Listening, Responding and Working Toward a Healthier Future

Listening, responding and working toward a healthier future

OUR COMMITMENT, PERFORMANCE, IMPACT AND ASPIRATIONS

Corporate Responsibility 2006–2007 Report FOLD HINGE SPINE HINGE

Our Medicines and Vaccines

PRODUCT NAME THERAPEUTIC AREA

ATHEROSCLEROSIS & CARDIOVASCULAR

Cozaar® (losartan potassium) High blood pressure

Hyzaar® (losartan potassium and hydrochlorothiazide) High blood pressure Sustainable business success depends on making quality products that Vytorin® (ezetimibe/simvastatin)* High cholesterol Zetia® (ezetimibe)* High cholesterol

DIABETES & OBESITY

people value, on sound ﬁ nancial stewardship and on responsible governance Janumet® (sitagliptin/metformin HCI) Type 2 diabetes

Januvia® (sitagliptin phosphate) Type 2 diabetes

INFECTIOUS DISEASES

that ensures we meet customers’ needs ethically and transparently. Atripla® (efavirenz 600mg/emtricitabine 200 mg/tenofovir disoproxil fumarate 300 mg)† HIV infection Cancidas® (caspofungin acetate) Certain fungal infections

Ut wisi enim ad minim veniam, quis Duis autem vel eum iriure dolor in Duis autem vel eum iriure dolor in Ut wisi enim ad minim veniam, quis Duis autem vel eum iriure dolor in Duis autem vel eum iriure dolor in consequat,Crixivan vel® (indinavir illum sulfate) dolore eu feugiat ullamcorper suscipit lobortis nisl utHIV infectionullamcorper suscipit lobortis nisl ut nostrud exerci tation hendrerit in vulputate velit esse molestie hendrerit in vulputate velit esse molestie nostrud exerci tation hendrerit in vulputate velit esse molestie hendrerit in vulputate velit esse molestie nulla Invanzfacilisis.® (ertapenem sodium) aliquip ex ea commodo consequat.Certain bacterialaliquip infections ex ea commodo consequat. consequat, vel illum dolore eu feugiat consequat, vel illum dolore eu feugiat consequat, vel illum dolore eu feugiat consequat, vel illum dolore eu feugiat Isentress® (raltegravir) HIV infection Duis autem vel eum iriure dolor in nulla facilisis. nulla facilisis. Duis autem vel eum iriure dolorrelations in and nullareturning facilisis. value to share- we have focusednulla our facilisis. CR reporting on volutpat. Ut wisi enim ad minim Duis autem vel eum iriure dolor in Duis autem vel eum iriure dolor in George W. Merck, our founder’s son, believed that placing ® hendrerit in vulputate velit esse molestie ABOUT MERCKhendrerit in vulputate velit esseholders. molestie We seek to maintain high ethi- critical, nonfi nancial material issues. We veniam,Primaxin quis (imipenemnostrud andexerci cilastatin) tation hendrerit in vulputate velit esse molestieCertain bacterialhendrerit infections in vulputate velit esse molestie cal standards and a culture that values provide greater detail than we have in the consequat,patients vel illum dolore before eu feugiat proﬁLorem ts ipsum was dolor sitboth amet, consect- good medicineLorem ipsum dolor sitand amet, consect- good consequat, vel illum dolore eu feugiat Lorem ipsum dolor sit amet, consect- Lorem ipsum dolor sit amet, consect- Duis Stocrinautem® (efavirenz)vel eum‡ iriure dolor in consequat, vel illum dolore eu feugiatHIV infection consequat, vel illum dolore eu feugiat nulla facilisis. etuer adipiscing elit, sed diam nonummy etuer adipiscing elit, sed diam nonummy Merck & Co.,nulla Inc. facilisis.(Whitehouse Station, honesty, integrityetuer andadipiscing transparency elit, sed in diam nonummypast on these issues,etuer adipiscing especially inelit, terms sed ofdiam nonummy hendrerit in vulputate velit esse molestie nulla facilisis. nulla facilisis. NEUROSCIENCE & OPHTHALMOLOGY nibh euismod tincidunt ut laoreet nibh euismod tincidunt ut laoreet NJ, USA) is a global research-driven all that we do.nibh Company euismod decisions tincidunt are ut laoreetour challenges,nibh metrics euismod and targets.tincidunt ut laoreet consequat, vel illum dolore eu feugiat business. His values live on in Merck today through our 1 ® (dorzolamide hydrochloride and timolol maleate) Elevated intraocular pressure Lorem ipsum dolor sit amet, consect- dolore magna aliquam erat volutpat. Ut dolore magna aliquam erat volutpat. Ut pharmaceuticalLorem company ipsum that dolor discovers, sit amet, consect-driven by whatdolore is right magna for patients. aliquam erat volutpat. Ut dolore magna aliquam erat volutpat. Ut nulla Cosoptfacilisis. Lorem ipsum dolor sit amet, consect- Lorem ipsum dolor sit amet, consect-

