility to use the most appropriate

Corporate Responsibility Report 2018/2019 32 ACCESS TO HEALTH | Regenerative Medicine

Regenerative Medicine

Together with the scientific community, to differentiate into specific cell types underscores their Our company’s Regenerative Medicine Oversight we believe that research using stem versatility and utility, from early target validation and Committee, which comprises both internal and external identification, to screening and testing of potential new experts, oversees company-sponsored research cells has the potential to help identify therapeutics, disease-modeling, generating humanized- involving stem cells, including highly targeted research medicines, therapies and vaccines to animal models and pre-clinical proof of concept. using human embryonic stem cells and induced pluripotent stem cells. The committee is responsible treat, cure or prevent diseases. We conduct research using stem cells in full accordance for ensuring that all projects involving stem cells adhere with all applicable laws and regulations, and our own Many of the most advanced scientific technologies to our policies. in regenerative medicine involve animal or human internal research policies. Our research policy involving embryonic stem cells. stem cells adheres to the U.S. National Academy of Sciences guidelines as well as those of the For more than a decade, we have been applying International Society for Stem Cell Research. advances made in stem-cell technologies to support our research and development. The capacity of stem cells

Corporate Responsibility Report 2018/2019 33 ACCESS TO HEALTH | Genetic Research

Genetic Research

The rapid development of new trials, primarily to understand how genetic and genomic Declaration of Helsinki, U.S. FDA requirements (21 CFR technologies that interrogate variability variation impacts patient response to medicines. This 50.20, 50.25 and 50.27), the International Conference enables us to communicate information to regulatory on Harmonisation (ICH) E6 Good Clinical Practices in human DNA and RNA, combined authorities and prescribers that will improve the use guidelines and the 1997 UNESCO Declaration on the with powerful computing hardware of our medicines. It also enables us to understand how Human Genome and Human Rights. We apply the and software, has made it practical genetics contribute to the underlying disease, which ethical principles for research involving human subjects to investigate genetic and genomic has the potential to identify new drug targets for to the collection and use of genetic and genomic that disease. samples. This includes respect for persons/autonomy, determinants for risk of human disease beneficence and justice. or predictors of human response to drugs. We also collect genetic and genomic samples outside of our clinical trials, often in collaboration with academic When collaborating with external organizations, we Our company conducts genetic and genomic research institutions or pre-competitive consortia. This is an ensure that consent has been obtained by individuals within our own clinical trials and in collaboration with important way of leveraging many of the large-scale who have contributed DNA or RNA and/or health- external organizations that have collected human “biobanking” efforts that are underway globally. related data to the organization via these same genetic and genomic samples and health data. standards. During clinical trials, we obtain appropriate subject Collecting genetic and genomic samples is a critical consent for use of the genetic and genomic samples foundation for human genetic research strategies. in accordance with the ethical principles of human- We collect genetic and genomic samples in our clinical subjects research, which have their origins in the

Corporate Responsibility Report 2018/2019 34 ACCESS TO HEALTH | Biologics & Biosimilars

Biologics & Biosimilars

We are building our biologics pipeline and generating sophisticated biologics mature, the A key aspect of our R&D is accessing product candidates and delivering high-quality biosimilar potential for discovering novel biological therapies and technologies from the external community. remains high. These collaborations and acquisitions broaden our products to help meet the growing company’s pipeline and enhance our ability to discover Our company is also marketing biosimilars, which are needs of patients and health care new therapies in our labs. Our largest collaboration highly similar to its approved reference product, with is with NGM Biopharmaceuticals, Inc. (NGM Bio), systems worldwide. no clinically meaningful differences in terms of the which we entered in February 2015. This broad safety, purity and potency of the product. We believe strategic collaboration aims to discover, develop and RESOURCES high-quality biosimilars that are functionally and commercialize novel biologic therapies across a wide physically equivalent to existing biotherapeutics can Public Policy Statement: range of therapeutic areas. Biosimilars and facilitate access to these lifesaving biological medicines Originator Biologics for patients across the globe, while respecting the The collaboration includes multiple therapeutic intellectual property rights of the originator. candidates currently in preclinical and clinical Biologics are therapeutics that are made in living development at NGM Bio, including NGM313 (MK-3655). organisms, most commonly from cultured cells. Due Portfolio and partnerships We believe NGM313 (MK-3655) has the potential for to their high degree of specificity for their molecular use as monotherapy or in combination with other drug targets and long half-life in the body once administered, We are developing a diversified portfolio of innovative classes, like GLP-1 analogs, to halt the progression of biologics have revolutionized the treatment of patients biotherapeutic candidates targeting several important diabetes and nonalcoholic steatohepatitis (NASH). clinical indications, including oncology (building on our suffering from some of the most debilitating and life- In 2013, we entered into an agreement with Samsung expertise in immune-oncology), infectious diseases, threatening diseases. As our understanding of human Bioepis Co., Ltd. to develop and commercialize multiple disease expands, and the technologies for discovering neurobiology, cardiovascular and metabolic disease.

Corporate Responsibility Report 2018/2019 35 ACCESS TO HEALTH | Biologics & Biosimilars

biosimilar candidates in our partnered territories. Public policy Our advocacy recognizes the complexity of all biologic Since that time, this partnership has made significant products, both innovator biologics and biosimilars, progress on a portfolio that includes biosimilar Our advocacy position on biologics and biosimilars is and seeks to establish sound policy parameters for candidates in immunology and oncology, with a number built upon a foundational objective of seeking to improve the development and use of biologics to ensure that of biosimilars either already approved or expected to health outcomes while maintaining patient safety. All of patients have access to high-quality, safe and effective be filed with regulatory authorities in our territories. our policies associated with biologics, biosimilars or any medicines. Our policies regarding biologics and Through April 2018, RENFLEXIS® (infliximab) has been other drug regulation are motivated first and foremost biosimilars are based on science and reflect a balanced approved in Australia, Canada and the United States; by our focus on the patient. approach consistent with our status as a developer of BRENZYS® (etanercept) has been approved in Australia both biosimilars and originator biologics. and Canada; and ONTRUZANT® (trastuzumab) has been approved in the European Union.

Corporate Responsibility Report 2018/2019 36 ACCESS TO HEALTH | Scientific Education Initiative

Scientific Education Initiative

We’re collaborating with academia, Authored by our company’s scientists and medical Today, these courses are part of the Global Scientific globally, to educate tomorrow’s doctors professionals, and approved by Yale faculty, the Education Initiative in our Global Center of Scientific program has been implemented by more than 85 Affairs, within our company’s research laboratories. The about biopharmaceutical development. academic institutions in 20 countries. It consists of an Web-based initiative focuses on working with academia The rigorous medical school curriculum is designed to interactive course that takes students through the to develop and share high-quality, balanced, unbranded give future physicians the information and skills they development process, from target identification and education on translational science topics. will need to begin clinical practice. For most, clinical validation through clinical trials, the regulatory review Since the Global Scientific Education Initiative was first practice will inevitably mean prescribing a medicine process and post-approval monitoring. introduced, the courses have been translated from or vaccine to a patient. Yet few medical students are A second course, the Principles of Clinical Research and English into six additional languages (Spanish, Mandarin trained to understand the drug development process Design (PCRD), was developed in 2011 in response to Chinese, Japanese, Turkish, Vietnamese and Russian). or how pharmaceutical research can be applied to a call for action from the then newly created National The program has been expanded to serve students patient care. In 2010, our company collaborated Center for Advancing Translational Sciences’ Clinical and in other health disciplines and graduate programs. At with the Yale School of Medicine to help bridge this Translational Science Awards (CTSA) program to foster the University of Texas Graduate School of Biomedical knowledge gap. new collaborations between academia and industry. Sciences, the courses are open to all students Our Drug Development Program, in partnership with interested in potential careers in biotechnology and the Additionally, many universities outside of the U.S. Yale University, is a comprehensive, seven-module, pharmaceutical industry. requested information to help them better understand 10-hour Web-based course established for second- how clinical studies are designed and implemented. The The courses are provided at no charge to degree- year medical students and graduate students in course includes topics addressing both interventional granting institutions, and faculty members have health sciences and includes a new module on vaccine and non-interventional studies, and addresses the unrestricted access to the materials to augment their development and clinical vaccinology. concepts of bias and confounding, randomization and curricula. For more information about the program, blinding, among others. contact [email protected].

Corporate Responsibility Report 2018/2019 37 ACCESS TO HEALTH | Manufacturing & Supply

Manufacturing & Supply

partners, make up an integrated, interdependent global DISCLOSURES IN THIS SECTION Our global supply chain is designed to ensure that we are manufacturing network that is committed to delivering operating a lean and efficient network while complying GRI 102-9 SDG 8 SDG 10 GRI 416-1 SDG 9 SDG 17 compliant, reliable supply to customers and patients on with rigorous quality, safety and environmental time, all the time and every time. standards. Through “end-to-end supply planning,” we Our vision is to be the most trusted and conduct efficient and balanced planning decisions to We manufacture, package and distribute maximize business results and deliver medicines and competitive supplier of pharmaceuticals, products to more than 140 markets vaccines to customers, which include hospitals, retail animal health products, vaccines around the world. outlets and patients, when and where they need them. and biologics to the world’s patients We partner with distributors, warehouses and freight and customers. We have entered into manufacturing and supply forwarders on air, land and cold-chain supply methods. agreements with local manufacturing partners to Our company is committed to providing patients and We remain committed to the development and broaden access to our products in local markets. We commercialization of our products and to ensuring customers with a reliable supply of high-quality, safe strive to forge relationships with partners that meet our and effective medicines and vaccines. Our global supply that we are a reliable global supplier of quality vaccines standards for quality manufacturing and distribution, and medicines. In 2018, we launched new products in strategy leverages both our internal manufacturing and today we have 144 external manufacturing sites, capabilities and those of external manufacturers that major regions with eight filings and 20 launches. We 35 Corporate Alliances and 98 Regional Alliances that we are implementing continuous manufacturing for small- provide specialized skills, expertise and various types of engage with to provide access to our products. manufacturing services. molecule products with planned submissions in 2019 In 2018, we manufactured approximately 8,000 SKUs and beyond. We manufacture, package and distribute products to (stock keeping units), approximately 213.7 million doses more than 140 markets around the world. Our facilities, We continue to optimize our manufacturing capacity for of Human Health vaccines and approximately 102 billion most vaccines, including, as appropriate, redundancy along with our external contractors, suppliers and doses of Animal Health vaccines.

Corporate Responsibility Report 2018/2019 38 ACCESS TO HEALTH | Manufacturing & Supply

in our supply chain for certain vaccines, so that we a greater focus on responsiveness and innovation and Supply challenges: commitment eliminate supply disruptions when temporary issues have initiated four workstreams addressing our primary arise in manufacturing. strategic elements for manufacturing and supply chain. to our patients and employees

We have made significant progress since the launch of Stability: We are continuing to ensure our supply Enterprise Resiliency and Modernization is a the “Manufacturing the Future” strategy in 2016. We stability by strengthening our core capabilities in safety, multiyear program aimed at modernizing and making have improved stability of supply through investments regulatory compliance and reliable supply. more resilient our manufacturing site technology in our people, processes and by enhancing our Quality, infrastructure in support of operational success. A set Responsiveness: We are preparing our facilities, Compliance, Technical and IT infrastructure. We of activities is currently being implemented to ensure processes and people to respond to the changing continue to improve our value chain risk management that we protect our systems, data and network from needs of health care by internalizing select products, with dual sourcing of key nodes and markets, external threats and incidents such as cyberattacks, improving asset utilization, reducing product cost and strengthening our raw material sourcing and optimizing natural disasters or other outages across our assessing innovative manufacturing technologies. use of strategic inventory. manufacturing sites network. Innovation: We are transforming the way we transact Our divisional service performance is at a 10-year high. Since program inception we have addressed over in manufacturing through establishment of foundational Looking ahead, we see the opportunity for substantial 30 percent of the targeted assets and moved data systems and use of innovative digital and analytics growth and, in response, have begun the process of over 30 percent of our manufacturing assets behind technologies. significantly shifting our asset base to expand or build our Shop Floor Network. new capacity to meet this demand. Diverse talent: We are fundamentally changing how We are on track to address 65 percent of the targeted we work, building an exceptional workforce of skilled, In 2018, we refreshed our manufacturing and supply assets by the end of 2019, and 100 percent by the end diverse talent—uniquely equipped to “Manufacture chain strategy—recognizing the transformation of 2020. the Future”—for our company and for our patients and required to address challenges that come with growth customers around the globe. and the shifting pharmaceutical base. With the significant advances made in stabilizing our business We continue to focus on internal and external strategies over the past two years, we have now pivoted toward that reduce cost and increase capacity to meet growing supply needs around the world.

Performance

MANUFACTURING & SUPPLY SUMMARY 2014 2015 2016 2017 2018

Number of local and regional manufacturing partnerships 104 179 179 153 144 to enable access

Number of products available through local and regional 499 1,157 941 765 700 partnerships

Corporate Responsibility Report 2018/2019 39 ACCESS TO HEALTH | Quality & Safety Standards

Quality & Safety Standards

DISCLOSURES IN THIS SECTION We apply and adhere to a strict set of quality We maintain strict quality standards standards, and we have policies and procedures in GRI 416-1 no matter where our products are place to identify, measure, control and sustain GRI 416-2 product-quality excellence. manufactured. In everything we do—from research and Our Global Quality Compliance organization is All manufacturing facilities that we own and operate, development to the manufacturing and responsible for establishing the requisite standards and any company from which we purchase formulated to ensure that all of our company’s products are pharmaceuticals, active ingredients or sterile distribution of our medicines, vaccines manufactured, tested, released and distributed in full products, must comply with CGMPs. These standards and other products—safety, quality and compliance with regulatory requirements. include requirements for incoming materials and the manufacturing, storage, handling and distribution efficacy are our primary considerations. We continuously strive to improve these standards of products. Our quality strategy is focused on ensuring reliable, in order to enhance procedures and ensure ongoing compliant supply to our customers, assuring that our compliance with Current Good Manufacturing Counterfeit products are a growing global problem products are there when people need them, and having Practices (CGMPs). and a serious threat to public health. We believe that maintaining the integrity of our supply chain is of an engaged and capable workforce to ensure and sustain We provide appropriate and ongoing training on CGMPs paramount importance. Our corporate global future success. for our employees, so they are prepared to perform anti-counterfeiting program has three primary goals: their duties effectively. Our system not only ensures Patient safety is at the forefront of what we do. We are securing the supply chain; deterring, detecting and that all applicable employees are trained, but also using and exploring new technological advancements responding to suspected and/or confirmed counterfeit monitors the effectiveness of training. such as integrated IT tools, artificial intelligence (AI) and activity; and raising public awareness of the risks posed streamlined digital platforms to further enhance how by counterfeits. we manufacture high-quality products.

Corporate Responsibility Report 2018/2019 40 ACCESS TO HEALTH | Quality & Safety Standards

Supplier selection Audits and inspections We maintain strict quality standards no matter Our manufacturing facilities are inspected by where our products are manufactured. international health authorities. In 2018, we had 100 regulatory inspections at our human health and animal Once we have decided to engage an external health facilities. Ninety-seven (97) of the inspections manufacturer, that manufacturer is required to comply concluded with satisfactory outcomes, and the outcome with our business requirements set forth in the of one inspection is pending. contract, regardless of geography. With respect to the remaining two inspections (both We conduct audits of every potential new supplier of which involved the same health authority), we have of active pharmaceutical ingredients or formulated already addressed several of the observations. We are products and sterile products, to determine its continuing to engage in activities to achieve successful Quality tests are performed on all drug substances acceptability and compliance with CGMPs. We review resolution of the remaining observations. that we manufacture or purchase as part of our overall the systems that the potential supplier uses to purchase supplier-qualification process, and further tests are materials in order to ensure the quality of the products We conduct periodic audits to further ensure that performed during subsequent stages of manufacturing. the supplier hopes to provide to us. suppliers continue to meet CGMPs. Through such audits Quality tests are performed on all formulated products we evaluate the continued acceptability of the facility Only if a supplier meets our stringent criteria, before we release them to the marketplace. from a quality assurance and regulatory compliance which include a review of the company’s regulatory perspective. Testing of raw materials or excipients used in the inspection and outcome history, will we then negotiate manufacturing of our products is conducted in a commercial agreement. These agreements include The frequency of quality auditing depends on a number accordance with our specifications, which in many detailed provisions relating to the quality standards of factors, including: cases include the applicable pharmacopeia standards we require suppliers to uphold in order for them to y The nature and complexity of the product being (e.g., the United States Pharmacopeia [USP], the manufacture a product for our use. manufactured (e.g., whether it is a formulated European Pharmacopeia [EUP] and the Japanese pharmaceutical, active ingredient or sterile product) Pharmacopeia [JP]). and how it is used by our company y The compliance history of the supplier and previous audit results

Performance

QUALITY & PRODUCT SAFETY 2014 2015 2016 2017 2018

Number of product recalls in the United States1, 2 3 3 1 0 2

Annual percentage of units manufactured/sold and recalled during 0.22% 0.07% 0.01% 0.01% 0.14% a given year (our global recall rate)1, 2

1 Definition of Recall Classifications: http://www.fda.gov/ForConsumers/ConsumerUpdates/ucm049070.htm#RecallClassifications. 2 Beginning in 2014, product recalls include data from our Animal Health business.

Corporate Responsibility Report 2018/2019 41 ACCESS TO HEALTH | Anti-Counterfeiting

Anti-Counterfeiting

We invest in an industry-leading, We define a counterfeit medicine as a product that in 2017. Another of the forensic laboratories became rigorous, intelligence-led exhibits an unauthorized use of trademark, trade operational in 2018 and the third is scheduled to be name, other identifying mark, imprint or device or operational in 2019. These labs follow international anti-counterfeiting strategy that any likeness thereof, to adulterate, falsely purport or standards and best practices for forensic testing, is solely focused on protecting falsely represent a product’s or material’s identity, including the World Health Organization (WHO) Guidance patients from the harm associated source or history. As counterfeiters have become more on Testing of Suspect Falsified Medicines and ISO 17025. sophisticated, counterfeit products have become with counterfeit, diverted and The threat to patient safety from counterfeit medicines so similar in appearance to authentic products that, is not specific to our company. Consequently, we other illicit medicines. without laboratory testing, it is often difficult to tell the work with industry peers and proactively share anti- authentic from the counterfeit medicines. counterfeiting intelligence with other pharmaceutical RESOURCES We have launched a global Forensic Services program companies as a way of protecting the public and Public Policy Position Statement: that significantly enhances our capacity and capability raising awareness. Counterfeiting of Medical Products for the robust forensic analysis of suspect counterfeit, diverted and illicit medicines. The Forensic Services Anti-counterfeiting strategy Producing, distributing, marketing and/or selling program focuses on both the identification and counterfeit pharmaceutical products are serious characterization of illicit medicines, and will further Our company’s Global Security Group oversees the criminal offenses, and the threat of these actions has support our efforts in the detection, characterization global anti-counterfeiting strategy and leads its become a real and significant risk to global public health. and enforcement of criminal enterprises engaged in the execution. The overall strategy is supported by a cross- Counterfeit pharmaceuticals can include the wrong manufacture and distribution of illicit medicines. functional team comprised of senior leaders from doses of an active ingredient, no active ingredient or, Human Health, Quality, Manufacturing, Strategy, Global The global Forensics Services capacity is supported by in some cases, harmful or poisonous ingredients. Safety, Legal, Public Policy and Global Security. three laboratories, the first of which became operational

Corporate Responsibility Report 2018/2019 42 ACCESS TO HEALTH | Anti-Counterfeiting

Ensuring product efficacy and patient safety and Advocacy, engagement and awareness applied on the basis of a global, risk-based assessment protecting our reputation are paramount. We maintain a Our efforts in the area of advocacy, engagement methodology. Our key focus in this assessment is the comprehensive, worldwide anti-counterfeiting strategy and awareness involve raising public and stakeholder patient-safety threat should a counterfeit or illegally and operational program that has three primary awareness of the risks posed by counterfeits, and diverted product of our company be introduced into the strategic deliverables. advocate for increased enforcement to shape relevant supply chain. Product and supply chain security regulatory requirements. In 2018, we continued our Each of our new medicines and vaccines is assessed commitment to increasing our focus in this area and Our Product & Supply Chain Security strategy enables for risk using this methodology prior to regulatory have strategically enhanced our ability to make a product protection through the use of sophisticated approval. The risk level assigned to a new product is long-term impact on patient safety through various product-security features and supply chain used to determine which product-security features education campaigns. security measures. will be included on the product and packaging prior to the product’s market release. A complementary threat The use of product-security features is intended to Anti-counterfeiting operations assessment is also performed on marketed products for make it more difficult to counterfeit our products, which a credible counterfeit threat has been identified enable rapid authentication of suspicious products, In keeping with our long-standing commitment to and for which updates to packaging security features identify instances of diversion, prevent and/or detect providing high-quality, safe and effective medicines and may be required. instances of tampering and support enforcement vaccines to patients who need them, we have executed actions of confirmed illicit events. a comprehensive Anti-Counterfeiting Operations These product-security features, along with our Program that delivers on our three primary strategic advanced forensic detection capabilities, enable us Our company’s supply chain security efforts enable deliverables. to accurately authenticate all finished products in the secure and efficient movement of our products our portfolio. and materials with the goal of providing safety and Product and supply chain security Serialization security for our patients. Proactive security risk We carefully manage our supply chain through strict management, documented policies and procedures, and policies and procedures designed to keep the legitimate Serialization—adding a 2D barcode with a unique the engagement of internal and external stakeholders drug distribution system safe and secure. In the identification number on each package that goes to to promote security awareness are critical components U.S., for example, we require customers to purchase market—is one of the tools we are investing in to secure to providing embedded end-to-end supply chain our products directly from our company or from our supply chain and prevent counterfeiting. A serial protections ranging from raw materials to final product distributors authorized by our company. In addition, number on individual packages will enable anyone along disposition. we publish the names of authorized distributors on our the supply chain—from a distributor to a pharmacist to a patient—to scan the code and authenticate it as a Ongoing and future efforts involve the assessment corporate website. genuine product of our company. and use of technology to enable real-time supply chain We conduct risk-based audits of our distributors to visibility and domain awareness to minimize exposure ensure compliance with our policies and procedures. Serialization adds a robust layer to the company’s to risk. Proactive threat assessments are also completed for product-security platform. When associated with a regulatory mandate that specifies effective Investigations and enforcement facilities and supply routes identified to be at risk of cargo thefts and other illicit activity. implementation and reporting to a national database, The investigations and enforcement pillar of our this method of product tracking can become a more strategy is focused on deterring, detecting and Product-security features deployed on our products are meaningful product-security tool. responding to suspected and/or confirmed counterfeit a key measure taken to protect patients who use our activity in ways that mitigate risks to patient safety. products. Our pharmaceutical products are protected Many jurisdictions around the world are requiring with best-in-class product-security features, uniquely serialization on pharmaceutical packages or are considering such mandates. Serialization is required

Corporate Responsibility Report 2018/2019 43 ACCESS TO HEALTH | Anti-Counterfeiting

today in China, Turkey, Argentina, South Korea, Nigeria, chain. Several incidents of both inter-market and intra- Working with customs authorities, we have helped India, Saudi Arabia, the Middle East, the U.S. and market diversion of our pharmaceutical products, and identify high-risk ports, borders and postal depots, and Europe and will soon be required in Indonesia, Russia, multiple cargo thefts and product thefts from MSD or have provided a framework of action for use by customs Brazil, South Africa and Pakistan. Each country’s third-party facilities, were also a concern. authorities to detect and respond to counterfeit regulations are different, making it very challenging for activities. This training enables customs agents to Global Security addressed 1,287 events in a total of our packaging sites and distribution networks to meet identify suspicious pharmaceutical shipments and take 77 countries in 2018 involving counterfeiting, diversion, these diverse and intricate requirements with additional appropriate actions to detain suspicious shipments and/ product theft/loss (including cargo theft), tampering complexity as reporting requirements are phased in. or have suspect products analyzed. and brand security (non-company, unapproved generic We launched the Global Product Serialization Initiative products), which led to 442 arrests and the seizure of in 2012, with the goal of meeting these varying more than 46,000 units of counterfeit or illicit versions Advocacy, engagement and requirements in a robust, standardized and effective of company products. There were 148 prosecutions way based upon GS-1 standards. We are working with resulting from Product Integrity investigations. awareness industry associations and regulatory authorities to help We are committed to cooperating with relevant Another key aspect of investigations is the forensic shape these new requirements, and advocate for simple, government agencies, other pharmaceutical analysis of questioned products. This forensic testing standardized and common-sense regulations that can manufacturers, wholesalers, distributors, health is aimed at concluding whether a questioned product be effective at protecting against counterfeit medicines. professionals, consumer groups and key related is counterfeit, diverted, or otherwise illicit. Counterfeit organizations in fighting the problem of counterfeit Investigation and enforcement products are characterized in order to gain further pharmaceutical products and in educating the public intelligence and understanding of the counterfeiters Our company’s anti-counterfeiting operations are driven about the risks of counterfeit products and how to and the threats to public health. Our company also has by intelligence-led decisions to identify, prioritize and protect against them. aggressively pursue criminal enterprises responsible forensic detection devices in the field to analyze and for the manufacture and distribution of counterfeit detect counterfeits in regions around the world. This effort includes a multipronged approach to communicating the threat that counterfeit medicines and other illicit medications, and to identify and enable As counterfeiters improve their skills and techniques, pose and to mitigating this threat as effectively as meaningful enforcement actions against those offenders. our forensic scientists have pioneered the use of possible, while recognizing that it cannot be entirely several analytical tools for pharmaceutical-counterfeits Suspected counterfeit products are reported to our eliminated. company by patients, providers and from internal and detection and continue to explore new analytical tools other health care stakeholders. We respond to every that would increase their forensic testing capabilities. Collaboration and information-sharing in order to raise notification of suspected counterfeit or illicit medicine, Lab findings are shared with regulatory and/or law public and stakeholder awareness of the issue and risks in alignment with local regulatory requirements and in enforcement agencies and may be used to support are a crucial focus of our anti-counterfeiting program. support of our global patient-safety mission. We also subsequent enforcement actions and legal proceedings. Through active partnerships with other pharmaceutical proactively conduct threat assessments and other risk- There were approximately 736 unique questioned companies, and with organizations focused on security, based operations to identify offenses that threaten the samples received as evidence and prepared for forensic patient safety and public health, we provide effective health and safety of patients. These proactive activities testing in relation to active events in 2018. advocacy on high-priority anti-counterfeiting policy initiatives. are intended to identify, assess and develop effective To support and enable enforcement actions, we partner enforcement actions for high-value targets engaged with law enforcement agencies to detect and respond Highlights of our 2018 activities include: in illegal activities involving our products that have the to threats due to counterfeit products. This includes y Maintained compliance with U.S. Customs C-TPAT potential for negative patient-safety impact. working with U.S. authorities on the importation Program, to include readiness for pending 2019 of counterfeit pharmaceuticals and with European In 2018, the biggest risks to patient safety involved revalidation, which in part helps to facilitate global authorities on the importation and/or transshipment counterfeit versions of our company’s products sold in trade of our company’s products multiple countries, some involving the legitimate supply of counterfeit pharmaceuticals throughout the European Union.

Corporate Responsibility Report 2018/2019 44 ACCESS TO HEALTH | Anti-Counterfeiting

y Received ISO 17025 Accreditation for Americas y Trained more than 3,500 law enforcement and These collaborative efforts support the production of and EMEA Forensic Services labs. These are the customs officials worldwide reports, whitepapers and data-circulation initiatives, as first forensic or counterfeit detection labs in the y Launched internal company training programs well as promoting the intelligence-sharing necessary to pharmaceutical industry to achieve this significant focused on Supply Chain Security and Reporting of combat threats from counterfeit medicines. distinction Counterfeit, Diversion and Tampering Events. More y Assisted in the development and distribution of the than 49,000 of our global employees have completed Public policy Asia-Pacific Economic Cooperation (APEC) Regulatory the Product Integrity training. Harmonization Steering Committee (RHSC) We support the increased enforcement of existing In keeping with our mission to protect global public “Roadmap to Promote Global Medical Product Quality anti-counterfeiting laws and the adoption of new public health, we actively collaborate with international law and Supply Chain Security” with direct engagement policies to strengthen existing laws and enforcement enforcement agencies that prioritize the investigation, on the 2018 APEC Harmonization Center Global programs, including increased criminal and civil penalties prosecution and disruption of counterfeit medicines and Supply Chain Integrity Training and participation for counterfeiters. associated criminal enterprises. in the APEC Medical Product Security Roadmap We advocate for such change in a number of ways: Steering Committee We further support efforts to educate the public y As board members of the Alliance for Safe Online y Actively participated in the U.S. Pharmacopeia- about the risks of counterfeit drugs and how to Pharmacies—Global and ASOP-EU we support Council of Experts Review of Surveillance and protect against them, as well as efforts to develop initiatives and advocacy in the U.S., Europe and Asia Screening Technologies for the Quality Assurance of industry collaborations to support a unified response to raise awareness about the dangers of illegal online Medicines Expert Panel to the threat of counterfeit medicines. We have deep partnerships and/or leadership positions with the drug sellers and to steer patients to safe sources y Supported the development of a national health following organizations: of medicines. care providers campaign with the American Medical y As a member of the Global Innovation Policy Center, Association and 15 other national health care y Pharmaceutical Security Institute we support the White House’s Intellectual Property partners, including creation of a new toolkit for y Alliance for Safe Online Pharmacies—Global Enforcement Coordinator, as well as policy matters providers, which reached 21 million Americans in 2018 y International Chamber of Commerce’s Business related to anti-counterfeiting and enforcement in y Supported an educational program focused on the Action to Stop Counterfeiting and Piracy Congress and with federal agencies. link between importation and counterfeit medicine for y International Anti-Counterfeiting Coalition y As a member of the Pharmaceutical Distribution U.S. federal policymakers y International Trademark Association Anti- Security Alliance (PDSA), we supported the passage y Provided sponsorship of a health care provider Counterfeit Committee of the Drug Quality and Security Act (DQSA), education project resulting in partnerships with 15+ U.S. legislation that creates a national system and y International Federation of Pharmaceutical health systems in the U.S. resulting in a cover story uniform standards for tracking products across the Manufacturers (IFPMA) Fight the Fakes Partnership in the American Pharmacists Association’s Pharmacy pharmaceutical supply chain. PDSA includes over Today publication, distribution of English and Spanish y U.S. Chamber of Commerce’s Global Innovation 20 partners in the domestic pharmaceutical brochures in doctors’ offices and onsite trainings Policy Center distribution supply chain working to achieve a national y Provided testimony to the U.S. Congressional y Partnership for Safe Medicines solution toward product tracking. Trademark Caucus and Homeland Security y Quality Brands Protection Committee of China y We support the Anti-Counterfeiting Trade Committees and to the Senate Finance Association of Enterprises with Foreign Investment Agreement, which increases protection against a wide Committee in support of Senate efforts around y Rx360 Consortium range of intellectual property infringements. counterfeit medicines y The Center for Anti-Counterfeiting and Product y Together with other pharmaceutical companies we Protection at Michigan State University created the Pharmaceutical Security Institute (PSI) to develop global security strategies focused on

Corporate Responsibility Report 2018/2019 45 ACCESS TO HEALTH | Anti-Counterfeiting

both prevention and enforcement in order to ensure Performance More than 40 percent of these events have been public safety and product integrity. We continue to proactively investigated by Global Security to identify In 2018, there were 148 prosecutions resulting from be an active participant in this organization and are new or emerging product-integrity threats, or to product integrity investigations; 68 occurred in the advocating for increased levels of intelligence-sharing further characterize and mitigate known product- United States and Latin America, 25 in Europe, among the members. integrity threats. Middle East and Africa and 55 in Asia Pacific and China. y Our company supported the SAFE DOSES Act, which When a new product-integrity event is initially reviewed, As part of our proactive awareness program, was signed into law in the U.S. in October 2012. The it is assigned to one of five categories: bipartisan legislation modernizes the U.S. Criminal throughout 2018, Global Security trained 3,539 law Code to increase criminal penalties for medical- enforcement personnel in more than 50 countries y Product Theft/Loss product cargo theft and provides law enforcement regarding the patient safety danger related to y Brand Security counterfeit and diverted medication. tools to deter this criminal behavior and take down the y Diversion organizations that are perpetrating it. Global Security also launched an internal training y Tampering y Our company supported the Trade Facilitation program on the Counterfeit, Diversion and Tampering y Counterfeiting and Enforcement Act, which was signed into (CDT) reporting process in late 2017. To date, more than law in February 2016. Known as the Customs 49,000 employees and contractors have completed this The following table details the number of new suspected Reauthorization Act, this bill provides additional training globally. and substantiated counterfeit events in 2018, as well as resources to Customs and Border Protection (CBP) the number of events introduced in previous years and In 2018, Global Security addressed more than 1,200 and formalizes the capacity for public-private the subsequent outcome for these events. active product-integrity events (counterfeit diversion, partnership to strengthen intellectual property supply chain security, tampering and brand security) in The category for any event can change as the event enforcement. 77 countries, which led to 442 arrests and the seizure develops and further information is collected, typically of more than 46,000 units of counterfeit or illicit as a result of forensic testing or other review of company product. associated samples: the data below reflects the current status of each event as of April 2019.

ANTI-COUNTERFEITING1 2014 2015 2016 2017 2018

Investigations of suspected counterfeit products 321 149 236 213 539

Substantiated cases of counterfeit products 172 73 102 73 117

1 Prior-year data has been adjusted to reflect the current status of each event as of April 2019.

Corporate Responsibility Report 2018/2019 46 ACCESS TO HEALTH | Product Registration

Product Registration

An important goal for our company is In addition to having our medicines and vaccines We have also focused on addressing the needs to reduce the historic gap in product approved by stringent regulatory authorities, when of patients in lower-income countries by adding relevant to enhancing access in low- and middle-income features and product improvements to respond to introduction between high-income countries, we also work to have certain medicines WHO’s criteria for vaccines that are candidates for and lower-income countries. and vaccines prequalified through the World Health programmatic suitability for prequalification. These Organization (WHO) prequalification process. features include vaccine vial monitors (VVMs), the acceptability of a two-dose regimen for HPV vaccines RESOURCES WHO prequalification can facilitate product and use in controlled-temperature-chain conditions. Public Policy Position Statement: procurement by international procurement agencies. IP and Access to Medicines in the WHO’s prequalification program covers medicines for Below is a list of products that have been prequalified Developing World HIV, TB, malaria, neglected tropical diseases, influenza, by WHO as of March 31, 2019. reproductive health and diarrhea, in addition to vaccines. In the absence of reliable national medicine authorities that can certify health care products meet required quality, safety and efficacy standards, stringent regulatory authority and WHO prequalification can serve as a basis for quality assurance for procurement by international agencies and national programs in lower-income countries.

Corporate Responsibility Report 2018/2019 47 ACCESS TO HEALTH | Product Registration

Product International Nonproprietary Name (IN) Date of Prequalification Registration status

FAMILY PLANNING In order to make our products available to the people who need them throughout the world, we registered MARVELON 28® Ethinylestradiol + Desogestrel October 2010 124 products and devices in 2018. The majority of these EXLUTON® Lynestrenol June 2010 products were registered in low- and middle-income countries in the Asia-Pacific, Central and Eastern IMPLANON NXT® Etonogestrel May 2013 Europe, Middle East and Africa, and Americas regions.

VACCINES To increase transparency regarding the registration status of the company’s products, we continue to MMR-II® Measles, Mumps, Rubella Virus Vaccine Live December 2008 disclose registration information for ROTATEQ, ROTATEQ® Rotavirus Vaccine, Live, Oral, Pentavalent October 2008 GARDASIL and our four antiretrovirals: y GARDASIL® [Human Papillomavirus Quadrivalent GARDASIL® Human Papillomavirus Quadrivalent (Types 6, 11, 16, 18) Vaccine, May 2009 Recombinant (including a VVM) (Types 6, 11, 16 and 18) Vaccine, Recombinant] y ROTATEQ® (Rotavirus Vaccine, Live, Oral, GARDASIL® Human Papillomavirus Quadrivalent (Types 6, 11, 16, 18) Vaccine, October 2014 Recombinant (two-dose regimen to support its programmatic Pentavalent) feasibility in developing countries) y ATRIPLA® (efavirenz, emtricitabine, tenofovir disoproxil fumarate) GARDASIL® Human Papillomavirus Quadrivalent (Types 6, 11, 16, 18) Vaccine, May 2016 Recombinant (compatibility for use in a controlled temperature y CRIXIVAN® (indinavir sulfate) chain to facilitate its administration in high-temperature, y ISENTRESS® (raltegravir)1 low-cold-chain infrastructure areas of developing countries) y STOCRIN® (efavirenz) GARDASIL®9 Human Papillomavirus Quadrivalent (Types 6, 11, 16, 18) Vaccine, February 2018 Recombinant (including a two-dose-regimen variation)

VARIVAX® Varicella Virus Vaccine Live (first varicella vaccine to receive February 2018 Intellectual property and access to WHO prequalification) medicines in low-income countries HIV/AIDS TREATMENTS As a global health care company, our primary role is to discover and develop innovative medicines and STOCRIN® Efavirenz (600mg tablet, Oral Solution 30mg) Efavirenz (50mg May 23, 2006 / May 14, 2008 tablet, 200mg tablet) vaccines that treat unmet medical needs and prevent illness around the world. For many decades, intellectual CRIXIVAN® Indinavir Sulfate May 23, 2006 property protection has promoted an environment conducive to research and development in the pharmaceutical arena.

Corporate Responsibility Report 2018/2019 48 ACCESS TO HEALTH | Product Registration

Although alternative approaches for incentivizing innovation and investment in medical R&D are Performance advocated by some, none of these approaches has PRODUCT REGISTRATION 2014 2015 2016 2017 2018 yet demonstrated the capacity to generate enough 1, 2, 3 sustained investment necessary to discover and develop New product and device registrations (annual) 176 156 143 143 124 new medicines. While we are interested in new ideas Products submitted that have achieved WHO prequalification 11 11 11 13 13 and proposals, it would not be in the best interests of (cumulative) patients to advance unproven alternatives that would 1 Data include new products and new indications. fail to incentivize and sustain the large investments 2 For information on new registrations by region, visit our Clinical Research section. necessary to develop and bring forth new medicines. 3 Data for all years have been updated based on a tracking system upgrade that corrected miscounts in prior years. We also recognize that we have a role to play in helping to ensure that our products are accessible and affordable to patients in need. We are committed to pursuing approaches to foster access to high quality health care and critical medicines. While our company files for patents in commercially significant markets to provide the continued incentive to support innovation, given the challenges that many people in low-income countries face to afford certain medicines and the very substantial resource constraints facing their governments, we have had a long-standing general policy of not filing for patents for our products in these markets, and currently do not file in any low-income country defined as such by the World Bank in its Country and Lending Groups classifications. Moreover, as evidenced by our voluntary licenses for raltegravir with multiple generic manufacturers for the 400 mg tablet and with the Medicines Patent Pool for pediatric formulations of raltegravir, we are committed to expanding access to our medicines globally, including through facilitating the availability of high-quality generics in the areas of greatest need to support global public health initiatives. Learn more about our commitment to register our: y HIV/AIDS medicines y Women’s health products y Vaccines

Corporate Responsibility Report 2018/2019 49 ACCESS TO HEALTH | Product Pricing

Product Pricing

provides through multiple lenses with the goal of As health care systems in many developed markets are DISCLOSURES IN THIS SECTION reflecting its benefit to patients and to society, while at moving to a value-based care model, we are working GRI 203-2 the same time paying an appropriate return on invested with payers and other stakeholders to find flexible SDG 3 capital to our shareholders, to ensure that we are able to approaches to pricing. These include the use of quality- sustain research & development. and performance-based contracts where payment is We are working to bring our medicines linked to quality metrics or improved health outcomes. While each individual situation varies based on factual and vaccines to more people around the circumstances and market dynamics, generally, As part of our commitment to transparency, in 2017 world in ways that are as accessible and we consider: we started disclosing information on our Corporate Responsibility website about the price of medicines affordable as possible for the patients y Value provided to patients who need them. across our portfolio in the U.S. through our U.S. Pricing y Value provided to health care systems Transparency Report. We strive to commercialize our products in a way that y Unmet need both develops our business and meets local needs in a y Access responsible, accessible and efficient manner. Pricing and access in low- and y R&D sustainability middle-income countries In keeping with George W. Merck’s timeless wisdom that y Competition “medicine is for the people,” we price our products to In many countries, patients are able to obtain health support access for patients today while also promoting We have a long history of making our medicines and care and medicines at competitive prices through the critical investments that will empower our scientists vaccines accessible and affordable through responsible public and private health insurance plans that negotiate to invent the cures and treatments of tomorrow. pricing practices and industry-leading patient access significant rebates and discounts with pharmaceutical programs. We are proud of the progress we have manufacturers. We approach pricing from the perspective of value. made to date and remain focused on responsible and This approach looks at the value that a medicine sustainable pricing of our medicines moving forward. Corporate Responsibility Report 2018/2019 50 ACCESS TO HEALTH | Product Pricing

We have differential pricing For example, we are engaged with stakeholders VAQTA® (Hepatitis A Vaccine, Inactivated)] are provided for 42 of our products, and within the family planning community, including the at a reduced price through our agreement with PAHO, United Nations Population Fund (UNFP), Marie Stopes which targets access to low- and middle-income 128 countries have implemented International (MSI), Population Services International patients in Latin America. inter- or intra-country pricing (PSI) and the United States Agency for International In 2018, we established a partnership with Rotary Development (USAID), to support advocacy of the for at least one of them. International to initiate a grant program to rural school “Total Market Approach (TMA)” in key markets to clinics in lower income districts supported with a In low- and middle-income countries, however, we help governments better target subsidized products, differentiated price for our HPV vaccine. This initial pilot recognize access to and funding for health care can be help the public sector focus on the poorest segments has helped to deliver HPV vaccination to over 3,000 limited. While major public health programs in these of the population, increase the ability of the private girls to date. In Indonesia, we successfully engaged countries that focus on health priorities such as HIV/ sector to serve middle-income tiers of the population with the government on continued growth in their AIDS, malaria, tuberculosis and routine immunization and decrease overall donor funding dependency. TMA HCV elimination goals through supportive disease are heavily subsidized by the government through leverages market efficiencies, helps expand equitable management efforts combined with reduced pricing. international organizations and private funding, health access and encourages intra-country price tiers based These efforts have recently led to expanded access insurance programs often do not exist or are limited. on economic population segments. treatment pilots initiated in three cities targeting 500 As a result, patients in these countries frequently must We partner with Gavi, the Vaccine Alliance to HCV patients complicated with renal impairment. pay the price of medicines out of pocket, a particularly expand access in low- and middle-income countries daunting ask for families living near or below the We remain committed to continued growth in to our vaccine, GARDASIL® [Human Papillomavirus poverty line. identifying and implementing opportunities to support Quadrivalent (Types 6, 11, 16 and 18) Vaccine, access through differential pricing. We will continue Therefore, we develop and support various sustainable Recombinant]. Several of our vaccines [i.e., GARDASIL, to champion innovative programs and partnerships strategies to improve access in low- and middle-income PNEUMOVAX23® (Pneumococcal Vaccine Polyvalent), to help increase the availability and accessibility of our countries, including directing differential pricing MMR-II® (Measles, Mumps and Rubella Virus Vaccine medicines and vaccines for those who need them. to patient sub-segments, either directly through Live), VARIVAX® (Varicella Virus Vaccine Live) and national or local programs or indirectly through third- party health care funding sources that demonstrate reasonable and secure product distribution to intended patient segments and subject to applicable legal Performance requirements. PRODUCT PRICING 2014 2015 2016 2017 2018 Currently, we have differential pricing for 42 of our products, and 128 countries have implemented inter- Number of products that are supported with differential pricing 1, 2 35 35 40 42 42 or intra-country pricing for at least one of our products. Number of countries where inter- and/or intra-country pricing 114 121 123 125 128 This notable increase of differentiated prices in both the has been implemented3 scope of our products and eligible countries is the result of several initiatives including expanding innovative Investment in patient- and provider-education programs $52 $80 $80 $90 $115 (in millions) concession program offers for our hepatitis C virus and women’s health product portfolios in low- and middle- NOTE: Year-over-year differential pricing performance metrics can be impacted based on the timing of local-market or third-party contract re- income markets and the continuation of HIV and vaccine newals and/or product life-cycle introductions or deletions. Therefore, increases or decreases in these pricing metrics should not be interpreted as anticipating the level of trend growth in future years. access pricing for Gavi-eligible and Gavi-graduated 1 Differential pricing intended to facilitate access for the at-need population. countries, as well as enabling expanded access through ² Products include HIV treatments, vaccines and other patented products. reduced vaccine pricing with UNICEF. ³ Countries as defined by the World Bank 2017 GNI Classification, including UN-defined Least Developed Countries.

Corporate Responsibility Report 2018/2019 51 ACCESS TO HEALTH | Social Investments

Social Investments

opportunities—all while growing a sustainable global DISCLOSURES IN THIS SECTION Philanthropic giving health ecosystem and attracting additional capital SDG 1 SDG 17 GRI 203-1 Our social investments through philanthropic giving SDG 3 GRI 201-1 and partners. target underlying barriers to access to health. Our approach to these investments is guided by several key Impact investing is led by our Office of Social Business We recognize that we cannot address principles: addressing critical global health needs where Innovation with guidance from the Impact Investing complex public health challenges on our we can have a meaningful impact, collaborating with key Committee. Established in 2019, the Impact Investing own but must address the barriers to partners to optimize our effectiveness, and leveraging Committee is a cross-functional team of senior company leaders that reviews and approves new investments access where we believe we can make not only cash and product donations but also expertise and capabilities across our company. in line with established policies and guidelines and the strongest contributions. monitors the financial and social returns of the impact Learn more about our social investments through portfolio. We are also members of the Global Impact We know that strengthening health systems and philanthropic giving. Investing Network (GIIN), through which we can building capacity are important to improve access contribute to and benefit from the growing body of to quality health care and to help address underlying expertise in the impact investing ecosystem. barriers to health. Through innovative approaches to Impact investing social investments, we invest in initiatives targeting One of our growing innovative approaches is impact Our impact investing portfolio is summarized below, and long-term solutions to improve health systems. investing, through which we are advancing sustainable we continue to evaluate impact investing opportunities These investments include philanthropic giving and global health solutions in line with our company’s overall that are aligned with our corporate responsibility impact investing. objectives. Through impact investing, we are able to priorities and business objectives. In 2018, more than deploy financial resources in ways that may generate 2.8 million people were reached by health interventions not only improved access to health care for underserved via our impact investments; as our investments populations, but also financial returns and commercial continue to mature, we will continue to measure the

Corporate Responsibility Report 2018/2019 52 ACCESS TO HEALTH | Social Investments

social impact of our portfolio. In addition, to support providing a fixed rate of return to investors, the Bridge Direct access the sustainability of our work, we intend to direct any Fund combines timely, high-impact health assistance financial returns from our impact investments into with sustainable deployment of our company’s While we are committed to addressing underlying other corporate responsibility activities. financial resources. barriers to access through social investments, we recognize there are patients who need access now. In 2014 we invested in the Global Health Investment In 2019, we invested in Leapfrog Investments Fund III, To complement our philanthropic giving and impact Fund (GHIF), a social impact investment fund that which is developing a portfolio focused on investing in investing that target long-term improvements in the supports the development of innovative medicines innovative businesses providing financial services and health ecosystem, we operate programs to provide and other health interventions for patients in low- and health care services and products to low- and middle- direct access to our medicines and vaccines to patients middle-income countries. In 2016, we invested in what income consumers in high-growth emerging markets. in need now and where market-based solutions are is now The Evercare Health Fund, managed by TPG. Investments will focus on health care inclusion (e.g., inadequate or unavailable. We remain committed to Evercare consists of a growing portfolio of hospitals, retail pharmacies) and financial inclusion, including donating our medicines and vaccines through organized diagnostic centers and other facilities in high-growth health insurance companies and other businesses. programs, as appropriate. The primary programs countries in Africa and Asia. The sustainable business We also made an investment into TEAMFund (www. involving donations of our products are: our Medical model of Evercare is developing commercial solutions to teamfundhealth.org), expanding access to affordable, Outreach Program, the MECTIZAN® (ivermectin) provide needed health services to reach patients who appropriate and sustainable medical technologies Donation Program and our U.S.-based Patient currently lack adequate health care and medical support. that address unmet health needs for underserved Assistance Programs. In 2018, we joined UNICEF Bridge Fund by making populations, with an initial focus on India and a five-year loan to this novel investment vehicle Sub-Saharan Africa. that accelerates the provision of critical health care commodities to benefit vulnerable children in limited- resource settings, including for disaster relief. By

Performance

COMMUNITY INVESTMENT 2014 2015 2016 2017 2018

Health care workers trained through our major programs and 137,000 19,000 32,000 74,000 67,000 partnerships (estimate)1

Annual investment in partnerships for activities that $32 $21 $28 $40 $37 address underlying barriers to health, such as health-system strengthening and capacity building (in millions)1

People reached through our major programs and partnerships 267 188 293 311 357 (in millions)1

1 Represents investments by our Office of Social Business Innovation, including our Office of Corporate Responsibility,MSD for Mothers and our company’s Foundation.

Corporate Responsibility Report 2018/2019 53 ACCESS TO HEALTH | Patient Engagement

Patient Engagement

Our company’s mission is to discover, patient perspectives fosters a culture of innovation We are committed to learning from the patient’s develop and provide innovative products and produces improved medical, patient, scientific and perspective and to empowering patients, caregivers and business outcomes. Optimized patient engagement health care professionals by making public the results of and services that save and improve lives will result in better informed patients and enable clinical trials in a timely manner, whether the outcomes around the world. opportunities for patients to have a greater voice in are positive or negative. decisions that will affect their health care options. Because of the gaps in patient care and changes to We have a strong commitment to health literacy, and we health policy in such areas as vaccination, oncology, Our chief patient officer represents our company believe that clear, simple information about clinical trials, heart disease, HIV, hepatitis C (HCV) and other globally on patient-related matters and leads the diseases and medicine should be made easily available to chronic conditions, there is a compelling need for the company’s efforts to engage with patients and patient people across a range of health-literacy levels. pharmaceutical industry to work more closely with organizations to bring their perspectives into the We have a long history of collaboration with patient patients, caregivers and patient organizations to company and help inform company decisions. groups and health-related charities and believe that better understand outcomes from the patient’s point As part of our company’s unwavering commitment an important way to advance our mutual objectives of view, and to improve access to therapies, validate to the well-being of patients worldwide we have to improve health and advance patient care is through measurement tools and increase awareness of diseases. established an internal Patient Innovation Advisory independent grants and donations to patient advocacy We embrace the opportunity to engage with individual Council, with key representation across the organization organizations. For more information, please see our patients, patient advocacy organizations and caregivers and internationally, to create a forum for routine, grant disclosures. to better understand their health care journeys and prompt and deliberate discussion and coordination to bring their perspectives into our company and help of patient-facing activities and issues of importance inform our decisions. We believe that the inclusion of to patients.

Corporate Responsibility Report 2018/2019 54 ACCESS TO HEALTH | Health Literacy

Health Literacy

We are committed to improving health health promotion, to maintain or improve quality of life Health literacy challenges can affect people of all ages, literacy as part of our mission to save during the life course. Put simply, it is a person’s ability races, incomes and educational levels. Some population to obtain, communicate, process and understand health groups in the U.S. are more vulnerable to low health and improve lives. information. literacy. They include the elderly, people with less than a high school education, people living in poverty, racial Health literacy is vital for health, be it living healthy, Since its inception in 1891, our company has pushed the and ethnic minorities and people with limited English disease prevention or to achieve the best possible boundaries of science with the hope and expectation proficiency. results from medical care. We must partner with that advancing scientific knowledge will lead to major patients to promote their understanding of their advances in health. Our commitment to improving Health literacy also has an impact on medical condition or disease, the reasons they are being patient health outcomes extends to our commitment to treated, and the appropriate use of their medications health literacy. the efficient use of health care resources. and other treatments. Those with limited health literacy are According to the World Health Organization (WHO), Put simply, health literacy is a person’s people with strong health literacy skills enjoy better more likely to have chronic conditions and ability to obtain, communicate, process health and well-being, while those with weaker skills are less able to manage them effectively. tend to engage in riskier behavior and have poorer and understand health information. health. Patients require health literacy skills in order Health literacy can affect a person’s ability to access to understand and navigate the health care system, Health literacy is linked to literacy and entails people’s health care services, use services appropriately, talk to providers, engage in self-management, exercise knowledge, motivation and competence to access, adopt health-promoting behaviors, manage chronic basic numeracy skills, adopt healthy behaviors and act understand, appraise and apply health information in conditions, navigate the health care system, and act on on news and information. Self-management with the order to make judgments and take decisions in everyday 1, 2 health-related news and information. support of health care providers led to better outcomes life concerning health care, disease prevention and in various chronic disease areas such as asthma, diabetes or arthritis. Corporate Responsibility Report 2018/2019 55 ACCESS TO HEALTH | Health Literacy

We understand improving health literacy takes a Externally, MSD sponsored the 2018 Asia Health Patients’ Forum (EFP), the European doctors (CPME) multifaceted effort focused on public policy, engaging Literacy Conference and is working with patient and the Global Health Literacy Academy and have begun diverse stakeholders and new ways of communicating. advocates and scientific leaders to develop a manuscript six publications about health literacy in several disease We are calling government agencies, health care highlighting health literacy activities across Asia. areas, as well as broader regional perspectives. providers, patient advocacy groups and health care We continue to actively engage throughout Europe to companies to work together to increase patient improve patient understanding of medicine, advocating understanding of health care, health promotion and Australia for health literacy in e-labeling. prevention and shared treatment plans. In Australia, a team participated in a health-literacy webinar and performed a review of conference Belgium materials. The team is committed to expanding MSD in Belgium crowdsourced “HealthNest,” a Initiatives the inclusion of health literacy in future patient coaching program to help health professionals, patient communications. associations and others address their needs and gaps, Our internal efforts focus on improving internal such as creating a business plan. awareness and the systematic adoption of health literacy. Europe France Global external efforts were driven by a strong At the European Union level, the role of health literacy is In France, MSD was the first pharmaceutical company commitment to scientific excellence in health literacy. recognized by high-level decision-making bodies. Both to support “University of Patients.” The region also These efforts focused on several areas: patient support the conclusions of the Council of the European Union partnered with patients and providers to support programs, evidence-based best practice sharing and the “Riga Roadmap”—a joint declaration by industry, women’s empowerment and HPV prevention and through presentations and publications and input to civil society and patient organizations—refer to the launched an online platform about HPV. importance of health literacy.³ regulators about the importance of health literacy. Germany As a result of our external engagement, the MRCT We believe health literacy is a key MSD in Germany is supporting a coalition for patient working group will produce publicly available tools, determinant for health. safety; participating in a working group for user-friendly, resources and case studies to aid patient advocates, digital Patient Information Leaflets and supporting 80 pharmaceutical companies and academic researchers in Patients with higher health literacy levels are better able patient organizations on projects to improve health more consistently implementing health literacy during to navigate and access the health system, understand literacy in cancer, HIV, Hepatitis C, and other diseases. all phases of clinical research. the importance of cancer prevention, seek earlier Greece diagnosis and adhere better to treatment. Throughout In addition, FDA draft guidance documents on PFDD In support of the National Action Plan to Eliminate 2018, we expanded our engagement to advance health have included health literacy references, and this has Hepatitis C, MSD partnered with providers and launched literacy within the field of cancer. We supported the also been incorporated as a recurring theme in PhRMA “Don’t be late” to improve awareness of cervical cancer development of an eLearning Module about Health and PFDD letters giving input on draft documents. and also supported several patient associations in their Technology Assessment (HTA) of the European Cancer efforts to improve health literacy. Patient Coalition that aims to improve patients’ Asia knowledge about HTA. Hungary A cross-functional team of employees from medical We believe health literacy is a key determinant for Under the leadership of MSD, a pharmaceutical affairs, marketing and sales participated in a day-long health. That is why we engage publicly and together manufacturing group is addressing health literacy health-literacy training in China, culminating in the with multiple stakeholders on health literacy and share through health literacy awards and delivering an identification of a pilot project to advance patient best practices in national and global forums. In 2018, Academy for Patient Organizations, serving over 60 communications. we have submitted a publication with the European organizations since its launch in 2018.

Corporate Responsibility Report 2018/2019 56 ACCESS TO HEALTH | Health Literacy

Ireland Latin America teach-back and cultural competence as part of their MSD Ireland conducted research showing a significant investigator training. In Latin America, Global Medical Affairs developed lack of public trust in online health information and consumer materials about anesthesia and antimicrobial External efforts focus on sharing best practices including: published and shared these results broadly. resistance, publishing 12 principles to remember before y Co-chair of Health Literacy in Clinical Research Italy starting an antibiotic. These materials integrated working group at the Multi-Regional Clinical Trials MSD Italy has addressed health literacy in several health-literacy principles. Externally, MSD is working (MRCT) Center of Brigham and Women’s Hospital ways, including two HPV awareness projects, the with patient advocates and scientific leaders in health and Harvard literacy to develop a manuscript highlighting health- development of an online portal to provide trusted y Case study presentation (Patient Labeling) to the literacy activities across Latin America. information about cancer and a patients’ digital FDA as part of PhRMA working group input session health award. on Patient Focused Drug Development (PFDD) Poland United States y Participant on BIO and PhRMA working groups Since 2009, MSD Poland has been organizing In the United States, we continue to focus on training on PFDD educational programs on HPV and cervical cancer, our global workforce in health literacy. To date, over y Planning committee for health literacy in clinical reaching more than 1,200,000 students since launch 1,000 employees have undergone training, including trials meeting of National Academies Health and 60,000 students in 2018 alone. They launched over 700 people in our clinical research organization. Literacy Roundtable short articles, videos and infographics about the value As a result, there are many examples of health literacy in y Initiation of pharmaceutical collaborative of National of vaccines. action across our company’s product lifecycle, including Academies Health Literacy Roundtable Portugal our earliest clinical trials, informed consent, diversity in y Keynote panel at 2019 SCOPE meeting (Summit for Throughout 2018, MSD Portugal partnered with several trials, patient labeling, instructions for use, packaging Clinical Ops Executives)—over 1,800 attendees organizations to launch a website about several types of and patient education. y Keynote presentation at 2019 International Society cancer and immunotherapy, providing practical guides The FDA approved our sixth health literate patient label for Medical Publication Professionals annual to improve the quality of life for cancer patients. developed with iterative patient input, and we were meeting—over 600 attendees Slovakia recognized as the second runner-up for the Healthcare y Health Literacy Out Loud Podcast Compliance Packaging Council’s “package of the MSD Slovakia created a “Map of Prevention,” As a result of our external engagement, the MRCT year” for our antiviral medicine used to help prevent highlighting key activities to promote prevention then working group will produce publicly available tools, cytomegalovirus (CMV) infection after a stem cell (bone convening multi-stakeholder working group to address resources and case studies to aid patient advocates, marrow) transplant from a donor. the important issues. The Ministry of Health announced pharmaceutical companies and academic researchers in 2019 the Year of Prevention including cancer screenings. In 2018, our product labeling team developed a more consistently implementing health literacy during Standard Operating Process (SOP) for new molecules, all phases of clinical research. Spain and currently human health marketing is developing a In addition, FDA draft guidance documents on PFDD MSD Spain has launched several initiatives to support process to integrate health literacy principles into all have included health literacy references, and this has health literacy and informed patients, including vaccine new or updated patient materials. awareness, quality of life for cancer patients, diabetes also been incorporated as a recurring theme in PhRMA and HIV. Our clinical safety and risk management/ and PFDD letters giving input on draft documents. pharmacovigilance teams have established goals 1 U.S. Department of Health and Human Services (HHS). Quick Guide to ensure that employees have a foundational to Health Literacy. Accessed June 22, 2016. understanding of health literacy to support 2 HHS. Quick Guide to Health Literacy. Fact Sheet. Health Literacy. Basics. Accessed July 9, 2018. communication of patient safety information. 3 The Riga Roadmap. Investing in Health and Wellbeing for All. (2015). Beginning in 2019, new clinical trials included Accessed May 13, 2016.

Corporate Responsibility Report 2018/2019 57 ACCESS TO HEALTH | Health Resources

Health Resources

We believe that health information is As the Manuals have evolved, they have continually The Manuals expanded the reach and depth of offerings to reflect a universal right and that every person The Manuals, known as the Merck Manuals in the the mission of providing the best medical knowledge is entitled to accurate, accessible and U.S. and Canada and the MSD Manuals in the rest of of the day to a wide cross-section of users, including usable medical information. the world, are among the most widely used medical medical professionals and students, veterinarians and information resources. veterinary students and consumers. RESOURCES The 20th edition of the Manual is As a sign of our deepened commitment to worldwide MSD Manuals medical information access, we have made the Manuals now available in print, and it has been available for free in digital form in multiple languages to completely revised, redesigned and professionals and patients around the world. expanded in this new edition. The 20th edition of the Manual is now available in print. We also believe that we have a responsibility to protect, Published in April 2018, this new edition boasts 3,584 preserve and share the best current medical information First published in 1899 as a small reference book for pages filled with the most up-to-date medical content to enable better informed decisions, to enhance physicians and pharmacists, the Manuals have grown written by over 350 medical experts. The Manual is one relationships between patients and professionals, and to in size and scope to become among the world’s most of the most comprehensive medical references and it improve health care outcomes around the world. widely used comprehensive medical resources. Over has been completely revised, redesigned and expanded the years, the Manuals have been translated into 17 Highlighted below are examples of publications, policies, in this new edition. languages in print, and a consumer version has been links and other resources for both patients and health published since 1997. care professionals.

Corporate Responsibility Report 2018/2019 58 ACCESS TO HEALTH | Health Resources

Global Medical Knowledge 2020 Consumer engagement program y Program app available on Google Play & Apple App Store Our most aggressive and far-reaching mission to make According to a study published by the New England y Links to product savings coupons and free trial offers medical knowledge available to date has been the Journal of Medicine, an estimated one-third to one-half Global Medical Knowledge 2020 initiative. Through this of all patients in the U.S. reportedly do not take their worldwide project, our goal has medications as prescribed.1 The Adherence Estimator® been to make the best current Twenty to thirty percent of new prescriptions are never Patients often fail to reach clinical goals because they do medical information accessible for filled at the pharmacy, and the majority of patients not take medications as directed. We remain committed more than 3 billion professionals prescribed medications for chronic diseases have, after to the issue of medication adherence and to helping and patients around the world six months, taken less medication than prescribed or patients with adherence-related programming and by 2020. We have successfully stopped the medication altogether.2 solutions that are scientifically based. accomplished this goal by making the Manuals available online The following resources are designed to help patients The foundation of our adherence program is the for free in 10 languages and as free mobile apps in six stay on course with their treatments and have better Adherence Estimator®. The Adherence Estimator is languages. Additional languages are planned for release conversations with their health care providers about the a validated, patient-based resource that gauges the in 2019 and beyond. medicines they have been prescribed. likelihood of a patient adhering to a newly prescribed oral medication for certain chronic asymptomatic Our company’s digital consumer engagement program, conditions. The Adherence Estimator asks questions a free health-support program intended for consumers about three key areas of patient perception that in the U.S., offers resources that help consumers affect adherence: achieve their health goals by reinforcing healthy lifestyle choices, providing disease-specific education, y Concerns about prescription medication supporting adherence to therapy and facilitating more y Commitment to a prescription medication productive interactions with health care professionals. y Financial burden from the cost of a The program also includes support and encouragement prescription medication for caregivers, who are often engaged in the day-to-day care and treatment decisions of family members After respondents answer the questions, the resource and friends. provides information to enable the patient and health care provider an opportunity to discuss any concerns Elements of the consumer engagement that the patient may have. In addition to our outcomes program include: research studies, we continue to explore behavioral and y Caregiver Resources motivational factors that contribute to non-adherence. y Disease-specific support information including With this new information, we will build tools and articles, slideshows, infographics and quizzes resources that will allow for a deeper conversation between patients and their health care professionals Furthermore, we are actively partnering with health y “Getting started” fitness ideas and recipe section on behavior change to improve medication adherence. care and patient organizations, companies and libraries y A guide to better “Know Your Health Insurance” And to facilitate the conversation, we are exploring throughout the world to fulfill our mission and make y Low-sodium, low-fat, low-sugar, low-calorie technology to get our adherence tools and resources the Manuals readily accessible to all. The Global Medical cookbooks are available to download the ability to integrate into workflow within electronic Knowledge 2020 initiative is a direct reflection of our health records. company’s broad corporate commitment to addressing y Ability to join our community on social media via unmet medical needs and improving global health. Facebook, Twitter, YouTube and Pinterest

Corporate Responsibility Report 2018/2019 59 ACCESS TO HEALTH | Health Resources

SPARTA How2Type2.com was launched in the United States in Over 3.6 million health care professionals are registered April 2019 to positively impact the diabetes health care members of Univadis, which is available across 63 SPARTA is an adherence platform that supports patients epidemic, one community and one patient at a time. specialties, 20 languages and 90 geographic markets. on any of our company’s therapies to improve adherence In the U.S. alone, 30 million Americans are living with The medical and scientific content comes from to these medications and provides access to various tools diabetes, most of which have type 2 diabetes (T2D). independent third parties, such as scientific leaders, and resources to assist in the management of conditions. T2D is a disease that impacts many aspects of daily educational institutions and medical societies, as well living, and as such the diagnosis always comes with SPARTA was created in Australia in 2009, in partnership as through partnerships with a range of world-leading recommended changes to lifestyle such as changing with physicians and pharmacists who voiced the need medical publishers. Sponsor organizations provide activity levels and eating habits. These behavioral for more robust patient support. In addressing this educational funding to expand and augment the site’s modifications can be challenging, and often leave unmet need, modules were created to support enrolled core content in adherence with the strict editorial patients feeling frustrated, guilty and alone. patients in managing their chronic conditions. The principles of independence, relevance and quality. modules consisted of various patient touch points How2Type2.com is designed to offer practical tips and With no subscription or registration fees, Univadis providing telephone support and text/email reminders, advice that help people make small changes in their provides access to: remote monitoring, symptom management tools and lifestyle choices, which can have a big impact on long- disease education to help patients understand their term habits. The content is also designed to give people y The latest medical news and clinical developments in condition better, realize the importance of diet and a sense that they’re not alone—by providing stories 60+ specialist areas exercise in managing their condition and, ultimately, and perspectives from “people like me” and showing y Weekly research summaries from major peer- improve medication adherence. them HOW to live with type 2 diabetes. The program reviewed publications also accounts for cultural nuances across the country SPARTA grew from 60,000 patients in Asia-Pacific in y Conference coverage from medical congresses 2013 to more than 270,000 patients across the globe by offers relevant content that accounts for social y Full online access to trusted medical references in 2018. and cultural differences, including a Spanish language version of the website. y A library of thousands of medical images to enrich In 2019, the program will continue its expansion into presentations and research the new therapeutic areas of immunology, oncology, Since the site launched, over 5,000 unique visitors have y A wide range of resources to enhance interactions hepatitis, HIV, women’s health and insomnia. visited and engaged with content—reading on average two articles per visit and sharing content with others. with patients at the point of care SPARTA has been launched in Australia, India, Indonesia, Univadis creates unique opportunities for long-term Vietnam, Malaysia, Singapore, Oman, Taiwan, Mexico, and meaningful partnerships with scientific and United Arab Emirates, Chile, Sweden, Belgium, Univadis® health care organizations, in addition to the world- Switzerland, Ireland and Germany. Univadis® is a comprehensive online medical- class publishers that our company already works with. information resource from Aptus Health—a wholly Univadis aims to be a valuable partner in building lasting How2Type2.com owned and independently operated subsidiary of the relationships with our 3.6 million individual health care Company—for health care professionals worldwide. users globally. How2Type2.com is a patient-centric website that 1 focuses on providing adults living with type 2 diabetes This Web- and mobile-optimized resource provides Osterberg L, Blaschke T. Adherence to medication. N Engl J Med. high-quality, relevant and trusted medical information 2005. Aug 4;353(5):487-97. access to useful and relevant content that will enable 2 https://www.fda.gov/drugs/special-features/why-you-need-take- them to make small, but significant lifestyle changes to essential for health care practice. The site features your-medications-prescribed-or-instructed breaking medical news, accredited education courses better manage their disease. The site is about the how to do, not the what to know. and tools tailored by medical specialty and clinician need. Additionally, a point-of-care mobile application is available in key markets.

Corporate Responsibility Report 2018/2019 60 ACCESS TO HEALTH | Animal Health

Animal Health

DISCLOSURES IN THIS SECTION diseases (diseases or infections that are naturally transmissible from vertebrate animals to humans or Initiatives SDG 4 vice versa), a reduction in the burden of certain food- borne diseases and longer, richer companionship for Communities Our global Animal Health business is pet owners. Emergencies and natural disasters impact our dedicated to preserving and improving Our Animal Health business is present in more communities, and our animals. In 2018, our Animal the health, well-being and performance than 50 countries. We operate a global network of Health business devoted time and resources to areas of animals through science. manufacturing sites and dedicated R&D facilities, and impacted by flooding, hurricanes, and wildfires around offer products for various species, including ruminants the world. In our continued partnership with WeForest, RESOURCES (cattle, sheep, goats), poultry, swine, aquatic animals our Animal Health business planted 20,000 trees in MSD Animal Health Antimicrobial and companion animals (dogs, cats, horses) in more Brazil, India, and Zambia. WeForest is an international Resistance Global than 150 countries. nonprofit association devoted to large-scale sustainable Action Plan reforestation and reducing plastic pollution. Our Animal Health business concentrates our corporate Delivering on Our responsibility efforts in the following areas: During the 2018 American Association of Equine Commitments Practitioners (AAEP) Convention, our Animal Health y Protecting animal health Equine team created and hosted the popular “Vet We offer veterinarians, farmers, pet owners and y Contributing to public health Stories” night, an opportunity for equine veterinarian governments the widest range of veterinary y Supporting a sustainable, global food supply and peers to share stories and raise funds in support of the pharmaceuticals, parasiticides, vaccines and health managing our global footprint AAEP Foundation and its mission to promote the health management solutions. Healthier animals mean and welfare of horses. y Ensuring ethical business practices sustainable food supplies, protection against zoonotic

Corporate Responsibility Report 2018/2019 61 ACCESS TO HEALTH | Animal Health

BANAMINE® TRANSDERMAL (flunixin transdermal The study yielded important new understandings about solution) was introduced, exemplifying our commitment well-being and the prevalence of mental illness in the 20,000 to improving animal health and well-being. BANAMINE veterinarian population: Trees planted by our Animal Health TRANSDERMAL is a non-steroidal, anti-inflammatory y Serious psychological distress in the veterinary business in Brazil, India and Zambia in 2018 (NSAID) cattle product that can be simply poured onto population is similar to that of the general the animal and is approved by the U.S. Food and Drug We invested in expanding the following production U.S. population, with only half of veterinarians Administration (FDA) for the control of pain associated facilities in order to deliver on the growing demand for receiving treatment with foot rot and the control of pyrexia (fever) vaccines to keep animals healthy: y associated with bovine respiratory disease. Well-being in the veterinary population is slightly y Boxmeer, The Netherlands lower than it is in the general U.S. population Our innovative SEQUIVITY™ Technology advanced our y There is significant variation in mental illness and y Elkhorn, Nebraska, U.S. role as a global leader in advancing vaccine development. well-being in different segments of the veterinary y Krems, Austria Launched in the U.S. in 2018, the RNA Particle profession, with younger veterinarians experiencing Technology can rapidly create targeted, safe vaccines y Milton Keynes, UK lower well-being and a higher prevalence of serious against novel or herd-specific pathogens. y Millsboro, Delaware, U.S. psychological stress than older colleagues Notably, only 41 percent of veterinarians surveyed would Animal health innovation Veterinary medical professionals endorse entering the profession. The vitality and sustainability of the veterinary We endeavor to help pet owners be successful in caring Our business is committed to contributing assistance profession is critically important to protect the health of for their companions. In 2018, we launched BRAVECTO® and resources to address the challenges that contribute animals both today and tomorrow. Plus for cats, a long-acting combination topical solution to lower well-being, including student debt. In 2018, for cats with, or at risk from, both internal and external In 2018, we published the results of our groundbreaking our Animal Health business partnered with veterinary, parasite infestations: ticks and fleas, heartworm, study on the well-being of veterinarians in the United educational and scientific organizations to award $1 roundworm and hookworm. BRAVECTO Plus for cats is States. Following multiple publications indicating that million to distinguished veterinary students. applied topically using the Twist’n’Use™ pipette design mental distress, compassion fatigue and burnout were Following the release of the study, we developed a free for ease of application. increasingly problematic in the veterinary profession, webinar to help those in the profession understand the our U.S. Commercial Animal Health business identified We announced a collaboration with Vinovo B.V. to bring factors that contribute to positive mental health and a need to evaluate these possible trends and determine together our poultry vaccine product line and Vinovo’s well-being at the organizational, practice and individual how we could lend support to veterinarians. Our vaccine delivery system to provide a new standard in levels. We have also partnered with the American Animal Health Veterinary Wellbeing Study, conducted safe and effective in ovo vaccination, thereby improving Animal Hospital Association (AAHA) in support of in partnership with Brakke Consulting, quantified bird welfare, reducing vaccine reactions and providing the Healthy Workplace Culture Initiative, which the prevalence of serious psychological stress and greater protection for chickens. provides resources to promote well-being in veterinary well-being in veterinarians in the United States and medicine1 by educating users about different types of We announced an exciting partnership with United compared the findings to equivalent measures in the organizational culture, how they impact a veterinary States Trotting Association (USTA) to be the sole broader U.S. population. practice, and how to use cultural understanding to microchip provider for the organization with the use of The study focused on two distinct key metrics of overall implement long-term, positive change in the workplace. our HomeAgain® TempScan™ microchips. The innovative psychological health: Serious psychological distress technology not only provides for rapid and accurate In partnership with the American Veterinary Medical which is equivalent to having a diagnosable mental identification of horses, but also measurement of equine Association (AVMA), we are building a digital platform health condition, and well-being, or how individuals body temperature—a potential indicator of disease. for the AVMA Workplace Wellbeing Certificate Program, think their current life compares to the best and worst a multi-module program aimed at promoting cultures possible lives they can imagine.

Corporate Responsibility Report 2018/2019 62 ACCESS TO HEALTH | Animal Health

of workplace well-being and inclusivity by offering core Supporting veterinary education helps address a critical In 2018, we awarded $1 million in scholarships and foundational educational materials and activities that student barrier—debt. A significant problem that many partnered with 11 nonprofit organizations. In addition, enhance the skills of the entire veterinary team.2 veterinary students face, debt is often a challenge long we supported the scientific research of a promising after graduating. This financial pressure is a burden on young veterinarian with a €10,000 grant through For more information on the study and resources students and can negatively impact health, academic the Gustav Rosenberger Memorial Fund. to promote veterinarian wellness, please visit performance and career aspirations. Our Animal Health 1 www.VetWellbeing.com. https://www.aaha.org/practice-resources/running-your-practice/ business is committed to helping veterinary students healthy-workplace-culture/ pay for their veterinary education and follow their 2 https://www.avma.org/ProfessionalDevelopment/ Veterinary student scholarship dream to help animals thrive. PeerAndWellness/Pages/Setting-up-Wellness-Program.aspx program Our company supports future veterinarians around the world through our Veterinary Student Scholarship $3.5M Program. Successful veterinarians are key to ensuring Grants awarded to veterinary that animals are provided with quality medical care. students from 2013 to 2018 The Veterinary Student Scholarship Program offers one-year scholarship opportunities to outstanding From 2013 to 2018, we awarded $3,475,000 in veterinary students of diverse backgrounds. grants across 650 scholarships. To date 67 percent of recipients of educational grants have been women, and y Impacted 30 U.S. states, 26 U.S. veterinary schools all recipients have completed their veterinary degrees and 56 countries in 2018 on schedule or are on schedule to complete them in y Awarded $1 million in scholarships in 2018 four years. y Partnered with 11 nonprofit organizations in 2018 y To date, 67 percent of scholarship recipients have been women Performance

ANIMAL HEALTH 2014 2015 2016 2017 2018

Year-over-year increase in rabies vaccine donations1 37% 47% 10% 20% 28%

Value of equine vaccines donated annually to the Unwanted $115,000 $107,000 $142,400 $182,420 $140,000 Horse Veterinary Relief Campaign

Number of new products approved (annually) 8 10 9 18 14

Scholarships provided to students through our Veterinary 52 77 105 190 188 Student Scholarship Program

1 Rabies doses donated to Mission Rabies and Rabies Free Africa.

Note: This section includes information about how Merck & Co., Inc., Kenilworth, N.J., U.S.A., contributes to societies through its Animal Health business. Information and data on the performance of our Animal Health business in the environment and in other areas are contained within the main sections of our global corporate responsibility report.

Corporate Responsibility Report 2018/2019 63 ACCESS TO HEALTH | Protecting Animal Health

Protecting Animal Health

Our Animal Health business addresses the lumpy skin disease, African swine fever, peste des 2016 and 2017, our company worked with affected world’s biggest animal health challenges petits ruminants and zoonotic diseases such as avian countries to provide doses of our lumpy skin disease flu and rabies. vaccine, LUMPYVAX® for inclusion in a comprehensive and collaborates with our customers to vaccination program in the region. answer their specific needs. Tackling human-animal health emergencies through greater veterinary capacity and response appropriate Highly infectious diseases RESOURCES to local contexts are core components of the World Organisation for Animal Health’s (OIE) have a direct impact on MSD Animal Health Antimicrobial food production and the Resistance Global Sixth Strategic Plan. Action Plan As a global animal health company, we are committed to livelihood of farming families. Delivering on Our addressing diseases that cross geographical boundaries Lumpy skin disease is a viral infection in cattle Commitments and cause emotional and economic hardship. that causes skin nodules and loss of condition and productivity. Through diligent vaccination across the South-East European herd, thousands of cattle Animal health and human health are inextricably linked: remained healthy and the spread of the virus across Highly infectious diseases have a direct impact on food Initiatives Europe was halted. In 2018, the European Food Safety production and the livelihood of farming families, leading Authority reported no new outbreaks of lumpy to malnutrition and poverty, while zoonotic diseases Outbreaks and emerging diseases skin disease in South-East Europe. Our company directly impact human health. Our disease response activities take place in both continues to research lumpy skin disease and how Global factors such as trade, migration of humans and disease-free and endemic regions around the world. it is spread, and we provide vaccines for disease animals, and climate, contribute to the spread of highly For example, following widespread outbreaks of lumpy control programs in Europe in pursuit of eradicating infectious diseases such as foot-and-mouth disease, skin disease in cattle in South-East Europe during this damaging disease.

Corporate Responsibility Report 2018/2019 64 ACCESS TO HEALTH | Protecting Animal Health

Over the course of the program’s history, 28,000 horses Our company is committed to working with animal Veterinary Relief Campaign. We are proud to dedicate have been vaccinated, and 300 rescue and retirement health’s most challenging pathogens like foot-and- a portion of all equine vaccine sales to support the facilities across 42 U.S. states have participated in mouth disease and African swine fever, and we support donation of equine vaccines to qualifying equine rescue the Campaign. research awards for these diseases. We aim to engage and retirement facilities. with stakeholders and governments to identify disease management gaps, improve scientific knowledge and Equine-assisted learning lend support through training and industry expertise. for military, veterans Through our eMergence website, free eMergence 10 years quarterly newsletter and eMergence Twitter channel, Length of our partnership and their families we share the latest news on emerging and spreading with the American Association Our company is more than a partner in animal health— animal diseases with veterinarians, farmers and those of Equine Practitioners our employees are neighbors, colleagues and friends curious to learn more about animal health. in our communities. We are dedicated to the human- Since the beginning of the program in 2008, we have animal bond, and the capacity of animals to improve contributed more than $1 million in vaccine donations human lives and health. Health and welfare of horses to the Campaign. Horses may be relinquished or retired The health and welfare of horses is important to our for a wide variety of reasons, but still require high In 2018, we devoted our time and resources to the company, and we support initiatives that enable access standards of care to protect their well-being. The equine Remount Foundation, a nonprofit organization which to care for horses in all activities: from competing rescue and retirement facilities we support may receive employs equine-assisted learning for members of to companionship. In 2018, we celebrated 10 years complimentary vaccines to protect their horses’ health the military and veterans recovering from combat- of partnership with the American Association of and help make them more adoptable. associated injury and their families. Equine Practitioners to support the Unwanted Horse In partnership with the Remount Foundation, we are committed to sharing stories of challenges, successes and strategies of veteran and service members with the veterinary community to further build support for professional cultures of well-being. We also remain committed to caring for the horses that care for the people. Each spring, our company’s equine team manages a vaccination, medical care and training program at the Remount Foundation for the horses under the Foundation’s care to ensure they can stay healthy for healing.

Corporate Responsibility Report 2018/2019 65 ACCESS TO HEALTH | Contributing to Public Health

Contributing to Public Health

DISCLOSURES IN THIS SECTION the recognition of the link between human, animal and In 2017, we initiated a project on rabies vaccination environmental health, critically important worldwide. outreach in collaboration with the United States Centers SDG 3 for Disease Control and Prevention (CDC), Christian Vaccination, alongside education, can help control such Veterinary Mission, the Haiti Ministry of Agriculture, the diseases in the animal reservoir, reduce the likelihood We provide a range of vaccines, Pan American Health Organization and Mission Rabies. pharmaceuticals and educational tools of their spreading to humans and minimize the medical, social and economic impact that could occur if they were The initiative tested the use of text-based (SMS) cell- to keep companion animals and livestock left unchecked. phone notifications to dog owners reminding them to healthy in order to help ensure a stable participate in one-day mass rabies vaccination programs food supply and help control diseases that in Gonaives and Saint-Marc in Haiti. The project sent can ultimately affect the health of people. Initiatives text message reminders to residents in the areas of the vaccination programs urging them to bring their dog to RESOURCES be vaccinated, resulting in 70 percent of text recipients Rabies-control efforts bringing their companions to the vaccination locations. MSD Animal Health Our Animal Health business collaborates with governments and charitable organizations to aid Education about safely interacting with in controlling infectious animal diseases that could dogs is essential, especially with children negatively impact human health. This is exemplified in Certain diseases in animals can have negative health who are at higher risk of being bitten. our rabies control and education efforts. Rabies is a fatal consequences for humans and are known as zoonotic neurological disease that can be carried by a number of diseases. Many people live in close contact with different Results of the project were published in 2018 in the hosts, including dogs, and has a significant, negative 1 species of animals, making the practice of One Health, or scientific journal Vaccine and by the World Health impact on public health budgets, local communities and Organization.2 This unique approach to stimulating livestock economies in developing areas.

Corporate Responsibility Report 2018/2019 66 ACCESS TO HEALTH | Contributing to Public Health

and Registry of Approved Continuing Education vaccination uptake during campaigns is now adopted by vaccination and education in Asia and Africa. We are (RACE) certification not only for veterinarians, but WHO and governments. proud to donate vaccines, as well as our time, with for all professionals in the veterinary clinic or animal Animal Health employees participating in vaccination Given that dogs are the primary route of rabies care setting. activities. By 2018, our company’s Afya Program transmission to humans, we support vaccination of dogs cumulative donations exceeded 2.5 million rabies doses Preventing disease spread in an animal care facility or where possible, but education about safely interacting as part of a broader global initiative to eliminate canine- clinic can be difficult, and there is no “one size fits all” with dogs is also essential. This is especially important in mediated rabies by the year 2030. disinfection or vaccination protocol. Led by our U.S. children, who are at higher risk of being bitten by dogs companion animal business, Heroes for Healthy Pets and dying from rabies as a result. In 2018, our Animal It is the goal of our Animal Health business to provide protects animal and public health through science-based Health business donated resources for the production the full rabies vaccine needs of Rabies Free Africa and recommendations for vaccination, diagnostic testing and distribution of educational comic books for children Mission Rabies. and disinfection. in Haiti on how to have a safe relationship with local dogs. This is forming part of a research project to In 2018, over 7,000 veterinarians, veterinary nurses demonstrate the impact of education on improving the Heroes for Healthy Pets™ and pet service professionals were individually certified interface between dogs and humans. We support public health best practices in all health care Heroes for Healthy Pets. In addition, more than 400 settings, including pet clinics and boarding facilities. In animal care and veterinary facilities in the U.S. became partnership with Clorox Healthcare, and in collaboration certified Heroes for Healthy Pets facilities. with the International Boarding and Pet Services To become a certified facility, 50 percent of staff must Association, the National Association of Veterinary 28% complete both modules of the Heroes for Healthy Pets Technicians in America, Pet Sitters International, VETgirl Year-over-year increase in our rabies course. The program also offers educational podcasts and Barkleigh Productions, our Animal Health business vaccine donations on infectious diseases, a Heroes for Healthy Pets developed the Heroes for Healthy Pets Infectious Infectious Disease Handbook, and promotional materials Since 1996 we have supported the Afya Program, Disease Management Certification Program. to help animal care businesses to showcase their “Hero which comprises a number of rabies control projects In this program, an informative pair of training modules Status” upon certification. This ongoing program and nonprofit organizations whose vaccination-based reviews the importance of preventing the spread strives to share understanding of preventable infectious campaigns are aimed at eliminating canine-mediated of infectious disease—including zoonotic disease— disease and the steps that practices, businesses, and rabies. Through our rabies vaccine donations, the through proactive measures like vaccination and individuals can take to be Heroes for Healthy Pets. Afya Program supports Rabies Free Africa (formerly cleaning and disinfection in animal health care settings. 1 known as the Afya Serengeti Project) in Tanzania, and, https://www.ncbi.nlm.nih.gov/pubmed/29580642 The free courses provide continuing education credit 2 https://www.who.int/neglected_diseases/news/Haiti_story_ as of 2013, Mission Rabies, which focuses on rabies WRD_2018/en/

Performance

ANIMAL HEALTH 2014 2015 2016 2017 2018

Year-over-year increase in rabies vaccine donations1 37% 47% 10% 20% 28%

1 Rabies doses donated to Mission Rabies and Rabies Free Africa.

Corporate Responsibility Report 2018/2019 67 ACCESS TO HEALTH | Promoting a Sustainable Food Supply

Promoting a Sustainable Food Supply

and water available for agricultural use continues to 2 DISCLOSURES IN THIS SECTION investments. Sustainable agriculture supports decrease each year. It is crucial that food-producing communities and alleviates food insecurity. It also SDG 2 animals remain healthy and are raised efficiently to meet requires continuous innovation. For this reason, global demands for sustainable protein. our Animal Health business is a strong supporter of The United Nations estimates that by researchers seeking to further the field of animal Our portfolio of Animal Health products and services is science and productivity. 2050 there will be an additional 2 billion focused on helping farmers keep their livestock healthy people in the world. To feed them, we will and productive. Targeted intervention with vaccines, Sustainable agriculture supports anti-parasitics anti-infectives, and other veterinary need to help animal producers become communities and alleviates food insecurity. more efficient and more sustainable. medicines and services help protect the health and well- being of animals and help producers to avoid and/or limit We sponsor High Quality Pork, High Quality Poultry RESOURCES their production losses. and High Quality Aquaculture Congresses around the world at which we additionally award outstanding MSD Animal Health researchers in each of these respective fields. The High Initiatives Quality Congresses are unique regional opportunities for researchers to present their scientific findings Our Animal Health business contributes to a sustainable, among peers in the pursuit of addressing agricultural affordable and safe food supply. Fostering future research opportunities, challenges and advancements. According to the Food and Agriculture Organization The World Organisation for Animal Health (OIE) In 2018, our U.S. Animal Health business additionally of the United Nations, research in agriculture is estimates that animal disease reduces global food presented the Animal Health Poultry Ph.D. Fellowship consistently seen to provide high rates of economic production by at least 20 percent.1 In addition, the land Award to a second-year doctoral student in poultry return when considered with all rural development

Corporate Responsibility Report 2018/2019 68 ACCESS TO HEALTH | Promoting a Sustainable Food Supply

science in collaboration with the Poultry Science In addition to communicating with farmers, retailers, addition, dissolving the particles is fast and convenient Association Foundation. The award, made possible veterinarians and consumers, our company has shared for administration of the vaccine via water, spray or through the Poultry Science Association Foundation Time to Vaccinate with government officials and eye drop. Capital Campaign, awards $33,000 per year over a policymakers. In 2018, three successful “Looking Beyond With the introduction of our IDAL® 3G and IDAL® three-year period to support the research of a talented Antibiotics” events were organized inviting policymakers 3G Twin vaccine delivery devices for swine, we doctoral student and includes a student stipend, tuition to discuss the value of vaccination at the Assemblée revolutionized how farmers care for their swine. By and fees. nationale in Paris, the European Parliament in Brussels providing options for using one (IDAL 3G) or two and in London. (IDAL 3G Twin) injector heads, these devices allow Time to Vaccinate Next steps for Time to Vaccinate will include veterinarians and farmers to quickly deliver single and constructing a training program for veterinarians to paired vaccines without using a needle. Not only is the Vaccination is an essential building block for sustainable communicate with farming clients about designing stress to pigs decreased, but large numbers of pigs can and healthy production with food animals. Regrettably, and implementing preventative care and vaccination be vaccinated much more rapidly with less farm labor. By proactive vaccination protocols may not always be a protocols for their facilities. We have additionally providing innovative products like the IDAL 3G and IDAL first consideration to preventing or treating disease committed to working with the University of Calgary 3G Twin, our business lowers the barriers to proactive on the farm and may be perceived as too complex to in Alberta, Canada, to develop a research program on vaccination of food-producing animals, thereby implement and keep up with. In Europe, Turkey and the role of communication between veterinarians and protecting their health, well-being and productivity. Russia, our Time to Vaccinate initiative has opened the farmers to improve herd health. By benefitting the farmer and their herd, sustainable dialogue on proactive vaccination of ruminant livestock agriculture is promoted. by connecting farmers with veterinarians, government bodies, processors and retailers. Innovative products and services In addition to delivering products that maximize animal and farmer well-being, we provide industry-leading Building off our successful whitepaper publication in for sustainability educational services like Cattle Care 365 and Dairy 2017, Looking Beyond Antibiotics, the Time to Vaccinate Sustainability in agriculture is multifaceted and comes Care 365. Decreasing animal stress contributes to initiative facilitates the exchange of information on from the contribution of many solutions. Our Animal animal health and well-being, as well as farmer safety preventative care best practices and routine, proactive Health business contributes to sustainability by and productivity. Our animal care programs empower health management. Vaccination not only prevents providing innovative products, application systems and farmers and veterinarians to develop standard livestock from falling ill due to pathogens but can also services to our customers that reduce environmental operating procedures and job training that are tailored decrease the need for antibiotics by strengthening the impact, improve animal welfare and optimize animal to their cattle or dairy operation. By simplifying immune system and lowering disease burden. productivity. standard operating procedures and offering training in both English and Spanish, farmers, farm staff and Vaccinations decrease the need for In 2018, we further rolled out innovation with our veterinarians can work together to streamline care for SPHEREON® technology, which freeze-dries poultry antibiotics. their animals and set up sustainably successful business vaccines into small, highly soluble particles (spheres) operations. The power of Time to Vaccinate lies in sharing instead of the traditional vaccine cake in a glass bottle. 1 information through vaccination training programs SPHEREON vaccines are packaged in lightweight, http://www.oie.int/for-the-media/editorials/detail/article/ feeding-the-world-better-by-controlling-animal-diseases/ and videos and celebrating farmers that excel in 100 percent recyclable aluminum cups in convenient 2 http://www.fao.org/research-and-extension/en/ implementing preventative medicine programs on their dose sizes. These individual cups are then packaged farms. In 2018, a Time to Vaccinate competition invited in recycled PET plastic trays to be recycled after use. farmers across Ireland to share their prevention success The innovative design provides convenience for poultry stories and compete for an opportunity to visit highly producers, as no component of SPHEREON packaging successful dairy farms on mainland Europe. needs to be sent for medical waste incineration. In

Corporate Responsibility Report 2018/2019 69 ACCESS TO HEALTH | Ensuring Ethical Business Practices

Ensuring Ethical Business Practices

DISCLOSURES IN THIS SECTION The authorization standards for veterinary medicines All products have labeling developed to ensure that are at the same level as those for human medicines. the intended use of the product is clear, so that it may SDG 12 On average, it takes 5–12 years to bring a veterinary be safely and properly used. This testing and refining product to market. of the product can take years to complete. When all We invest millions of dollars each year in of the required testing is completed and found to be the research and development of novel satisfactory by the appropriate government regulatory animal health products. agency, the product is approved to be sold. Once a 5–12 years product is on the market, we monitor all aspects that RESOURCES could affect product safety. Findings are assessed Average time to bring a and reported to regulatory authorities, as required MSD Animal Health Antibiotics veterinary product to market Position by pharmacovigilance rules and addressed through Statement All of our pharmaceuticals and vaccines used in food- appropriate measures. producing animals must be tested for safety, quality The approval process for medicines and vaccines used As with our human health pharmaceuticals and vaccines, and efficacy in the treated animals and any food in farm animals also establishes withdrawal periods, we test our investigative animal health pharmaceuticals products that may come from them (such as milk, from the time the last dose of product is given until and vaccines vigorously for safety, quality and efficacy eggs or meat). Our submissions to regulatory the animals or their products can enter the food before submitting them for approval, which can be agencies also include an environmental assessment chain. These withdrawal periods ensure the safety obtained only after thorough review by independent that appraises the effects of the use of our products of human consumption of meat, milk and eggs from regulatory authorities. on flora, fauna, soil and water. pharmaceutical- and vaccine-treated animals.

Corporate Responsibility Report 2018/2019 70 ACCESS TO HEALTH | Ensuring Ethical Business Practices

A science-based, predictable regulatory environment 1. Protect animal health and welfare in a unified is one of the key conditions necessary for innovation One Health approach and for providing our customers with high-quality 90% 2. Use antibiotics judiciously and responsibly products. We support global harmonization of the CO2 savings using ocean regulatory process for veterinary medicinal products 3. Promote disease prevention and increased access shipping versus airplanes through participation in and dialogue with the to products and expertise Choosing to ship products over the ocean versus via International Cooperation on Harmonisation of Technical 4. Invest in development of products for prevention airplanes can reduce carbon emissions by over 90 Requirements for Registration of Veterinary Medicinal and treatment percent. By working to consolidate routine shipments Products (VICH) and the Codex Alimentarius. in Europe from airplanes into ocean containers, our 5. Increase knowledge, transparency and business was able to reduce our carbon output by over communication1 4 million kilograms. Initiatives In addition to carbon output, landfill waste is a growing In 2018, we participated in the United States Centers Smart solutions for global concern and our business continues to explore how for Disease Control and Prevention (CDC) AMR (Anti- transportation we can reduce, reuse and recycle. Our Animal Health Microbial Resistance) Challenge, in which we confirmed business uses insulating blankets in shipments to Reducing our environmental footprint and contributing our focus to research pathogens found in CDC’s 2013 maintain our products at a stable temperature and to sustainability is a value shared across our company. Antibiotic Resistance Threats Report and prioritized by protect product quality. Previously, the insulating Since 2016, our animal health business has been the OIE. We encourage proactive vaccination of animals or thermal blankets could only be used once before actively evaluating methods of transportation that to prevent disease and support the responsible use of disposal, resulting in considerable waste. By working could lessen our environmental impact. In 2018, we antibiotics to treat and improve the health of animals. with a vendor to redesign the thermal blankets our celebrated major milestones in two innovative programs As a global animal health company, we support the business was using, we achieved a durable blanket to more sustainably transport shipments: “Air to Ocean “Antibiotic Commitment” established by the animal constructed to be used more than ten times, resulting Consolidation” and recycling of thermal blankets. health industry and its principles: in more than 30 tons of waste kept out of landfills. 1 https://healthforanimals.org/resources-and-events/ antibiotics-commitment.html

Corporate Responsibility Report 2018/2019 71 ACCESS TO HEALTH | Infectious Diseases

Infectious Diseases

DISCLOSURES IN THIS SECTION Cytomegalovirus (CMV) and antibiotics and antifungals collaborations to further develop treatments to address and a pipeline focused on addressing unmet needs in infectious diseases, including neglected tropical diseases SDG 3 infectious disease. (NTDs) and tuberculosis (TB). Our company is committed to discovering Infectious diseases are a leading cause of death Beyond our in-house research and engagement with and developing innovative medicines and worldwide, particularly in low- and middle-income external partners to address infectious diseases, we countries. According to the World Health Organization continue to seek new ways in which we can contribute vaccines to treat and prevent infectious (WHO), three of the top ten causes of death worldwide expertise and resources to these disease areas. diseases. We are collaborating with in 2016 were due to infectious diseases, accounting We recognize that new methods and a broader scope of for approximately 5.7 million deaths worldwide. In diverse stakeholders to save and improve collaborating—with both public and private entities— low-income countries, five of the top ten causes of lives around the world. are critical to supporting continued investment in death were due to infectious diseases. innovation and to enhancing access. This is true for all For more than 80 years, our company has played a We apply our research and development resources, diseases, but it is especially true for diseases prevalent significant role in the discovery and development of expertise and technology to identifying potential in low- and middle-income countries, for which the novel medicines and vaccines to treat and prevent products that would address unmet needs in the relevant expertise spans academia, local public health infectious diseases. treatment of infectious diseases. We have multiple authorities, industry and international agencies. We Today, our company is a global leader in infectious programs that span discovery through late-stage continue to expand our interactions with these groups disease with a proud heritage, a broad portfolio of development. We are also involved in a number of to provide relevant expertise and resources. vaccines and medicines for HIV, hepatitis C (HCV), product-development partnerships and research

Corporate Responsibility Report 2018/2019 72 ACCESS TO HEALTH | Antimicrobials/Antibiotics

Antimicrobials/Antibiotics

diseases in both humans and animals. This work includes DISCLOSURES IN THIS SECTION The global challenge of the development of sulfamerazine, one of the world’s SDG 3 first antibiotics, in 1938 and one of the first methods for antimicrobial resistance (AMR) mass production of penicillin during World War II. Today, Vaccines and antibiotics have Antimicrobials are medicines to treat and prevent we are one of only a few large pharmaceutical companies infectious diseases caused by pathogens such as revolutionized infectious disease that has sustained a focus in research and development bacteria, viruses, fungi and parasites. Antibiotics, prevention and treatment, saving (R&D) aimed at producing new vaccines and medicines which are used to treat bacterial infections, are millions of lives worldwide. Rising levels to prevent and treat bacterial infections. one of the most important types of antimicrobials. of resistance to antimicrobials is a serious AMR occurs when a pathogen evolves to survive “The rise in infections that are resistant antimicrobial treatment. While such evolution is threat to public health, food safety and to current antibiotics has become one of inevitable, AMR is developing more quickly due to the global security. the world’s most pressing public health inappropriate use of antimicrobials. Bacteria resistant problems. We are proud to reaffirm our to multiple antibiotic medicines are becoming more RESOURCES common—jeopardizing our ability to treat what are Delivering on Our Global long-standing commitment to develop new historically considered minor infections. AMR increases Commitments Antimicrobial therapeutics to fight infectious diseases, the risks associated with secondary infections that Resistance can be commonplace with procedures such as surgery, Action Plan and to continue to collaborate with others to support antimicrobial stewardship to chemotherapy and transplantation. Action is needed to slow down the development and spread of AMR so For more than 80 years, our company has played a help slow the rate of emerging resistance.” that the antimicrobials we have continue to work for significant role in the discovery and development of novel as long as possible. medicines and vaccines to treat and prevent infectious – DR. JULIE GERBERDING, EXECUTIVE VICE PRESIDENT AND CHIEF PATIENT OFFICER Corporate Responsibility Report 2018/2019 73 ACCESS TO HEALTH | Antimicrobials/Antibiotics

The health and economic consequences of antibiotic including DIFICID® (fidaxomicin), ZERBAXA® Supporting antimicrobial resistance are considerable and costly, making it a (ceftolozane/tazobactam), SIVEXTRO® (tedizolid serious threat to population health that demands phosphate) and RECARBRIOTM (imipenem/cilastatin stewardship (AMS) to improve a concerted, global response. The U.S. Centers for and relebactam). We also developed and introduced health outcomes Disease Control and Prevention estimates that at least ZINPLAVA® (bezlotoxumab), an innovative compound 2 million people become infected with bacteria that designed to reduce the recurrence of Clostridium Our company is committed to working with health are resistant to antibiotics and at least 23,000 people difficile infection (CDI) in adults receiving antibacterial care providers, patients and governments to promote die as a direct result of these infections each year.1 drug treatment for CDI who are at risk for recurrence. antimicrobial stewardship (AMS)—the appropriate use The cost of infections caused by resistant pathogens of antimicrobials—through education, implementation, In 2019, the FDA accepted two of our company’s to the U.S. health care system is between $21 and research and advocacy initiatives across both human antibacterial agents for Priority Review. The first was $34 billion annually.2 In the European Union, drug- and animal health, with an emphasis on patient a New Drug Application (NDA) for the combination resistant bacteria are estimated to cause 25,000 deaths outcomes, population health and value of care. of relebactam and imipenem/cilastatin to treat adult per year.3 patients with complicated urinary tract infections (cUTI) Implementation is required for and complicated intra-abdominal infections (cIAI) caused by certain susceptible Gram-negative bacteria. The NDA AMS action and impact. Outside the for RECARBRIO (imipenem/cilastatin and relebactam) United States, our company supports 2M was approved in July 2019. The second, a supplemental AMS implementation in over 1,500 Antibiotic-resistant bacterial infections in the U.S., NDA, was for ZERBAXA to treat adult patients with hospitals in 33 countries. More than leading to 23,000 deaths, annually hospital-acquired and ventilator-associated bacterial pneumonia caused by certain susceptible Gram- 850 clinical pathways have been New antibiotics are urgently needed to address negative bacteria. The supplemental NDA for developed based on local-hospital growing resistance; however, there are relatively few ZERBAXA was approved in June 2019. microbiological data. in development. Over the past two decades, there has been a significant decline in the number of companies In 2017, we established an Exploratory Science Center Education is foundational to AMS, and our company conducting antibiotic and antifungal R&D. Today, only in Cambridge, Massachusetts, which focuses on has helped support a variety of educational offerings five of the top 50 pharmaceutical companies have the earliest stages of discovery research to better through independent grants to international, national, antibiotics in clinical development. understand the underlying biology of human disease. regional and state organizations. This includes those The center’s research explores the most promising areas While the pace of resistance may be slowed through with an infectious disease-based membership as well as of emerging disease biology and will be used to inform programs that promote the responsible and appropriate other subspecialty and generalist organizations. our company’s ongoing drug discovery. use of antibiotics, research must continue into new These grants have supported programs and Web-based antibiotics and additional therapeutic and vaccine Our company is also engaging in a number of platforms to educate both providers and patients on strategies that address this critical unmet need. partnerships to advance work related to AMR. We diverse topics related to AMS, including clinical practice, work with Prokaryotics on pre-clinical programs to infection control and prevention, policy, clinical research develop, manufacture and commercialize compounds and animal health. Driving innovation to potentially target Gram-positive and Gram-negative Despite significant scientific, regulatory and economic bacteria. We have ongoing collaborations with Armata Outside the United States, we provide preceptorships challenges, our company continues to dedicate Pharmaceuticals to develop proprietary synthetic and workshops for health care providers to learn significant resources to both early- and late-stage phage candidates and our scientists have provided firsthand from other providers practicing AMS. antibiotic R&D, including the key unmet needs training through the Global Antibiotic Research and Research is needed to build and disseminate evidence established by public health authorities. Since 2010, Development Partnership (GARD-P) Memory Recovery regarding AMS best practices and their impact on our company has launched multiple novel antibiotics and Exploratory Program. patients and population health. Our company supports

Corporate Responsibility Report 2018/2019 74 ACCESS TO HEALTH | Antimicrobials/Antibiotics

an investigator-initiated research grant program specific Our Global AMR Action Plan describes our company’s y Advancing antimicrobial stewardship to improve to AMS and has funded more than 35 studies since 2013. long-standing commitment to the global fight against patient outcomes and slow the development of AMR We provided an independent grant to support an annual infectious disease and our efforts to help slow the rate y Supporting global AMR surveillance through our two-day research conference implemented by the of emergence of potentially deadly resistant organisms. Study for Monitoring Antimicrobial Resistance Society for Healthcare Epidemiology of America, with The Global AMR Action Plan includes sections on how Trends (SMART), which provides data to the scientific the goal of improving the quality of AMS research. our company is: community on AMR trends y y by “Our company remains deeply committed Leading in infectious prevention through the Protecting and maintaining animal health development and production of vaccines to prevent promoting vaccination and the responsible use of to working with governments, health infections and reduce the need for antibiotics antibiotics care providers, patients and others to y Driving innovation to discover and develop 1 Centers for Disease Control and Prevention. “Antibiotic Resistance drive antibiotic innovation, promote new treatments and antibiotic alternatives to Threats in the United States, 2013.” 2 Roberts, R.R., Hota, B., Ahmad, I., Scott, R.D., Foster, S.D., Abbasi, appropriate use and enhance access for address AMR F., et al. (2009) “Hospital and societal costs of antimicrobial-re- y to support sistant infections in a Chicago teaching hospital: implications for patients.” Advocating for policy solutions antibiotic stewardship.” Clin Infect Dis 49:1175–1184. sustainable investment in the development of new 3 European Medicines Agency, European Centre for Disease Preven- – KEN FRAZIER, CHAIRMAN AND CEO tools to combat AMR tion and Control. “Joint technical report: the bacterial challenge— time to react.” 2009.

Corporate Responsibility Report 2018/2019 75 ACCESS TO HEALTH | Hepatitis C

Hepatitis C

For nearly three decades, our company Our scientists have been engaged in research to address In January 2016, ZEPATIER® (elbasvir and grazoprevir), has been engaged in the response to HCV infection since the discovery of the virus in the a once-daily, fixed-dose combination tablet for the late 1980s, and we continue to work with the scientific treatment of adult patients with chronic HCV, was the hepatitis C virus (HCV) epidemic. community to advance understanding of this significant approved in the United States. ZEPATIER has been global public health epidemic. approved in 81 countries most recently in China DISCLOSURES IN THIS SECTION and Russia. SDG 3 In the past decade, our company’s We have focused on broadening and accelerating We have worked to apply our scientific expertise, clinical development programs patient access to HCV treatment, including underserved resources and global reach to the development and or difficult-to-treat chronic HCV-infected populations. delivery of health care solutions that support people in chronic HCV infection have: Consistent with that goal, the clinical development living with HCV worldwide. program for ZEPATIER enrolled diverse groups of patients with chronic HCV infection, including patients The World Health Organization (WHO) estimates that in Enrolled approximately who had failed certain prior therapies and patients with 2015, 71 million people globally were chronically infected 10,000 participants significant comorbidities and health complications such with HCV, and at risk of developing liver cirrhosis and/or as severe renal impairment, compensated cirrhosis liver cancer, with 1.75 million new infections occurring and HIV co-infection. Notably, the clinical development each year. In 2015, WHO and its 194 Member States Included more than program also included a trial of patients who were committed to eliminating viral hepatitis as a public 135 clinical trials receiving opioid agonist therapy. health threat by 2030. in approximately 40 countries

Corporate Responsibility Report 2018/2019 76 ACCESS TO HEALTH | Hepatitis C

According to WHO, in addition to unsafe health care The majority of patients with chronic HCV have not yet practices, injection drug use is one of the most common been treated. While restrictions on access continue modes of transmission of HCV today. Patients who to be a barrier to chronic HCV treatment worldwide, inject drugs are and will be an important population our company is taking steps to address these barriers. to address in achieving WHO’s goal of eliminating viral We have worked closely with key stakeholders in the hepatitis as a public health threat by 2030. countries where we have launched ZEPATIER to increase the affordability of treatment, reduce barriers and expand eligibility criteria to broaden and accelerate Working to enable broad patient access to treatment for more patients. access For example, in the United States we continue to Innovations in chronic-HCV treatment that have become contract with multiple state departments of corrections available over the past several years—now including to expand hepatitis C treatment to incarcerated ZEPATIER—provide the world with an unprecedented populations, and in the United Kingdom we are part opportunity to significantly reduce the burden of HCV of a multiyear effort with NHS England toward the by 2030. However, a significant medical need remains: elimination HCV which includes provision of our HCV It is estimated that fewer than one in five patients medicines and offering solutions to help identify with chronic HCV infection are currently treated, with patients with hepatitis C. thousands of new cases occurring each year.

Corporate Responsibility Report 2018/2019 77 ACCESS TO HEALTH | HIV / AIDS

HIV/AIDS

DISCLOSURES IN THIS SECTION However, key challenges remain. While HIV treatment ARV treatment that are the standard for today’s and care has kept millions of people alive, global HIV treatment paradigm. We will continue to partner with SDG 3 prevalence is at its peak due to a significant decrease scientists, clinicians, patient advocates and the global in AIDS-related mortality and ongoing new infections. health community as we work together towards a For more than 30 years, our company has Globally, as of 2017, 38.9 million people are living with common goal of addressing unmet medical need for the been committed to addressing the global HIV but only 59 percent are receiving antiretroviral prevention of HIV infection and treatment of HIV, and challenge of the HIV epidemic. therapy (ART) and less than half have undetectable viral ultimately the ending of this disease. load. There are 1.8 million people newly infected with HIV each year. RESOURCES Pharmaceutical innovation in HIV treatment and Our Work in HIV Initiatives prevention holds the promise of addressing the significant unmet and evolving needs of people Ongoing research living with HIV. Our work has been pioneering, in the We continue to focus on R&D that targets HIV, Since 1985, we’ve been engaged in research and development of new antiretroviral (ARV) treatments, recognizing the need for new methods to address the development (R&D) efforts in the prevention and including protease inhibitors (PIs), non-nucleoside epidemic. Our current R&D work includes programs to treatment of HIV, and a cure for HIV. These efforts reverse transcriptase inhibitors (NNRTIs) and integrase develop novel HIV-prevention technologies, new HIV continue today. inhibitors. We have been a scientific leader in the development of medicines to help people living with HIV antiretroviral medicines, and approaches to addressing Through our ongoing R&D, we are committed to lead longer, healthier, more productive lives. HIV latency and eradication. contributing to the global effort to end the AIDS We have an active HIV R&D program to develop new epidemic as a public health threat by 2030. We also played an important role in collaboration with others to define the principles for combination antiretroviral medicines that address unmet needs in HIV treatment. In August 2018, the U.S. Food and Corporate Responsibility Report 2018/2019 78 ACCESS TO HEALTH | HIV / AIDS

Drug Administration (FDA) granted approval to our We have seen that increasing access requires a each country’s HIV-access needs. As part of this effort, newest HIV medication, doravirine, a new NNRTI, both broad, comprehensive approach. Consequently, we we have implemented a differential pricing policy based as part of a once-daily fixed-dose combination tablet are committed to improving patient access through on country income level, disease burden, treatment- as a complete regimen, DELSTRIGO™ (doravirine/ expanded availability, enhanced access strategies and guideline position, patient access through national AIDS lamivudine/tenofovir disoproxil fumarate), and as a multisectoral partnerships. To make these possible, treatment programs, and market conditions. single agent, PIFELTRO™ for the use in combination we have employed multiple strategies to address the Pharmaceutical companies alone cannot solve these with other HIV antiviral medicines. DELSTRIGO and needs of particular regions and countries, including: immense public-health problems. PIFELTRO received marketing authorization from seeking broad registration of our antiretroviral the European Medicines Agency in November 2018. medicines, implementing differential-pricing strategies; To truly enhance access to treatment in low- Registrations in additional countries are ongoing. signing voluntary licenses with generic manufacturers; and middle-income countries, the international developing pediatric formulations; and establishing community must collaborate to strengthen health Our clinical development programs include several early- strong collaborations with governments, manufacturers care infrastructure, to ensure adequate financing for stage and later-stage clinical development programs, and other stakeholders. health care and to help to build local health care capacity including an ongoing Phase II study of doravirine and through training and support. Sustainable solutions will a new investigational candidate MK-8591 for the To facilitate access to raltegravir in sub-Saharan Africa and come from comprehensive approaches that draw on the treatment of HIV. in World Bank-defined low-income countries, the areas of expertise of all stakeholders. greatest need and the least ability to finance health care, Access and availability we instituted a multi-strategy model that includes: y Implementing differential pricing and a dedicated Focusing on unmet need in Since the beginning of our HIV/AIDS research program supply chain to reduce the cost of raltegravir more than 30 years ago, we have recognized the global pediatric treatment impact of HIV/AIDS in developing countries where y Establishing voluntary licenses for raltegravir with As part of the company’s commitment to fighting economic, social and political factors impede access to generic manufacturers and for raltegravir pediatric HIV/AIDS, we have conducted extensive R&D efforts HIV education, care and treatment. Multi-stakeholder formulations with the Medicines Patent Pool to develop pediatric formulations for our HIV ARVs. efforts, including those of governments, civil society, y Partnering to expand access to raltegravir pediatric We have developed several pediatric formulations of donors and the private sector, are needed to address the formulations and an effort in collaboration with raltegravir, which, following clinical studies conducted challenges of delivering comprehensive HIV prevention, PEPFAR and the Elizabeth Glaser Pediatric AIDS in collaboration with the IMPAACT Network, have been care and treatment. Foundation (EGPAF) to provide access to raltegravir approved by the FDA. for HIV-infected neonates in sub-Saharan Africa A multifaceted approach to enhancing access in In November 2017, raltegravir received approval from resource-limited settings Implementing a low-cost supply chain with manufacturing the FDA for the treatment of neonates from birth. We are committed to working with governments, partners has enabled us to reduce our access price in In its various dosage formulations, raltegravir is now donors, innovative and generic manufacturers, sub-Saharan Africa, low-income countries and LDCs. approved by the FDA from birth through adulthood. Public-sector purchasers in these countries are eligible multilateral organizations, and civil society to address Given the challenges of delivering pediatric HIV for our lowest price. According to WHO, three-fifths of the full range of factors affecting access. We strive treatment in the areas of greatest need, public-private patients in need of therapy live in these countries. to find new ways to apply our expertise, human and partnerships are key mechanisms to facilitate availability financial resources, and market-based solutions to Given the varying levels of economic development of new pediatric ARV formulations. addressing the complex challenge of patient access. Our and national strategies, in other middle-income Rome Action Plan for Scaling Up Early Diagnosis and strategies are designed to enable us to facilitate access countries, we have implemented strategies to facilitate Treatment of Children and Adolescents while continuing to develop new medicines. They also patient access. help us move beyond the limits of what we can achieve In November 2017, our company joined other key if we work alone. Collaboration has been essential to the We focus on working with governments and with other stakeholders at the Vatican in Rome as part of the progress made against HIV. country stakeholders to develop strategies tailored to meeting that endorsed the Rome Action Plan for

Corporate Responsibility Report 2018/2019 79 ACCESS TO HEALTH | HIV / AIDS

Scaling Up Early Diagnosis and Treatment of Children y China-MSD HIV/AIDS Partnership (C-MAP): Our with HIV and HCV as part of our company’s efforts to and Adolescents.1 As part of the Rome Action Plan, company made a $36 million commitment for HIV improve population health outcomes. our company has committed to making pediatric prevention and capacity-building. The initiative The project team served as a catalyst to convene the raltegravir available at no profit in low-income promoted HIV counseling and testing, linked patients relevant stakeholders (providers, provincial health countries, Least Developed Countries (LDCs), and to treatment and enhanced the capacity of primary district officials, First Nation leadership, councils and across sub-Saharan African countries, until generics health care workers. communities) to support the 2018 Pan-Canadian are available. Partnership to End AIDS and Cervical Cancer among Framework for Action, a framework created by the In December 2018, at the Rome Action Plan meeting, HIV-positive women in Africa Canadian government to reduce the health impact our company announced its partnership with PEPFAR We have also sought to collaborate on public-private of sexually transmitted and blood-borne infections and the Elizabeth Glaser Pediatric AIDS Foundation partnerships that impact women in the developing world country-wide by 2030. (EGPAF) to begin a pilot project to introduce living with HIV/AIDs. In 2019 our company joined PEPFAR Out of the convening activities we facilitated came a series raltegravir granules for infants who test positive and the George W. Bush Institute (Bush Institute) in the of potential approaches to help prevent the spread of HIV for HIV at birth. Our company will donate the RAL Partnership to End AIDS and Cervical Cancer among and HCV, expand access to high-quality care including granules as part of this pilot. Development of this HIV-positive women in Africa (read the press release). testing and treatment sites, and improve health outcomes pilot follows the inclusion of raltegravir in WHO HIV for those individuals living with these conditions. treatment guidelines as the preferred treatment The collaborative effort aims to reduce cervical cancer for neonates. incidence by 95 percent among approximately 3.5 million Presently focused on central Saskatchewan, including women living with HIV in eight African countries with the city of Prince Albert and the surrounding First As of December 2018, ISENTRESS® (raltegravir) the highest rates of HIV prevalence and cervical cancer Nation communities, we hope to broaden its geographic chewable tablets (25 mg and/or 100 mg) have been deaths in the world. Human papillomavirus (HPV) is boundaries and tackle other chronic diseases prevalent approved in 72 countries, and ISENTRESS granules the major cause of cervical cancer, and women who are within the indigenous populations. for suspension (100 mg) have been approved in 34 HIV-positive are four to five times more likely to develop countries for use in pediatric patients. invasive cervical cancer. HIV Care Connect To help address persistent HIV disparities in the The focus of the partnership is an accelerated strategy U.S., in 2019, our company’s Foundation launched Partnership spotlight for prevention, screening, and treatment with the goal HIV Care Connect. This multi-site initiative aims to of significantly reducing HPV-related cervical cancer in Our foundation has partnered with governments, reduce disparities in access to care and improve health HIV-positive women as well as nationwide cervical cancer non-governmental organizations and other stakeholders outcomes for people of color living with HIV in vulnerable rates in sub-Saharan Africa. More than 100,000 women to support intervention programs, strengthen health and underserved communities in the Southeastern are diagnosed annually with cervical cancer in sub-Saharan care capacity and improve access to treatment. We United States. The Foundation has committed $7 Africa, where it is the leading cancer killer of women. have also made significant investments in public-private million over five years (2019–2023) to support HIV partnerships, such as the: Among our contributions to the goals of the Partnership Care Connect and its program partners in selected y African Comprehensive HIV/AIDS Partnerships is the provision of HPV vaccine for use in a cohort of communities across the Southeast. (ACHAP): Over 15 years, our foundation committed HIV-positive women in Eswatini and Namibia through over $106 million and our company donated our HIV an exploratory research study. The study will help Addressing access issues in medicines to this multi-stakeholder partnership to determine appropriate dosage for HIV-positive women. help scale up the HIV prevention, care and treatment The Red Lily Project high-income countries response in Botswana, one of the countries with this In Canada, The Red Lily Project is an initiative that In high-income countries, we continue to work to highest prevalence of HIV. The partnership leveraged brings increased awareness and access to care for address patient access needs. In the United States, for private sector management expertise to create a Saskatchewan’s “First Nation” people who are living example, many state AIDS Drug Assistance Programs successful model of treatment and care. (ADAPs) have struggled to meet growing need. Over the

Corporate Responsibility Report 2018/2019 80 ACCESS TO HEALTH | HIV / AIDS

last two decades, our company has lowered or frozen the or DELSTRIGO. If patients have private insurance and through national AIDS treatment programs and market price of our ARVs five times. We also continue to offer an out-of-pocket cost for ISENTRESS, ISENTRESS conditions, and will be negotiated with each government. support to eligible patients through our U.S. Patient HD, PIFELTRO, or DELSTRIGO, they may be eligible to For high-income countries, we make ISENTRESS Assistance Program and Co-Pay Assistance Program. receive a savings coupon. The coupon provides savings available at competitive prices that take into account the toward their out-of-pocket costs. Restrictions, terms innovation and value that ISENTRESS represents. State AIDS Drug Assistance Program (ADAP) and conditions apply. We have a long history of working closely with leaders We sell ATRIPLA® (efavirenz/emtricitabine/tenofovir from the HIV community to ensure that our approach to Common Patient Assistance Program Application disoproxil fumarate) in 98 Access countries, as defined pricing our medications is fair and reasonable, balancing We also participate in the national Common Patient by our agreement with Gilead. our interest in conducting extensive HIV research with Assistance Program Application (CPAPA) for HIV efforts to support broad access to our medicines. medications. The form was developed by the Department Registration of Health and Human Services (DHHS), participating We were one of the first companies to provide our pharmaceutical companies, the National Alliance of State We are committed to pursuing registration of our ARVs HIV medicines to uninsured patients on waiting lists and Territorial AIDS Directors (NASTAD), and community including registration in those countries most affected for drugs under the AIDS Drug Assistance Program stakeholders. The form can be used both by people living by HIV/AIDS. Currently, our ARVs are registered or (ADAP). In addition, we were the first company to with HIV and by their providers and reduces the need to available through import waiver in many countries. Since provide a price freeze for state ADAPs in the late 1990s, complete several different and individual PAP application the first approval in 2007, ISENTRESS has received when they began to suffer a funding challenge. forms for HIV medications. regulatory approval in more than 110 countries. We expanded our price-freeze policy to subsequent Details of registration and availability of our four ARVs products and continue to provide expanded financial are available through the links below: relief to state ADAPs through increased discounts. Pricing Through the agreement, which has been extended We have sought to enhance access to our ARVs globally y ATRIPLA® (efavirenz, emtricitabine, tenofovir through December 31, 2019, we provide continued through implementation of differential pricing strategies. disoproxil fumarate) support for initiatives that give low-income individuals We established a low-cost supply chain with external y CRIXIVAN® (indinavir sulfate) living with HIV access to medicines. partners for commercialization in all low-income countries y ISENTRESS® (raltegravir) and all countries in sub-Saharan Africa. ADAPs reach approximately one-third of the people y STOCRIN® (efavirenz) with HIV estimated to be receiving care nationally. Our differential-pricing policy is part of our commitment All of our company’s formulations of ISENTRESS, to addressing HIV through a multipronged strategy, U.S. Patient Assistance Program including the 600 mg tablet, the 400 mg tablet, the with the goal of ensuring that our HIV ARV medicines 100 mg and 25 mg chewable tablets, and the granules Our commitment to patients’ access to our products reach as many of those in need as possible. is reflected in our U.S. Patient Assistance Program, a for suspension, have been approved by the U.S. Food separately incorporated nonprofit charitable organization. The lowest Access price for our HIV medicines is offered and Drug Administration (FDA) and the European DELSTRIGO, PIFELTRO, ISENTRESS and CRIXIVAN® to countries with a combination of highest disease Medical Agency, making these formulations eligible for (indinavir sulfate) qualify for this program. This private and burden and lower country income (gross national income purchase by both the U.S. PEPFAR program and the confidential program provides product free of charge to [GNI] per capita), as defined by the World Bank. Global Fund to Fight AIDS, Tuberculosis, and Malaria. eligible individuals, primarily the uninsured, who, without Countries classified as lower-middle-income and ¹ http://www.pedaids.org/wp-content/uploads/2017/12/Rome_ Action_Plan_2017.pdf our assistance, could not afford this medicine. upper-middle-income2 by the World Bank are eligible ² Customers eligible for public-sector pricing in lower-middle- Co-Pay Assistance Program in the U.S. for prices that are discounted from those in high- and upper-middle-income countries will include: governments income countries. These prices are based on, among and programs fully funded by governments and/or by multi- In addition to our Patient Assistance Program, we and bilateral donors (e.g., the Global Fund, PEPFAR, UNITAID); other things, a combination of country income, disease have a program in the United States for eligible UN System organizations; NGOs. Low- and middle-income burden, treatment guideline positioning, patient access countries that are members of the European Union are not patients on ISENTRESS, ISENTRESS HD, PIFELTRO, eligible for pricing under this Access program.

Corporate Responsibility Report 2018/2019 81 ACCESS TO HEALTH | Neglected Tropical Diseases

Neglected Tropical Diseases

DISCLOSURES IN THIS SECTION in humans for the NTD onchocerciasis (river blindness) medicines to treat or prevent these diseases. Donors in 1978, leading to the creation of the groundbreaking committed financial resources, and NGOs agreed to SDG 3 SDG 17 MECTIZAN Donation Program. support implementation needs. The partners came together under the banner of “Uniting to Combat Through a range of in-house programs and external NTDs” to track progress and identify gaps that need Neglected tropical diseases (NTDs) are a partnerships, we continue to conduct research to to be addressed in order to reach the goals of the address the burden of NTDs today. set of 17 diseases that disproportionately London Declaration. Through the MECTIZAN Donation affect more than 1 billion people living The London Declaration Program, we are helping to achieve the disease control primarily in the developing world. We are an original signatory to the London Declaration, and elimination goals for two diseases, onchocerciasis a collaborative effort launched in 2012 to accelerate (river blindness) and lymphatic filariasis (LF). RESOURCES progress toward eliminating or controlling 10 NTDs by To help provide the necessary ongoing technical support Uniting to Combat the end of the decade. Our company joined 12 other for country-led neglected tropical disease (NTD) NTDs global pharmaceutical companies and many other programs, including support for onchocerciasis and LF stakeholders, including endemic country governments, elimination programs in Africa, in 2018, our company WHO, the Bill & Melinda Gates Foundation, As a leading cause of disability, NTDs carry with them provided $500,000 in financial support to WHO’s the U.S. Agency for International Development (USAID), significant social and economic burdens. However, as Expanded Special Program to Eliminate NTDs (ESPEN). the UK Department for International Development the World Health Organization (WHO) reports, many (DFID), nongovernmental organizations (NGOs) and Although existing tools are having a major impact, of these diseases can be effectively controlled and, other organizations in this effort. several NTDs require new or improved drugs and in many cases, eliminated. Our company has a long- diagnostics to achieve the goals of the London standing commitment to research into NTDs. We Together with the other pharmaceutical companies, Declaration. We are engaged in various efforts to initiated research on MECTIZAN® (ivermectin) for use we committed to continuing or increasing donations of advance progress toward developing new drugs and

Corporate Responsibility Report 2018/2019 82 ACCESS TO HEALTH | Neglected Tropical Diseases

diagnostics. For example, together with several other of malaria. In 2015, our joint team was successful in Since 2008, reported industry investment has increased companies, we are providing access to compound applying for and receiving a Wellcome Trust Pathfinder by nearly 50 percent, while funding from both the public libraries with external researchers through the Award. Initial screening yielded quality hits with and philanthropic sectors has fallen. World Intellectual Property Organization’s Re:Search excellent antimalarial potency and in vivo proof-of- Macrofilaricide Drug Accelerator Program (WIPO Re:Search) consortium and Drugs for Neglected concept activity. With the encouragement and support Diseases Initiative (DNDi). of the BioVentures for Global Health Partnership In 2015, our company became a founding member Hub, the team applied and successfully competed for of the Macrofilaricide Drug Accelerator Program Taken together, through our drug donations further funding from the Wellcome Trust (WT). Such (MacDA), an effort driven by the Bill & Melinda Gates for onchocerciasis and LF, and our research and support will accelerate the team’s collaborative research Foundation to support the members’ collective work development activities for schistosomiasis, visceral program with an objective to achieve lead optimization toward identifying and generating lead drug compounds leishmaniasis (VL) and Chagas disease, we are status in 2019. to augment the global onchocerciasis and LF drug supporting the London Declaration goals for five NTDs. pipelines. We have established collaborations within the In furtherance of our commitment to the WIPO MacDA membership in support of the program’s goals to Re:Search mission and community, we continue to accelerate the discovery of such lead drug compounds. Research and development provide relevant expertise to other WIPO Re:Search WIPO Re:Search members as requested and appropriate. We also Emerging Pathogens with Potential to Generate Severe Epidemics Our company is one of the founding members of continue to consider other collaboration opportunities WIPO Re:Search, a consortium of public and private where our company’s contributions can provide unique We are currently collaborating with the United States organizations that facilitates research on NTDs, malaria and significant impact. Army Medical Research Institute of Infectious Diseases to perform targeted screening of the company’s and tuberculosis. Through this consortium, we are G-FINDER Survey collaborating with investigators at the University of compounds. The primary focus of this effort includes To contribute to global awareness and advocacy California, San Diego (UCSD), providing scientists with viral pathogens such as Ebola, Zika and related viruses on research and development (R&D) for NTDs, we a series of compounds for screening that have the that have the potential to generate severe epidemics participate in the annual G-FINDER survey. potential to lead to better and safer treatments for and pose a threat to civilian and military populations. patients suffering from schistosomiasis. This disease is Since 2008, G-FINDER has reported on global Most recently, in vivo proof-of-concept inhibitory caused by a blood-borne parasite and affects millions of investments in neglected disease R&D from a range activity was achieved for two classes of molecules. people living in the developing world. of public and private institutions, and is considered a More detailed pharmacokinetic / pharmacodynamic unique source of current information and insights into Also through WIPO Re:Search, in late 2014 we entered studies are planned. ongoing trends for stakeholders engaged in NTDs. into an agreement with researchers at the Walter We are pleased to note that industry investment in and Eliza Hall Institute of Medical Research (WEHI) in neglected disease R&D has increased in each of the last Australia which supports collaboration focused on the five years and reached new record highs in each of the research and development of antimalarial drugs that last three years. could potentially impact the replication and transmission

Corporate Responsibility Report 2018/2019 83 ACCESS TO HEALTH | Tuberculosis

Tuberculosis

To reach WHO’s ambitious targets to reduce the Our company has completed two large in-house DISCLOSURES IN THIS SECTION number of TB deaths by 95 percent between 2015 and screening campaigns. One was a screen of over 2 million SDG 3 2035,3 new, better-tolerated regimens with shorter compounds, and the other was a collaborative effort SDG 17 durations are urgently needed. with TBDA partners using our proprietary Automated Our company is working to identify and Ligand Identification System (ALIS) technology. Both Our company is a member of the TB Drug Accelerator screens delivered sets of unique hit molecules that are develop new drugs against tuberculosis (TBDA), a groundbreaking collaboration among eight being followed up by our scientists and other TBDA (TB) that can lead to shorter and better- research institutions, nine pharmaceutical companies member scientists. tolerated regimens. and a product development partnership to facilitate TB drug discovery. It has been designed and coordinated by In collaboration with the National Institute of Allergy 1 TB is one of the top-ten causes of death worldwide. In the Bill & Melinda Gates Foundation. and Infectious Diseases, we continue to champion a lead 2016, the World Health Organization (WHO) estimated optimization program within the TBDA. In addition, Through the TBDA, companies share targeted sections that there were 10.4 million new TB cases worldwide, through the TBDA, we are progressing a natural product 2 of their compound libraries and data with one another and that 1.7 million people died from the disease. program that targets a novel target in collaboration and with academic research institutes in order to with Eisai, NIH, University of Cape Town and University Although TB is a treatable and curable disease, current develop the best drug prospects, regardless of where of Dundee. treatments require patients to take multiple antibiotics they originate. To date, scientists from four continents for six to 24 months or longer, are complicated to have tested more than 3 million small molecules 1 https://www.who.int/news-room/fact-sheets/detail/the-top-10- causes-of-death administer, and have significant adverse events. These from corporate and other compound collections for 2 https://apps.who.int/iris/bitstream/handle/10665/329368/978924 factors prevent people from accessing or completing screening. The immediate goal is to provide clinical proof 1565714-eng.pdf?ua=1 their treatment, which can lead to the development of of concept by 2024 for a new regimen that can cure a 3 https://www.who.int/tb/strategy/end-tb/en/ drug-resistant strains or death. patient with TB in only one to three months.

Corporate Responsibility Report 2018/2019 84 ACCESS TO HEALTH | Oncology

Oncology

DISCLOSURES IN THIS SECTION immuno-oncology clinical development program SDG 3 20M in the industry, we are exploring how KEYTRUDA SDG 17 can potentially help the greatest number of cancer New annual cancer cases expected patients globally. Cancer is one of the most significant worldwide by 2030 global health challenges today. We are proud to be a part of the great progress being made in this fight. We have a long history of bringing Research on global cancer burden shows more than Our legacy in cancer care forward innovative medicines in oncology, beginning 14 million new cancer cases were diagnosed in 2012,1 a with the approval of our first oncology medicine by the number that is expected to grow to more than 20 million U.S. Food and Drug Administration (FDA) in 1986.4 Timeline by 2030.2 In the United States alone, approximately 1.7 Building on this foundation, our company has continued million new cancer cases were diagnosed in 2018.3 1986 to invest in promising science and has developed a Our first oncology product, INTRON A® (Interferon Remarkable progress has been made in the fight against portfolio of medicines to treat cancer and cancer alfa-2b), is approved by the FDA. In 1986, it is the only this disease. Five-year survival is increasing for many treatment-related conditions. These medicines span treatment for hairy cell leukemia, a rare cancer that types of cancer, in large part due to early detection and therapy types and patient needs, showcasing the depth affects about 2,000–3,000 Americans at the time.5 better treatments. Current research holds enormous and breadth of our commitment to cancer. promise to fight the growing burden. 1989 An anchor of that commitment is KEYTRUDA® Our expanding research portfolio and broad interest (pembrolizumab), an anti-PD-1 therapy. KEYTRUDA in cancer leads to actions to protect employees from is a type of immunotherapy that harnesses the body’s cancer-causing risk factors. The establishment of a immune system to help fight cancer. With the largest link between tobacco smoking and cancer leads us to

Corporate Responsibility Report 2018/2019 85 ACCESS TO HEALTH | Oncology

2003 V600 mutation-positive, a BRAF inhibitor. Just one year While chemotherapy is most effective on cancer cells, it later, it is approved for treating patients with metastatic also kills some healthy cells that are actively replicating. non-small cell lung cancer (NSCLC) whose tumors For patients being treated with chemotherapy, side express PD-L1 and who have disease progression on or effects often stem from the death of these healthy cells. after platinum-containing chemotherapy. In 2003, EMEND® (aprepitant), our fourth oncology 2017 product, is approved by the FDA to address nausea and KEYTRUDA continues to reach regulatory milestones vomiting caused by chemotherapy. and expand to new indications. KEYTRUDA is now 2006 approved for more than 18 indications across 11 tumor As we continue to learn more about how and why cancer types plus MSI-H cancers—and is now approved in more develops, we begin to understand the ways to detect than 88 countries around the world. cancer earlier and prevent it altogether. In 2006, our KEYTRUDA became the first cancer therapy approved first vaccine to prevent cancer, GARDASIL® [Human change workplace policies to promote healthy living by the FDA for use based on a biomarker, regardless Papillomavirus Quadrivalent (Types 6, 11, 16, and 18) globally.6 In 1989, the company becomes one of the of tumor type. This was a first-of-its-kind indication: Vaccine, Recombinant], is approved by the FDA for first corporations to establish a smoke-free workplace, the treatment of adult and pediatric patients with the prevention of cervical cancer caused by 4 types of encouraging employees to live healthier lives. unresectable or metastatic, microsatellite instability- HPV. This same year, we also receive FDA approval for high (MSI-H) or mismatch repair deficient (dMMR) 1998 ZOLINZA® (Vorinostat), which treats a certain type solid tumors that have progressed following prior Our oncology portfolio continues to grow as we pursue of lymphoma. treatment and who have no satisfactory alternative cutting-edge cancer research. Our second oncology 2013 treatment options. product, TICE® BCG (Bacillus Calmette-Guerin), is Through better understanding the biology of cancer approved by the FDA for the treatment of carcinoma cells, we learn how to use biological signals to control of the bladder—more than 50,000 new cases are cancer cell growth. This type of therapy, called diagnosed annually in the United States at the time Initiatives immunotherapy, harnesses the immune system of approval.7 to help identify and fight cancer cells. In 2013, we Improving access to cancer care is our strategic Furthermore, in collaboration with the National Cancer announce that our first immunotherapy, KEYTRUDA, priority. We are working with governments and other Institute, we co-fund the creation of the Chemistry- receives Breakthrough Therapy Designation by the stakeholders to help patients gain access to the oncology Biology Center at Harvard University, which aims to FDA for previously treated, advanced melanoma, medicines that they need and to invest in health systems screen and develop cancer drug candidates much more indicating evidence of significant improvements to expand the provision of quality cancer care. quickly in order to address the need for expedited over existing treatment options for serious or life- discovery of cancer therapies. threatening diseases.8 Research and development 1999–2001 2014–2015 Our goal is to translate breakthrough science into At the turn of the century, chemotherapy is the KEYTRUDA is the first anti-PD-1 therapy to be approved innovative oncology medicines to help people with standard of care for most cancer patients. TEMODAR® in the United States. In 2014, KEYTRUDA is approved cancer worldwide. Today, our portfolio includes oncology (temozolomide), our first chemotherapy, receives FDA for treating unresectable or metastatic melanoma with medicines that treat different cancers and conditions approval in 1999 to treat certain types of brain tumors. disease progression following ipilimumab and, if BRAF related to cancer treatment.

Corporate Responsibility Report 2018/2019 86 ACCESS TO HEALTH | Oncology

Clinical Research Program It is because of this promise that we are also exploring Outside the United States In an effort to help as many people as possible, our combining KEYTRUDA with other cancer treatments in Where there is limited or no reimbursement for company has created the largest immuno-oncology more than 400 clinical trials⁹ globally. KEYTRUDA, we have structured various patient access clinical development program in the industry. We are programs in some markets and continue to explore studying KEYTRUDA, our first anti-PD-1 therapy, Access and affordability initiatives which enable greater access to our products. in hundreds of clinical trials across 30 tumor types⁹ These types of initiatives are currently active across Asia as both a single agent and in combination with other Once evidence has been collected regarding the safety Pacific and the Middle East. cancer medicines. With approximately 90,000 patients⁹ and efficacy of a compound, it must be approved by the Lastly, the time lag between regulatory approval of a expected to participate in these clinical trials, we are relevant regulatory agency before it can be prescribed product and reimbursement of that product in a given researching various ways that KEYTRUDA may work and administered in a region or country. To prevent country can present access challenges for patients across different types of cancers. We also have more delayed access between products being deemed in need. We are working with relevant authorities on than 20 novel mechanisms⁹ being explored in our clinically beneficial and being approved, we have focused achieving reimbursement to ensure patients are able to pipeline, in the clinic or close to entering the clinic, for on expediting filings for regulatory approvals across access our products as quickly as possible. monotherapy or combination with KEYTRUDA. We are the globe. This ensures that the greatest number of also focusing our R&D efforts in evaluating KEYTRUDA patients in need have access to our products as soon as in earlier disease states exemplified by the recent FDA safely possible. KEYTRUDA is currently approved in 86 9 Partnerships approval for adjuvant melanoma, but with many similar countries around the world. We believe that many access challenges cannot be efforts across tumor types. After our products are approved by the local regulatory resolved in isolation. To enable broader access to bodies, our next priority is to expedite reimbursement “New medicines like KEYTRUDA are cancer medicines and health care, we are undertaking to support patients in getting access to care that a number of efforts in partnership with stakeholders, central to our mission to save and they need as quickly as possible. In countries where which target barriers to access from drug availability improve lives. Providing early access to reimbursement is delayed or not available, we undertake to reimbursement, while ensuring local infrastructure promising investigational medicines helps different approaches to improve patient access. exists to treat patients across the pathway of care. us join with the scientific and medical Patient-Centered Cancer Care communities in seeking additional ways Patient access programs Our company’s Foundation established the Alliance to extend compassion, and potentially to We offer patient access and assistance programs to to Advance Patient-Centered Cancer Care to increase extend or save lives.” help enable patient access to our medicines by reducing timely access to patient-centered care and to reduce patient inability to pay for their prescribed cancer disparities in cancer care for vulnerable and underserved treatment. We have launched many of these programs populations in the United States. The Foundation has – DR. SCOT EBBINGHAUS, VICE PRESIDENT, across many geographies: committed $15 million over five years (2017–2021) CLINICAL RESEARCH, MRL to support the Alliance and its program partners in United States Combination Therapies selected communities across the country. Our Patient Assistance Program, a separately While single cancer therapies have proven to be incorporated nonprofit charitable organization, effective in many patients, in some cases, combination supports patients who do not have insurance or whose therapies have delivered better clinical outcomes than insurance does not cover KEYTRUDA (or other eligible 10 stand-alone medicines. This scientific progress has the medicines). Patients may be eligible for free product if potential to improve patients’ survival and quality of life. they meet certain financial and medical criteria.