We have used several external guidelines ® etuer adipiscing elit, sed diam nonummy wisi enim ad minim veniam, quis nos- wisi enim ad minim veniam, quis nos- develops, manufacturesetuer adipiscing and markets elit, sed a diam nonummy wisi enim ad minim veniam, quis nos- wisi enim ad minim veniam, quis nos- Maxalt (rizatriptan benzoate) etuer adipiscing elit, sed diam nonummyAcute migraine etuer adipiscing elit, sed diam nonummy commitment to innovative drug research and discovery, broad range of innovative vaccines and and measurement frameworks to inform nibh euismod tincidunt ut laoreet trud exerci tation ullamcorper suscipit trud exerci tation ullamcorper suscipit nibh euismod tincidunt ut laoreet trud exerci tation ullamcorper suscipit trud exerci tation ullamcorper suscipit LoremTimoptic-XE ipsum dolor® (timolol sit maleate amet, ophthalmic consect- gel formingnibh solution) euismod tincidunt ut laoreet Elevated intraocularnibh euismod pressure tincidunt ut laoreet dolore magna aliquam erat volutpat. Ut lobortis nisl ut aliquip ex ea commodo lobortis nisl ut aliquip ex ea commodo medicines to doloreaddress magna unmet aliquam medical erat volutpat. Ut lobortis nisl ut aliquip ex ea commodothe scope of ourlobortis reporting. nisl utThese aliquip include ex ea commodo etuer adipiscing elit, sed diam nonummy dolore magna aliquam erat volutpat. Ut dolore magna aliquam erat volutpat. Ut ethical business practices, and working to ensure access Trusopt® (dorzolamide hydrochloride) Elevated intraocular pressure wisi enim ad minim veniam, quis nos- consequat. consequat. needs. Merckwisi operates enim as ad Merck minim Sharp veniam, & quisABOUT nos- THISconsequat. REPORT the Global Reportingconsequat. Initiative (GRI 3) nibh euismod tincidunt ut laoreet wisi enim ad minim veniam, quis nos- wisi enim ad minim veniam, quis nos- Guidelines,3 the Millennium Development trud exerci tation ullamcorper suscipit Dohme (MSD)trud in exercimost countries tation ullamcorper outside suscipit doloreONCOLOGY magna aliquam erat volutpat. Ut trud exerci tation ullamcorper suscipit trud exerci tation ullamcorper suscipit to medicines and vaccines for those who need them. This report covers Merck’s CR perfor- Goals4 and the Access to Medicines Index.5 lobortis nisl ut aliquip ex ea commodo Duis autem vel eum iriure dolor in Duis autem vel eum iriure dolor in the United States.lobortis Because nisl ut of aliquip what weex ea commodo Duis autem vel eum iriure dolor in Duis autem vel eum iriure dolor in wisi enimEmend ad® (aprepitant) minim veniam, quis nos- lobortis nisl ut aliquip ex ea commodoPrevention oflobortis postoperative nisl or ut chemotherapy-induced aliquip ex ea commodo nausea and vomiting consequat. hendrerit in vulputate velit esse molestie hendrerit in vulputate velit esse molestie do, we recognizeconsequat. that we have special mance duringhendrerit 2006–2007, in vulputate with some velit esseWe molestie are pleased hendrerit to have achieved in vulputate a reporting velit esse molestie trud exerci tation ullamcorper suscipit consequat. consequat. ® Globalization and the expandingconsequat, reach vel illum of fi dolore rms euduring feugiat the consequat,past decades vel illum have dolore escalatedeu feugiat obligations to society. Accordingly, the additional informationconsequat, relating vel illum to dolore 2008, eu feugiatlevel of B on theconsequat, GRI 3 Guidelines, vel illum dolore eu feugiat lobortisEmend nisl for ut Injection aliquip (fosaprepitant ex ea commodo dimeglumine) Intravenous prevention of chemotherapy-induced nausea and vomiting Duis autem vel eum iriure dolor in nulla facilisis at vero eros et accumsan et nulla facilisis at vero eros et accumsan et stated missionDuis of Merck autem is vel to eumprovide iriure dolorand in updates thenulla 2004–2005 facilisis at reportvero eros et accumsanand our etself-assessment nulla facilisis has beenat vero eros et accumsan et consequat.Zolinza® (vorinostat) Duis autem vel eum iriure dolor inCancer [cutaneousDuis T-cellautem lymphoma vel eum (CTCL)] iriure dolor in expectations for multinational enterprises to create more social value, moving beyond published in December 2005. We have checked by the GRI. Go to the hendrerit in vulputate velit esse molestie iusto odio dignissim qui blandit praesent iusto odio dignissim qui blandit praesent society with superiorhendrerit products in vulputate and velit esse molestie iusto odio dignissim qui blandit praesent iusto odio dignissim qui blandit praesent RESPIRATORY, BONE, ARTHRITIS & ANALGESIA hendrerit in vulputate velit esse molestie hendrerit in vulputate velit esse molestie consequat,compliance vel illum dolore with eu regulations, feugiat luptatum philanthropy zzril delenit augue and duisnormal dolore economicluptatum zzril activities. delenit augue Corporate duis dolore serv ices by developingconsequat, innovations vel illum dolore and eu soughtfeugiat to provideluptatum a comprehensive zzril delenit augueview duisback dolore cover forluptatum more information. zzril delenit augue duis dolore Duis autem vel eum iriure dolor in consequat, vel illum dolore eu feugiat consequat, vel illum dolore eu feugiat of how Merck works, balanced by stake- Arcoxia® (etoricoxib) Pain and arthritis nullaresponsibility facilisis at vero eros (CR) et accumsan has emerged et te feugait as nullaan important facilisi. Lorem element ipsum of tethe feugait private nulla facilisi.sector’s Lorem response ipsum solutions thatnulla improve facilisis the qualityat vero erosof life et accumsan et te feugait nulla facilisi. Lorem ipsum te feugait nulla facilisi. Lorem ipsum Writing support: Zoe Bell Consulting rdecker hendrerit in vulputate velit esse molestie nulla facilisis at vero eros et accumsan et nulla facilisis at vero eros et accumsan et iusto odio dignissim qui blandit praesent dolor sit amet, consectetuer adipiscing dolor sit amet, consectetuer adipiscing and satisfy customeriusto odio needs, dignissim to provide qui blanditholder praesent feedback dolor to sitfocus amet, on consectetuerwhat is most adipiscingWe have alsodolor published sit amet, a CR consectetuer Executive adipiscing consequat,Fosamax vel® (alendronate illum dolore sodium) eu feugiat iusto odio dignissim qui blandit praesentOsteoporosis iusto odio dignissim qui blandit praesent important. As much as possible, we have Summary that will be available in print luptatumto these zzril delenit expectations augue duis dolore and demands.elit, sed diam While nonummy CR nibhcan euismod be seen aselit, a sed way diam to nonummy improve nibh reputation, euismod employees withluptatum meaningful zzril delenitwork and augue duis dolore elit, sed diam nonummy nibh euismod elit, sed diam nonummy nibh euismod nulla Fosamaxfacilisis Plus at veroD® (alendronate eros et accumsansodium/cholecalciferol) et luptatum zzril delenit augue duis doloreOsteoporosis luptatum zzril delenit augue duis dolore te feugait nulla facilisi. Lorem ipsum tincidunt ut laoreet dolore magna ali- tincidunt ut laoreet dolore magna ali- advancement teopportunities, feugait nulla facilisi.and inves- Lorem guidedipsum readerstincidunt to where ut they laoreet can dolore go for magnaand ali- on our website.tincidunt We ut plan laoreet to publish dolore magna ali- iusto odio dignissim qui blandit praesent te feugait nulla facilisi. Lorem ipsum te feugait nulla facilisi. Lorem ipsum or simply as a response to a moral imperative to do good, at Merck we believe that Singulair® (montelukast sodium) Asthma, indoor and outdoor allergies dolor sit amet, consectetuer adipiscing quam erat volutpat. quam erat volutpat. Ut wisi enim ad tors with a superiordolor sit rate amet, of return. consectetuer adipiscingmore information, quam eratincluding volutpat. our CR our next CRquam report erat in 2009.volutpat. Ut wisi enim ad luptatum zzril delenit augue duis dolore dolor sit amet, consectetuer adipiscing dolor sit amet, consectetuer adipiscing website (www.merck.com/cr) and other elit, sedCR diam is inherentnonummy nibh in theeuismod way we do business and can provideminim us with veniam, new quis opportunities nostrud exerci elit, sed diam nonummy nibh euismod minim veniam, quis nostrud exerci te feugaitSPECIALTY nulla facilisi. Lorem ipsum elit, sed diam nonummy nibh euismod elit, sed diam nonummy nibh euismod reports such as our annual fi nancial In this report, we defi ne where we do not tincidunt ut laoreet dolore magna ali- Ut wisi enim ad minim veniam, quis tation ullamcorper suscipit lobortis nisl Our Companytincidunt mission utand laoreet values dolore are magna ali- Ut wisi enim ad minim veniam, quis tation ullamcorper suscipit lobortis nisl dolor sit amet,® consectetuer adipiscing tincidunt ut laoreet dolore magna ali- tincidunt ut laoreet dolore magna ali- 2 Propecia (finasteride) Male pattern hair loss quamto erat create volutpat. shared Ut wisi enim value. ad nostrud exerci tation ullamcorper sus- ut aliquip ex ea commodo consequat. refl ected in ourquam CR erat approach, volutpat. which Ut wisi enimreports ad (Formnostrud 10-Ks). exerci tation ullamcorperreport sus- metricsut as aliquip follows: ex N/A:ea commodo not avail- consequat. elit, sed diam nonummy nibh euismod quam erat volutpat. quam erat volutpat. Ut wisi enim ad minim veniam, quis nostrud exerci cipit lobortis nisl ut aliquip ex ea com- Duis autem vel eum iriure dolor in clearly sets outminim how weveniam, see our quis respon- nostrud exerci cipit lobortis nisl ut aliquip ex eaable; com- N/D: noDuis data; autem N/R: vel not eum reported. iriure dolor in tinciduntVACCINES ut laoreet dovlore magna minim veniam, quis nostrud exerci tation ullamcorper suscipit lobortis nisl modo consequat. Duis autem vel eum hendrerit in vulputate velit esse molestie sibilities in termstation of ullamcorperglobal health suscipit and lobortisBased nisl on developmentsmodo consequat. in the global Duis autem velMany eum of our hendreritindicators in are vulputate new this velityear esse molestie aliquamComvax erat® [Haemophilusvolutpat. Ut b conjugate wisi enim (meningococcal Utprotein wisi conjugate) enim adand minim hepatitis Bveniam, quisHaemophilus tation influenzae ullamcorper type b and hepatitis suscipit B lobortis nisl ut aliquip ex ea commodo consequat. iriure dolor in hendrerit in vulputate consequat, vel illum dolore eu feugiat access to medicines,ut aliquip ethical ex ea and commodo sustain- consequat.business environment,iriure dolor the inpharmaceutical hendrerit in vulputateand for this reasonconsequat, some velprior illum year dolore data is eu feugiat ad minim(recombinant) veniam, vaccine] quis nostrud exerci nostrud exerci tation ullamcorper sus- ut aliquip ex ea commodo consequat. Duis autem vel eum iriure dolor in velit esse molestie consequat, vel illum nulla facilisis at vero eros et accumsan et able business Duispractices, autem contribution vel eum iriure to dolorsector in and Merckvelit specifi esse molestiecally, and consequat, consid- velnot illum available. nulla facilisis at vero eros et accumsan et tationGardasil ullamcorper® [human papillomavirussuscipit lobortis quadrivalent nisl (typescipit 6, 11, lobortis 16, 18) vaccine, nisl recombinant]ut aliquip ex ea com-Cervical cancer,Duis cervical autem lesions, vel vulvareum lesions, iriure vaginal dolor lesions in and genital warts caused by hendrerit in vulputate velit esse molestie dolore eu feugiat nulla facilisis at vero iusto odio dignissim qui blandit praesent scientifi c advancement,hendrerit in good vulputate employee velit esseering molestie feedback dolore from multipleeu feugiat stakeholders, nulla facilisis at vero iusto odio dignissim qui blandit praesent ut aliquip ex ea commodo consequat. modo consequat. Duis autem vel eumHPV types 6, hendrerit11, 16 and 18 in vulputate velit esse molestie STAKEHOLDER FEEDBACK consequat, vel illum dolore eu feugiat eros et accumsan et iusto odio dignis- luptatum zzril delenit augue duis dolore consequat, vel illum dolore eu feugiat eros et accumsan et iusto odio dignis- luptatum zzril delenit augue duis dolore Duis M-M-Rautem® IIvel (measles, eum iriuremumps anddolor rubella in virus vaccineiriure live) dolor in hendrerit in vulputateMeasles, mumps,consequat, rubella (German vel illum measles) dolore eu feugiat nulla facilisis at vero eros et accumsan et sim qui blandit praesent luptatum zzril te feugait nulla facilisi. te feugait nulla facilisi. hendrerit in vulputate® velit esse molestie velit esse molestie consequat, vel illum nulla facilisis at vero eros et accumsan et We have begun a process of collecting stakeholder feedback process, as well as consider including stakeholder voices FORWARD-LOOKINGnulla facilisis STATEMENT at vero eros et accumsan et sim qui blandit praesent luptatum zzril PedvaxHIB [Haemophilus b conjugate vaccine (meningococcal protein conjugate)] Haemophilus influenzae type b iusto odio dignissim qui blandit praesent delenit augue duis dolore te feugait nulla iusto odio dignissim qui blandit praesent delenit augue duis dolore te feugait nulla consequat, vel illum dolore eu feugiat dolore eu feugiat nulla facilisis at vero iusto odio dignissim qui blandit praesent to inform our approach to CR and how we measure our perfor- in our annual CR report. ® This report contains “forward-looking statements” as that update any forward-looking statement, whether as a result Pneumovax 23 (pneumococcal vaccine polyvalent) Pneumococcal disease luptatummance. zzril delenitHere are augue some duis outcomes: dolore facilisi. Nam liber tempor cum soluta nobis luptatum zzril delenit augue duis dolore facilisi. Nam liber tempor cum soluta nobis nulla facilisis at vero eros et accumsan et eros et accumsan et iusto odio dignis- luptatum zzril delenit augue duis dolore term is defi ned in the Private Securities Litigation Reform Act of new information, future events, or otherwise. Forward- ® [measles, mumps, rubella and varicella (Oka/Merck) virus vaccine live] Measles, mumps, rubella (German measles) and chickenpox te feugait nulla facilisi. » In 2007 and 2008,eleifend we met option with manycongue investors nihil imperdiet committed te feugait nulla facilisi. eleifend option congue nihil imperdiet iusto ProQuadodio dignissim qui blandit praesent sim qui blandit praesent luptatum zzril te feugait nulla facilisi. of 1995. These statements are based on management’s cur- looking statements in this report should be evaluated together » During 2007 and 2006, thought leadersNam in liber CR related tempor to cum soluta tonobis sustainable dominginvesting, id analysts, quod mazim shareholder placerat groups facer Nam liber tempor cum soluta nobis doming id quod mazim placerat facer luptatumRecombivax zzril HBdelenit® [hepatitis augue B vaccine duis (recombinant)] dolore delenit augue duis dolore te feugaitHepatitis nulla B Nam liber tempor cum soluta nobis eleifend option congue nihil imperdiet possim assum. Lorem ipsum dolor sit rent expectationsNam liber and involvetempor risks cum and soluta uncertainties, nobis whicheleifend optionwith the congue many uncertainties nihil imperdiet that affectpossim Merck’s assum. business, Lorem ipsum dolor sit te feugait nulla facilisi. facilisi. Nam liber tempor cum soluta nobis the pharmaceutical industry advised us (1) to articulate the and nongovernmental organizations and discussed a wide ® may cause results to differ materially from those set forth in particularly those mentioned in the risk factors and caution- RotaTeq (rotavirus vaccine, live, oral pentavalent) Rotavirus eleifend optionbusiness congue case fornihil CR imperdiet at Merck and providedoming greater id quod emphasis mazim placeratrange facer of issues,amet, including consectetuer access to adipiscing medicines, elit, sales sed and eleifend option congue nihil imperdiet doming id quod mazim placerat facer amet, consectetuer adipiscing elit, sed eleifend option congue nihil imperdiet the statements. The forward-looking statements may include ary statements in Item 1A of Merck’s Form 10-K for the years Vaqta® (hepatitis A vaccine inactivated) Hepatitis A doming idof quod CR impact; mazim (2) placerat to explain facer how CR possimis integrated assum. and Lorem gov- ipsum dolormarketing sit practices,diam nonummy the safety ofnibh our euismod products, tinci- human doming id quod mazim placerat facer possim assum. Lorem ipsum dolor sit diam nonummy nibh euismod tinci- Nam liber tempor cum soluta nobis Nam liber tempor cum soluta nobis doming id quod mazim placerat facer statements regarding product development, product potential ended December 31, 2006 and 2007, and in any risk factors or possim assum.erned Lorem within ipsumMerck; dolor and (3) sit to be moreamet, explicit consectetuer about how adipiscing rightselit, sed and clinicaldunt trials. ut laoreet dolore magna aliquam possim assum. Lorem ipsum dolor sit amet, consectetuer adipiscing elit, sed dunt ut laoreet dolore magna aliquam eleifendVarivax option® [varicella congue virus vaccinenihil imperdietlive (Oka/Merck)] eleifend option congue nihil imperdietChickenpox possim assum. Lorem ipsum dolor sit amet, consectetuer adipiscing elit, sed diam nonummy nibh euismod tinci- erat volutpat. Ut wisi enim ad minim or fi nancialamet, performance. consectetuer No forward-looking adipiscing elit, statement sed diam can nonummycautionary nibh statements euismod tinci-contained in theerat Company’s volutpat. Ut periodic wisi enim ad minim doming id quod mazim placerat facer doming id quod mazim placerat facer amet, consectetuer adipiscing elit, sed we measure and manage our operational risks. In addition, ® be guaranteed and actual results may differ materially from reports on Form 10-Q or current reports on Form 8-K, which Zostavax (zoster vaccine live) Shingles diam nonummythey asked nibh us euismod for targets tinci- and commitments,dunt ut laoreet including dolore magnaTo aliquamfi nd out more aboutveniam, how quis we arenostrud responding exerci totation feedback, diam nonummy nibh euismod tincidunt ut laoreet dolore magna aliquam veniam, quis nostrud exerci tation possim assum. Lorem ipsum dolor sit possim assum. Lorem ipsum dolor sit diam nonummy nibh euismod tincidunt ut laoreet dolore magna aliquam erat volutpat. Ut wisi enim ad minim ullamcorper suscipit lobortis nisl ut those projected.dunt utMerck laoreet undertakes dolore magna no obligation aliquam to publiclyerat volutpat.the Company Ut wisi enimincorporates ad minim by reference.ullamcorper suscipit lobortis nisl ut amet, consectetuer adipiscing elit, sed amet, consectetuer adipiscing elit, sed dunt ut laoreet dolore magna aliquam more information on metrics and challenges. And they go to www.merck.com/cr/externalinput. * Vytorin (marketed as Inegy outside the United States) and Zetia (marketed as Ezetrol outside the United States) are marketed through a partnership with erat volutpat. Ut wisi enim ad minim veniam, quis nostrud exerci tation aliquip ex ea commodo consequat. erat volutpat. Ut wisi enim ad minim veniam, quis nostrud exerci tation aliquip ex ea commodo consequat. diam Schering-Ploughnonummy Corporation.nibh euismod tinci- diam nonummy nibh euismod tinci- erat volutpat. Ut wisi enim ad minim advised us to create a more robust stakeholder engagement † Atripla is marketed by Bristol-Myers Squibb and Gilead in the United States, Canada and Europe. Merck and Gilead are working to register and distribute Atripla in veniam, quis nostrud exerci tation ullamcorper suscipit lobortis nisl ut veniam, quis nostrud exerci tation ullamcorper suscipit lobortis nisl ut dunt ut 106 laoreetdeveloping countriesdolore around magna the world. aliquam dunt ut laoreet dolore magna aliquam veniam, quis nostrud exerci tation ‡ Efavirenz is marketed by Bristol-Myers Squibb as Sustiva in the United States, Canada and certain European countries, and by Merck in the rest of the world as Stocrin. ullamcorper suscipit lobortis nisl ut aliquip ex ea commodo consequat. Duis autem vel eum iriure dolor in ullamcorper suscipit lobortis nisl ut aliquip ex ea commodo consequat. Duis autem vel eum iriure dolor in erat volutpat. Ut wisi enim ad minim erat volutpat. Ut wisi enim ad minim ullamcorper suscipit lobortis nisl ut ENDNOTES aliquip ex ea commodo consequat. hendrerit in vulputate velit esse molestie aliquip ex ea commodo consequat. hendrerit in vulputate velit esse molestie veniam, quis nostrud exerci tation veniam, quis nostrud exerci tation aliquip ex ea commodo consequat. 1 www.merck.com/about/mission.html 3 www.globalreporting.org/ 4 www.un.org/millenniumgoals We welcome your feedback on this report. Please contact us to tell us what you think—our contact information is on the back cover. 2 www.merck.com/finance/reportsannual.html ReportingFramework/G3Guidelines 5 www.atmindex.org/ Design by Addison www.addison.com Photography from Susan Alderfer, the Carter Center, Bob Cimmino, Tom Maday and Bill Vande Bob Cimmino, Tom Center, the Carter Susan Alderfer, from Photography Design by Addison www.addison.com

GATE I GATE II IB-COVER FOLD HINGE SPINE HINGE

Our Medicines and Vaccines

PRODUCT NAME THERAPEUTIC AREA

ATHEROSCLEROSIS & CARDIOVASCULAR

Cozaar® (losartan potassium) High blood pressure

DIABETES & OBESITY

people value, on sound ﬁ nancial stewardship and on responsible governance Janumet® (sitagliptin/metformin HCI) Type 2 diabetes