Corporate Responsibility Report 2018/2019 87 ACCESS TO HEALTH | Oncology

Access Accelerated Initiative Significant progress has already been made. City This partnership aims to improve patient support and Our company is a member of Access Accelerated, a first- Executive Committees have been established and access to cancer care in sub-Saharan Africa and develop of-its-kind, multi-stakeholder collaboration focused initiative managers appointed in all four cities. guidance to help low- and middle-income countries on improving non-communicable disease (NCD) care. Needs assessments have been completed with the adopt similar models of care. Involving more than 20 pharmaceutical companies, the involvement of over 1,000 health professionals and initiative works with partners such as the World Bank 800 patients. Activities to address capability gaps are and the Union of International Cancer Control (UICC) being implemented. Three additional “Challenge Cities” to help overcome access barriers in low- and middle- have been selected to start the C/Can process including income countries. Kigali, Rwanda; Porto Alegre, Brazil; and Tbilisi, Georgia. Our company has taken a leadership role in this initiative, spearheading a multi-stakeholder working group. Furthermore, by supporting C/Can 2025 and a holistic 1 Ferlay J., Soerjomataram I., Ervik M., Dikshit R., Eser S., Mathers C., Rebelo M., Parkin D.M., Forman D., Bray, F. GLOBOCAN 2012 treatment solution, we and the rest of our industry v1.0, Cancer Incidence and Mortality Worldwide: IARC CancerBase partners have agreed to be prepared to negotiate on No. 11 [Internet]. Lyon, France: International Agency for Research on Cancer; 2013. http://globocan.iarc.fr/Pages/fact_sheets_cancer. pricing if it is identified as a barrier to access in the gap aspx analysis in pilot cities. 2 American Cancer Society. Global Cancer Facts & Figures. 2nd Edition. http://www.cancer.org/acs/groups/content/@epidemiolo- City Cancer Challenge 2025 (C/Can 2025) gysurveilance/documents/document/acspc-027766.pdf 3 In partnership with UICC, Access Accelerated has American Cancer Society Partnerships American Cancer Society. Cancer Facts & Figures 2018. https:// www.cancer.org/content/dam/cancer-org/research/can- launched C/Can 2025, a global, signature, cancer To address cancer care challenges in the U.S., our cer-facts-and-statistics/annual-cancer-facts-and-figures/2018/ initiative to deliver robust cancer treatment solutions company’s Foundation provided a $1.58 million, four- cancer-facts-and-figures-2018.pdf 4 in cities in low- and middle-income countries with year grant to the American Cancer Society (ACS) to Food and Drug Administration. Clinical Review. http://www.access- data.fda.gov/drugsatfda_docs/bla/1997/ifnasch110697r.pdf populations over one million. The initiative engages enhance its Patient Navigation Program (PNP) across 5 https://www.washingtonpost.com/archive/politics/1986/06/05/ with cities in the design, planning and implementation six communities in the United States. The program cancer-drug-interferon-wins-approval-for-commercial- of treatment solutions to improve the health of their helps improve care coordination, promote patient use/0046e95a-6cc8-402f-910a-09bad92eeb59/?utm_ter- m=.87b606b08291 citizens and reduce inequalities in access to quality activation, and increase access to high-quality cancer 6 Bode A.M., Dong Z. Cancer Prevention Research—Then and Now. cancer care. care. The PNP has reached thousands of patients across Nature reviews Cancer. 2009;9(7):508–516. doi:10.1038/nrc2646. participating sites, and evaluation findings show that 7 http://wayback.archive-it.org/7993/20170723144330/https:// The challenge addresses the need to ensure that patient navigators help patients overcome barriers www.fda.gov/downloads/BiologicsBloodVaccines/Vaccines/Ap- functional, comprehensive cancer solutions are available provedProducts/UCM101490.pdf to treatment. 8 for the majority of the world’s population. C/Can 2025 https://www.fda.gov/RegulatoryInformation/LawsEnforcedbyFDA/ SignificantAmendmentstotheFDCAct/FDASIA/ucm329491.htm piloted the model in four key learning cities: Yangon, Through a ~$2 million, five-year grant, our company’s 9 Figures are accurate as of April 20, 2018. Myanmar; Cali, Colombia; Asunción, Paraguay; and Foundation is also helping the American Cancer Society 10 Xu, Liang, et al. “A Meta-Analysis of Combination Therapy versus Kumasi, Ghana. (ACS) bring its expertise and experience in patient Single-Agent Therapy in Anthracycline- and Taxane-Pretreated Metastatic Breast Cancer: Results from Nine Randomized Phase III navigation to countries with a growing burden of cancer. Trials.” OncoTargets and therapy 9 (2016): 4061–4074. PMC. Web. 8 Feb. 2018.

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Vaccines

DISCLOSURES IN THIS SECTION In that time, our company has been home to some of the greatest vaccinologists, including the late Dr. Maurice SDG 3 SDG 17 Hilleman, a scientist and visionary who developed more than 40 vaccines for humans and animals over the 9 Vaccines are one of the most valuable course of his remarkable career. public health innovations of modern Our long history of success in discovering, developing, times, according to the World Health manufacturing and distributing vaccines is the foundation on which we will build a healthier future for people of all Organization (WHO), the U.S. Centers for ages worldwide. As we look to the future, we’re making Disease Control and Prevention (CDC) and investments in our pipeline and manufacturing capability other leading health authorities.1, 2, 3, 4, 5 to help protect one billion more lives by 2030. RESOURCES “I think there’s perhaps no better Public Policy Position example of how we make our mark Statement: Vaccines Maurice Hilleman, ca. 1962. on long-term health than our vaccines business. The bottom line is, children are Vaccines are vital in the global fight against disease, Our company has played a defining role in the history protected and communities are being eradicating smallpox and nearly eliminating other of vaccines. For more than 100 years, our scientists changed for the better around the world diseases like polio worldwide.2, 6 According to WHO, have been discovering and developing vaccines to help vaccines help prevent more than 30 infectious diseases protect children, adolescents and adults from a number because of our company.” 1, 7 8 and save 2–3 million lives globally each year. of serious diseases. – KEN FRAZIER, CHAIRMAN AND CEO

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Our company’s framework is one that allows the But inventing and developing vaccines is complex, MSD-Wellcome Trust Hilleman Laboratories ongoing research, development and distribution of time intensive and carries no guarantees. Doing so We are committed to discovering and developing new innovative vaccines that address important unmet takes vast resources, investment and ingenuity. It vaccines and helping expand global vaccination coverage health needs. takes active collaboration by tireless teammates who by supporting efforts that contribute to more sustainable partner with governments, academic researchers and vaccination programs that expand access and uptake. non-government organizations around the world. Inspired by the rich legacy and innovative spirit of Initiatives Our company is working with a number of collaborators, Dr. Maurice Hilleman, we are proud to be engaging Our Commitments including global and national health institutions, with the global health community in support of these to develop vaccines that target diseases of global y Support ongoing surveillance and assessments objectives through the MSD-Wellcome Trust Hilleman significance, such as pneumococcal disease, respiratory to understand infectious-disease trends and their Laboratories. This unique partnership was founded syncytial virus (RSV), cytomegalovirus (CMV) and Ebola impact on people in 2009 with co-funding from our company and virus disease. Wellcome Trust. y Engage in innovative research and development (R&D) to provide vaccines that address vital global We are also working to develop a vaccine to help prevent Headquartered in New Delhi, India, Hilleman health needs dengue fever. It is estimated that each year there Laboratories is a research and development center are 390 million people infected with dengue viruses y Strive to maintain the highest standards of safety and whose mission is to pursue innovation in vaccine science throughout the tropics and subtropics, resulting in up to product quality in all stages of vaccine development and technology that helps make access to vaccines more 100 million cases of dengue fever, with at least 500,000 affordable and equitable in lower-income markets. It and manufacturing 10 of those cases being classified as severe. Nearly specializes in early discovery and development science y Invest in manufacturing innovations to help assure 4 billion people live in the more than 140 countries that if shown to have promise, finds expert partners 11 reliable product supply and lower production costs where dengue transmission occurs. In 2014, we to whom vaccine candidates can be transferred for y Use tiered (or differential) pricing—systematically in-licensed the NIH live attenuated dengue vaccine further testing, registration and if approved, eventual pricing vaccines at differing levels appropriate to candidate. NIH-sponsored Phase II clinical trials are manufacturing in support of supply to Gavi and others. the value they create under the economic conditions ongoing, and Instituto Butantan is conducting a Phase III Hilleman Laboratories pursues its work in strong where they are used—to facilitate broad access trial of their vaccine, which is based on the NIH parental strains. A Phase I company-sponsored clinical trial is also collaboration with government and non-government y Work with governments and nongovernmental ongoing. In December 2018 the company announced organizations, spanning global public health, science, organizations (NGOs) to build sustainable and a collaboration with Instituto Butantan to support technology and the vaccine industry, including, for effective vaccination programs that reliably data sharing between the institutions in order to example, WHO, Gavi, UNICEF, vaccine manufacturers reach people speed development of their respective dengue vaccine and others. Current program areas include working to Our company invents—i.e., conducts innovative candidates. innovate vaccines for cholera, shigella and meningitis research and development—to create vaccines that that are more affordable and more suited to meet the address unmet and emerging global health needs. needs of low-income country vaccination programs. Improving vaccines Learn more about Hilleman Laboratories’ work at In addition to engaging in new vaccine R&D, we are also www.hillemanlabs.org. Research and development innovating to improve the characteristics of our existing We remain one of the few global companies dedicated vaccines. This includes investing in improved production Manufacturing and supply to the complex business of researching and producing approaches, formulations, schedules and presentations, vaccines to help address the public health burden of as well as investigating opportunities to improve supply We continue to invest in manufacturing and end-to-end infectious diseases for people around the world. security and expand the number of serotypes in our supply improvements in both capability and capacity to vaccines and evaluating the appropriateness of our help ensure a sustainable, reliable supply of quality and vaccines for additional populations. affordable vaccines to serve global needs.

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In the last few years, countries around the world have Reliable and high-quality supply long history of progress in this area, dating back to our enacted new or expanded vaccination programs. This licensing of hepatitis B technology to manufacturers in has contributed to an unprecedented increase in global Our manufacturing division has undertaken an China in the 1990s. demand for vaccines. At the same time, the number ambitious program to reduce the cost of production by of vaccine manufacturers has remained the same, and increasing efficiency, minimizing procurement spending In February 2018, VARIVAX® (Varicella and improving supply performance. some have stopped production of certain vaccines, Virus Vaccine Live) was the first creating additional needs for supply. Maintaining product quality is paramount. To varicella vaccine to receive World Health provide high-quality vaccines to people who need We are committed to meeting this increased global Organization (WHO) prequalification, demand for our vaccines, and we are significantly them, we manage our supply chain through policies ramping up our production capacity to do so. We plan and procedures designed to keep the distribution making it eligible for procurement by the to invest $16 billion in capital projects over the next five system secure. United Nations Children’s Fund (UNICEF) years, with a significant portion dedicated to vaccines. We also have initiatives in place to help ensure that and other United Nations agencies for In fact, we are already supplying vaccines at our highest- our packaging reduces unnecessary waste and is use in national vaccination programs. ever annual production rate. environmentally friendly. For instance, evaluating The total number of doses distributed of our vaccines opportunities to reduce packaging elements for has increased significantly since 2010. And over the providers that have a controlled delivery environment Registration and prequalification or removing unnecessary packaging for individual past eight years, our global reach has also increased We seek to ensure global access to our vaccines units within bulk purchasing can result in substantial dramatically: In 2018, approximately 69 percent of our by obtaining and maintaining up-to-date product efficiencies and reduced waste. vaccines were distributed outside the U.S., up from just registrations around the globe. Additionally, we seek 28 percent in 2010. to obtain WHO prequalification so that our vaccines Importantly, we are working hard to ensure that many Manufacturing partnerships may be easily obtained and distributed to underserved areas of the world’s poorest countries. of these doses reach people in the low-income settings We continue to explore potential strategic partnerships where they are needed most. More than 40 million with other manufacturers to increase supply and The following table summarizes the registration and WHO doses of two of our vaccines—GARDASIL® [Human promote greater access in local markets. We have a prequalification status of a select list of our vaccines. Papillomavirus Quadrivalent (Types 6, 11, 16 and 18) Vaccine, Recombinant] and ROTATEQ® (Rotavirus GARDASIL Vaccine, Live, Oral, Pentavalent)—have been [Human distributed in Gavi-eligible countries through 2018. Papillomavirus GARDASIL ROTATEQ M-M-R®II Quadrivalent 9 (Human (Rotavirus (Measles, (Types 6, 11, 16 Papillomavirus Vaccine, Mumps & and 18) Vaccine, 9-valent Vaccine, Live, Oral, Rubella Virus VARIVAX (Varicella Recombinant] Recombinant)12 Pentavalent) Vaccine Live) Virus Vaccine Live)

Product is WHO Yes Yes Yes Yes Yes prequalified13

Date of prequalification May 20, 2009 February 9, 2018 October 7, 2008 January 6, 2009 February 9, 2018

Approximate number 136 78 126 74 71 of countries where product is registered (as of Q2 2018)

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In February 2018, VARIVAX® (Varicella Virus Vaccine Our company’s commitment to helping protect global an investigational vaccine against the Zaire Ebola virus Live) was the first varicella vaccine to receive World health by improving the affordability, availability, disease. Five years later, our company’s commitment Health Organization (WHO) prequalification, making accessibility and use of our vaccines around the world to innovatively work with a diverse set of partners to it eligible for procurement by the United Nations is fundamental to our business and overall mission. We provide supply of the investigational Ebola Zaire vaccine Children’s Fund (UNICEF) and other United Nations offer ROTATEQ and GARDASIL at an access price that as part of international response efforts to address agencies for use in national vaccination programs. is significantly less than the value-based price of these Ebola outbreaks remains steadfast. vaccines in other markets. The access price is exclusive Since the beginning of the latest Ebola outbreak in to the public sectors of the countries eligible for support Pricing the Democratic Republic of the Congo (DRC), the from Gavi, the Vaccine Alliance. Our company works with governments, international company has donated and shipped hundreds of health and development organizations, donor In 2015, we extended our current Gavi prices for thousands of doses of investigational vaccine to WHO groups, NGOs and others to support countries’ ROTATEQ and GARDASIL through 2025 to Gavi- in support of current outbreak response efforts. We population health aims and help improve sustainable graduated countries with a per-capita gross national are deeply humbled by our collaboration with partners vaccination programs. income (GNI) not exceeding $3,200. This action greatly on the ground working to stop this outbreak amidst assists Gavi-transitioned countries by facilitating access an ever-evolving context. To better support these Vaccination is one of the most cost- to these vaccines in those countries while also making ongoing response efforts in the DRC and neighboring effective ways of avoiding disease. sure they remain affordable and sustainable in the long countries, we have decided to expand emergency-use term. We believe that our pricing approach contributes replenishment plans. Our company believes that this We use tiered pricing for vaccines as an equitable to broader access to our vaccines while taking into decision reaffirms our commitment to do the best it way to achieve twin objectives: to expand access for account our need to continue investing in vaccine can to accelerate the availability of investigational Ebola people who can benefit from vaccination, and to ensure research, development and production. In the short vaccine supply. sufficient return on investment over time to support the period of time since we made our price commitment In addition to working toward an increased stockpile of complex and costly research and development and other to countries transitioning out of Gavi support, five investigational Ebola vaccine, our company is making activities necessary to create new vaccines and address countries have taken advantage of the offer to introduce progress with regulatory submissions to obtain licensure post-licensure regulatory requirements as well as the or continue existing national HPV vaccination programs. to enable more sustainable access of an Ebola vaccine manufacturing capacity needed to supply them. As mentioned in WHO’s Top 10 Health Threats 2019, to those who need it most. Efforts to develop a vaccine We consider a variety of factors in arriving at a price in a vaccine hesitancy threatens to reverse progress made against Ebola Zaire disease is a testament to the power given country, including public health need and burden in tackling vaccine-preventable diseases. Vaccination of innovation and public-private partnerships, and we of disease, the health economic value of the vaccine, is one of the most cost-effective ways of avoiding will continue to support this endeavor. the country’s ability to support vaccine delivery and disease—it currently helps prevent 2–3 million deaths a The Ebola virus outbreaks and other recent epidemics achieve population health coverage, its level of economic year, and a further 1.5 million could be avoided if global and pandemics have highlighted the extent to which development, its fiscal capacity for investments in coverage of vaccinations improved. infectious diseases threaten human life and health and health and actual health spending, its mechanism and lead to economic and social disruption. These outbreaks policies for procuring vaccines and others. Responding to present and future have exposed the shortcomings in the world’s capacity We also consider inequities in access within a to prepare and respond. Ebola and Zika are the most country. Where regulations and infrastructure epidemics recent pathogen examples; others include SARS, MERS, allow, reduced pricing has been offered to support In response to the 2014 outbreak of Ebola in West Chikungunya, Lassa and Nipah. government- or donor-funded coverage of lower- Africa, we joined our global health partners from economic-tier segments. across sectors in collaborative efforts to help develop

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Our company is proud to be ranked As a result of the increased awareness of the burden a nonprofit health care organization, health officials in number two on Fortune magazine’s 2018 of HPV-related cancers and diseases, HPV vaccine Haiti plan to leverage the learnings from this program in recommendations and goals have changed, and the development of a national vaccination program. “Change the World” list for our work countries around the world have enacted new or In Peru, we are working with CerviCusco, Direct Relief on Ebola in partnership with the global expanded existing vaccination programs, which have and the Peru Ministry of Health on an HPV vaccination created an unprecedented increase in global demand health community and affected countries. program in Cusco. CerviCusco is a clinic for specialized for vaccines, including our company’s vaccines. We medical care in the prevention and detection of cervical In addition to our work toward development, licensure are significantly ramping up our production capacity, cancer in women from the underserved mountainous and sustainable manufacturing of a safe and efficacious utilizing Contract Manufacturing Organizations for region of Cusco. As of early 2018, CerviCusco had nearly Ebola Zaire vaccine to add to the toolbox of Ebola the first time ever and investing significantly in capital completed vaccinating an expected total of over 30,000 response efforts, we are working closely with global projects over the next five years, with a sizable portion persons with GARDASIL. partners to share our experience. Our company’s lessons dedicated to vaccine expansion. This investment and learned could help the broader public health community expansion represents another example of our company’s Despite the inherent complexity, long lead times be better prepared to keep disease outbreaks from long-term commitment to support global public health. and significant infrastructure required for vaccine becoming epidemics or pandemics in the future and to development and manufacturing, our commitment to Our commitment to expanding access and enabling mount effective responses against novel pathogens. We access for all stakeholders remains firm. Our company’s vaccination to help protect eligible populations globally, are committed to using all its available expertise to help continued commitment to collaborate with stakeholders remains firm. Recognizing the disproportionate burden improve the health and well-being of people everywhere. on expanding access, coupled with existing global of disease in low- and mid-income countries, we plan partnerships, will enable equitable access to our HPV to distribute a significant portion of our HPV vaccines vaccines around the world. Cervical cancer to low- and mid-income countries, including non-Gavi countries, in 2019. Over the last year, calls-to-action have been set forth by the World Health Organization (WHO), the American Additionally, we continue to work in partnership Partnership to end AIDS and Cancer Society (ACS) and National Cancer Institute with stakeholders on programs to support increased cervical cancer (NCI)-designated cancer centers to work toward the access to our vaccine. For example, in Haiti, one of In 2019 our company joined the U.S. President’s reduction and possible goal of elimination of certain the poorest countries in the world, our company is Emergency Plan for AIDS Relief (PEPFAR) and the HPV-related cancers. While progress has been made in collaborating with Zanmi Lasante in a two-year HPV George W. Bush Institute (Bush Institute) in the the fight against certain HPV-related diseases, more vaccination program across three districts. The program Partnership to End AIDS and Cervical Cancer among work needs to be done as HPV-related cancers remain is expected to vaccinate nearly 30,000 girls against HIV-positive women in Africa. The focus of the a significant public health burden in women and men. certain HPV-related cancers and diseases. Vaccinations partnership is an accelerated strategy for prevention, These efforts are important steps toward a world where completed in 2016 to 2017 achieved a coverage rate of screening and treatment with the goal of significantly the number of women and men affected by certain >93 percent for two doses. reducing HPV-related cervical cancer in HIV-positive HPV-related cancers is greatly reduced. To complement these efforts in Haiti, in early 2018 women as well as nationwide cervical cancer rates in Addressing the burden of certain HPV-related cancers the St. Boniface Haiti Foundation initiated a school- sub-Saharan Africa. As part of the partnership, our will require sustained commitment and coordinated based HPV vaccination program with donated doses company will provide PEPFAR with HPV vaccine for research and action across multiple stakeholders and of GARDASIL. This program achieved more than 93 use in an exploratory research study in a cohort of should include screening, prevention, treatment, percent vaccination among 5,000 girls 9–13 years of HIV-positive women in Eswatini and Namibia. infrastructure strengthening and surveillance and age, living in hard-to-reach areas. And, in combination monitoring. Our company is committed to working with with the program being conducted by Zanmi Lasante, organizations and governments across the globe to support these goals.

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1 WHO, UNICEF, World Bank. State of the world’s vaccines and immunization, 3rd ed. Geneva, World Health Organization, 2009. http://whqlibdoc.who.int/publications/2009/9789241563864_ eng.pdf?ua=1. Accessed April 2, 2017. 2 Centers for Disease Control and Prevention. Ten Great Public Health Achievements—United States, 2001–2010. Morb Mortal Wkly Rep. 2011;60(19):619–623. 3 Ibid.; 60(24):814–818. 4 Centers for Disease Control and Prevention. “Achievements in Public Health, 1900–1999 Impact of Vaccines Universally Recom- mended for Children—United States, 1990–1998.” Morb Mortal Wkly Rep. 1999;48(12):243–248. 5 World Medical Association. “Statement on the Prioritisation of Immunisation.” World Medical Association 63rd General Assembly, 2012, Bangkok, Thailand. https://www.wma.net/policies-post/ wma-statement-on-the-prioritisation-of-immunisation/. Accessed April 2, 2017. 6 WHO. Poliomyelitis. Fact Sheet No 114. http://www.who.int/media- centre/factsheets/fs114/en/. Accessed April 4, 2018. 7 WHO. Immunization Coverage Fact Sheet. http://www.who.int/ mediacentre/factsheets/fs378/en/ Accessed April 4, 2018. 8 The College of Physicians of Philadelphia. The History of Vaccines. http://www.historyofvaccines.org/timeline#EVT_102212. Accessed March 19, 2017. 9 Obituaries—Maurice Hilleman. BMJ2005;330:1028. doi: https:// doi.org/10.1136/bmj.330.7498.1028. Published April 28, 2005. 10 “The global distribution and burden of dengue.” Nature, 2013, Apr 25;496(7446):504–507. doi:1038/nature12060. Epub 2013 Apr 7. 11 “Refining the global spatial limits of dengue virus transmission by evidence-based consensus.”PLoS Negl Trop Dis. 2012;6:e1760. doi: 10.1371/journal.pntd.0001760. 12 Not currently available through UNICEF procurement; awaiting Vaccine Vial Monitor (VVM). 13 https://extranet.who.int/gavi/PQ_Web/Browse.aspx?nav=3.

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Women’s Health

DISCLOSURES IN THIS SECTION As the global community embraces the UN SDGs, we We support the ambitious—but, we continue to support efforts to accelerate access to our SDG 3 believe, achievable—goal set by the public SDG 17 products and ensure that reproductive health and rights are included in global, regional and country strategies. health community in 2012 of ensuring The private sector has an important role that voluntary lifesaving family planning to play in contributing to the achievement Access to reproductive health information, services and products reach an additional 120 million women and girls of the United Nations’ Sustainable Enabling couples to determine whether, when and how Development Goals1 (SDGs) regarding often to have children is vital to helping achieve safe in the world’s poorest countries by 2020. women’s health. motherhood, healthy families and healthy communities. Research has shown that appropriately spacing Voluntary family planning and broadening the method pregnancies helps improve both mother and child While progress regarding women’s health has been mix of family planning options help protect the health survival rates and reduces the risk of preterm birth.2 made since the launch of the Millennium Development of women by reducing high-risk pregnancies, and help The use of family-planning methods can also reduce Goals, rates of maternal mortality and unintended protect the health of children, adolescents and mothers the number of unsafe abortions and associate pregnancy remain high in many countries, and access by allowing sufficient time between pregnancies. complications.3 to modern contraceptive methods remains limited, especially among the poorest and most vulnerable women and girls.

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Access to modern contraceptives is an important aspect health programs. These activities are focused primarily addition to existing and in-process registrations, we of family planning. Our multifaceted approach supports on sub-Saharan Africa and countries in Asia and Latin continue exploring options to expand the number efforts to improve access to family-planning services and America with high unmet need. of registrations for products in countries of various contraceptives for the women most in need of them. We income levels. are actively engaged in areas where maternal mortality is high, and the prevalence of contraceptive use is low.4 Manufacturing and supply chain In 2018, IMPLANON NXT was approved management in India. We support the European Patients Forum We work to ensure that we track changes in the markets The following metrics are for our family-planning and their efforts with the European to support short-, medium- and long-term availability products intended for underserved segments of the Parliament to raise awareness and of our contraceptive products to meet customer world’s poorest countries (defined as Family Planning needs globally. improve equity in access to contraception 2020 or FP2020 countries) that are supplied through in other parts of the world. The majority of production of our long-term reversible the public sector and social-marketing organizations. contraceptive implant is for developing countries. When Note: World Bank country classifications Our commitment to providing access to reproductive we face supply constraints in these markets due to health starts with our research and development, un-forecasted demand, we work in close collaboration which has resulted in a diverse portfolio of with our customers and partners to allocate supply IMPLANON MARVELON contraceptive products. to those countries most in need in the fairest and NXT® EXLUTON® 28® most transparent manner with aligned focus on Over the years, we have been responsible for the Product is WHO Yes Yes Yes development of a wide range of contraceptive options, existing programs. prequalified including a single-rod contraceptive implant and We continuously examine our supply chain, seeking to FP2020 54 22 23 progestin-only and combined oral contraceptives. reduce inefficiencies, optimize yields, and lower costs countries where of production where possible to support availability for product is 5 Sustainable business model to access pricing. This enables us to mitigate cost increases registered and allowed us to extend our access price for Implanon FP2020 34 4 5 promote access NXT® (etonogestrel implant) through the end of 2023. countries We are committed to making our contraceptive in which we As we continue to see demand grow for our long- supplied products available to women around the world. We take term reversible contraceptive implant, particularly in product a comprehensive approach to access that includes high- developing markets, we continue to analyze potential Women reached 4,700,000 400,000 1,800,000 quality manufacturing and supply chain management, investment needs to significantly expand our production extensive registration and WHO prequalification for in FP2020 capacity. In 2018, this resulted in a renewed long-term countries6 a variety of our family-planning products, responsible capacity plan that will be finalized in 2019. commercialization that promotes training and capacity- building, policy advocacy and community investment. Prequalification Registration and prequalification In order to facilitate institutional purchases of family- In developing countries that have high rates of maternal planning products and provide quality assurance, mortality and low rates of contraceptive prevalence, we Registration we have extended our WHO prequalification in 2018 have created a sustainable public-private partnership We seek to ensure global access to our contraceptive for EXLUTON® (lynestrenol), IMPLANON NXT and model, with first quality products made available at products by obtaining and maintaining up-to- MARVELON 28® (desogestrel-ethinyl estradiol). access pricing to promote access to contraceptive date product registrations around the world. In

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IMPLANON NXT is also included on the WHO Model increase awareness of and access to a broad choice of contraceptive options that include non-daily and long- List of Essential Medicines. The WHO list, updated contraceptive products: acting reversible methods. every two years, serves as a guide for the development y Requests for quotation We believe that our pricing approach will help improve of national and institutional essential medicine lists. product availability while also allowing the company to Medicines for inclusion are selected by WHO based on y Pricing continue to invest in research, development, production a rigorous review process by an Expert Committee of y Partnering for implementation and the training and education necessary to help ensure public health and clinical experts. y Public advocacy appropriate counseling on and use of our products.

International Our company receives and responds to “Requests for Nonproprietary Date of Quotation” from developing countries’ governments Health care provider training Name (IN) Prequalification seeking supplies for their own programs (financed by government funds, by multilateral organizations or In February 2015, we announced, as part of our MARVELON Ethinylestradiol + October 21, 2010 through bilateral aid); from donor country aid agencies commitment to health care provider training, that we 28 Desogestrel (e.g., USAID, DFID and KfW, a German government- would provide IMPLANON NXT training applicators at no cost in FP2020 countries through 2018 as part of the EXLUTON Lynestrenol June 18, 2010 owned development bank) seeking to purchase reproductive health commodities that will be donated product launch. to programs in one or more countries; from multilateral Throughout 2018, we donated approximately 33,280 IMPLANON Etonogestrel May 23, 2013 agencies, such as UNFPA, donating to one or more NXT placebos for FP2020 countries, and supported “training countries; or from nongovernmental agencies seeking of trainers” by providing other training materials, supplies for programs that they manage in one or including audiovisual materials, training kits and artificial Pricing and commercialization more countries. arm models. Based on an average of two trainers per health care provider this volume represents another The success of reproductive health programs in the In responding to these requests, we adhere to 16,000–17,000 providers being (re)trained, which developing world relies upon the close cooperation the specific guidelines of each proposal and act in helps secure and expand the regions with access to and coordination of many partners. Those include full compliance with local and international laws IMPLANON NXT. pharmaceutical companies like ours that discover, and requirements, as well as with our own high develop and manufacture contraceptive products; ethical standards. national governments that seek to support family For contraceptive product pricing, we consider a nation’s Partnering for implementation planning through policies that increase the use level of economic development and other relevant Beyond our research, we continue to work hard to of contraception and through investment in both factors, including the types of family-planning programs develop sustainable business models that will help procurement and capacity-building; international, implemented by the local government. improve access to our products for the people who bilateral and multilateral donors that finance the need them most. Our partnerships with governments, purchase of reproductive health commodities and invest In upper-middle-income and high-income countries, international organizations and nongovernmental in service delivery management and implementation; we provide our products at prices that take into organizations (NGOs) help support and implement NGOs that support implementation of such programs; account the innovation and value they represent. With programs and policies that improve access and promote and health care professionals and health extension a commitment to making our contraceptive products capacity-building by helping to train health care workers who counsel and provide care for women available to the public sector, we also offer discounts professionals and address barriers to care. around the world. to organizations that serve women of all income levels, like Planned Parenthood affiliates, so that the women We participate in a number of coalitions that support As one of many partners, we take the following steps who rely on their services have routine access to women’s reproductive health by increasing access to to support family planning programs and to help

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family planning, working to reduce maternal mortality, We have extended our access pricing The coalition brings together diverse agencies and and promoting collaboration between the public, private to targeted countries through 2023, groups with critical roles in providing contraceptives and not-for-profit sectors. and other reproductive health supplies. These include an additional five years beyond the multilateral and bilateral organizations, private Throughout the world, we have partnered with expiration of our 2013 agreement. foundations, governments and civil society and private- organizations and supported projects that work to sector representatives. We participate in various RHSC increase women’s access to health services, reduce Throughout 2018, IMPLANON NXT volumes for FP2020 working groups, including the Market Development maternal mortality, increase awareness of reproductive/ countries exceeded 400 percent of the threshold Approaches Working Group, which contributes to the sexual health among adolescents and vulnerable volume agreed in the Implant Access program—a clear goal of reproductive health supply security, and to populations, prevent mother-to-child transmission of reflection of the increased availability this agreement ForoLAC, which focuses on access in Latin America HIV/AIDS, and promote women’s empowerment and had for the access markets. and the Caribbean. access to economic opportunities. In addition, the volume of IMPLANON NXT supplied to the Through these partnerships we help to expand FP2020 countries increased to the level of approximately Together we support the efforts access to highly effective modern contraception and 126 percent of the 2016/2017 annual average, which of local country ministries of ensure that health care workers gain access to skilled creates access for approximately 26 percent more women heath to increase the availability contraception training. compared to the previous two years. of quality, life-saving commodities Family Planning 2020 (FP2020) Reproductive Health Supplies Coalition (RHSC) for women’s and children’s health FP2020 works with governments, civil society, The RHSC is a global partnership of public, private and per the recommendations of multilateral organizations, donors, the private sector nongovernmental organizations (NGOs) dedicated to and the research and development community to helping all people in low- and middle-income countries the UN Commission on enable 120 million more women and girls to use gain access to and use affordable, high-quality supplies Life-Saving Commodities. contraceptives by 2020. It is based on the principle that ensure better reproductive health. that all women, no matter where they live, should have access to lifesaving contraceptives, and supports the UN Secretary-General’s global effort for women’s and children’s health. In May 2013, together with the Bill & Melinda Gates Foundation, we announced an agreement to expand contraceptive access and options for millions of women in some of the world’s poorest countries. Under the agreement, we reduced the cost of IMPLANON and IMPLANON NXT by approximately 50 percent through 2018 in the targeted poorest eligible countries of focus for the reproductive health community. In November 2015, we extended this commitment to FP2020 by five years, through 2023, to offer access pricing for IMPLANON NXT to eligible countries.

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Reproductive Health Global Traceability As a result of this research, the group of experts Advisory Group supported by EPF published a whitepaper, representing Throughout 2018, we continued to participate in the a call to action and providing recommendations on Reproductive Health Global Traceability Advisory Group, how to improve access to contraception in Europe. The convened by USAID and UNFPA. All of our company’s whitepaper was launched at the European Parliament on contraceptive products supplied to USAID have received September 26, 2018, World Contraception Day. global standardized Global Trade Item Number (GTIN) Centers for Disease Control and reference, which will be added to all relevant documents, Prevention Foundation individual packs and shipper boxes from mid-2019 In June 2016, together with the CDC Foundation, we onwards. This standardization, together with 2D matrix announced a collaboration to enable increased access to and serialization, will strengthen traceability throughout NEXPLANON® (etonogestrel implant) and NuvaRing® the supply chain. (etonogestrel/ethinyl estradiol vaginal ring) in Puerto Rico Women Deliver Global Implant Removal Task Force through the Zika Contraception Access Network (Z-CAN). Women Deliver is a leading global advocate for the Since 2015, we have participated in the Bill & Melinda Z-CAN was established by the CDC Foundation to health, rights and well-being of girls and women that Gates Foundation-convened Global Implant Removal address an urgent need to improve contraception access brings together diverse voices to drive progress, with a Task Force, which brings together multiple organizations in Puerto Rico during the Zika outbreak. As part of the particular focus on maternal, sexual, and reproductive to deliver clear evidence and best practices and offer effort, we are also providing training and education health and rights. We are proud to participate in Women tangible solutions for identified problems in implant support to health care providers. Deliver-led initiatives and coalitions that seek to bring removal services. This participation is still ongoing meaningful change to women around the world. and new material continues to be developed with a Z-CAN concluded in June 2017 when Puerto Rico focus on education for removal of accidentally deep declared an end to its Zika epidemic. During the inserted implants. program’s run, more than 28,000 women visited 1 http://www.un.org/sustainabledevelopment/sustainable- Z-CAN clinics, of which 95 percent received same-day development-goals/ European Parliamentary Forum on Population & family planning services. Approximately 25 percent 2 http://www.marchofdimes.com/news/jul19b_2011.html, www.guttmacher.org/pubs/AddingItUp2009.pdf Development of all women who were offered the full range of 3 Singh, S., et al., Guttmacher Institute and United Nations We have established a partnership with the European contraceptive methods chose NEXPLANON. Prior to Population Fund; 2009. Parliamentary Forum on Population & Development the establishment of the Z-CAN program, NEXPLANON 4 http://www.everywomaneverychild.org/networks/life-saving- (EPF) to support their efforts to raise awareness of was not widely available on the island. commodities 5 inequities in access to contraception and family-planning There are additional unregulated markets where our products In January 2018, an article was published in The Lancet may be available that are not represented by these numbers. services among European countries. 6 Public Health highlighting the work of Z-CAN and Number represents potential number of women who could be reached based on number of products provided. Our company provided EPF with support to create a demonstrating what is possible during an emergency unique new tool called the European Contraception response or humanitarian crisis through partnership. Atlas, an online interactive map that scores 45 European countries on access to modern contraception, focusing on access to information and contraceptive supplies. With criteria established by a multi-stakeholder group of experts in sexual and reproductive health and rights, the atlas aims to provide a dynamic and robust tool to help improve access to modern contraception.

Corporate Responsibility Report 2018/2019 99 ACCESS TO HEALTH | Key Initiatives

Key Initiatives

DISCLOSURES IN THIS SECTION Active programs Addressing the Opioid Crisis SDG 3 GRI 203-2 SDG 17 The programs highlighted below are examples of our in West Virginia ongoing efforts: Our company’s Foundation is We believe we have an important role supporting an initiative with Marshall and responsibility in improving access ACS: Global Patient Navigation Health through a $2 million grant over to medicines, vaccines and quality health four years (2018–2021) to establish Through a $2 million grant over the Great Rivers Regional System for care worldwide, helping to reduce the five years (2019–2023), our Addiction Care—a comprehensive burden of disease in the parts of the company’s Foundation is helping program to address the opioid crisis in West Virginia. the American Cancer Society (ACS) world that need it most. bring its expertise and experience We work in collaboration with local communities, in patient navigation to countries Alliance to Advance Patient- governments, donors, patient organizations, health with a growing burden of cancer. This partnership Centered Cancer Care care professionals, nongovernmental organizations aims to improve patient support and access to cancer (NGOs), multilateral organizations, and others care in sub-Saharan Africa and develop guidance to Our company’s Foundation established the Alliance to in the private sector to contribute our expertise help low- and middle-income countries adopt similar Advance Patient-Centered Cancer and knowledge. models of care. Care to increase timely access to patient-centered care and reduce disparities in cancer care, especially for vulnerable and underserved populations in the United States.

Corporate Responsibility Report 2018/2019 100 ACCESS TO HEALTH | Key Initiatives

Bridging the Gap: Reducing MECTIZAN® Donation Program MSD for Mothers Disparities in Diabetes Care The MECTIZAN® (ivermectin) MSD for Mothers is a 10-year, $500 Donation Program is the longest- million initiative focused on improving Our company’s Foundation running disease-specific drug the health and well-being of mothers established Bridging the Gap to donation program and public-private before, during and after pregnancy improve access to high-quality partnership of its kind and is widely and childbirth. Working together diabetes care and to reduce health regarded as one of the most successful with committed partners, we believe disparities among vulnerable and public-private health collaborations in the world. we can help make pregnancy and childbirth a safe, underserved populations with healthy and joyful experience for women. type 2 diabetes in the United States. MSD Medical Outreach Program HIV Care Connect (MMOP) Project ECHO To help build health care capacity and To help address persistent HIV Our company’s Medical Outreach expand access to specialty care for disparities in the U.S., our company’s Program was established in 1958. It complex or chronic conditions among Foundation launched HIV Care Connect. is the primary mechanism through underserved populations in Asia, our This multi-site initiative aims to which our company donates its company’s Foundation established reduce disparities in access to care and pharmaceuticals and vaccines for a partnership with Project ECHO improve health outcomes for people humanitarian assistance in the (Extension for Community Healthcare Outcomes) of color living with HIV in vulnerable and underserved developing world and in support of disaster relief and to expand the replication of Project ECHO in India communities in the Southeastern United States. emergency situations worldwide. and Vietnam.

Improving Alzheimer’s Care in MSD Fellowship for Global Health U.S. Patient Assistance Programs The MSD Fellowship for Global the U.S. More than 55 years ago, our company Health is a three-month, field- In 2018, our company’s Foundation created our first U.S. patient based corporate pro bono program launched several new programs assistance program (PAP) to keep designed to leverage the skills and that aim to improve the health and affordable medicines within patients’ talents of our employees worldwide. well-being of vulnerable individuals reach. Today, our patient assistance living with Alzheimer’s and their offerings include several programs. caregivers in the United States.

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Completed programs China-MSD HIV/AIDS Partnership GARDASIL® Access Program The programs highlighted below are examples of our Our company’s Foundation Through the GARDASIL® [Human past programs and initiatives: committed $36 million to establish Papillomavirus Quadrivalent (Types the China-MSD HIV/AIDS Partnership 6, 11, 16, 18) Vaccine, Recombinant] (C-MAP). C-MAP was the first large- Access Program, we pledged to African Comprehensive HIV/AIDS scale public-private partnership donate at least 3 million doses of Partnerships between the Chinese government GARDASIL for use in smaller-scale and a multinational company to focus on HIV/AIDS human papillomavirus (HPV) vaccination projects in Together with our company’s prevention and control. eligible lowest-income countries around the world. Foundation and the Bill & Melinda Gates Foundation, we established the African Comprehensive HIV/ HIV Care Collaborative AIDS Partnerships (ACHAP) in 2002 To help address remaining barriers to support Botswana, a country to HIV care, especially among disproportionately affected by HIV/AIDS. To learn more, underserved populations, our you may also read about ACHAP’s contributions to the company’s Foundation established fight against HIV/AIDS in Botswana. the HIV Care Collaborative for Underserved Populations in the U.S. Alliance to Reduce Disparities in with the goal of connecting more people living with HIV to the care they need to stay healthy. Diabetes To address the growing problem of health care disparities related to type 2 diabetes in the U.S. among low-income and underserved adult populations, our company’s Foundation launched the Alliance to Reduce Disparities in Diabetes, with a commitment of $15 million.

Corporate Responsibility Report 2018/2019 102 ACCESS TO HEALTH | ACS: Global Patient Navigation

ACS: Global Patient Navigation

DISCLOSURES IN THIS SECTION (NCDs)—diminish the likelihood that patients will burden of cancer. Through a $2 million grant over five receive the critical care they need. years (2019–2023), the partnership will improve patient SDG 3 support and access to cancer care in sub-Saharan Africa SDG 17 Patient navigation is an effective way to help cancer and develop guidance to help low- and middle-income patients overcome the many challenges that may countries adopt similar models of care. According to the World Health affect their care by providing them with individualized Organization and American Cancer assistance. A successful patient navigation program The cornerstone of the ACS patient navigation Society, 1 in 6 people die from cancer helps ensure timely diagnosis and treatment, increases program is the connection between the patient and the rates of treatment completion and improves patients’ patient navigator. These navigators—whether nurses globally, with cancer-related mortality overall quality of life. While navigation for cancer providing cancer education or lay health workers linking outnumbering deaths from HIV/AIDS, patients has become the standard of care in the patients to transportation services in the community— tuberculosis and malaria combined. United States, it also holds great potential to support play a vital role by supporting patients from the cancer patients in other regions, including resource- point of diagnosis at a health facility through their RESOURCES limited settings. treatment journey. ACS Backgrounder Linking cancer patients to the Program goals

In resource-limited settings, patients often face barriers care they need In 2015, ACS partnered with Kenya’s only comprehensive cancer care facility—Kenyatta National to obtaining a timely cancer diagnosis and receiving To help enhance NCD care in resource-limited settings, Hospital—to identify the challenges patients face high-quality cancer care. Fragmented health systems our company’s Foundation is helping the American accessing cancer care services at the hospital and in sub-Saharan Africa—overwhelmed by a double Cancer Society (ACS) bring its expertise and experience introduce patient navigation as a potential solution. burden of infectious and non-communicable diseases in patient navigation to new regions with a growing

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With support from the Foundation, the ACS plans to: Through this partnership, ACS aims to demonstrate that patient navigation can be effective and viable for y Continue the successful patient navigation model at resource-limited health institutions and can be fully Kenyatta National Hospital integrated into the way each institution delivers cancer y Bring the tools and resources that have been care for sustainability. developed in Kenya to a high-need facility in Uganda— The Uganda Cancer Institute—which serves about ACS will work with an independent evaluator to evaluate 200 patients daily the implementation of the patient navigation programs in Kenya and Uganda as well as the pilot of the program y Create a comprehensive guide to patient navigation design guide and toolkit. The evaluation team will program development and implementation for health disseminate its findings to the global cancer community facilities in low- and middle-income countries and other interested stakeholders to advance the field’s y Pilot the guide in health institutions in Asia and knowledge of how to effectively support cancer patients Latin America. in resource-limited settings.

Corporate Responsibility Report 2018/2019 104 ACCESS TO HEALTH | Alliance to Advance Patient-Centered Cancer Care

Alliance to Advance Patient-Centered Cancer Care

DISCLOSURES IN THIS SECTION While the past decade has marked significant cancer care for vulnerable and underserved populations advancements in cancer treatment, many cancer in the United States. The Foundation has committed SDG 3 SDG 17 patients still do not receive timely, patient-centered $15 million over five years (2017–2021) to support care. Additionally, cancer care is often fragmented and the Alliance and its program partners in selected According to the American Cancer poorly coordinated. communities across the country. Society, an estimated 1.7 million In its landmark 2013 publication, Delivering High-Quality The Alliance aims to: Cancer Care: Charting a New Course for a System in Crisis, people in the United States receive y Promote evidence-based interventions that: the Institute of Medicine (now the National Academy of a cancer diagnosis each year, and this Medicine) highlighted important gaps in the delivery of º Improve care coordination and integration number is projected to grow as the cancer care in the United States. In particular, the IOM º Enhance patient-provider communication population ages. underscored the need to strengthen patient-centered º Empower patients to actively engage in their care and reduce disparities in care for underserved and health care and treatment planning RESOURCES vulnerable populations. º Offer psychosocial care and other Alliance to Advance Alliance Website support services Patient-Centered Cancer Care Profile Goals y Improve patients’ satisfaction with their care and quality of life Delivering High-Quality In response to these needs, our company’s Foundation y Build sustainable community partnerships that Cancer Care: Charting established the Alliance to Advance Patient-Centered advance patient-centered cancer care a New Course for a Cancer Care (the Alliance) to increase timely access System in Crisis to patient-centered care and to reduce disparities in y Identify and disseminate best practices in patient- centered cancer care

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Alliance program sites Approach Through both quantitative and qualitative methods, the evaluators will assess changes in patient- and Through grants to six organizations, our company’s The Alliance programs will: system-level outcomes over the course of the Alliance Foundation is supporting evidence-based, multifaceted y Strengthen patient-centered cancer care by sites’ interventions. programs to promote sustainable improvements in the implementing interventions in three critical areas: delivery of cancer care. The program sites are: In 2018, the evaluators at the University of Michigan º Coordination of cancer care and its integration collected the first year of intervention data across y Georgia Cancer Center for Excellence at Grady Health with primary care and other specialty care the key measures captured in the cross-site evaluation. System Patient-provider communication and patient The evaluators provided the preliminary results outlined (Atlanta, Georgia ) engagement in care below. These measures will be captured and reported y The Johns Hopkins University School of Medicine º Psychosocial care and other supportive care annually until project completion. Upon completion of (Baltimore, Maryland) the cross-site evaluation, findings and program results y Implement cross-cutting interventions that address will be widely disseminated to help advance patient- y Massachusetts General Hospital Cancer Center multiple cancer types (Boston, Massachusetts) centered cancer care in the United States. y Integrate components at different levels of the 1 y Northwestern University Feinberg School of Medicine R.E. Glasgow, T. M. Vogt, and S. M. Boles, “Evaluating the public health care ecosystem: health impact of health promotion interventions: the RE-AIM (Chicago, Illinois) framework,” American Journal of Public Health, 1999 September, º Patient 89(9):1322–1327. y Ohio State University Comprehensive Cancer Center º Health care provider / health care team (Columbus, Ohio) º Health care system y The University of Arizona Cancer Center Performance (Tucson, Arizona) y Collaborate with community partners to foster sustainable programs to improve the delivery of The Cross-Site Evaluation presents preliminary data The University of Michigan’s School of Nursing (Ann cancer care derived from four sites that submitted data related to Arbor, Michigan) serves as the National Program interventions and services delivered between January Office (NPO) for the Alliance. The NPO provides The Foundation is working with the University of and December 2018. Two of the six sites experienced technical assistance to the program grantees, fosters Michigan to conduct a cross-site evaluation of the delays in the implementation of their Alliance-supported collaboration among grantees and community partners Alliance and its programs. The cross-site evaluation will interventions. Consequently, this report does not to share best practices and lessons learned and leads examine how patient-centered cancer care outcomes include data from those two sites in 2018. efforts to disseminate Alliance program information to across the six program sites change over the course policy makers and other key stakeholders. of the five-year Alliance. The RE-AIM Implementation In addition, some sites did not report on all key measures. Science framework guides the evaluation.1 This This is due, in part, to the different interventions being framework examines a program’s Reach, Effectiveness, implemented across the sites, as well as the varying Adoption, Implementation and Maintenance. timelines for patients or participants to complete the interventions. During 2018, a total of 719 patients were enrolled in interventions across the four reporting Alliance sites.

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SELECTED REACH MEASURES (JANUARY–DECEMBER 2018)1

MEASURE 2018

Of patients enrolled, number (%) of those who completed interventions 98 (13.6%) supported through the Alliance2 (n=719)

Of patients enrolled, number (%) of those who received navigation services 473 (65.7%) supported through the Alliance3 (n=719)

Of patients screened, per protocol, the number (%) of those who screened 361 (46.2%) positive and received at least one psychosocial service4 (n=782)

1 n=719 total patients recruited to or enrolled across Alliance sites’ interventions (four of six sites reporting, to date). 2 Three of six sites reported data on patients completing interventions. 3 Three of six sites reported data on navigation services. 4 Four of six sites reported data on psychosocial screening. Not all screened patients participated in interventions.

SELECTED EFFECTIVENESS MEASURES (JANUARY–DECEMBER 2018)

MEASURE 2018

Access to Care: Average number of days between scheduling and attending 11.2 days Range: 0–119 days first appointment with cancer provider1

Engagement in Care: Number (%) of patients actively engaged in 44 (62.9%) management of their cancer treatment and symptoms2 (n=70)

Communication with Health Care Providers: Number (%) of patients 49 (70.0%) reporting “feeling heard” by providers in decisions about their care2 (n=70)

Adherence to Care: Of 6,427 scheduled appointments for enrolled patients, 1,418 (22.1%) number (%) of missed appointments3

Utilization of Health Care: Of 719 enrolled patients, number (%) of 314 (43.7%) Emergency Department visits for cancer-related issues4

Quality of Life:5 (n=69) The number (%) of patients reporting • Below average quality of life 22 (31.9%) • Average quality of life 23 (33.3%) • Better than average quality of life at the completion of intervention 24 (34.8%)

1 Three of six sites reported time to first appointments. 2 Two of six sites reported survey measures. 3 Two of six sites reported number of missed appointments. 4 Four of six sites reported. 5 Two of six sites reported. Sites varied in instruments used to assess quality of life, including Patient-Reported Outcomes Measurement Information System (PROMIS) or Functional Assessment of Cancer Therapy – General (FACT-G) tools.

Corporate Responsibility Report 2018/2019 107 ACCESS TO HEALTH | Bridging the Gap in Diabetes Care

Bridging the Gap in Diabetes Care

Vulnerable and underserved populations bear a DISCLOSURES IN THIS SECTION Goals disproportionate burden of diabetes and its related SDG 3 To help address the growing burden of diabetes, our SDG 17 complications. These populations also experience persistent inequities in access to high-quality company’s Foundation established Bridging the Gap: diabetes care. Reducing Disparities in Diabetes Care (Bridging the Gap). An estimated 30 million Americans— This initiative aims to improve access to high-quality about 9 percent of the population— Promoting health equity among people with diabetes diabetes care and reduce disparities in health outcomes are living with diabetes, according to requires a multifaceted approach that improves among vulnerable and underserved populations with the delivery of health care while addressing the the U.S. Centers for Disease Control type 2 diabetes in the United States. The Foundation complex array of interrelated factors that influence committed $16 million over five years (2017–2021) to and Prevention. health. Multisectoral collaborations can reduce support Bridging the Gap and its program partners in health disparities by integrating high-quality medical RESOURCES selected communities across the country. care with resources drawn from the social and Bridging the Gap Bridging the Gap environmental sectors, such as food, housing and Bridging the Gap aims to: Backgrounder Partners neighborhood and physical environments. For example, y Build sustainable partnerships between the health multisectoral collaborations can help improve access care sector and other sectors to address the medical Bridging the Gap Bridging the Gap to nutritious food and increase options for physical and social factors that influence health Infographic in Diabetes Care: activity, both of which are important for better y Redesign health care systems, particularly primary Website health outcomes. care, to improve the delivery of diabetes care for vulnerable and underserved populations

Corporate Responsibility Report 2018/2019 108 ACCESS TO HEALTH | Bridging the Gap in Diabetes Care

y Improve health outcomes for individuals with type Approach Key measures 2 diabetes through measures such as better glucose and lipid control Bridging the Gap programs are: Patients engaged y Disseminate key findings and lessons learned to y Using multisectoral collaborations to address factors Metric: Number of eligible patients enrolled in advance cross-sector approaches that improve inside and outside the health care system that interventions and programs supported through Bridging population health and reduce diabetes disparities influence diabetes outcomes the Gap y Transforming the delivery of primary care, including Metric: Number and percentage of eligible patients Bridging the Gap program sites team-based, coordinated care tailored to the patient’s who completed Diabetes Self-Management Education level of risk for complications from diabetes and (DSME) classes supported through Bridging the Gap Through grants to eight organizations, our company’s social factors that can complicate treatment and Primary care transformation Foundation is supporting evidence-based, multisectoral care management approaches to promote sustainable improvements in Metric: Number and percentage of eligible patients y Engaging multiple levels of the health care system, the delivery of diabetes care. who received community health worker, navigator or such as the patient, family support system, health promotora services y Alameda County Public Health Department (Oakland, care team and health care organization levels California) Metric: Number and percentage of eligible patients y Clearwater Valley Hospital and St. Mary’s Hospitals Cross-site evaluation who obtained appointments with Certified Diabetes and Clinics (Orofino, Idaho) Educators (CDEs) who demonstrated improvement in The Foundation is working with the National Program blood sugar control as measured by HbA1c levels y La Clínica del Pueblo (Washington, D.C.) Office at the University of Chicago to conduct a cross- y Marshall University (Huntington, West Virginia) site evaluation of Bridging the Gap and its programs. y Minneapolis Health Department Through innovative diabetes care transformation that Patient experience (Minneapolis, Minnesota) addresses both medical and social needs, the cross-site Engagement in care y Providence Health and Services (Portland, Oregon) evaluation will examine how diabetes outcomes across Metric: Percentage of patients who report that their program grantees change over the course of the five- y Trenton Health Team (Trenton, New Jersey) primary care provider asked for their ideas about year Bridging the Gap initiative. managing their own health y Western Maryland Health System (Cumberland, Maryland) Through both quantitative and qualitative methods, Communication with health care providers the evaluators will assess changes in patient- and Metric: Percentage of patients who report that their The University of Chicago (Chicago, Illinois) serves system-level outcomes over the course of interventions primary care provider seemed to know important as the National Program Office for Bridging the implemented by Bridging the Gap grantees. The information about their work or life at home that they Gap. It supports the program efforts of the grantee evaluators at the University of Chicago have indicated had discussed in the past organizations and provides leadership in building a their intention to capture the following key measures national public-private partnership to help reduce annually through the cross-site evaluation. These key Diabetes self-management disparities in diabetes care. measures are outlined below. The evaluation findings Metric: Percentage of patients who report they feel and program results will be widely disseminated to help confident that they know what to do when their blood advance diabetes care for vulnerable populations in the sugar level goes higher or lower than it should be United States. Metric: Percentage of patients who report they feel confident that they can control their diabetes so that it does not interfere with the things they want to do

Corporate Responsibility Report 2018/2019 109 ACCESS TO HEALTH | Bridging the Gap in Diabetes Care

Quality of life Health outcomes and health care utilization Metric: The proportion of patients who report positive Metric: The proportion of eligible patients who health-related quality of life participated in interventions supported through Bridging the Gap who had improved blood sugar control Identifying and supporting social needs as measured by HbA1c levels Metric: Number and percentage of patients (among those screened for social needs) who received referrals Metric: The proportion of eligible patients who to address their identified social needs participated in interventions supported through Bridging the Gap who had decreased emergency Metric: Number and percentage of patients with department utilization (Note: Restricted to analysis confirmed receipt of social services or community of organizations that have capability for tracking programs (Note: Restricted to analysis of organizations emergency department utilization) that have capability for bi-directional communication between clinics and social service agencies or community programs)

Corporate Responsibility Report 2018/2019 110 ACCESS TO HEALTH | HIV Care Connect

HIV Care Connect

Over half of all people newly diagnosed with HIV live in DISCLOSURES IN THIS SECTION Goals the U.S. South, and approximately three quarters of SDG 3 2 To help address persistent HIV disparities in the U.S., SDG 17 them are people of color. In 2017, over two thirds of gay and bisexual men diagnosed with HIV were men of color, our company’s Foundation launched HIV Care Connect. Approximately 1.1 million people in and approximately three quarters of women diagnosed This multi-site initiative aims to reduce disparities in the United States are living with HIV with HIV were women of color.3, 4 access to care and improve health outcomes for people of color living with HIV in vulnerable and underserved today, according to the U.S. Centers Substantial disparities in HIV persist throughout the communities in the Southeastern United States. 1 for Disease Control and Prevention. HIV care continuum, and frequently lead to poorer The Foundation has committed $7 million over five Although the incidence of HIV health outcomes. Social determinants of health— years (2019–2023) to support HIV Care Connect and factors such as economic stability, neighborhood has declined, certain populations its program partners in selected communities across and physical environment, education, stigma, social the Southeast. and geographic regions bear a context and trust in health care systems—contribute disproportionate burden of new significantly to disparities among persons living with HIV HIV Care Connect aims to: infections. in underserved U.S. communities. y Improve linkage to and retention in high-quality Connecting individuals living with HIV to high-quality HIV care for populations most affected by HIV RESOURCES care, treatment, and support is critical in helping them y Build sustainable collaborations between the health HIV Care Connect achieve and maintain viral suppression, which is a key care sector and other sectors to address access Backgrounder goal of treatment. barriers related to the social determinants of health

Corporate Responsibility Report 2018/2019 111 ACCESS TO HEALTH | HIV Care Connect

y Improve health outcomes for persons living with HIV, 1 Centers for Disease Control and Prevention (2018). HIV Surveillance Approach Supplemental Report, 2018; 23(4). Retrieved July 30, 2019, from particularly in underserved communities https://www.hiv.gov/hiv-basics/overview/data-and-trends/ HIV Care Connect programs will: y Disseminate key findings and program results to statistics 2 advance best practices for improving HIV care y Centers for Disease Control and Prevention (2018). HIV Surveillance Implement evidence-based, multilevel strategies to Report, 2017. Retrieved July 23, 2019, from https://www.cdc.gov/ improve the linkage to and long-term engagement in hiv/pdf/library/reports/surveillance/cdc-hiv-surveillance- HIV care infographic-2017.pdf HIV Care Connect program sites 3 Centers for Disease Control and Prevention. HIV and African y Establish or expand multisectoral collaborations American Gay and Bisexual Men. Retrieved August 22, 2019, from Through grants to three organizations, the Foundation to address factors inside and outside the health https://www.cdc.gov/hiv/group/msm/bmsm.html 4 is supporting evidence-based, multifaceted programs to care system that affect access to HIV care and Centers for Disease Control and Prevention (2018). HIV Surveillance help promote sustainable improvements in the delivery Report, 2017 (2017 ed., Vol. 29). Retrieved July 23, 2019, from health outcomes https://www.cdc.gov/hiv/pdf/library/reports/surveillance/cdc-hiv- of HIV care. surveillance-report-2017-vol-29.pdf y Engage the community in program development to y Care Resource (Miami, Florida) ensure that interventions are effectively tailored to y Medical Advocacy and Outreach address local needs (Montgomery, Alabama) Through an independent cross-site evaluation, the y University of Mississippi Medical Center (Jackson, Foundation will assess the impact of the HIV Care Mississippi) Connect initiative and its programs. This effort is designed to identify and promote best practices for The University of Alabama at Birmingham (Birmingham, improving access to high-quality HIV care among Alabama) serves as the National Program Office for populations disproportionately affected by HIV. HIV Care Connect. It supports the program efforts of the grantee organizations and provides leadership in building a public-private partnership to help reduce disparities in HIV care.

Corporate Responsibility Report 2018/2019 112 ACCESS TO HEALTH | Improving Alzheimer’s Care in the U.S.

Improving Alzheimer’s Care in the U.S.

y DISCLOSURES IN THIS SECTION Given the complexity of the disease, patients and their Increase access to needed care and provide support caregivers often require multidisciplinary care that for people living with Alzheimer’s disease and SDG 3 SDG 17 may involve physicians, nurses and social workers as their caregivers well as community-based service providers. Effectively y Foster collaboration across the health and social Alzheimer’s disease is a progressive coordinating this care, including referrals for social service sectors to address the medical and social support, can improve patient and caregiver outcomes, needs of patients and their caregivers neurodegenerative condition that often enhance overall quality of life, and reduce disparities y Improve patient and caregiver outcomes, including leads to a serious emotional, physical and in care.2, 3 quality of life financial burden on both people living with the disease and their primary caregivers, Investing in programs to Program partners usually family members. support Alzheimer’s patients Alzheimer’s Association, Massachusetts/ RESOURCES and caregivers New Hampshire chapter Improving Care for Alzheimer’s To help improve the health and well-being of people In 2018, our company’s Foundation announced a Patients and Their Caregivers living with Alzheimer’s and their caregivers in vulnerable $1.5 million, four-year (2018–2021) grant to the Backgrounder U.S. communities, our company’s Foundation Alzheimer’s Association, Massachusetts/New Hampshire chapter to expand its Dementia Care An estimated 5.7 million Americans are currently living committed $5 million through 2021 to support programs Coordination program in Massachusetts and take with Alzheimer’s, which is now the sixth leading cause of that strengthen care coordination and navigation. it to Maine, New Hampshire and Rhode Island. death in the United States.1 Program partners are implementing evidence-based programs to help: The program increases access to care and support

Corporate Responsibility Report 2018/2019 113 ACCESS TO HEALTH | Improving Alzheimer’s Care in the U.S.

for people living with Alzheimer’s disease and their The Care Ecosystem expands the ability of dementia To help improve access to community resources and caregivers in underserved urban and rural areas. specialists to address the unmet needs of patients empower vulnerable communities, the COAACH and their caregivers by providing support, education, programs include: As part of this evidence-informed model, a health care care coordination and linkages to community-based provider or payer refers the caregiver for a consultation y Caregiver College, which provides support, education resources. As part of adopting this model, which has with a memory specialist who develops an individualized and training for caregivers of family members living demonstrated strong results in California, UCSF will care plan. The plan is designed to help manage the with Alzheimer’s disease to help improve awareness, provide ongoing training to the HP clinical team and care patient’s symptoms and behaviors, connect caregivers care management and coping strategies team navigators. to needed resources in the community, and overcome y Lay Health Ambassadors from local faith-based barriers to care and support. The program includes: institutions, who help raise disease awareness and To provide ongoing support for patients and caregivers, y Deploying Care Team Navigators, who serve as provide information about community resources to the program also includes: the primary point of contact for patients and their assist patients with Alzheimer’s and their families caregivers as they navigate the challenges of living y Family Navigation to help families of people living y New and more frequent forms of follow-up with with dementia and develop personalized care plans with Alzheimer’s overcome barriers to timely patients and families, including telephone calls, screening, diagnosis, treatment and supportive care emails, texts and chats that increase the likelihood of y Delivering tailored information and resources— reaching caregivers appropriate for the stage of the disease—to patients and caregivers and providing follow-up phone support y Telephone support groups for patients and caregivers Key accomplishments y Establishing and testing new billing mechanisms to y Interactive webinars that provide education for y In 2018, COAACH launched its Caregiver College and increase reimbursement for dementia care services, patients and caregivers trained 20 lay health ambassadors from 10 faith- helping ensure sustainability y Collaboration with clinical partners to provide based institutions in a variety of topics related to appropriate training and support to allied health care UCSF will evaluate HP’s adoption of the Care Ecosystem Alzheimer’s and associated conditions to improve professionals and relevant nonclinical staff in three areas: (1) impact of the program on patient awareness of the disease in their communities. access to dementia care services; (2) projected value of y During 2018, the Center reached more than 5,000 The Alzheimer’s Association’s health system and the program in reducing emergency-related health care community members through caregiver support insurance partners, recognizing the potential financial costs; and (3) potential for HP to receive reimbursement group meetings and community events. The Center’s savings of coordinating patient care, assume a portion, for the nonclinical care and services it provides to unique community outreach and engagement or all, of the cost associated with their participation in patients with dementia. approach was featured at the 2018 Alzheimer’s the program, helping to ensure sustainability. North Carolina A&T State University Center for Association International Conference. HealthPartners Center for Memory and Aging, Outreach in Alzheimer’s, Aging and Community y The Family Navigation program, which began in Minneapolis, Minnesota Health, Greensboro, North Carolina 2018, provides a Web-based hub where families, Our Foundation is supporting efforts to strengthen Our Foundation is supporting the North Carolina A&T including long-distance caregivers, can find support care coordination for people with dementia and their State University Center for Outreach in Alzheimer’s, and community resources to help them navigate the caregivers in rural areas with limited access to specialty Aging and Community Health (COAACH) with a challenges of Alzheimer’s disease. During 2018, the care. In 2018, the Foundation provided a $1.5 million, $2 million, four-year (2016–2019) grant to implement program helped a cohort of over 30 families affected four-year (2018–2021) grant to support HealthPartners programs that better support Alzheimer’s patients and by Alzheimer’s and diabetes. (HP) Center for Memory and Aging and its partner, caregivers by broadening outreach among underserved the University of California, San Francisco (UCSF), populations and improving awareness of the disease in to implement UCSF’s Care Ecosystem program rural North Carolina. in Minnesota.

Corporate Responsibility Report 2018/2019 114 ACCESS TO HEALTH | Improving Alzheimer’s Care in the U.S.

Advancing best practices in Alzheimer’s care 1 Alzheimer’s Association. 2018 Alzheimer’s Disease Facts and Figures. By investing in these innovative programs, the 2 Brown, A.F., Vassar, S.D., Connor, K.I., Vickrey, B.G. “Collaborative Foundation hopes to identify effective models that Care Management Reduces Disparities in Dementia Care Quality for demonstrate strong potential for replication. We also Caregivers with Less Education.” Journal of the American Geriatrics Society. 2013;61(2):243–251. doi:10.1111/jgs.12079. aim to disseminate best practices to help advance 3 Callahan, C.M., Boustani, M.A., Unverzagt, F.W., Austrom, M.G., Alzheimer’s care and support for vulnerable patients Damush, T.M., Perkins, A.J., Fultz, B.A., Hui, S.L., Counsell, and their caregivers. S.R., Hendrie, H.C. “Effectiveness of Collaborative Care for Older Adults with Alzheimer Disease in Primary Care: A Randomized Controlled Trial.” JAMA. 2006;295(18):2,148–2,157. doi:10.1001/ jama.295.18.2148.

Corporate Responsibility Report 2018/2019 115 ACCESS TO HEALTH | MECTIZAN Donation Program

MECTIZAN Donation Program

developing countries. LF causes painful and disfiguring DISCLOSURES IN THIS SECTION Our commitments chronic enlargement of the arms and legs, and, in SDG 3 Following our 1987 commitment, we continue to SDG 17 men, severe swelling in the genitals. River blindness causes severe rashes, intense itching, lesions, skin donate as much MECTIZAN as is necessary to eliminate river blindness globally. In 1998, we made a new More than 30 years ago, our company depigmentation, vision impairment and, over time, blindness. At the time of MDP’s inception, river commitment to expand MDP to include mass treatment established the MECTIZAN® (ivermectin) blindness was one of the leading causes of preventable for the elimination of LF in African countries where Donation Program (MDP)—the longest- blindness worldwide. onchocerciasis and lymphatic filariasis are co-endemic. running disease-specific drug donation Both LF and river blindness can be treated through In 2017, the donation of MECTIZAN was once again program and public-private partnership mass drug administration by trained community health expanded to provide an additional 100 million of its kind. workers. River blindness is treated through MECTIZAN treatments per year through 2025 to support alone. In countries where river blindness coexists with the elimination of LF globally, in countries where MDP operationalizes the commitment our company LF, an annual single dose of MECTIZAN, administered onchocerciasis is not endemic. The most recent made in 1987 to donate MECTIZAN for the treatment together with a second drug, albendazole (donated by expansion supports WHO’s guidelines for the of onchocerciasis (also known as river blindness) to GlaxoSmithKline), is the recommended treatment for elimination of LF with annual treatments of a all who needed it, for as long as needed. Since then, the diseases. Following the revised guidelines of the combination of the “IDA” triple therapy to at-risk the program has expanded to include additional World Health Organization (WHO) for the elimination populations. commitments to donate MECTIZAN for the treatment of LF, MECTIZAN also is recommended as an annual of lymphatic filariasis (LF). In 2018 alone, 346 million treatments were approved treatment in combination with diethylcarbamazine and shipped to endemic countries for the elimination of LF and river blindness are two debilitating parasitic citrate (DEC) and albendazole, known as “IDA” triple river blindness and LF. diseases that primarily impact communities in therapy, for certain at-risk populations.

Corporate Responsibility Report 2018/2019 116 ACCESS TO HEALTH | MECTIZAN Donation Program

The partnership To date, WHO has verified that in Latin America, problem. Two other countries, Malawi and Mali, have river blindness has been eliminated in Colombia, stopped treatment with MECTIZAN in all endemic To facilitate the donation and delivery of MECTIZAN, we Ecuador, Guatemala and Mexico. The remaining communities and are currently conducting the post- established a multisectoral partnership involving WHO, two affected countries in Latin America, Brazil and treatment surveillance necessary for validation. In the World Bank, ministries of health, nongovernmental Venezuela, are continuing treatment in an area in the addition, more than 114 million people in sub-national organizations (NGOs) and local communities. In 1988, Amazon jungle shared by the two countries where regions of 12 other countries no longer need MECTIZAN we established the MECTIZAN Donation Program at the transmission continues. treatment for LF, as the transmission of the disease has Task Force for Global Health, as well as the MECTIZAN been interrupted. Expert Committee to provide technical and scientific In Africa, national onchocerciasis elimination advice on the implementation of the program. committees (NOECs) have been established in 21 of At the same time, as part of the commitment our the 29 endemic countries. Under the guidance of the company made to donate MECTIZAN for IDA, we In 2019, Yemen received validation from NOECs, MECTIZAN treatment has stopped in 15 of the have expanded the program into eight new countries: 17 focus areas in Uganda, three states in Nigeria, two of American Samoa, Egypt, Fiji, India, Kenya, Papua New WHO for eliminating lymphatic filariasis the four focus areas in Sudan and 16 districts in Ethiopia. Guinea, Samoa and Tuvalu. as a public health problem. In total, more than 11.5 million people no longer need For more information, visit the MECTIZAN Donation treatment for onchocerciasis in these areas, which are Program’s website. currently completing three years of post-treatment Milestones and impact surveillance, as recommended by WHO. For more information on our neglected tropical disease An estimated 40,000 cases of blindness are prevented (NTD) research, visit Infectious Diseases. For LF, in 2017, Togo received validation from WHO by the MECTIZAN Donation Program annually. that the disease had been eliminated as a public health In addition, the donation of MECTIZAN led to the development of CDTI (community-directed treatment with ivermectin) programs, through which trained community volunteers distribute medicines, a critical Performance element in effective mass-treatment programs in 2014 2015 2016 2017 2018 remote areas that often lack trained health care workers. The system is also used to distribute other Direct financial investment in the MECTIZAN (ivermectin) $5.50 $5.80 $3.74 $3.10 $2.20 health interventions including the provision of vitamin Donation Program (in millions)1, 2 A, cataract identification, bed nets distribution and Total treatments approved (in millions) 257 176 283 300 346 immunizations and treatment for other NTDs. Treatments approved for river blindness (in millions) 39 55 64 97 111

Treatments approved for lymphatic filariasis (LF) (in millions) 147 94 141 89 152

Treatments approved for joint river blindness and LF programs (in 71 27 78 114 83 millions)

Countries where elimination of LF has been validated by the World 0 0 0 1 1 Health Organization (target: 30)

Latin American countries where the elimination of river blindness 3 3 4 4 4 has been verified by the World Health Organization (target: 6)

1 Direct investment includes operational support and grants. 2 Total investment decreased due to successful completion of eight-year grant in support of the African Program for Onchocerciasis Control.

Corporate Responsibility Report 2018/2019 117 ACCESS TO HEALTH | Medical Outreach Program

Medical Outreach Program

DISCLOSURES IN THIS SECTION vaccines to a limited number of qualified, U.S.-based With each participating NGO, we maintain an nongovernmental organization (NGO) partners. The agreement designed to ensure the proper distribution SDG 3 SDG 17 SDG 11 scope of the program varies from year to year and is and handling of our medicines, as well as to outline influenced by changing medical needs in developing procedures for reporting potential adverse reactions. Recognizing that there are communities countries, the quantity of our medicines available for The agreement also follows the World Health donation, and the unpredictable nature of emergencies Organization (WHO) Guidelines for Drug Donations, around the world without access or disasters. which establish quality-assurance standards for to medicine and vaccines, the MSD responsible product donations. For example, we donate Donations of our medicines are made primarily through only products with adequate dating to ensure that Medical Outreach Program (MMOP) was these qualified NGOs: established 60 years ago to help provide they can be administered appropriately prior to their y AmeriCares expiration date. lifesaving medicine to those in need. y The Catholic Medical Mission Board (CMMB) The MMOP is the primary means through which the y Direct Relief company donates its pharmaceuticals and vaccines for y Initiatives humanitarian assistance in the developing world and in MAP International support of disaster relief worldwide. y Project HOPE Annual allotment program Managed by the company’s Office of Corporate Each NGO has a long-standing relationship with Responsibility, the MMOP helps expand access to the company, demonstrates integrity of purpose, Each year, the participating NGOs can order fully dated our products, particularly in developing countries. provides assurance that our products will be securely medicines of their choice from the company’s current Through this program, we donate pharmaceuticals and warehoused, and has well-established programs in product line, up to an annually authorized amount. developing countries.

Corporate Responsibility Report 2018/2019 118 ACCESS TO HEALTH | Medical Outreach Program

Through this approach, the partners can receive a and capacity-building efforts. Some of these capacity to improve the safety, security and storage of our sustained and predictable supply of needed medicines, building grants helped the NGOs increase positive medicine. Such recommendations have included crucial to the effective planning of ongoing humanitarian treatment outcomes to improve the health and quality enhancing storage-rack inspection and maintenance, programs. The most commonly requested medicines of life of cancer and hemophilia patients in Macedonia, strengthening delivery receipt procedures and help treat diabetes, high blood pressure, breathing provide ongoing training to maternal and neonatal improving material-handling procedures. problems and fungal or bacterial infections in developing nurses in the Dominican Republic, and implement We are also a member of the Partnership for Quality countries where people don’t otherwise have access to electronic inventory management system software in Medical Donations (PQMD), an alliance of NGOs and these medications. health care facilities in Haiti. medical product manufacturers dedicated to raising Finally, we conduct periodic, collaborative site the standards of medical donations in order to meet Ongoing donations of assessments of our NGO partners’ warehouse the needs of underserved populations and disaster facilities to strengthen their overall operations and victims around the world. Members of PQMD are pharmaceuticals and vaccines optimize supply chain effectiveness. Collaborative site committed to bringing measurable health impact by Donations of our pharmaceuticals and vaccines are assessments occur every five years or less, depending setting quality standards, disseminating knowledge and also made throughout the year in response to requests on whether previous assessments have resulted in influencing policy. from our partners to address some additional needs recommended corrective actions to address measures of specific programs around the world. We also offer products to our partners proactively, based on available supply, for use in their ongoing humanitarian programs.

Disaster and emergency relief Through the MMOP, we donate pharmaceuticals and vaccines in response to, or in preparation for, major disasters and emergency recovery efforts. We respond to those requests based on the relief agency’s firsthand assessment of need. We also may provide financial support for our NGO partners’ disaster-relief efforts when appropriate.

Capacity-building Beyond donated medicines, we seek ways to add value to our NGO partner organizations by providing both financial assistance and technical support. Beginning in 2016, the company has awarded yearly operational cash grants to assist with shipping and logistics associated with the annual allotment of product donations for ongoing NGO programs. In addition, in 2018, to commemorate the 60th anniversary of the program, the company awarded $300,000 ($60,000 each) in cash grants to our NGO partners for general operations Employee volunteers help package disaster response kits for Americares, an MMOP NGO partner.

Corporate Responsibility Report 2018/2019 119 ACCESS TO HEALTH | Medical Outreach Program

Performance MEDICAL OUTREACH PROGRAM (MMOP) 2014 2015 2016 2017 2018 Throughout 2018, the donations of our medicines and 91 72 55 62 vaccines provided immediate and ongoing assistance to Countries and territories reached by the MMOP 72 those affected by hurricanes, earthquakes and other Estimated number of people reached1, 2 433,624 78,555 109,398 376,304 349,570 natural or manmade disasters in India, South America, 3 $8.50 $4.70 $13.41 $19.91 the Caribbean and the United States (including Puerto Disaster relief (product) contributions (in millions) $12.76 Rico and the U.S. Virgin Islands). 1 Estimated figures, which assume all product reached patients, are based on converting volume of medicines and vaccines donated. Conver- sion factors for this estimate were developed using a combination of QuintilesIMS SMART Data and U.S. product information found on our We supported partner emergency preparedness and company’s product website. medical mission programs and supplied medical aid 2 Inhalation brands were analyzed differently in 2017 and 2018 as compared to previous years. Prescriber Information dosing information was used to calculate total doses for one year for chronic asthma patient and assumes splitting inhalers. to hundreds of thousands of people in need through 3 We set the value of our product donations based on the U.S. wholesale acquisition cost. our partner NGOs’ disaster response and ongoing medical programs. Our product donation program enabled our NGO partners to provide local health care workers in developing countries the medications they need to treat chronic conditions and acute diseases through community health services worldwide.

Corporate Responsibility Report 2018/2019 120 ACCESS TO HEALTH | MSD Fellowship for Global Health

MSD Fellowship for Global Health

DISCLOSURES IN THIS SECTION Teams of highly skilled Fellows, who are passionate These Fellows worked side by about our company’s mission to save and improve lives side with eight NGO partners GRI 203-1 SDG 9 SDG 3 SDG 17 around the world, are assigned to Non-Governmental in sub-Saharan Africa, Central Organization (NGO) partners to help build their capacity Asia, India and the U.S. for Our mission to save and improve lives and provide increased access to health services and three months to improve health education in the communities they serve. In turn, the care delivery for people in the underpins the idea behind the MSD Fellows bring back experiences that contribute to our greatest need: Fellowship for Global Health. company’s future success and our ability to deliver innovative health solutions to patients and customers RESOURCES around the world. Employee development Our Fellows Case Study: The MSD Fellowship for Global Health works in The program focuses on three areas of impact: Bringing HIV collaboration with our Human Resources department Learnings Full y Strengthening the capacity and reach of NGO to integrate diverse skill sets, experience and points of Circle partners with technical and human capital support view into each team to increase the level of creativity and innovation, yielding sustainable results for the NGO The MSD Fellowship for Global Health is a three-month, y Providing rich professional-development experiences partners. The Fellow selection process, preparation field-based corporate pro bono program designed for our selected employees activities, manager support and reintegration activities to leverage the skills and talents of our employees y Applying key learnings across the company all align with our objectives to attract, develop and worldwide. The company continually seeks innovative From 2012 to 2019, 220 Fellows from 37 countries have retain the best and brightest talent. ways to increase access to health around the world worked with 35 NGO partners. while also growing and developing our talent. The MSD Fellowship for Global Health is one way that we can Twenty-nine employees from 11 countries served as accomplish both objectives. part of the 2018 MSD Fellowship for Global Health.

Corporate Responsibility Report 2018/2019 121 ACCESS TO HEALTH | MSD Fellowship for Global Health

Our partners The NGO partners vary year to year. However, partner organizations must have proven expertise and success in implementing programs that improve access to health, strengthen health systems and/or support the advancement of research and development capabilities. Program guidelines prohibit projects that focus on the research and/or development of specific compounds or biological agents for the treatment and prevention of disease.

Become a Fellowship partner The 2020 application period is now open! To apply, The 2019 Fellows spent a week together at the pre-assignment Onboarding Session in Johannesburg, South Africa. please carefully review the documents below and submit project proposal(s) by 12:00 noon, U.S. ET “This was an incredibly rich learning External recognition on January 6, 2020. The Fellowship was recognized by several external experience. New opportunities were y 2020 NGO Overview Deck constantly carved out and the unforeseen organizations in 2018 including: y 2020 Proposal Guidelines challenges really have equipped me with y Feature in Life Science Leader magazine called an open mind. I have returned to MSD “Big Pharma’s Unique Approaches to Leadership y 2020 Proposal Template Development” with a sense of pride and a feeling that I y 2020 Project Line Item Budget y Inspiring Practice Award from the International can work to a level I did not know I could Association for Volunteer Effort y Grant Submission Instructions prior to embarking on the Fellowship.” y Honorable Mention in the IMPACT 2030 Awards 2019 partners: – 2018 RTC FELLOW y Brandon Hall Group Human Capital Management y Africa Resource Center (ARC) Gold Excellence Award for Learning and Development y Africare We’ve made significant progress in aligning the program with the geographic diversity of the company, “This program is a good example of private y BIO Ventures for Global Health (BVGH) specifically incorporating a greater proportion of sector engagement to share knowledge y Center for Disease Dynamics, Economics colleagues from outside the United States. and experience with the public sector. & Policy (CDDEP) y In 2018, 45 percent of Fellows came from company We are looking forward to continuing CerviCusco locations outside the United States, an increase of 23 y this fruitful collaboration with you for the Infectious Disease Research Institute percent since 2013. Additionally, half of the 16 Fellows (IDRI) transformation of public health supply who currently reside in the U.S. have an international y Jhpiego background. chain in Africa.” y Mission Rabies Our annual survey of Fellows and NGO partners – 2018 NGO PARTNER y North Star Alliance demonstrates the program’s significant benefits and y Purdue University improvements, as well as measurable benefits for our We remain committed to the continued expansion of company’s business and reputation. the program’s global reach.

Corporate Responsibility Report 2018/2019 122 ACCESS TO HEALTH | MSD Fellowship for Global Health

Performance

MSD FELLOWSHIP FOR GLOBAL HEALTH IMPACT 2014 2015 2016 2017 2018

NGO partners reporting extraordinary or substantial 85% 100% 100% 100% 100% capacity gains

NGO partners reporting that they are extremely or very likely NA NA 100% 90% 88% to implement the Fellows’ recommendations1

Fellows reporting that the experience helped them better 81% 96% 96% 100% 100% connect (or reconnect) with the purpose of their global health work at MSD to a significant or extraordinary degree

Fellows who say they will apply learnings from the program to NA NA 93% 93% 85% Fellows Lisa Archibald, Roger Ongosi and Maki Kanesaka worked their role at MSD with NGO partner Purdue University and the Kilimanjaro School of Pharmacy for three months to develop a strategy for establishing a Note: This table shows annual survey data from the Fellows and NGO partners to gauge the success of the program and understand its model drug formulation and manufacturing center in Tanzania to impact. The survey is sent to each Fellow and NGO partner at the end of the assignment. help address unmet medical needs in the region. NA: Not Available. 1 New question introduced in the 2016 impact survey.

Corporate Responsibility Report 2018/2019 123 ACCESS TO HEALTH | MSD for Mothers

MSD for Mothers

empowering. Her experience will have an indelible ensure that women have access to two of the most DISCLOSURES IN THIS SECTION influence on how—and whether—she seeks health care powerful means to end preventable maternal deaths: SDG 3 SDG 17 for herself, her newborn and her family. quality maternity care and modern contraception. It is estimated that meeting women’s needs in these two We call it the “Mom Effect.” The ripple effects of a mother’s death areas would reduce maternal deaths by more than Today, maternal mortality is prioritized under UN 70 percent.1 can be enormous—devastating families Sustainable Development Goal (SDG) 3, which calls for a MSD for Mothers has reached more than 9 million and communities. global reduction in the maternal mortality ratio to fewer women in 48 countries around the world since 2011, than 70 deaths per 100,000 live births by 2030. RESOURCES furthering the global effort to save women’s lives, strengthen health systems and meet the SDGs. MSD for Mothers MSD for Mothers MSD for Mothers is our company’s $500 Website Video million global initiative to create a world We support programs that: where no woman dies giving life. y Empower women to make informed choices about But a healthy pregnancy and childbirth leads to a contraceptives and the quality care they need for a lifetime of benefits, both for a woman’s own health Although there has been impressive progress and we healthy pregnancy and safe childbirth have much to be proud of, we also have more work and prosperity as well as that of her children, family, y Equip health care providers with the skills, tools and left to do. community and nation. technologies they need to deliver high-quality services A positive experience during pregnancy and childbirth MSD for Mothers is our company’s $500 million global wherever women seek care also builds a woman’s trust in the health care system. initiative to create a world where no woman dies giving y Strengthen health systems to sustain the delivery of Depending on the care she receives, this short period life. Contributing our scientific and business expertise, high-quality services that benefit women and their in a woman’s life can either be life-threatening or as well as our financial resources, we are working to communities

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in activities such as our “May is for Mothers” campaign in the U.S. and MSD for Motherhood Week in Europe. Employee ambassadors also coordinate mobile phone collections and donations, share information about MSD for Mothers with their colleagues and communities, and volunteer with local nonprofit organizations that support pregnant women.

Initiatives Major achievements in 2018 included:

Supporting innovation to prevent postpartum hemorrhage Project CHAMPION MSD for Mothers is collaborating with the World Health Organization (WHO) and Ferring Pharmaceuticals in an effort to advance postpartum hemorrhage (PPH) prevention and improve maternal health outcomes.

Strengthening health systems Publishing the first U.S. report on maternal mortality We supported the publication of the United States’ We collaborate across sectors—working with Working alongside more than 160 first multi-state report on maternal mortality from governments, nongovernmental organizations partners, we have improved access the Centers for Disease Control and Prevention, which (NGOs), patient groups, physician, nursing and highlights the unique value of maternal mortality review midwife associations, entrepreneurs, UN agencies, to quality maternity care and family committees in providing data on why women are dying research institutions, other businesses and even planning services for more than and how to prevent future tragedies. other pharmaceutical companies. Likewise, we 9 million women around the world. collaborate across our company, leveraging our Expanding access to family planning in Nigeria talent to generate fresh thinking and infuse We’re also mobilizing our employees to raise awareness We supported a new project—as part of our new, business-minded approaches to help solve and champion maternal health efforts. There are now commitment to Family Planning 2020—to work the longstanding challenge of maternal mortality. more than 600 employee ambassadors in 43 countries with local private drug shops and community who support MSD for Mothers throughout the year. They pharmacies to expand access to a broad range of family work to encourage fellow employees to become involved planning options.

Corporate Responsibility Report 2018/2019 125 ACCESS TO HEALTH | MSD for Mothers

Achieving dramatic reductions in maternal mortality Given the surprisingly high proportion of women in new and interactive ways. We believe that disruptive in sub-Saharan Africa who receive health services from private maternity innovation through digital technology has the power to Saving Mothers, Giving Life (SMGL), a five-year public- providers, we believe that strengthening the ability transform the quality of maternal health care around private partnership, ended last year and produced of these providers to meet the health needs of the world and reduce the number of women who die impressive results: 44 percent decline in maternal pregnant women could have an impact on reducing during pregnancy and childbirth. That’s why we are mortality in target districts in Uganda and 41 percent maternal mortality. collaborating with entrepreneurs to design digital solutions that are highly targeted and effective in decline in Zambia. In only three years, maternal In 2018, we supported Jhpiego (a maternal health reaching women and adolescent girls. mortality declined by 66 percent in target facilities NGO) and the Indian OB/GYN association FOGSI in in Nigeria, the country with the highest number of scaling up a model to improve and help assure the In 2018, we supported development and scale-up of maternal deaths in the world. quality of care that private maternity providers offer cutting-edge mobile platforms with the potential to Improving quality maternity care in India to women during labor and delivery. Manyata is a equip any woman with the information she needs to quality-improvement and quality-assurance model make smart decisions about her reproductive health. We supported scale-up of a quality improvement and that helps private maternity providers improve their Nivi is a simple, mobile phone-based service that uses quality assurance model (Manyata) that helps private care and certifies those who consistently deliver high- SMS and interactive voice response to help women maternity providers improve their care and certifies quality care. We are working with national accreditation learn about their family planning options, identify the those who consistently deliver high quality care. organizations to institutionalize quality standards across method(s) they want and find local providers who Our goal is to support the design and testing of, the country. Manyata is currently available in Uttar offer quality services and have their preferred options and advocate for innovative models that expand Pradesh, Jharkhand and Maharashtra and has expanded available. Nivi has over 85,000 users in Kenya. women’s access to quality care and can be scaled for to Rajasthan through India’s first maternal health Together for Her Health is a mobile phone and website greater impact. We’re striving to find solutions to end development impact bond: Utkrisht. As of 2018, almost platform that educates women about quality maternal preventable maternal mortality, today and for years 400 private providers have become Manyata-certified, health care and encourages them to rate the care they to come. serving over 200,000 women. receive, in turn helping providers to improve quality. As Our goal is to help ensure that women have access to of 2018, the platform has reached over 31,000 women Equipping health providers affordable, quality maternal health services wherever who have provided more than 27,000 reviews. they seek care, through public or private sources. That’s Enabling providers to improve the quality of MSD for Mothers aims to be a catalyst in helping leverage why we are raising awareness among policy makers, maternity care technology to address critical and potentially lifesaving donors and other global health stakeholders about the needs for women around the world. Ensuring high-quality maternity care is a critical step in complementary role of private providers. We believe it is reducing maternal mortality. Health providers have an important to improve the quality of maternity care that important role to play in delivering high-quality care, as both public and provide health providers deliver to help Advancing life-saving solutions do women in demanding better care. end preventable maternal deaths. Every day, nearly 200 women around the world die from One way in which we’re working to increase access to bleeding complications after childbirth, also known as quality maternal health services is by improving the care Digital innovations to empower postpartum hemorrhage (PPH). Most deaths due to delivered by local private providers such as independent PPH are preventable, yet it is still the leading, direct doctors, midwives and pharmacy owners. Women seek women cause of maternal mortality worldwide. Annually, 14 million women suffer from PPH—and some 70,000 care from private providers for a range of reasons, Digital innovations, especially mobile technology women do not survive. including proximity to their home, flexible hours, a solutions, are playing an increasingly important role sense of personalized care, and sensitivity to local needs in advancing global health and development efforts, In 2013, MSD for Mothers, Ferring Pharmaceuticals and customs. However, this care can be unregulated, empowering people to learn and make decisions about and WHO established a unique collaboration—Project expensive and of variable quality. their health and to receive much-needed health services CHAMPION—to evaluate an investigational formulation

Corporate Responsibility Report 2018/2019 126 ACCESS TO HEALTH | MSD for Mothers

of carbetocin to prevent postpartum hemorrhage first step toward this goal, identifying a dose range Health systems strengthening is the backbone of that is designed to be heat-stable, even in hot and using our internal modeling and simulation expertise the SMGL approach—enhancing the interconnected tropical climates. and data from collaborating universities and hospitals components of the health system simultaneously around the world, was completed in 2017. to address the three delays to accessing lifesaving In 2018, along with our collaborators at WHO and maternity care: the delays in deciding to seek, reaching Ferring Pharmaceuticals, we announced the completion Maternal sepsis is another leading cause of maternal and receiving quality care. of a WHO-led multi-country clinical study to evaluate mortality. To better understand how to address the the effectiveness of heat-stable carbetocin in vaginal issue, WHO—with the support of MSD for Mothers— SMGL is a public-private partnership involving the deliveries compared to the current standard of care, embarked on a multi-country study (known as the U.S. government, the Norwegian Ministry of Foreign oxytocin. Participating countries include Argentina, Global Maternal Sepsis Study, or “GLOSS”), that Affairs, the American College of Obstetricians and Egypt, India, Kenya, Nigeria, Singapore, South Africa, engaged 53 low-, middle- and high-income countries Gynecologists, Every Mother Counts, Project C.U.R.E. Thailand, Uganda and the United Kingdom. across all six WHO regions to assess the issue of and MSD for Mothers to reduce maternal mortality in maternal sepsis. sub-Saharan Africa. Approximately 30,000 women were recruited to participate in the trial—one of the largest clinical GLOSS recruited more than 3,000 women with trials ever conducted in PPH prevention. The results suspected or confirmed infection in over 600 Addressing the distance challenge demonstrated that heat-stable carbetocin is clinically participating facilities in late 2017. The study is part of In Zambia, distance challenges are a leading contributor non-inferior to the standard of care, oxytocin, for the WHO’s response to the sepsis resolution adopted by the to the country’s high maternal mortality ratio of 213 primary outcome of ≥500 ml blood loss or additional 70th World Health Assembly in 2017. maternal deaths for every 100,000 live births. Women uterotonic use. Non-inferiority was not demonstrated often have to travel long distances to reach the nearest for the second primary outcome of blood loss of ≥1,000 health facility, making it difficult for them to get the ml or more. Building local health system care they need during pregnancy and childbirth and With the results from this trial and other evidence, capacity immediately postpartum. WHO, for the first time, recommended carbetocin, Maternal mortality is often a leading indicator of the MSD for Mothers helped launch the Mothers’ Shelters including the heat-stable formulation, for the prevention strength of a country’s health system. And when a Alliance in 2015 to address this challenge by building of PPH for the first time in December 2018 and added health system succeeds in lowering rates of maternal and strengthening mothers’ shelters—residences near it to the Essential Medicines List in July 2019. Ferring is death, the benefits extend far beyond maternal health. health facilities where pregnant women can stay until currently engaged in efforts to submit the results of this Launched in 2012, Saving Mothers, Giving Life (SMGL) they go into labor and immediately after childbirth. trial to regulatory authorities and together with MSD for is a five-year public-private partnership led by the Mothers and WHO aims to ensure access to heat-stable The goal was to make these shelters and the services U.S. government to reduce maternal and newborn carbetocin at an affordable and sustainable price in the they offer sustainable by empowering local communities mortality using a district-level approach to strengthen public sector in low- and lower-middle-income countries. to both effectively manage them and generate health systems. MSD for Mothers is a founding partner income to support their operations through creative MSD has been providing scientific and business and our programs in Uganda, Zambia and Nigeria have entrepreneurial activities. expertise throughout the project and is committed to contributed to SMGL’s work to put in place lifesaving working with governments in the developing world to maternal and newborn health interventions. In early 2019, the project came to a close and generated help reduce the toll of PPH on women’s lives. impressive results. Nearly 10,000 women have stayed In 2018, SMGL came to a close, showing impressive in a mothers’ shelter and more than 600 community MSD for Mothers is also interested in devising an easier- results—a maternal mortality decline of 44 percent in health workers are encouraging their use. to-administer dosing regimen for magnesium sulfate, SMGL districts in Uganda and a decline of 41 percent the current standard of care for managing seizures in Zambia. And in only three years, maternal mortality Local communities have helped establish over 20 in pregnant women suffering from pre-eclampsia/ declined by 66 percent in target facilities in Nigeria. micro-businesses that generate enough revenue to eclampsia—a leading cause of maternal mortality. The cover almost all of the shelters’ operating costs. Today,

Corporate Responsibility Report 2018/2019 127 ACCESS TO HEALTH | MSD for Mothers

community members have proudly taken ownership to deaths. And community-based initiatives are underway y Strengthening maternal mortality review programs: manage and sustain the shelters in partnership with to help women with chronic health conditions receive The Centers for Disease Control and Prevention (CDC) nearby facilities so pregnant women have a safe place timely, appropriate care and supportive services. and the CDC Foundation published the first multi- to stay before and immediately after giving birth in a state report on maternal mortality in the United In late 2018, MSD for Mothers launched the Safer quality health facility. States: Report from Nine Maternal Mortality Review Childbirth Cities Initiative to support community-based Committees as well as a Vital Signs report featuring The Mothers’ Shelters Alliance is a collaboration among organizations in cities across the U.S. with a high burden data from 13 states. MSD for Mothers, the Bill & Melinda Gates Foundation of maternal mortality and morbidity. In 2019, the Safer and the ELMA Foundation, with partners Africare, the Childbirth Cities Initiative will fund nine community- y MSD for Mothers supported the CDC to provide University of Michigan, Boston University and Right to based organizations to implement evidence-based technical assistance to 42 states to strengthen their Care. The Alliance had been working in conjunction with interventions and innovative approaches to save women’s maternal mortality review programs to understand Saving Mothers, Giving Life. lives, improve maternal health and narrow disparities. why women are dying during pregnancy and childbirth. The recent Preventing Maternal Deaths Other key accomplishments include: Act will direct federal funds to states to establish and Our work in the United States y Scaling evidence-based obstetric practices: Building sustain maternal mortality review committees. Even in settings with advanced medical technology, upon our early efforts to scale up evidence-based 1 Guttmacher Institute. Greater Investments Needed to Meet Wom- too many women—especially from marginalized and practices to treat the three leading causes of maternal en’s Sexual and Reproductive Health Needs in Developing Regions. Available at: https://www.guttmacher.org/news-release/2017/ underserved communities—die from complications that death in the United States—PPH, pre-eclampsia and greater-investments-needed-meet-womens-sexual-and-repro- could have been prevented or treated. embolism—MSD for Mothers is now working with the ductive-health-needs Institute for Healthcare Improvement to ensure that In the United States, MSD for Mothers is working to all hospitals in the U.S. adopt these lifesaving tools. address the country’s trend in maternal mortality. We are supporting projects in states across the country to help standardize clinical care, enhance data collection, and strengthen linkages to comprehensive care to Performance improve maternal health for all women. PRIORITY COUNTRY DATA (CUMULATIVE) 2017 2018 In hospitals, partners are implementing standard Districts/regions reached 253 336 approaches to ensure that mothers get timely and consistent emergency obstetric care. At the state level, Facilities strengthened to provide quality care 3,352 4,739 processes are now in place to find out why women are Providers equipped to offer quality care 73,999 135,289 dying in pregnancy and childbirth, to prevent future Women empowered to demand quality care 325,859 748,902

Women with improved quality of care 2,900,355 3,396,659

Women with improved access to modern contraception 3,775,907 4,038,980

Women reached 6,388,321 7,134,196

People with improved access to lifesaving products1 15,411,614 15,411,614

People with improved access to quality facilities 21,311,854 29,943,800

1 MSD for Mothers’ support to nationally scale a supply chain innovation improved access to lifesaving products for the entire population of Senegal in 2017—an estimated 15 million people. Consequently, MSD for Mothers is transitioning its funding and working with partners to ensure sustained success in reducing stock-outs.

Corporate Responsibility Report 2018/2019 128 ACCESS TO HEALTH | Project ECHO

Project ECHO

DISCLOSURES IN THIS SECTION access to specialty services, making it challenging for company’s Foundation established a partnership with many communities and residents to obtain specialty Project ECHO (Extension for Community Healthcare SDG 3 SDG 17 care for complex or chronic conditions, such as mental Outcomes). The Foundation committed $7 million over health illnesses, tuberculosis, HIV, hepatitis C, cancer five years (2017–2021) to expand the replication of Throughout Asia, many patients have and diabetes. Project ECHO in India and Vietnam. difficulty accessing the health services In rural areas of these regions, much of the health The ECHO Model™ expands access to preventive they need, particularly for chronic or care workforce is composed of primary care providers, and specialty care for rural and underserved urban community health workers (CHWs) and other grassroots populations by building capacity of primary care complex conditions. health networks that focus mainly on basic primary care. physicians and community health workers to provide RESOURCES These frontline health workers often have insufficient safe and effective care for complex and chronic knowledge and skills to provide their patients with the conditions. Project ECHO® right care at the right place and the right time. Without Fact Sheet Project ECHO is a tele-mentoring model that links the level of training and ongoing support that a wide multidisciplinary medical specialist teams at an academic range of health workers need to treat patients with hub with multiple primary care providers (PCPs) This situation is due to many factors, including an complex diseases, their ability to provide patients with through virtual teleECHO™ programs around the world. insufficient number of skilled or adequately trained best-practice care is difficult or impossible. health care professionals. These programs allow experts to mentor and share their expertise via case-based learning across a virtual According to the World Health Organization, countries Partnership with Project ECHO network, training PCPs to treat patients with complex in Southeast Asia and South Asia have significantly conditions in their own communities. fewer doctors, nurses and midwives per capita than To help build health care capacity and expand access developed nations. These regions also have limited to specialty care for complex and chronic conditions among underserved populations in Asia, our

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Program goals Performance y Project ECHO is also expanding its superhubs There is substantial need to improve the delivery of Project ECHO plans to evaluate the impact and (regional training centers) in India to help build the health care throughout India and Vietnam. Project outcomes of the ECHO model to determine its success capacity of new hubs in the region through training ECHO has four goals: in improving access to best-practice specialty care for and technical assistance. y Further develop ECHO superhubs (training sites) patients—particularly those with complex or chronic y Because of the model’s demonstrated success, in India to provide technical assistance for ECHO conditions—in rural and underserved areas in India Project ECHO has been incorporated into India’s projects throughout Southeast and South Asia and Vietnam. This evaluation will aid in the continued Revised National Tuberculosis Control Programme improvement of the replication of the ECHO model y Develop and expand ECHO hubs across India and guidelines for Programmatic Management of in India and Vietnam and around the world. Project Vietnam in targeted disease areas: hepatitis C, Tuberculosis, the National Health Mission guidelines ECHO has reported the following achievements and tuberculosis, HIV, cancer, diabetes, mental health for Health and Wellness Centers and for mental milestones during the past year. illnesses and other noncommunicable diseases (NCDs) health, increasing the potential for continued expansion in India. y Establish ECHO hubs in India and Vietnam for y To date, Project ECHO has successfully scaled up developing and implementing training programs for operations from one hub in New Delhi to 19 hubs y Project ECHO has also made significant progress in CHWs to further improve the quality and availability (8 of which are government-run) and 38 teleECHO laying the groundwork for replicating the model in of treatment and care programs across India. In 2018, it is estimated Vietnam. Three hubs have already been established, that more than 2,900 health care providers were training more than 3,300 health care providers y Document the effectiveness of the ECHO model in trained across these 19 hubs. The hubs (specialty in 2018. improving access to specialty care for patients in rural teams at academic medical centers or other care and underserved areas in India and Vietnam centers) provide specialized training in hepatitis C, tuberculosis, HIV, mental health and addiction, cancer and other NCDs.

Corporate Responsibility Report 2018/2019 130 ACCESS TO HEALTH | Tackling the Opioid Crisis

Tackling the U.S. Opioid Crisis

DISCLOSURES IN THIS SECTION West Virginia is one of the states hardest hit by the This comprehensive, integrated program is responding opioid epidemic. According to the CDC, West Virginia to the opioid crisis in the Great Rivers Region of West SDG 3 SDG 17 has the highest overdose death rate in the United Virginia by providing individuals who have substance States,3 with opioids responsible for most overdose use disorders with the care they need to help increase 4 In 2017, the U.S. Department of deaths in the state. The state also ranks first nationally retention in treatment and ultimately reduce opioid for rates of hepatitis B and second for rates of hepatitis overdoses. It also is helping develop a model to tackle Health and Human Services declared C.5 Research shows that the national increase in the challenges of the opioid epidemic and the spread of a nationwide public health emergency hepatitis C is related to the growing opioid epidemic and infectious diseases associated with the epidemic. regarding the opioid crisis.1 may lead to a rise in the number of people contracting HIV as well.6 RESOURCES The Great Rivers Regional System Tackling the Opioid Our response to the opioid for Addiction Care Crisis in West Virginia The System is serving as a hub that coordinates the Backgrounder epidemic in West Virginia efforts of all program partners to help reduce opioid Each day, according to the Centers for Disease Control To help address the opioid crisis in West Virginia, our addiction and overdose deaths, improve access to and Prevention (CDC), it is estimated that more than company’s Foundation is supporting an initiative with substance abuse prevention and treatment services, 140 Americans die from drug overdoses, 91 specifically Marshall Health through a $2 million grant over four and help lower the rising rates of HIV and hepatitis C due to opioids.2 years (2018–2021) to establish the Great Rivers Regional infections. System for Addiction Care (the System).

Corporate Responsibility Report 2018/2019 131 ACCESS TO HEALTH | Tackling the Opioid Crisis

The System includes comprehensive public health 1 Department of Health and Human Services. “Determination That a Public Health Emergency Exists.” https://www.hhs.gov/sites/ harm-reduction programs; quick response teams (which default/files/opioid%20PHE%20Declaration-no-sig.pdf. Accessed include a medical provider, a law enforcement officer and July 2018. a treatment-and-recovery provider) that visit individuals 2 Department of Health and Human Services. “HHS Acting Secretary Declares Public Health Emergency to Address National Opioid following an overdose incident; care centers that Crisis.” https://www.hhs.gov/about/news/2017/10/26/hhs-act- connect individuals with addiction to recovery resources ing-secretary-declares-public-health-emergency-address-nation- and treatment services; and community engagement al-opioid-crisis.html. Accessed July 2018. 3 Centers for Disease Control and Prevention. “Drug Overdose Data.” and substance abuse prevention education. https://www.cdc.gov/drugoverdose/data/statedeaths.html. Ac- cessed July 2018. 4 Centers for Disease Control and Prevention. “Increases in Drug and Program goals Opioid Overdose Deaths—United States, 2000–2014.” https:// www.cdc.gov/mmwr/preview/mmwrhtml/mm6450a3.htm. Ac- Given the substantial need to combat the opioid cessed July 2018. epidemic in West Virginia, the Great Rivers Regional 5 Centers for Disease Control and Prevention. “Surveillance for Viral Hepatitis—United States, 2016.” https://www.cdc.gov/hepatitis/ System for Addiction Care has four overarching goals: statistics/2016surveillance/index.htm. Accessed July 2018. 6 y Reduce opioid overdoses and overdose deaths Centers for Disease Control and Prevention. “Increases in Acute Hepatitis C Virus Infection Related to a Growing Opioid Epidemic y Increase access to and retention in substance and Associated Injection Drug Use, United States, 2004 to 2014.” https://ajph.aphapublications.org/doi/10.2105/AJPH.2017.304132 abuse treatment y Enhance access to care for viral hepatitis and HIV and prevent new infections y Improve public health education to increase awareness and prevention of substance abuse and addiction Over the next four years, an independent evaluator will assess the impact of the System and help Marshall Health and its program partners identify the most effective community-based programs to curb the opioid epidemic. The evaluation results will aid in creating a potential model that can be adapted by local health care and public health systems in other states or regions to improve their own responses to this public health crisis.

Corporate Responsibility Report 2018/2019 132 ACCESS TO HEALTH | U.S. Patient Assistance Programs

U.S. Patient Assistance Programs

DISCLOSURES IN THIS SECTION This approach is consistent with our company’s We work to raise awareness of our patient assistance commitment to improve access to our medicines program among doctors and eligible patients via GRI-203-2 SDG 17 SDG 3 and adult vaccines for people who need them. brochures and enrollment forms posted on our website and other company communications. All toll-free More than 57 years ago, our company created our phone lines for our medicines and/or vaccines include We believe that no one should go without first U.S. patient assistance program (PAP) to keep an option for patients to learn about our patient affordable medicines within patients’ reach. the medicines or vaccines they need. assistance programs. Through these programs, we have provided more RESOURCES than 41.6 million free prescriptions and adult vaccines, U.S. Patient Medical Assistance representing a total value (at wholesale acquisition Medicine Assistance Tool Assistance Tool (MAT) cost) of more than $7 billion. As a demonstration of our commitment to helping Programs (PAP) low-income, uninsured patients gain access to our That is why our company’s U.S. patient assistance medicines and adult vaccines, we also participate in program, a separately incorporated nonprofit charitable PhRMA’s Medicine Assistance Tool (MAT), formerly organization, provides certain medicines and adult 41.6M known as the Partnership for Prescription Assistance vaccines for free to eligible people who do not have Free prescriptions and adult vaccines provided to (PPA). MAT is a search engine designed to help patients, patients through our Patient Assistance Programs prescription drug or health insurance coverage and caregivers and health care providers learn more since 1962 who, without our assistance, cannot afford our about access resources available through the various medicines and vaccines. biopharmaceutical industry programs.

Corporate Responsibility Report 2018/2019 133 ACCESS TO HEALTH | U.S. Patient Assistance Programs

MAT helps eligible patients get free or nearly free brand name medicines through a single website that Performance provides information for and access to more than PATIENT ASSISTANCE PROGRAMS SUMMARY 2014 2015 2016 2017 2018 500 public and private patient assistance programs, including approximately 200 programs offered by Patients utilizing our U.S. Patient Assistance Programs 301 293 306 244 233 1 biopharmaceutical companies. To date, this tool has (in thousands) helped millions of Americans get free or reduced-cost 30-day prescriptions filled (in millions) 1.6 1.6 1.7 2.1 2.1 prescription medicines. 1 Totals represent 2014–2018 volumes of our U.S. Patient Assistance Program. Changes within the patient and prescription volumes for 2014–2018 are a result of periodic changes in the products covered in the U.S. Patient Assistance Programs. Product changes are due, in part, to the inclusion of new products, and as a result of company divestitures, introductions of competing products and the availability of generic alternatives.

Corporate Responsibility Report 2018/2019 134 EMPLOYEES | Overview

Employees Overview

DISCLOSURES IN THIS SECTION We value global diversity and inclusion at Employees by region GRI 102-7 every level of the organization and strive for inclusiveness in every aspect of work. We recognize that our ability to excel depends on the integrity, knowledge, Harnessing the knowledge and insights of a globally diverse workforce requires leadership, a corporate imagination, skill, diversity and culture of respect and full engagement, and a thoughtful teamwork of our employees. and strategic approach to workplace inclusion and employee development and well-being—physical, A positive, inclusive and high-performing work emotional, social and financial. environment is essential for employees to feel welcomed and valued, and to fully achieve their We are: business objectives. y Committed to fostering development and rewarding talent y Dedicated to diversity and inclusion at every level of the organization y Adept at recognizing unique skill sets and nurturing employees’ talents

Corporate Responsibility Report 2018/2019 135 EMPLOYEES | Overview

Global diversity and inclusion Performance Diversity and inclusion are fundamental to our success and core to future innovation. We foster a culture WORKFORCE 2014 2015 2016 2017 2018 of inclusion and belonging where all employees feel Number of employees (approximate) 70,000 68,000 68,000 69,000 69,000 welcomed and valued, a culture where we regard every individual as a source of competitive advantage in our larger mission of saving and improving lives. Learn more about our global diversity and inclusion efforts.

Learning and development As we pursue our goal of becoming the world’s premier research-based biopharmaceutical company, we need to continuously develop our diverse and talented people. They are a clear competitive advantage for us, and their active engagement matters. Learn more about our learning and development efforts.

Employee well-being For over 125 years, our company has been inventing for life, bringing forward medicines and vaccines to address many of the world’s most challenging diseases. We must lead by example. Therefore we are committed to helping our employees and their families be healthy and stay safe. Only when our employees feel their best, in all aspects of their lives, can they perform at their highest level. Learn more about our employee well- being efforts.

Corporate Responsibility Report 2018/2019 136 EMPLOYEES | Engaging Our Employees

Engaging Our Employees

DISCLOSURES IN THIS SECTION Initiatives GRI 102-17 GRI 102-43 83% GRI 102-41 GRI 401-1 Employees who offered a favorable Global employee opinion survey response to our engagement survey We strive to foster employee engagement As part of our mission to maintain a satisfying and by promoting a safe, positive, diverse and Through our global enterprise portal, known internally productive work environment, we routinely survey all inclusive work environment that provides as “Sync,” employees worldwide can gain access to employees to learn about their perspectives on the company news and videos, divisional and functional business and on how we are responding to the needs of numerous opportunities for two-way news channels, and social collaboration tools that allow our global workforce. The Voice Survey, our company’s communication with employees. them to share interests, messages and ideas online. all-employee opinion survey, is our flagship employee Other employee communications vehicles include Employee engagement is achieved through trust, feedback medium. quarterly Employee Business Briefings, periodic town mutual commitment and transparent communication. hall meetings, email communications from senior Offered in 20 languages, the Voice Survey helps As we do with our external stakeholders, we work management, and employee surveys—in particular, the our company leaders and managers to understand to understand our employees’ concerns, needs and Voice Survey, which is distributed to all employees employees’ perspectives on our culture and its effect on thoughts pertaining to our company’s strengths and the company’s ability to meet our business objectives, weaknesses, while at the same time informing them of and to learn what drives employee engagement. We our business strategy and progress toward our goals. communicate highlights of the survey results through meetings with our employees, in our employee publications, on Sync and through summaries that are distributed via email.

Corporate Responsibility Report 2018/2019 137 EMPLOYEES | Engaging Our Employees

Professional networking and Our company’s ethics hotline is 86% collaboration available 24/7 and allows employees to Participation rate in our employee confidentially (where permitted by law) feedback survey, a record high We ensure that our employees have ample opportunity to engage, network, build important relationships, raise concerns, or ask questions, about The Voice Survey is conducted on a biennial basis, and grow skills and benefit from the perspectives of senior labor and human rights issues. the most recent survey was conducted in 2018. We had leaders. Our company fosters an inclusive environment Our company’s Speak Up Tool, at msdethics.com an 86 percent employee participation rate, which is a by ensuring that employees have the opportunity to (formerly theadviceline.com), is available 24/7 and record high. Our overall engagement score increased to develop strong relationships with supervisors, connect allows employees to raise concerns or ask questions, 83 percent with significant improvement in 11 of the 15 with coworkers and develop their professional skills in including those related to labor and human rights categories compared to 2016. The survey results help the workplace. issues, confidentially (where permitted by law) in their validate the effectiveness of our focus on customers, We conduct global Employee Business Briefings every preferred language via phone or internet. Learn more a strong sense of reputation and trust, and the quarter. Our CEO and members of the Executive about our approach to compliance and ethics. importance of a continued focus on innovation. Committee speak to employees about how we are In addition, we leverage the business insights of our In addition, managers at certain levels of the fulfilling our company’s mission and goals. These U.S. employees, including those who are members organization also have direct access to their own sessions cover topics such as the quarterly financial of DRIVEN (Delivering Real Insights Via Employee organization’s Voice Survey results, which provide performance update, pipeline progress, patient Networks), to support our company’s business additional opportunity to share feedback with their perspectives, anticipated product developments and objectives. DRIVEN represents true innovation in own direct reports and/or broader organization. a question and answer discussion. the pharmaceutical industry and allows us to adopt best practices from other industries to get the quick, cost-effective and deep insights we need to drive our business forward, asking our own employees to share their experiences—as parents, caregivers, patients and consumers—so we can serve patients better.

Corporate Responsibility Report 2018/2019 138 EMPLOYEES | Engaging Our Employees

Performance

TURNOVER 2014 2015 2016 2017 2018

Overall turnover rate1, 2 18.8% 14.8% 11.1% 10.7% 11.8%

Voluntary turnover rate 8.0% 7.4% 6.3% 6.5% 6.8%

Avoidable voluntary turnover rate 6.2% 6.0% 4.8% 5.0% 5.2%

Involuntary termination rate 10.8% 7.4% 4.9% 4.2% 5.0%

1 Includes all types of turnover, including restructuring. ² 2014 turnover rates are restated by incorporating the retroactive transactions.

2018 TURNOVER BY GENDER & REGION Female Male

Overall 49% 51%

Asia Pacific 51% 49%

EEMEA (Eastern Europe, Middle East and Africa) 54% 46%

Latin America 47% 53%

EUCAN (Europe and Canada) 53% 47%

Japan 12% 88%

U.S. 54% 46%

1 Includes all types of turnover, including restructuring. ² 2014 turnover rates are restated by incorporating the retroactive transactions.

Asia Latin 2018 TURNOVER BY REGION Pacific America EEMEA Japan EUCAN U.S.

Overall turnover rate¹ 21.65% 10.91% 13.30% 13.76% 7.20% 10.35%

Voluntary turnover rate 16.38% 4.22% 10.22% 1.47% 4.56% 4.76%

Avoidable voluntary turnover rate 15.05% 2.86% 8.75% 1.22% 2.57% 3.06%

Involuntary termination rate 5.28% 6.69% 3.08% 12.29% 2.64% 5.58%

1 Includes all types of turnover, including restructuring.

Corporate Responsibility Report 2018/2019 139 EMPLOYEES | Engaging Our Employees

EMPLOYEE HIRES PER REGION 2015 2016 2017 2018 ASIA PACIFIC Number of hires 2,104 1,732 1,909 3,071

Hire rate1 17.70% 14.79% 16.14% 24.38% EEMEA (EASTERN EUROPE, MIDDLE EAST AND AFRICA) Number of hires 384 382 378 505

Hire rate1 12.84% 13.49% 13.69% 16.67% LATIN AMERICA Number of hires 509 380 1,246 714

Hire rate1 9.80% 8.01% 23.82% 13.13% EUCAN (EUROPE AND CANADA) Number of hires 1,427 1,636 1,865 2,495

Hire rate1 7.81% 8.90% 9.80% 12.34% JAPAN Number of hires 101 196 109 153

Hire rate1 2.66% 5.04% 2.80% 4.32%

U.S. Number of hires 1,909 1,937 2,173 3,019 Hire rate1 8.28% 8.33% 9.12% 12.41% 1 Percentage of new hires in the total onboard head count; regular employees only.

UNION MEMBERSHIP 2014 2015 2016 2017 2018

Percentage of employees worldwide represented by an independent trade 31% 32% 29% 29% 30% union or covered by a collective bargaining agreement (approximate)

EMPLOYEE SURVEY 2014 2015 2016 2017 2018

Response rate to Voice Survey 78% NA 85% NA 86%

Engagement Index1 (favorable response rate) 79% NA 82% NA 83%

Culture Index2 (favorable response rate) 69% NA 72% NA 74%

NA: Not Administered; the Voice Survey is conducted on a biennial basis. 1 The Engagement Index is a composite that averages scores measured from three aspects: “Engaged,” “Enabled” and “Energized.” 2 The Culture Index is a composite that averages scores measured from three aspects: “Customer Focus,” “Reputation and Trust” and “Innovation.”

Corporate Responsibility Report 2018/2019 140 EMPLOYEES | Learning & Development

Learning & Development

DISCLOSURES IN THIS SECTION In addition to foundational management skills, we offer Initiatives a suite of programs for experienced managers that are GRI 404-1 GRI 404-3 GRI 404-2 driven by key topics integral to the organization, like Build the best teams and talent strategic planning, innovation and influencing others. Whether it’s helping invent the next Build the Best Teams and Talent is a global program breakthrough treatment or simply intended to help the organization learn, grow and Recognition through INSPIRE achieve. It is based on neuroscience intended to increase challenging and supporting one another In 2018, employees benefited from the first full year of the quality of performance conversations and helps INSPIRE, our new global recognition program. INSPIRE for mutual betterment, our culture is people share and receive feedback in a more “normal” helped create a culture of acknowledgement and about applied curiosity. and comfortable manner. engagement by empowering employees to recognize The Global Learning & Development organization others for their good work. Employees shared simple delivers learning solutions by leveraging resources, Management and leadership thank-you messages for everyday contributions as well educational platforms and other synergies to drive as accumulated points and cash rewards for significant business performance. programs achievements. In INSPIRE’s first year, over 85 percent of To support our global employee base, we build Management Foundations is a comprehensive program employees received recognition through approximately workforce capability to accelerate talent, improve that focuses on building core, common and critical 400,000 recognition moments. performance and mitigate risk through relevant knowledge and skills for new managers. Using a variety continuous learning experiences. This includes, but is of learning methods, new managers focus on what they not limited to, building leadership and management will need to know and do to be effective in their role and skills, as well as providing technical and functional to gain the knowledge and skills to manage others. training to all employees.

Corporate Responsibility Report 2018/2019 141 EMPLOYEES | Learning & Development

Team development The Women’s Leadership Program talent data. It helps ensure that our workforce A global, nomination program designed to support the continues to stay aligned with company objectives. To support building and maintenance of effective teams, advancement of women into senior leadership ranks. The system keeps track of employee development we have a suite of programs that provide skills and Areas of focus include: strengthening the ability to plans, performance objectives and performance tools for team leaders and team members, including navigate within the organization; gaining skills and ratings, career aspirations, experience, language Leading High Performing Teams, Virtual Teaming, knowledge to grow and improve leadership capacity; proficiency, certifications and education. Assessing Team Performance, Teaming Fundamentals and increasing the ability to manage gender differences and Insights Discovery, a program to understand Managers and employees meet throughout the year and any subtle “micro-inequities” that may exist in communication styles. to discuss progress and accomplishments against their the culture. priorities. Emphasis is placed on creating a culture of We have five active Key Talent Programs to support Diverse Leader Program (U.S. only) ongoing coaching and future-focused feedback. At the learning and development of our future key talent, year-end, colleagues assess the impact employees This thought-provoking nomination program is an women in leadership, diverse talent and those who are have had on the organization, their team and their interactive leadership journey that is designed to create at the executive level. These programs support the own development. This leads to annual performance a safe place where participants can hone their leadership advancement of our talent pipeline and diversity and reviews of employees at all levels (except those subject skills while exploring what it means to be a Leader of inclusion strategy. to collective bargaining obligations) to guide company Color within the company. While building leadership decisions relating to development, compensation The programs are as follows: proficiency, participants will also investigate the and rewards. General Management Acceleration Program (GMAP) similarities and differences of leaders from other racial/ ethnic groups. Finally, they will have the opportunity to Employee performance is measured, in part, by how well Our flagship, application-based program to develop deepen relationships with their sponsors and mentors employees demonstrate our leadership behaviors. We future global, enterprise-wide leaders. The objective of through experiential activities and conversations. seek to emphasize not just what an employee achieves, GMAP is to create a robust global acceleration program but also how he or she achieves it. It is critical to our for internal talent, providing the right experiences and Executive Acceleration Experience company that the annual incentive bonus is determined, learning opportunities to help meet our future business An inspiring and actionable learning experience designed in part, by demonstration of our leadership behaviors. demand. Successful participants will broaden their to help our company’s top leaders further embed and experience and perspective, enhance their leadership amplify their leadership capabilities. The experience In addition, we conduct an annual employee- abilities and be well placed to grow into positions of involves small cohorts being immersed in a variety of development planning process in which managers greater responsibility following their rotations. leadership principles, looking outside the company for discuss with each of their employees his or her strengths and development opportunities. The manager The Business Leadership Program broader inspiration and devising experiments they can run with their teams. Leaders visit leading organizations, and employee then jointly create an action plan to grow A global, nomination program designed to enhance both talk to inspiring leaders and entrepreneurs, all while capabilities and skills. an individual’s leadership and business acumen skills. learning new tools, skills and mindsets. Areas of focus include: our company’s strategic context Leadership Development Center and how to integrate long-term plans with short-term The Leadership Development Center is a website that action; value creation in financial and non-financial terms Tools and resources features videos, articles, program announcements so one is able to increase ability to perform in the short- and resources for leaders and managers. Resources Our current talent management system supports term and plan for the long-term; and ability to translate are aligned to our leadership behaviors, professional companywide performance management, talent strategy into action to deliver business impact. competencies and functional competencies, and review, succession planning and associated employee are available in the following formats: “on-demand” performance and development processes for critical web-based modules, classroom programs, articles, books (including audio books), webcasts and suggestions for “on-the-job” development activities.

Corporate Responsibility Report 2018/2019 142 EMPLOYEES | Learning & Development

Performance

TRAINING AND EDUCATION 2016 2017 2018

Total course completions for all employees (in millions) 4.2 5.3 4.4

Hours of training for all employees (in millions)1 2.1 2.6 2.2

Course completions per employee 60 48 43

1 Based on average of 30 minutes per course.

PERFORMANCE REVIEWS 2014 2015 2016 2017 2018

Executives1 100% 100% 100% 100% 100%

Middle management 100% 100% 100% 100% 100%

Line supervisors 100% 100% 100% 100% 100%

Non-managers2 93% 94% 94% 93% 94%

1 “Executives” refers to the first two levels below the chief executive officer. 2 All “non-managers” (previously “individual contributors”) including those who are subject to a collective bargaining agreement (unions).

Corporate Responsibility Report 2018/2019 143 EMPLOYEES | Employee Well-Being

Employee Well-Being

DISCLOSURES IN THIS SECTION that address the continuum of population health Environmental, Health & Safety teams to build a culture management—for those who are well, those at risk, of health in addition to our long-standing commitment GRI 401-2 those with acute or chronic illnesses and those requiring to a culture of safety. We are committed to helping our highly complex care. employees and their families be healthy Our philosophy behind these programs Initiatives and stay safe. is rooted in maintaining our competitive Only when our employees feel their best, in all aspects position in the market while providing a LIVE IT of their lives, can they perform at their highest level. comprehensive and valuable package of As part of our commitment to becoming a leader in We believe that well-being is a holistic approach that rewards to attract and retain a talented includes physical, emotional and financial well-being, as employee health and well-being, we brought together well as safety to employees and their family members at and diverse workforce. our health and wellness offerings under one brand called all life stages. We are working hard to advance a culture LIVE IT. LIVE IT serves as a call to action for employees to We are actively collaborating in and integrating of well-being to make the healthy choice the easy choice take control of their health and live their best lives. programs and policies to improve employee health and and the valued choice within our organization. safety, reduce injury and illness and improve workforce Our LIVE IT continuum of well-being includes four pillars: We are applying the principles that support global productivity. These goals include increasing physical PREVENT IT, BALANCE IT, MOVE IT and FUEL IT. It is a population health to our own employee population— movement/activity, expanding access to healthier holistic approach to well-being designed by and for our including dependents and, potentially, other members foods, enhancing policies to eliminate tobacco within company’s employees and their families. We promote of our communities. We strive to offer services our campuses, providing education and tools to help offerings within each of these areas to engage and and programs and to create work environments mitigate the effects of stress, and collaborating with our enhance the lives of our employees.

Corporate Responsibility Report 2018/2019 144 EMPLOYEES | Employee Well-Being

do this is to provide a valuable suite of compensation and Benefits T BA benefit programs, as well as resources to support our T I LA employees’ professional achievements. Together, we call Our health and well-being, retirement and insurance N N programs draw from best practices to ensure quality, E C these “Total Rewards.” V E competitive value, protection from significant financial E I Total Rewards include compensation and financial R T hardship and access to tools and resources to support P rewards, health and insurance benefits, opportunities employees and their family members at all life stages. for employees to develop their skills and grow their careers and programs that help meet the demands In the U.S., we generally offer health, life, disability and LIVE IT of managing employees’ professional and personal business travel insurance as well as retirement income well-being. Our philosophy behind these programs is benefits to all employees, including those who work part-time. Employees also can opt to contribute to F rooted in maintaining our competitive position in the U T market while providing a comprehensive and valuable tax-free Flexible Spending Accounts for reimbursement E I L E package of rewards to attract and retain a talented and of certain health spending and/or dependent care costs. I V T MO diverse workforce. Outside the U.S., while benefits may vary by region and myTotalRewards is an online personalized resource that country, we offer health, life and injury, disability and provides U.S. employees with a simple, consolidated business travel insurance, along with retirement income benefits. In addition, in many countries, where legally LIVE IT was launched in the United States in 2011. As of view of their total compensation and financial rewards permitted, including the U.S., we extend health care January 2019, LIVE IT has reached more than 68,000 at our company. For most active employees (certain and various insurance benefits to employees’ domestic employees in 65 countries, representing 99 percent of groups are excluded, such as those that are subject to partners and their partners’ eligible dependent children. the workforce, and it continues to be made available to collective bargaining), myTotalRewards contains the remaining colleagues. following detailed information: In 2018, we were recognized for our efforts in Money: Annual pay, cash incentives and our company’s Health advocacy (U.S.) employee well-being by several national and global estimated contribution to pension, 401(k), insurance Within the United States, we partner with a health organizations including: and other benefits advocacy company to help employees and their families navigate the health care and health insurance system. y The National Business Group on Health’s Best Health Benefits: The value of the key health benefits Health Advocate is designed to make employees’ lives Employers for Healthy Lifestyles® Award (Gold in which an employee participates, including medical, easier by saving hours of effort, with activities such as: recognition) dental and vision coverage y The Global Business Group on Health’s Global Retirement & Long-Term Incentives: Retirement y Helping to resolve complicated medical and dental Distinction Award benefits and long-term incentives—and how they’ve insurance claims y The American Heart Association’s Workplace Health performed over time y Finding doctors, providers and facilities Achievement Index (Silver recognition) Other Rewards: Other benefits available, such as y Scheduling appointments for physicians, treatments y CEO Cancer Gold Standard™ by the CEO educational assistance, K–12 educational guidance and and tests Cancer Roundtable financial planning y Securing second opinions In the U.S., employees have the option of banking y Assisting with eldercare and Medicare issues Total Rewards through our company’s credit union, which offers y Getting cost estimates for medical procedures competitive interest rates on savings accounts We recognize that our employees are critical to our y Assisting in the transfer of medical records and lending. mission to save and improve lives. One way in which we y Researching and locating the latest treatments y Locating work-life resources Corporate Responsibility Report 2018/2019 145 EMPLOYEES | Physical Well-Being

Physical Well-Being

DISCLOSURES IN THIS SECTION fitness centers are not available, membership fee Through a Web-based and mobile platform, the tool reimbursement or discounts are provided in accordance is designed to raise awareness about an individual’s GRI 403-3 with local market practice. health status and to motivate employees and spouses/ domestic partners to manage and improve their health Every day our employees are resolutely In the U.S., professional fitness managers organize and well-being. Employees and spouses/domestic voluntary programs and events to encourage focused on their quest to save and improve partners can set health goals, track their progress, employees to eat well, manage their weight, exercise the lives of people around the world. engage in fitness challenges, find helpful tips and have and participate in various fitness challenges and fun with family and colleagues while earning incentives Living this mission starts with ensuring that our other special events. We also offer onsite massage throughout the year. employees are caring about themselves, their families therapy services at these centers at a reasonable cost and their communities. Global Employee Health, Global to employees. Benefits and Global Population Health work closely Tobacco-free workplace together to provide a wide range of health and wellness Employees and spouses/domestic We are committed to providing all employees, services and work-life programs to our employees, partners can set health goals, track their contractors and guests with healthy and safe work retirees and their covered dependents. progress and engage in fitness challenges. environments. Since smoking and second-hand smoke are known to cause lung disease, heart conditions and As part of our integrated approach to well-being, LIVE IT cancer, our goal is to be a globally tobacco-free company Initiatives digital supports the full spectrum of LIVE IT by helping by the end of 2020. We are making progress toward employees and their spouses/domestic partners make this goal. As of 2019, 100 percent of U.S. locations are LIVE IT 1 healthy, long-lasting behavior changes through a social tobacco free. This policy prohibits the use of all tobacco well-being solution. The site features online interactive products including oral tobaccos and e-cigarettes on We offer access to onsite fitness centers at several health tools and information, health coaching programs company property including outdoor spaces, parking facilities around the world. In countries where onsite and more. areas and in company vehicles. Corporate Responsibility Report 2018/2019 146 EMPLOYEES | Physical Well-Being

Healthy food choices Lab, Acute Episodic Health Care and Other Services and applicable regulatory requirements. In the event Many of our onsite clinics offer employees the that an employee becomes injured or ill while performing What we eat and drink affects our daily physical and opportunity for lipid, blood glucose and other laboratory his or her job, we have programs in place for treatment mental well-being and our longer-term health and services, including blood collection ordered by a personal and rehabilitation. resilience. To contribute to a healthy work culture, we physician. Each year during the annual enrollment period work with our onsite food vendor at most of our U.S. Our company’s Global Employee Health professionals in the U.S., employees are reminded they can make an facilities to increase the availability and visibility of are clinically trained and dedicated to supporting appointment to have their biometric screening done. healthy food choices and to raise awareness of proper efficient and effective quality health care for employees nutrition. For example, employees receive discounts Automatic External Defibrillator Program and who become injured or ill as a result of their work. They for healthy food purchases and have access to free fruit Emergency Response advise on and coordinate health care with providers or agencies to ensure a smooth treatment-and-recovery on Fridays. In addition, many of our sites around the At many of our sites, onsite health clinic staff responds process, while complying with both company and globe have cafeterias that offer healthy food options to medical emergencies while also working with applicable regulatory record-keeping requirements. and nutrition education. Our food vendor is an integral volunteers who help as emergency responders. Our partner of our LIVE IT team, and we jointly sponsor Global Employee Health group provides direct oversight healthy eating events that correspond with the National for automatic external defibrillators and associated Disability management/disability Health Calendar. training, provided at many of our sites in the U.S. accommodations Most Global Employee Health clinics also provide The Disability Leave team and our Global Employee Onsite wellness clinics non-work-related acute episodic health care, including Health group work with external vendors in the U.S. to the diagnosis and treatment of minor non-occupational Most of our larger sites offer onsite health clinics that develop and implement short- and long-term disability illnesses or injuries, health maintenance counseling and provide an array of services to help our employees stay management and return-to-work policies and programs. appropriate referral to specialty services. In addition, or get well. Specific services include: Optimizing the health and productivity of our employees to support new mothers returning to work, our clinics is a key goal of these efforts. Our centralized Workplace Annual Flu Shots and Pandemic Flu Planning offer work-site lactation programs. “Lunch and Learn” EnABLEment program in the U.S. ensures that Most of our sites around the world offer employees programs and site-based wellness activities, including employees with apparent and non-apparent disabilities annual flu shots. In the U.S., our Global Employee Health walking and weight-reduction programs, are also are able to be accommodated, where feasible, to enable group provides annual flu shots at no cost to employees available at some sites. them to work to their full potential. at site-based employee health clinics. Vaccinations Occupational health Business travel program Our onsite clinics in the U.S., as well as many around As a global organization, our company has numerous We are committed to ensuring the health and the world, offer employees both occupational operating divisions and work assignments—each with safety of our employees who travel on business. Our vaccinations (including travel-related vaccinations) its own requirements. Particular work assignments may Global Employee Health group maintains up-to-date and non-occupational vaccinations for such diseases involve potential exposure to one or more occupational information about infectious diseases that are prevalent as pneumonia, influenza and HPV. We also conduct hazards, such as noise, mixtures of chemicals, or in all countries and required immunizations. Business vaccination clinics off-site during our National U.S. Sales hazardous biological compounds. Our company travelers are given any required immunizations, Meetings to offer the same level of convenience to our maintains a concerted effort to assess and control information on health conditions in the country of their field-based employees. Vaccines are covered at 100 workplace hazards (chemical, biological and physical) and destination, and additional support to ensure medical percent at participating retail pharmacies under our to make sure that each employee’s work assignment is care and safety while traveling. company’s prescription drug plan. safe and consistent with his or her evaluated capabilities. 1 Privacy is important to us. No personal health information related Occupational health programs are developed and to participation in LIVE IT is shared with the company. implemented in accordance with identified health risks

Corporate Responsibility Report 2018/2019 147 EMPLOYEES | Emotional & Social Well-Being

Emotional & Social Well-Being

DISCLOSURES IN THIS SECTION offering Mental Health First Aid training in 2018 to our The key services of the program include: employees. Once trained, employees become Mind GRI 401-2 y In-the-moment telephonic support for daily parenting Well Champions whose mission is to create an inclusive questions, relationship challenges, work issues and and supportive work environment that values overall Today’s professionals are interested in everyday stress employee health, focusing on emotional well-being and intellectually challenging work, and the mental health. y Professional counseling sessions for U.S.-based opportunity to contribute to company employees for personal, family or emotional issues goals, as well as work environments that (up to five telephonic, face-to-face or video sessions per person per issue) support and enhance their emotional Initiatives y Work-life services for everyday help with everyday and social well-being. Employee assistance and work-life needs, such as finding assisted living for aging We have developed comprehensive, innovative emotional parent(s) or locating a service provider for common and social support programs that meet the needs of our services household needs y talent and appeal to employees at all stages of life. We We recognize that our employees’ lives are busy—filled Crisis support for unanticipated events offer an environment intended to support employee with priorities, commitments and tasks—and that y Monthly educational programs on topics such as engagement and team cohesiveness, which leads to when our employees are doing so much, any challenge— stress management, balancing work and home, reduced absenteeism and increased productivity. whether big or small—can create stress or disrupt life. relaxation and sleep We take a balanced approach to improve employees’ “Resources for Living” (available in local languages) is Resources for Living is available at no cost to all emotional and mental health. To raise awareness our global, employee assistance and work-life program employees and their family members 24 hours a day, of mental health and our company’s resources and that supports our employees and family members in all 7 days a week and is confidential except as required reduce the stigma often associated with it, we began aspects of their lives. by law.

Corporate Responsibility Report 2018/2019 148 EMPLOYEES | Emotional & Social Well-Being

Global flexible work arrangements Job Sharing Time off and leave policies Two employees on reduced schedules and workloads We believe flexible work arrangements offer a For U.S.-based employees not subject to a collective share the overlapping responsibilities of one full-time different way of working and have the potential to bargaining agreement, we offer paid time off, leaves of position; benefits and compensation are reduced enhance employees’ commitment to the company, absence and other benefits to help employees manage accordingly. increase productivity and make employee teams more work-life issues. competitive. The company has had a flexible work Flextime Vacation, Holiday and Year-End Shutdown arrangement policy globally since 2008. Employees with full-time job responsibilities modify the We provide employees with fixed holidays, year-end start time and quit time of a standard day while being In developing our global flexible work arrangement shutdown days and a set number of paid vacation days present for departmentally established “core hours” policy, we’ve challenged traditional assumptions about to use throughout the year based on years of service, or (hours of mandatory attendance), if any. where and how work can and must be done. Flexibility on work experience for new hires. reflects our belief that job effectiveness is determined Compressed Workweeks by employee performance and results, not by the Parental Leave Employees compress full-time job responsibilities into number of hours one is seen in the office. What is We provide employees up to six weeks of paid parental fewer than five days per week or 10 days per two weeks. produced or accomplished is more important than time off for the birth, adoption or foster placement of a when or where the work is done. Telework child. Paid parental time off is available to both birth and Employees fulfill full-time job responsibilities up to non-birth parents. Our belief is that job effectiveness is several days a week at sites other than their primary Childcare Leave determined by employee performance location—usually their home or a satellite office. In addition to parental leave, employees receive and results, not by the number of hours Remote Work separate, unpaid, job-protected leave to care for a one is seen in the office. Employees fulfill full-time job responsibilities working newborn child, adopted child or child placed in foster primarily as home-based or mobile employees, with care within six months (182 days) following the child’s Employees and managers work together to assess limited presence in a regular company facility. birth, adoption or foster-care placement. the opportunities and challenges of a proposed arrangement. While the overall process should be Summer Hours collaborative, managers are accountable for making The Summer Hours program offers U.S. employees Other programs to support the final decision in light of business requirements, an additional resource in our flexible work schedule well-being (U.S.) recognizing that some positions may not lend portfolio. Specifically, eligible employees are able to Our company offers many programs to help make it easier themselves to a flexible work arrangement. work nine-hour days Monday through Thursday, and for employees to balance their various responsibilities. the final four hours on Friday. Except for those subject to collective bargaining The following are a non-exhaustive sampling: agreements, all regular full- or part-time employees Other are eligible to apply for a flexible work arrangement, Transportation Services Other options, including hybrid arrangements, which includes: Free commuter/shuttle services from specific locations seasonal work and project-based approaches, may also near our headquarters in Kenilworth, New Jersey, Part-Time Work make business sense. Employees and managers are U.S.A., and other locations enable employees to save encouraged to consider and pilot other alternatives. Employees’ workloads and hours are reduced to less on transportation costs and commute time while than the standard workweek requirements, along with reducing their carbon footprint. Transit and parking commensurate reduction in benefits and compensation. reimbursements are also available at various locations.

Corporate Responsibility Report 2018/2019 149 EMPLOYEES | Emotional & Social Well-Being

Backup Dependent Care K–12 Educational Guidance Adoption Assistance Temporary child and adult backup dependent care Educational counseling is available for dependent The adoption/surrogacy assistance program provides services are available to employees when their regular children ranging from kindergarten to grade 12 that up to $25,000 per child for eligible adoption/ care arrangements are unavailable. Employees are offers a comprehensive menu of education topics surrogacy expenses. eligible for 10 days’ usage per dependent per year for and helps employees manage their professional and For U.S.-based employees who are subject to a a nominal out-of-pocket fee. Employees can also take family responsibilities through live webinars, online collective bargaining agreement, work-life benefits advantage of significant online resources. support and personalized counseling. The program may be offered in accordance with the agreement. helps employees and their families reach their academic Childcare Support For employees based outside the U.S., the work-life goals—reducing stress and keeping employees content benefits offered differ by location and may be subject Our company offers several onsite or near-site childcare and productive, both at home and at work. centers that enable employees to be close to their to a collective bargaining agreement or local legal children during the work day. Recognizing not all Special Needs requirements. employees work at a site with a company-sponsored The Autism Spectrum Disorder (ASD) Program is childcare facility, we have made arrangements with for employees and their children as they plan for and several national childcare providers to offer discounts navigate school and college options for students with to employees on their eligible regular tuition. diagnosed ASD and related conditions. Once qualified, employees can receive personalized counseling and participation in one live webinar.

Corporate Responsibility Report 2018/2019 150 EMPLOYEES | Financial Well-Being

Financial Well-Being

DISCLOSURES IN THIS SECTION Long-Term Incentives: A future-oriented program that In the U.S., for example, we rewards the demonstration of individual performance, GRI 201-1 offer a defined benefit pension leadership and potential (based on defined skills plan as well as a 401(k) plan with Our compensation programs are designed and sustained performance) through stock-based incentives. company matching contributions. to recognize and reward employees for their accomplishments and the value they Worldwide, our company offers retirement benefits Outside the U.S., we have more than 80 pension that are competitive with those of our peers and plans (including defined benefit, cash balance, and bring to the company. the general industry in each market we serve. In the defined contribution plans) in over 40 countries. The programs target different aspects of individual and U.S., for example, we offer a defined benefit pension These plans often supplement government- company performance and are monitored to ensure that plan as well as a 401(k) plan with company matching sponsored social security pension benefits to they are competitive with those of other companies— contributions. improve employees’ financial security through and appropriate for the markets in which we compete To assist in financial decision making, we offer all U.S. added retirement income. for talent. employees comprehensive financial education and In the U.S., our employees have the option of banking Competitive Base Pay: Individual base pay based on guidance through Ernst & Young at no cost. U.S.-based through our company’s credit union, which offers job, market-aligned pay range, relevant experience, skill employees who are at least age 55, and those who have competitive interest rates on savings accounts 1 level, breadth of responsibility and proficiency. at least 10 years of service after age 40, are eligible for and lending. subsidized medical benefits at retirement. 1 For certain employees, service before 40 also counts. Short-Term Incentives: Cash award programs to reward employees on the basis of company and/or individual performance versus objectives.