Januvia® (sitagliptin phosphate) Type 2 diabetes

INFECTIOUS DISEASES

GATE I GATE II IB-COVER GLOBAL CRITERIA FROM MILLENNIUM Table of Contents REPORTING INITIATIVE THE ACCESS TO DEVELOPMENT PAGE INDICATORS* MEDICINES INDEX† GOALS‡ Introduction Inside front cover About Merck and this Report Inside front cover Message from the Chairman 1 Economic Contribution to Society 4 EC1, SO1 MDG 4; MDG 6; MDG 8 Target 8.E Summary of Our Progress and Future Plans 6 1 Researching New Medicines and Vaccines to Address Unmet Needs 8MDG 4 » Our research agenda and strategy 8 C1, C3, C4 » Nonclinical research 12 » Our clinical research and disclosure of results 13 PR3 » Research agenda and management priorities for the future 14 » Fostering science education 15 EC8, EC9 MDG 2 2 Improving Access to Medicines, Vaccines and Health Care 18 EC8, EC9 H » Merck’s access strategy and commitment to improving and accelerating access 18 A1, (A2), A3, D1, D2, E2, F1, F2, G1, G2 » Improving access in the developing world and emerging markets 20 B2, B3, E3 MDG 1; MDG 4 » Focus on improving access to vaccines and immunization in developing countries 23 B3, E3 MDG 4; MDG 8 Target 8E » Focus on improving access to HIV and AIDS treatment and care in developing 24 B3 MDG 6 Targets 6A, 6B, countries 6C; MDG 8 Target 8E » Improving access in developed countries 27 B3, F3, F4 » Future challenges for improving and accelerating access to medicines 29 worldwide 3 Ensuring Confi dence in the Safety and Quality of Our Products 30 PR1, PR3 » Merck’s safety commitment 30 E3 » Merck’s commitment to product quality 32 E1, E4 » Combating the threat of counterfeits 33 4 Conducting Ourselves Ethically and Transparently 34 SO2, SO3, SO4, SO8 A5 » Merck’s Offi ce of Ethics and global Code of Conduct 34 LA10 » Appropriate sales and marketing practices 36 PR3, PR6, PR9 A5 » Fostering a fair, transparent and open business environment 37 » Priorities for the future and targets 37 » Promoting and protecting human rights 37 HR3, HR5, HR6, HR7 LA4, LA10, 5 Managing Our Environmental Footprint 40 MDG 7 » Environmental approach and compliance 40 EN23, EN28, SO8, » Key energy use and climate change initiatives 42 EN3, EN4, EN5, EN7, EN16, EN18 » Global water use 42 EN8 » Global emissions, effl uents and waste 43 EN1, EN2, EN19, EN20, EN22 » Product stewardship 44 EN26 » Environmental footprint priorities for the future and targets 45 Executing the Basics 46 » Corporate governance 46 » Ensuring Merck has the right skills for leadership 48 EC7, LA1, LA2, LA3, LA11, MDG 3 LA12, LA13 » Fostering safety and health in the workplace and in our communities 49 LA6, LA7, LA8, LA10, E5 PR1 » Our supply chain and how we manage it 50 EC6, HR1, HR2, LA10 E1 Advocacy and Outreach Relating to Our Corporate Responsibilities 52 LA10 » Our advocacy and public policies 52 SO5, SO6 B1, B2, B3, B4, B5 » Engaging with our stakeholder groups 55 A4 » Merck and public/private partnerships 56 Merck’s Approach to Corporate Responsibility 57 » Corporate responsibility principles 57 » Materiality assessment process 57 » External stakeholder review of our reporting approach 58 A4 » Corporate responsibility governance and performance management 59 » Merck’s approach to philanthropy 59 Summary of Key Performance Indicators 62 Our Medicines and Vaccines Inside back cover Contact Us Back cover

For more information on additional GRI disclosures and a comprehensive GRI index, go to www.merck.com/cr/gri For more information on ATMI reporting, go to www.merck.com/cr/atmi

* Our Annual Financial Report (10-K) has data for EC3 and SO7. † A2: Merck has a long history of working to improve access to medicines and numerous related policies, but we have not yet formalized an overall access to medicines policy. ‡ We mention only the goals that are most closely related to our business. For more information on our contributions to the MDGs, see p. 22. Message from the Chairman

George W. Merck, our Company’s modern founder, had a simple saying: “We should fi rst see to it that what we are doing is right.” This way of doing business, along with the opportunity to make dramatic improvements in the lives of millions, is why I joined Merck more than 35 years ago. Today we continue our long- standing commitment to fi nd innovative ways to solve the many medical and scientifi c challenges that remain in the fi ght against disease worldwide. The unmet medical needs we face are changing every day, as new diseases and resistance to existing therapies emerge. To me, this is why the work we do at Merck matters.

MERCK’S WORK AFFECTS » Conducting ourselves ethically Health Organization (WHO). As of July 31, MANY WORLDWIDE and transparently 2008, we have 43 compounds in our Phase I–III pipeline. This is a strong return on our Since I took over the helm as CEO at » Managing our environmental impacts Merck in 2005, we have been listening annual R&D investment of $5 billion. carefully to the ideas of those concerned To communicate all that is happening 1 about the state of global health care and on these important issues, in this second However, we recognize that most people the success of our Company. Patient Corporate Responsibility Report we worldwide still lack adequate access to groups and health care professionals, have gathered extensive information medicines, vaccines and health care. We governments and nongovernmental about our policies and performance. are committed to improving access to our organizations, payors and investors, our We have attempted to present the facts products for all who can benefi t, wherever communities and our own employees and our analyses in a clear and straight- they live. This makes good business sense. have expressed their needs, concerns and forward way. It is also the right thing to do. expectations. This report is an important part of our response. OUR PRIMARY CORPORATE IMPROVING ACCESS TO RESPONSIBILITY IS THE DISCOVERY, OUR PRODUCTS Based on what we’ve heard from and DEVELOPMENT AND DELIVERY OF We are expanding our business in about patients everywhere, we have INNOVATIVE MEDICINES AND VAC- emerging markets and making positive concluded that fi ve issues are vital to CINES FOR UNMET MEDICAL NEEDS changes in product pricing and registra- Merck’s future success: We are delivering on this commitment. tion, public policy and partnerships. In 2006–2007, seven new products were Some examples of our eff orts include: » Researching and developing new approved, including ISENTRESS for » In 2007, Merck adopted a new medicines and vaccines that address HIV, ROTATEQ for prevention of developing world pricing policy for unmet needs gastroenteritis, JANUVIA for diabetes our vaccines. We off er ROTATEQ » Improving access to medicines, and GARDASIL for prevention of cervi- and GARDASIL at signifi cantly vaccines and health care cal cancers, precancerous or dysplastic discounted or not-for-profi t prices, lesions, and genital warts caused by human » Ensuring confi dence in the safety and based on countries’ ability to pay. This papilloma virus. Our products currently quality of our products complements the existing diff erential address 60 percent of the top 20 global pricing policy for our HIV medicines. burdens of disease as defi ned by the World 1 Researching Needed New Medicines and Vaccines to Address Unmet Needs 2 Improving Access to Medicines, Vaccines and Health Care 5 Managing Our Environmental Footprint

Merck’s Key Issues At-a-Glance

» We collaborated with other stake- which delivers MECTIZAN to treat river A POSITIVE ENVIRONMENTAL IMPACT holders, under the leadership of the blindness and prevent lymphatic fi lari- We announced plans earlier this year to U.K. Department for International asis in 35 developing countries. We have reduce greenhouse gas emissions from Development, in establishing the seen important successes along the way. Merck’s global operations by 12 percent 2 Medicines Transparency Alliance In 2007, transmission of river blindness by the end of 2012, from a 2004 base- (MeTA), which will tackle the was halted in Colombia, the fi rst time line. In our global public policy position, excessive markups, corruption and that the disease has been eliminated as a we recognize the potential public health mismanagement that cause good public health problem on a countrywide implications that may result from climate quality medicines to be either basis anywhere in the world. I have reaf- change and have adopted a strategy to too expensive or unavailable for fi rmed Merck’s pledge to donate enough reduce our environmental footprint, hundreds of millions of people in MECTIZAN for as long as necessary to including energy, water use and renew- developing countries. eliminate river blindness. In addition, in able resources. December we pledged up to $25 million » Currently, we are working hard to toward a new initiative with the World fi nd health care solutions for the more PROMOTING TRANSPARENCY Bank and other partners to help eliminate than 45 million Americans who are Yet our commitment to improving the the disease in 28 African countries. uninsured. Merck believes that all state of global health has not spared citizens, regardless of age or income, Merck from the challenges facing the We are building on this commitment to should have access to quality, aff ord- pharmaceutical industry: patent expira- improve global health by systematically able health insurance that includes tions and an increasingly challenging facilitating the widespread adoption coverage for medicines and vaccines. R&D environment, and questions about of our new vaccines. We are creating product safety and corporate integrity. replicable examples to demonstrate the We are also working through public/ Rapidly growing health care costs are ease of introduction and the benefi ts of private partnerships to donate our prod- placing great pressures on reimburse- these vaccines in resource-constrained ucts now and to help strengthen health ment and utilization, resulting in settings. For example, we launched care capacity worldwide. Merck has a criticism targeting pharmaceuticals well the ROTATEQ Access Partnership in rich history of such commitments. beyond their actual contribution to those Nicaragua in 2006 and the GARDASIL costs. There is also increasing debate Access Program to support vaccina- Last year marked the 20th anniversary about the value of the intellectual prop- tion in the lowest-income countries the of our MECTIZAN Donation Program, erty rights system that creates incentives following year. for innovation. 4 Conducting Ourselves Ethically and Transparently

3 Ensuring Conﬁdence in the Safety and Quality of Our Products

Executing the Basics

Advocacy and Outreach Relating to Our Corporate Responsibilities

Corporate We believe that the best way to address » The portion of dues Governance the concerns, risks and questions facing that major U.S.-based our business and to build a foundation of trade associations report trust is to be more transparent about the to us as being used for way we operate. advocacy and/or political activities. 3 » Registration status by country continue to respond in ways that help This is why, in this report, we seek to be for our newest vaccines and all bring our new products to more people clear not only about our opportunities, of our HIV medicines. and sustain our business. but also about the challenges we face, » Our perspective on the right to what we are doing to address them and By doing this, I am confi dent that we why. We discuss our approach, our per- health, and our role in realizing this right. will continue to succeed in our most formance and impact, and our priorities fundamental responsibility—discover- and commitments for the future. We also ing and developing medicines and vac- report on many more performance indi- In addition to providing greater transparency at Merck, as chairman of cines that make a diff erence in people’s cators than ever before. This report pres- lives and create a healthier future. ents the main highlights. You can fi nd The Pharmaceutical Research and more detail on our corporate responsibil- Manufacturers of America (PhRMA) ity website at www.merck.com/cr . I am working to establish greater transparency in the pharmaceutical As part of our response to stakeholders, sector more broadly. we have begun to disclose: Richard T. Clark WHAT’S AHEAD? » Grants provided by Merck’s Global I want to assure you that Merck is com- Chairman, President and Human Health Division to U.S. mitted to reporting on our progress and Chief Executive Offi cer organizations in support of inde- challenges, including questions about pendent accredited educational our marketing practices and the safety October 2008 programs for health care profes- of our medicines. We will continue to sionals. Early next year, we will listen and engage with our stakeholders begin to report other grants and pay- globally to benefi t from broader perspec- ments to U.S. organizations, as well tives and to share our own. And we will as grants in other regions. Economic Contribution to Society

The principal economic value we contribute is through our products, which directly improve and maintain the health of individuals and communities around the world, helping them to live better and to be more productive economically.

In 2006–2007, seven new products CONTRIBUTIONS TO MEDICINE AND SOCIETY were approved including the vaccine GARDASIL for prevention of cervical GLOBAL 20072007 20062006 20052005 cancers, precancerous or dysplastic lesions, and genital warts caused by the human Number of new products approved 2 5 2 papillomavirus, ISENTRESS for the Number of products in the pipeline 49 57 58 treatment of HIV-1 infection, JANUVIA (Phases I–III) + products under regulatory review for the treatment of Type 2 diabetes, and the vaccine ROTATEQ to help protect Philanthropic investment ($USM)* 828 826 1,039 against rotavirus gastro enteritis. More information on our products is on the inside back cover. FINANCIAL INFORMATION†

We remain confi dent that our pipeline GLOBAL 20072007 20062006 20052005 continues to show great potential and we are continuing to work hard to ensure Sales ($USM) 24,197.7 22,636.0 22,011.9 confi dence in the safety and eff ectiveness Merck’s investment in R&D programs ($USM) 4,882.8 4,782.9 3,848.0 4 of our products. Number of employees 59,800 60,000 61,000 Number of stockholders (including those holding 1.2M 1.2M 1.2M In addition, we return value to share- Merck stock in “street name”) holders in the form of dividends and an active stock repurchase program. Over Annual cash dividend paid per share ($US) 1.52 1.52 1.52 the past fi ve years (2003–2007), we also Global tax expense as reported on income 95.3 1,787.6 2,732 paid a total of $12 billion in income statement ($USM)‡ taxes worldwide. * Our philanthropic giving decreased after 2005 because of a reduction in the use of Merck's Patient Assistance Program, due mainly to an increasing number of patients with prescription drug coverage, including the Medicare Prescription Drug Program, which began January 1, 2006, and from the removal of ZOCOR® (simvastatin) and PROSCAR® (finasteride) from the eligible products list in 2007 once patients had broad access to lower-cost generic equivalents. † www.merck.com/finance/reportsannual.html ‡ The tax expense in 2007 reflected the reduction in domestic pretax income primarily resulting from the U.S. VIOXX® (rofecoxib) settlement charge. For more information, see our Annual Financial Report (10-K) for the year ended December 31, 2007. 2007 REVENUE BY GEOGRAPHIC SUPPORTING OUR COMMUNITIES WORKING WITH LOCAL COMMUNITIES REGION ($USM) As of June 30, 2008, Merck had a physi- cal presence in approximately 82 coun- Everyone within Merck is responsible tries worldwide, with approximately for obtaining trust and acceptance in OTHER $2,814.6 365 research, manufacturing, sales and local communities. One way in which JAPAN we do this is through our Neighbor $1,533.2 administration sites. In all of these loca- tions, we recognize that our success of Choice program, developed in the depends in large part on our relationships mid-1990s, which aims to: EUROPE, UNITED STATES and interactions with our local communi- » Identify the community’s essential MIDDLE EAST $14,690.9 ties, including elected offi cials, business AND AFRICA needs, issues and concerns. $5,159.0 and community leaders, charities, fence- line neighbors, educators, local media and » Respond appropriately to these our employees. needs, issues and concerns. » Establish relationships of trust with Merck aspires to have a positive impact community groups and individuals. on the communities in which we operate worldwide and we recognize our respon- Through this program, our employees sibility toward those aff ected directly or at Merck facilities develop culturally OUR MEDICINES AND VACCINES indirectly by our operations and activi- appropriate mechanisms to engage ties. We rely on local communities not and build relationships with their Merck’s focus on discovering and only for our workforce but also for some community stakeholders. More infor- developing medicines and vaccines of our suppliers and for our ability to do mation at www.merck.com/cr/noc. has resulted in products that have business. Through ongoing engagement helped millions of patients around and dialogue, we work to understand the the world. We continue to grow our concerns and needs of our communities, » Managing our community impacts — business with new product indications and we seek to respond by addressing for example, by ensuring confi dence and formulations, as well as clinical local challenges in ways that build stronger in environmental and safety perfor- trials that demonstrate their benefi ts. communities and support the sustain- 5 mance; and For a list of selected Merck medicines ability of our business. and vaccines, go to the inside back cover. » Addressing community needs through philanthropy and commu- We contribute to our communities in nity involvement. three ways: » Direct economic contributions such Underlying our community approach is as employment, training, support of our commitment to respecting human local suppliers of goods and services, rights. Merck is committed to protecting and paying taxes; and promoting fundamental human rights not only within our immediate workforce, but also more broadly in our local communities. For more information, see p. 37. Summary of our Progress and Future Plans

ISSUE PROGRESS FUTURE PLANS INCLUDE: 1 Researching » In 2006–2007, seven new products were approved. Our » To grow our pipeline with a focus on researching and needed new products address 60 percent of the top 20 global bur- developing fi rst-in-class or best-in-class medicines medicines dens of illness. As of July 31, 2008, we have 43 com- and vaccines. and vaccines pounds in our Phase I–III pipeline. This is a strong » To expand our interactions with public and private entities return on our annual R&D investment of $5 billion. to understand and support key research priorities and » In each of 2006 and 2007, Merck signed more than opportunities, including for developing world diseases. 50 external agreements to leverage excellent and » To initiate development of a formal policy on posttrial drug innovative science that is conducted outside of Merck. access in 2008. » In January 2008, Merck agreed to provide fi nan- » To fi nalize principles for business practices involving the cial support for the WHO/TDR Partnership medical and scientifi c community. Network, an independent global program of scientifi c collaboration.

2 Improving » In 2006, we launched the ROTATEQ Access » To continue to work with international groups such as the access to medi- Partnership in Nicaragua and in 2007 the GARDASIL GAVI Alliance to facilitate introduction of vaccines in the cines, vaccines Access Program to support vaccination programs in world’s poorest countries. and health care the lowest-income, GAVI1-eligible countries. » To continue to investigate opportunities to reduce the » In 2007, Merck adopted a new developing world cost of our ARVs for people living in the world’s poorest pricing policy for our vaccines, which offers countries and those hardest hit by the pandemic, including ROTATEQ and GARDASIL at signifi cantly discounted through working with external manufacturers and suppli- or not-for-profi t prices, based on countries’ ability ers to achieve incremental effi ciencies. to pay. This complements our existing differential » To expand our presence in emerging markets and explore pricing policy for our HIV medicines. business models for all our products to reach new popula- » In November 2007, public health offi cials announced tions. We will report on developments in future reports. that transmission of river blindness had been halted in Colombia, the fi rst time that the disease has been eliminated as a public health problem on a countrywide basis anywhere in the world thanks to the success of Merck’s MECTIZAN Donation Program and a range of key partners. » We have begun reporting on our website registration status by country for our newest vaccines and all of our HIV medicines. » As of July 2008, more than 777,000 patients in 125 countries and territories were being treated with regimens containing at least one of Merck’s anti-retrovirals (ARVs).

3 Ensuring » Of 71 Good Clinical Practice/Pharmacovigilance » Continue to register at trial initiation all clinical trials conﬁ dence inspections conducted by the U.S. Food and Drug in patients that the Company sponsors worldwide at in the safety Administration (FDA) and other regulatory agencies www.ClinicalTrials.gov. and quality of worldwide during 2006 and 2007, none resulted in » Continue to disclose results from all registered trials our products critical observations and none resulted in the rejec- of marketed products regardless of outcome at tion of any clinical study or regulatory ﬁ ling. www.ClinicalStudyResults.org in a timely manner. 6 » Since 2007, Merck has registered at trial initiation » Continue to work to enhance and integrate our systems to all clinical trials (Phase I–V) in patients that it identify, measure, control and sustain quality excellence sponsors and conducts worldwide on the in our products. www.ClinicalTrials.gov website. » As of May 2008, Merck had published a total of 218 clinical trial results on the www.ClinicalStudyResults.org website.

4 Conducting » In 2007, the Offi ce of Ethics launched an online global » To achieve 95 percent completion rate of new ethics training ourselves compliance training series to complement existing courses by required employee populations, including Know ethically and programs to provide employees with new tools and the Code, by the end of 2009. transparently resources for making responsible business decisions. » To disclose over time our fi nancial support to medical, sci- » To date, 90 percent of Merck employees have taken entifi c and patient organizations globally. In January 2009, the basic online ethics training, Know the Code, which Merck will begin reporting grants/payments to other U.S. reviews Merck’s Code of Conduct. organizations as well as grants made in Europe and Canada. » In October 2008, we plan to begin reporting grants We will continue to expand our disclosure into other regions provided by Merck’s Global Human Health division as we work to build the infrastructure and systems neces- to U.S. organizations in support of independent sary to allow us to report this information on a global basis. accredited educational programs for health » To disclose in 2009 payments to physicians in the United care professionals. States who speak on behalf of Merck and our products. » In 2008, to formalize our historical practice of inform- » To update our policies and practices in the United States by ing health care professionals about our products January 2009 to ensure compliance with the revised PhRMA before we advertise them to consumers, Merck Code on Interactions with Health Care Professionals. adopted a policy requiring a minimum six-month time period following the approval of a new product before launching direct-to-consumer broadcast advertising.

ISSUE PROGRESS FUTURE PLANS INCLUDE: 5 Managing our » At the end of 2007, we had reduced our demand for » To reduce the Company’s total global greenhouse gas emis- environmental water at Merck facilities worldwide by 24.6 percent, sions by 12 percent by the end of 2012, from a 2004 baseline. footprint exceeding our 2008 goal of reducing water use by » To continue to work with stakeholders on the issue of 15 percent from a 2004 baseline. Pharmaceuticals in the Environment to identify additional » In 2007, we began to track our generation of non- data needs and to conduct our own environmental risk hazardous waste. assessments based upon the best available science. » In 2007, Merck adopted a public policy on Pharmaceuticals in the Environment, which describes our efforts to work with others to understand and evaluate the issue. » In 2008, we adopted a public policy position on climate change, which outlines Merck’s strategy to reduce our environmental footprint, including energy, water use and renewable resources goals.

Executing Employee Practices Employee Practices the basics » In 2007, Merck initiated a new global diversity strategy » To increase global female representation at the senior man- linking compensation of managers and leaders to ager level from 31 percent to 36 percent by 2012. diversity and inclusion performance measures. » To increase senior manager level employees from under- » In 2007, Merck introduced Health Matters to raise represented ethnic groups from 14 percent to 18 percent by awareness of health issues and motivate employees to 2012 in the United States. manage and improve their health and well-being. » To raise awareness of our fl exible work arrangements policy, » In 2008, we launched a consistent global approach to increase employee satisfaction with fl exible work opportuni- fl exible work arrangements. ties and begin tracking global use in 2009. Supply Chain Management » To reduce Company-wide and lost-time injury rates by » In 2006, Merck was one of the fi ve initial companies 15 percent each, from the 2007 baseline by the end of 2008. to support publicly the Pharmaceutical Industry Supply Chain Management Principles for Responsible Supply Chain Management. » To achieve 100 percent completion of Pharmaceutical » In 2008, Merck expanded our supplier diversity pro- Industry Principles for Responsible Supply Chain gram to the United Kingdom and Canada. Management survey by existing external suppliers of phar- » In 2008, Merck’s CEO and Executive Committee signed maceutical intermediates and compounds by the end of 2008. a supplier diversity commitment to reach 14 percent » To achieve 100 percent completion of Merck’s preselection in 2008 and 17 percent by 2010 as a percentage of total Detailed Suppliers Ethical Assessment by potential sup pliers applicable spend in the United States and Puerto Rico. of new business globally by 2010. To reach these aggressive goals, supplier diversity is » To develop formal mitigation plans for those items sourced now a corporate objective for all divisions. externally that are critical to ensuring our ability to supply fi nished product without interruption. Our target is to have plans for 20 percent, 60 percent and 100 percent of our suppliers that fi t within this category for 2008, 2009 and 2010, respectively. » To expand our supplier diversity reporting in the United Kingdom and Canada by 2010.

Advocacy » In 2008, we began to report on our website the por- » To include in 2009 on our website all dollars spent globally on and outreach tion of dues that major U.S.-based trade associations corporate political campaign contributions. We have pro- report to us as being used for advocacy and/or political vided this information for U.S. contributions since 1996. 7 activities where dues are more than $50,000. » To report externally in 2009 on adherence to ethical business » By June 2008, we were in compliance with 10 of the 11 practices related to corporate political spending, as recom- Center for Political Accountability criteria on its Model mended in the 11th criterion of the model code of conduct Code of Conduct for Corporate Political Spending. from the Center for Political Accountability. » To ensure that all of the major public/private partnerships (PPPs) in which we participate have clear annual performance requirements, where possible linked to the Millennium Development Goals. By 2010, we will work toward reporting on the percentage of PPPs that report annually against such requirements.

ENDNOTES

1 GAVI Alliance is the acronym for the Global Alliance for Vaccines and Immunization. www.gavialliance.org KEY ISSUE Researching Needed New Medicines 1 and Vaccines to Address Unmet Needs

In the past 60 years, innovative medicines and vaccines have helped dramatically to improve public health and economic well-being in many countries.

Diseases that were prevalent 100 years ago, such as smallpox and polio, have all but disappeared. The global burden of illness looks very different today, and the WHO projects that it will be different again in just 20 years.

Our research and development is focused GOVERNANCE OF OUR OUR RESEARCH AGENDA on the following six franchises: RESEARCH AGENDA AND STRATEGY » Atherosclerosis and The Research Management Committee, cardiovascular disease chaired by the Executive Vice President and President of Merck Research Merck is committed to addressing » Bone, respiratory, immunology Laboratories (MRL), reviews and unmet medical needs through scien- and endocrine disorders approves the Company’s basic, non- tifi c excellence: We invested almost clinical and clinical research objectives $5 billion annually in R&D in » Diabetes and obesity and strategy annually. In addition, our 2006 and 2007. The talent of our » Infectious diseases and novel vaccines Research Strategy Review Committee scientists, combined with the dramatic » Neuroscience including includes external scientifi c experts and scientifi c and technological advances Alzheimer’s Disease and pain provides critically important input to of the past decade, has led to an excit- Merck’s strategic decisions. 8 ing period of Merck research as we » Oncology seek new and more eff ective ways Merck’s R&D model is designed to to treat diseases. In assessing our Within these therapeutic areas, we com- increase productivity and improve the research priorities, we explore the mit resources to achieve research breadth probability of success by prioritizing scientifi c and commercial feasibility and depth and to develop best-in-class resources. In addition, as part of our of conducting research to develop a targeted and diff erentiated products that R&D strategy, we continue to pursue product that is useful, considering will be valued highly by patients, payers appropriate external licensing opportu- available knowledge, theories, tech- and physicians. nities. MRL recognizes advancements in nologies and skills. Medicines discovered and developed scientifi c knowledge external to Merck by Merck scientists save and improve and we are vigilant in leveraging, licens- countless lives around the globe. Thanks ing and acquiring new technologies to more than 11,000 Merck people and compounds that are consistent with 1 who work on the Company’s research our R&D strategy. activities, we are among the world’s most innovative institutions in the medical sciences for producing fi rst-in- class medicines. RESEARCH AND DEVELOPMENT Our global Code of Conduct applies PERFORMANCE DATA SUMMARY 2005–2007 to the way we work with external researchers, doctors and academics. In addition, Merck is fi nalizing Guiding GLOBAL2007 2006 2005 Principles for Business Practices Merck’s investment in R&D programs ($US)4.9B 4.8B 3.8B Involving the Medical and Scientifi c Community. For more on our Code of Number of people employed in 11,700 11,400 12,400 Conduct and how we work with the the Company’s research activities external scientifi c community, go to www.merck.com/cr/research. Number of medicines and vaccines in 49 57 58 pipeline (Phase I–III) and products under EXTERNAL ALLIANCES regulatory review AND ACQUISITIONS The majority of our research invest- Number of products approved 2 5 2 ment is conducted in-house but we are also committed to working with stra- Percentage of top 20 global burdens of illness 60 N/R N/R tegic partners who can help us achieve addressed by our products and pipeline our research and fi nancial objectives. (as deﬁned by WHO and excluding accidents, External licensing is a fundamental and premature birth and self-inﬂicted injuries) ongoing component of our research and development strategy. In each of 2006 Participation in consortia 5 10 N/R and 2007, Merck signed more than 50 external agreements to leverage excel- Research activities and investments include all Merck divisions. lent and innovative science that is conducted outside of Merck. These included Globally, we recognize that our research Medicine (IOM). In addition, to pro- several acquisitions, which are being agenda is critical in the retention and moting dialogue and exchange of ideas integrated into Merck’s research and attraction of employees, including some in research, Merck sponsors research development activities. 9 of the world’s leading scientists who conferences such as selected Gordon want assurance that the fruits of their Research Conferences related to areas in discoveries will be available to patients biology, chemistry and physics in which worldwide. This is also an increasingly Merck is conducting research. important factor for potential external research alliances. Over and above this, Merck collaborates with external researchers and other WORKING WITH THE EXTERNAL members of the pharmaceutical industry SCIENTIFIC COMMUNITY by participating in selected scientifi c Merck supports numerous profes- consortia. Consortia are an important sional associations, including the mechanism by which researchers can World Medical Association (WMA), work together on nonproprietary scien- the American Association for the tifi c challenges that are common to all Advancement of Science (AAAS), parties. Merck also supports academic the U.S. National Institutes of Health and community-based physicians and (NIH), the U.S. National Science researchers in expanding clinical and Foundation (NSF) and the Institute of scientifi c knowledge and in improving the understanding of the appropriate use of Merck products. Merck’s R&D is Aligned with Global Needs