Corporate Responsibility Report 2018/2019 151 EMPLOYEES | Financial Well-Being

Performance

EMPLOYEES & COMPENSATION 2014 2015 2016 2017 2018

Total compensation paid to employees/payroll, $7.40 $7.50 $7.7 7 $8.65 $8.98 including benefits (in billions)

Corporate Responsibility Report 2018/2019 152 EMPLOYEES | Employee Safety

Employee Safety

adopted the Code, we report to governments as DISCLOSURES IN THIS SECTION required by applicable law. GRI 403-2 -23% GRI 403-3 In 2018, our lost-time injury rate For consistency across the company, and to enable declined 23 percent from 2017 us to compare our injury rates with those of other As a global health care company, we strive multinational companies, we use the U.S.-based to provide a safe and healthy workplace. Our global safety program is designed to drive Occupational Safety and Health Administration (OSHA) a proactive safety culture and reinforce the link record-keeping criteria for recording and tracking work- We are committed to providing a safe and healthy between our leadership behaviors and our safety and related injuries and illnesses. We require all injuries, workplace for our employees and contractors, and environmental objectives. We believe that through illnesses and incidents involving our employees to be to complying with all applicable safety laws and visible management, leadership and employee reported and investigated to determine their cause. We regulations. In addition, we aim for Environmental, engagement, we can increase the awareness of hazards also require that actions be taken to prevent recurrence. Health & Safety (EHS) performance that is among the and help employees make the right choices when it Our injury and illness data are consolidated into a central best in the pharmaceutical industry. comes to safety, health and the environment—both on system, enabling us to analyze trends and focus our efforts and off the job. One example of leadership and employee We seek to eliminate work-related injuries, illnesses to continually improve. We communicate significant engagement is our active site safety committees that and unplanned events from our operations through incidents, near-miss events and workplace conditions drive program implementation and address safety issues comprehensive safety programs that are part of our that could represent risks to our operations and sites collaboratively between management and employees. EHS management system. We also work to minimize around the world. We also proactively share corrective and the frequency and severity of safety and environmental Our company has processes in place that are consistent preventive actions across our operating locations to allow incidents by focusing on proper facility design, process with the International Labour Office (ILO) Code of all sites to learn from the improvements we make. controls, operation and maintenance procedures, Practice on Recording and Notification of Occupational Learn more about EHS governance, roles and protection systems and emergency response capabilities. Accidents and Diseases (the Code) where governments responsibilities. have adopted the Code. In countries that have not Corporate Responsibility Report 2018/2019 153 EMPLOYEES | Employee Safety

have developed global safety standards to minimize the Our biological risk management program drives safety Initiatives potential for serious incidents when our employees are by setting industry-leading performance expectations We are committed to providing a safe and healthy working at heights, entering confined spaces and working for governance, controls, strategy, planning, workplace for all of our employees and business partners. on or near machinery, piping and electrical systems. This management, reporting, policies, processes and global effort is focused on creating a rigorous, error-free corporate culture. and safe approach to performing these non-routine high- Our company’s commitment to protect human health Process safety hazard work activities. and the environment extends to every aspect of our Our Process Safety program identifies and controls biological safety program, including: risks associated with manufacturing our human and Industrial hygiene animal health products. The program applies not y Biosafety (preventing accidental biological release) only to operations that are subject to process safety Our Industrial Hygiene program protects employee y Biosecurity (preventing intentional biological release) regulations, but also to our pilot plants, manufacturing health throughout all stages of research and operations and utility areas where process hazards may manufacturing by identifying chemical, physical and y Bioethics (promoting responsible use of biological exist. In addition, we have implemented a structured biological hazards, assessing exposures and properly materials and technologies) chemical-reaction-hazard review program for our controlling risks using the hierarchy of controls starting y Sustainability (reducing our environmental footprint) research laboratories. with prevention, then substitution, engineering controls, administrative controls and personal y Product stewardship (reducing In the early stages of product development, we protective equipment. environmental hazards) conduct chemical reaction and thermal testing of our intermediate materials and products to identify For new processes and facilities, we design for safety by potential reactivity, fire and explosion hazards and eliminating risks, substituting less hazardous processes Motor vehicle safety environmental risks. This testing continues throughout or materials and installing effective engineering The aim of our Motor Vehicle Safety program is to each product’s life cycle to assure that we are aware and operational controls. We also confirm the initial promote a strong safety culture for our employees of and can appropriately manage process risks. Global and ongoing effectiveness of these controls after who operate vehicles for conducting company process safety professionals work with operations installation through a robust monitoring program. business. Our program is designed to reduce the and engineering personnel to conduct process- For existing processes, we first seek to eliminate or find frequency and severity of motor vehicle injuries hazard analyses and hazard and operability studies to a substitute for a hazardous material or process. When and reduce the number of collisions, violations and thoroughly evaluate our operations. These structured it is not possible to do so, we evaluate the feasibility vehicle-related incidents across our global network. reviews take place during process design, initial start-up of engineering controls based on the hazard and We have implemented a global motor vehicle safety and throughout the life of the process to ensure that risk. Where engineering controls are not feasible, we standard and adopted programs, such as telematics our facility design, equipment, operating controls and establish effective work practice controls and require that provide real-time continuous feedback, to support maintenance procedures are effective in controlling the use of appropriate personal protective equipment. safe driving skills and behaviors of our sales and process-related hazards. marketing employees who operate the majority of our Biological safety business-use vehicles. As a result of our continuous Non-routine hazardous work improvement efforts, we are seeing a corresponding Our Biological Safety Organization works to protect our reduction in the injuries associated with vehicular In recognition of industrial safety trends and our own employees, customers and neighboring communities collisions, both for our own employees and for those internal assessments, we have refined our global approach by systematically identifying, assessing and controlling with whom we share the road. to managing safety during non-routine maintenance and biological risks associated with the research, repair activities, as these work activities are a leading development and manufacture of our vaccines and cause of serious and fatal injuries across industries. We therapeutic proteins.

Corporate Responsibility Report 2018/2019 154 EMPLOYEES | Employee Safety

Ergonomics Our priorities for emergency response include: We also engage the services of globally recognized engineering service providers to routinely inspect y Ensuring the safety and well-being of our employees The objective of our ergonomics program is to minimize facilities and review new designs and facility employee injuries and improve human performance and y Preserving the environment and nearby communities modifications. This helps us to maintain a high standard well-being in relation to job tasks, equipment and the y Protecting our physical assets of loss prevention that corresponds to the level of work environment. Our priority business areas are the operational risk, monetary value and supply-chain Site-specific emergency response procedures include manufacturing, research and sales environments, where importance. most ergonomic injuries and illnesses are related to incident reporting and management, personnel manual material handling and repetitive motion. evacuation, medical/first-aid response and incident response and control. We routinely conduct emergency Capital projects construction response drills and train employees in both job- and site- specific emergency response duties. safety We have a strong Construction Safety program with We conduct pre-emergency planning for credible 17% a focus on zero harm to people, property and the emergency scenarios such as process upsets, fires, Ergonomic-related injuries environment. Our Global Engineering Solutions group spills, releases, severe weather and security-related as a percentage of our global oversees hundreds of contractors and thousands recordable injury cases incidents. Many of our manufacturing plants have of skilled craftworkers on our construction projects trained emergency response teams, and mobile fire worldwide. Safety is integrated into all stages of our Ergonomic-related injuries continue to represent about and rescue apparatus that can respond to onsite fires, construction projects, beginning with the concept and 17 percent of our recordable injury cases globally. Our medical emergencies, technical rescues and spills/ design phases and carried through to detailed design long-term strategy is to minimize ergonomic related releases. Most of our emergency response teams and construction. injuries by improving the engineering design of our interact directly with their local community-based processes and equipment. Critical elements of our emergency responders, and in some cases, assist In 2018, we received two Safety Excellence Awards for program include providing training on risk and controls, off-site when requested. our contractor safety management program from the communicating with employees and encouraging their Construction User Round Table (CURT). CURT is a global participation in workplace assessments. Loss prevention organization that provides an international forum for In 2018, we placed additional emphasis on proactively the exchange of information and expertise to improve assessing existing processes and equipment that Protecting our people, facilities, production processes safety, productivity and competitive advantage for the presented ergonomic risks. Formal plans drove risk and product supply chains from threats such as construction industry. hurricanes, floods, windstorms, earthquakes and assessments and an engineering control feasibility Our Construction Safety program mandates pre-job fires is critical to ensuring that our products reach our process was established to better mitigate risk factors planning, hazard assessments and daily safety audits. customers when needed. We proactively assess and following the hierarchy of control principles. We also conduct monthly peer reviews by bringing manage these risks at our facilities and at several of our together in-house engineers, contractors, EHS and strategic third-party manufacturers and warehouse other partners to conduct thorough project safety Emergency preparedness and providers. Our loss-prevention program focuses on: evaluations and sharing of best practices. We completed response y Providing appropriate facility and process designs 112 peer safety reviews in 2018, covering 93 percent of We prioritize the prevention of incidents through y Implementing inspection, prevention and our active projects. equipment and facility design, operational and maintenance procedures Our injury rates continue to be maintenance procedures and employee training. y Installing fire detection and protection systems Because we recognize that incidents can still occur, our significantly better than construction y Executing emergency response and business EHS standards require emergency preparedness and continuity programs to eliminate or reduce the impact industry averages. response capabilities at all of our facilities worldwide. of potential loss events

Corporate Responsibility Report 2018/2019 155 EMPLOYEES | Employee Safety

Safety for non-company personnel Performance We frequently work with integrated facility We have worked steadily to drive down our workplace management (IFM) partners whose employees perform injury rates. work at our sites. These contractors are required to follow our company’s EHS procedures, identify and In 2018, our lost-time injury rate was 0.10, a 23 percent monitor compliance activities associated with their reduction from 2017. Our recordable injury rate was scope of services, and meet safety-related performance 0.30, down 9 percent from the prior year. This is the objectives. seventh consecutive year of global injury reduction and our second consecutive year in the first quartile when Our IFM partners pre-qualify the contractors that they compared against our pharmaceutical industry peers. use at our sites, provide those contractors with safety We regret to report that we lost two of our employees Each year we set targets for leading and lagging safety training, perform EHS inspections and monitor EHS in 2018. One was fatally injured while performing work metrics, including safety observations, near-miss performance. Contractors are required to report and on a chiller unit at one of our locations in Japan. Another reporting, peer safety audits, recordable injury rates investigate all incidents and near-miss events. They employee perished in a motor vehicle incident in China. and days away, reassignment or transferred (DART) also work with site-based EHS contacts to identify rate. During contractor prequalification, we review and implement corrective and preventive actions, Last year, 33 percent of our recordable injuries were each contractor’s safety program along with their past which are tracked to completion. Our internal facility related to slips, trips and falls, with “struck-by/ safety performance to verify safety targets are met. managers monitor IFM partner compliance with all EHS caught-in” and ergonomic-related injuries accounting Every contractor receives a detailed safety orientation requirements. for 22 and 17 percent of the total number of injuries, and training prior to beginning work onsite. All craft Contractors working at our sites that are not managed respectively. We continue to focus our efforts on workers must complete 10 hours of OSHA training and by our IFM partners are pre-qualified using the same reducing these types of injuries. In addition to our focus all craft supervisors must complete 30 hours of OSHA process as our embedded contractors, including on the safe design of new facilities, we proactively training (or equivalent) before coming onsite. Quarterly verification of safety training. These contractors are address existing risks through the hierarchy of controls, contractor performance evaluations are completed assigned internal company liaisons who monitor safety focusing on eliminating high-risk tasks and improving and reviewed with management to ensure compliance and environmental compliance, perform observations of engineering controls. with procedures and foster continuous improvement. their work and verify that necessary corrective actions In 2018, 13 percent of our company’s recordable injuries Contract provisions exist for termination of contracts are taken. were related to motor vehicle collisions. We saw a 5 due to unsatisfactory contractor safety performance. In 2018 our IFM partners had a total recordable injury percent decrease in the number of collisions, normalized In 2018, we logged 5.8 million construction hours and rate (RIR) of 0.71 and a lost-time injury rate (LTIR) of for miles traveled in 2018 versus the prior year. Our achieved zero injuries on 92 percent of our capital 0.47. Our major IFM providers’ injury rates continue to global vehicle safety program includes a standard construction projects. Our 2018 construction safety be significantly better than industry averages. duty of care by holding both employees and managers recordable injury rate (RIR) of 0.73 reflects an increase accountable for achieving safe driving expectations. over our 2017 rate, but our DART rate of 0.28 is lower than last year showing a drop in the severity of contractor injuries. In 2018, we had a significant increase in the number of construction hours and capital projects being implemented outside the U.S., where contractor safety cultures and performance can be less advanced. Even so, our injury rates continue to be significantly better than construction industry averages.

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GLOBAL SAFETY PERFORMANCE 2014 2015 2016 2017 2018

WORKPLACE SAFETY

Recordable Injury Rate (RIR) 0.58 0.48 0.35 0.33 0.30

RIR percentage change -6% -17% -27% -6% -9%

Lost-Time Injury Rate (LTIR) 0.20 0.22 0.13 0.13 0.10

Fatalities1 1 1 0 0 2

MOTOR VEHICLE SAFETY

Collisions per million miles (CPMM)2 13.40 12.41 9.48 7.29 6.93

CAPITAL PROJECTS CONSTRUCTION SAFETY3, 4

RIR 0.96 0.87 0.53 0.59 0.73

DART5 0.44 0.38 0.26 0.32 0.28

Fatalities 0 0 0 0 0

FACILITY MANAGEMENT CONTRACTOR SAFETY6

RIR NA NA NA NA 0.71

LTIR NA NA NA NA 0.47

Fatalities NA NA NA NA 0

NA: Not Available. Note: Injury rates are subject to change over time, as new cases are added and case classifications change in accordance with our own require- ments and applicable regulatory requirements. 1 All fatalities were transportation-related, except for one high-risk work fatality in 2018. 2 CPMM: Reflects both personal and business use of company-owned or -leased vehicles. 3 LTIR/RIR: Calculated per OSHA methodology. 4 Primarily reflects capital projects over $100,000 managed by our global engineering group. 5 DART: days away, reassigned or transferred, calculated per OSHA 300 methodology. 6 Injury rates for IFM partners; reporting initiated in 2018. 1Percentage of new hires in the total onboard head count; regular employees only.

Corporate Responsibility Report 2018/2019 157 EMPLOYEES | Employee Safety

Lost-Time Inuries by Business Area () Lost-Time Recordable CASES BY BUSINESS AREA (#) Cases Cases Animal Health .3 Facility Management 2 12

Facilities Management .6 Global Human Health (GHH) 31 73

Global Support Functions Global Support Functions (legal, HR, IT, 5 11 Sales Mareting 6.5 S&E, et al.) 4.3 Animal Health 1 8 Research . Manufacturing (MMD) 29 92

Research (MRL) 9 32

TOTAL 77 228

Manufacturing 3. RECORDABLE INJURIES BY CAUSAL FACTORS (2018)

Biological Exposure 4 1.8%

N May not total due to rounding. Chemical Exposure 8 3.5%

Ergonomic 38 16.7% Recordable Inuries by Causal Factors () Motor Vehicle 29 12.7%

PhysicalEnvironmental Exposure .6 Non-Ergonomic 11 4.8%

Other 3. Other 9 3.9% Physical/Environmental Exposure 6 2.6% Non-ergonomic 4. Slips-Trips-Falls 74 32.5% ChemicalBiological SlipsTripsFalls Exposure 5.3 3.5 Struck-Caught 49 21.5%

TOTAL 228 Motor Vehicle .

Ergonomic 6. Struc byCaught in N .5

Corporate Responsibility Report 2018/2019 158 EMPLOYEES | Global Diversity & Inclusion

Global Diversity & Inclusion

DISCLOSURES IN THIS SECTION We regard Global Diversity & Inclusion (GD&I) as a age, race, gender, ethnicity, culture, nationality, sexual key business strategy to inspire, develop and unleash orientation, gender expression, gender identity, SDG 5 SDG 10 GRI 405-1 SDG 8 SDG 17 the potential of our people—holding ourselves to the religion, faith and veteran and disability status. highest standards of accountability for gender parity y We resolve to achieve gender equality and empower The diversity of our people is the dynamic established by the United Nations—and knowing all women and girls as evidenced by improvements in that progress for women will stall without sustained, force driving everything we do. the representation of women in our workforce, on the proactive intervention. senior management team and in management roles. RESOURCES Diversity and inclusion are fundamental to how we y We are proud of the improvements achieved in U.S. Employee operate, how we engage employees, and how we representation on the senior management team Demographics (2018) drive competitive advantage to support our mission of of Black/African-American, Hispanic/Latino and developing innovative medicines and vaccines to save Pan-Asian employees and have a plan in place—with and improve lives. dedicated resources—to address areas within which From fostering innovation through a culture of inclusion ethnic groups are underrepresented (also known as y We have unparalleled commitment from our CEO that instills a sense of belonging for all, to investing underrepresented ethnic groups or “UEGs”). in the creation of a gender-balanced and globally and senior leaders, we challenge ourselves to y We create enterprise-wide engagement for diversity diverse team of passionate and results-oriented continuously raise the performance bar for GD&I and inclusion through more than 14,000 Employee leaders, our people represent our greatest asset. They goals, and we approach these goals with a progressive Business Resource Group (EBRG) members, operate at the leading edge of science where medical growth mindset—always focused on learning and through educational programs to further the breakthroughs have the potential to save and improve improving results. career advancement, leadership development and the lives of millions. y We understand that true innovation is achieved managerial skills of employees, and through external through the powerful intersection of ideas from partnerships that advance talent management goals employees across a range of diverse backgrounds: and strengthen our connections to the community.

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Our Global Diversity & Inclusion Center of Excellence Employee Business Resource Group (EBRG) “For more than 70 years now, we have oversees GD&I in all our business practices. We have Executive Leadership Council been deeply committed to fostering an a clear strategy and plan of action to drive business With ten EBRGs representing different constituencies inclusive environment that embraces impact with diversity and inclusion. and 14,000 members worldwide, the Council strengthens and diversifies the global leadership pipeline different perspectives and values the “Diversity and inclusion have the ability and provides culturally relevant insights that drive our contributions of each individual. Having to transform our culture, drive business success. The ten EBRGs represented at our company are a globally and locally diverse workforce results and advance our company’s Women, Veterans, Hispanic/Latino, African Ancestry, makes us a more innovative and agile mission to save and improve lives around Asia Pacific, Native American and Global Indigenous, Lesbian, Gay, Bisexual and Transgender, Differently-able, company and one better attuned to the the world. When people feel valued and Interfaith, Generational. Each EBRG has an executive needs of our customers, health care empowered, they are able to innovate and sponsor—many of whom report directly to the CEO. providers and patients who ultimately make amazing things happen.” GD&I Business Consortium use our products.” This consortium enhances our business performance – CELESTE WARREN, VICE PRESIDENT, GLOBAL through GD&I best practices—creating a competitive – KEN FRAZIER, CHAIRMAN AND CEO DIVERSITY & INCLUSION business advantage and driving shareholder GD&I Experience Month With this as our focus, we use GD&I best practices and value. Members come from Business Strategy, GD&I Experience Month is our annual, month-long implement our strategy to focus on establishing a strong Supplier Diversity, Clinical Trials and other key program designed to engage our global employees to foundation for diversity and inclusion, fostering internal business functions. highlight the importance of GD&I. This effort, kicked workforce and workplace excellence, driving external Our leaders believe GD&I drives our business by breaking off by our CEO, Ken Frazier, enables the company’s reputation and achieving innovation through business down barriers and changing minds so we can unleash the business performance, builds diversity and inclusion integration. Our GD&I Ambassador Teams ensure powerful potential of our employees. Among the most capabilities among the workforce and creates a platform integration into our business and people strategies. visible advocates of GD&I is our CEO, Ken Frazier. for employees around the world to share stories about The Global Disability Inclusion Strategic Council Mr. Frazier publicly advocates for diversity and inclusion how they experience diversity and inclusion. The Council recognizes and values the importance of a as a strategic business imperative through the following disability-confident workforce and understands how full commitments: inclusion of people with disabilities increases creativity y Approving diversity metrics and reviewing progress Initiatives and innovation for its employees, customers, external against aspirational talent goals for women and UEGs We engage with third-party organizations to advance partners and suppliers. y Driving accountability through meetings with the the efforts of our GD&I commitments: The GD&I Extended HR Leadership Team company’s leaders to review key strategic initiatives y Deliver for Good Campaign Business Ally Network This cross-functional, cross-divisional group of Human centered on GD&I y Paradigm for Parity® coalition Resources professionals supports GD&I with policies, y Conferring with the company’s vice president of y Women’s Leadership Program processes, programs, benefits, work-life integration, human resources and chief diversity officer on compensation, training and business partners to foster innovation opportunities and business solutions y UN Women’s Empowerment Principles greater employee engagement. y Participating in companywide events, town halls y International Labour Organization (ILO) Global and fireside chats that provide platforms for sharing Business and Disability Network leadership perspectives and for energizing and y CEO ACTION for Diversity & Inclusion building engagement among employees around the importance of diversity and inclusion

Corporate Responsibility Report 2018/2019 160 EMPLOYEES | Global Diversity & Inclusion

Deliver for Good Business Ally Network United Nations Women’s Empowerment Principles y Continuing to make our workplaces trusting Together with P&G and civil society organizations, In 2009, we signed onto the United Nations Women’s environments where all can have complex we recently announced the launch of the Deliver for Empowerment Principles. These principles reflect seven conversations about diversity and inclusion Good Campaign Business Ally Network. The Network areas of focus designed to promote gender equality y Expanding unconscious bias education will provide a platform for private sector champions to in business. y Continuing to share best—and work alongside leading civil society organizations and Research shows that at the current rate of progress, unsuccessful—practices governments to drive solutions toward a more gender- it will take 202 years for women to achieve economic In 2018, we deepened our commitment to the equal world. 1 parity. The full economic participation of women in CEO Action for Diversity & Inclusion pledge in the 2 The announcement came during the Women Deliver the workforce will generate $12T to $28T in GDP. For following ways: 2019 Conference, the world’s largest conference on these reasons, we have committed to gender equality gender equality and the health, rights and well-being of as a strategy to drive business results and advance y We participated in the “Day of Understanding”—a girls and women. our mission. global webcast designed to build a more trusting place to have complex and sometimes difficult, Paradigm for Parity® coalition We continue to establish leadership programs to conversations about diversity and inclusion. By In July 2018, we became a signatory to Paradigm for promote equality and publicly report on our progress to encouraging an ongoing dialogue, we are building Parity®, a coalition of business leaders dedicated to achieve gender equality. trust, encouraging compassion and open- addressing the corporate leadership gender gap. The The International Labour Organization (ILO) Global mindedness, and reinforcing our commitment to a goal of the coalition is to achieve full gender parity by Business and Disability Network (GBDN) culture of inclusivity. 2030, with a near-term goal of women holding at least We are a member of the ILO Global Business and y All employees now participate in Unconscious Bias 30 percent of senior roles. Disability Network, a partnership of multinational Education—a program previously reserved for With 49 percent of our company’s workforce companies, national employers’ organizations, business managers within the company. represented by women, full gender parity is within our networks and advocacy groups working in collaboration y Kenji Yoshino, author and professor at New York reach. In addition, with 41 percent of our company’s to promote the inclusion of persons with disabilities University’s School of Law, was invited to host a women holding senior management or management in the workplace. We believe that disability-inclusive workshop at our company on “covering.” Professor roles, we exceed the Paradigm for Parity goal for women companies provide a better workplace for all their Yoshino describes covering as the process of hiding in senior positions and intend to continue to focus on employees. Through this partnership and in conjunction a stigmatized identity in the workplace (e.g., sexual this area for ongoing progress. with our Global Disability Inclusion Strategic Council, we orientation or a history of mental illness) and provides strengthen our ability to maximize the full potential of research on the impact concealment has on social Some of the major leadership development programs our workforce and are better positioned to respond to engagement, interaction and personal value. that contribute to our success with gender equity and diverse patient needs. will be leveraged for future growth include: CEO Action for Diversity & Inclusion Women’s Leadership Program (WLP) Inclusion unlocks the power of Now entering our third year, Ken Frazier, along with The WLP positions us to increase the gender diversity our people other CEOs, signed a pledge with CEO Action for of leadership by creating a pipeline of high potential Diversity & Inclusion that outlines a specific set of Diversity is the “measure,” while inclusion is the mid-manager talent, increasing retention of these actions the signatories will take to cultivate a trusting “mechanism,” by which we engage all employees women and creating more opportunities for their environment where all ideas are welcomed, employees to contribute to their full potential. Inclusion puts advancement. The WLP sharpens leadership skills, feel comfortable, and all are empowered to discuss this the concept and practice of diversity into action by builds self-awareness, provides organizational very important topic. creating an environment of involvement, respect, and navigation skills, increases exposure to senior connection—where the richness of ideas, backgrounds leaders and creates a sense of community for high By signing this pledge, we are demonstrating our and perspectives are harnessed to create business potential women. commitment to GD&I by:

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value. This is important to us because research Fourteen of our senior executives met over the course ensure a safe and productive workplace environment for shows that diverse teams that work in collaborative of ten months and completed the program. They all employees. environments—where open participation from pledged to: Preventing Discrimination & Harassment Workplace individuals with diverse ideas is valued—achieve y Continue to grow a diverse workforce through Policy (PDHWP) stronger business outcomes.3 attrition hires and opportunity hires The company updated its policy to include language In 2018, we developed our own Inclusion Index from the y Become more strategic and deliberate about how reflecting workplace bullying and to provide procedures 2018 Employee Opinion Survey. This is an aggregated they develop a diverse talent base for reporting such incidences. The term “bullying” single percent favorable score of eight existing survey y Develop systemic approaches to leveraging the includes, but is not limited to, any form of harassment items proposed to measure inclusion. Results from our capabilities of our diverse employees or intimidation, and is not limited solely to actions company’s Inclusion Index indicate a favorable score based upon a legally protected personal or group y Identify and place the next generation of leaders in of 77 percent, up +1 point versus 2016. Although an characteristic. The PDHWP training is an online roles to drive change aggregate score of 77 is favorable, we continually strive mandatory course for people managers and employees to improve the employee experience by creating an y Continue engagement with program participants to based in the United States and Puerto Rico. environment that reinforces fairness and respect, value, share learnings, challenges and successes to hone and a sense of belonging. strategies that drive cultural change Recruiting diverse candidates Throughout 2018, we leveraged a broad range of Thriving with a Multi-Generational education programs to foster greater inclusion: Workforce webcast We highlight diversity and inclusion through our employer branding efforts, ensuring that the global This global webcast addresses principles to help Foundations of Diversity & Inclusion Training diversity of our workforce is represented and celebrated promote intergenerational collaboration and provides Through this course, available in nine languages, across our social media channels, reaching an audience tips to more effectively work together and leverage the employees learn the foundations of diversity and of +1.2 million followers. These efforts are inclusive of talents of different workforce generations. inclusion and explore why it is important to our individual employee spotlights as well as campaigns company and the broader marketplace. The demand Building the Best Teams and Talent focused on a global array of diverse initiatives and for this course grew rapidly after it was introduced at We launched Build the Best Teams and Talent (BBT&T) celebrations including heritage month celebrations. a GD&I Experience Month and was reinforced through program. We collaborated with the Neuro-Leadership We use a comprehensive approach to ensure recruiting, word-of-mouth and other forms of communications. Institute, an organization that uses hard science to retention and leadership development goals are Since the launch of this program in 2017, more than 50 influence leadership effectiveness. BBT&T is a year- systematically executed throughout our company percent of all employees globally have completed this long program designed to focus on creating a culture and that we hire talented future leaders across all voluntary training. that fosters inclusive behaviors, coaching, high-quality dimensions of diversity. Inclusive Leaders Executive Development Program conversations and frequent feedback. y Our candidate selection process includes aspirational We introduced the Inclusive Leaders Executive diversity recruiting goals and the selection process Development Program to prepare our leaders with Diversity and inclusion policies includes representation of diverse talent on all panels, insights, best practices and strategies to successfully In addition to educational efforts, we have established including women and underrepresented ethnic groups lead teams that are more challenging and dynamic the following policies to further promote our y We provide unconscious bias training to recruiters than we have seen in the past. The program focuses commitment within our governance structure: and hiring managers on strategies for the candidate on what is required to build an inclusive organization selection and hiring process in which individuals, regardless of their demographic Transgender policy y We utilize a comprehensive communications strategy, profile, can realize their potential and contribute to the This policy is designed to support our Equal Employment including social media and marketing outreach, company’s mission. Opportunity and Affirmative Action Policy and to help and nurture strategic alliances to ensure that top

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prospective candidates in STEM (science, technology, to veterans. Each branch of the military produces UBE toolkit was developed to support managers at all engineering and mathematics) and those from scientists, engineers and doctors, all of whom are stages of the employee life cycle—from recruiting, to marketing and other important business functions are aligned with our company’s needs. Each year the onboarding, to development, retention and promotion. represented in our recruiting efforts company offers an internship through the Corporate Today, all employees—regardless of level—have y The strategy comprises academic and university Fellow Program, which provides transitioning service access to this education as a strategy to accelerate relations, participation in targeted job fairs, national members with civilian work experiences to prepare awareness on UBE and provide solutions to reduce bias advocacy alliances, community outreach, branded those individuals for smooth transitions into meaningful in the workplace. civilian careers. communications and external recognition Micro-Inequities We collaborate with external organizations in both Our company offers employees training options to professional and academic settings to reach the Inclusion is key to maximum reinforce our commitment to diversity and inclusion. broadest possible base of talent that supports performance Micro-inequities training helps to create a more fully our business goals. Some examples of these inclusive work environment by providing employees organizations include: To ensure that we foster a culture of inclusion we with an opportunity to learn about and avoid design educational programs and encourage leadership non-inclusive behaviors. G.I. Jobs and Viqtory behaviors around perceptions of fairness and respect, For 18+ years, G.I. Jobs magazine has been a leading value and feeling a sense of belonging. We actively resource for service people transitioning into the civilian leverage the wealth of knowledge, insights and Career advancement and workforce. Each month they distribute 75,000 copies of perspectives of all employees in an open, trusting, leadership development programs their publication on 250+ military installations globally non-judgmental workplace—one where everyone feels and online through a digi-mag and robust social media they are known, valued and respected. We invest in career advancement education and provide presence. Their parent company, Viqtory, mobilizes the targeted development offerings for high potential talent Our “Diversity and Learning Development Catalog” G.I. Jobs audience, helping employers like ours connect and managers. allows for ongoing access to foundational training with an audience of U.S. military veterans and service and programs such as “unconscious bias” and “micro- Women’s Sponsorship Program people in transition. Each month we work with Viqtory inequities,” executive seminars, peer coaching, external The purpose of the Women’s Sponsorship Program is to to advertise job opportunities to targeted segments of conferences and more. Examples of our inclusion- accelerate the movement and to improve readiness and their audience through ads and articles in their print and focused educational programs include the following: visibility of women and women of color into positions online publications. of greater leadership responsibility. This two-year Foundations of Diversity & Inclusion Training Getting Hired engagement between the sponsor and protégé is In this course, employees learn the foundations of Getting Hired is an industry leader connecting curated to help build the network and personal brand diversity and inclusion and explore why D&I is important employers to individuals with disabilities, particularly of high potential women leaders and to further their to our company and the broader marketplace. Since the those individuals who are disabled veterans. We development and career. launch, more than one third of employees globally have collaborate with Getting Hired to advertise job taken this training. This training has been translated into The Diverse Leadership Program opportunities to their network of people with disabilities our company’s nine core languages. We provide an innovative leadership development online through their job board, via social media and program focused on strengthening the pipeline of through events like Virtual Career Fairs, which allow Unconscious bias education ethnically diverse talent to increase representation in job seekers to interact with employers through text or Using thought leadership related to unconscious bias in our senior leadership. speech-to-text platforms. the workplace, all company vice presidents and above MSD Fellowship for Global Health Hiring Our Heroes were introduced to Unconscious Bias Education (UBE) as an enabler to identify and mitigate hidden biases. In The MSD Fellowship for Global Health is a field-based We collaborate with Hiring Our Heroes, an organization order to cultivate a mindset of conscious inclusion, a corporate pro bono program that embeds highly that provides employment opportunities nationwide

Corporate Responsibility Report 2018/2019 163 EMPLOYEES | Global Diversity & Inclusion

qualified MSD employees into NGOs. The Fellowship is y We are a founding partner of the Disability:IN’s interfaith and generational. Membership has grown by one way that our company is helping answer the global Disability Supplier Diversity Mentoring and approximately 4,000 members in the last year. health needs of the underserved. Development Program. This program helps Our largest EBRG, The Women’s Network, strives disability-owned businesses to better connect with to create a community where women feel a sense corporate supply chains and each other, giving them of belonging, positively engage with each other and Disability inclusion is a global valuable support, networking and potential business foster an environment where men engage as allies. opportunities. Learn more about our supplier opportunity The Women’s Network empowers members to realize diversity program. We understand that by creating a culture of inclusion their full professional and personal potential within an where employees with disabilities can thrive fosters y Our company’s “Mind Well Champions” are tasked environment of networking and mentoring. Programs innovation, ideation and drives business outcomes. with reducing the stigma of mental health within our include Lean In Circles, engaging with male colleagues, workplace. To achieve this, they raise awareness that providing mentoring support to members, and Our company’s Global Disability Inclusion Strategic mental health—like physical health—is an important leveraging external partners such as Working Mother, Council has embarked on a five-year strategy component of overall well-being. NAFE, the Healthcare Businesswomen’s Association encompassing areas such as Information Technology, y Through our association with the International Labor and The Conferences for Women in Pennsylvania, Texas, Facilities, Health & Benefits, Talent Acquisition, Labor Organization (ILO) Global Business and Disability Massachusetts and California. Relations, Supplier Diversity and D&I capability building. Network, we have an opportunity to collaborate We are proud of the advancements made for all To monitor the results of our efforts, the Council meets with other companies to address issues to advance women and yet, recognize that within the U.S. there monthly to discuss the impact the company is having on disability inclusivity in the workplace. are opportunities to support the career aspirations of these areas. We are proud to report several important women of color—Black/African-American, Hispanic/ accomplishments to help leverage disability inclusion as Latina and Pan-Asian women. Research shows that a global business opportunity. Employee Business Resource women of color experience a heightened awareness of y To foster an inclusive business culture, the executive Groups (EBRGs) their difference in the workplace, which manifests itself sponsor for our capABILITY Network brought Our EBRGs represent volunteer organizations of in reduction of their sense of psychological safety and together EBRG site-specific chapter leaders and employees for different diversity constituencies aligned engagement at work.4 facility managers to mobilize the organization. The around supporting talent acquisition, sharing business Given these challenges, we have invested in several capABILITY Network grew in regions around the insights and enhancing the company’s reputation leadership development programs designed for this globe by almost 30 percent. in external events. EBRGs support the growth of important population, which is predicted to be the employees—both those new to the organization, as well y To ensure that all our facilities are accessible for largest segment of women in the U.S. by 20605 and as existing employees—by affording them development people with disabilities, we implemented facility- therefore, is a critical source of both current and opportunities, networking forums to meet new people accessibility standards that facility managers future talent. use when executing new construction or and mentoring opportunities. The EBRGs also play an renovation projects. important role in cultivating talent to prepare them for The Diversity Leadership Program addresses the leadership roles. Each EBRG is supported by company leadership development needs of multicultural leaders— y To improve the employment rate of persons with leaders who provide counsel, insight and perspective on both men and women. Its goal is to develop the pipeline a disability, we launched the first Leadership business plans. of diverse talent to increase representation in senior Development Day with talent from Disability:IN, leadership. Of last year’s women of color participants, a national nonprofit that helps business drive With approximately 14,000 members worldwide, EBRGs 50 percent were promoted. performance by leveraging disability inclusion. represent different constituency groups, including y We established a goal to enhance the Digital women, veterans, Hispanic/Latinx, African ancestry, In addition, we partner with external programs such Experience for People with Disabilities and to achieve Asia-Pacific, Native American and Global Indigenous, as the Women of Color Leadership and Empowerment and maintain compliance across the company. lesbian, gay, bisexual and transgender, differently able, Conference and the Hispanic Alliance for Career

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Enhancement (HACE) Women’s Professional and Leadership Development Program to support the Performance advancement of women of color in corporate. GENDER & ETHNICITY 2014 2015 2016 2017 2018 To date, more than 52 Black/African-American, Women in the workforce 48% 48% 48% 48% 49% Hispanic/Latina and Pan-Asian leaders at our company have participated in these programs. We expect these Women on the Board 17% 21% 23% 23% 23% programs, in addition to support provided by Employee Women in executive roles1 31% 34% 31% 32% 32% Business Resource Groups (EBRGs) and participation in The Conferences for Women to have a positive impact Women on the senior management team2 31% 34% 36% 39% 41% on the promotion and retention of top women of color Women in management roles3 37% 38% 39% 40% 41% with talent. 1 UN Global Compact. Women’s Empowerment Principles. https:// Members of underrepresented ethnic groups on the Board 25% 21% 23% 23% 23% www.unglobalcompact.org/take-action/action/womens-principles 20% 20% 23% 23% 2 McKinsey. https://www.mckinsey.com/featured-insights/employ- Members of underrepresented ethnic groups in 21% ment-and-growth/how-advancing-womens-equality-can-add-12- executive roles (U.S.) trillion-to-global-growth 3 McKinsey. https://www.mckinsey.com/~/media/mckinsey/busi- Members of underrepresented ethnic groups on the senior 15% 18% 18% 17% 19% ness%20functions/organization/our%20insights/delivering%20 management team (U.S.) through%20diversity/delivering-through-diversity_full-report.ashx 4 Catalyst. https://www.catalyst.org/research/day-to-day-experi- Members of underrepresented ethnic groups in the 24% 26% 26% 26% 27% ences-of-emotional-tax-among-women-and-men-of-color-in-the- workforce (U.S.) workplace/ 5 Catalyst. https://www.catalyst.org/research/women-of-color-in- Members of underrepresented ethnic groups in 20% 23% 23% 23% 25% the-united-states management roles (U.S.)

New hires that were female 49% 50% 51% 49% 51%

New hires that were members of underrepresented 22% 33% 37% 36% 36% ethnic groups (U.S.)

Note: Our company has publicly disclosed EEO-1 information since 1999. Our 2018 data is available at: https://s3.amazonaws.com/msd19-assets/wp-content/uploads/2019/06/14162626/2018EEO-1Diversity-Brochure.pdf. 1 “Executive” is defined as the chief executive officer and two structural levels below. 2 “Senior management team” is defined as the fourth structural level below the CEO. 3 “Management role” is defined as all other managers with direct reports not reflected in notes 1 or 2.

Corporate Responsibility Report 2018/2019 165 ENVIRONMENTAL SUSTAINABILITY | Overview

Environmental Sustainability Overview

A healthy planet is essential to The world’s resources are limited, and over the next Drive Efficient Operations human health and the sustainability few decades the demand for energy, clean water and y Implementing energy-conservation and water-use- other natural resources is likely to increase substantially of our business. reduction initiatives due to population growth and economic development. y Finding ways to more efficiently use raw materials Additionally, climate change is projected to significantly RESOURCES y Handling wastes in a compliant and responsible manner impact global human health and could present long- Environmental term risks to our business. Design for Environment Goals Factsheet We believe that companies have a responsibility to use y Innovating to reduce the environmental impacts of resources wisely and to drive innovations that will enable new products, packaging, buildings and equipment Our company has a long history of environmental global development while protecting and preserving y Purchasing electricity from renewable energy sources stewardship and compliance, but we realize that our both the planet and the communities in which we live to reduce greenhouse gas emissions strategy and efforts need to continuously improve and work. in order for us to excel in an increasingly resource- Reduce Value Chain Impacts constrained world. Our environmental sustainability strategy has three y Understanding the life-cycle impacts of products areas of focus: driving efficiency in our operations, y Assessing the environmental impacts and risks in the designing new products to minimize environmental Climate change is projected to significantly value chain and striving to minimize them impact and reducing impacts in our upstream and impact global human health and could downstream value chain. y Collaborating with suppliers and customers to address present long-term risks to our business. shared needs and interests in environmentally beneficial ways

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Environmental goals Design for the environment We have adopted a set of environmental sustainability The environmental footprint of our products can be improved by how we decide to make them. So, we use green goals to help position our company to succeed in an and sustainable design principles and other environmental design criteria in the development of our manufacturing increasingly resource-constrained world. processes and packaging right from the start. These were developed to address the rising Learn more about our Product Stewardship efforts. expectations of our customers, investors, external stakeholders and employees regarding the GOAL(S) PROGRESS INDICATOR environmental impact of our operations, supply chain, products and packaging. Green and Sustainable Science On track to establish and meet By 2020, at least 90% of our new human health targets that will drive improvements We have made progress toward our environmental active pharmaceutical ingredient processes will in the material efficiency of our new ··· sustainability goals and remain on track to achieve meet internal sustainability targets at launch. products them. Our Design for the Environment goals are being incorporated into our product and packaging Materials & Packaging 100% of products launched 100% of the packaging for our new human health in 2018 development processes. We are reducing our water products will be reviewed for environmental ··· use and examining water risk more closely. We impact and improvement. continue to find ways to decrease energy demand and have increased the amount of renewable energy we purchase. Our procurement team has started to engage our strategic suppliers in our efforts to reduce the Water environmental footprint outside of our own operations. Water is essential to the well-being of our patients and the planet, and is a critical input for our manufacturing processes. As demand for water increases with global population growth, we are committed to utilizing this vital resource responsibly. We look for ways to continuously improve our use of this natural resource by promoting the reuse and recycling of water at our facilities around the globe. Learn more about our efforts to reduce our water use.

GOAL(S) PROGRESS INDICATOR

By 2020, we will develop water conservation On track plans for sites in “high water risk” locations. ··· By 2025, we will maintain global water use at 3.5 million m3 below 2015 or below 2015 levels. levels (15% reduction) ···

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Climate Although the biopharmaceutical industry sector is not a leading emitter of greenhouse gases (GHGs), we believe it is in the best interest of our company and our patients to reduce GHG emissions and other associated air pollutants by driving energy efficiency improvements and purchasing more electricity from renewable sources of energy, such as wind and solar. Learn more about our efforts around climate change and energy use.

GOAL(S) PROGRESS INDICATOR

GHG Emissions 19.6% reduction By 2025, we will reduce global Scope 1 and market- based Scope 2 GHG emissions by at least 40% ··· from 2015 levels.

Renewable Energy 14.1% of our purchased By 2025, at least 50% of our purchased electricity electricity comes from will come from renewable sources. By 2040, renewables ··· 100% of our purchased electricity will come from renewable sources.1

1 We have defined “purchased electricity” as electricity sourced from external suppliers, as well as renewable electricity that was generat- ed and utilized onsite where we retained the renewable attributes or where we have obtained renewable attributes through contract.

Waste Reducing waste not only decreases our environmental footprint; it also reduces costs through improved resource efficiency and decreased waste disposal needs. Learn more about our efforts to reduce waste.

GOAL(S) PROGRESS INDICATOR

By 2025, no more than 20% of our global operational 33% to landfills and waste will be sent to landfills and incinerators. incinerators ···

By 2025, at least 50% of sites will send zero 38% of sites waste to landfill. ···

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Supply chain A strong environmental sustainability strategy is critical to meeting the needs of our customers and Our analysis shows that a large portion of our water use and GHG emissions are generated upstream of our own the expectations of our external stakeholders. Our operations in various tiers of our supply chain. We realize that in order to make a truly meaningful reduction in our customers are concerned about the health impacts of overall environmental impact, we must engage with our suppliers to environmental degradation and are working to reduce drive positive change. their environmental impacts, both in their operations Learn more about our efforts to engage with our suppliers. and in their supply chains. We also know that the financial investment community GOAL(S) PROGRESS INDICATOR views sustainability performance as an indicator of long- By 2018, we will collect GHG emissions and water use GHG and water data collected term business value, and that current and potential data from at least 90% of our strategic suppliers with from 93% of high-impact employees are seeking to work in a company whose the highest environmental impact. strategic suppliers ··· values reflect their own concerns for social responsibility and environmental sustainability.

By 2020, we will engage with those suppliers and On track Our environmental goals support our business strategy request them to identify GHG emission and water use by helping us to operate more efficiently, reduce risk reduction opportunities. ··· and drive down costs. By focusing on environmental sustainability, we can foster employee engagement By 2025, at least 90% of our strategic suppliers with On track and drive innovation by challenging our scientists the highest environmental impacts will set their own and engineers to design new products and packaging GHG emission and water use reduction targets. ··· that lower our environmental impact, while delivering lifesaving medicines to our patients.

Corporate Responsibility Report 2018/2019 169 ENVIRONMENTAL SUSTAINABILITY | EHS Management & Compliance

EHS Management & Compliance

RESOURCES Our company strives every day to conduct business in DISCLOSURES IN THIS SECTION a safe and environmentally responsible manner. We are GRI 306-3 Corporate Policy: Public Policy committed to providing a safe and healthy workplace GRI 307-1 Respect for Position Environmental, Statement: for our employees and to reducing the environmental Protecting our people, our Health and Safety Climate Change impact of our operations around the world. We believe that promoting wellness for employees and respect for Public Policy Public Policy communities and the environment the environment is not just the lawful thing to do, it’s Position Position is fundamentally important to the Statement: PIE Statement: Water the right thing to do. way our company operates. Sharps Global Our Environmental, Health and Safety (EHS) Management Antimicrobial Management System is based on the “Plan, Do, Plan—CalRecycle Resistance Check, Act” model, which allows us to assess and Action Plan continually improve our practices over time. The model Public Policy Business is implemented globally through a set of interwoven Position Statement: Partner Code business processes that span the corporation: Responsible of Conduct Disposal of y Our planning process includes developing goals, Medicines in the objectives and metrics based on a review of our Household company’s performance, EHS programs, applicable regulations and external factors that may impact our business (PLAN)

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y Activities are performed by using standards, y Understand the potential hazards associated with our conduct periodic Web-based seminars to inform EHS guidelines and tools that are integrated into products and take action to minimize any potential professionals of changes in regulations, standards and the EHS Management System and include risks or adverse impacts company practices. specific expectations for sites and operating y Promote EHS excellence in our supply chain by A mandatory course for all senior company leaders organizations (DO) entering into business relationships with partners highlights the importance of EHS to the business, the y Governance committees, from the executive- that share our commitment to responsible EHS critical role senior leaders play in EHS performance, and level EHS Council through site-based compliance stewardship the specific actions our leaders can take to drive their committees, review business unit performance areas of accountability toward EHS excellence. and progress against objectives throughout the year (CHECK) y Corrective actions and continuous-improvement Initiatives EHS governance initiatives are established to resolve EHS concerns Our commitment to the environment and employee that have surfaced during periodic assessments, Training health and safety begins with the company’s Executive audits and routine surveillance of the regulatory Training is critical to building worldwide employee Committee, which has established the corporate landscape (ACT) competencies that will improve compliance, reduce risks Environmental, Health & Safety (EHS) Council. Our corporate EHS management system is generally and drive continuous performance improvement. The EHS Council is composed of senior-level executives aligned with the requirements of the International We have a global standard that defines the EHS training representing all business units, and is responsible for Standards Organization (ISO), but we do not pursue expectations for employees in three categories: overall EHS governance, as well as for leading and certification under the Environmental (ISO 14001) or driving enterprise-wide excellence in EHS management y Safety (ISO 45001) frameworks at the global level. Manager training covers specific management and performance. Some of our facilities have individually achieved ISO responsibilities with regard to safety and The Council’s responsibilities include: 14001 certification to meet customer requirements. environmental compliance and promoting a “safety first” culture y Establishing EHS strategy, policy and standards In addition to complying with all applicable country, y EHS professional training is designed to expand regional and local safety and environmental laws, we y Providing companywide oversight of environmental technical expertise and improve our EHS capabilities strive for EHS performance that is among the best in and employee safety issues, risk mitigation and around the world the pharmaceutical industry. control strategies y Employee training covers the specific information y Monitoring performance, establishing continuous- We also adhere to the following key operating principles: our employees need to perform their jobs in a safe improvement targets, and recognizing and promoting y Maintain a safe and healthy working environment for and environmentally compliant manner, focusing on EHS excellence hazards and control measures they encounter on all employees, contractors and guests y Allocating resources and/or sponsoring projects to the job y Foster a culture of EHS excellence that is built address specific EHS concerns on science, integrity, accountability, personal Site EHS professionals complete an assessment of An EHS Standards Committee has been chartered by responsibility, collaboration and active employee the activities performed at their sites and ensure the Council to provide stewardship over the Standards participation that relevant topics are included in their site training and enable business engagement in the development plans. They develop employee training curricula y Seek to continuously improve our EHS systems, of new or revised Standards. Each area of the business to comply with internal and regulatory training processes and standards is responsible for executing against the Standards, requirements. These training programs are reviewed y Minimize our impact on the environment by contributing to the development of programs, periodically to ensure that they remain current. identifying and implementing approaches to reduce supporting internal audits and communicating Our EHS training program materials are available in the resources we use during the design, development significant EHS events. Divisional EHS compliance both instructor-led and e-learning formats. We also and manufacture of our products committees have also been established to provide

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governance on the implementation of the Standards, y Ensuring that line management fully understands EHS We use multiple factors to determine the audit and to manage, execute and resolve EHS issues as requirements, including applicable regulations, permit frequency for our facilities, including facility size, they arise. requirements and company EHS Standards operational complexity, compliance status and performance history. Our most complex operations are The vice president (VP) of global safety and the y Establishing, assessing and improving programs audited every year, and all manufacturing and research environment (GSE) is responsible for communicating to y Providing regulatory and technical support to operations are audited at least every two years. Less the Board of Directors, the Executive Committee and employees and the operating areas complex facilities, such as sales and business offices the EHS Council regarding progress on goals, objectives y Routinely assessing performance against our are audited less frequently. In 2018, we performed and metrics, as well as other material issues. The VP of company standards, regulatory requirements and 48 corporate EHS audits of our facilities, covering 69 GSE partners with business leaders to establish long- performance targets percent of our manufacturing and research locations and short-term goals and performance metrics to drive y Acting as the primary liaison with local regulators and involving 718 auditor days of onsite review activities. EHS excellence. and inspectors Safety and environmental performance targets are y Investigating incidents and near-miss events to Our most complex operations are audited included in divisional management objectives. In identify root causes and developing corrective and every year, and all manufacturing and addition, all employees are eligible for special recognition preventive actions to prevent recurrence for innovative ideas and projects related to improving research operations are audited at least EHS aspects of our operations. every two years. Internal auditing Learn more about our corporate governance efforts. An internal Quality Assurance Review of the EHS We have a detailed and rigorous EHS audit program. Auditing program was conducted in 2018 by Corporate Our corporate EHS organization is responsible for: Our global corporate EHS audit program is one way Audit and Assurance Services. As a result of this internal y Developing corporate policies, procedures, guidelines, in which we identify and resolve compliance and review, the EHS auditing program was rated “Effective,” standards, tools and programs to set expectations performance issues within the company. with controls and practices deemed to be in line with and to support EHS compliance Company requirements and expectations. These results y Our audit leaders are full-time professional EHS y Providing technical and regulatory support to site- were consistent with the third-party review of our auditors with extensive experience in auditing a based EHS staff and operating organizations program in 2017. broad range of EHS programs applicable to the y Managing and implementing an internal audit company. The individual audit teams consist of EHS In addition to our corporate EHS audit program, our program targeted at understanding the current state professionals with extensive site and subject-matter sites regularly perform self-inspections, and annually of compliance and identifying potential issues expertise. In many cases, particularly outside of complete self-assessments of selected regulatory y Tracking and communicating internal and external the United States, our internal auditors work with requirements and company standards, with all programs trends that should be addressed independent consultants who have regulatory being evaluated at least once every three years. y Anticipating, tracking and commenting on new expertise in the laws of the host country. regulations affecting our business and, where y All audit findings are addressed through the Remediation appropriate, developing plans to address them development of corrective and preventive action plans, Environmental management practices have evolved y which are reviewed, approved by the audit leader and Tracking EHS performance of sites, divisions and the significantly over the past 30 years. company as a whole, and communicating performance regional EHS leader, and tracked to completion. versus targets y Findings from our audit program are communicated to With research and manufacturing operations dating appropriate parts of the organization so that learnings back more than 100 years, some of our facilities operated Our site-based safety and environmental professionals may be shared, and actions can be taken. at a time when there were few regulations and little around the world support the EHS needs of their understanding of good environmental practices. y Audit performance and key program metrics are business areas, which include manufacturing, research Because our company has responsibility for remediation operations, sales and administrative activities, by: reviewed as part of our governance process.

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of these sites, we have launched investigations, Notices of violations, fines and developed science-based remediation plans and implemented cleanup projects to protect the health settlements and safety of our neighbors, communities, employees We report all forms of EHS compliance notices and the environment, and comply with all applicable using the term Notices of Violation (NOVs), which requirements. includes citations, letters of warning and notices of Over time, we have acquired properties and noncompliance from environmental and safety-focused manufacturing facilities that may not have been regulatory agencies. subject to the same EHS management standards that In 2018, we had 184 EHS-related regulatory agency we have in place today. We are also investigating and inspections of our facilities around the world. We remediating those properties where necessary. received one safety-related and six environmental- We spent $15.9 million in 2018 for remediation and related NOVs and paid no fines in 2018. environmental liabilities, including those at formerly owned and operated sites. Our company has an NOTICES OF VIOLATIONS (NOVS) & CITATIONS 2014 2015 2016 2017 2018 environmental liability reserve of approximately $70 Environmental 17 16 12 5 6 million to fund the continued remediation of these sites into the future. In addition, we are a potentially Safety 11 2 2 3 1 responsible party at 18 multi-party Superfund sites in the U.S. Significant environmental events A “significant environmental event” is defined as an Performance environmental release that results in environmental Our centralized EHS information system allows us to harm to humans, aquatic organisms or wildlife, or collect, manage, learn from and share our safety and any environmental release that requires reporting environmental performance data more efficiently. to the U.S. Securities and Exchange Commission. We experienced no significant environmental events We collect and analyze data in both leading and in 2018. lagging metrics to look for potential trends and identify opportunities that can help drive performance FINES 2014 2015 2016 2017 2018 improvement. We continuously explore new ways to $81,600 $92,270 $33,906 $0 learn from and report on our performance. Environmental fines paid $0 Number of environmental fines 4 6 2 0 0

Safety fines paid $1,000 $0 $0 $0 $0

Number of safety fines 1 0 0 0 0

Corporate Responsibility Report 2018/2019 173 ENVIRONMENTAL SUSTAINABILITY | Climate Change & Energy Use

Climate Change & Energy Use

DISCLOSURES IN THIS SECTION As a global biopharmaceutical company, we recognize “implemented a range of actions to manage climate the important role we play in identifying, adapting and change, both in our own operations and beyond.” GRI 201-2 GRI 305-1 GRI 305-5 responding to the public health risks associated with GRI 302-1 GRI 305-2 SDG 7 We have committed to reducing our Scope 1 and climate change, such as threats to clean air and water, GRI 302-4 GRI 305-3 SDG 13 market-based Scope 2 absolute GHG emissions by 40 insufficient food supplies and the spread of disease. We percent between 2015 and 2025. This goal is designed believe our long-standing support of stronger health to meet the science-based criteria to limit the global Scientific data support that climate systems in underserved areas is even more important temperature increase to below 2°C. We have submitted change is occurring, and we are taking given the evidence that certain disease patterns are our goal to be evaluated by the Science-Based Targets associated with changing climate conditions. action to reduce the economic and initiative (SBTi), and joined We Mean Business to public health risks associated with a Our energy strategy aligns with the United Nations emphasize our commitment. changing climate. Sustainable Development Goals (SDGs) by striving to increase our use of renewable electricity sources, Our Scope 3 GHG emissions impacts are RESOURCES making energy efficiency improvements and supporting nearly three times greater than our science-based reductions of our greenhouse gas Public Policy WSP Assurance Scope 1 and Scope 2 emissions, combined. Position Letter (GHGs + (GHG) emissions. Statement: Water) We realize that in order to make a truly meaningful Climate Change We report our GHG emissions as required by regulations in certain countries and annually through CDP (formerly reduction in our overall environmental impact, we must CDP—Climate Carbon Disclosure Project). In 2018, for the second engage with our suppliers to drive positive change. We Change 2018 year in a row, the CDP graded our disclosure with have set a goal that includes a three-phase process: an A- “leadership” rating, indicating that we have

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y Throughout 2018, we collected GHG emissions data Our company has launched initiatives around the world from 93 percent of our strategic suppliers with the Initiatives to improve energy use, reduce greenhouse gas (GHG) highest environmental impacts to help us better We have made it a priority to reduce our demand emissions from our operations and understand our understand the GHG emissions associated with our for energy and have established internal policies and supply chain-related impacts. supply chain practices focused on reducing energy use at all of our Our Energy Center of Excellence (CoE) identifies, shares sites and minimizing GHG generation throughout y By 2020, we will engage with those suppliers and and standardizes best practices, and prioritizes the the company. By taking these steps, we are not only request them to identify GHG emission reduction funding of energy projects to reduce energy use across minimizing GHG emissions but also reducing our opportunities the company. Our manufacturing facilities, warehouses, operating costs and mitigating the business impacts y By 2025, at least 90 percent of our strategic suppliers laboratories, major offices and vehicle fleet are the expected to be associated with future climate change with the highest environmental impacts will set their primary targets of our energy-demand-reduction requirements. own GHG emission reduction targets programs, as they represent the majority of our energy consumption. We have established an Energy Capital Fund of up to $12 million per year in order We have established an Energy Capital Fund of up to $12 million per year in order to transition to more energy- to transition to more energy-efficient efficient technology and to better position the company technology and to better position the to respond to energy demands in the future. The Energy company to respond to energy demands Capital Fund supports the implementation of projects in the future. with a simple four-year payback averaged over the entire portfolio. In 2018, we allocated approximately Energy-efficiency and demand-reduction projects $9.8 million to energy projects. The completed projects will continue to contribute to lowering our energy will result in $1.65 million in annual savings and a consumption and reducing our direct GHG emissions. reduction of more than 6,000 metric tons of carbon In addition, we will continue to optimize systems, dioxide from our facilities. In 2019, we have over 100 consolidate excess facility space when possible, shift projects in progress, that when completed will reduce power supplies to combined heat and power systems carbon dioxide emissions from our facilities by over and utilize renewable energy sources. 30,000 metric tons.

Scope 1 35 MT CO₂e GOAL(S) PROGRESS INDICATOR Scope 2 3 MT CO₂e GHG Emissions 19.6% reduction Scope By 2025, we will reduce global Scope 1 and 63 MT CO₂e market-based Scope 2 GHG emissions by at ··· least 40% from 2015 levels.

Renewable Energy 14.1% of our purchased By 2025, at least 50% of our purchased electricity comes from electricity will come from renewable sources. renewables ··· By 2040, 100% of our purchased electricity will come from renewable sources.1

Note: Scope 2 is the market-based value in accordance with the 1 We have defined “purchased electricity” as electricity sourced from external suppliers, as well as renewable electricity that was generated and Greenhouse Gas Protocol. utilized onsite where we retained the renewable attributes or where we have obtained renewable attributes through contract.

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Facilities utility-system assessments (Energy Kaizens), and y Site energy use is tracked monthly by our Energy CoE online Energy Treasure Hunts, which allow for best- through a centralized system We continuously strive to make our facilities energy- practice sharing. Since 2010, we have conducted y A global energy scorecard is issued monthly, and sites efficient. Our Energy CoE has created an “energy Energy Treasure Hunts at 13 of our facilities around receive a letter grade based on an internal assessment road map” to help our facilities reduce energy demand the world. This process has identified over 1,000 of their energy intensity and performance. Our and associated GHG emissions. The energy road energy-efficient project opportunities, many of which companywide average score has consistently been a map’s foundation includes large-scale metering and have been successfully implemented, resulting in top-level grade of “A-”. monitoring to assess and identify opportunities over US$10 million in cost savings and approximately y We developed an energy management strategy that for continuous improvement. As facility energy 35,000 metric tons of GHG emission reductions. management programs mature, energy savings are seeks to achieve energy savings through continuous y In 2018, four facilities participated in 12 Energy sought by improving the reliability of the equipment, by improvement, reliability, operations and design Kaizens, which helped them to identify and fix costly the efficient operation of utility systems and by building y A rail-travel option is included in our online business- air and water leaks and reduce heat energy losses efficiencies into systems design. travel booking tool to make it easier to travel by from missing or damaged insulation. These Kaizen train when appropriate. Train travel has a smaller All of our new facilities are required to comply with our events identified over US$550,000 in potential carbon footprint than traveling by either airplane or Energy Design Guide and Energy Conservation Planner. energy savings. As important as the immediate personal vehicle. If we purchase a facility, it is evaluated for energy energy savings and resultant GHG emission y efficiency and assessed against our energy scorecard as reductions, the training, assessment skills and The long-range freight carriers that transport our part of its integration into our company. knowledge the employees received can be applied to products use alternatives to air freight whenever the rest of their facilities. practical. In 2018, 38 percent (by weight) of our All new laboratories, offices and major renovations products were shipped by ocean freight, which y Our online Energy Treasure Hunts have identified are built following cost-effective and energy-efficient reduces the amount of transportation-related GHG high-level recommendations such as renewable practices and are designed to meet LEED Silver or the emissions by over 90 percent as compared energy assessments and lighting systems comparable country standard. to air shipping. optimization. As we are a global company, the online y Our China Head Office is certified as LEED Gold format proves to be a great way to engage our In 2018, our company presented internal Energy Awards y Our new South San Francisco Office was built to LEED employees, understand their concerns and use their to recognize sites, teams or individuals from around the Gold Standards unique expertise and local understanding of their world who exhibited leadership through their energy y An operations support facility at our facility in facilities. management efforts: y Durham, North Carolina is certified as LEED Silver All of our employees have access to a training Energy Savings by Design curriculum that allows them to learn more about We require our facilities to have a plan to manage their A site in South Africa installed a new, more efficient energy management and energy systems. Through energy use. heating ventilation and air conditioning (HVAC) system, this program, employees can earn an Energy Manager submetering on all buildings and a 915 KW solar array. y Four sites in Ireland, three sites in Germany, one Certification. Site energy managers from over 70 They utilize a thermal storage unit, conduct regular site in Spain and one site in the United Kingdom are of our facilities are expected to complete the basic insulation assessments and incorporate lighting controls certified as ISO50001 for energy management to energy efficiency training curriculum. into all projects. comply with the EU Energy Efficiency Directive audit requirements Work practices and recognition Energy Savings by Operations y Our Energy CoE has provided tools for facility Our site in Italy utilizes set-backs to optimize HVAC managers to identify opportunities to reduce energy Our company takes advantage of technology advances and lighting during non-operational hours, turns use and eliminate waste. These tools include facility- in order to save energy, time and money while also off a boiler used for space heating when not needed wide, three-day Energy Treasure Hunts, half-day reducing emissions. and has activated sequencers to manage multiple air compressors.

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Energy Savings by Reliability In January 2018, our company signed a VPPA with Partnerships A site in North Carolina performs regular infrared steam Invenergy Wind Development LLC that adds 60 We have a long-standing partnership with the U.S. trap inspections, has an air leak inspection program, megawatts (MW) of renewable energy to the Electric Environmental Protection Agency’s (EPA’s) ENERGY performs real-time monitoring of variable frequency Reliability Council of Texas (ERCOT) market and STAR® program. This partnership provides a broad drives and has completed several Energy Kaizens. provides us with the associated renewable energy credits. This new wind asset, Santa Rita East, will energy-management strategy that serves as a Energy Savings by Energy Program Management reduce our company’s greenhouse gas emissions by useful framework for measuring our current energy One of our sites in Pennsylvania has a dedicated energy more than 100,000 metric tons per year over the life performance, setting goals, tracking savings and management team that includes a cross section of of the 12-year agreement. This agreement will help us rewarding improvements. operations and facilities management personnel, has reach approximately 50 percent of our 2025 goal and In March 2019, the U.S. EPA again recognized our formalized standard operating procedures to support 25 percent of our 2040 goal. The Santa Rita East wind company with the Sustained Excellence Award. This its energy management team, and has used its success farm is expected to come online in the third quarter is the 14th consecutive year in which we have been in energy management to drive solid waste reductions, of 2019. recognized by ENERGY STAR for excellence in energy hold zero waste meetings and host an external management. We also received several facility-specific sustainability summit in collaboration with a vendor. Vehicle fleet awards from EPA in 2018: A site in Ireland has obtained ISO50001 Approximately 9 percent of our total Scope 1 and 2 y Our Puerto Rico facility was awarded the ENERGY certification, is installing submetering GHG emissions are associated with our vehicle fleet. STAR Pharmaceutical Energy Performance Indicator Award by U.S. EPA for superior energy efficiency and received the 2018 Pharmaceutical We calculate our fleet’s GHG emissions on the basis of estimated fuel economy and actual total miles driven. and environmental performance among U.S. Industry Award for the Best Energy pharmaceutical manufacturing plants for the 10th y Management Program in Ireland. In an ongoing effort to improve fuel efficiency, consecutive year we have converted our U.S. sales fleet from cars y An office building and a data center in New Jersey with six-cylinder engines to cars with four-cylinder and two office buildings in Pennsylvania earned the engines, replaced eight-cylinder-engine trucks Renewable energy ENERGY STAR Certified Building label with six-cylinder-engine trucks, and introduced Our company has set bold renewable energy targets. an all-wheel-drive (AWD) sedan option to replace 1 We have defined “purchased electricity” as electricity sourced We have committed to sourcing 100 percent of our from external suppliers as well as renewable electricity that was AWD sport utility vehicles. This has resulted in fuel generated and utilized onsite where we retained the renewable at- purchased electricity from renewable energy sources efficiency improvements from an average of 22 miles tributes or where we have obtained renewable attributes through 1 by 2040, with an interim goal of 50 percent by 2025. per gallon (mpg) in 2008 to an average of 27 mpg contract. Photovoltaic arrays, wind turbines and other renewable- in 2018. energy installations avoid emissions, help reduce y 40 percent of the U.S. fleet are now partial zero energy-demand peaks and postpone or preclude adding Performance emission vehicles (PZEV) new power plants. The World Resource Institute’s Greenhouse Gas y Our European fleet continues to convert to the use of Protocol defines Scope 1 GHG emissions as emissions While renewable energy accounts for a small percentage more fuel-efficient vehicles and we are conducting a from owned or controlled sources such as onsite fuel of the electricity we currently purchase, we continually plug-in hybrid pilot in the UK analyze our sites to look for opportunities for new combustion and fleet vehicles. Scope 2 emissions y Hybrid vehicles are being utilized in Japan and onsite installations, power-purchase contracts, vendor- are those from indirect sources such as purchased Australia and we are looking to expand their use in supplied renewable energy through the electrical grid electricity. Scope 3 includes indirect emissions in a Brazil and Mexico and virtual power-purchase agreement (VPPA) projects. company’s value chain.

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ENERGY USE SUMMARY 2014 2015 2016 2017 2018

Total energy use (GJ) 21,926,200 21,217,200 20,851,700 19,252,800 19,113,300

SCOPE 1 & LOCATION-BASED SCOPE 2 ENERGY USE (% OF TOTAL)1 2014 2015 2016 2017 2018

Natural gas (Scope 1) 60% 60% 61% 59% 62%

Purchased electricity (Scope 2)2, 3 23% 24% 23% 23% 22%

Fleet fuel (Scope 1) 12% 11% 12% 13% 10%

Purchased steam (Scope 2) 3% 3% 2% 3% 3%

Fuel oil (Scope 1) 2% 2% 2% 2% 2%

Spent solvents (Scope 1) 0.2% 0.1% 0.1% 0.0% 0.0%

Coal (Scope 1) 0.0% 0.0% 0.0% 0.0% 0.0%

Bio-Fuel (Scope 1) 0.3% 0.3% 0.4% 0.6% 0.6%

Renewable energy generated and used onsite4 0.0% 0.01% 0.04% 0.04% 0.05%

1 May not add to 100 percent due to rounding. 2 Reported using Scope 2 location-based value in accordance with the Greenhouse Gas Protocol. 3 Includes solar, wind and other renewables generated onsite where renewable energy credits (RECs) have been sold. 4 Includes solar, wind and other renewables generated onsite where renewable energy credits or guarantees of origin have been retained or retired.

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From 2017 to 2018, we reduced our year-over-year SCOPE 1 & MARKET-BASED SCOPE 2 Scope 1 and Scope 2 market-based GHG emissions by 7 ENERGY USE (% OF TOTAL)1 2014 2015 2016 2017 2018 percent due to our continued focus on energy efficiency Natural gas (Scope 1) 60% 60% 61% 59% 62% and an increased utilization of renewable energy. Purchased electricity (Scope 2)2, 3 23% 24% 22% 22% 19% We have analyzed and reported our Scope 3 impacts using primary operating data, accepted emission Fleet fuel (Scope 1) 12% 11% 12% 13% 10% factors, and an economic input-output model based Renewable energy generated and used 0.0% 0.01% 0.3% 1.1% 3.2% on our third-party spend. In 2018, our Scope 3 GHG onsite or purchased4 emissions remained roughly the same as in 2017. Purchased steam (Scope 2) 3% 3% 2% 3% 3% Our analysis shows that our Scope 3 GHG emissions impacts are nearly three times greater than our Fuel oil (Scope 1) 2% 2% 2% 2% 2% combined Scope 1 and Scope 2 emissions. We are Bio-Fuel (Scope 1) 0.3% 0.3% 0.4% 0.6% 0.6% working to reduce those impacts through activities such as reducing waste in our operations, reducing fuel use Spent solvents (Scope 1) 0.2% 0.1% 0.1% 0.0% 0.0% and looking for opportunities to shift from air shipping Coal (Scope 1) 0.0% 0.0% 0.0% 0.0% 0.0% to ocean transport when practical. We are also starting to engage with our strategic suppliers to identify ways 1 May not add to 100 percent due to rounding. 2 to reduce GHG emissions in our supply chain. These Reported using Scope 2 location-based value in accordance with the Greenhouse Gas Protocol. 3 actions not only reduce our environmental impact but Includes solar, wind and other renewables generated onsite where renewable energy credits (RECs) have been sold. 4 Includes solar, wind and other renewables generated onsite where renewable energy credits or guarantees of origin have been retained or benefit the business by reducing costs. retired.

1 GHG SUMMARY (MT CO2E) 2014 2015 2016 2017 2018

Scope 1 and location-based Scope 2 1,532,400 1,416,400 1,363,300 1,254,700 1,208,100 greenhouse gas emissions

Scope 1 and market-based Scope 2 1,532,400 1,458,500 1,400,000 1,267,000 1,173,200 greenhouse gas emissions

Scope 3 greenhouse gas emissions 5,760,000 5,586,300 7,975,100 6,586,100 6,231,700

1 In accordance with the Greenhouse Gas Protocol, prior-year data have been adjusted to add or remove facilities that have been acquired or sold. Adjustments also reflect changes in methodology to ensure consistency from year to year.

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SCOPE 3 GREENHOUSE GAS GHG DETAILS

(MT CO2E) 2014 2015 2016 2017 2018

Purchased goods and services1 4,437,700 3,864,900 6,204,000 4,997,600 4,615,400

Capital goods1, 2 NA 112,700 224,000 192,900 229,200

GHG emissions from fuel and energy-related 309,500 276,200 304,500 262,100 243,400 activities not included in Scopes 1 & 23, 4

Upstream transportation and distribution1 258,000 222,200 255,500 267,100 271,600

Waste generated in operations (excluding 23,500 20,600 16,800 16,000 18,200 recycled & composted waste)5, 6

GHG emissions related to employee business 182,600 283,300 265,400 218,200 301,100 travel7, 8

Employee commuting 320,700 302,400 301,500 262,200 239,000

Downstream transportation and distribution9 NA 211,000 118,000 121,900 120,800

GHG emissions from use of sold products10 228,000 255,000 248,400 205,800 148,100

End-of-life treatment of sold products11 NA 38,000 37,000 42,200 44,900

Total 5,760,000 5,586,300 7,975,100 6,586,100 6,231,700

Note: Limited Data Assurance was granted for emissions calculated from primary travel vendor data and employee reimbursable travel mileage data. The total reported here includes non-primary travel vendor data emissions which were based on our 2018 third-party spend data and an Economic Input-Output Model performed by Climate Earth, Inc. NA: Not Available. 1 Based on third-party spend data and an economic input-output model performed by Climate Earth, Inc. ² Data not available before 2015. ³ Emission factors from Argonne National Laboratory’s GREET Model (https://greet.es.anl.gov/) were used in conjunction with primary fuel and energy-use data. ⁴ Data as reported historically, not baseline adjusted. ⁵ Primary-waste data were used with the U.S. EPA’s WARM Model (https://www.epa.gov/warm).

⁶ Including recycled and composted waste in these calculations, would result in negative emissions in 2014 (-39,900 MT CO2e), 2015 (-40,200 MT CO2e), 2016 (-60,200 MT CO2e), 2017 (-41,200 MT CO2e) and 2018 (-43,700 MT CO2e). ⁷ Based on primary travel vendor data, employee-reimbursable mileage and UK Defra factors (https://www.gov.uk/government/collections/ government-conversion-factors-for-company-reporting#conversion-factors-2015). ⁸ Beginning in 2014, emissions are based on primary vendor data where available and economic input-output modeling performed by Climate Earth, Inc., using spend data. ⁹ Emissions were calculated using our “Upstream transportation and distribution” spend data as a worst-case estimate entered into the WRI Quantis tool. We assumed that all “downstream” material would first have been stored, transported and handled “upstream.” 10 Assumes that all HFC-containing devices shipped for sale were consumed. The amount and identity of HFC in each product is calculated and

multiplied by the appropriate global warming potential (GWP) to determine the CO2e released as a result of product use. 11 Calculated assuming that all primary, secondary and tertiary packaging purchased was disposed of by our customers. Packaging material data was used with the U.S. EPA’s WARM Model.

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Air Emissions

DISCLOSURES IN THIS SECTION Standard requires our facilities to quantify and control air emissions to comply with applicable regulations and GRI 305-6 SDG 3 SDG 13 -19% GRI 305-7 SDG 12 emission standards. Reduction in sulfur Many of our pharmaceutical manufacturing processes, oxides (SOx) since 2017 We are committed to controlling cleaning operations and research laboratories require air emissions from our facilities to the use of solvents. Evaporation of solvents into the Air emissions are also generated by burning fuel in our reduce local, regional and global air is the primary source of volatile organic compound boilers and power-generation turbines (for heat and (VOC) emissions. In an effort to reduce VOC emissions, energy), and by other combustion processes, such environmental impacts. reduction in solvent usage has been incorporated as an as thermal oxidizers (for treating air emissions) and incinerators (for destroying waste). Our fleet vehicles RESOURCES element of our Green & Sustainable Science program. and aircraft also burn fuel and generate air emissions. Key elements of the program include designing efficient Public Policy CDP—Climate These combustion processes result in emissions of Position Change 2018 processes that use fewer and less-hazardous solvents carbon dioxide (CO2), nitrogen oxides (NOx), sulfur Statement: and using water-based methods for cleaning our process oxides (SOx) and volatile organic compounds (VOCs). Climate Change equipment where they are as effective as solvent-based We strive to make our facilities more energy-efficient methods. To reduce emissions from processes where through our energy-management programs and to Air emissions are generated by our manufacturing and solvents are used, we use pollution-control technologies improve the fuel efficiency of our fleet vehicles. By research operations, as well as by burning fuel in on-site such as conservation vents, carbon filters, thermal making these improvements, we also reduce emissions equipment and fleet vehicles. Our Air Management oxidizers, condensers and scrubbers. of CO2, NOx, SOx and VOCs from our operations.

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Performance AIR POLLUTANT EMISSIONS BY TYPE (MT)1 2014 2015 2016 2017 2018 Our NOx emissions increased slightly from 2017 to 2018 Nitrogen oxides (NOx) 515 494 454 480 494 due to the need to burn more fuel during the cold winter Sulfur oxides (SOx) 49 48 37 37 30 months and the use of emergency generators at our Puerto Rico facility during an extended power outage Volatile organic compounds (VOCs) 512 455 440 380 404 caused by Hurricane Maria. Ozone-depleting substances (ODS) 1.5 0.1 0.7 0.1 0.3 Even though our use of solvents in manufacturing Note: Previously reported data have been restated per our methodology, which includes adding facilities that have been acquired and removing operations has declined over time, our VOC emissions facilities that have been sold as operating sites. increased from 2017 to 2018 due to the adoption of 1 Data are estimated using conservative assumptions and factors, not measured or weighed. more-accurate emission-tracking methods. The decrease in SOx emissions from 2017 to 2018 can be attributed to the use of fuel with a lower sulfur content and our energy-conservation programs. Emissions of ozone-depleting substances (ODS) are the result of non-routine releases from temperature- control and fire-suppression systems and can vary from year to year.

Corporate Responsibility Report 2018/2019 182 ENVIRONMENTAL SUSTAINABILITY | Water

Water

DISCLOSURES IN THIS SECTION Global water use and risk— GRI 102-12 GRI 303-03 SDG 15 15% GRI 303-01 SDG 6 percentage by region Reduction in water use since 2015 We have established water goals to help us manage Access to clean water is critical for water-related risks in our operations and supply chain: Our global water strategy aims to achieve sustainable human health and is a key input to our y Maintain global water use at or below 2015 levels water management within our operations and our manufacturing operations. through 2025 supply chain, which supports Sustainable Development y Implement water conservation plans for internal RESOURCES Goal (SDG) 6, “Clean Water and Sanitation.” To achieve these strategic objectives, we are focusing on the sites in “high water risk” locations by 2020. In 2018, Public Policy WSP Assurance following commitments: we successfully completed one site water-use Position Letter (GHGs + assessment and we are targeting additional facilities Statement: Water Water) y Ensuring that our wastewater discharges comply to develop water-use management plans in 2019. with local and national standards, as well as internal CDP—Water y Supply chain: Security 2018 company requirements y Understanding and controlling our operational º In 2018, we collected water-use data from 93 water footprint percent of our strategic suppliers with the As we strive to meet the health needs of our patients, highest environmental impacts to help us better y Managing water risk at our facilities and in our we are increasingly operating in regions of the world understand the amount of water used in our supply chain where access to clean water and proper sanitation is supply chain under great pressure. Even in established markets, y Reporting publicly on our water use and goals our business faces water-related risks.

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º By 2020, we will engage with those suppliers and GOAL(S) PROGRESS INDICATOR request that they identify water-use reduction opportunities By 2020, we will develop water conservation On track plans for sites in “high water risk” locations. º By 2025, ≥ 90 percent of our strategic suppliers ··· with the highest environmental impacts will set By 2025, we will maintain global water use at 3.5 million m3 below 2015 their own water-use reduction targets or below 2015 levels. levels (15% reduction) ···

Initiatives Our sites employ a variety of technologies and Over the past several years, we have committed techniques aimed at reducing our water footprint and All of our facilities are required to implement an internal $121 million from a dedicated water infrastructure improving operational performance. Closed-loop cooling Environmental Quality Criteria (EQC) program for improvement fund to projects that include API systems, which reduce freshwater use, are employed controlling active pharmaceutical ingredient (API) treatment systems as well as water-use reduction at more than half of our facilities worldwide. Reverse discharges into the environment. technologies. Examples of API treatment systems osmosis (RO) “reject water” is reused for non-potable installed at our manufacturing sites include evaporation Each facility uses internal EQC standards to: and non-process applications such as cooling-tower feed and ozonation. Evaporation systems separate and y water and fire water. In all, more than one million cubic Assess the potential risk from its operations concentrate API containing wastewater from a distillate meters of water are recovered, reused or recycled at our using science-based and industry-accepted risk stream. Ozonation systems are designed to treat API facilities, which is equivalent to six percent of the total assessment methods; by oxidation. water that is withdrawn. y Minimize environmental impacts; and Our internal Environmental Management Standard y CEO Water Mandate Establish procedures for managing APIs for water requires each of our sites to assess the in wastewater impact of its operations on the local watershed, assure We have endorsed the UN CEO Water Mandate, a public commitment to adopt and implement a comprehensive Our production facilities have, or will be provided with, compliance, and drive continuous improvement in how approach to water management, and we have aligned API-treatment technology where needed, so that our water is used and in the quality of water discharged. Our our water program with its principles. wastewater discharges meet these internal standards. Energy Center of Excellence includes the total cost of water in energy-related project evaluations and drives CEO Water Mandate endorsers have a responsibility best practices that conserve both energy and water. to make water-resource management a priority and to Our water-use-reduction initiatives include: work with governments, UN agencies, nongovernmental $121M organizations, local communities and other interested y Consideration of water use in process design parties to address global water challenges. We are Dedicated water infrastructure improvement y fund for treatment systems and water-use Cooling-system optimization working to identify partnerships that will help us advance reduction technologies y Prompt repairs and maintenance of steam- our water stewardship priorities in the areas in which distribution systems and traps we operate. These projects also support the goals of In addition, as a member of the Antimicrobial Resistance SDG 15, which strives to “protect, restore and promote y Recovery and reuse of steam condensate and (AMR) Industry Alliance and signatory to the Industry sustainable use of terrestrial ecosystems.” “reject water” Roadmap for Progress on Combating AMR, we are The Nature Conservancy working to deliver on our commitments to reduce the y Process-water purification system optimization environmental impacts from antibiotic residues in y Avoiding the use of water in mechanical seals, such as In 2018, we supported the Nature Conservancy’s wastewater. those in pumps Mexico City Water Fund with a $100,000 donation. The Fund was created to alleviate the serious

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groundwater depletion in and around Mexico City, where our Xochimilco facility is located, by restoring 78% and conserving natural areas that recharge the city’s aquifers. The Fund will also create efficiencies in the supply networks and the reuse of wastewater, which will reduce the pressure on groundwater sources. Our 2017 contribution of $100,000 to the Nature Conservancy’s Atchafalaya River Basin Initiative near our facility in Baton Rouge, Louisiana, helped to protect a critically important freshwater system that supplies drinking water for the area and also provides flood protection for millions of Americans. Our funding enabled land acquisition and restoration, advanced scientific monitoring and understanding of the area and supported community outreach through the development of a floating research and 14% education center. Performance In 2018, we used 20.5 million cubic meters of water globally, versus 24.0 million cubic meters in 2015, representing a 15 percent reduction in water use. Water use increased slightly from 2017 to 2018 due to an equipment replacement project at one of our major facilities, which resulted in additional water use during the changeover. Water use at this facility is expected to decrease from 2018 levels in the coming years. Approximately 63 percent of the total water we WATER USE & RISK BY Extremely Med to Low to % of used in 2018 was supplied from nearby surface REGION (%) High High High Med Low NA Total Total water and groundwater resources, with the balance North America 19% 16% 65% 0% 0% 0% 78% 16.06 sourced from municipal water supplies. Many of our facilities employ water reuse and recovery strategies, Europe, Middle East and Africa 1% 11% 9% 23% 48% 7% 14% 2.93 including recirculation of water in cooling towers and Asia Pacific 64% 1% 10% 0% 6% 18% 6% 1.22 condensate recovery.

Latin America 0% 18% 0% 24% 37% 20% 1% 0.29 We use the World Resources Institute’s (WRI’s) Aqueduct water-risk-assessment tool to measure and Total 1 19% 15% 53% 4% 8% 3% 100% 20.50 map our water risks. Sites are categorized using the NA: Categorization Not Available.

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“Baseline Water Stress” indicator, which is the ratio WATER USE & RISK BY Extremely Med to Low to % of of total annual water withdrawals to total available REGION (M3) High High High Med Low NA Total Total annual renewable supply, and accounts for upstream North America 3.00 2.59 10.42 0 <0.01 0.04 78% 16.06 consumptive use. Higher stress values indicate more competition among water users. Europe, Middle East and Africa 0.03 0.32 0.27 0.68 1.41 0.21 14% 2.93

In 2018, we operated 11 manufacturing and/or research Asia Pacific 0.78 0.01 0.12 0 0.08 0.22 6% 1.22 facilities in areas with “extremely high” Baseline Water Latin America 0 0.05 0 0.07 0.11 0.06 1% 0.29 Stress, according to the WRI’s Aqueduct tool. Our manufacturing facilities that use the most water are Total 1 3.82 2.98 10.81 0.75 1.61 0.53 100% 20.50 located in areas of “medium to high” or “high” Baseline NA: Categorization Not Available. Water Stress and are located in the U.S. 1 The total is less than 100 percent due to rounding. We are assessing our facilities located in areas of “extremely high” and “high” Baseline Water Stress to 3 1 determine if more extensive water management plans WATER USE BY SOURCE (MILLION M ) 2014 2015 2016 2017 2018 are needed. We are also working to identify “hot spots” Pumped water (surface water and groundwater) 18.9 16.2 13.6 13.0 12.8 of water use within our supply chain so that we can engage with our suppliers on the issue of water risk. Purchased water 7.9 7.8 7.1 6.6 7.7 Wastewater from our facilities is managed and treated to Total 26.9 24.0 20.7 19.6 20.5 meet regulatory standards and minimize environmental 1 In accordance with the Greenhouse Gas Protocol, prior-year data have been adjusted to add or remove facilities that have been acquired and impacts. We operate wastewater-treatment plants sold. Adjustments also reflect changes in methodology to ensure consistency from year to year. at many of our production and research facilities. Approximately 63 percent of the wastewater from our manufacturing plants is treated on-site before being discharged into rivers or other surface-water bodies. The remaining 37 percent is sent to local municipal wastewater-treatment facilities that have the technology and capacity to treat our wastewater.

Corporate Responsibility Report 2018/2019 186 ENVIRONMENTAL SUSTAINABILITY | Materials & Packaging

Materials & Packaging

increased the number of doses per case and reduce DISCLOSURES IN THIS SECTION Packaging the weight of the packaging materials by approximately SDG 12 We have adopted “Design for Environment” guidelines SDG 15 25 percent. This change reduces the amount of natural that help our engineers design new product packages resources needed to package the products and the that are better for the environment by minimizing Optimal packaging design protects amount of fuel needed for transportation, thereby package sizes and using more environmentally friendly lowering greenhouse gas emissions. our products in a compliant manner materials, where possible. and meets or exceeds customer To help us evaluate the differences in environmental We have set a target to review all of our new human impacts between packaging options, we use a simplified needs with the minimum possible health packaging designs prior to launch to understand life-cycle assessment (LCA) tool that provides environmental impact. and minimize environmental impacts as much as information on the environmental impacts generated possible, while still providing adequate protection of by the materials used in our packaging. The tool helps The packaging we use for our finished products serves our products. In 2018, we implemented a packaging us to make informed decisions as to which materials are a range of important purposes: The foremost purpose design change for some of our solid dose products that better for the environment. is to protect the purity, efficacy and physical integrity of the product. Packaging also provides the customer with information and convenience, the pharmacist GOAL(S) PROGRESS INDICATOR or provider with accurate dispensing information at the point of purchase, and our business with Materials & Packaging 100% of products marketing value. For some products, packaging also 100% of the packaging for our new human launched in 2018 health products will be reviewed for ··· serves safety functions such as child resistance and environmental impact and improvement. tampering evidence.

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Solvent use We have an active Green & Sustainable Science program We have put procedures, systems and processes in to design our new processes using fewer solvents and place to manage the approval, procurement, inventory, Solvents play a key role in the manufacturing of our other hazardous materials, and to reuse and recycle more receipt, transfer, storage, use and disposal of chemicals products, as well as in equipment cleaning. Because of the solvents we do use. For cleaning our manufacturing at all of our sites. We provide our employees and others of their significance to our business and the life-cycle equipment, we use water-based methods where they are with information about the identities and potential impact they represent, we focus on designing our effective as solvents. At each of our manufacturing sites, hazards of the chemicals in our operations and final processes to minimize or avoid their use where practical. we have engineers who are responsible for identifying products through proper labeling of chemicals and the Where we do use solvents, we maximize efficiency, and and driving process-improvement projects. When it is creation of safety data sheets. control them in our emissions, effluents and waste. not practical to reuse regenerated solvents in our own production processes, we either work with suppliers who recover the spent solvents for resale to other Performance industries, or safely burn them as a source of energy. 26% Any used solvents that leave our site as hazardous waste In 2018, we used 18,560 metric tons of new solvents and 6,553 metric tons of recovered solvents in our In 2018, we used recovered are managed at offsite facilities that are on our list of production processes and cleaning activities. The solvents for more than a approved waste management sites. quarter of our manufacturing decrease in total solvent use from 2017 to 2018 and cleaning needs. reflects efficiencies in manufacturing and less solvent- Chemical management based activity, such as equipment cleaning, for the A comprehensive and effective chemical management manufacturing of active pharmaceutical ingredients. In program is critical to the safety and protection of our 2018, we used recovered solvents for 26 percent of our employees, the communities in which we operate and manufacturing and cleaning needs. the environment.

SOLVENT USE (MT) 2014 2015 2016 2017 2018

Fresh solvents used 24,000 15,000 20,000 19,000 18,560

Recovered solvents used 11,000 7,000 8,000 7,300 6,553

Total 35,000 22,000 28,000 26,300 25,113

Note: Previously reported data have been restated per our methodology, which includes adding facilities that have been acquired and removing facilities that have been sold as operating sites.

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Waste Management

DISCLOSURES IN THIS SECTION The amount of non-hazardous waste that Initiatives GRI 306-2 SDG 3 SDG 15 was reused doubled from 2017 to 2018. GRI 306-4 SDG 12 Waste minimization begins with the upfront evaluation The amount of waste we generate reflects the of our product designs and manufacturing processes. The proper management of waste efficiency of our manufacturing processes. Our facilities Through our Green and Sustainable Science program, we design processes that use safer chemicals, consume from our facilities is important for track and report the amount of operational waste they generate and how it is managed. less energy, use less water and other resources and the communities where we operate generate less waste. Our process-development and is the focus of our environmental We continuously strive to reduce the amount of biologists, chemists and engineers have the expertise operational waste we generate and to maximize the use to create more sustainable ways to make our products. permits and other regulatory of environmentally beneficial disposal methods such as requirements. recycling, composting and waste-to-energy. To minimize our environmental footprint, we look for opportunities to avoid the use of hazardous GOAL(S) PROGRESS INDICATOR materials, to reuse or recycle materials, and to By 2025, no more than 20% of our global operational 33% to landfills and prevent the generation of waste. When prevention, waste will be sent to landfills and incinerators. incinerators reuse and recycling are not practical, we ··· apply controls and treatment technologies to By 2025, at least 50% of sites will send zero 38% of sites prevent human health impacts and minimize waste to landfill. environmental impacts. ···

Corporate Responsibility Report 2018/2019 189 ENVIRONMENTAL SUSTAINABILITY | Waste Management

To ensure our waste is managed in an environmentally waste that could not be recycled or beneficially reused, The percentage of operational waste sent to landfill responsible manner, we use only approved waste 46 percent was incinerated. Approximately 2 percent and incinerators increased from 29 percent in 2017 to disposal facilities. Approved facilities demonstrate that was sent to hazardous-waste landfills. The amount of 33 percent in 2018. This is mainly due to an increase they have the systems, technologies and practices hazardous waste sent offsite for incineration rose from in production volumes at one of our manufacturing to manage our waste streams responsibly and in 2017 to 2018, mainly due to an increase in production at facilities that sends waste offsite for incineration. In compliance with all applicable requirements. We one of our manufacturing sites. 2018, 38 percent of our facilities sent zero operational routinely audit these facilities to verify the acceptability waste to landfill, down from 42 percent in 2017. We We beneficially reused 82 percent of the 35,517 metric of their systems and practices. are working to identify alternate methods of waste tons of non-hazardous waste we generated in 2018. management that will reduce the amount of waste Waste types are defined differently in various parts The amount of non-hazardous waste that was reused sent to incinerators and landfills. of the world. For this report, we have divided our doubled from 2017 to 2018. We are evaluating and operational waste into two categories: refining the programs in place at our manufacturing, research and office sites to reduce waste generation Hazardous waste: Heavily regulated or high-risk and increase recycling. waste streams that need to be neutralized, treated or destroyed to address a particular hazard such as toxicity, flammability, corrosivity, radioactivity, GLOBAL OPERATIONAL WASTE 2014 2015 2016 2017 2018 pharmaceutically active or infectious. Landfill 10% 15% 10% 10% 9% Non-hazardous waste: All other operational waste. Incineration (without energy recovery) 14% 13% 20% 19% 24% Because the amount of project-related waste can vary significantly from year to year based on the number Total 24% 28% 30% 29% 33% and size of projects, our definition of operational waste 2025 GOAL ≤20% does not include construction or demolition waste from projects.

HAZARDOUS WASTE (MT) 2014 2015 2016 2017 2018 Performance Incinerated (without heat recovery) 9,724 7,928 13,186 13,462 17,639 In 2018, we managed approximately 73,930 metric tons Landfilled 1,628 1,652 1,492 745 731 of waste from our operations, a 2 percent increase from Recycled 12,196 5,944 6,135 7,979 6,827 2017. Of this, 38,413 metric tons were hazardous waste. Energy recovery 15,773 11,089 9,871 9,538 10,300 Of the hazardous waste we generated in 2018, 46 percent was beneficially reused in some way (reused, Reused 2,408 1,428 2,132 1,505 695 recycled, composted or sent for energy recovery). Composted 4 5 5 0 0 Approximately 18 percent of our hazardous waste was sent offsite for recycling and was either returned to us Other 2,387 2,299 2,425 2,423 2,221 for reuse or sold to other industries. Another 27 percent Total 44,120 30,345 35,246 35,652 38,413 was burned to generate power. Of the hazardous

Corporate Responsibility Report 2018/2019 190 ENVIRONMENTAL SUSTAINABILITY | Waste Management

NON-HAZARDOUS WASTE (MT) 2014 2015 2016 2017 2018

Incinerated (without heat recovery) 788 1,243 1,361 426 374

Landfilled 6,349 8,459 5,826 6,633 5,684

Recycled 16,952 15,811 14,636 15,188 12,975

Energy recovery 10,405 9,706 10,342 8,576 9,273

Reused 782 970 972 1,071 2,204

Composted 4,094 3,018 3,771 4,668 4,798

Other 242 304 445 212 209

Total 39,612 39,511 37,353 36,774 35,517

HAZARDOUS + NON-HAZARDOUS WASTE (MT) 2014 2015 2016 2017 2018

Landfill + incineration 18,489 19,282 21,865 21,265 24,428

Landfill 7,97 7 10,111 7,318 7,378 6,415

Incineration 10,512 9,171 14,547 13,887 18,013

Recycled, energy recovery, reused or composted 62,614 47,971 47,864 48,525 47,072

Other 2,629 2,603 2,870 2,635 2,430

Total 83,732 69,856 72,599 72,426 73,930

Corporate Responsibility Report 2018/2019 191 ENVIRONMENTAL SUSTAINABILITY | Product Stewardship

Product Stewardship

Our product stewardship program focuses on DISCLOSURES IN THIS SECTION RESOURCES identifying and either preventing or minimizing potential GRI 102-11 SDG 3 Public Policy Public Policy GRI 416-1 SDG 12 Position Position safety and environmental hazards throughout each Statement: Statement: product’s life cycle. We conduct extensive testing of our We are committed to understanding, Pharmaceuticals Responsible products to identify and understand possible safety, in the Environment Disposal of health and environmental hazards. We manage and managing and reducing the Medicines in communicate information about hazardous materials the Household environmental impacts of our to keep our employees, contractors, transporters and products and the materials associated Global Sharps other partners safe. Antimicrobial Management with discovering and producing them. Resistance Plan—CalRecycle Action Plan

Environmental Goals Factsheet

GOAL(S) PROGRESS INDICATOR

Green and Sustainable Science On track to establish and By 2020, at least 90% of our new human health meet targets that will drive active pharmaceutical ingredient processes will improvements in the material ··· meet internal sustainability targets at launch. efficiency of our new products

Corporate Responsibility Report 2018/2019 192 ENVIRONMENTAL SUSTAINABILITY | Product Stewardship

Our chemists and engineers are trained in green design Precautionary principle industry, we also collaborate with external resources principles and are provided with tools and resources to and industry groups, such as the American Chemical help them develop manufacturing processes that use We take a precautionary approach when evaluating Society and the European Federation of Pharmaceutical safer chemicals and reduced quantities of raw materials. potential human exposures and environmental Industries and Associations. We use innovations like nanotechnology to make our impacts resulting from our manufacturing processes. Using the results of our scientific studies, we determine products more effective, while ensuring that product Conservative assumptions are made when data are hazard ratings for all of our chemical compounds, and safety always remains of utmost importance. limited, and safety factors are added to address uncertainty and variability in our assessments. default to more conservative exposure limits when Complying with chemical substance and product we have limited health hazard information. We use a requirements is a top priority for us. We track numerous This type of approach is particularly relevant to our rigorous and data-driven review process and re-evaluate existing and emerging chemical control regulations that work in toxicology, industrial hygiene and environmental hazard ratings as new data become available. require us to register specific types of chemicals with protection. Our Industrial Hygiene Risk Assessments require the proper authorities. To meet these requirements, our By using more efficient and innovative processing evaluation of the effectiveness of control measures. scientists complete assessments of the environmental methods and technologies, we are reducing the amount Risk-based exposure monitoring is also conducted and human health risks of the substances we work of energy, water and raw materials we use to make our to verify the effectiveness of installed engineering with and submit the required regulatory notifications. products, thereby minimizing the amount of waste we controls, and improvements are made as needed. We Additionally, we provide details on product use and risk- generate and lowering our production costs. use conservative safety factors to set low de minimis based control measures in accordance with applicable levels for environmental releases until we have sufficient regulations. We go to great lengths to ensure that our products are designed, made and used in a safe, effective and data to fully understand their impacts on aquatic Our product stewardship program extends to our environmentally sound manner. We deliver on this organisms. Levels are reviewed and updated as new customers and patients through the design of effective, commitment by maintaining a highly trained and capable data become available. low-impact product packaging. Our company also scientific staff and by actively pursuing manufacturing supports the development of science-based, cost- process improvements that minimize environmental effective and environmentally sound programs that impacts. We have set environmental sustainability goals promote the proper disposal of unused medicines to demonstrate this commitment with concrete targets in accordance with regional requirements. For more and timelines. To ensure that our knowledge stays information, see our position statement on responsible current with that of thought leaders and experts in the disposal of medicines.

Corporate Responsibility Report 2018/2019 193 ENVIRONMENTAL SUSTAINABILITY | Green & Sustainable Science

Green & Sustainable Science

Green and sustainable science is the By using more efficient and innovative processing commercial manufacturing process. We have set a design of new products and processes methods and technologies, we are reducing the amount target to ensure that by 2020 at least 90 percent of our of energy, water and raw materials we use to make our human health active pharmaceutical ingredient (API) that reduce or eliminate the use or products, thereby minimizing the amount of waste we processes will meet internal sustainability targets at the generation of hazardous substances. generate and lowering our production costs. time of product launch.

The concept applies across the life cycle of a Process Mass Intensity (PMI) represents product, including its design, manufacture, use and Initiatives ultimate disposal. the number of kilograms of raw materials (including water) used to produce one As part of our Green & Sustainable Science program, Developing innovative, cost-efficient manufacturing we calculate the Process Mass Intensity (PMI) of our processes with low environmental impact aligns with kilogram of an active pharmaceutical human health products. PMI represents the number our company’s environmental sustainability strategy. ingredient (API) or biologic. of kilograms of raw materials (including water) used Our integrated strategy involves several stages to produce one kilogram of an active pharmaceutical We aim to develop the most efficient and sustainable and aims to provide innovative solutions rather ingredient (API) or biologic. PMI indicates how processes at product launch, with the goal of than incremental improvements to historical efficiently we convert raw materials into final products. minimizing material use and waste from our commercial practices. We see science and innovation as critical We use this metric internally to compare different manufacturing. Our company’s Research Laboratories enablers to developing sustainable, low-cost manufacturing methods, identify process improvement (MRL) utilize an innovative “green-by-design” manufacturing processes that provide both opportunities and track our progress. We are also using development strategy to progress from an initial early environmental and economic benefits over the life-cycle assessment (LCA) tools to further evaluate the clinical supply route to a fully optimized and sustainable life cycles of our products. environmental impacts of our processes.

Corporate Responsibility Report 2018/2019 194 ENVIRONMENTAL SUSTAINABILITY | Green & Sustainable Science

In 2018 and again in 2019, our company was honored by GOAL(S) PROGRESS INDICATOR the American Chemistry Society (ACS) as one of five winners of the Green Chemistry Challenge Awards. In Green and Sustainable Science On track to establish and By 2020, at least 90% of our new human health meet targets that will drive 2018, our scientists were recognized for successfully active pharmaceutical ingredient processes will improvements in the material ··· applying green chemistry design principles to the meet internal sustainability targets at launch. efficiency of our new products commercial synthesis of PIFELTRO™ (doravirine), a new antiviral drug approved in 2018 in the U.S. and Europe. In 2019, we were recognized for changing the way we manufacture ceftolozane, an antibiotic sold in combination with another chemical as ZERBAXA® (ceftolozane and tazobactam). Since the establishment of the annual Green Chemistry Challenge Awards in 1996, we have been the only pharmaceutical company to be recognized with six Green Chemistry Awards for innovative process improvements. We are a founding member of the ACS Green Chemistry Institute® (GCI) Pharmaceutical Roundtable, a partnership between the ACS GCI and member pharmaceutical companies. The Roundtable assists with the development of tools such as solvent selection and reagent guides and the PMI calculator, which drive the integration of sustainability into process design. Roundtable members also work together to support and advance academic research and education on new ways to apply green and sustainable science to pharmaceutical discovery and manufacture, which have resulted in several industry publications on more sustainable processes and technologies. More recently, the ACS GCI member companies have developed tools and guidelines for sustainable production practices relevant to bioprocessing.

Corporate Responsibility Report 2018/2019 195 ENVIRONMENTAL SUSTAINABILITY | Nanotechnology

Nanotechnology

We support the use of nanotechnology monitor developments in the area of nanotechnology Animal Health—Nanoscale milling is used for the active to develop innovative drugs and vaccines and pharmaceuticals. Based on the current scientific ingredient in PANACUR® (fenbendazole), resulting in a body of knowledge for nanoparticles, our existing formulation that provides improved dosing and makes that address the unmet medical needs of methods of assessing risks and applying controls are the product easier to administer. people and animals. appropriate for effectively managing exposures to employees and the environment. We do not currently Nanotechnology involves the use of materials less than use engineered nanoparticles. 100 nanometers in size (nanomaterials). This highly precise technology offers multi-faceted applications Below are two examples of how we use nanotechnology: for commonly used substances that have been reduced Human Health—The manufacturing process for in size, as well as novel substances such as carbon EMEND® (aprepitant) uses a nanoscale milling approach nanotubes and other exotic materials. to generate very small granules (with some in the The required testing for all of our drugs ensures that “nano” range), allowing for easier absorption by the nano-based pharmaceuticals are safe and effective for digestive tract. patient use. Our health and safety professionals closely

Corporate Responsibility Report 2018/2019 196 ENVIRONMENTAL SUSTAINABILITY | Pharmaceuticals in the Environment

Pharmaceuticals in the Environment

We conduct environmental risk assessments on our DISCLOSURES IN THIS SECTION Pharmaceutical compounds have been found to products, from the development phase through enter the environment primarily through the use of SDG 6 SDG 14 product launch, to understand and manage product medicines by humans and animals, and the subsequent impacts from manufacturing and patient use. We excretion into wastewater treatment systems, water We are committed to understanding assess products in a manner consistent with the most bodies or soil. Other potential environmental routes stringent applicable global regulations, including the include manufacturing wastewater discharges and and managing the environmental regulatory review processes of the U.S. Food and Drug waste disposal. impacts of our products throughout Administration and the European Medicines Agency. their life cycles—from discovery through Product environmental safety profiles are reassessed manufacturing, use and disposal. during periodic renewals of product filings, and risk- mitigation actions are implemented when needed. Initiatives RESOURCES We use the information from our risk assessments to We carefully monitor scientific research establish or update our internal, compound-specific Public Policy Global Environmental Quality Criteria (EQCs), which are used Position Antimicrobial on the issue of pharmaceuticals in to confirm that wastewaters discharged from our Statement: Resistance the environment, including studies Pharmaceuticals in Action Plan facilities do not contain levels of residual products that the Environment that evaluate the potential effects present a risk to human health or the environment. (PIE) pharmaceutical products may have on the Our manufacturing facilities are required to use these aquatic environment and human health. EQCs, along with industry-accepted risk-assessment

Corporate Responsibility Report 2018/2019 197 ENVIRONMENTAL SUSTAINABILITY | Pharmaceuticals in the Environment

methods, to establish procedures for managing and Stakeholder engagement and The IFPMA is spearheading the battle against controlling active pharmaceutical ingredients (APIs) in antimicrobial resistance (AMR) for industry. Our their wastewater. advocacy company is helping to lead these industry efforts to minimize AMR risk from manufacturing while following We also provide EQC information to suppliers that We participate in efforts to address PIE with various a One Health approach to antimicrobial stewardship. As manufacture pharmaceutical compounds for us and organizations, including the European Federation of a member of the AMR Industry Alliance and signatory have initiated detailed assessments of our suppliers Pharmaceutical Industries and Associations (EFPIA) to the Industry Roadmap for Progress on Combating to better understand and address potential impacts. and the International Federation of Pharmaceutical Antimicrobial Resistance, we are working to deliver on Our production facilities have, or will be provided Manufacturers and Associations (IFPMA). The EFPIA, our commitments to reduce environmental impacts with, API-treatment technology to ensure that our Medicines for Europe, and the Association of the from the production of antibiotics. We have reviewed wastewater meets these EQCs. Our facilities are also European Self-Medication Industry (AESGP) have the operations of our third-party suppliers to assess required to incinerate any product-containing solid worked together to develop the Eco-Pharmaco- their wastewater treatment controls and have waste streams, unless restricted by local regulation. Stewardship (EPS) initiative. The EPS initiative considers the environmental impacts of a medicine recommended improvements where needed, which we We carefully monitor scientific research on the throughout its entire life cycle and addresses the will follow through to completion. issue of pharmaceuticals in the environment (PIE), roles and responsibilities of all parties in managing The AMR Industry Roadmap signatories have including studies that evaluate the potential effects those impacts. This includes public services, the established and published a common framework pharmaceutical products may have on the aquatic pharmaceutical industry, environmental experts, for managing antibiotic discharges which will be environment and human health. We support the use of doctors, pharmacists and patients. the foundation for future assessments. Targets for science-based environmental risk assessments, and we assessing environmental discharges from antibiotic will continue to collaborate with regulatory, academic, Our Public Policy Statement on Pharmaceuticals in the manufacturing have been developed using the most health care and research organizations to identify Environment contains additional details on this initiative current scientific understanding in the published additional needs for data on pharmaceuticals in the and covers how we address environmental risks in our literature. We are evaluating our sites against these environment. drug filings, within our manufacturing plants, and with our suppliers and patients. targets and identifying areas where improvement may be needed. We are also developing a mechanism for transparently demonstrating that our supply chains meet the standards in this framework.

Corporate Responsibility Report 2018/2019 198 ETHICS & VALUES | Overview

Ethics & Values Overview

Our company’s reputation, and the From sales and marketing practices, to engaging with Our Values and Standards, our Code of Conduct, trust that our stakeholders place in health care professionals and working with third-party represents the very core of our character as a company suppliers, we have established mechanisms to cultivate and guides our decisions and actions. These values and us, depends on how we conduct this trust. standards apply worldwide, wherever we do business. ourselves as a business. Our Values and Standards are fundamental to RESOURCES our success. Code of Conduct Business Partner 100% y Patients First Code of Conduct on Human Rights Campaign’s (HRC) We aspire to improve the health and wellness of people Corporate Equality Index and animals worldwide, and to expand access to our Operating with ethics, integrity and respect for human medicines and vaccines. All of our actions must be We devote considerable time and resources to making rights is critical to our success. measured against our responsibility to those who use or sure that: need our products. As a global health care leader, our work requires us y Our policies reflect our values and business goals y to cultivate strong relationships based on trust. This Respect for People means listening to and learning from our stakeholders y We have an effective corporate governance We work to create an environment of mutual respect, and communicating openly about the decisions we make structure inclusion and accountability. We reward commitment and the outcomes we achieve. y We are operating in a way that is open, honest and and performance and are responsive to the needs of our transparent employees and their families.

Corporate Responsibility Report 2018/2019 199 ETHICS & VALUES | Overview

y Ethics & Integrity In 2018, we achieved an 8 percent vaccines, biologics and animal health products to the We are responsible to our customers, to our increase of spend with diverse suppliers, world’s patients and customers. Our expectations of suppliers are described in our Business Partner Code competitors, to distributors and suppliers, to exceeding our corporate goal to achieve shareholders and to the communities we serve of Conduct, which is based on our Code of Conduct, worldwide. In discharging our responsibilities, we $1 billion in spend with minority-owned, as well as the Pharmaceutical Supply Chain Initiative’s do not take professional or ethical shortcuts. Our women-owned, veteran-owned, (PSCI) Pharmaceutical Industry Principles and the Ten interactions with all segments of society must be LGBT-owned and disability-owned Principles of the United Nations Global Compact. transparent and reflect these high standards. business enterprises. Information about our company, products and people y Innovation & Scientific Excellence is one of our most valuable assets. We are committed Our company strives to conduct business with to the ethical use, management and protection of Our research is guided by a commitment to improving individuals and organizations who share our information and operate our business in a manner that is health and the quality of life. We strive to identify commitment to high ethical standards and who consistent with global privacy practices and standards. and meet the health care needs of patients through operate in a responsible manner. continuous innovation. As we continue to build on our strong heritage of We source from suppliers globally and operate an innovation to create a sustainable positive return end-to-end supplier management process to ensure on investment, one thing that will not change is our a reliable and compliant supply of pharmaceuticals, commitment to unwavering ethics and integrity.

Corporate Responsibility Report 2018/2019 200 ETHICS & VALUES | Compliance

Compliance

DISCLOSURES IN THIS SECTION We have a well-established global ethics and compliance reporting structure supports open communications program that is consistent with the International with senior leadership regarding important GRI 102-17 Federation of Pharmaceutical Manufacturers & developments that relate to ethics and compliance. Associations (IFPMA) Code of Practice requirements, As part of our long-standing commitment as well as with other applicable regional or country to ethics and good corporate citizenship, industry codes of conduct, including those issued by Office of Ethics we adopt policies and procedures that the Pharmaceutical Research and Manufacturers of Our company’s Office of Ethics was established over America (PhRMA) and the European Federation of 20 years ago to protect and promote the company’s facilitate compliance with the laws and Pharmaceutical Industries and Associations (EFPIA). values and standards on a global basis by developing and regulations that govern the way we overseeing initiatives designed to deter illegal, unethical Our company’s Board of Directors and senior and improper behavior related to the company’s market and sell our medicines, vaccines management, including the chief ethics and compliance business. The Office of Ethics is responsible for ensuring and other products. officer and members of the Corporate Compliance that employees are aware of and trained on the Code of Committee, provide the foundational elements of RESOURCES Conduct and company policies. leadership, accountability and structure to oversee the Code of Conduct Ethical Operations company’s global ethics and compliance program. The Office of Ethics serves as a channel for the receipt Handbook and investigation of ethics and compliance-related The chief ethics and compliance officer reports directly concerns. Employees are encouraged to raise their to our company’s CEO and provides regular quarterly concerns to their management, Human Resources, Business Partner updates to the Audit Committee of the Board of Code of Conduct Compliance, Legal or the Office of Ethics. Throughout Directors on key indicators of ethical culture. This 2018 and 2019, the Office of Ethics enhanced its global

Corporate Responsibility Report 2018/2019 201 ETHICS & VALUES | Compliance

ethics program including the implementation of an We also maintain a policy that will give our company selected company employees to certify adherence to improved reporting tool operated by an independent the discretion to recoup incentive payments made to corporate policies on preventing bribery and corruption, third party, named Speak Up at msdethics.com. The employees in certain instances. This policy will apply antitrust-law compliance, and conflict-of-interest and global Speak Up Tool (formerly theadviceline.com) is when a senior leader engages in misconduct or fails insider trading. These employees are also expected to available 24/7 and allows employees to raise concerns or to reasonably supervise an employee who engages in regulate their outside activities to avoid any conflicts ask questions confidentially (where permitted by law) in misconduct that results in a material policy violation of interest, and to certify, in writing, whether actual or their preferred language via phone or internet. relating to the research, development, manufacturing, potential conflicts of interest exist. sales or marketing of company products where In alignment with our priority to protect and enhance Where potential conflicts are identified, the Office of the policy violation causes significant financial or our company’s reputation through safe, ethical and Ethics will work with management to take actions to reputational harm to the company. compliant behaviors, the Office of Ethics added three mitigate the potential conflict. In addition, all U.S.-based Regional Ethics Officers to its team and established a employees must certify compliance with our corporate network of site-based volunteer Ethics Ambassadors Annual ethics and policy policy on the effects of exclusions, debarments, outside of the United States. suspensions and health care-related criminal certification convictions, reporting and screening. An important component of our corporate ethics and Addressing misconduct compliance program is our annual ethics and policy It is our policy to maintain a work environment where certification. The annual review process requires all employees are expected to report ethical and compliance concerns that are potentially inconsistent with the company’s Code of Conduct and policies. Our company is committed to maintaining a process for Performance escalation and investigation of potential compliance- OFFICE OF ETHICS 2015 2016 2017 2018 related concerns. Employees trained on the Code of Conduct training series 99% 100% 100% 99% Retaliation against employees who report such concerns is a violation of corporate policy and will not Employees who responded to the disclosure statement on the 100% 100% 100% 100% be tolerated. The Office of Ethics and the Office of Conflicts of Interest form Global Investigations are responsible for oversight of Concerns brought to the company’s attention, such as employees 484 389 432 526 the global processes for managing investigations into seeking guidance and coaching (most often relating to manager or potential ethics and compliance concerns to ensure coworker relations) and guidance on conflict of interest or Code of consistent and timely resolution of potential concerns Conduct issues. and implementation of remediation actions. When we Allegations involving noncompliance with company policy 638 479 550 493 substantiate allegations of ethical misconduct, we take investigated appropriate disciplinary actions to ensure that those Ratio of substantiated allegations to concerns/issues raised 58% 55% 60% 52% who were responsible are held accountable. Employees separated related to substantiated corporate policy 156 123 132 122 Disciplinary actions can include dismissal from the violations1 company, issuance of final written warning letters or financial penalties. In addition, we take appropriate Employees who received written warnings as disciplinary actions 148 137 90 102 steps to address any needed improvements in resulting from a substantiated concern organizational and process controls. 1 This data represents investigations conducted on a companywide basis.

Corporate Responsibility Report 2018/2019 202 ETHICS & VALUES | Code of Conduct

Code of Conduct

DISCLOSURES IN THIS SECTION a company and helps us to protect the reputation the organization. All employees are required to we have earned. complete the assigned ethics and compliance courses. GRI 102-16 GRI 412-2 GRI 205-2 In addition to publishing a PDF version of our Code Training on our Code of Conduct is designed as an of Conduct, our company offers a Code of Conduct annual training series that is assigned to all employees Our Code of Conduct is considered to be intranet site (msdethics.com) that allows employees worldwide. The series is focused on our core values: the foundation of our company’s success. to search for a policy, ask a question or raise a concern. Patients First, Ethics & Integrity, Respect for People, These values and standards apply globally, Tools and resources are also available on the site to and Innovation & Scientific Excellence. help employees apply our values into practice with The 2018 series consisted of five modules including wherever our company does business. every decision and every action. Code of Conduct, Anti-Bribery and Anti-Corruption, RESOURCES Adverse Event Reporting, Data Privacy (including Code of Conduct Business Partner General Data Protection Regulation) and Preventing Code of Conduct Initiatives Discrimination and Harassment. Ethics and compliance content is also integrated Our Code of Conduct, Our Values and Standards, is Training and development into business and leadership development courses available in 23 languages and applies to all employees Ethics and compliance training is an important part of for managers and senior leaders on an ongoing basis. worldwide. Our Values and Standards continues to lead creating a strong culture, and our program is reflective Ethics and integrity are key leadership competencies us on the principled path to be a company worthy of of the Code of Conduct and corporate policies tailored to that are assessed as part of annual performance reviews trust. It represents the very core of our character as meet the needs of different groups of employees within and play an integral role in our decisions about employee advancement within the company.

Corporate Responsibility Report 2018/2019 203 ETHICS & VALUES | Code of Conduct

External suppliers’ ethical Performance standards CODE OF CONDUCT 2014 2015 2016 2017 2018 We abide by strict ethical standards in our own 99% 99% 100% 100% operations, and we insist on equivalent standards from Employees trained on the Code of Conduct training series 99% our suppliers. Our Business Partner Code of Conduct is based on our own Code of Conduct, as well as on the Pharmaceutical Supply Chain Initiative’s (PCSI’s) Pharmaceutical Industry Principles and the Ten Principles of the UN Global Compact. Learn more about how we work with our suppliers to uphold ethical standards.

Corporate Responsibility Report 2018/2019 204 ETHICS & VALUES | Human Rights

Human Rights

company’s corporate policies, including our Global DISCLOSURES IN THIS SECTION Our company believes in the dignity of every human being and recognizes the international human rights Human Resources Policy, Labor & Human Rights Policy, GRI 102-12 SDG 5 SDG 16 Environmental, Health & Safety Policy and Information GRI 407-1 SDG 8 principles embodied in the United Nations Global GRI 409-1 SDG 10 Compact and as defined in the United Nations Universal Management & Protection Policy, as well as our Declaration of Human Rights and its subsequent Procurement & Supplier Relations Policy. Respect for human rights is a changes, the International Covenant on Economic, fundamental part of our mission to Social and Cultural Rights, the International Covenant Respecting human rights in on Civil and Political Rights, the Organization for discover, develop and provide innovative Economic Cooperation and Development Guidelines for our own operations products and services that save and Multinational Enterprises and the core labor standards Within our own operations, we work to meet our set out by the International Labor Organization. improve lives around the world. responsibility to respect human rights by:

RESOURCES y Not using forced, bonded or indentured labor Code of Conduct Public Policy Initiatives y Not using child labor Position y Not engaging in any form of human trafficking Statement: We take our responsibility to respect human rights (modern slavery) Human Rights seriously. We strive to detect and prevent labor and human rights abuses in our own operations and in y Not allowing employees to engage in commercial sex Business Partner our supply chain. For this reason, respect for human acts while on company travel Code of Conduct rights is embedded in our company’s own Code of y Not using misleading or fraudulent recruitment Conduct, Our Values & Standards, and many of our practices or charging recruiting fees

Corporate Responsibility Report 2018/2019 205 ETHICS & VALUES | Human Rights

y Not withholding employee’s identity or immigration Respecting human rights in our Contracts documents (e.g., passports, etc.) Seeking commitment from suppliers to respect and y Not tolerating any form of discrimination supply chain abide by the principles set forth in our company’s or harassment We expect appropriate standards of conduct and respect Business Partner Code of Conduct through our y Not tolerating any actions that have the potential to for human rights, consistent with our own, from our contracts and agreements. Our standard contract threaten safety suppliers, contractors, vendors and external partners. We templates contain an ethical business practice are committed to doing business with those that share compliance clause. And by… our commitment to human rights and to the principles Auditing y Providing a safe and secure workplace, free from outlined in our Business Partner Code of Conduct. Performing Labor & Human Rights (LHR) Audits and harsh and inhumane treatment In 2018, we performed over 90 labor and Environmental Health & Safety (EHS) Audits at selected y Prohibiting behaviors that are sexual, coercive, supplier facilities to verify their compliance with our threatening, abusive or exploitative human rights audits. company’s expectations, and by working with them y Recognizing, as far as legally possible, the rights of Our practices are informed and guided by the to address identified compliance gaps in a responsible employees to associate freely including the right to Pharmaceutical Supply Chain Initiative’s (PSCI) manner. In 2018, we performed over 90 LHR Audits. form, join labor unions or refrain from doing so Pharmaceutical Industry Principles for Responsible Managing and monitoring y Enabling open communication with management Supply Chain Management which set the standard for Managing and monitoring suppliers to ensure that they regarding working conditions ethics, labor, health, safety and the environment for our continue to meet our company’s expectations. We industry. Within our supply chain, we work to meet our y Compensating employees competitively relative to hold them accountable for meeting their contractual responsibility to respect human rights by: others in our industry obligations and take appropriate action to address y Complying with applicable wage, work hours, Selection those that do not. Termination clauses are included overtime and benefits laws Selecting suppliers that are socially responsible and in contracts. y Valuing diversity and striving to provide equal who share our company’s commitment to ethics and Governance opportunity for all employees integrity. We strive obtain the goods and services we Using our Third-Party Risk Committee to oversee need to further our mission in a way that is lawful, y Respecting individual privacy rights and protecting the management of risks presented by suppliers. The efficient and fair. personal information Committee is chaired by our senior vice president In addition, we foster an environment where employees Expectations for Procurement and is composed of management feel safe to speak up. Setting and communicating our expectations of representatives from multiple functions, including suppliers. We use our Business Partner Code of Conduct Human Resources, Health & Safety, Corporate If an employee sees or suspects improper, unethical to communicate our expectations for Human Rights, Responsibility, Procurement and Compliance. or illegal activity, they are encouraged to talk to their Labor & Employment, Health, Safety & Environment manager, another company resource (e.g., Compliance, Responsible sourcing and Ethical Business Practices. We make it available in Legal or Human Resources) or, where permitted by law, Implementing procedures to ensure responsible 26 languages. “Speak Up at msdethics.com” to address their questions sourcing of minerals. As stated in our Conflict Minerals or concerns confidentially without fear of retaliation. Due diligence Policy, we endeavor to avoid the purchase of minerals Conducting appropriate due diligence and determining (e.g., tin, tantalum, tungsten and gold) that directly the risks—including those related to human rights, prior or indirectly finance or benefit armed groups or to entering a business relationship with a supplier— perpetrators of serious human rights abuses. to determine that they can meet all our company’s Learn more about how we work with external suppliers. expectations.

Corporate Responsibility Report 2018/2019 206 ETHICS & VALUES | Sales & Marketing Practices

Sales & Marketing Practices

DISCLOSURES IN THIS SECTION We adhere to strict ethical sales and marketing Our high ethical sales and marketing standards require practices in all our businesses, whether that scientific information is the predominant factor GRI 417-2 GRI 417-3 pharmaceuticals, vaccines or animal health. in prescribing decisions, reinforcing our reputation for providing high-quality products and for contributing to One of the ways we provide product information is improvements in public health. We know that health care providers and by maintaining informative and ethical professional patients look to us to provide accurate relationships with health care providers. Our professional sales representatives and other employees inform our customers about our medicines and balanced information about our Our interactions with providers, other customers and and vaccines and their appropriate use. To respond consumers are governed by laws and regulations, and products and services. to increasing requests for on-demand information, by our long-standing global Code of Conduct, Our Values in certain countries we offer resources and product RESOURCES & Standards. We enforce these external and internal information to health care providers on company standards through our ethics and compliance program. Public Policy Sales and websites and other digital platforms. Position Marketing We recognize that both our reputation for integrity Statement: Direct- Compliance In some countries, where permitted by law, we may and the trust that our stakeholders place in us are to-Consumer directly inform patients and other consumers about Advertising in dependent on our ethical practices. Consequently, we diseases and available treatments that they may wish the U.S. want to make certain that the ways in which we market to discuss with their doctors. We believe direct-to- and sell our products to our customers—health care PhRMA Code Ethical Operating consumer advertising contributes to greater awareness professionals, health insurers and governments— on Interactions Standards about conditions and diseases, which can benefit include accurate, balanced and useful information with Healthcare Handbook public health by increasing the number of patients Professionals so that prescribers can make the best decisions for appropriately diagnosed and treated. their patients.

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We also recognize the importance of collaborating y We provide current, accurate and balanced Research and Manufacturers of America (PhRMA) with health care providers and other customers information about our products; we share sound Code and the Compliance Program Guidance for and stakeholders to develop innovative services scientific and educational information; and we support Pharmaceutical Manufacturers, published by the Office and solutions to improve the treatment and care medical research and education. of the Inspector General, U.S. Department of Health of patients. We are committed to working with a y Our employees are prohibited from offering health and Human Services. wide range of stakeholders to help achieve our vision care professionals items of personal benefit, such as In addition, we have several additional mechanisms to make a difference in the lives of people globally tickets to sporting events, support for office social in place to minimize noncompliance and foster ethical through our innovative medicines, vaccines and animal events or gift certificates for stores or golf outings. promotional practices. health products. Where permitted, we may occasionally provide health care professionals with approved educational items Hiring people with the right values, and then Fostering ethical practices that are not of substantial monetary value and that reinforcing those values: We look for people who are intended primarily for educational purposes. Such believe in a value system similar to ours. In our interview We believe that our marketing, sales and advertising materials may include medical textbooks, medical process, we try to ascertain how candidates make activities make an important contribution to medicine journals and anatomical models. decisions. We are interested in people who will want to by informing our customers of treatment options based commercialize our medicines and vaccines based on the y Our employees and others speaking on behalf of the on the most recent scientific information and findings merits of our products and the applicable science. company may give presentations specifically designed from rigorous clinical studies. to provide the type of information that practicing Maintaining strict control over promotional materials: Our sales and marketing practices are governed by health care professionals have indicated is needed Every promotional claim we make throughout the external laws and regulations and industry codes of and most useful in the treatment of their patients, in world has to be approved through a rigorous approval conduct, and by our own global Code of Conduct, our accordance with U.S. Food and Drug Administration process to ensure compliance with legal requirements corporate policies and procedures, and our ethics and (FDA) regulations and the regulations of other and ethical considerations. In the U.S., we also submit compliance program. countries in which the presentations or discussions new promotional materials to the FDA for new-product are taking place. approvals and new indications prior to use. Our ethics and compliance program seeks to address y and prevent inappropriate practices, and we evaluate A company representative may offer occasional Ensuring strong medical, legal and compliance our policies and practices as appropriate. Our practices modest meals to health care professionals in oversight: Our medical, legal and compliance teams are monitored, and compliance is enforced to ensure connection with an informational presentation; are active partners who foster ethical promotional that our interactions with customers and consumers however, such meals must be in accordance with local practices, helping to achieve business goals by help inform their decisions accurately and in a balanced codes and regulations. reducing risk and increasing compliance with the laws manner. We believe that compliance with all policies Our sales representatives must provide truthful, and guidelines in a highly regulated environment. governing scientific, business and promotion-related non-misleading information in their interactions Our medical, legal and compliance teams are also activities, in letter and spirit, is a corporate and with the medical and scientific community. Our involved in ensuring that the sales force provides individual responsibility of the highest order. Through compliance program is consistent with applicable laws balanced information to physicians and health care our ethical behavior, we strive to ensure that scientific and regulations, and is aligned with the International decision makers. information predominates in prescribing decisions. Federation of Pharmaceutical Manufacturers & Implementing a promotional approach that reflects Our Guiding Principles for Ethical Business Practices Associations (IFPMA) Code of Pharmaceutical customer input: Our sales and marketing teams actively Involving the Medical and Scientific Community include Marketing Practices, as well as with regional and seek input from health care professionals, consumers the following: country industry codes, such as the Pharmaceutical and payers to understand their needs regarding our

Corporate Responsibility Report 2018/2019 208 ETHICS & VALUES | Sales & Marketing Practices

common goal of improving patient outcomes. We Worldwide Review Guidelines complete general sales and product training. Training incorporate their feedback into training efforts and is specific to the country where an employee is based promotional activities in order to build trustworthy The review and approval of global promotional and and covers the scope of the employee’s responsibilities partnerships with our customers and to achieve our educational materials for health care practitioners follow in ensuring compliance with applicable laws and common goal. a comprehensive and strict process. regulations.

Enforcing a performance management system that In the U.S. this is done through the Promotions Review Sales representatives are trained on anti-bribery rewards ethical behavior: Our companywide annual Team process. Outside of the U.S., our employees follow and anticorruption laws such as the U.S. Foreign performance management system considers not only the principles of the Worldwide Review Guidelines Corrupt Practices Act and the U.K. Bribery Act. what an employee has achieved, but also how he or she (WWRG) to define the concept of fairness and Sales representatives in the U.S. are also required to has done so. balance in the communication of scientific/educational understand, among other things, their responsibilities information. under the Anti-Kickback Statute, the U.S. Prescription Working to raise marketing standards industrywide: Drug Marketing Act, and all applicable FDA promotional We are active on numerous industry association All such materials are reviewed and approved by medical regulations. committees that address marketing standards. personnel, captured in a global database, and assigned a unique identifying number and expiration date. All After this initial training, we require periodic training Conducting continuous oversight, monitoring and regional and country medical personnel involved in the aimed at recertifying employees on relevant policies risk assessment: We conduct ongoing oversight and review and approval of promotional/educational material and practices in accordance with local and functional monitoring of our key risk areas and of any activities receive comprehensive training on corporate policies, requirements. that have been identified through our annual risk the WWRG, the medical-reviewer role, and the required assessment process. database functionalities. In addition to mandatory training on our Code of Conduct, employees receive training on other levels of business practice and compliance, according to their Privacy practices Training roles and responsibilities. We evaluate and update the With the evolution of external data available to support As a condition of employment, all of our sales and content for all marketing and sales training periodically our sales and marketing efforts, it is important to marketing employees are required to be certified to ensure that it remains relevant and current. note that the company has a comprehensive global periodically on sales and marketing practices. privacy program that manages our evolving risks and responsibilities pertaining to data, including data that In the U.S., for example, employees who do not Industry codes of conduct we use to direct our commercial and marketing efforts. satisfactorily meet these training requirements may not The pharmaceutical industry as a whole recognized conduct specific activities on their own and must repeat that more needed to be done to address concerns The company is subject to a significant number of the training until they meet the requirements. raised by public officials and stakeholders in the health privacy and data protection laws and regulations care community. Self-regulating industry codes of globally, many of which place restrictions on our ability All new employees receive training and testing and conduct such as the IFPMA, the European Federation to collect, transfer, access and use personal data across must be certified on relevant policies and our company’s of Pharmaceutical Industries and Associations (EFPIA) the business. For more information on our privacy ethical operating standards. And although many of and PhRMA codes set the standards that govern the practices, please see the Privacy and Information our employees who market and sell our medicines and industry’s sales and marketing practices and ensure that Security section of this report. vaccines have advanced scientific or medical degrees and backgrounds, all of our sales representatives must companies have adequate policies and procedures in place to comply with the codes.

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Among PhRMA’s Code on the Interactions with Healthcare Professionals (the Code) key components Performance is an annual requirement for company CEOs and chief compliance officers to certify personally that they have SALES & MARKETING 2014 2015 2016 2017 2018 processes in place that foster compliance with the Number of warning letters or untitled letters from OPDP1 or 0 0 0 0 0 Code. The Code also encourages companies to obtain APLB2 in the U.S. third-party verification of their compliance policies and 1 OPDP: Since September 2011, the Division of Drug Marketing, Advertising and Communication (DDMAC) is now the Office of Prescription procedures. We complete PhRMA Code certification Drug Promotion (OPDP). every year in compliance with the Code. 2 APLB: Advertising and Promotional Labeling Branch (APLB) of the FDA Center for Biologics Evaluation and Research. Other requirements of the Code have previously been incorporated into our already strong ethical business practices. For example, our company follows the standards for commercial support of continuing medical education established by the Accreditation Council for Continuing Medical Education, and our ethics and compliance program requires that company representatives be periodically assessed to make sure they comply with relevant company policies and standards of conduct. We stress that if our employees are unsure about the appropriateness of the conduct that they ask for help. There are several places employees can turn for assistance. The first option is to talk their manager. If they do not feel comfortable with that course of action, the other resources they may contact are: y Divisional Compliance Departments y Office of Ethics y Privacy Office y Office of General Counsel y Human Resources Department y MSDethics.com

Corporate Responsibility Report 2018/2019 210 ETHICS & VALUES | Engaging with Health Care Professionals

Engaging with Health Care Professionals

The guiding principles serve as a bridge between Our interactions and informational materials must DISCLOSURES IN THIS SECTION countries’ laws and regulations, industry guidelines, provide truthful, balanced and non-misleading GRI 205-2 and our own Code of Conduct, enabling us to interact information to health care professionals. All of our with the medical and scientific communities, to meet interactions with health care professionals are highly Ethical relationships with health care our ethical and legal obligations and to contribute to regulated by governments through laws such as the U.S. professionals are critical to our shared improvements in human health. Anti-Kickback Statute; the U.S. Food, Drug & Cosmetic Act; the U.S. Foreign Corrupt Practices Act; and anti- We provide promotional information in several mission and vision to save and improve bribery laws in other countries. lives around the world. ways, including: Our company’s robust anti-bribery/anticorruption y Product discussions between our professional An important part of achieving our mission is ensuring program and corporate prevention of bribery and representatives and health care professionals that health care professionals have balanced and corruption policy give our employees the awareness accurate information about our products. All of y Promotional and/or educational meetings sponsored and knowledge to comply with applicable laws and our sales and marketing activities are conducted in and organized by our company regulations, and to understand that the company will accordance with our Guiding Principles for Ethical We also provide non-promotional information through not tolerate any act of impropriety. Our activities must Business Practices Involving the Medical and Scientific educational and scientific activities, including: comply with company policies as well as applicable laws, Community. These principles are aligned with national including the laws of the U.S. and other countries in regulations and worldwide industry codes, including y Scientific presentations at medical conferences which we do business. the International Federation of Pharmaceutical y Support of independent continuing medical education Manufacturers & Associations Code of Practice and Our program prohibits the offer, promise or giving of any y Articles and related scientific studies published in the World Health Organization’s Ethical Criteria for payment or benefit at any time to an individual or entity peer-reviewed scientific journals Medicinal Drug Promotion. for the purpose of improperly influencing decisions or

Corporate Responsibility Report 2018/2019 211 ETHICS & VALUES | Engaging with Health Care Professionals

actions with respect to our business. This policy applies U.S. Medical Forums distribution and use of samples to safeguard against to direct engagements (e.g., those conducted by our the potential for misuse or abuse of our products, or company) as well as to indirect engagements (e.g., those We deliver balanced medical and scientific information the diversion of our products to inappropriate channels. managed through a third-party intermediary or partner). to health care professionals within the U.S. through our company’s Medical Forums, which are conducted In accordance with the law and with ethical practices, We conduct anticorruption/anti-bribery training by external speakers. Speakers are selected on the we do not provide product samples to reduce or across the company. Supplemental training is also basis of their expertise in the relevant subject matter. discount the price paid or reimbursed, or in exchange for provided for employees who engage with non-U.S. By attending one of our Medical Forums, health care prescribing, purchasing or contracting for our products government officials. professionals participate in interactive learning on or for recommending our products for formulary status. therapeutic and health care industry topics. The goal of these interactions is to help attendees achieve improved Unapproved or “off-label” use of Initiatives medical results for their patients. our medicines and vaccines With our strict standards for conducting these Continuing Medical Education Medical Forums, we comply with the PhRMA Code on In accordance with laws, regulations, internal policies (CME) and Continuing Education Interactions with Health Care Professionals as well and ethical practices, our professional representatives as with U.S. Food and Drug Administration (FDA) and other members of our sales and marketing team (CE) programs regulations, which assure that any product presentation are not permitted to promote product uses that are inconsistent with the approved product label, Our CME/CE Grant Program supports independent is appropriately balanced with information regarding sometimes referred to as “off-label” promotion. We educational programs whose purpose is to maintain, both the product’s potential benefits and its risks, and is have policies and training in place to address violations, develop or enhance the knowledge, skills and/or consistent with approved product labeling. and we ensure that physicians are aware that we do not professional performance that health care professionals y Payments made to U.S. medical and scientific encourage off-label use. rely on to provide services for patients, the public or professionals who speak on behalf of the company the profession. We are committed to ensuring that our CME/CE programs are educational and not promotional. Through them, we seek to increase physicians’ Obtaining services from external knowledge about the latest scientific data and health health care professionals care topics, thereby improving patient care. We engage the services of external health care The environment in which we sponsor or support professionals only when we do not have the specialized educational programs worldwide is complex, governed talent or expertise internally, or when an external by a multitude of laws, regulations and medical or viewpoint is critical. We ensure that compensation industry association guidelines. We are committed to provided to external health care professionals is fair honoring them all in the countries in which we operate. and reasonable and is aligned with the fair market value of the service in the home country of the health care CME programs that we support or sponsor are governed professional providing the service. by an internal policy that is aligned with the appropriate standards and regulations to which the programs are held including, among other things, independence and Prescription product samples financial disclosure. Where sampling is permitted, our company has y Grants of more than $500 made to U.S. organizations established country-specific guidance and policies on in support of independent, accredited educational providing prescription product samples to health care programs for health care professionals professionals. This guidance specifies the appropriate

Corporate Responsibility Report 2018/2019 212 ETHICS & VALUES | Direct-to-Consumer Advertising

Direct-to-Consumer Advertising

We believe that direct-to-consumer identification and potential treatment. To remain true a physician, a representative from the Office of (DTC) advertising can be an important to this goal, we adhere to the letter and spirit of U.S. Promotion and Advertising Review, and a product Food and Drug Administration (FDA) regulations and scientific specialist) who ensure that promotional and helpful way to inform patients about guidelines governing DTC promotion, meet or exceed all material is clinically and scientifically accurate, diseases that may be relevant to them Pharmaceutical Research and Manufacturers of America compliant with applicable laws and regulations, and and about therapeutic options they may (PhRMA) guidelines on DTC advertising, and follow a compliant with company policy comprehensive set of internal policies and practices want to discuss with their physicians. In addition, we include information on our Patient when engaging in DTC advertising within the U.S. Assistance Program in all new U.S.-based DTC print and RESOURCES Our company has a long-standing policy of voluntarily television advertisements for eligible products. submitting new U.S.-based DTC advertising campaigns Public Policy Position Statement: We inform and educate health care professionals about to the FDA for its review and comment before running Direct-to-Consumer Advertising our products before we advertise them to consumers. them. Under our DTC policies and practices, the in the U.S. We implement comprehensive programs to educate information provided in our DTC advertising must: physicians and other prescribers about a new product We recognize that broadcast advertising is one y Contain appropriate product benefit and risk for an appropriate period of time before starting channel among many to help educate patients. Print information product-specific DTC broadcast advertising in the U.S. materials, telephone, websites, digital platforms and other channels are also used to provide information y Be appropriately balanced, consistent with FDA These principles and our practices are reflected in the to patients. regulations, and use appropriate “taste and tone” PhRMA Guiding Principles on Direct-to-Consumer y Be approved by our company’s Promotion Review Advertisements about Prescription Medicines. We try to help consumers achieve better health Team, a governing body consisting of a team of outcomes by delivering accurate, relevant and reviewers (including the job owner, an attorney, understandable information on disease prevention,

Corporate Responsibility Report 2018/2019 213 ETHICS & VALUES | Sourcing & Supplier Relations

Sourcing & Supplier Relations

DISCLOSURES IN THIS SECTION RESOURCES Our business goal is to achieve world-class supply in delivery, services and quality. We source from suppliers GRI 102-9 GRI 407-1 GRI 414-2 California Supplier GRI 205-2 GRI 409-1 SDG 8 Transparency in Performance globally, in the areas of capital equipment and services, GRI 308-1 GRI 414-1 SDG 12 Supply Chains Act Expectations direct materials and services, energy, professional services, site and commercial services, IT, marketing and research supplies and services. We operate an end-to-end supplier Conflict Minerals MSD Modern management process to ensure reliable Policy Slavery Act The Global Sourcing & Procurement and Supplier Transparency Management function is responsible for maintaining the and compliant supply of pharmaceuticals, Statement standards by which suppliers are identified, qualified vaccines, biologics and animal health Business Partner and managed. Supplier selection and management Code of Conduct products to the world’s patients follow a robust sourcing management process, in which and customers. economic inclusion and supplier diversity principles Our company manufactures, packages and distributes are integrated throughout each stage. Throughout products to more than 140 markets around the world. the supplier life cycle, our company establishes Our facilities, along with our external contractors, expectations, assesses risk, supports supplier suppliers and partners, make up an integrated, development and manages performance. interdependent global manufacturing network that is committed to delivering compliant, reliable supply to customers and patients on time, all the time, and every time.