MERCK’S PIPELINE (as of July 31, 2008*)

PHASE I PHASE II PHASE III 2008 U.S. APPROVALS

Alzheimer’s Disease, Atherosclerosis, CINV, MK-0517 Alzheimer’s Disease, V950 MK-0249 MK-0524A EMEND for Injection

Atherosclerosis, Atherosclerosis, MK-1903 Atherosclerosis, MK-6213 MK-0524B

Atherosclerosis, MK-0859 Cancer, MK-0752 Cancer, MK-0646 (anacetrapib)

Obesity, MK-0364 Cancer, MK-2461 Cancer, MK-0822 (taranabant)

Migraine, MK-0974 Cancer, MK-1775 Cardiovascular, MK-8141 (telcagepant)

Cancer, MK-8669 Cancer, MK-2206 Diabetes, MK-0893 (deforolimus; AP23573)

Osteoporosis, MK-0822 Cancer, MK-5108 HPV, V503 (odanacatib)

CHF, MK-7418 Cardiovascular, MK-0448 Infectious Disease, V419 (rolofylline; KW3902)

Hepatitis B Vaccine, V270 Diabetes, MK-0941 Infectious Disease, V710 HEPLISAV (on hold)

Diabetes, MK-4074 Neurologic, MK-0249 Small molecules and therapeutic biologics are given MK-number designations and vaccine candidates are given V-number designations. Diabetes, MK-8245 Ophthalmic, SIRNA-027† Progressed since February 2008

Infectious Disease, * Candidates shown in Phase I and Phase II include the most advanced Ophthalmic, MK-0140 MK-3281 candidate for a speciﬁc mechanism within a given therapeutic area. Backup candidates, regardless of their phase of development; additional indications in the same therapeutic area; and additional claims, Infectious Disease, line extensions or formulations for in-line products are not shown. Pain, MK-2295‡ MK-4965 † Clinical program conducted by Allergan, Inc. ‡ Proof-of-Concept Molecule

Infectious Disease, Psychiatric Disease, MK-7009 MK-0249

RESEARCH INTO DISEASES PREVALENT Respiratory Disease, Neurologic, MK-4305 IN THE DEVELOPING WORLD MK-0633 Merck has a long history of both in-house research and external research partnerships in infectious disease areas that enable inno- Neurologic, MK-8998 Sarcopenia, MK-2866 vation in diseases of the developing world. In formulating and refi ning our R&D approach, we engage with stakeholders such as the NIH, the WHO, PATH, the GAVI Alliance, the Medicines Psychiatric Disease, Stroke, MK-0724 Research Council in the United Kingdom, the Wellcome Trust MK-5757 and the Global Fund for HIV/AIDS, TB and Malaria, to understand better the research priorities of countries worldwide.

We apply our R&D expertise and technology to identify potential treatments for diseases prevalent in the developing world, such as pneumococcus, that current medicines and vaccines do not ade- quately cover. We are also involved in product development and research collaborations, including some in which we have licensed compounds and donated products for further investigation to partners with specialized expertise. MAJOR GLOBAL BURDENS OF ILLNESS, AS DEFINED BY THE WHO GLOBAL BURDENS OF DISEASE PROJECT*

LEADING CAUSES LEADING CAUSES LEADING CAUSES LEADING CAUSES OF MORTALITY: OF MORTALITY: OF DALYs‡: OF DALYs‡: DISEASE, CONDITION OR INJURY 2002 RANK† PROJECTED 2030 RANK† 2002 RANK§ PROJECTED 2030 RANK§

Ischemic heart disease 1 1 6 3

Cerebrovascular disease 2 2 7 6

Lower respiratory infections 3 5 2 8

HIV and AIDS 4 3 3 1

Chronic obstructive pulmonary disease 5 4 11 7

Perinatal conditions 6 9 1 5

Diarrheal diseases 7 16 5 12

Tuberculosis 8 23 10 25

Trachea, bronchus, lung cancers 9 6 N/A N/A

Road trafﬁc accidents 10 8 8 4

Diabetes mellitus 11 7 20 11

Malaria 12 22 9 15

Hypertensive heart disease 13 11 N/A N/A

Self-inﬂicted injuries 14 12 17 14

Stomach cancers 15 10 N/A N/A

Unipolar depressive disorders N/A N/A 4 2

Congenital abnormalities N/A N/A 12 20

Hearing loss – adult onset N/A N/A 13 9

Cataracts N/A N/A 14 10

Violence N/A N/A 15 13

Considering Merck’s pipeline and the list of products we currently market (see inside back cover), we estimate that Merck addresses 60 percent of the top 20 global burdens of illness as deﬁned by the WHO. * Projections of Global Mortality and Disease. Mathers and Loncar. PLOS Medicine Nov 2006, Vol 3, Issue 11, e 442. † From table 2 in referenced article ‡ From table 5 in referenced article § DALYs: Disease-adjusted life years—a metric of the impact of disease or disability

Merck has research programs and is than $30 million dollars in direct fi nancial global program of scientifi c collaboration. engaged in R&D collaborations relating support for the MECTIZAN Donation Potential collaboration involves industry to the following signifi cant burdens of Program, in addition to 2.1 billion tablets grants to scale up TDR’s network infra- illness in the developing world. More at of MECTIZAN with a market value of structure for maintaining capacities for www.merck.com/cr/researchpriorities. $3.2 billion. In 1998, Merck expanded the drug testing in cell and animal models; Merck MECTIZAN Donation Program maintaining its database of drug targets and » Malaria to include the prevention of lymphatic information on known “drug-ability” of » Tuberculosis fi lariasis, commonly referred to as ele- the targets; and evaluation and feedback to 2 » Diarrheal disease phantiasis, in African countries where the collaborating institutions. disease co-exists with river blindness. For » Cervical cancer more information, go to p. 21. In addition, Merck was a founding mem- » HIV and AIDS, including for ber of the Partnership for Disease Control pediatric use In January 2008, Merck, along with several Initiatives (PDCI), a coalition of pharma- other pharmaceutical companies, agreed to ceutical companies and nongovernmental Merck’s research has also resulted in provide fi nancial support for the WHO/ organization partners engaged in specifi c MECTIZAN for the treatment of the par- TDR Partnership Network (Special disease control or elimination programs asitic infection onchocerciasis (river blind- Program for Research and Training in for neglected tropical diseases. ness). To date, Merck has invested more Tropical Diseases [TDR]), an independent THE RESEARCH AND DEVELOPMENT PROCESS

Drug discovery is a long, diffi cult, expensive and high-risk Studies have estimated that, across the entire pharmaceutical undertaking. It begins with basic research in the laboratory, industry, it costs more than $1 billion to bring one medicine from which expands the fundamental understanding of disease discovery in a laboratory to the patient.3 For every one medicine pathways, and identifi es and characterizes new drug candidates. that reaches the market, between 4,000 and 10,000 compounds The next step is developmental research, where researchers must be screened. The research-based pharmaceutical industry test the safety and effi cacy of a new drug candidate in animals. assumes the high risk of failure in drug development and plays a If the compound makes it through this stage we then begin critical role in the research and development of new medicines clinical development in which multiple studies are conducted in and vaccines worldwide.4 Profi tability and a strong fi nancial base people over several years. are essential to investment and to the allocation of resources necessary to develop and produce future medicines that can Safety is our highest priority. We rigorously study our products meet evolving health needs. and work with regulators and health care professionals over many years to characterize the safety profi les of these products.

the use of animal or human stem cells. Our standards for animal care and use NONCLINICAL RESEARCH We believe it has the potential to help meet or exceed applicable local, national identify important new medicines and and international laws and regulations. Merck scientists use the most therapies for currently unmet needs, For further oversight, Merck volun- advanced tools and latest technologies including neurodegenerative condi- tarily seeks review and accreditation of to facilitate drug discovery and devel- tions such as Parkinson’s disease, cancer, our animal care facilities by an inde- opment and increase our chances of cardiovascular disease, diabetes, osteo- pendent organization, the Association success. However, we recognize that arthritis or trauma. for Assessment and Accreditation of new technologies such as cloning and Laboratory Animal Care-International 5 stem cell research are frequently the We recently formed a Regenerative (AAALAC). As of 2007, all of Merck’s subject of controversy. We encourage Medicine Oversight Committee, com- animal care and use programs were further debate on them so that society prised of Merck and external experts, to accredited by the AAALAC. In addi- can understand better the benefi ts as help oversee Merck’s research involv- tion, we hold external animal research well as the potential risks of new ways ing stem cells, including highly tar- laboratories that we contract with to of working. geted research using human embryonic high animal research standards and we stem cells. Merck conducts research require that they comply with and con- GENETIC RESEARCH using stem cells in full accordance form to applicable animal welfare laws Merck is strongly committed to under- with all applicable laws and regulations and regulations. standing how genes work and how they and with our own research policies. relate to diseases and drug treatments. Research involving human embry- Merck is committed to the philosophy The foundation of our clinical pharma- onic stem cells is guided by National of replacement, reduction and refi ne- cogenomic strategies is our collection of Academy of Sciences guidelines. ment (3Rs) for animal-based research. genetic samples in Merck clinical trials. The vast majority of our biological We analyze related data and apply new Merck is opposed to the reproductive studies do not involve animals. It is our technologies to enhance our develop- cloning of human beings. responsibility to use the most appropri- ment of new medicines and vaccines. ate methodology and aggressively to We obtain appropriate subject consent ANIMAL RESEARCH seek alternatives to the use of animals 12 To discover, develop, manufacture in research. Whenever possible we for the use of genetic samples, in accordance with domestic and international and market innovative medicines and use animal alternatives (replacements) laws and regulations. vaccines that treat and prevent illness, that include in vitro (cell culture) tests, laboratory animal research is indispens- computer modeling, robot screening REGENERATIVE able for scientifi c and regulatory reasons. and database mining. For example, MEDICINE RESEARCH Merck is dedicated to the ethical and Merck has created a world-class imag- Merck has been conducting research into responsible treatment of all animals used ing department that allows scientists to the biology of stem cells for more than in the development of its medicines view tumors in mice and monitor non- a decade. This research has involved and vaccines. invasively the long-term eff ectiveness of

BIOPROSPECTING

In the course of our drug discovery, NONCLINICAL RESEARCH we believe that it is important to pro- PERFORMANCE DATA SUMMARY 2006–2007 tect and preserve the environment in which we operate. Merck no longer is GLOBAL 2007 2006 actively involved in research on natural products. However, through exter- Number of ﬁled U.S. patent applications 200 227 nal collaborations, Merck assays may be used to screen natural products, Number of initiated licenses for new technologies 100 122 in which case Merck adheres to the Convention on Biological Diversity. The number of ﬁlings and patents granted demonstrates the extent of innovation taking place at Merck Research Laboratories. Merck spends BASIC RESEARCH DEVELOPMENT REGISTRATION AND INTRODUCTION about $5 billion YEAR: 123456789101112 $5 a year on R&D. billion 10,000+ 250 SUBSTANCES COMPOUNDS Merck employs more than 5 1 11,000 people COMPOUNDS PRODUCT in the Company’s 11 research activities. PHASE I PHASE II PHASE III PHASE IV thousand SCREENING PRECLINICAL TESTS CLINICAL STUDIES PRODUCT SURVEILLANCE