Corporate Responsibility Report 2018/2019 214 ETHICS & VALUES | Sourcing & Supplier Relations

Our Business Partner Code of Conduct, along with our We have a defined risk-management process, and our Initiatives company’s Supplier Performance Expectations, are supply base is measured against the process criteria. communicated to existing and potential third-party Using a risk-based approach, supplier assessments and Supplier and third-party risk suppliers and are included in requests for information, audits are conducted based on multiple factors (e.g., risk proposals and quotes as well as in our purchase- profile, engagement and activity type and geography). management order terms and conditions. We select suppliers that The assessments and audits evaluate a supplier’s Supplier and third-party risk management is an share our commitment to our values and principles, ability to meet both industry and our own standards enterprise-wide effort supported by Global Sourcing as defined in our Business Partner Code of Conduct for quality, safety and ethical business practices. & Procurement, Supplier Management, the Office of and Supplier Expectations Letter. In addition, we Results are reviewed with senior management across General Counsel, Ethics & Compliance, Global Quality, participate in the Pharmaceutical Supply Chain the company. Corporate Audit and Assurance, and Environmental Initiative’s Pharmaceutical Industry Principles and are Our supplier assessments include: Health & Safety. Representatives from each function a signatory to the 10 Principles of the United Nations meet regularly to discuss, assess and manage issues Global Compact. y Labor and human rights on a risk-driven basis. y Anti-bribery and anti-corruption y Privacy and data protection y Environmental, health and safety issues GOAL(S) PROGRESS INDICATOR y Quality By 2018, we will collect GHG emissions and water GHG and water data collected use data from at least 90% of our strategic from 93% of high-impact y Responsible sourcing of minerals suppliers with the highest environmental impact. strategic suppliers ··· y Animal welfare y Information technology By 2020, we will engage with those suppliers and On track y Intellectual property request them to identify GHG emission and water y Financial solvency use reduction opportunities. ··· Where assessments and audits identify deficiencies or opportunities for improvement, we monitor By 2025, at least 90% of our strategic suppliers On track with the highest environmental impacts will set suppliers to ensure that our concerns are addressed their own GHG emission and water use reduction ··· in a responsible and compliant manner. As part of targets. our oversight and monitoring, we have established mechanisms to report, track and monitor supplier plans to address nonconformance and help drive continued improvement. We believe in developing We conduct business with We seek to have a positive We expect companies in our mutually beneficial integrity; we comply with all impact on the lives of our business partner network to relationships with our applicable laws, rules and employees, their families and do the same. Protecting the privacy of personal business partners, founded regulations of the countries the communities in which we on trust and respect. in which we operate. operate along with our information suppliers in support of our Some of our suppliers and service providers, such as customers. contract research organizations, market research agencies, information technology systems developers

Corporate Responsibility Report 2018/2019 215 ETHICS & VALUES | Sourcing & Supplier Relations

and other service providers, process personal Each supplier’s responses are used to judge whether Global Technical Operations and Global Sourcing & information in connection with their performance of or not that supplier has programs and/or procedures Procurement representatives. services for our company. We require these suppliers in place to address potential risks for labor and human The external manufacturers we contract with are and service providers to provide appropriate privacy rights related deficiencies. periodically reassessed using a risk-based approach; protection for personal information that they handle Since implementing the Labor and Human Rights higher-risk external manufacturers are subject to in accordance with our privacy policies and applicable program in 2015, we have conducted over 200 onsite more frequent onsite assessments. We expect that privacy laws, regulations and guidelines. audits in countries identified as high risk for potential observations made during the audit process will human rights violations. No critical observations have be remediated by our external manufacturers, and Protecting against cyberattacks been found. We track audit-related corrective and we monitor and track corrective actions through and assuring business continuity preventative actions to completion. completion. Additionally, we maintain a “Speak Up” tool (msdethics. We continue to support the Pharmaceutical Industry In 2018, recognizing that cybersecurity events at com) for any employee, supplier or business partner to Principles for Responsible Supply Chain Management third parties pose an increased risk to our business report concerns, including those related to labor and (the Principles). The Principles outline industry continuity, our company enhanced our risk assessment human rights issues. expectations for external manufacturers and licensees and best practices. We held collaborative workshops with regard to labor, health, safety, environment, ethics to determine risks and remediation actions that foster and management systems. The external manufacturers mutually beneficial partnerships with our top suppliers. Managing external manufacturers with which we contract are expected to understand and We will continue to build the cybersecurity program align with the Principles. establishing a Center of Excellence for governance and of our products guidance in 2019. The company maintains strict quality standards— no matter where in the world our products are Global economic inclusion and manufactured. Once we have decided to engage with an Supplier assessment for labor external manufacturer, that manufacturer is required supplier diversity practices and human rights to comply with our business requirements, which are Global Economic Inclusion & Supplier Diversity (EI&SD) set forth in our contract with that supplier, regardless is integrated with our overall Global Diversity & Inclusion We have a formal program to evaluate the risks for of geography. (GD&I) strategy and supports our corporate vision. The labor and human rights in our supply chain. Prior EI&SD Center of Excellence is a member of the GD&I to contracting, all new direct suppliers (as well as Prospective external manufacturers of active Business Consortium, where EI&SD is one of four target certain new indirect and research suppliers in certain pharmaceutical ingredients and finished products areas focusing on increasing business performance geographies) are required to complete and return are screened for environmental, health and safety through diversity and inclusion, creating a competitive a Supplier Self-Assessment Questionnaire (SAQ) (EHS) compliance, in addition to quality and supply and business advantage, attracting and retaining top talent for Ethics & Compliance. Pre-existing external technical competence requirements. The EHS screening and driving shareholder value. manufacturing suppliers and contract manufacturing includes a survey covering such topics as regulatory organizations also complete SAQs. compliance, fatalities and major incidents. We have broadened the scope of our company’s EI&SD process over the past few years from a national Our SAQ requires suppliers to answer a series of Based on the screening results and activities undertaken focus to a global one. Responsibility for EI&SD has labor and human rights questions covering a range of by the supplier, certain external manufacturers are expanded vertically and horizontally through all levels subjects, including freely chosen employment, child subject to a more detailed onsite assessment conducted of the organization. EI&SD is managed under the labor, employment practices, employee disclosures, fair by a multidisciplinary team, which may include our Global Supplier Management Group. As a result of treatment, wages, benefits and working hours. company’s Quality, Environmental, Health & Safety, commitment at the senior and executive levels of

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management, overall visibility and accountability have allows us to share and access best practices in supply Building Bridges improved. The program’s importance and value have chain diversity excellence with other organizations that increased significantly as a result. have also achieved this status. In June 2018, to emphasize the importance of diversity & inclusion, MSD Germany—led by Procurement— Our company’s Supplier Diversity Leadership Council Our company’s spend goal with diverse suppliers for organized an event entitled “Building Bridges.” The convenes once a month to share information, 2019 is $2.0 billion. Our commitment to growing our event, with attendance from nearly 260 guests from 33 identify opportunities, develop solutions and plan small-business suppliers continues as we increase our different nations, brought together business members, appropriate actions. small-business spend year over year. suppliers and community leaders to deliver the strong In 2018, we achieved an 8 percent increase of spend Our goals go beyond the amount of dollars we spend message that diversity makes us stronger. VIDEO with diverse suppliers, exceeding our corporate goal with small and diversity-owned businesses, as we focus to achieve $1 billion in spend with minority-owned, on the growth and development of our suppliers to drive women-owned, veteran-owned, LGBT-owned and economic impact and value delivery to our company. We disability-owned business enterprises. are committed to support the businesses that are the economic engine of growth around the world by making This accomplishment and our sustained efforts a difference in global economic inclusion. will enable us to continue our membership in the Billion Dollar Roundtable (BDR), an exclusive From a global perspective, we exceeded our regional industry organization that recognizes and celebrates EI&SD goals in 2018 by 28 percent. Our global initiatives corporations that achieve spending of at least $1 continue to grow and mature, as we target a combined billion with minority- and women-owned suppliers regional spend of $400 million for 2019. headquartered in the U.S. Our membership in the BDR

Performance

EXTERNAL MANUFACTURING EHS ASSESSMENTS 2014 2015 2016 2017 2018

Prospective external manufacturers 48 50 34 37 65

Current external manufacturers 68 69 85 53 61

Total 116 119 119 90 126

SUPPLIER DIVERSITY 2014 2015 2016 2017 2018

Diverse-supplier spend (in millions) $805 $953 $1,500 $1,962 $2,111

Small-business spend (in millions) $529 $568 $753 $1,218 $1,341

Corporate Responsibility Report 2018/2019 217 ETHICS & VALUES | Information Security & Privacy

Information Security & Privacy

DISCLOSURES IN THIS SECTION information throughout its life cycle to ensure integrity This achievement demonstrates that organizations can of information and to prevent unauthorized access rely on common internal standards and processes to GRI 205-2 and disclosure. We have developed and continue to govern international data transfers across both the EU improve upon a comprehensive, global, state of the and APEC regions to simplify their ability to address the In all that we do, we strive to be good art information security and cyber resiliency program growing regulatory challenges in this area. to enable our company to fulfill its mission: inventing data stewards to balance our data needs We also self-certify to the EU-U.S. and Swiss-U.S. for life. with our responsibilities to the people and Privacy Shield Frameworks. These frameworks were communities we serve. designed by the U.S. Department of Commerce Global privacy program together with the European Commission and with RESOURCES the Swiss Administration, respectively, following Over the past 18 years, we have developed and the invalidation of the EU-U.S. and Swiss-U.S. Safe Business Partner Privacy Statement continually improved a comprehensive global privacy Code of Conduct Harbor programs. program that promotes organizational accountability for privacy, data governance and data protection In 2018, we updated our global privacy practices using Information about our company, products and people is across our business and with our collaborative partners the requirements stemming from the General Data one of our most valuable assets. We are committed to and suppliers. Protection Regulation (GDPR) in the EU. This was a comprehensive overhaul of our privacy program ethical use, management and protection of information. We were the first company in the world to obtain framework that included a closed loop accountability regulatory approval in the European Union (EU) for Our commitment applies not only to our company’s model starting with integrated governance, global Binding Corporate Rules (BCRs) based in part on our information, but also to the information entrusted deployment and operations and independent existing Asia Pacific Economic Cooperation (APEC) to us by others. Our tools, processes and procedures verification of program effectiveness. ensure that we appropriately use and safeguard Cross-Border Privacy Rules (CBPRs) certified program.

Corporate Responsibility Report 2018/2019 218 ETHICS & VALUES | Information Security & Privacy

OUR GLOBAL PRIVACY VALUES Cyber security Our company is increasingly dependent on sophisticated software applications and complex information RESPECT TRUST PREVENT HARM COMPLY technology systems and computing infrastructure (collectively, “IT systems”) to conduct critical operations. We recognize that We know that trust is We understand that We have learned that Disruption, degradation or manipulation of these IT privacy concerns vital to our success, misuse of laws and regulations systems through intentional or accidental means could often relate to the so we strive to build information about cannot always keep impact key business processes. essence of who we and preserve the people can create pace with the rapid Cyber attacks against our IT systems could result in are, how we view the trust of our both tangible and change in exposure of confidential information, the modification world and how we customers, intangible harm for technologies, data of critical data, and/or the failure of critical operations. define ourselves, so employees, patients individuals, so we flows, and associated Misuse of these IT systems could result in the disclosure we strive to respect and other seek to prevent shifts in privacy risks of sensitive personal information or the theft of trade the perspectives and stakeholders in how physical, financial, and expectations, so secrets, intellectual property, or other confidential business information. We continue to leverage new interests of we respect privacy reputational and we strive to comply and innovative technologies across the enterprise to individuals and and protect other types of privacy with both the spirit improve the efficacy and efficiency of its business communities and to information about harm to individuals. and the letter of processes, the use of which can create new risks. be fair and people. privacy and data In 2017, our company experienced a network cyber transparent in how protection laws and attack that led to a disruption of our worldwide we use and share regulations in a operations, including manufacturing, research and information about manner that drives sales operations. them. consistency and We have implemented a variety of measures to further operating efficiency enhance and modernize our systems to guard against for our global similar attacks in the future, and we are pursuing business operations. an enterprise-wide effort to enhance our resiliency against cyber attacks, including incidents similar to the 2017 attack. The objective of these efforts is not only to protect against future cyber attacks, but also to Our holistic approach to privacy has its origins in We also have established a set of privacy values to guide improve the speed of our recovery from such attacks biomedical research ethics and the protection of all of our privacy, data stewardship, and data protection and to enable continued business operations to the participants in the research studies that we sponsor decisions. These core tenets serve as the foundational greatest extent possible during any recovery period. and conduct. We have adapted human subject research ethical framework for our comprehensive global privacy ethics standards for risk-benefit analysis, transparency, program and our compliance with the continually Although the aggregate impact of cyber attacks and anonymization, coding and prior review to other evolving legal and regulatory standards for privacy and network disruptions, including the 2017 cyber attack, activities and processes involving data about people. data protection. on our company’s operations and financial condition

Corporate Responsibility Report 2018/2019 219 ETHICS & VALUES | Information Security & Privacy

has not been material to date, we continue to be a target of events of this nature and expect them to Performance continue. We monitor our data, information technology GLOBAL PRIVACY PROGRAM 2014 2015 2016 2017 2018 and personnel usage of our IT systems to reduce these risks and continue to do so on an ongoing basis for Number of countries in which we conduct privacy 137 137 137 137 137 any current or potential threats. However, there is no compliance verification and risk assessment assurance that our efforts to protect our data and IT Number of concerns regarding privacy practices, 151 143 227 123 315 systems will be successful in preventing disruptions to breaches of privacy and losses of personal data that our operations, including its manufacturing, research were substantiated1, 3, 4 and sales operations. Any such disruption could result Percentage of reported concerns regarding privacy 18% 96% 98% 98% 97% in loss of revenue, or the loss of critical or sensitive practices, breaches of privacy and losses of personal information from our company’s or our third-party data that were substantiated2 providers’ databases or IT systems and could also result 1 0 1 0 in financial, legal, business or reputational harm and Number of privacy breaches requiring notification 2 by Merck & Co., Inc., Kenilworth, N.J., U.S.A., to potentially substantial remediation costs. individuals or government authorities

Given the exponential rise in cybersecurity threats Number of privacy breaches requiring notification 1 3 0 1 1 and complexity of those threats, and the increasing by third parties working for Merck & Co., Inc., dependency on trusted partners to conduct our Kenilworth, N.J., U.S.A., to individuals or government company’s business, as a critical component of the authorities IT transformation, we have consolidated information 1 Privacy concerns include all concerns about our privacy practices escalated to our company’s Privacy Office. Substantiated concerns are those security and cyber resiliency activities across IT under that are determined to be consistent with our own privacy standards or that involve loss of, theft or unauthorized access to personal data. the leadership of the Chief Information Security 2 In 2015, because of the scope of lost or stolen devices known to be encrypted, we ceased inclusion of lost or stolen MSD devices in our incident metrics. Officer (CISO). 3 Reporting in 2017 was impacted by cyber-incident. 4 Increase in substantiated concerns in 2018 due to changes reporting practices stemming from new requirements in the EU (GDPR).

Corporate Responsibility Report 2018/2019 220 PHILANTHROPY | Overview

Philanthropy Overview

DISCLOSURES IN THIS SECTION access to health and to enhance the quality of life in Through our philanthropic programs, we also communities where we have a presence. demonstrate our commitment to advancing the UN SDG 3 Sustainable Development Goals (SDGs). In particular, SDG 17 The company’s Office of Corporate Responsibility this commitment focuses on SDG 3—ensuring provides cash and product donations, and also health and well-being for all—as well as SDG 17, which We strive to find sustainable solutions coordinates employee volunteerism and disaster-relief emphasizes strong global partnerships and cooperation. to key global health challenges and to assistance. Our company’s Foundation funds qualified, strengthen communities where our eligible nonprofit and philanthropic organizations. Our company and Foundation support an array of innovative programs and partnerships to help improve employees live and work. Total Philanthropy the health and well-being of people around the world. RESOURCES

Grant Application Grant Application Guiding principles Website Guidelines Sills-Based Several key principles guide our philanthropic Volunteering investments and program portfolio. $3.M Philanthropy at y Address critical global health needs where we can MSD Infographic Product $2.8B Cash Grants Donations Contributions have a meaningful impact $.B $4M y Collaborate with key partners to optimize our Philanthropy is an important component of our effectiveness company’s commitment to corporate responsibility y Leverage not only cash and product donations but and is a visible demonstration of our efforts to improve also expertise and capabilities across our company

Corporate Responsibility Report 2018/2019 221 PHILANTHROPY | Overview

Giving priorities and transparency requirements. Additionally, our Foundation’s Board of Trustees comprises selected company senior executives and meets biannually to provide oversight and strategic direction for the Foundation’s program Our giving priorities strengthen the effectiveness and investments. impact of our company’s philanthropy by focusing on areas of global health need in which we have substantial expertise and capability. We also focus on strengthening We manage our philanthropic programs in two ways: the communities in which we operate around the world. 1. The Office of Corporate Responsibility supports charitable programs through cash and product donations and Health employee volunteerism. It also coordinates the company’s disaster relief assistance throughout the world. We work to reduce health disparities and improve 2. Our company’s Foundation, funded entirely by the company, serves as the chief source of funding support to access to health for people in underserved communities, qualified, eligible nonprofit charitable and philanthropic organizations whose initiatives address important societal especially those living with Alzheimer’s disease, cancer, needs and whose goals are consistent with our giving priorities. diabetes, and HIV/AIDS—areas where there are specific We use an online grants management system that allows qualified, eligible nonprofit organizations seeking cash health challenges that have relevance to our company. contributions to submit proposals and supporting documents electronically. The system also facilitates the Through our program investments, we aim to support submission of all required compliance documentation and helps ensure consistent review of grant requests. evidence-based interventions that strengthen health systems to deliver high-quality care, foster innovation We report the company’s charitable contributions and the Foundation’s grants on this website and update the in the delivery of health care and empower patients to information quarterly. better manage their health by helping them overcome social and environmental barriers to care.

Community Performance

We help build stronger communities where our GRANTS & CONTRIBUTIONS 2014 2015 2016 2017 2018 employees live and work. We contribute financial support through grants to local nonprofit organizations Grants and contributions (total cash, in-kind and product) $1,543 $1,820 $2,238 $2,722 $2,793 that address critical health needs and selected social (in millions) issues in communities where we have a presence. We Cash grants and contributions (in millions) $111 $133 $117 $94 $84 also share the expertise of our employees through volunteer programs globally. Further, our company Product donations through U.S. Patient Assistance $433 $567 $798 $1,112 $1,242 supports disaster relief efforts and preparedness Program (in millions) assistance throughout the world. Product donations for ex-U.S. programs and U.S. disaster $997 $1,117 $1,320 $1,513 $1,464 relief (in millions)1 Philanthropic governance Valuation of employee volunteer time (in-kind, in millions)2 $2.2 $2.9 $2.6 $3.2 $3.1 Our philanthropy must reflect efficient, responsible and ethical judgment and behavior. Consequently, 1 Includes our Medical Outreach Program (including U.S. disaster relief), the African Comprehensive HIV/AIDS Partnerships (2014–2016 only), our charitable contributions are periodically audited the MECTIZAN® Donation Program, the GARDASIL® Access Program (2014 only), and MSD division and subsidiary donations. 2 to ensure consistency in our giving criteria and Includes valuation of volunteer time for only those employees who participated in the MSD Fellowship for Global Health program and our company’s Pro Bono Legal and other skills-based volunteer programs. grant-making, as well as adherence to compliance

Corporate Responsibility Report 2018/2019 222 PHILANTHROPY | Our Company’s Foundation

Our Company’s Foundation

DISCLOSURES IN THIS SECTION The Foundation is the principal vehicle through which we support eligible nonprofit organizations and innovative SDG 3 $921M SDG 17 programs that are aligned with our two focus areas: Health and Community. Foundation contributions since its inception Established in 1957, our company’s The following priorities guide the Foundation’s strategic partnerships and program investments: Foundation (the “Foundation”) is funded Since its inception, the Foundation has contributed entirely by the company and is our chief more than $921 million to support initiatives that source of funding support for qualified Health address important societal needs in a manner consistent with our company’s overall mission of inventing for life nonprofit charitable organizations. We envision a world where all people have access to by bringing forward medicines and vaccines for many of high-quality health care. We aim to reduce health RESOURCES the world’s most challenging diseases. disparities and improve the health of people in Grant Application Grant Application underserved communities, especially those living with Website Guidelines Alzheimer’s disease, cancer, diabetes and HIV/AIDS— areas where there are significant health challenges that Philanthropy at have relevance to our company. We support innovative MSD Infographic and evidence-based programs that help health systems deliver high-quality care and improve access by helping individuals overcome social and environmental barriers to health care.

Corporate Responsibility Report 2018/2019 223 PHILANTHROPY | Our Company’s Foundation

Key initiatives include: Community y Alliance to Advance Patient-Centered Cancer Care We help build stronger communities where our y Alzheimer’s Association, Massachusetts/New employees live and work. We contribute financial Hampshire Chapter—Dementia Care Coordination support through grants to local nonprofit organizations y American Cancer Society—Care Coordination that address critical health needs and selected social Navigation Program issues in communities where we have a presence. We also share the expertise of our employees through y American Cancer Society—Global Patient Navigation volunteer programs globally. Further, our company y Bridging the Gap: Reducing Disparities in supports disaster relief efforts and preparedness Diabetes Care assistance throughout the world. y HealthPartners Center for Memory and Aging— Key initiatives include: Care Ecosystem y HIV Care Connect y American Red Cross Annual Disaster Giving Program y Marshall Health—Great Rivers Regional System for y Neighbor of Choice Program Addiction Care in West Virginia y Partnership for Giving y North Carolina A&T State University Center for y The Children’s Inn at NIH Outreach in Alzheimer’s, Aging and Community Health (COAACH) y Project ECHO® in India and Vietnam y University of North Carolina School of Public Health— Peer Support Diabetes Program in Shanghai, China y YMCA’s Diabetes Prevention Program

Corporate Responsibility Report 2018/2019 224 PHILANTHROPY | Enabling Access to Health

Enabling Access to Health

DISCLOSURES IN THIS SECTION Development Goals (SDGs). Our health program company. These innovative, evidence-based programs investments focus on SDG 3—ensuring health and aim to reduce disparities in access and health outcomes. SDG 3 SDG 17 well-being for all—as well as SDG 17, which encourages strong global partnerships and cooperation. For more than a century, our company has We are committed to discovering smart, sustainable Key Foundation programs been inventing medicines and vaccines for ways to enable access to health, especially in parts Alliance to Advance Patient-Centered Cancer Care of the world where there are limited health care the world’s most challenging diseases. With a $15 million, five-year (2017–2021) commitment resources. Given the scale of this challenge, we believe from our company’s Foundation, the Alliance aims RESOURCES we can make the strongest contribution by working in to increase timely access to patient-centered care partnership with others—governments, donors, patient Grant Application Philanthropy at and reduce disparities in cancer care, especially groups, health care professionals, nongovernmental Website MSD Infographic for vulnerable and underserved populations in the organizations (NGOs), academic institutions, United States. multilateral organizations and the private sector—to Grant Application NCD Infographic strengthen health systems and improve the delivery Alzheimer’s Association, Massachusetts/New Guidelines of health care. Hampshire Chapter The programs we support work to promote health With a $1.5 million four-year (2018–2021) grant, our As we continue to invent new approaches that save equity, strengthening the quality of health care for company’s Foundation is supporting the Alzheimer’s and improve lives, we have a responsibility to help people in underserved communities who are living Association, Massachusetts/New Hampshire chapter enable access to medicines, vaccines and quality with Alzheimer’s disease, cancer, diabetes and HIV/ to expand its Dementia Care Coordination program in health care worldwide. This responsibility underpins AIDS—areas of global health need and relevance to our Massachusetts, and take it to Maine, New Hampshire our commitment to advancing the UN Sustainable and Rhode Island.

Corporate Responsibility Report 2018/2019 225 PHILANTHROPY | Enabling Access to Health

American Cancer Society—Care lodging, treatment side effects) to cancer care with HIV Care Connect Coordination Navigation their navigator With a $7 million, five-year (2019–2023) commitment With a four-year (2015–2018), $1.58 million grant y Patients were highly satisfied with their navigation from our company’s Foundation, HIV Care Connect from our company’s Foundation, the American Cancer experiences and navigator as well as felt more aims to reduce disparities in access to care and improve Society (ACS) enhanced its Patient Navigator Program empowered to solve problems and take action related health outcomes for people with HIV living in vulnerable (PNP) in the United States to improve care coordination, to their cancer care Southeastern U.S. communities. promote patient activation and increase access to y Patients experienced improved levels of treatment Marshall Health—Great Rivers Regional System for high-quality cancer care in communities where there adherence and completion Addiction Care in West Virginia are substantial health care disparities. The ACS worked with six PNP sites as part of its community-based pilot Final results from the pilot program evaluation are Our company’s Foundation is supporting an initiative program—Care Coordination Navigation Program. expected in late 2019. with Marshall Health through a $2 million grant over four years (2018–2021) to establish the Great Rivers American Cancer Society: Global Patient Navigation This program provides training in participating Regional System for Addiction Care—a comprehensive communities for ACS patient navigators on concepts Our company’s Foundation is supporting the American program to address the opioid crisis in West Virginia. of care coordination and patient activation, as well Cancer Society (ACS) to improve patient support and as effective patient-provider communication about access to cancer care in sub-Saharan Africa and develop North Carolina A&T State University Center such topics as treatment planning, palliative care and guidance to help low- and middle-income countries for Outreach in Alzheimer’s, Aging and survivorship, among others. The training also equips adopt similar models of care. Through a ~$2 million Community Health navigators with effective communication strategies grant over five years (2019–2023), the Foundation is Through a $2 million, four-year (2016–2019) grant, and problem-solving and coaching skills to help support helping ACS bring its expertise and experience in patient our company’s Foundation is supporting the North and coach patients in managing psychosocial issues and navigation to new countries with a growing burden Carolina A&T State University Center for Outreach in treatment side effects, building social support networks of cancer. Alzheimer’s, Aging and Community Health (COAACH) and engaging in healthy behaviors throughout the to implement programs that better support Alzheimer’s Bridging the Gap: Reducing Disparities in cancer care continuum. patients and caregivers and broaden Alzheimer’s Diabetes Care awareness among underserved populations in rural According to the American Cancer Society, the pilot With a $16 million, five-year (2017–2021) commitment North Carolina. Care Coordination Navigation Program has reached from our company’s Foundation, Bridging the Gap thousands of patients and demonstrated that ACS aims to improve access to high-quality diabetes care Project ECHO® in India and Vietnam navigators can effectively work with patients and and reduce health disparities among vulnerable and Our company’s Foundation committed $7 million over families to help them overcome challenges that may underserved populations with type 2 diabetes in the five years (2017–2021) to support the ECHO (Extension affect their care. United States. for Community Healthcare Outcomes) Institute™ at the University of New Mexico Health Sciences Center. This As reported by the ACS, to date, the program has HealthPartners Center for Memory and Aging reached more than 1,200 eligible cancer patients funding supports the replication of Project ECHO® in Through a $1.5 million, four-year (2018–2021) grant, our across six sites in California, New Mexico, New York, India and Vietnam to improve access to specialty care for company’s Foundation is supporting HealthPartners Pennsylvania, Texas and Washington State. complex and chronic conditions such as hepatitis C, HIV, Center for Memory and Aging and its partner, the tuberculosis and noncommunicable diseases, including Preliminary evaluation findings from the ACS University of California, San Francisco (UCSF) to cancer and diabetes, as well as mental health conditions. suggest that: implement UCSF’s Care Ecosystem program for people with dementia and their caregivers in rural areas of y Most patients reported overcoming or managing Minnesota with limited access to specialty care. barriers (e.g., financial issues, transportation,

Corporate Responsibility Report 2018/2019 226 PHILANTHROPY | Enabling Access to Health

University of North Carolina (UNC) School of The peer support program is part of the Shanghai Public Health—Diabetes Peer Support Program in Integration Model, which links hospital and specialty Shanghai, China care with primary care through Community Health Our company’s Foundation provided a $781,000 three- Centers. The positive results of the diabetes peer year (2016–2018) grant to the UNC School of Public support program will contribute to program replication Health to support the development, implementation in a greater number of Shanghai’s 240 CHCs. The and evaluation of a diabetes peer support program, Shanghai Health and Family Planning Commission, in based on the Peers for Progress model, in nine collaboration with the Shanghai Sixth People’s Hospital Community Health Centers (CHCs) in Shanghai, China. and other partners, will develop a platform that enables Using a practical and flexible peer support model, peer local health entities to implement peer support models leaders work in a variety of areas, such as: helping in 12 additional communities in 2019, followed by professional staff lead monthly meetings for patients dissemination across the city. and their families; helping individuals with diabetes The UNC School of Public Health and its partners are address challenges in their daily self-management; conducting a robust program evaluation. Results are promoting diabetes awareness initiatives in the anticipated in 2020. community; leading tai chi or other exercise groups; and offering support and day-to-day interaction YMCA’s Diabetes Prevention Program with patients. With a three-year (2016–2018), $2 million grant from our company’s Foundation, the YMCA expanded its To date, the peer support program has trained more Diabetes Prevention Program across five U.S. states: than 100 peer leaders and reached more than 1,280 Illinois, Kentucky, New Jersey, Pennsylvania and adults with diabetes. Initial evaluation results showed Texas. The YMCA’s Diabetes Prevention Program is an that this model was effective in improving diabetes evidence-based chronic-disease prevention model that self-management, treatment adherence and quality improves the health of participants with prediabetes of life among people living with diabetes. Program by helping them achieve modest weight loss through participants showed improvements in blood glucose healthy eating and physical activity. It is also part of the levels, body mass index and diabetes-specific distress. National Diabetes Prevention Program, led by the U.S. “I used to not discuss my diabetes with Centers for Disease Control and Prevention. anyone other than my doctor. Since To date, 72 local YMCAs in these states have served joining the peer support program, I got more than 2,500 participants in their Diabetes Prevention Program. At the end of the first 16 program to know a lot of friends and we openly sessions, participants achieved an average 4.6 percent share our experiences managing diabetes. weight loss. The YMCA has also expanded payer and Through the care and help from my doctor employer coverage of the program to help ensure and peer leader, I have gained more sustainability. confidence in controlling my blood sugar and living better with diabetes.”

– FEMALE, AGE 57, SHANGHAI

Corporate Responsibility Report 2018/2019 227 PHILANTHROPY | Supporting Our Communities

Supporting Our Communities

DISCLOSURES IN THIS SECTION We recognize that our success depends in large We contribute to local communities through direct and indirect economic contributions, such as GRI 201-1 GRI 203-2 part on our relationships and interactions with local GRI 203-1 GRI 413-1 communities, including elected officials, business and employment, training, support of local suppliers, local community leaders, charitable organizations, neighbors, R&D and paying taxes, and we manage the impact We aspire to have a positive effect educators, local media and our own employees. we have on communities by ensuring confidence in our environmental and safety performance and by on the communities in which we As of December 31, 2018, Merck & Co. respecting human rights. operate worldwide. Inc., Kenilworth, N.J., U.S.A. (including its Our community engagement programs aim to RESOURCES Banyu subsidiary in Japan) had a physical strengthen communities where our employees live and work by helping address critical health needs and Grant Application Philanthropy at presence in 76 countries, with 378 active selected social issues. Website MSD Infographic (occupied) research, manufacturing, sales and administrative sites.

Grant Application Neighbor of We rely on local communities not only for our workforce, Initiatives Guidelines Choice Application but also for some of our suppliers and for our ability Guidelines to do business. Through ongoing engagement and Neighbor of Choice dialogue, we work to understand the concerns and Our Neighbor of Choice (NOC) community grant Neighbor of Choice needs of our communities, and we seek to respond Participating Sites program supports the work of local nonprofit by addressing local challenges in ways that build organizations that strive to improve people’s quality of stronger communities and support the sustainability of life and to preserve the environment in communities in our business. which we have a presence.

Corporate Responsibility Report 2018/2019 228 PHILANTHROPY | Supporting Our Communities

Managed by our company’s Office of Corporate The Arc reported an increase in the number of clients The Children’s Inn at NIH Responsibility, the NOC program fosters partnerships engaged in Health Advocacy Services from 130 to 144 with local nonprofit organizations whose mission is to between July 2018 and April 2019 and has a current Our company’s partnership with The Children’s Inn promote the well-being of community residents. waitlist of 20 additional clients whose immediate health at NIH spans more than 25 years. Our company needs could be improved from specialized health care and Foundation provided $7.4 million for the initial We provide financial resources, enhanced by employee management from an Arc health advocate. construction and expansion of The Children’s Inn at volunteerism, to support community programs that the National Institutes of Health (NIH) in Bethesda, aim to improve health care quality and increase access The advocates helped clients by providing support at Maryland. The Inn provides seriously ill children involved to care for underserved populations in the areas of medical appointments and follow-through, as well as in treatment at the NIH a place to call home. Alzheimer’s disease, cancer, diabetes, HIV/AIDS and education on prediabetes self-management strategies. maternal health. The Arc also provides training services and from July Most children who come to the NIH for treatment are 2018 to April 2019, served approximately 30 caregivers facing life-threatening illnesses that resist conventional We also strive to reduce health disparities, of clients with diabetes. therapy. Since its opening in 1990, The Inn has hosted strengthen local health system capacity and protect more than 14,700 children from all over the U.S. and the environmental health of local communities, Association for Considering Environment in from more than 94 other countries. Our Foundation demonstrating our commitment to advancing the Kumagaya (ACEK) helps cover The Inn’s operating costs, and employees UN Sustainable Development Goals. In 2018, our company supported the Japanese also have generously supported The Inn through Throughout 2018, our company invited nonprofit nonprofit Association for Considering Environment personal contributions as part of our company’s organizations in 19 communities in which we have a in Kumagaya (ACEK) and its Natural Environment Partnership for Giving (P4G) program. Conservation Activities in Kumagaya, Saitama program. major presence to apply for funding support. Factors Since 2009, our Foundation has committed $10 million This initiative helped to advance efforts to maintain that determine our local sites’ participation in the NOC to support the establishment and operations of a the natural environment by improving understanding program include whether we have a major presence, the transitional home adjacent to the NIH campus, called and awareness of environmental issues through number of employees at the site, and community need. The Woodmont House. This home accommodated up various conservation activities. The project had several to five families at a time when their children were no In 2018, we expanded support to include the community components: around Menuma, Japan and South San Francisco, longer in the acute phases of illness, yet still required California, U.S. In 2019, we will continue to deepen y Water quality testing of the Arakawa River and treatment at the NIH Clinical Center. Tonegawa River water systems support in these communities through additional In February 2018, The Inn sold The Woodmont House. y program funding. An activity with local school children to study the river Proceeds from the sale are being used to support environment and living organisms Two examples of projects supported through the the renovation of the NIH-owned The Quarters, a Neighbor of Choice program in 2018 include: y Arakawa River clean-up efforts duplex house on the NIH campus. The Quarters will accommodate up to six families, and The Inn expects As of May 2019, ACEK had completed the first study The Arc of San Francisco that this housing will be used primarily for its young tour of the Wada-Yoshino river with local school children Our Foundation provided a $25,000 grant in support adult residents up to age 30. The Inn anticipates and, in a separate event, collected 785kg of garbage of the Arc’s Health Advocacy: Health Matters program. having a master facility plan for The Quarters by along the Arakawa River. Health Advocacy Services serves adults with intellectual December 2019. and developmental disabilities, ages 22 and over, living in the following communities of California: San Francisco, San Mateo and Marin County.

Corporate Responsibility Report 2018/2019 229 PHILANTHROPY | Supporting Our Communities

Disaster relief Through support of our philanthropic partner Disaster preparedness organizations, our company has provided aid to Our company is committed to supporting communities individuals and families impacted by the humanitarian Our company is a long-standing member of the around the world that are affected by natural disasters. crises that occurred throughout the year, some of which American Red Cross Annual Disaster Giving Program We provide disaster relief assistance through cash and are described below. (ADGP). In 2018, our company’s Foundation renewed product donations during major disasters and support our pledge to donate $2.4 million over four years to y efforts in disaster preparedness and recovery. Hurricanes Florence, Michael and Lane, affecting support the ADGP and to help ensure that the Red Hawaii, the Florida Panhandle and the Southeastern Through our disaster relief efforts, we aim to respond Cross can be on the scene of a disaster as quickly as United States, brought historic amounts of rainfall, possible and to work with local agencies to deliver in a timely, coordinated manner to meet the immediate catastrophic flooding and record high winds that needs of affected communities, to provide ongoing assistance immediately across affected areas in the U.S. resulted in numerous deaths and widespread and globally. assistance through recovery (as needed) and to support destruction. preparedness efforts as appropriate. In addition to our ongoing support of the American Red y The 2018 wildfire season in California saw a Cross, our company’s Foundation provided a $250,000 It is our practice to base our response on the total of 7,983 fires burning an area of 1,824,505 grant to support CancerCare’s Disaster Response assessment of need by local authorities and/or acres—including the Camp Fire, which has become Program to help address patient needs by providing humanitarian relief agencies. California’s deadliest and most destructive wildfire access to comprehensive support services that will on record. Where appropriate, and in consultation with local enable patients to continue their prescribed treatment y management, our company may donate medicines The worst monsoon flooding in a century occurred in plans and provide them with referrals to needed and vaccines through the disaster and emergency Kerala, India, in August 2018, resulting in more than supportive services. relief component of our Medical Outreach Program. one million displaced individuals and more than 400 In major disaster situations, donations of our reported deaths. Our company also donated products to support MAP International’s Medical Mission Packs and Direct medicines may be made directly by a local subsidiary or y In September, Indonesia’s Central Sulawesi Province Relief’s Hurricane Preparedness Packs, which include manufacturing facility. was struck by a 7.5 magnitude earthquake that prepositioned supplies that are ready for responders to triggered a tsunami and landslides causing widespread use in emergencies at a moment’s notice. During 2018, our company provided destruction, affecting more than 1.5 million people over $10.2 million in cash and product and resulting in more than 2,000 deaths. donations in support of disaster y Typhoon Yutu made landfall across Tinian and Saipan preparedness and in response to acute in the Northern Mariana Islands, in October 2018, causing catastrophic damage to infrastructure before and protracted disaster events that moving on to impact the Philippines (Typhoon Rosita). occurred globally.

Corporate Responsibility Report 2018/2019 230 PHILANTHROPY | Supporting Our Communities

Performance

COMMUNITY CONTRIBUTIONS 2014 2015 2016 2017 2018

Art $729,325 $735,000 $608,000 $616,000 $663,500

Civic $1,350,950 $135,375 $11,500 $16,190 $445,430

Education $923,465 $586,277 $600,263 $690,864 $696,170

Environment $148,665 $123,144 $392,422 $346,500 $287,566

Human Health Services $1,941,185 $2,690,459 $2,721,534 $7,102,636 $3,632,776

TOTAL $5,093,590 $4,270,255 $4,333,719 $8,756,000 $5,725,442

DISASTER RELIEF 2014 2015 2016 2017 2018

Total giving value of disaster relief contributions (cash and $10.0 $5.6 $13.4 $23.9 $10.2 products, in millions)

NEIGHBOR OF CHOICE 2014 2015 2016 2017 2018

Amount contributed (in millions)1 $2.2 $2.5 $3.1 $3.1 $3.1

Number of people reached globally2 NA NA NA 221,328 191,138

Number of employees who volunteered with grantees2 NA NA NA 2,511 2,299

NA: Not Available. 1 Data include funding provided through the Office of Corporate Responsibility and our company’s Foundation. Additional funding is provided through local U.S. sites and our company sites outside the United States that we do not track centrally. 2 Beginning in 2017, we estimate the number of beneficiaries receiving funding through the NOC program and the number of employees who volunteered with NOC grantees.

Corporate Responsibility Report 2018/2019 231 PHILANTHROPY | Employee Giving & Volunteering

Employee Giving & Volunteering

DISCLOSURES IN THIS SECTION program. We believe that providing opportunities for As part of this commitment, in 2018, our company our employees to “give back” also enhances employee joined IMPACT2030—a private-sector-led initiative, GRI 203-1 engagement and productivity. carried out in collaboration with the United Nations, the social and public sectors and academia, designed to Our corporate policy on volunteerism provides Around the world, our employees activate human capital investments through employee employees worldwide with the opportunity to take up to take an active role in giving back to volunteer programs to advance the achievement of the 40 hours of paid time off annually to engage in volunteer UN Sustainable Development Goals (SDGs). their communities through a variety activities that support eligible nonprofit organizations. of programs. Additionally, employees in the U.S. and Puerto Rico are Our employees undertake various volunteer activities encouraged to participate in Partnership for Giving, our globally that support a number of the SDGs. One example RESOURCES dollar-for-dollar matching gift program, and Dollars for includes volunteer support for Swim Across America. In Philanthropy at Doers, a volunteer rewards program. addition to funding support provided by our company to MSD Infographic Swim Across America, in 2018, 39 employees recorded 587 volunteer hours in support of the organization.

Each year, our employees donate thousands of hours to Initiatives We also became a member of the Global Corporate help improve the health and well-being of communities We are committed to helping facilitate industry Volunteer Council (GCVC), an initiative of the around the world through programs such as MSD for engagement and to identifying innovative ways to have International Association for Volunteer Effort (IAVE). Mothers, the MSD Fellowship for Global Health, and a a positive impact on people’s lives around the world, The GCVC highlights both proven and promising practices range of volunteer activities. Employee volunteers also while also achieving our company’s business objectives. in corporate volunteering while raising awareness of complement the support we provide to organizations This includes offering opportunities to leverage human how companies are addressing critical human, social, through our Neighbor of Choice community grants capital support through employee volunteerism. environmental and economic challenges throughout the world.

Corporate Responsibility Report 2018/2019 232 PHILANTHROPY | Employee Giving & Volunteering

In 2018, the MSD Fellowship for Global Health was their professional skills. This program is available to our Throughout 2018, 133 attorneys, paralegals and recognized with an Honorary Mention from the IMPACT employees in the U.S. and Puerto Rico. administrative associates provided approximately 2030 Awards and also by the IAVE with their Inspiring 3,000 hours of pro bono legal services. Our employees find these projects to be enjoyable Practice Award. and gratifying experiences that can enhance their Although pro bono work is less common outside the individual skill sets. Since its launch in 2015, more than United States, our international attorneys provided Volunteering 733 employees have registered on the site and over more than 20 hours of pro bono assistance overseas, 102 projects have been completed or are under way, through collaboration with external partners, attorneys MSD Fellowship for Global Health representing over 2,352 volunteer hours donated. from other multinational pro bono programs, and local The MSD Fellowship for Global Health is a three-month, law firms. field-based corporate pro bono program designed to Making Positive Choices leverage the skills and talents of our employees. Teams Through the Making Positive Choices initiative, One example is our partnership with Legal Services of highly skilled Fellows, who are passionate about our employees from New Jersey and Pennsylvania volunteer of New Jersey to help qualified victims of domestic company’s mission to save and improve lives around to have a positive influence on the lives of underserved violence seek immigration relief through the filing of the world, are assigned to NGO partners to help build and at-risk children and young adults through three applications to obtain U Visas. U Visas are available for their capacity. programs offered and administered by Street Law, Inc.: victims of certain violent crimes who have suffered substantial mental or physical abuse and are helpful y Community Works: Helping teens prepare to to law enforcement or government officials in the participate in their communities in a positive way investigation or prosecution of criminal activity. In 2018, y Career Exploration: Preparing high school students 12 of our lawyers or staff volunteered over 100 hours to to achieve academic and career goals file U Visa applications for five different clients. y Youth in Transition: Providing youth in the foster care system with instruction in basic life skills and Matching gift program guidance in navigating community resources to help them live independently We are proud of our company’s Partnership for Giving (P4G) year-round matching gift program. P4G supports Led by our company’s Legal department, more than 100 employees in the U.S. and Puerto Rico through employees contributed 1,400 volunteer hours through matching funds that double employee donations to Bridget Brady receives an enthusiastic and genuine welcome from this program in 2018, reaching more than 600 students young girls in a village near Toubakouta, Senegal, where she spent three causes that are important to them. Through a dollar- months working with the Africa Resource Center on a public health in school and community settings. In April 2019, our for-dollar match of employee contributions to eligible supply chain project as part of the MSD Fellowship for Global Health. company received Street Law’s 2019 “Excellence in organizations, our company’s Foundation supports Service Award” for our contributions to Making Positive nonprofits that help to promote a healthier society, Skills-based volunteer program Choices and our Legal Diversity Pipeline program. advance education, foster the arts, address the welfare Our skills-based volunteer program offers employees of animals and preserve the environment. the opportunity to donate their professional skills Pro Bono Legal Program through virtual, short-term projects that provide Our company’s Pro Bono Legal Program has been Our company’s Foundation also funds our Dollars for important capacity-building support for nonprofit serving the poor and disadvantaged for nearly 25 Doers program that matches volunteer hours with a organizations. The program expands opportunities for years and is led by our Legal department. The program cash contribution. Employees in the U.S. and Puerto employees to grow and develop, while giving back to the provides opportunities for our legal professionals to Rico investing 40 hours or more of service with an community. Whether volunteering for a one-hour phone provide their expertise, free of charge, to members eligible nonprofit organization can apply for a $500 consultation or a 30-hour project, employees have the of the community that would otherwise be unable contribution to that nonprofit, with an annual limit of opportunity to provide meaningful volunteer support to access legal advice on a range of issues including two donations per eligible employee or volunteer team. for nonprofits in need, while using and developing family law, veterans’ affairs, child advocacy and others.

Corporate Responsibility Report 2018/2019 233 PHILANTHROPY | Employee Giving & Volunteering

Performance

EMPLOYEE GIVING SUMMARY VOLUNTEERING 2014 2015 2016 2017 2018

Employees who volunteered1 NA 9,381 16,446 6,560 6,557

Percent of total company population2 NA 14% 24% 10% 10%

Employees who used paid time off (PTO)3 NA 6,123 14,376 4,870 4,795

Percent of total company population NA 9% 21% 7% 7%

PTO hours1 NA 52,372 187,818 67,239 54,148

Total recorded volunteer hours (TRVH)1 109,932 80,585 214,862 114,903 114,393

Ratio of PTO/TRVH NA 65% 87% 58% 47%

Skilled volunteer hours as percentage of TRVH 8% 25% 8% 17% 16%

SkillShare Volunteer Program4 – Volunteer Hours NA 1,500 520 96 236

MSD Fellowship for Global Health – Volunteer Hours 12,144 16,120 15,080 15,080 15,080

Pro Bono Legal Program – Volunteer Hours 3,200 2,400 1,126 4,292 3,001

NA: Not Available. 1 2018 figures are based on employee self-recorded volunteer hours and volunteer hours communicated directly to the Office of Corporate Responsibility for certain countries. 2015 marked the first year in which volunteer hour reporting was based solely on employee self-reporting. Prior years included estimates for unrecorded volunteer hours. 2 Company population figures are based on an estimated workforce of approximately 66,000 in 2018. 3 Figures based on estimated data. 4 Our skill-based volunteer program launched in 2015. This figure reflects total recorded hours.

PARTNERSHIP FOR GIVING (P4G) 2014 2015 2016 2017 2018

Total contribution (in millions)1 $26 $21 $26 $25 $22

Number of organizations that benefited2 9,038 7,145 6,200 8,770 7,350

Number of employee/retiree participants3 10,365 9,400 8,200 8,302 6,503

1 Total contribution includes Foundation matching funds for Dollars for Doers and P4G programs, 2018 active employee participant funds donat- ed through the P4G Direct Giving program and 2017 retiree donations matched in Q1 and Q2 of 2018. Retiree participation in the P4G program was discontinued as of January 1, 2018. 2 Includes organizations receiving funds through the P4G Direct Match and Dollars for Doers programs. 3 Includes active employee participants in the P4G Direct Match program and retiree participants submitting requests for 2017 donations. Effec- tive January 1, 2018 the P4G program was limited to active employees, resulting in a reduction in participant numbers.

Corporate Responsibility Report 2018/2019 234 PHILANTHROPY | Product Donations

Product Donations

DISCLOSURES IN THIS SECTION Our product donation programs and initiatives include: U.S. Patient Assistance Programs Our Patient Assistance Program, a separately SDG 3 SDG 17 MECTIZAN® (ivermectin) Donation Program SDG 11 incorporated nonprofit charitable organization, provides This program is one of the most significant initiatives selected medicines and adult vaccines for free to people undertaken by our company to help enable access to who do not have prescription drug or health insurance It’s not enough to discover and develop medicines in developing countries. Currently in its 32nd coverage and who, without our assistance, could not new medicines and vaccines. We also year, the MECTIZAN (ivermectin) Donation Program otherwise afford them. need to help get them to the people who is the longest-running disease-specific drug donation need them. program and public-private partnership of its kind. Initially focused on control of onchocerciasis (river RESOURCES blindness), the company expanded the program in 1998 Philanthropy at MSD to include lymphatic filariasis (LF). Both diseases are Infographic now candidates for elimination, and our company is engaged in several global partnerships to help achieve that goal. One important way to achieve the Sustainable Development Goal of improving health and well- MSD Medical Outreach Program (MMOP) being globally is through donations of medicines and Established over 60 years ago, our company’s Medical vaccines that address specific health needs, whether Outreach Program is the primary mechanism through in communities with a fundamental lack of access which we donate our pharmaceuticals and vaccines for to health care and services or in acute or protracted humanitarian aid in the developing world and in support humanitarian crises. of disaster relief and emergency response worldwide.

Corporate Responsibility Report 2018/2019 235 REPORTING | Overview

Reporting Overview

DISCLOSURES IN THIS SECTION In this 2018/2019 Corporate Responsibility Report, all All of our company’s global operations, including those of the quantitative data covers the calendar year from of subsidiaries, are in scope unless stated otherwise. GRI 102-10 GRI 102-46 GRI 102-45 GRI 102-49 January 1 to December 31, 2018, unless otherwise It includes activities at all facilities, owned and leased, noted. To ensure that readers have the most up-to- over which we have operational control, unless As part of our commitment to being date information, the narrative in the report is otherwise noted. focused on progress to date against our objectives and We did not seek external assurance for the report; transparent about our corporate commitments that took place in 2018 and 2019. responsibility initiatives, including our however, WSP conducted an independent third- We use several external guidelines and measurement party review of our 2018 greenhouse gas and water business activities and operations, frameworks to inform the scope of our reporting. This inventories and provided limited assurance for the we publish an annual corporate report has been prepared in accordance with the Global data that we submit to CDP and for inclusion in this responsibility report. Reporting Initiative (GRI) Standards, the UN Sustainable Corporate Responsibility Report. Please see WSP’s Development Goals, the 10 principles of the UN Global limited assurance of our environmental data for details. RESOURCES Compact, and the Sustainability Accounting Standards The basis for reporting on other matters specific to the Board (SASB). 2018 ESG Report WSP Assurance operations of our business—including joint ventures, Letter (GHGs + The content in this report is based on the corporate subsidiaries, leased facilities, outsourced operations and Water) responsibility material issues that were identified during other entities that can affect comparability from period Performance 2018 Form 10K our most recent materiality assessment, completed to period—can be found in our 2018 Form 10-K, which Data Spreadsheet in 2018 and represents the issues that internal and is filed with the United States Securities and Exchange (Excel) external stakeholders identified as those that are of Commission and is also available in the “Financial greatest priority to our stakeholders and our company’s Reports” section of our corporate website. long-term success.

Corporate Responsibility Report 2018/2019 236 REPORTING | Overview

There have been no significant changes from previous reporting periods in the scope, boundary or measurement methods applied in this report. Acquisitions and divestitures are thoroughly discussed in our 2018 Form 10-K. We have sought to provide a comprehensive view of how our company operates and have focused on what is most important to our business success as well as to our external stakeholders. Wherever possible, we have guided readers to sources of more information, including our corporate website and our annual financial reports. We plan to publish our next comprehensive corporate responsibility report in 2020.

Corporate Responsibility Report 2018/2019 237 REPORTING | Corporate Responsibility Materiality

Corporate Responsibility Materiality

DISCLOSURES IN THIS SECTION Most recently, we have engaged with our Enterprise Risk Management (ERM) team to integrate our CR GRI 102-46 GRI 102-47 Materiality process through the ERM approach with the goal to further integrate corporate responsibility into Understanding and prioritizing the the overall business strategy. corporate responsibility (CR) issues In addition to our comprehensive, online that matter most to our business and report, we have published a 2018 ESG stakeholders enables us to focus on Progress Report with a focus on the most the right issues and report on them material issues as defined through the effectively and transparently. materiality process. The materiality assessment process provides us an opportunity to listen to and engage our many The materiality matrix shown on the following page stakeholders, which helps us improve as an organization represents the environmental, social and governance and provides insight into future trends, potential (ESG) issues that internal and external stakeholders business risks and opportunities that influence our have identified as having significant financial, ability to create value. operational or reputational impact on the company and illustrates where our company can have a significant impact on society and the environment.

Corporate Responsibility Report 2018/2019 238 REPORTING | Corporate Responsibility Materiality

Materiality process Our Prioritized ESG Issues In response to external expectations for increased Ethics and compliance

HIGHER Data privacy and levels of transparency in our reporting, we leveraged information security Access to health Product quality and safety Datamaran’s Materiality Analysis tool—a business Occupational health and safety Intellectual property intelligence tool that uses big data and artificial Research and intelligence to conduct real-time materiality Clinical trials development Labor relations assessments. Responsible sales Transparency and marketing This tool enabled us to identify and prioritize the ESG and reporting Patient and caregiver engagement Product stewardship impacts, risks and opportunities most important to Responsible pricing Diverse and inclusive workplace internal and external stakeholders by analyzing a range Governance of sources such as corporate reports, competitive Disease awareness and education Water use and management analysis, global regulations and initiatives, social media Waste management platforms and online news sources. Antimicrobial stewardship Supply chain responsibility Human rights The results of this assessment will help Importance to Stakeholders Climate change Talent recruitment, retention identify corporate responsibility-relevant and development Employee wellbeing opportunities and risks to enable us to Bioethics Digital innovation Community support and development better prioritize our efforts to address Energy efficiency Counterfeit drugs the issues of greatest significance to Biodiversity and land stewardship stakeholders and to our company’s future Employment practices HIGHER success. Importance to Business Success

To supplement and validate the data-driven analysis, we engaged with a wide range of internal and external stakeholders through online surveys to validate and prioritize the list of issues. Datamaran External view The graphic below summarizes those sources and how External view they were used for the final output. sources + survey score By using this innovative approach, we were able to expand the scope of our analysis and derive evidence- Materiality based results to strengthen our overall corporate Matrix responsibility materiality process.

Internal view Internal view Survey score

Corporate Responsibility Report 2018/2019 239 REPORTING | GRI Index

GRI Index

The table on the following page summarizes where the DISCLOSURES IN THIS SECTION This report provides an inclusive picture of our corporate responsibility material topics, their related impacts, and disclosures can be found throughout this report. GRI 102-55 GRI 102-56 how they are managed. Throughout this report, we denote which GRI This report has been prepared in disclosures are relevant to the text, where applicable. accordance with the Global Reporting Initiative (GRI) Standards at the Assurance Core level. WSP Environment & Energy, one of the world’s leading engineering and professional services consulting RESOURCES firms, conducted an independent third-party review of WSP Assurance ESG Report 2018 our 2018 greenhouse gas and water inventories, and Letter (GHGs + provided limited assurance for the data in this report as Water) well as what we submit to CDP. This data can be found on the Water and Climate Change & Energy Use pages The GRI Standards represent global best practices of this report. for reporting publicly on a range of economic, environmental and social impacts.

Corporate Responsibility Report 2018/2019 240 REPORTING | GRI Index

INDEX # Description Report Location/Direct Answer

General Disclosures

GRI 102: ORGANIZATIONAL PROFILE GRI 102-1 Organization name Merck & Co., Inc., Kenilworth, N.J., USA GRI 102-2 Primary brands, Our Business products, and services 2018 Form 10-K (pages 1–3)

GRI 102-3 Headquarters location Kenilworth, N.J., USA GRI 102-4 Location of operations We have operations in more than 140 markets around the globe (MSD worldwide) GRI 102-5 Ownership and legal form 2018 Form 10-K (cover, page 33) GRI 102-6 Markets served Our Business 2018 Form 10-K (pages 9, 126) GRI 102-7 Scale of the organization Economic Impact Positive Work Environment 2018 Form 10-K (pages 1, 17, 30, 35, 40) 2019 Proxy Statement (page 29) GRI 102-8 Information on employees and other workers As of December 31, 2018, the Company had approximately 69,000 employees worldwide, with approximately 26,700 employed in the United States, including Puerto Rico

GRI 102-9 Supply chain Manufacturing & Supply Sourcing & Supplier Relations

GRI 102-10 Organizational changes during the reporting period About This Report

GRI 102-11 Precautionary principle Product Stewardship

GRI 102-12 External initiatives Reporting Frameworks Access to Health Water Human Rights

GRI 102-13 Membership associations Public Policy

GRI 102: STRATEGY GRI 102-14 CEO letter Letter from Our CEO

Corporate Responsibility Report 2018/2019 241 REPORTING | GRI Index

INDEX # Description Report Location/Direct Answer

GRI 102: ETHICS & INTEGRITY GRI 102-16 Values, principles, standards, and norms of behavior Code of Conduct GRI 102-17 Mechanisms for advice and concerns about ethics Office of Ethics

GRI 102: GOVERNANCE GRI 102-18 Governance structure of the organization Corporate Governance Corporate Responsibility Governance Leadership GRI 102-20 High-level accountability for sustainability topics Corporate Responsibility Governance GRI 102-21 Access to the board Corporate Responsibility Governance GRI 102-22 Composition of the board and its committees Leadership GRI 102-23 Chair of the highest governance body Kenneth C. Frazier is both the chairman of the board and the chief executive officer Corporate Governance 2019 Proxy Statement (pages 17–18)

GRI 102-24 Board nomination and selection processes Policies of the Board

GRI 102-25 Board conflicts of interest Policies of the Board

GRI 102-26 Board and executive roles Corporate Governance Corporate Responsibility Governance

GRI 102-29 Board identification of ESG impacts, risks and Corporate Responsibility Governance opportunities Board of Directors

GRI 102-30 Board ESG review of risk management processes Corporate Responsibility Governance Governance Committee Charter

GRI 102-31 Frequency of board review The Governance Committee shall meet no less frequently than twice each year. Meetings may be called by the Chairperson of the Committee or upon the vote of a majority of the Board.

GRI 102-32 Report review Governance Committee of the Board

GRI 102-33 Board communication 2019 Proxy Statement (pages 25–26)

GRI 102-35 Remuneration policies for the board and senior 2019 Proxy Statement (pages 28–29, 39–70) executives

GRI 102-36 Process for determining remuneration 2019 Proxy Statement (pages 39–70)

GRI 102-37 Remuneration shareholder resolutions 2019 Proxy Statement (page 42)

Corporate Responsibility Report 2018/2019 242 REPORTING | GRI Index

INDEX # Description Report Location/Direct Answer

GRI 102: STAKEHOLDER ENGAGEMENT GRI 102-40 Stakeholder engagement Stakeholder Engagement

GRI 102-41 Union representation Positive Work Environment GRI 102-42 Stakeholder identification Stakeholder Engagement GRI 102-43 Approach to stakeholder engagement Stakeholder Engagement Engaging Our Employees

GRI 102: REPORTING PRACTICE GRI 102-45 Entities included in financial statements About This Report Data regarding employees who are part of underrepresented ethnic groups are provided for the U.S. only. GRI 102-46 Defining report content and topic boundaries About This Report Materiality GRI 102-47 Material Aspects included Materiality GRI 102-48 Restatements Any restatements of information are included in the footnotes beneath the specific performance data tables. GRI 102-49 Reporting changes None GRI 102-50 Reporting period January 1, 2018–December 31, 2018 GRI 102-51 Date of most recent report Released in November 2017, covering 2016 programs and data GRI 102-52 Reporting cycle Annual GRI 102-53 Report contact Contact Us GRI 102-54 Claims of reporting in accordance with the GRI Standards Core level GRI 102-55 GRI content index GRI Index GRI 102-56 External assurance FAQ

GRI 201: ECONOMIC PERFORMANCE

Management Explanation of the material topic, its boundary, how Economic Impact Approach the topic is managed, and mechanisms for evaluating 2018 Form 10-K (pages 1–8, 17–18, 35) the effectiveness of the company’s strategy. Climate Change & Energy Use

Corporate Responsibility Report 2018/2019 243 REPORTING | GRI Index

INDEX # Description Report Location/Direct Answer

GRI 201-1 Direct economic value generated and distributed Economic Impact Supporting Our Communities Social Investments Financial Well-Being 2018 Form 10-K (page 35)

GRI 201-2 Financial implications and other risks and opportunities Climate Change & Energy Use due to climate change. Water 2018 Form 10-K (pages 17–18) CDP Climate Change (CC5.1–CC5.1c, CC6.1–CC6.1c)

GRI 201-3 Benefit plan coverage Financial Well-Being 2018 Form 10-K (pages 111–117)

GRI 203: INDIRECT ECONOMIC IMPACTS

Management Explanation of the material topic, its boundary, how Product Pricing Approach the topic is managed, and mechanisms for evaluating Access to Health the effectiveness of the company’s strategy.

GRI 203-1 Infrastructure investments and Supporting Our Communities services supported Social Investments

GRI 203-2 Indirect economic impacts Product Pricing U.S. Patient Assistance Programs Key Initiatives UN SDGs

GRI 205: ANTI-CORRUPTION

Management Explanation of the material topic, its boundary, how Code of Conduct Approach the topic is managed, and mechanisms for evaluating Sourcing & Supplier Relations the effectiveness of the company’s strategy.

GRI 205-2 Communications and training on anti-corruption Code of Conduct Sourcing & Supplier Relations Compliance Engaging with Health Care Professionals

Corporate Responsibility Report 2018/2019 244 REPORTING | GRI Index

INDEX # Description Report Location/Direct Answer

GRI 206: ANTI-COMPETITIVE BEHAVIOR

Management Explanation of the material topic, its boundary, how Sales & Marketing Practices Approach the topic is managed, and mechanisms for evaluating Code of Conduct the effectiveness of the company’s strategy.

GRI 206-1 Anti-competitive behavior 2018 Form 10-K (pages 101–108)

GRI 301: MATERIALS

Management Explanation of the material topic, its boundary, how Waste Management Approach the topic is managed, and mechanisms for evaluating Materials & Packaging the effectiveness of the company’s strategy. Green & Sustainable Science Nanotechnology

GRI 301-2 Recycled inputs Waste Management

GRI 302: ENERGY

Management Explanation of the material topic, its boundary, how Climate Change & Energy Use Approach the topic is managed, and mechanisms for evaluating the effectiveness of the company’s strategy.

GRI 302-1 Energy consumption within the organization Climate Change & Energy Use (Scopes 1 + 2)

GRI 302-4 Energy reductions Climate Change & Energy Use

GRI 303: WATER

Management Explanation of the material topic, its boundary, how Water Approach the topic is managed, and mechanisms for evaluating the effectiveness of the company’s strategy.

GRI 303-1 Water withdrawals by source Water CDP Water (W1.2a, W5.1a)

GRI 303-2 Water sources affected by withdrawals CDP Water (W2.6, W3.2a, W5.1)

Corporate Responsibility Report 2018/2019 245 REPORTING | GRI Index

INDEX # Description Report Location/Direct Answer

GRI 305: EMISSIONS

Management Explanation of the material topic, its boundary, how Air Emissions Approach the topic is managed, and mechanisms for evaluating Climate Change & Energy Use the effectiveness of the company’s strategy.

GRI 305-1 Direct GHG emissions (Scope 1) Climate Change & Energy Use CDP Climate Change (CC9.1a)

GRI 305-2 Indirect GHG emissions (Scope 2) Climate Change & Energy Use CDP Climate Change (CC10.1a)

GRI 305-3 Other indirect GHG emissions (Scope 3) Climate Change & Energy Use CDP Climate Change (CC14.1)

GRI 305-5 Reduction of GHG emissions Climate Change & Energy Use

GRI 305-6 Ozone-depleting substances (ODS) Air Emissions

GRI 305-7 NOx, SOx and other emissions Air Emissions

GRI 306: EFFLUENTS & WASTE Management Explanation of the material topic, its boundary, how Waste Management Approach the topic is managed, and mechanisms for evaluating Pharmaceuticals in the Environment the effectiveness of the company’s strategy. Product Stewardship

GRI 306-1 Water withdrawals by source CDP Water (W0.3, W1.2, W1.2b)

GRI 306-2 Waste by type and disposal method Waste Management

GRI 306-3 Significant spills EHS Management & Compliance

GRI 307: ENVIRONMENTAL COMPLIANCE

Management Explanation of the material topic, its boundary, how EHS Management & Compliance Approach the topic is managed, and mechanisms for evaluating Product Stewardship the effectiveness of the company’s strategy.

GRI 307-1 Non-compliance with environmental laws and regulations EHS Management & Compliance 2018 Form 10-K (pages 108–109)

Corporate Responsibility Report 2018/2019 246 REPORTING | GRI Index

INDEX # Description Report Location/Direct Answer

GRI 308: SUPPLIER ENVIRONMENTAL ASSESSMENT Management Explanation of the material topic, its boundary, how Sourcing & Supplier Relations Approach the topic is managed, and mechanisms for evaluating the effectiveness of the company’s strategy.

GRI 308-1 New suppliers screened using environmental criteria Sourcing & Supplier Relations

GRI 401: EMPLOYMENT Management Explanation of the material topic, its boundary, how Employees Overview Approach the topic is managed, and mechanisms for evaluating Employee Well-Being the effectiveness of the company’s strategy. Learning & Development Office of Ethics Sourcing & Supplier Relations Human Rights GRI 401-1 New employee hires and turnover Employees Overview

GRI 401-2 Benefits provided to full-time employees Employee Well-Being Financial Well-Being GRI 401-3 Parental leave Emotional & Social Well-Being

GRI 403: OCCUPATIONAL HEALTH & SAFETY Management Explanation of the material topic, its boundary, how Employee Safety Approach the topic is managed, and mechanisms for evaluating EHS Management & Compliance the effectiveness of the company’s strategy.

GRI 403-2 Rates of injury, occupational disease, lost days, Employee Safety absenteeism, and work-related fatalities GRI 403-3 Workers with high risk of diseases related to their Employee Safety occupation

GRI 404: TRAINING & EDUCATION Management Explanation of the material topic, its boundary, how Learning & Development Approach the topic is managed, and mechanisms for evaluating the effectiveness of the company’s strategy.

GRI 404-1 Average hours of employee training Learning & Development

GRI 404-2 Programs for upgrading employee skills and transition Learning & Development assistance programs

Corporate Responsibility Report 2018/2019 247 REPORTING | GRI Index

INDEX # Description Report Location/Direct Answer GRI 404-3 Percentage of employees receiving regular performance Learning & Development reviews

GRI 405: DIVERSITY & EQUAL OPPORTUNITY

Management Explanation of the material topic, its boundary, how Global Diversity & Inclusion Approach the topic is managed, and mechanisms for evaluating Employee Diversity the effectiveness of the company’s strategy.

GRI 405-1 Diversity of governance bodies and employees Global Diversity & Inclusion

GRI 407: FREEDOM OF ASSOCIATION & COLLECTIVE BARGAINING

Management Explanation of the material topic, its boundary, how Human Rights Approach the topic is managed, and mechanisms for evaluating the effectiveness of the company’s strategy.

GRI 407-1 Operations and suppliers in which the right to freedom of Human Rights association may be at risk Sourcing & Supplier Relations

GRI 409: FORCED OR COMPULSORY LABOR

Management Explanation of the material topic, its boundary, how Human Rights Approach the topic is managed, and mechanisms for evaluating the effectiveness of the company’s strategy.

GRI 409-1 Operations and suppliers in which the right to freedom of Human Rights association may be at risk Sourcing & Supplier Relations

GRI 412: HUMAN RIGHTS ASSESSMENT

Management Explanation of the material topic, its boundary, how Human Rights Approach the topic is managed, and mechanisms for evaluating Sourcing & Supplier Relations the effectiveness of the company’s strategy.

GRI 412-2 Employee training on human rights policies and procedures Code of Conduct

GRI 414: SUPPLIER SOCIAL ASSESSMENT

Management Explanation of the material topic, its boundary, how Sourcing & Supplier Relations Approach the topic is managed, and mechanisms for evaluating the effectiveness of the company’s strategy.

Corporate Responsibility Report 2018/2019 248 REPORTING | GRI Index

INDEX # Description Report Location/Direct Answer

GRI 414-1 New suppliers screened using social criteria Sourcing & Supplier Relations

GRI 415: PUBLIC POLICY

Management Explanation of the material topic, its boundary, how Public Policy Approach the topic is managed, and mechanisms for evaluating the effectiveness of the company’s strategy.

GRI 415-1 Political contributions Public Policy

GRI 416: CUSTOMER HEALTH & SAFETY

Management Explanation of the material topic, its boundary, how Manufacturing & Supply Approach the topic is managed, and mechanisms for evaluating Product & Patient Safety the effectiveness of the company’s strategy.

GRI 416-1 Assessment of the health and safety impacts of product Quality & Safety Standards and service categories Manufacturing & Supply

GRI 416-2 Incidents of non-compliance concerning the health and Quality & Safety Standards safety impacts of products and services.

GRI 417: MARKETING & LABELING

GRI 417-1 Requirements for product and service information and Product & Patient Safety labeling

GRI 417-2 Incidents of non-compliance concerning product and Sales & Marketing Practices service information and labeling

GRI 417-3 Incidents of non-compliance concerning marketing Sales & Marketing Practices communications

GRI 418: CUSTOMER PRIVACY

Management Explanation of the material topic, its boundary, how Information Security & Privacy Approach the topic is managed, and mechanisms for evaluating the effectiveness of the company’s strategy.

GRI 418-1 Substantiated complaints regarding breaches of customer Information Security & Privacy privacy and losses of customer data

Corporate Responsibility Report 2018/2019 249 REPORTING | Sustainability Accounting Standards Board (SASB)

Sustainability Accounting Standards Board (SASB)

The Sustainability Accounting Standards INDEX # Description Website Board (SASB) is dedicated to improving the effectiveness and comparability of SAFETY OF CLINICAL TRIAL PARTICIPANTS corporate disclosure on environmental, 210a.1 Management process for ensuring quality and patient Clinical Research social and governance (ESG) factors. safety during clinical trials globally Product & Patient Safety Quality & Safety Standards RESOURCES Clinical Trials Website

ESG Report 2018 210a.2 FDA Sponsor Inspections related to clinical trial Clinical Research management and pharmacovigilance that resulted in: Clinical Trials Website (1) Voluntary Action Indicated (VAI) and (2) Official Action Indicated (OAI) The table to the right cross-references the SASB Standards for the Health Care sector, and Biotechnology 210a.3 Monetary losses as a result of legal proceedings associated Not reported 1 & Pharmaceuticals industry, with where that with clinical trials in developing countries information can be found in conjunction with GRI disclosures throughout this report.

Corporate Responsibility Report 2018/2019 250 REPORTING | Sustainability Accounting Standards Board (SASB)

INDEX # Description Website

ACCESS TO MEDICINES

240a.1 Access to health care for priority diseases and Access to Health in priority countries Enabling Access to Health HIV/AIDS Key Initiatives Product Pricing Product Donations Product Registration Vaccines Women’s Health

240a.2 Products on WHO’s List of Prequalified Product Registration Medicinal Products

AFFORDABILITY & PRICING

240b.1 Settlements of Abbreviated New Drug Application (ANDA) Not reported litigation that involved payments and/or provisions to delay bringing an authorized generic product to market

240b.2 Percentage change in: (1) average list price and Product Pricing (2) average net price across U.S. product portfolio compared to previous year

240b.3 Percentage change in: (1) list price and (2) net price of Product Pricing product with largest increase compared to previous year

DRUG SAFETY

250a.1 Products listed in the FDA’s MedWatch Safety Alerts for We do not currently disclose this information. Human Medical Products database See links for related information. FAERS MedWatch

250a.2 Fatalities associated with products as reported in the We do not currently disclose this information. FDA Adverse Event Reporting System See links for related information. FAERS MedWatch

250a.3 Recalls issued, and total units recalled Quality & Safety Standards FAERS MedWatch

Corporate Responsibility Report 2018/2019 251 REPORTING | Sustainability Accounting Standards Board (SASB)

INDEX # Description Website

250a.4 Amount of product accepted for takeback, reuse, Not reported or disposal

250a.5 FDA enforcement actions taken in response to violations Not reported of current Good Manufacturing Practices (cGMP)2

COUNTERFEIT DRUGS

260a.1 Methods and technologies used to maintain traceability Manufacturing & Supply of products throughout the supply chain Quality & Safety Standards Sourcing & Supplier Relations

260a.2 Process for alerting customers and business partners Not reported of potential or known risks associated with counterfeit products

260a.3 Actions that led to raids, seizure, arrests, and/or filing Not reported of criminal charges related to counterfeit products

ETHICAL MARKETING

270a.1 Monetary losses as a result of legal proceedings associated Sales & Marketing Practices with false marketing claims1

270a.2 Code of ethics governing promotion of off-label use of Sales & Marketing Practices products Sales & Marketing

EMPLOYEE RECRUITMENT, DEVELOPMENT, AND RETENTION

330a.1 Talent recruitment and retention efforts for R&D Research & Development personnel MRL Postdoctoral Research Fellow Program

330a.2 (1) Voluntary and (2) involuntary turnover rate for: (a) Not reported. See our Global Diversity & Inclusion executives and senior managers, (b) midlevel managers, page for related information. (c) professionals, and (d) all others

Corporate Responsibility Report 2018/2019 252 REPORTING | Sustainability Accounting Standards Board (SASB)

INDEX # Description Website

SUPPLY CHAIN MANAGEMENT

430a.1 Facilities and Tier I suppliers participating in the Rx-360 Not reported International Pharmaceutical Supply Chain Consortium audit program, or equivalent

BUSINESS ETHICS

510a.1 Monetary losses as a result of legal proceedings associated Not reported with corruption and bribery

510a.2 Monetary losses as a result of legal proceedings associated Engaging With Health Care Professionals with corruption and bribery Sales & Marketing Practices Code of Conduct Compliance Sales and Marketing

ACTIVITY METRICS

000.A Patients treated (#) Social Investments

000.B Number of drugs (1) in portfolio and (2) in R&D Pipeline (Phases 1-3)

¹ Note to HC-BP-210a.3 – The entity shall briefly describe the nature, context, and any corrective actions taken as a result of the monetary losses. ² Note to HC-BP-250a.5 – The entity shall briefly describe the nature, context, and any corrective actions taken as a result of the enforcement actions.