new cancer treatments. In addition, since scientifi c advisory committees to advise PEDIATRIC FORMULATIONS 1994 Merck has annually presented an on trial design, provide for transparent AND INDICATIONS Animal Alternative Award to Merck sci- review and discussion of the data, and entists who develop new animal alterna- foster a collaborative approach to the Where appropriate, we are conducting tives techniques. For more information, publication and presentation of fi ndings. clinical trials and seeking approval for go to www.merck.com/cr/animalresearch. All protocols and related documents pediatric indications and age-speciﬁ c are reviewed and approved by external formulations. For a listing of all of our and independent Institutional Review pediatric clinical trials in Phases I-IV go to www.ClinicalTrials.gov. OUR CLINICAL RESEARCH Boards or Ethical Review Committees. AND DISCLOSURE Merck recognizes the importance of INFORMED CONSENT OF RESULTS providing participants of clinical trials for severe or life-threatening diseases— Merck requires assurance that Merck conducts clinical trials such as HIV and oncology —access to subjects and/or their legal representa- worldwide to evaluate the effi cacy the medicine after the trial is completed. tives understand the procedures, use and safety profi les of our products. Based on our evolving practices to meet and disclosure of personal health These trials are fundamental to the patient needs, Merck is developing a information, use of biological samples, development of innovative medicines formal policy on posttrial drug access. and risks/beneﬁ ts involved in a clinical and vaccines that treat and prevent study and that their participation is illness in humans. Merck’s investi- CLINICAL QUALITY voluntary. Informed consent is gational studies in human subjects ASSURANCE AUDITING obtained prior to initiation of any clini- adhere to laws and regulations for the Merck’s Worldwide Clinical Quality cal study procedures, including those protection of human subjects, includ- Assurance Resources department con- performed solely for the purpose of ing the International Conference ducts independent, periodic audits of determining eligibility for participation on Harmonization—Good Clinical the processes, computerized systems in the trial. In the case that a prospec- Practices (ICH-GCP) standards. and collaborative partners supporting tive clinical study participant cannot Merck continues to support the prin- Merck clinical development. The audits read the form, the consent form may ciples in the Declaration of Helsinki. primarily assess compliance with GCP be read by a patient advocate, with 13 and Pharmacovigilance regulations and consent documented and witnessed. CLINICAL TRIAL CONDUCT guidelines, clinical study protocols AND GOVERNANCE and contractual agreements, divisional and Our clinical trials are designed, con- departmental standard operating proce- ducted and monitored in adherence to dures, and applicable corporate policies Merck global standards, regardless of and procedures. The audits also assure the study location. Consistent with a trend in the pharmaceutical industry, more CLINICAL TRIALS AND DISCLOSURE than half of the patients participating in our clinical trials are enrolled out- PERFORMANCE DATA SUMMARY 2006–2007 side the United States, in more than 50 countries. As a result, we obtain GLOBAL 2007 2006 information in diverse populations that Number of clinical trials registered at 161 98 helps to ensure a thorough evaluation of www.ClinicalTrials.gov the safety and effi cacy of our medicines and vaccines. Phase II–V* clinical trials conducted 58 (54) 50 (49) (in number of countries) Our clinical trials are designed with extensive input from local clinical Manuscripts of clinical trial results and related 172 172 investigators and external consultants papers submitted to peer-reviewed journals with relevant, specifi c experience. For all Phase III and later clinical trials, it * Phase V trials are conducted to determine new uses for existing products and/or broader is Merck policy to establish external health and economic outcomes. accuracy and integrity of clinical trial data For many years, Merck has published in MERCK’S PUBLICATION POLICY that support our regulatory applications. a timely manner the results of hypothe- sis-testing trials — regardless of outcome. Merck formally developed and imple- CLINICAL TRIALS REGISTRATION The Company expanded our commit- mented our Guidelines for Publication AND DISCLOSURES OF CLINICAL ment in 2005 by disclosing results from of Clinical Trials and Related Works in TRIALS RESULTS all registered trials of marketed products 2003, and posted them on our website We believe that clinical trial registries on www.ClinicalStudyResults.org. In publicly in January 2004. The guide- serve an important function for patients keeping with our publication guidelines, lines contain additional information and health care providers to learn about Merck discloses balanced, complete and about how Merck works with external and gain access to relevant clinical trials accurate information regarding all of authors and contributing writers. of experimental treatments or preventa- our registered clinical trials of marketed tive agents. In response to physicians’ and products, regardless of outcome. As patients’ requests for improved informa- of May 2008, Merck had published a » We will continue and expand our tion, Merck worked with other phar- total of 218 clinical trial results on the interactions with public and private maceutical companies and associations www.ClinicalStudyResults.org website. entities, such as academic institu- to utilize the NIH clinical trials registry tions and nongovernmental organi- for posting clinical trials and to develop RESEARCH AGENDA AND zations, to understand and support other sites for posting trial results in 2005. MANAGEMENT PRIORITIES key research priorities and oppor- In 2007, the FDA Amendments Act FOR THE FUTURE tunities, including for developing (FDAAA) was passed, requiring that all world diseases. » We will continue to grow our pipeline trials Phase II–V must be registered. Prior with a focus on researching and devel- » We are developing a formal policy on to FDAAA, only serious or life-threat- oping fi rst-in-class or best-in-class posttrial drug access. ening studies Phase II–V were required. medicines and vaccines in targeted Since February 2007, Merck’s policy » We are fi nalizing Guiding Principles areas such as atherosclerosis and has been to register at the trial initiation for Business Practices involving the cardio vascular disease, bone and respi- all clinical trials (Phase I–V) in patients Medical and the Scientifi c community. ratory diseases, diabetes and obesity, that it sponsors and conducts worldwide infectious diseases and novel vaccines, 14 on the www.ClinicalTrials.gov website. neuroscience and oncology therapies. Previously, starting in 2005, Merck had registered clinical trials Phase II–V.

GEOGRAPHIC SPREAD OF MERCK’S CLINICAL STUDIES PHASE II-V* PERCENTAGE OF PATIENTS

0 10 20 30 40

United States

Europe

Asia Paciﬁc

Latin America

Central and Eastern Europe 2006

South Africa 2007

* Phase V trials are conducted to determine new uses for existing products and/or broader health and economic outcomes. SELECTED RESEARCH, SCIENCE AND INNOVATION POLICY ACTIVITY AND STAKEHOLDER ENGAGEMENT 2006–2008

In the past two years, Merck scientists medical school students in effective and health system development and capacity have participated in developing public safe prescribing.6 building for the prevention and control of policy on numerous and varied issues infectious diseases.7 related to the support of science and To inform the debate on research in innovation. For example, the Association neglected tropical diseases and other Merck also participated in the 2008 of American Medical Colleges has diseases prevalent in the develop- Partnering for Global Health forum, engaged in the Medical School Objectives ing world, Merck has participated in which reviewed developing world health Project for more than 10 years. One numerous forums, including the 2008 needs and discussed new U.S. incen- result was the report on the education of Infectious Diseases Summit that focused tives for neglected tropical disease on leveraging private sector skills for drug development.8

to education reform was necessary. Independent analyses of student perfor- FOSTERING SCIENCE Funded through a $38 million, 15-year mance found that students receiving commitment from The Merck Company science instruction from teachers who EDUCATION Foundation, MISE has worked to participated in MISE professional devel- improve science education and raise opment activities over several years Fostering the next generation of the levels of science performance for outperformed students whose teachers scientifi c leaders is consistent with students from kindergarten through had only one or no years of MISE train- Merck’s overall commitment to scien- 12th grade. MISE activities are focused on ing. More recent analyses of student tifi c innovation: It is essential for the school districts near Merck facilities in achievement data also found that the sustainability of our business to have New Jersey, Pennsylvania, Massachusetts race/ethnicity achievement gap is sig- access to the best-trained scientifi c and, most recently, Thailand. nifi cantly smaller in science for students minds globally, and it is essential for of teachers who participated in coaching the economic development and well- In addition to funding provided by than for students whose teachers did not being of the communities in which The Merck Company Foundation, participate in coaching. MISE provides we operate. MISE has also received funding from the academic content and pedagogical sup- NSF, including through a $7.1 million port for coaches. Merck has a long history of promoting award in 2003 to MISE and a regional science education in schools and at the partnership of schools and education In 2006, MISE was included as precollege, undergraduate, graduate and organizations to strengthen science a best practice in “Innovation postdoctoral levels. We want to help and mathematics education in certain America—Building a Science, develop and train future leaders in sci- New Jersey school districts. Technology, Engineering and Math ence and biomedical research, by stimu- Agenda,” published by the National lating interest and excellence in science Governors Association.9 from an early age; by expanding interest among undergraduate students to pursue graduate study in the health sciences and possible research careers; and by creating opportunities for graduate and post- 15 doctoral training in a variety of basic THE MERCK INSTITUTE FOR SCIENCE EDUCATION (MISE) and clinical research areas. PERFORMANCE AND IMPACT DATA SUMMARY 2005–2007

Our support continues today through 2007 2006 2005 public/private partnerships with local, regional and national partners that rely Merck Company Foundation investment 3.4M 3.4M 3.3M on evidence-based approaches to learn- in MISE ($US) ing and undergo rigorous evaluation. Two major programs in this area are the Total student enrollment in grades pre-K–8 37,015 36,244 36,696 Merck Institute for Science Education (In NJ and PA MISE-supported school districts) and the UNCF/Merck Science Initiative. Number of teachers and principals 775 800 900 attending MISE workshops THE MERCK INSTITUTE FOR SCIENCE EDUCATION (MISE) Quality of Professional Development: 90 80 100 Based on our belief that interest in sci- Percentage of principals reporting being pre- ence must be fostered at an early age, in pared to support teachers implementing the 1993, Merck made a long-term com- NJ Core Curriculum Content Standards in mitment to improve science teaching Science (four NJ school districts; grades 6–8) in U.S. public schools with the establishment of MISE. We were deeply Percentage of grade 8 State Science Test 59.2 59.8 55.6 concerned about the quality of science results (NJ school districts) proficient proficient proficient instruction at the time and believed that a more focused, proactive approach Number of teachers attending 95 30 N/A IN-STEP workshops in Thailand Led by Dr. Carlo Parravano, MISE has become a model for how corporations can support America’s STEM (science, technology, engineering, mathematics) education objectives and make a lasting diff erence in education reform by: » Developing and delivering research-based professional development opportunities to enhance teacher knowledge and skills » Providing access to high-quality curriculum materials and resources » Building communities within a school that are committed to strengthening science teaching and learning within and across schools and school districts » Promoting local, state and national policies that support eff ective science education

Through this partnership, we are changing the way science and math are taught and learned at every grade level. MISE has become an anchor in our instructional planning and delivery systems. The MISE partnership truly has made a diff erence in the lives of our children.

Dr. Raymond Bandlow Superintendent, Hillside, New Jersey, Public Schools

In 2006, MISE launched its fi rst inter- United Negro College Fund (UNCF) Merck has contributed more than national program in the tsunami-ravaged to establish the UNCF/Merck Science $36 million to the UNCF/Merck Science areas of Thailand, in conjunction with Initiative. This program seeks to expand Initiative. To date, 479 recipients —half MSD Thailand, the Kenan Institute the pool of world-class African-American of them women—at more than 170 insti- Asia, and the Thai Ministry of biomedical scientists and help to enhance tutions have received fellowships. In a Education. Known as the Inquiry-based the economic competitiveness of the recent survey, of the Fellows who have Science and Technology Education United States. The initiative also provides entered the workforce, 43 percent are Program (IN-STEP), the initiative Merck with an opportunity to recruit in academe and work in Ivy League seeks to improve student performance from a more diverse pool of postdoctoral institutions, large state universities and in science through inquiry-based learn- fellows in support of the Company’s historically black colleges and universi- ing, and to develop a proven model diversity workforce goals (see p. 48.), and ties. Nearly 32 percent of Fellows work for the Ministry of Education to repli- supports one of Merck’s fi ve strategic in industry (pharmaceutical and biotech); cate nationwide. Through December philanthropic priorities (see p. 60). and 25 percent work in the public sector. 16 2007, the initiative has trained more In 2006, one Fellow was selected as one than 125 Thai educators. Thirty-six of Each year, the initiative provides schol- of Ebony magazine’s “30 on the Rise” these Thai teachers have used their new arship and fellowship support to 37 out- Young Leaders of the Future. knowledge to teach workshops co- standing African-American students designed with IN-STEP staff . pursuing studies and careers in chemistry and the life sciences. Awardees SUPPORTING HISPANIC STUDENTS’ For more on MISE, go to www.mise. are selected through a national com- ACCESS TO EDUCATION com/cr/mise. petition open to all eligible students at In May 2008, Merck partnered with colleges and universities throughout the The National Alliance for Hispanic UNCF/MERCK the United States. The awards provide Health to create the Alliance/Merck SCIENCE INITIATIVE fi nancial support, hands-on training, Ciencia (Science) Scholars Program, African-Americans currently hold fewer mentoring relationships and institu- aimed at improving Hispanic stu- than 2 percent of PhDs in biology and tional support to help the UNCF/ dent access to higher education chemistry. To help address this imbal- Merck Fellows devote their attention to and degrees in science, technology, ance, Merck partnered in 1995 with the education. Undergraduate scholars also engineering and math (STEM). The receive paid internships for two summers Merck Company Foundation provided at Merck Research Laboratories, where a $4 million grant and MISE is working Merck scientists volunteer to mentor closely with the Alliance to implement Fellows, serving as teachers, career advi- the program. sors and friends helping to ensure that the Fellows move seamlessly from one More on the Alliance at www.merck. educational level to the next. com/cr/docs/merck_ciencia_ scholars_program_2008.pdf PUBLIC POLICY AND STAKEHOLDER ENGAGEMENT ON SCIENCE EDUCATION

The Merck Institute for Science Education seeks to have a understand the implications of critical new research on teach- broader impact on education reform through public policy ing and learning science, and puts this research into the context and stakeholder engagement efforts. For example, in 2007, of the classroom through practical examples and case studies.10 Dr. Parravano served as a resource expert at the National Governors Association winter meeting and assisted governors In July 2008, Dr. Parravano testiﬁ ed before the U.S. House of and staff in 35 states in developing initiatives to improve sci- Representatives’ Education and Labor Committee as part of a ence education. That same year, MISE supported the develop- hearing to examine how business/education partnerships can ment and publication of Ready, Set, SCIENCE! A publication of help drive innovation and strengthen math and science educa- the National Academies Press, the book helps K–8 educators tion in America’s schools.11

SCIENCE EDUCATION UNCF/MERCK SCIENCE INITIATIVE PRIORITIES AND TARGETS PERFORMANCE DATA SUMMARY 1996–2005 » To improve the interest, participation and performance of students in sci- CUMULATIVE 1996–2005 ence in grades K–12, during the next three years, MISE plans to expand its Merck Company Foundation/Merck investment 36M work to additional school districts and in UNCF ($US) to a new international site. MISE will provide each new site with techni- Degree completion rates of Fellows (%) cal assistance and access to current » Undergraduate (BA/BS) 99 MISE programs. Specifi c targets » PhD 95 for this work are currently being developed in collaboration with an Percentage of former undergraduate Fellows 65 external evaluator. who entered graduate school » We will continue to make further Percentage of former graduate Fellows who 53 evaluation reports available entered postdoctoral positions on www.mise.org. » MISE will continue to disseminate Number of Fellows hired by Merck (2002–2007) 10 information about the impact of the UNCF/Merck Initiative and seek to expand the model of support for minority scientists to other corporations and nonprofi t organizations. 17 MORE INFORMATION ONLINE

You can ﬁ nd more information on the issues covered in this section, as well as on the following topics at www.merck.com/cr/research. » How we work with the external scientiﬁ c community » Clinical trial monitoring » Research programs and collaborations relating to major » Contract research organizations burdens of illness in the developing world » Access to Merck clinical databases by the external clinical research community

ENDNOTES

1 www.merck.com/licensing Medical Progress, 2008. (available at 9 National Governors Association. www.manhattan-institute.org/html/ Innovation America: Building a Science, 2 www.who.int/tdr/ mpr_06.htm) Technology, Engineering and Math Agenda. 3 DiMasi J, Grabowski H. The Cost of Washington, D.C. NGA Center for Best 5 www.aaalac.org Pharmaceutical R&D: Is Biotech Different? Practices, 2008. (available at www.nga. Managerial and Dec Econ 2007; 28:469- 6 Association of American Medical Colleges. org/Files/pdf/0702INNOVATIONStem.pdf) 479. (available at www.fds.duke.edu/ Report X—Contemporary Issues in 10 Michael S, Shouse AW, Schweingruber db?attachment-25--1301-view-325) Medicine: Education in Safe and Effective HA. Ready, Set, Science!: Putting Research Prescribing Practices. Washington, D.C: 4 Zycher B, DiMasi J, Milne C. The Truth to work in K-8 Science Classrooms. AAMC 2008. About Drug Innovation: Thirty-Five Washington, D.C: National Academies Summary Case Histories on Private 7 www.aafsummit.org Press, 2008. (available at www.nap.edu/ Sector Contributions to Pharmaceutical catalog.php?record_id=11882) 8 www.pgh.bio.org Science. Manhattan Institute Center for 11 www.merck.com/cr/resources KEY ISSUE Improving Access to Medicines, 2 Vaccines and Health Care

Millions of people worldwide are healthier and living longer lives due to medical advances and globalization, but at least as many people are sick or dying because they do not have adequate access to medicines, vaccines and health care.

While advances have been made in recent years to expand access to medicines and vaccines, we agree with many in the global health community that progress has been too slow.

Merck believes we have an important » Promoting and participating in pub- responsibility in improving access to lic/private partnerships to help build Access is determined by many medicines, vaccines and quality health health care capacity, expand delivery interrelated elements. Poverty is care worldwide. Our fundamental role systems and address specifi c health and the most important factor, but also is to discover and develop innovative development challenges particularly critical are health care infrastruc- products that treat and prevent unmet in the developing world (see p. 20). tures and government policies on medical needs. We are also working very health and insurance coverage, on hard through initiatives and partnerships We also seek to advance access to medi- R&D, on education and on human to ensure that our products are accessible cines, vaccines and health care through rights. This is why improving access and aff ordable. public policy and outreach activities that requires more than simply making address barriers and challenges to health medicines and vaccines available at MERCK’S ACCESS STRATEGY AND care delivery. reasonable prices. To solve access 18 COMMITMENT TO IMPROVING AND challenges, even in developed coun- ACCELERATING ACCESS SUSTAINABLE BUSINESS tries, many stakeholders worldwide Working to improve access to medicines STRATEGIES must pool resources and expertise and vaccines worldwide is the right To improve and accelerate access, our to strengthen health care infrastruc- thing to do ethically, and it is also a business strategies and practices consider ture, ensure adequate ﬁ nancing for major element of our corporate mission issues such as breadth of registration and health, and help build local health and necessary to sustain our business WHO prequalifi cation, diff erential pric- care capacity. Pharmaceutical in the longer term. Merck’s strategy to ing, the returns on intellectual property companies alone cannot solve public accelerate access to our medicines and protection, infrastructure improvements health problems. Sustainable solu- vaccines is three-pronged: and impacts, and how our philanthropy tions will come from comprehensive can be most eff ective. We believe that approaches that draw on the exper- » Discovering and developing break- tise of all stakeholders. through medicines and vaccines that our access approach is also key to attract- address major burdens of illness glob- ing and motivating our most talented ally (see p. 8). employees—those committed to making a positive diff erence to society. registration status, in 2008 we have begun » Developing sustainable business strat- to disclose on our website the coun- egies and practices tailored to the REGISTRATION AND WHO PREQUALI- try registration status for ROTATEQ, needs of diff erent countries and situ- FICATION Merck is committed to reg- GARDASIL and our four anti-retroviral ations so that our products can reach istering our medicines and vaccines as (ARVs) medicines. We plan to update this the patients who can benefi t from broadly as possible around the world. We information every six months. them, wherever they may be, and our seek to register in developing and least business can continue to grow. We developed countries in parallel to devel- Merck is seeking WHO prequali- also consider philanthropic activities oped country registration to the extent fi cation for MMRII, ROTATEQ that will support our business strate- permitted by local regulations. To increase and GARDASIL. gies (see pp. 20–21). the transparency of Merck’s product Cross-company Accountability for MERCK RESEARCH LABORATORIES In determining therapeutic areas in which to focus, Merck Research Laboratories Merck’s Access Strategy take into account three main criteria: unmet medical need and global burdens of illness, ACCESS STRATEGY: APPROVED BY OUR EXECUTIVE COMMITTEE feasibility in terms of available knowledge and expertise, and commercial value.

MERCK MANUFACTURING DIVISION Our Manufacturing Division is investing in a robust, high-quality supply chain, as well MERCK RESEARCH as product formulations and packaging to LABORATORIES meet the needs of all populations, includ- REGIONAL ing the elderly, children and developing BUSINESS UNITS world populations.

GLOBAL HUMAN HEALTH

MERCK Global Human Health, including Merck MANUFACTURING Vaccines and Infectious Diseases, sets DIVISION GLOBAL PUBLIC POLICY and achieves product access indica- & OFFICE OF CORPORATE tors and targets through coordination of RESPONSIBILITY supporting activities.

OFFICE OF CORPORATE RESPONSIBILITY (OCR) GLOBAL HUMAN HEALTH OCR collaborates with senior, divisional and regional management to establish access strategies and provide counsel on alliance development, health policy and other issues related to global health partnerships and access, particularly in developing 1 2 STOCRIN, CRIXIVAN and ATRIPLA, RESPONSIBLE PRICING Merck’s countries and emerging markets. (OCR is our treatments for HIV and AIDS, have worldwide pricing strategy aims to make part of Merck’s Global Public Policy group.) received WHO prequalifi cation. As our ARVs and vaccines aff ordable and required by the prequalifi cation process, accessible to more people by applying a GLOBAL PUBLIC POLICY Merck is awaiting the inclusion of its diff erential pricing policy corresponding Global Public Policy advocates for reforms fourth ARV, ISENTRESS, in the WHO’s to countries’ level of development and and legislation with both national and inter- Expression of Interest and will be ready to burdens of disease, as well as the sustain- national authorities that will help expand submit the necessary documents. WHO ability of our business. Merck is commit- access to medicines and health care. prequalifi cation is an important step ted to making our ARVs and vaccines toward accelerating global access because available at dramatically lower prices REGIONAL BUSINESS UNITS it is often required by UN agencies such as (including selected products for which Our regional business units are measured UNICEF and the Pan-American Health Merck does not profi t) in the developing on their ability to expand product access Organization (PAHO) that distribute world, at signifi cantly reduced prices in in their markets, including developing and products throughout developing coun- emerging markets, and at competitive middle income segments. tries, and is necessary in the absence of prices in developed countries. We believe reliable national medicines safety authori- that our pricing approach has contributed ties to certify that products meet required to improving access to our medicines quality, safety and effi cacy standards. and vaccines, while also considering Merck’s need to continue to invest in vital new drugs will be reduced in ways elimination programs, donations are an research, development and production that could aff ect all countries and lead important mechanism for expanding access and to provide an attractive return to to a decline in biomedical innovation. for a specifi c period of time. For these our shareholders. It is also important to note that Merck reasons, Merck remains committed to believes that once a patent has expired donating our products through the Merck » Since 2001, Merck’s diff erential pric- on any of our products, that patented Medical Outreach Program, the MDP and ing policy for our HIV medicines has invention should be in the public our U.S.-based Patient Assistance Programs provided not-for-profi t prices in the domain, available for use by others. (see p. 28). least developed countries and those hardest hit by the AIDS pandemic, as LICENSING Merck considers licenses ACCESS STRATEGY COMMITMENTS measured by adult HIV prevalence. for our medicines and vaccines to help » Countries with a higher degree of We plan to report on our access increase their availability, but to grant economic development and/or lower to medicines and vaccines perfor- such licenses we must fi rst ensure that prevalence rate receive signifi cantly mance annually. the licensee’s product is of suffi ciently discounted prices. The prices at which » We plan to continue to expand our high quality and that they will be able patients and countries can obtain their supply chain through qualifi ed local to assure uninterrupted supply. To date, ARVs are based on relative level of partners, to help ensure sustainable, Merck has granted royalty-free licenses economic development, relative bur- high-quality and aff ordable supplies of our ARV efavirenz to fi ve South den of disease, the degree to which the of our medicines and vaccines to all of African generic manufacturers, of which government is committed to treating our customers. four are currently on the market. HIV-infected people and the value » We plan to ensure that all of our access Merck’s ARVs provide relative to EXTERNAL MANUFACTURING PPPs have stated targets and eff ective- alternatives. For the most economically APPROACH Merck is committed to ness measures by the end of 2010. developed countries, Merck prices seeking additional ways to reduce the cost our ARV products using competitive, of our medicines and vaccines and increase market-based principles. access for people living in the world’s The Access to Medicines Index (ATMI) » In 2007, Merck adopted a new devel- poorest countries. These include working ranked Merck No. 3 and the only U.S. oping world pricing policy for Merck with external manufacturers and suppli- pharmaceutical company in the top vaccines, under which we off er no- ers to achieve incremental effi ciencies and seven in its inaugural index launched profi t pricing in the developing world to reduce or waive the royalty on vaccine in June 2008. The Index is evolving and for two of our vaccines —ROTATEQ doses sold in the developing world. we are committed to working with the and GARDASIL. This pricing is ATMI and other organizations, includ- available to public sector markets in INFRASTRUCTURE AND CAPAC- ing the Global Reporting Initiative , to GAVI-eligible countries, which are ITY BUILDING THROUGH PUBLIC/ develop meaningful measurement among the world’s least developed PRIVATE PARTNERSHIPS A key tools for our industry. countries. For more developed middle element of Merck’s access strategy is income nations, Merck will provide promoting and participating in public/ our vaccines at tiered prices based on private partnerships (PPPs) with local countries’ ability to pay. communities, governments, non- IMPROVING ACCESS IN governmental organizations (NGOs), THE DEVELOPING WORLD PATENTS Ninety-fi ve percent of medi- multilateral organizations and other cines and vaccines described as essential corporations to address specifi c health AND EMERGING MARKETS by the WHO are not patented in the and development challenges beyond developing world. Despite this, very few those over which Merck has direct Merck is helping to improve and accel- people in those countries have access to control. Merck has three decades of erate access to our products in least 20 the medicines they need, which dem- experience in developing PPPs to build developed countries where access is onstrates that patents are not the barrier health care capacity and expand delivery most lacking. Middle income coun- to access. Rather, other factors such as systems. In 1987, with many partners, tries and emerging markets such as lacking health care infrastructures cre- we launched the fi rst large-scale, com- China, Brazil, South Africa and India ate practical barriers to care.3 Intellectual prehensive global health initiative of its off er opportunities to expand our property protection, including that kind, the Merck MECTIZAN Donation business and make our medicines and aff orded through patent systems, pro- Program (MDP) to provide the drug vaccines available to new patients as vides a critical incentive for innovative MECTIZAN to treat onchocerciasis, or health care systems and infrastructures pharmaceutical companies to perform river blindness, in countries where the evolve. Beyond our responsible pricing the risky and costly research and devel- disease is endemic. Merck has applied approach, we are developing new ways opment required to bring new medicines our experience with the MDP to proof doing business in these markets, to market. Incentives to innovation grams and partnerships around the world including more aggressive registration generally are a key driver for country that are helping to prevent and treat HIV strategies (see p. 18), new licensing and competitiveness, and help to foster eco- and AIDS, other chronic conditions and external manufacturing arrangements, nomic development and social prosper- vaccine-preventable illnesses. More on and building health care capacity. ity. For these reasons we support and our approach to PPPs on p. 56. advocate for eff ective intellectual prop- HEALTH CARE CAPACITY-BUILDING erty protection in developing as well as PRODUCT DONATIONS Merck does Since 1990, sub-Saharan Africa has been developed countries. Our policy and not believe that donating medicines and losing 20,000 health care workers a year our practices recognize the public health vaccines is a sustainable solution to the to other destinations. This hemorrhaging fl exibilities contained in the TRIPS global challenge of access to medicines and of skills means that Africa has to spend agreement. Nevertheless, these fl exibili- vaccines. However, we recognize that the about $4 billion every year on employ- ties were designed to provide exceptions millions of patients who need medicines ing non-African expatriates instead. In to the general rules. If they become the and vaccines now cannot wait. And, in addition to PPPs on HIV and AIDS and rule, then incentives for innovation in emergency situations and as part of disease immunizations, Merck is engaged in a number of initiatives to address the broad Merck Medical Outreach Program MMOP Now in its 50th year, the Merck Medical Outreach Program (MMOP) is the primary PERFORMANCE DATA SUMMARY 2005–2007 mechanism through which Merck donates our pharmaceuticals and vaccines for GLOBAL 2007 2006 2005 humanitarian assistance in the developing world and in support of disaster relief Number of countries reached by the 104 103 98 and emergency situations worldwide. The Merck Medical Outreach Program MMOP is one of the ways Merck helps to Total value of product donations ($US)* 125M 46M 54M expand access to medicines and vaccines, especially in the developing world. Number of disaster relief efforts assisted 6 2 4 The scope of the MMOP varies from year to Total value of disaster relief contributions 3.3M 2.6M 12.2M† year and is infl uenced by changing medical (product) ($US) needs in developing countries, the quantity of Merck medicines available for donation, * We value our product donations based on the U.S. wholesale price. and the random nature of natural and man- † 2005 was unprecedented in terms of disaster relief and included efforts in the wake of the made disasters globally. More on MMOP at tsunami that struck southeast Asia, hurricanes Katrina and Rita, a major earthquake in www.merck.com/mmop. Pakistan and floods in Guatemala. issue of health care capacity-building in WHO’S GUIDELINES FOR DRUG DONATIONS the developing world, focused specifi cally on health care training. Merck played an important role in the development of the WHO’s Guidelines for Drug Donations through our involvement in the Partnership for Quality Medical » We participated in the Task Force on Donations, an alliance of private voluntary organizations and medical product manu- Education and Training of the Global facturers dedicated to raising standards of medical donations to meet the needs Health Workforce Alliance to explore of underserved populations and disaster victims around the world.6 In donating our practical solutions for scaling up mas- products, Merck conforms fully to the WHO Guidelines.7 We have also worked with sively the education and training of the World Economic Forum to develop new industry guidelines for donations in health workers, recognizing that many disaster situations.8 have a part to play in the global health workforce crisis: governments, educational leaders, international develop- PERFORMANCE IN THE ment partners and donors, local partners DEVELOPING WORLD The unique and broad-based and the public and private sectors.4 Merck is basing our performance in 2008 partnership that has evolved around on setting targets for R&D, policy, pric- » Merck is also a member of the Global ing and supply chain management, with onchocerciasis control is extremely Health Initiative (GHI) of the World the goal of maximizing the reach and important and helpful to the Economic Forum, which aims to public health impact of our products. invermectin [MECTIZAN] mass engage businesses in PPPs to tackle HIV We are particularly focused on registra- and AIDS, TB, malaria and health sys- treatment eff orts, bringing about tion and WHO prequalifi cation for our tems. Merck is engaged in several GHI results that no single party could products, and on increasing the number initiatives, including a program to help achieve…Much of the experience of countries that use our products in their build business and management skills government access programs. We plan to gained in the development of among health care workers at the local expand our reporting in future reports. ivermectin treatment can usefully be and district levels in Africa.5 applied in the recent broader perspective of control of neglected MERCK MECTIZAN DONATION PROGRAM tropical diseases. One of the most signifi cant initiatives under- additional treatments of MECTIZAN were taken by Merck to help improve access to approved last year by the MECTIZAN Expert B. Thylefors, M. M. Alleman and medicines in developing countries is the Merck Committee/Albendazole Coordination N. A. Y. Twum-Danso, Tropical Medicine MECTIZAN Donation Program (MDP), estab- for lymphatic fi lariasis through Merck’s and International Health.9 lished more than 20 years ago to treat river work with the Global Alliance to Eliminate blindness (onchocerciasis). The MDP is the Lymphatic Filariasis. largest ongoing disease-specifi c drug donation and signals the potential for elimination of river program and public/private partnership of its In November 2007, public health offi cials blindness in all of the Americas. kind in history, and is widely regarded as one of announced that transmission of river blindness the most successful public/private health col- had been halted in Colombia, the fi rst time that Building on this, in December 2007, Merck pledged laborations in the world. the disease has been eliminated as a public up to $25 million toward a new initiative with the health problem on a countrywide basis anywhere World Bank and other partners to help eliminate Since the program’s inception, Merck has donated in the world. Health offi cials also announced the disease in 28 African countries. We estimate more than 2.1 billion tablets of MECTIZAN, with that river blindness transmission has been that Merck’s donation of MECTIZAN for river more than 600 million treatments administered. halted in certain endemic areas in Ecuador and blindness will reach 100 million treatments The program currently reaches more than Guatemala. The success in Latin America means annually by 2010. 80 million people in Africa, Latin America and that almost 75,000 people in 190 communities the Middle East (Yemen) each year for the treat- are now free of the threat of river blindness, More on the MDP, its performance and impacts at ment of river blindness; an estimated 50 million www.merck.com/cr/mectizan. ACCESS TO MEDICINES AND VACCINES PERFORMANCE DATA SUMMARY 2005–2007