Corporate Responsibility Report 2018/2019 253 REPORTING | Sustainable Development Goals (SDGs)

Sustainable Development Goals (SDGs)

The United Nations has called for broad-based support DISCLOSURES IN THIS SECTION Our Priorities of the SDGs, including active involvement by the private GRI 203-2 sector. We are committed to helping facilitate industry As a global health care company that is committed to engagement and to identifying ways to work creatively improving health and well-being around the world, The Sustainable Development Goals to have an impact on people’s lives while achieving our SDG 3 (Good Health and Well-Being) is at the core of represent the international community’s company’s business objectives. our business and is aligned with our mission to save and improve lives. plan of action for “people, planet and Throughout this report, you’ll see SDG disclosures in prosperity.” the left-hand navigation, which indicate the content on In addition, while we realize that all of the SDGs are the page demonstrating how our work is aligned to help essential to fostering sustainable development, we RESOURCES meet these goals. have prioritized eight global goals as those where we are Performance United Nations positioned to have the biggest impact. Data Spreadsheet Website “We are honored to play a role in the global For the eight SDGs that we have prioritized as those (Excel) efforts to achieve the SDGs. Through where we can make a difference, we have identified existing metrics that enable us to quantitatively On September 25, 2015, the United Nations General our ongoing commitments to address demonstrate our progress in support of the global goals. Assembly adopted the 2030 Agenda for Sustainable important health challenges, we are Development which includes a set of 17 Sustainable mobilizing the best of our company to help The UN has identified subtargets for all of the global Development Goals (SDGs) to end poverty, fight save and improve lives around the world.” goals, against which corporate and governmental inequality and injustice, and tackle climate change progress can be measured. While there are 169 targets by 2030. in all, we have identified 11 targets for our priority SDGs – KEN FRAZIER, CHAIRMAN AND CEO that most closely align with our business.

Corporate Responsibility Report 2018/2019 254 REPORTING | Sustainable Development Goals (SDGs)

SDG 3: Good Health We are working to bring our medicines and vaccines to more people around the world in ways that are as accessible and and Well-Being affordable as possible for the patients who need them. As a global health care company, we believe we have an important role and responsibility in improving UN Target 3.B: Support the research and development of vaccines and medicines for access to medicines and vaccines, and in helping to the communicable and noncommunicable diseases that primarily affect developing reduce the burden of disease around the world. countries, and provide access to affordable essential medicines and vaccines.

We are working to ensure that women have access to two PROGRESS ON TARGET 3.B 2014 2015 2016 2017 2018 of the most powerful means to end preventable maternal Number of products that are 35 35 40 42 42 supported with differential pricing1, 2 deaths: quality maternity care and modern contraception. Number of countries where inter- 114 121 123 125 128 UN Target 3.1: Reduce the global maternal mortality ratio to less than 70 per 100,000 and/or intra-country pricing has live births. been implemented3

1 PROGRESS ON TARGET 3.1 2017 2018 Differential pricing intended to facilitate access for the at-need population. ² Products include HIV treatments, vaccines and other patented products. Women with improved quality of care through 2,900,355 3,396,659 ³ Countries as defined by World Bank 2013 GNI classification; includes UN-defined least developed MSD for Mothers (cumulative) countries.

Women with access to modern contraception 2,775,907 4,038,980 through MSD for Mothers (cumulative) For more information, please visit the Vaccines, Product Pricing, Research & Development, and Infectious Diseases pages on our website.

For more information, please visit the MSD for Mothers page on our website.

UN Target 3.7: Ensure universal access to sexual and reproductive health care services, including for family planning, information and education, and the integration of reproductive health into national strategies and programmes.

PROGRESS ON TARGET 3.7 2017 2018

Women potentially reached in FP2020 countries 4,066,477 6,900,000 (cumulative) 1

Note: To learn more about the Family Planning 2020 (FP2020) initiative, visit http://www.familyplanning2020.org/. 1 Number represents potential number of women who could be reached based on number of products provided.

For more information, please visit our Women’s Health page.

Corporate Responsibility Report 2018/2019 255 REPORTING | Sustainable Development Goals (SDGs)

SDG 5: Gender Equality SDG 6: Clean Water & Our company promotes and values global diversity Sanitation and inclusion at every level of the organization. Our business, suppliers, communities and We regard Global Diversity & Inclusion (GD&I) as a customers all need access to clean water, and we key business strategy to inspire, develop and unleash are committed to managing the environmental the potential of our people—holding ourselves to the impacts of our products throughout their life highest standards of accountability for gender parity cycles—from discovery through manufacturing, established by the United Nations—and knowing use and disposal. that progress for women will stall without sustained, proactive intervention. UN Target 6.4: By 2030, substantially increase water-use efficiency across all sectors and ensure sustainable withdrawals and supply of freshwater to address water scarcity UN Target 5.5: Ensure women’s full and effective participation and equal opportunities and substantially reduce the number of people suffering from water scarcity. for leadership at all levels of decision making in political, economic and public life.

2016 2017 PROGRESS ON TARGET 5.5 2014 2015 2016 2017 2018 PROGRESS ON TARGET 6.4 2018 3 20.7 19.6 Women on the Board 17% 21% 23% 23% 23% Total water use (million m ) 20.5 3 3.0 2.9 Women in executive roles1 31% 34% 31% 32% 32% Water use in extremely-high-risk areas (million m ) 3.82 3) 3.4 3.0 2.99 Women in the workforce 48% 48% 48% 48% 49% Water use in high-risk areas (million m

New hires that were female 49% 50% 51% 49% 51% GOAL(S) PROGRESS INDICATOR Note: Our company has publicly disclosed EEO-1 information since 1999. Our 2018 data is avail- able here. By 2020, we will develop water On track 1 “Executive” is defined as the chief executive officer and two structural levels below. conservation plans for sites in “high water risk” locations. ···

You may find more information on the Global Diversity & Inclusion page. By 2025, we will maintain global 3.5 million m3 below 2015 water use at or below 2015 levels. levels (15% reduction) ···

For more information, please visit the Water page on our website.

Corporate Responsibility Report 2018/2019 256 REPORTING | Sustainable Development Goals (SDGs)

SDG 7: Affordable & SDG 8: Decent Work Clean Energy & Economic Growth We believe the private sector has an increasingly Our company is dedicated to actively promoting important role to play to ensure that we meet the opportunities for people regardless of race, gender, goal of access to affordable, reliable and sustainable ethnicity, culture, age, disability, religion, gender energy for all by 2030. We have made a commitment identity, gender expression or veteran status. to reduce GHG emissions and other associated air UN Target 8.5: Achieve full and productive employment and decent work for all pollutants by driving energy efficiency improvements women and men, including for young people and persons with disabilities, and equal and purchasing more electricity from renewable pay for work of equal value. sources of energy, such as wind and solar.

UN Target 7.2: By 2030, increase substantially the share of renewable energy in the PROGRESS ON TARGET 8.5 2014 2015 2016 2017 2018 global energy mix. New hires that were members of 22% 33% 37% 36% 36% underrepresented ethnic groups (U.S.) PROGRESS ON TARGET 7.2 2016 2017 2018 Note: Our company has publicly disclosed EEO-1 information since 1999. Our 2017 data is available here. Purchased electricity from renewable sources1 1% 4.9% 14.1%

For more information, please visit the Global Diversity & Inclusion page on GOAL(S) PROGRESS INDICATOR our website.

Renewable Energy 14.1% of our purchased By 2025, at least 50% of our electricity comes from ··· purchased electricity will come renewables. from renewable sources. By 2040, 100% of our purchased electricity will come from renewable sources.

1 We have defined “purchased electricity” as electricity sourced from external suppliers, as well as renewable electricity that was generated and utilized onsite where we retained the renewable attributes or where we have obtained renewable attributes through contract.

Our Environmental Goals: By 2025, ≥50 percent of our purchased electricity will come from renewable sources. By 2040, 100 percent of our purchased electricity will come from renewable sources. For more information, please visit the Climate Change & Energy page on our website.

Corporate Responsibility Report 2018/2019 257 REPORTING | Sustainable Development Goals (SDGs)

SDG 12: Responsible PROGRESS ON TARGET 12.5 2014 2015 2016 2017 2018 Operational waste sent to landfills and 24% 28% 30% 29% 33% Consumption & incineration

Production Landfill 10% 15% 10% 10% 9% Our product stewardship programs focus on Incineration 14% 13% 20% 19% 24% identifying, and either preventing or minimizing, potential safety and environmental hazards Hazardous waste generated (MT) 44,120 30,345 35,246 35,652 38,413 throughout a product’s life cycle. Non-hazardous waste generated (MT) 39,612 39,511 37,353 36,773 35,517 By 2020, achieve the environmentally sound management of UN Target 12.4: Note: Totals may be slightly off due to rounding. chemicals and all wastes throughout their life cycle, in accordance with agreed upon international frameworks, and significantly reduce their release to air, water and soil in For more information, please visit the Waste Management page on our website. order to minimize their adverse impacts on human health and the environment.

PROGRESS ON TARGET 12.41 2014 2015 2016 2017 2018

Nitrogen oxides (NOx) (MT) 515 494 454 480 494

Sulfur oxides (SOx) (MT) 49 48 37 37 30

Volatile organic compounds (VOCs) (MT) 512 455 440 380 404

Ozone-depleting substances (ODS) (MT) 1.5 0.1 0.7 0.1 0.3

Note: Previously reported data have been restated per our methodology, which includes adding facilities that have been acquired and removing facilities that have been sold as operating sites. 1 Data are estimated using conservative assumptions and factors, not measured or weighed.

For more information, please visit the Air Emissions page on our website.

UN Target 12.5: By 2030, substantially reduce waste generation through prevention, reduction, recycling and reuse.

GOAL(S) PROGRESS INDICATOR

By 2025, no more than 20% of our 33% to landfills and global operational waste will be incinerators sent to landfills and incinerators. ··· By 2025, at least 50% of sites will 38% of sites send zero waste to landfill. ···

Corporate Responsibility Report 2018/2019 258 REPORTING | Sustainable Development Goals (SDGs)

SDG 13: Climate Action SDG 17: Partnerships for We support science-based, international and the Goals national actions to address the challenges presented by climate change, including economic incentives for Given the immensity of the challenge of discovering researching, developing and deploying low-carbon smart, sustainable ways to expand access to health and renewable-energy technologies. care, especially in areas with limited infrastructure and resources, it is only by working with others that UN Target 13.1: Strengthen resilience and adaptive capacity to climate-related hazards we can make the strongest contribution. and natural disasters in all countries. UN Target 17.17: Encourage and promote effective public, public-private and PROGRESS ON TARGET 13.1 2014 2015 2016 2017 2018 civil society partnerships, building on the experience and resourcing strategies of partnerships. Scopes 1 and 2 GHG 1,532,400 1,458,500 1,400,000 1,267,000 1,173,200 emissions (MT CO e) 2 PROGRESS ON TARGET 17.17 2014 2015 2016 2017 2018 5,760,000 5,586,300 7,975,100 6,586,100 Scope 3 GHG emissions 6,231,700 Health care workers trained 137,000 19,000 32,000 74,000 67,000 (MT CO e) 2 through our major programs 1 Note: Tracking of all of our Scope 3 emissions began in 2014. In accordance with the Greenhouse and partnerships Gas Protocol, prior-year data have been adjusted to add or remove facilities that have been acquired Investment in partnerships $32 $31 $28 $40 $37 or sold. Adjustments also reflect changes in methodology to ensure consistency from year to year. Scopes 1 and 2 emissions are calculated using the market-based approach. for activities that address underlying barriers to health, such as health-system GOAL(S) PROGRESS INDICATOR strengthening and capacity- building (in millions)1 GHG Emissions 19.6% reduction By 2025, we will reduce global People reached through 267 188 293 311 357 Scope 1 and market-based Scope 2 ··· our major programs and GHG emissions by at least 40% partnerships (in millions) from 2015 levels. 1 Represents investments by our Office of Social Business Innovation, including our Office of Corporate Responsibility, MSD for Mothers and our company’s Foundation. Renewable Energy 14.1% of our purchased By 2025, at least 50% of our electricity comes from purchased electricity will come renewables ··· For more information, please visit the Social Investments page on our website. from renewable sources. By 2040, 100% of our purchased electricity will come from renewable sources.1 PROGRESS ON TARGET 17.17 2014 2015 2016 2017 2018 Total recorded volunteer hours1 109,932 80,585 214,862 114,903 114,393 1 We have defined “purchased electricity” as electricity sourced from external suppliers, as well as renewable electricity that was generated and utilized onsite where we retained the renewable 1 2018 figures are based on employee self-recorded volunteer hours and volunteer hours attributes or where we have obtained renewable attributes through contract. communicated directly to the Office of Corporate Responsibility for certain countries. 2015 marked the first year in which volunteer hour reporting was based solely on employee self-reporting. Prior years included estimates for unrecorded volunteer hours. For more information, please visit the Climate Change & Energy Use page on our website. For more information, please visit the Employee Giving & Volunteering and Key Initiatives pages on our website.

Corporate Responsibility Report 2018/2019 259 REPORTING | Sustainable Development Goals (SDGs)

SDG Index While we have prioritized eight of the SDGs, our company is working toward SDG 10: REDUCED INEQUALITIES Global Diversity & Inclusion Human Rights all of the 17 global goals in some capacity. See below for links to information on Manufacturing & Supply our activities for each of the SDGs.

SDG 11: CITIES & COMMUNITIES Supporting Our Communities SDG 1: NO POVERTY Social Investments Medical Outreach Program Product Donations SDG 2: ZERO HUNGER Promoting a Sustainable Food Supply

SDG 3: GOOD HEALTH & Air Emissions SDG 12: RESPONSIBLE Materials & Packaging Air Emissions WELL-BEING Supporting Our Communities CONSUMPTION & Environmental Sustainability Social Investments PRODUCTION Enabling Access to Health Sourcing & Supplier Relations Fellowship for Global Health Product Stewardship Infectious Diseases Waste Management Waste Management MSD for Mothers SDG 13: CLIMATE ACTION CDP Climate Change Product Pricing Climate Change & Energy Use Product Stewardship Public Policy Position Statement: Climate Change Research & Development Supporting Our Communities Vaccines SDG 1 4: LIFE BELOW WATER Water Water Pharmaceuticals in the Environment Women’s Health Supporting Our Communities SDG 4: QUALITY EDUCATION Protecting Animal Health Supporting Our Communities SDG 15: LIFE ON LAND Environmental Sustainability Materials & Packaging Water SDG 5: GENDER EQUALITY Global Diversity & Inclusion Human Rights Waste Management Women’s Health Supporting Our Communities Corporate Governance SDG 6: CLEAN WATER & Pharmaceuticals in the Environment SDG 16: PEACE, JUSTICE & Human Rights SANITATION Water STRONG INSTITUTIONS

SDG 7: AFFORDABLE & CLEAN Climate Change & Energy Use ENERGY Environmental Sustainability SDG 17: PARTNERSHIPS FOR THE Social Investments GOALS Our Company’s Foundation Health Literacy SDG 8: DECENT WORK & Global Diversity & Inclusion Manufacturing & Supply Human Rights ECONOMIC GROWTH Fellowship for Global Health Manufacturing & Supply Neglected Tropical Diseases Sourcing & Supplier Relations Priorities & Performance SDG 9: INDUSTRY, INNOVATION & Fellowship for Global Health Product Donations INFRASTRUCTURE Manufacturing & Supply Research & Development To learn more about all 17 SDGs, please visit the United Nations’ website.

Corporate Responsibility Report 2018/2019 260 REPORTING | UN Global Compact

UN Global Compact

DISCLOSURES IN THIS SECTION As a signatory to the UNGC, we are fulfilling our commitment through the publication of this report to GRI 102-12 produce a UNGC Communication on Progress—a public disclosure outlining our progress in implementing the The United Nations Global Compact ten principles of the UNGC. (UNGC) is a strategic initiative that The table below summarizes how our existing reporting helps companies align their business aligns with these disclosures and where the information can be found on our website. In addition, this letter from activities and strategies with ten our CEO serves as our statement of continued support universally recognized principles in the for the initiative. areas of human rights, labor standards, environmental protection and the fight against corruption.

Corporate Responsibility Report 2018/2019 261 REPORTING | UN Global Compact

2018 Communication on progress

INDEX Description Report Location/Direct Answer

HUMAN RIGHTS

UNGC-1 Businesses should support and respect the protection of Human Rights internationally proclaimed human rights

UNGC-2 Businesses should make sure that Human Rights they are not complicit in human rights abuses Sourcing & Supplier Relations

LABOR

UNGC-3 Businesses should uphold the freedom of Human Rights association and the effective recognition of the rights to collective bargaining

UNGC-4 Businesses should support the elimination of all forms Human Rights of forced and compulsory labor

UNGC-5 Businesses should support the effective Human Rights abolition of child labor

UNGC-6 Businesses should support Global Diversity & Inclusion the elimination of discrimination in Compliance respect of employment and occupation Human Rights

ENVIRONMENT

UNGC-7 Businesses should support a precautionary Product Stewardship approach to environmental challenges

UNGC-8 Businesses should undertake initiatives to Product Stewardship promote greater environmental responsibility EHS Management & Compliance Sourcing & Supplier Relations

UNGC-9 Businesses should encourage the development and Product Stewardship diffusion of environmentally friendly technologies Green & Sustainable Science

ANTI-CORRUPTION

UNGC-10 Businesses should work against corruption Code of Conduct in all its forms, including extortion and bribery Compliance Sourcing & Supplier Relations

Corporate Responsibility Report 2018/2019 262 REPORTING | Stakeholder Engagement

Stakeholder Engagement

DISCLOSURES IN THIS SECTION their expectations of our company and the potential journeys, expected outcomes and decision-making for collaboration; and to enhance mutual trust and considerations. Learn more about our work with GRI 102-40 GRI 102-43 GRI 102-42 understanding. patient groups. We strive to exchange information, views and Health care professionals We recognize that we can’t address major recommendations; to share activities and progress We are committed to providing appropriate and health, environmental and economic toward key goals; and to work in partnership toward balanced information to physicians and other health care challenges alone, so we collaborate with common objectives. Engagement may take the form of providers about our medicines, vaccines and ongoing one-on-one meetings, expert-input forums, roundtable others who share our commitment and research. Learn more about our interactions with health discussions, industry coalitions or formal partnerships. care professionals. who bring their own unique expertise to the table. Payers Stakeholder groups We work with payers worldwide to inform their We conduct stakeholder engagement at both the We engage with a diverse group of stakeholders to more understanding of the relationship between the prices corporate and the local level, depending on the issue. fully understand their needs and expectations, and to of our products and the true value they deliver to We engage with industry, governments, policy makers, gain insights that can inform our efforts to improve patients and health care systems. Learn more about our nongovernmental organizations (NGOs), opinion access to health care and foster progress toward pricing practices. leaders, patient groups, academic organizations, solutions that benefit society and support our business. our employees and others to inform our policies, Governments, multilateral organizations our practices and the development of our products. Patients and caregivers and regulators Our intention is to build lasting relationships with We embrace the opportunity to engage with We work with policy makers, legislators, multilateral our stakeholders; to understand their objectives, individual patients, patient advocacy organizations organizations and governments worldwide to ensure and caregivers to better understand their health care that policy and regulatory environments globally,

Corporate Responsibility Report 2018/2019 263 REPORTING | Stakeholder Engagement

nationally and locally foster patient access to medicines Employees and vaccines, and that they are conducive to ethical We strive to foster a positive and inclusive working business practices, science and innovation. Learn more environment for our employees by providing resources about our public policy and advocacy positions. to improve their health and that of their families, Shareholders opportunities to further their professional development and ways to get more involved in the communities We strive to create shareholder value by identifying where they live. Learn more about our employee opportunities to meet customer needs and by managing relations efforts. our business responsibly to achieve superior financial results over the long term. Learn more about how we Suppliers and business partners engage with shareholders. We strive to engage a diverse supplier base and to International and local organizations encourage responsible approaches on the part of suppliers regarding labor, employment, human rights, We work hard to identify the best organizations and health and safety, ethics, diversity and protection of individuals to collaborate with in order to address the environment. Learn more about our approach to societal challenges and to inform debate on pressing procurement and supplier relations. issues. Learn more about how we collaborate with others. Trade and industry associations Local communities We engage with stakeholders through membership in numerous organizations. Within these groups, we aim We work toward developing culturally appropriate to inform relevant debates in ways that are constructive mechanisms to engage and build relationships with and that ultimately foster improved patient access to our local community stakeholders. medicines and vaccines globally. Environmental stakeholders We welcome your comments, questions and feedback We work to reduce the environmental effects of our to help guide the development of our programs, our operations and products and to promote sustainable reporting efforts and our corporate responsibility environmental practices within the company, among our website. Contact us. partners and throughout our supply chain.

Corporate Responsibility Report 2018/2019 264 REPORTING | Transparency Disclosures

Transparency Disclosures

y DISCLOSURES IN THIS SECTION We do this by proactively providing nonproprietary Payments to Health Care Professionals information to stakeholders about our business and how GRI 303-1 GRI 305-1 GRI 305-3 y Philanthropic Grants and Contributions we operate, which helps stakeholders make informed GRI 303-2 GRI 305-2 GRI 305-4 y Post-Marketing Requirements decisions about their interactions with the company and y Pricing Practices in the United States We aspire to be open and transparent our products. about how we operate in order to earn We disclose information through a variety of CDP and retain the trust and confidence of our mechanisms, including our financial disclosures, our annual corporate responsibility report, and participation CDP is an independent nonprofit organization working customers, employees, shareholders and in voluntary efforts such as the CDP (formerly the to drive greenhouse gas (GHG) emissions reduction and other important stakeholders. Carbon Disclosure Project), as well as through the media sustainable water use by businesses and cities. and through one-on-one stakeholder discussions. As RESOURCES CDP works with investors globally to advance the part of this commitment to increasing transparency, investment opportunities and reduce the risks posed by California MSD Modern we disclose information in this corporate responsibility climate change by asking almost 6,000 of the world’s Transparency in Slavery Act report in the following areas: Supply Chains Act Transparency largest companies to report on their climate strategies, Statement y CDP GHG emissions and energy use in the standardized y Investor CDP format. We have been disclosing climate Conflict Minerals 2018 U.S. Pricing Clinical Trials information via the CDP for a number of years, and more Report Transparency y Corporate Political Advocacy and Contributions Report recently have participated in both its Water and Supply y Employee Diversity Chain disclosures. Sharps 2018 ESG Report y Grants to Medical, Scientific and Patient Management y CDP Water Plan—CalRecycle Organizations y CDP Climate Change

Corporate Responsibility Report 2018/2019 265 REPORTING | Transparency Disclosures

Clinical trials Clinical Trial Results Corporate political advocacy The clinical study results of our company and Schering- Clinical trials can offer hope for many people and may Plough, previously posted via the Pharmaceutical and contributions help researchers find better treatments for others in Research and Manufacturers of America (PhRMA) Our company is committed to participating the future. Clinical Study Results Database, have been constructively and responsibly in the political process. Clinical trial registries help patients and their health available as of December 2011 on our corporate To improve access to information about our advocacy care providers learn about and gain access to relevant headquarters website. activities, we disclose our costs associated with lobbying clinical trials of experimental treatments or preventative in the European Union and the United States. Where Clinical Trial Data Sharing agents. permitted by law in the United States, Canada and We are committed to the PhRMA/EFPIA Principles Australia, the company provides corporate political A clinical trial registry also serves those who analyze, for Responsible Clinical Trial Data Sharing. Learn more contributions, primarily to the electoral campaigns of report or publish the results of clinical trials by providing about our policies and perspectives: individual candidates. information on trials in progress and the ability to track y such trials over the course of development. Procedure on Access to Clinical Trial Data To improve access to information about our corporate y Procedure on CSR Synopsis Posting political and Political Action Committee (PAC) In keeping with our publication guidelines, we are y contributions in the United States, our company committed to disclosing balanced, complete and External Scientific Review Board Charter semiannually posts our contributions, categorized by accurate information about our registered clinical trials Scientific and medical researchers who wish to submit state, candidate and amount. We post our contributions of marketed products, regardless of outcome. a proposal for access to our company’s data may send in Canada and Australia annually. Learn more about our policies and perspectives: an inquiry. We also disclose a list of industry and trade groups of y Clinical Trials Website To learn more, you may also view our data sharing which we are members, and our dues (dues that are metrics for 2014–2019. y Clinical Trial Ethics greater than $25,000), to U.S. trade associations that are used for political purposes. We encourage all trade y Clinical Trial Registries and the Publication of Clinical Clinical Research Protocols associations to which we belong to disclose publicly their Trial Results Since July 1, 2011, when we submit a manuscript on a political activities as well. y Guidelines for Publication of Clinical Trials in the study of an investigational or an approved medicine or Scientific Literature vaccine to a biomedical journal, we voluntarily include the protocol and statistical analysis plan. We previously y Policy on Expanded Access Employee diversity supplied this material only upon request. Upon a Diversity and inclusion are integrated into our leadership journal’s acceptance of the manuscript for publication, Clinical Trial Disclosures model and are considered an essential leadership skill for we provide the journal, at its own discretion, with the all of our employees. Since 2007, we have registered at trial initiation all opportunity to post on its website the key sections of clinical trials in patients in which treatment is assigned the protocol, including the objectives and hypotheses, We were one of the first companies in the United States that our company sponsors and conducts worldwide patient inclusion and exclusion criteria, study design to begin disclosing our Equal Employment Opportunity on www.ClinicalTrials.gov. We also disclose results and procedures, efficacy and safety measures, and data, and we continue to do so annually. from registered clinical trials of marketed products— statistical analysis plan, and any amendments relating to regardless of outcomes. those sections.

Corporate Responsibility Report 2018/2019 266 REPORTING | Transparency Disclosures

Independence: Our company respects the Outside the United States Grants to medical, independence of medical, scientific and patient scientific and patient organizations and refrains from using our financial Disclosure of grants to patient organizations has been support to influence the policies of organizations or to mandatory in Europe since March 2009. However, in organizations promote specific medicines. Europe, the Middle East and Africa, we voluntarily began disclosing financial support to patient organizations Transparency: Our company supports transparency in 2008, and in Canada in 2009. In October 2009, United States of financial support provided to medical, scientific and in Europe, the Middle East, Africa and Canada, our patient organizations. We believe this is an important We believe that providing support through grants or company also began to disclose grants to other third- step in building public trust both in our company and in donations to third-party medical, scientific and patient party organizations such as medical societies and those to whom we provide support. Making our support organizations is an important way to advance our mutual scientific organizations. The information disclosed public also enhances the visibility of our commitment to objectives to improve health and advance patient care. includes the organizations, the amounts received, helping advance health and science. the dates of payment and the projects for which the We disclose grants of more than $500 provided by In providing financial money was used. Disclosures include all donations and the company’s Global Human Health division to U.S. Compliance with local laws: support to medical, scientific and patient organizations, charitable contributions, grants, and membership fees organizations in support of independent, accredited we comply with all relevant local laws and regulations. As to professional societies or other medical or scientific educational programs for health care professionals, as part of our commitment to these principles, we regularly organizations. well as grants to patient organizations and other medical review and update our Code of Conduct to reaffirm education or scientific societies and organizations in 2018 Grants Outside the United States our mission and commitment to scientific excellence, the United States, Europe, the Middle East, Africa and ethics and integrity. These principles are also reflected Canada. in the company’s corporate policies, procedures and Austria Israel Romania We have robust standards and policies in place to ensure guidelines, which all employees are responsible for Belgium Italy Russia that our grants are intended for, and provided in support understanding and applying appropriately. of, improving patient care, and are not promotional or Canada Lebanon Serbia y Grants made in the 3rd Quarter 2019 in the U.S. likely to be perceived as being promotional in nature, Cyprus MSD for Mothers Slovenia or provided to induce or reward prescription of our y Grants made in the 2nd Quarter 2019 in the U.S. products. Furthermore, any grant or donation must also y Grants made in the 1st Quarter 2019 in the U.S. Denmark Morocco South Africa be permitted by and aligned with local country laws and y Grants made in 2018 in the U.S. Finland Netherlands Spain regulations. y Grants made in 2017 in the U.S. France Norway Sweden We update grants to medical, scientific and patient y Grants made in 2016 in the U.S. organizations quarterly in the United States, and Germany Office of Corporate Switzerland y Grants made in 2015 in the U.S. annually in ex-U.S. jurisdictions. Responsibility y Grants made in 2014 in the U.S. The following three principles guide our approach to Greece Poland Turkey y Grants made in 2013 in the U.S. providing financial support to medical, scientific and Hungary Portugal United Kingdom patient organizations: y Grants made in 2012 in the U.S. y Grants made in 2011 in the U.S. Ireland y Grants made in 2010 in the U.S. The reports in this section are updated on a quarterly y Grants made in 2009 in the U.S. basis. Please refer to https://msdresponsibility.com/ y Grants made in 2008 in the U.S. reporting/transparency-disclosures for the latest reports.

Corporate Responsibility Report 2018/2019 267 REPORTING | Transparency Disclosures

y 2017 Grants Outside the United States marketing, we continue to conduct studies in order to Europe y 2016 Grants Outside the United States monitor ongoing safety and effectiveness. In 2016, we began disclosing payments to European- y 2015 Grants Outside the United States We also engage with health care professionals through based health care professionals and health care y 2014 Grants Outside the United States our Investigator Studies Program, whose mission is to organizations, in alignment with the disclosure advance the delivery of quality health care by supporting y 2013 Grants Outside the United States code announced by the European Federation investigator-initiated original research that will of Pharmaceutical Industries and Associations y 2012 Grants Outside the United States enhance the understanding of disease entities and their (EFPIA). Our company played a supportive role in the y 2011 Grants Outside the United States (2nd half) treatment. This program is open to all academic and development and adoption of the code by the EFPIA y 2011 Grants Outside the United States (1st half) community-based physicians and researchers worldwide board. who are interested in conducting their own research. We are committed to the discovery and development of Payments to health care important new drugs and vaccines through collaboration Philanthropic grants with scientific leaders from academic and scientific professionals organizations around the world. Advice in the form and contributions We believe in broad disclosure of financial relationships of consulting engagements with external medical We report philanthropic grants and charitable between physicians and the pharmaceutical industry. and scientific experts results in meaningful scientific contributions, including contributions made through exchanges that bring real-world knowledge and the Office of Corporate Responsibility, our company’s perspectives to our company. These critical exchanges Foundation, U.S. Global Human Health, and the MSD for contribute to advancing science both at our company Mothers Program. United States and in the broader scientific community, and ultimately help benefit human health. All reports are intended for residents of the United As an early supporter of the Physician Payments States and Canada. Sunshine Act, we believe in broad disclosure of We also engage physicians as speakers in the U.S. y Charitable Contributions Report 3Q 2019 financial relationships between physicians and the through our company’s Medical Forums, which are pharmaceutical industry. In October 2009, our company designed to deliver balanced medical and scientific y Charitable Contributions Report 2Q 2019 began voluntarily disclosing all payments to U.S.-based information to health care professionals so that patients y Charitable Contributions Report 1Q 2019 can have access to the medicines and vaccines they health care professionals who speak on behalf of our y Charitable Contributions Report 2018 company about our products and other health care need and use these products correctly. These programs y Charitable Contributions Report 2017 issues. are structured to be consistent with the PhRMA Code on Interactions with Healthcare Professionals and are y Charitable Contributions Report 2016 SEARCH OPEN PAYMENTS DATA conducted in compliance with FDA regulations to help y Charitable Contributions Report 2015 ensure that our product information is presented in We engage with health care professionals around the y Charitable Contributions Report 2014 world to conduct company-sponsored clinical studies an appropriately balanced manner, with respect to y Charitable Contributions Report 2013 on the safety and effectiveness of our products. potential benefits and risks. We conduct these studies, in accordance with strict y Charitable Contributions Report 2012 regulatory requirements, with “real world” physicians y Charitable Contributions Report 2011 and their patients in order to learn more about our products and bring new medicines and vaccines to patients who need them. Once a product is approved for

Corporate Responsibility Report 2018/2019 268 REPORTING | Transparency Disclosures

Explanation of Status: An explanation is provided writing that the study commitment has been fulfilled or Post-marketing where appropriate. Any revisions to due date agreed that the commitment has been released. upon with the FDA are reflected here requirements Fulfilled: The applicant has submitted the final study We recognize the importance of providing transparent PMR #: Post-Marketing Requirements number report for the commitment, and upon review of the final information about the status of our marketing and assigned to commitment by the FDA study report, the FDA is satisfied that the applicant has met the terms of the commitment. development activities after a product has been PMR Description: The description of the post- approved by regulatory authorities. marketing requirement Released: The FDA has informed the applicant that it has This information can help ensure that health care been released from its obligation to conduct the post- marketing study because the study is either no longer providers and patients remain informed about our U.S. Post-Marketing Requirements products. feasible or would no longer provide useful information. Report (3Q2019) To inform the public about post-marketing activities, we will, on a quarterly basis, post information on this website concerning post-marketing requirements Below are definitions of the status used for each final Pricing practices in (PMRs) for U.S.-marketed products intended for human report submission. There may be differences between the United States use. Information will include the nature and status of the status of the information posted to this website and the PMRs for the life cycle of a marketed product, in that on the FDA Post-Marketing Commitments website, As part of our ongoing commitment to transparency accordance with U.S. regulations. due primarily to the differences in timing of the updates about our business operations, and to help people and the fact that the Company only posts the status of better understand our pricing practices in the United Information will also include reference to clinical, the final report submission and not interim milestone States, in 2017 we began disclosing information about nonclinical or pharmacovigilance studies/trials that have statuses (such as final protocol, study/trial completion, the price of medicines across our portfolio in the U.S. been identified as PMRs. Additional background on post- etc.). The due date reflected is the original due date marketing requirements is available at the FDA website. This information includes changes in average annual list agreed upon with FDA. and net prices across our product portfolio since 2010. Any revisions to due date agreed upon with the FDA are The disclosure also includes the average discount rate Headings, column headings reflected in the Explanation of Status. across our portfolio each year. and explanations Pending: Commitment activity has not yet started. These disclosures don’t tell the complete story about Registered Trade Name: Trade name registered in the how we are responding to concerns about access and Ongoing: Activity for the Commitment has begun. The U.S. market affordability. We have a long history of discovering commitment status should be changed from “Pending” medicines and vaccines and making them accessible Generic Name: Active ingredient[s] in the drug to “Ongoing” when the first subject/patient is screened. and affordable to people who need them. Additional NDA/BLA #: New Drug Application or Biologic License Delayed: The status is changed to “Delayed” once the information about our activities can be found on our Application number original due date has passed or the due dates of any Access and Affordability page. We also recognize that approved extensions have passed. more needs to be done, and we welcome opportunities Original Due Date: The date in the original FDA to work with stakeholders to find long-term solutions. correspondence by which our company has agreed to Terminated: The applicant ended the study before complete the post-marketing requirement to the FDA completion and has not yet submitted a final study report to the FDA. Report on pricing practices Status: The status of the post-marketing requirement at the last quarterly update (Pending, Ongoing, Delayed, Submitted: The applicant has concluded or terminated in the U.S. Terminated, Submitted, Fulfilled and Released—see the study and has submitted a final study report to the Pricing Action Transparency Report (2010–2018). definitions below) FDA, but the FDA has not yet notified the applicant in Posted February 2019.

Corporate Responsibility Report 2018/2019 269 REPORTING | Policy and Resources

Policy and Resources

Our Business Other Websites Access to Health Below are the policies, resources and y MSD Manuals guidelines that govern the work we do y MSD Animal Health Reports every day y U.S. Patient Assistance Programs (PAP) y 2018 U.S. Pricing Transparency Report

Corporate Website Policies Reporting y Public Policy Position Statements y Homepage y Financials Corporate Responsibility Reports Action Plans y Investor Relations y ESG Report (2018/2019) y Antimicrobial Resistance Global Action Plan y Product Pipeline y Executive Summary (2017/2018) y Delivering on Our Commitments y Board Governance y Public Policy Position Statements Performance Data Backgrounders y Performance Data Spreadsheet Company Documents y Alliance to Advance Patient-Centered Cancer Care y Company Fact Sheet y Bridging the Gap Backgrounder y 2018 Form 10-K y Bridging the Gap Infographic y 2019 Proxy Statement

Corporate Responsibility Report 2018/2019 270 REPORTING | Policy and Resources

y Bridging the Gap Partners y HIV Care Connect Ethics & Values Philanthropy y Improving Care for Alzheimer’s Patients and Codes of Conduct Guidelines Their Caregivers y Code of Conduct, Our Values & Standards y Grant Application Guidelines y Project ECHO Fact Sheet y Ethical Operations Handbook y Neighbor of Choice Application Guidelines y Tackling the U.S. Opioid Crisis in West Virginia y Business Partner Code of Conduct y Neighbor of Choice Participating Sites y NCD Infographic y Grant Application Website Transparency Statements Employees y California Transparency in Supply Chains Act Infographics y MSD Modern Slavery Act Transparency Statement y NCD Infographic Diversity y Philanthropy Infographic y U.S. Employee Demographics (2018) Policies y Supplier Performance Expectations Environmental y Conflict Minerals Policy y Public Policy Position Statements Sustainability Policies y Respect for Environmental, Health and Safety y Public Policy Position Statements

Other Resources y Environmental Goals y GHG + Water Assurance Letter y Sharps Management Plan-CalRecycle

Corporate Responsibility Report 2018/2019 271 REPORTING | Awards & Recognition

Awards & Recognition

Over the years, we have received Dividend Channel FTSE4Good numerous awards and recognition Named a Top Socially Responsible Dividend Stock in Since 2008 our company remains a constituent of for our comprehensive approach both 2018 and 2019 signifying a stock with above- the FTSE4Good Index. The FTSE4Good Index series average “Dividend Rank” statistics, as well as being measures the performance of companies that meet to corporate responsibility. recognized by prominent asset managers as being a globally recognized corporate responsibility standards The following is a selection of awards and recognition socially responsible investment (January 2018 & 2019). (August 2018 & 2019). received throughout 2018 and 2019. ECPI Glassdoor We are a constituent of ECPI’s indices, which have been Our company’s Chairman and CEO Ken Frazier was Global Recognition dedicated to environmental, social and governance named to Glassdoor’s list of Top CEOs​ as part of its research since 1997. 2019 Employees’ Choice Awards. This award puts the Center for Corporate Political Accountability (CPA) spotlight on 100 top leaders who exemplify exceptional Forbes Recognized on the CPA-Zicklin Index of Corporate vision, trust and communication to employees in North Political Disclosure and Accountability as a “trendsetter” Named as one of Forbes Global 2000 on the 16th and 17th America and parts of Europe (June 2019). for corporate disclosures related to political spending annual Forbes Global 2000 list, which includes publicly (September 2018). traded companies from 60 countries (June 2018 & 2019). Hispanic Network Magazine One of the Top Healthcare, Pharmaceutical and Biotech Corporate Responsibility Magazine Fortune Companies to win the 2019 Summer and the 2019 Ranked #26 on the 20th annual “100 Best Corporate Named to the “World’s Most Admired Companies” list in Fall “Best of the Best” award from Hispanic Network Citizens” list, which recognizes environmental, social both 2018 and 2019 (January 2018 & 2019). magazine out of hundreds of Fortune 1000 companies and governance (ESG) performance of public companies Our company’s Chairman and CEO Ken Frazier was (Spring & Summer 2019). across the United States (May 2019). named to the #5 spot on the 2018 Fortune’s World’s Greatest 50 Leaders list (April 2018). Corporate Responsibility Report 2018/2019 272 REPORTING | Awards & Recognition

ISS-oekom Wall Street Journal Management Top 250 EMEA SABRE Awards Maintained “Prime Status” by oekom research on their Ranked #42 on the Wall Street Journal’s Management Awarded the Platinum SABRE Award for communication ISS-oekom Corporate Rating Report; meaning that the Top 250 List; a ranking of U.S. companies by the Drucker in the medical field in Romania and the Protect Her company fulfills ISS-oekom’s requirements regarding Institute (November 2018). Wings Campaign that contributed to Romania’s Ministry sustainability performance within our sector (October of Health decision to re-launch HPV vaccination within 2018). Access to Health the National Immunization Program (May 2019). JUST Capital European Patient Group for American Chemical Company Forbes—in partnership with JUST Capital—analyzed Rare Diseases (EURORDIS) Received a “Citation for Chemical Breakthrough” from nearly 1,000 U.S. publicly traded companies to Our company, along with Bayer, UCB and EFPIA, the American Chemical Society (ACS) Division of the determine which have the best and most just business were jointly honored by the European Patient Group History of Chemistry (November 2018). behavior and named our company to the 2018 JUST for Rare Diseases (EURORDIS) with an award for our 100 List. The rankings provide a comprehensive AnimalPharma commitment to championing patient engagement in measurement of how U.S. companies perform on the Received the “Animal Pharma Award” for Best New Europe (February 2018). issues Americans care about most (December 2018). Food Animal Product for our IDAL® family of devices Fortune for needle-free and intradermal application of swine MSCI Ranked second on Fortune magazine’s “Change the vaccines (January 2019). Remained a top 10 constituent on the Global World” list for our leadership role in the fight against Sustainability Index for MSCI, Inc., a leading provider of BioPharma Ebola, including our investigational Ebola vaccine and global benchmark indexes that has over 500 equity and Conferred “Best 2017 Immuno-oncology Breakthrough” our support for humanitarian organizations involved in fixed-income ESG indexes (September 2018). for KEYTRUDA® and “Best 2017 Vaccine Breakthrough” Ebola relief and recovery efforts (September 2018). Philadelphia Inquirer for our Ebola vaccine at the 8th annual BioPharma Frost & Sullivan Manufacturing Leadership Council Industry Awards which recognizes organizations and Our company’s Chairman and CEO, Ken Frazier, was Recognized with the Manufacturing Leadership Award individual contributions to innovation and standards inducted into the Philadelphia Inquirer’s Business Hall of in 2018 and 2019 (March 2018 & 2019). of excellence in Asia’s biopharma industry (December Fame for his distinguished record of civic engagement 2018). GreenBook Research Industries Trend (GRIT) Report and professional achievement (November 2018). BioNJ Named the 19th most innovative company in the GRIT TIME report, which recognizes innovation in insights across Received an Innovator Award in recognition of the TIME magazine named Ken Frazier, our company’s industries (July 2019). 2018 FDA approval of PIFELTRO™ (doravirine), a new Chairman and CEO, to the 2018 TIME 100, its annual list treatment for HIV. Innovator Awards are given to New Hungarian Society of Experimental of the most influential people in the world (April 2018). Jersey companies that have received a novel FDA drug and Clinical Pharmacology TIME magazine named our company to its inaugural approval (February 2019). Honored with the “Drug of the Year” for the fourth time list of the Most Genius Companies of 2018 for “making Construction User Roundtable (CURT) for KEYTRUDA (pembrolizumab) (December 2018). deadly diseases a priority” with our investigational Ebola vaccine. The list features 50 companies that are Our Global Engineering Services (GES) won a Top Safety National Association of Manufacturers “inventing the future” and driving progress in their Award for its company-wide safety efforts, including Received five Manufacturing Leadership Awards at the respective fields (October 2018). the Safe by Choice program (March 2019). Manufacturing Leadership Council’s 2019 annual awards ceremony, including top billing as Manufacturer of the Year in the large company category (June 2019).

Corporate Responsibility Report 2018/2019 273 REPORTING | Awards & Recognition

National Inventors Hall of Fame American Indian Science and Engineering Society Equileap Four of our company’s scientists were posthumously Named to the 2018 and 2019 list of “Top 50 Places to Ranked #4 in the Gender Equality Global Report that inducted into the National Inventors Hall of Fame for Work for Native American STEM Professionals” by the measures how well companies do in offering equal their work in developing thiazide diuretics, the first class American Indian Science and Engineering Society (April opportunities for men and women (October 2018). of drugs to safely and effectively treat hypertension 2018 & 2019). Equal Opportunity Magazine (May 2019). Black Enterprise Our company ranked #3 in the 17th and 18th annual “Top People Black Enterprise, in collaboration with The Executive 50 Employers 2019 Readers Choice Awards” in Equal Recognized by People magazine as one of the top “50 Leadership Council, the leading organization of Opportunity magazine (March 2018 & 2019). Companies that Care” for our efforts through MSD black senior managers, included our company on its Fast Company for Mothers to reduce preventable maternal mortality annual listing of the 50 Best Companies for Diversity across the globe with education, tools and technologies (December 2018). Honored on Fast Company’s inaugural list of the for health care providers and moms. We were the “50 Best Workplaces for Innovators,” recognizing Brandon Hall Group top-ranked pharmaceutical company on the list, coming businesses and organizations that demonstrate a deep in at 12th place (July 2019). Honored with the “Gold Excellence Award in the Best commitment to encouraging invention at all levels Unique or Innovative Learning and Development (August 2019). Project HOPE Program in Learning” for the MSD Fellowship for Global Fortune Honored with Project HOPE’s first Lifetime of Global Health program, our company’s three-month, field- Health Award for outstanding contributions in global based corporate pro bono program designed to leverage Fortune and Great Place to Work honored our company health and humanitarian relief (November 2018). the skills and talents of our employees worldwide. as one of the 2019 Top 10 Best Workplaces in Health Care and Biopharma (April 2019). The National Minority Supplier Development Council CAREERS & the disABLED Magazine Global Business Group on Health Awarded Class II ($11 billion to $50 billion revenue) Ranked on the “Readers’ Choice Top 50 Employers” list Corporation of the Year for our exceptional in 2018 and 2019 by CAREERS & the disABLED magazine, Recognized by the Global Business Group on Health accomplishments in promoting minority supplier honoring corporations for creating a progressive with the Best Employers for Healthy Lifestyles Global development (October 2018). environment for people with disabilities, as reported by Distinction Award for dedication to the health and well- readers of the magazine (February 2018 & 2019). being of our global workforce (September 2018). Vet Show Global Women in Leadership Economic Forum MSD Animal Health was awarded the category of “Best CEO Roundtable on Cancer Veterinary Pharmaceutical Company” for the 2018 Vet Recognized by the CEO Roundtable on Cancer as a Gold Our company in the Gulf Corporation Council (GCC) was Trust Awards, which is given to companies, charities Standard Employer for our company’s commitment to awarded in the “Most Women-Friendly Employer” and and individuals that have made a positive impact on the a healthier workplace focused on cancer risk reduction, “Best D&I Initiative in the Workplace” categories at the veterinary world (November 2018). early detection, access to clinical trials and high-quality annual Global Women in Leadership Economic Forum of care (October 2018). (December 2018). Employees DIVERSEability Magazine HR Asia MSD Taiwan was named one of the 2019 winners of HR American Heart Association Recognized as one of DIVERSEability magazine’s Best of the Best Top Disability-Friendly Companies in 2018 and Asia’s “Best Companies to Work for in Asia” (August Recognized by the American Heart Association 2019 (August 2018 & 2019). 2019). (AHA) at the gold level on the 2018 Workplace Health Achievement Index (August 2018).

Corporate Responsibility Report 2018/2019 274 REPORTING | Awards & Recognition

Human Rights Campaign (HRC) Foundation Professional Woman’s Magazine Named to the inaugural Working Mother “Best Scored 100 percent and earned the designation as a Named our company to its “Best of the Best” list of Companies for Dads” list (November 2018). “Best Place to Work for LGBT Equality” on the HRC Top Healthcare, Pharmaceutical & Biotech Companies Earned a spot on the “Best Companies for Multicultural Corporate Equality Index in 2018 and 2019 (January (March 2019). Women” list to recognize the hiring of diverse women 2018 & 2019). The American Association of and helping them reach their full potential (May 2019). Indeed People with Disabilities (AAPD) Workplace Gender Equality Agency (WGEA) Named to Indeed’s list of Top 50 Top-Rated Workplaces Recognized for scoring 100% on the 2018 Disability For the fourth year in a row, MSD Australia was to work for in 2019 (July 2019). Equality Index of Best Places to Work (DEI) in 2018 and recognized as an Employer of Choice for Gender Equality 2019 (May 2018 & 2019). JUST Capital by the Workplace Gender Equality Agency (WGEA) (February 2019). JUST Capital, with support from the Robert Wood The International Association for Volunteer Effort Johnson Foundation, ranked our company #15 on their Awarded the Inspiring Practice Award in recognition list of the Top 100 U.S. Companies Supporting Healthy of the MSD Fellowship for Global Health for tangible Environmental Sustainability Communities and Families. They tracked company outcomes that resulted from a specific volunteer-based American Chemical Society performance on key issues—from paying a living wage strategy to meet a particular need (October 2018). and providing good benefits to maintaining strong Recognized with the Green Chemistry Challenge Award Thomson Reuters community relationships and minimizing pollution (May for innovative processes in reducing waste and the 2019). Ranked #20 out of the top 100 publicly traded generation of hazardous materials (October 2018). companies that make up the Thomson Reuters Diversity Environmental Protection Agency (EPA) Latina Style, Inc. & Inclusion Index (September 2018). Recognized as one of the “50 Best Companies for Recognized as one of the winners of the Green Top Employers Institute Latinas to Work in the U.S.” by Latina Style 50 Report in Chemistry Challenge Awards for changing the way our 2018 and 2019 (September 2018 & February 2019). For the 3rd consecutive year our company was awarded company manufactures ceftolozane, an antibiotic sold the Top Employers certification to recognize companies in combination with another chemical as ZERBAXA ® Military Times Magazine that have shown excellence in people practices and (ceftolozane and tazobactam) (June 2019). Recognized for the fourth consecutive year on the structures worldwide (February 2019). For the 14th straight year, our company was awarded Military Times magazine list of prestigious top 75 “Best U.S. Veterans Magazine the Energy Star for Partner of the Year: Sustained for Vets: Employers 2019” for the many initiatives Excellence for outstanding contributions to protecting underway across the company to attract, select, Recognized in the 2018 and 2019 evaluation of the the environment through superior energy efficiency engage and retain employees with past military service nation’s Best of the Best Top Veteran-Friendly achievements (April 2019). (May 2019). Companies (May 2018 & 2019). Newsweek Green Rankings National Association for Female Executives Working Mother Magazine Ranked #33 on Newsweek’s “2017 Global 500 Green Named our company one of its 2019 “Top Companies Ranked on Working Mother’s “100 Best Companies” list Rankings” list (May 2018). for Executive Women” for the 17th time. The award for more than 30 years. This list recognizes companies recognizes U.S. corporations where women have for helping working parents succeed by providing Sustainable Greece 2020 expanded parental leaves, more flexibility with work significant clout to make the decisions that affect their MSD Greece was recognized as one of the Most hours, assistance for special needs and opportunities for company’s future and its bottom line (March 2019). Sustainable Companies in Greece (March 2018). career development (November 2018).

Corporate Responsibility Report 2018/2019 275 REPORTING | Awards & Recognition

Ethics & Values Philanthropy Billion Dollar Roundtable American Journey Award Certified as a member of the Billion Dollar Roundtable, a The Ronald H. Brown American Journey Award was top-level corporate advocacy organization that promotes awarded to our Chairman and CEO Ken Frazier in excellence in supply chain diversity (March 2019). 2018 for his inspiring professional path, as well as his work to improve the lives of children. This award was Women’s Business Enterprise National established in 2009 to honor outstanding Americans Council (WBENC) who exemplify the vision and transformative ideals of One of 60 companies awarded the America’s Top Ronald H. Brown (1941–1996). The award is granted Corporations for Women’s Business Enterprises to individuals who have developed opportunities and (WBEs) award for having demonstrated a sustained fostered the achievements of others (March 2018). commitment to the inclusion of women-owned Chronicle of Philanthropy businesses in their supply chains (January 2019). Ranked #2 overall (combined cash and in-kind donations) on the Chronicle of Philanthropy’s 2017 “Top Corporate Givers” list (October 2018).

Fortune Magazine Ranked #4 in Fortune’s 50 Best Workplaces for Giving Back in 2018 (February 2018).

Corporate Responsibility Report 2018/2019 276 REPORTING | Performance Data

Performance Data

Below are key performance indicators These KPIs serve as baseline measurements for our (KPIs) for each of our four focus corporate responsibility activities, are measured globally unless otherwise noted, and cover all of our business areas (Access to Health, Employees, units with the exception of joint ventures. Environmental Sustainability, and Ethics & Values), as well as links to the performance data tables found Our Purpose throughout this site. Performance data RESOURCES y Economic Impact Performance Data CDP Website (Excel)

ESG Report 2018

Corporate Responsibility Report 2018/2019 277 REPORTING | Performance Data

Access to Health

Key Performance Indicators (KPIs)

RESEARCH & DEVELOPMENT 2014 2015 2016 2017 2018

Top 20 global burdens of disease addressed by our products 88% 88% 88% 88% 88% and pipeline1

GCP/PV inspections by regulatory agencies of the company or clinical 0 0 – 0 0 trial investigators that led to significant fines, penalties, warning letters or product seizures2

Established significant external licenses and collaborations3 35 64 57 55 64

Narrative of compounds provided to product-development Online partnerships4

MANUFACTURING & SUPPLY 2014 2015 2016 2017 2018

Annual percentage of units manufactured/sold and recalled 0.22% 0.07% 0.01% 0.01% 0.14% during a given year (recall rate globally) 5, 6

Number of local and regional manufacturing partnerships to 104 179 179 153 144 enable access

Number of products available through local and regional 499 1,157 941 765 700 partnerships7

PRODUCT REGISTRATION 2014 2015 2016 2017 2018

New product and device registrations (annual) 8, 9, 10 176 156 143 143 124

Products submitted that have achieved WHO prequalification 11 11 11 13 13

PRODUCT PRICING 2014 2015 2016 2017 2018

Number of products that are supported with differential pricing11, 12 35 35 40 42 42

Number of countries where inter- and/or intra-country pricing has 114 121 123 125 128 been implemented13

Investment in patient- and provider-education programs (in millions) $52 $80 $80 $90 $115

NOTE: Year-over-year differential pricing performance metrics can be impacted based on the timing of local-market or third-party contract re- newals and/or product life-cycle introductions or deletions. Therefore, increases or decreases in these pricing metrics should not be interpreted as anticipating the level of trend growth in future years.

Corporate Responsibility Report 2018/2019 278 REPORTING | Performance Data

SOCIAL INVESTMENTS 2014 2015 2016 2017 2018 Performance data

Health care workers trained through major programs and partnerships 137,000 19,000 32,000 74,000 67,000 y Animal Health 14 (estimate) y Anti-Counterfeiting Investment in partnerships for activities to address underlying barriers $32 $21 $28 $40 $37 y Clinical Research to health, such as health-system strengthening and capacity building (in y Manufacturing & Supply millions)14 y MECTIZAN® (ivermectin) Donation Program People reached through major programs & partnerships (in millions)14 267 188 293 311 35 y MSD Medical Outreach Program (MMOP) Note: Unless otherwise stated, data for Access to Health are reflective of our Human Health business only; information on our company’s Animal y Health is reported separately. MSD for Mothers 1 As defined by the Institute for Health Metrics and Evaluation (IHME), which replaces the previously used WHO chart of leading causes of disease, y Patient Assistance Programs condition or injury. 2 Complete response letter received for Sugammadex (MK-8616) in 2013, and the complete response letter received for Januvia (sitagliptin; MK- y Product Pricing 0431) in 2016. y Product Registration 3 Starting in 2014, this metric no longer includes select early licenses and research collaborations that were included in the metric for previous years. 4 For information on product-development partnerships, visit https://www.msdresponsibility.com/access-to-health/research-development/. y Quality & Product Safety 5 Definition of Recall Classifications: http://www.fda.gov/ForConsumers/ConsumerUpdates/ucm049070.htm#RecallClassifications. y Research & Development ⁶ Starting in 2014, product recalls include data from our Animal Health business. y Social Investments 7 Increase represented in 2015 is due in part by better visibility to global partner information. 8 Data includes new products and new indications. y Women’s Health 9 For information on new registrations by region, visit our Clinical Research section. 10 Data for all years have been updated based on a tracking system upgrade that corrected miscounts in prior years. 11 Differential pricing intended to facilitate access for the at-need population. 12 Products include HIV treatments, vaccines and other patented products. 13 Countries as defined by the World Bank 2017 GNI Classification, including UN-defined Least Developed Countries. 14 Represents investments by our Office of Social Business Innovation, including our Office of Corporate Responsibility,MSD for Mothers and our company’s Foundation.

Corporate Responsibility Report 2018/2019 279 REPORTING | Performance Data

Employees Performance data y Global Diversity & Inclusion Key Performance Indicators (KPIs) y Financial Well-Being y Employees Overview 2014 2015 2016 2017 DIVERSITY & INCLUSION 2018 y Employee Safety Women in executive roles1 31% 34% 31% 32% 32% y Engaging Our Employees

Women on the Board 17% 21% 23% 23% 23% y Learning & Development

Members of underrepresented ethnic groups on the Board 25% 21% 23% 23% 23%

Members of underrepresented ethnic groups in executive roles (U.S.) 20% 20% 23% 23% 21%

Members of underrepresented ethnic groups in the workforce (U.S.) 24% 26% 26% 26% 27%

WELL-BEING 2014 2015 2016 2017 2018

Response rate to the Voice Survey 78% NA 85% NA 86%

Employees who completed a health assessment (U.S.)2 57% 58% 57% 70% NA

Lost-time incident rate (LTIR) 0.20 0.22 0.13 0.13 0.1

Recordable injury rate (RIR) 0.58 0.48 0.35 0.33 0.3

VOLUNTEERISM 2014 2015 2016 2017 2018

Employees who took release time according to the global policy on NA 9.0% 21.0% 7.0% 7.0% employee volunteerism3

Total recorded volunteer hours4 109,932 80,585 214,862 114,903 114,393

NA: Not Available. 1 “Executive” is defined as the chief executive officer and two structural levels below. 2 Did not capture health assessment data in 2018 due to change in vendor. 3 Company population figures are based on an estimated workforce of approximately 66,000 in 2018. 4 2018 figures are based on employee self-recorded volunteer hours and volunteer hours communicated directly to the Office of Corporate Re- sponsibility for certain countries. 2015 marked the first year in which volunteer hour reporting was based solely on employee self-reporting. Prior years included estimates for unrecorded volunteer hours.

Corporate Responsibility Report 2018/2019 280 REPORTING | Performance Data

Environmental Sustainability Performance data y Key Performance Indicators (KPIs)1 Air Emissions y Climate Change & Energy Use 2014 2015 2016 2017 2018 y EHS Management & Compliance

2 Greenhouse gas emissions (Scope 1 & 2) (MT CO2e) 1,532,400 1,416,400 1,363,300 1,254,700 1,208,100 y Materials & Packaging

Water usage (m3) 26.9 24.0 20.7 19.6 20.5 y Waste Management y Water Operational waste generated (MT) 83,732 69,856 72,599 72,426 73,930

1 Includes facilities worldwide. 2 In accordance with the Greenhouse Gas Protocol, prior-year data have been adjusted to add or remove facilities that have been acquired or sold. Adjustments also reflect changes in methodology to ensure consistency from year to year.

Ethics & Values Performance data Key Performance Indicators (KPIs) y Corporate Governance

2014 2015 2016 2017 2018 y Global Privacy Program y Office of Ethics Employees trained on our Code of Conduct training 99% 99% 100% 100% 99% series y Sourcing & Supplier Relations y Sales & Marketing Ratio of substantiated allegations to concerns/issues 60% 58% 55% 60% 52% raised

Reported concerns regarding privacy practices, 18% 96% 98% 98% 97% breaches of privacy and losses of personal data and devices that were substantiated1, 2

1 Privacy concerns include all concerns escalated to our Privacy Office about the company’s privacy practices. Substantiated concerns are those that are determined to be inconsistent with our privacy standards or that involve the loss of, theft of or unauthorized access to personal data. 2 In 2015, because of the scope of lost or stolen devices known to be encrypted, we ceased inclusion of lost or stolen MSD devices in our incident metrics.

Philanthropy

Performance data y Grants & Contributions y Community Contributions y Employee Giving y MSD Fellowship for Global Health Impact

Corporate Responsibility Report 2018/2019 281 CONTACT US | Overview

Contact Us

DISCLOSURES IN THIS SECTION MSD in Canada 1-800-444-2080 16750, Trans-Canada Highway Kirkland Monday–Friday GRI 102-53 Quebec H9H 4M7 Canada 8:00 am–7:00 pm, ET Thank you for your interest in our corporate +1-514-428-7920 You can call this number 24/7 for any product- Visit MSD in Canada related emergency responsibility activities and performance. Worldwide offices Download our ESG report We hope you find this report engaging and informative. MSD is known as Merck & Co., Inc., Kenilworth, N.J., In addition to the publication of our comprehensive, We continue to welcome your feedback on our U.S.A. within the U.S. and Canada online Corporate Responsibility Report, we have also Corporate Responsibility Report, as well as any other Worldwide Contact Information published a corresponding ESG Report available to view comments or questions you may have. or download in PDF format. You may contact us at either of the addresses below or Suppliers Note: Software to view files presented in PDF or SWF email us here. To inquire about invoice and payment issues, please contact the appropriate country’s procurement center. format is available at no charge through the Adobe MSD corporate headquarters Procurement Contact List website. Get Adobe Reader.

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Corporate Responsibility Report 2018/2019 282 CONTACT US | FAQ

Frequently Asked Questions

DISCLOSURES IN THIS SECTION Why is your company publishing What does this report contain? GRI 102-56 this report? Our 2018/2019 Corporate Responsibility Report includes quantitative data for the calendar year from January 1 to We published this year’s online report to provide We are committed to increasing December 31, 2018, unless otherwise noted. To ensure information about our approach to corporate transparency in our reporting and that readers have the most up-to-date information, responsibility, as well as background on our initiatives. some of the narrative in the report is about decisions continue to engage with stakeholders on We seek to be clear not only about our opportunities, and initiatives that took place in 2019. Based on those issues and concerns that matter but also about the challenges we face, what we are feedback from stakeholders and the company’s own doing to address them, and why. most—both to our stakeholders and to analysis, our reporting focuses on four broad topics: the future success of our company. Where can your company’s 2018 y Access to Health We believe that the best way to address the concerns, y Employees risks and questions facing our business, and to build a performance data be found? y Environmental Sustainability foundation of trust, is to be more transparent about This website serves as our comprehensive report, and the way we operate. y Ethics & Values thus contains metrics and information pertinent to our corporate responsibility performance and activities. For each of these issues, the report details the You can find our key performance indicators here, and challenges we face as a company, our strategy and our performance data to specific topics can be found on the performance. tabs associated with those issues. To download an Excel We have also identified corporate responsibility spreadsheet that includes all of the performance data issues that internal and external stakeholders have found on the website, please click here. identified as having significant financial, operational

Corporate Responsibility Report 2018/2019 283 CONTACT US | FAQ

or reputational impact on the company, and illustrate Has the 2018/2019 report received Will you issue updates to this where our company can have a significant impact on society and the environment. These can be found within independent external verification? report throughout the year? the Materiality section of this report. WSP conducted an independent third-party review of We publish our Corporate Responsibility Report We are also using several external guidelines and our 2018 greenhouse gas and water inventories and on an annual basis, but we do update the measurement frameworks to inform the scope of our provided limited assurance for the data that we submit transparency disclosures section as new information reporting, including the Global Reporting Initiative (GRI) to CDP and for inclusion the Corporate Responsibility becomes available. Standards, the Sustainable Development Goals (SDGs), Report. Please see WSP’s limited assurance of our the Sustainability Accounting Standards Board (SASB) environmental data for details. When will you publish your next and the UN Global Compact. While we did not obtain external verification, we did speak with numerous external stakeholders, report? Do you report in accordance with representing a variety of constituencies, about the We plan to publish our next comprehensive company’s planned approach to reporting, our corporate responsibility report in 2020. the Global Reporting Initiative responsibility materiality assessment process and (GRI)? the broad material areas upon which we planned to report. The company reflects these consultations, How can feedback about your Yes, our company’s online corporate responsibility where feasible and appropriate, on our website, corporate responsibility programs report as well as our 2018 ESG report has been prepared and will use the insights gained through these and in accordance with the GRI Standards. The Standards continuing discussions with stakeholders to inform be submitted? offer a useful framework for transparent reporting future reporting. Your feedback is important to us and will be helpful for about environmental, social and governance (ESG) the development of future reports. Please visit the performance. Greater transparency on such matters Contact Us page. is beneficial to our business, because it helps to inform Were stakeholders’ views our stakeholders and also enables us to compare obtained? performance with peers on relevant metrics. We believe Are hard copies of the report that this will help us focus on continuously improving the Yes, we did speak with external stakeholders available upon request? things that matter most. representing a variety of constituencies about our company’s planned approach to reporting as well as part Our comprehensive corporate responsibility report is of our corporate responsibility materiality assessment an online report. Beginning this year, we now publish a process. Learn more about our stakeholder engagement corresponding ESG Report. You may download a copy process and our recent corporate responsibility of our 2018 ESG Report but we no longer print copies of materiality assessment. our comprehensive report.

Corporate Responsibility Report 2018/2019 284 CONTACT US | Terms of Use

Terms of Use

This website is maintained by Merck Sharp & Dohme If you are a doctor or other qualified health care On this website the Company and its affiliates may Corp., a wholly-owned subsidiary of Merck & Co., Inc., professional, you should not allow the content of this collect, through registration processes or other means, Kenilworth, NJ, USA (the “Company”) and is intended website to substitute for your own medical judgment, personal information about you. Please refer to the for use by entities or individuals who are 18 years of age which you should exercise in evaluating the information Company’s Internet privacy policy for details about or older. on this website. how we protect your personal information. You are responsible for the accuracy of any personal information By using this website, you agree to be bound by, and While it has used reasonable efforts to ensure that about you that you provide to the Company through to comply with, the terms of use on this page (“Terms the information on this website is accurate, complete, this website. of Use”). The Company reserves the right to change and current, the Company expressly disclaims any the Terms of Use from time to time, as necessary, and warranty or representation regarding the accuracy, Except for information covered by our privacy policy, any will provide notice, on this page, of any such changes, completeness, or currency of such information. THE communication or materials you transmit to or through including the date they became effective. You may INFORMATION ON THIS WEBSITE IS PROVIDED “AS the website, including data, comments, questions, access this page at any time through the Terms of Use IS,” WITHOUT A WARRANTY OF ANY KIND, EXPRESS suggestions, ideas, concepts, know-how, techniques, link at the bottom of each page on this website. OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, or the like, shall become the property of the Company. THE IMPLIED WARRANTIES OF MERCHANTABILITY, The Company shall be free to use, disclose, reproduce, Nothing on this website should be construed as the FITNESS FOR A PARTICULAR PURPOSE, OR or distribute any such communications or materials giving of advice or the making of a recommendation NON-INFRINGEMENT. The Company furthermore without limitation of any kind. regarding any decision or action related to your health disclaims all liability for any damages, no matter their or the health of others. If you are a patient, you This website may contain information brought to you by alleged cause nor theory of liability on which they should consult a doctor or other qualified health care third parties or through links to other Internet websites. are based, including, but not limited to, damages for professional regarding any questions you have about Notice of information or links of this kind is provided personal injury or lost profits. your health or before making any treatment decisions. throughout the website. The Company does not control

Corporate Responsibility Report 2018/2019 285 CONTACT US | Terms of Use

nor assume any responsibility for the information You may not, distribute, modify, transmit, reuse, The Company reserves the right, if you violate the provided by third parties or the content of other repost, or use the content of the website for public Terms of Use, to suspend or terminate any account you Internet websites to which we provide links. or commercial purposes, including the text, images, have created on this website. audio, or video, without the written permission of the This website may include “forward-looking statements” You agree to indemnify, defend, and hold the Company, Company. You should assume that everything you see within the meaning of the safe harbor provisions of the its corporate affiliates and its and their respective or read on this website is copyrighted unless otherwise U.S. Private Securities Litigation Reform Act of 1995. officers, employees, and suppliers harmless from any noted and may not be used, except as provided in the The Company undertakes no obligation to publicly claim or demand, including reasonable attorneys’ fees, Terms of Use or in the text on the website, without update any forward-looking statement, whether as a made by any third party due to, or allegedly arising out the written permission of the Company. The Company result of new information, future events, or otherwise. of, your use of this website or any breach of the Terms of neither warrants nor represents that your use of Additional factors that could cause results to differ Use or violation of any rights of another. materials displayed on the website will not infringe materially from those described in the forward-looking rights of third parties not owned by, or affiliated with, If any dispute arises between you and the Company statements can be found in the most recent Annual the Company. concerning these Terms of Use or your use of this Report on Form 10-K of the Company’s parent entity, website, it shall be resolved through good-faith Merck & Co., Inc., Kenilworth, NJ, USA, and its other Although the Company or its corporate affiliates may negotiations. If such efforts prove unsuccessful, all filings with the Securities and Exchange Commission from time to time monitor or review discussions, controversies, claims, or disputes shall be submitted to (SEC) available at www.sec.gov. chats, postings, transmissions, bulletin boards, and binding arbitration pursuant to the Federal Arbitration the like on the website, if any, the Company is under You should assume that all trademarks, logos, designs, Act, 9 U.S.C. § 1 et seq. The rules of the American no obligation to do so and assumes no responsibility or slogans, and trade dress appearing on this website, Arbitration Association shall apply to the conduct of liability arising from the content of any such Web pages whether or not appearing in large print, italics, or with the hearing, which shall be venued in Montgomery or utilities nor for any error, defamation, libel, slander, the trademark symbol, are owned by the Company County, Pennsylvania. The governing law shall be omission, falsehood, obscenity, pornography, profanity, or its affiliate companies, or are used under license. Pennsylvania. The arbitration award shall be final and danger, or inaccuracy contained in any information This website may also contain or reference patents, binding and may be confirmed and enforced in any within such pages or utilities on the website. You are proprietary information, technologies, products, court of competent jurisdiction. The parties shall bear prohibited from posting or transmitting any unlawful, processes, or other proprietary rights of the Company equally the costs of the arbitration, but each party shall threatening, libelous, defamatory, obscene, scandalous, and/or other parties. No license to, or right in, any such pay its own attorneys’ fees incurred in connection with inflammatory, pornographic, or profane material or any trademarks, patents, trade secrets, technologies, the arbitration or the confirmation or enforcement of material that could constitute or encourage conduct products, processes, and other proprietary rights of any award. that would be considered a criminal offense, give rise to the Company and/or other parties is granted to, or civil liability, or otherwise violate any law. conferred upon, you.

Corporate Responsibility Report 2018/2019 286 FORWARD-LOOKING STATEMENT

This communication of Merck & Co., Inc., Kenilworth, N.J., U.S.A. (the “company”) includes “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based upon the current beliefs and expectations of the company’s management and are subject to significant risks and uncertainties. There can be no guarantees with respect to pipeline products that the products will receive the necessary regulatory approvals or that they will prove to be commercially successful. If underlying assumptions prove inaccurate or risks or uncertainties materialize, actual results may differ materially from those set forth in the forward-looking statements.

Risks and uncertainties include, but are not limited to, general industry conditions and competition; general economic factors, including interest rate and currency exchange rate fluctuations; the impact of pharmaceutical industry regulation and health care legislation in the United States and internationally; global trends toward health care cost containment; technological advances, new products and patents attained by competitors; challenges inherent in new product development, including obtaining regulatory approval; the company’s ability to accurately predict future market conditions; manufacturing difficulties or delays; financial instability of international economies and sovereign risk; dependence on the effectiveness of the company’s patents and other protections for innovative products; and the exposure to litigation, including patent litigation, and/or regulatory actions.

The company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Additional factors that could cause results to differ materially from those described in the forward-looking statements can be found in the company’s 2018 Annual Report on Form 10-K and the company’s other filings with the Securities and Exchange Commission (SEC) available at the SEC’s Internet site (sec.gov).

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The Office of Corporate Responsibility Copyright © 2019 Merck Sharp & Dohme Corp., 2000 Galloping Hill Road (K1-3181) a subsidiary of Merck & Co., Inc., Kenilworth, N.J., Kenilworth, N.J., U.S.A. U.S.A. All rights reserved. Merck & Co., Inc., Kenilworth, N.J., U.S.A., is known as MSD outside the United States and Canada.