GLOBAL 2007 2006 2005

Number of Merck products for which not-for-proﬁt prices are offered 6 2 2 to least developed countries

Number of patients on Merck ARV therapy—all formulations, all products 763,118 701,391 N/D (percentage in developing world) (91) (93)

Number of countries and territories in which patients are on at least 135 125 N/D one formulation of Merck's ARVs

Product donations ($US) 766M 768M 979M (percentage in the developing world)* (79) (58) (45)

N/D: No data available because we did not track the information in this way before 2006.

* We value our product donations based on the U.S. wholesale price. Decrease in product donations is due in large part to decline in patient enrollment in our corporate U.S. Patient Assistance Program attributed in part to an increasing number of patients with prescription drug coverage (including through the Medicare Prescription Drug Program, which began January 1, 2006).

MERCK’S COMMITMENT TO THE MILLENNIUM DEVELOPMENT GOALS PUBLIC POLICY RELATING We believe we can help achieve the United Nations’ Millennium Development Goals (MDGs). To this TO ACCESS IN THE end, we have endorsed the business “Call to Action on the Millennium Development Goals”launched DEVELOPING WORLD 10 at the World Economic Forum in January 2008 and have assessed our contributions to the health To help inform our decision making and care-related MDGs. to understand how best we can con- REDUCING CHILDHOOD MORTALITY BY 2015 » Merck is a founding member of the UN/ tribute to global health challenges, we (GOAL 4) Industry Accelerating Access Initiative (AAI), actively engage with external stakehold- a cooperative endeavor of fi ve multilateral ers with other perspectives and experi- » Our pediatric vaccines help protect millions organizations and nine research-based ence. We also participate in numerous of children from many common and serious pharmaceutical companies begun in 2000 high-level forums, including: childhood diseases including rotavirus, to help improve access to more affordable » The Medicines Transparency Haemophilus infl uenzae type b (Hib), hepatitis A HIV-related medicines and diagnostics for Alliance (MeTA), established by the and B, chickenpox, measles, mumps, rubella, developing countries and those hardest hit U.K. Department for International and human Papillomavirus (HPV). by the HIV pandemic.11 Development in 2008, which aims » We participate in numerous public/private to build transparency and account- DEVELOPING PUBLIC/PRIVATE DEVELOPMENT partnerships focused on improving childhood ability around the selection, procure- PARTNERSHIPS TO IMPROVE ACCESS TO mortality. For example, with the GAVI Alliance ment, sale and distribution of essential MEDICINES IN DEVELOPING COUNTRIES and the Merck Vaccine Network-Africa we aim medicines, and to tackle the excessive (GOAL 8, TARGET 17) to build capacity in immunization services to markups, corruption and mismanage- prevent childhood diseases. ment that cause good quality medi- Merck has been a pioneer in developing public/ » cines to be either too expensive or » We include pediatric clinical trials in all of our private partnerships to foster access to unavailable for hundreds of millions product development strategies worldwide, medicines and vaccines in developing countries of people in developing countries.12 where relevant, including for our HIV and around the world. AIDS medicines. » The Global Fund Technical Working In 1987, Merck made a commitment to donate » Group on In-Kind Donations, com- our drug MECTIZAN for the treatment of river HALTING AND BEGINNING TO REVERSE THE prised of representatives from all blindness (oncho cerciasis) to all who need SPREAD OF HIV/AIDS BY 2015 sectors including private, academic it for as long as necessary. Working through a (GOAL 6, TARGET 7) and NGOs, which is examining the unique, multisectoral partnership involving the Global Fund’s acceptance of donations WHO, the World Bank and UNICEF, ministries » For more than 20 years, Merck has been at of in-kind goods.13 of health, NGOs and local communities, today the forefront of the effort to respond to the the program reaches more than 80 million » We have also engaged in small group pandemic and today markets four ARVs. people a year in 34 endemic countries. discussions with individual stake- Merck has also licensed four compounds holders, as well as larger events such as to the International Partnership for Working in partnership with the Government » the 2008 Infectious Diseases Summit.14 Microbicides14 (IPM) to help prevent HIV of Botswana, the Bill & Melinda Gates infection in developing countries. Foundation, the Government of China and PRIORITIES FOR THE many others, Merck has helped to establish » Our differential pricing policy is designed to FUTURE IN RELATION TO THE trailblazing programs to address HIV and ensure that infected people in the least devel- DEVELOPING WORLD AIDS worldwide. Merck is applying the lessons oped countries and those hardest hit by the » We are expanding our presence in learned through these programs to projects HIV and AIDS pandemic can obtain Merck ARVs developing countries and emerging elsewhere to assist others in addressing the at prices at which Merck makes no profi t. markets and are exploring business challenges of the disease. and fi nancing models for all our products to reach new populations. VACCINES IN RESOURCE-CONSTRAINED SETTINGS

A unique challenge in introducing new information is vital to countries’ deci- of introduction and the beneﬁ ts of our vaccines in resource-constrained set- sion-making and prioritization-setting products in resource-constrained coun- tings is the need to demonstrate the processes for scarce health resources. tries. We are also researching formu- feasibility of mass immunization among We are systematically encouraging lations for resource-poor settings to the targeted population and the public and facilitating the widespread adop- address the need for heat resistance and health beneﬁ t in terms of health and eco- tion of our new vaccines by establishing less packaging to simplify transportation nomic outcomes of immunization. This precedents that demonstrate the ease and storage.

But they are diffi cult to deliver. By shingles. We believe that our research and FOCUS ON IMPROVING making our vaccines more accessible, scientifi c advances will lead to new gen- and helping to build health care capac- erations of vaccines. ACCESS TO VACCINES AND ity, Merck continues to make progress in IMMUNIZATION IN DEVEL- preventing disease and saving lives. To ensure that our vaccines reach those OPING COUNTRIES who need them we continue to develop Merck manufactures 11 vaccines aimed at novel business strategies and work with Because of lacking health care infra- preventing 12 communicable diseases, par- many partners in public/private col- structure, preventive measures such as ticularly in children (see table on the inside laborations to improve the health care immunizations are critical to the health back cover). We are also making vaccines infrastructure needed to implement and economies of developing countries. for diseases that aff ect older people, such as immunization programs.

ACCESS TO VACCINES PERFORMANCE DATA SUMMARY 2005–2007

GLOBAL 2007 2006 2005

Number of countries where Merck has committed to no-proﬁt prices for 72 N/A N/A* ROTATEQ and GARDASIL

Number of low and middle income countries using Merck's vaccines 11 N/R N/R in their public sectors

Number of vaccines (registered in number of countries) 11 (100) N/R N/R

Number of doses sold worldwide of ROTATEQ, GARDASIL and MMRII 46.5M N/R N/R

» In high Human Development Index (HDI) countries 44M N/R N/R

» In medium HDI countries 1.6M N/R N/R

» In low HDI and GAVI countries 500,000 N/R N/R Number of country registrations of GARDASIL and ROTATEQ globally 62 (164) 101 (102) 1 (N/A) 23 (and cumulative)

» In high HDI countries 23 81 1

» In medium HDI countries 23 13 0

» In low HDI and GAVI countries 16 7 0

Partnership data:

» Merck investment in Merck Vaccine Network–Africa (MVN–A) ($US) 1M 400,000 400,000

» Number of health care professionals trained through MVN–A 97 97 89

» The Merck-Nicaraguan Ministry of Health ROTATEQ Partnership

» Total doses of vaccine delivered as 1st, 2nd or 3rd dose 291,797 20,325 N/A†

» Total doses of ROTATEQ delivered as 3rd dose (fully vaccinated child) 87,611 0 N/A

» Vaccine coverage (% receiving 3rd dose of ROTATEQ) among 80 0 N/A Nicaraguan infants

* Merck did not have a no-profit vaccine pricing policy prior to 2007. † Program did not exist prior to 2006. By the end of June 2008, ROTATEQ developing countries. In 2006, Merck was approved in 85 countries and and the Nicaraguan Ministry of Health FOCUS ON IMPROVING launched in 48. Also as of end of announced a new partnership through ACCESS TO HIV AND AIDS June 2008, GARDASIL was approved which all eligible infants born in in 103 countries, many under fast-track Nicaragua in a three-year period will TREATMENT AND CARE IN or expedited review, of which 19 are receive free doses of ROTATEQ, our DEVELOPING COUNTRIES GAVI-eligible. The vaccine remains vaccine to help prevent rotavirus. This under review in approximately 30 other demonstration program also marks the Signifi cant progress has been made in countries and territories. In June 2008, fi rst time there was access to a vaccine in addressing HIV and AIDS in recent the GAVI Alliance included HPV vac- a developing country in the same year it years, including increasing access to cines on its list of vaccines for potential was fi rst licensed in a developed country. ARV medicines around the world. future investment. To date, the country has achieved one of But AIDS remains one of the lead- the highest rotavirus vaccination rates in ing causes of death globally and the PPPS FOCUSED ON VACCINES the world. Since this eff ort began, hospi- primary cause of death in Africa. As Merck is a founding partner in the talizations for diarrhea and dehydration more people become infected each GAVI Alliance. Formed in 1999, GAVI have been considerably lower. More year, it will become increasingly chal- is an unprecedented public/private than 1 million doses of ROTATEQ lenging to ensure everyone has access partnership whose mission is to mobi- are expected to be distributed by the to the medicines they need. The solu- lize resources quickly that support the end of 2009, valued at $75 million. tion lies in a multifaceted approach widespread use of vaccines—and save Approximately 80 percent of eligible that addresses both treatment and children’s lives.15 children in Nicaragua were vaccinated prevention, with the public and pri- with ROTATEQ in 2007. vate sectors working together toward MERCK VACCINE NETWORK–AFRICA a common goal. Merck believes that (MVN–A) As part of our commitment GARDASIL ACCESS PROGRAM Cervical the pharmaceutical industry has to the GAVI Alliance, Merck initiated cancer takes the lives of more than an important role to play as part of 24 the Merck Vaccine Network–Africa 250,000 women a year, 80 percent of this solution. (MVN–A). A multiyear philanthropic whom live in developing countries.17 initiative, MVN–A supports the devel- In 2007, Merck announced our pledge RESEARCH & DEVELOPMENT INTO opment of sustainable immunization to donate at least 3 million doses of HIV AND AIDS TREATMENTS training centers in Africa by providing GARDASIL, Merck’s cervical cancer Since 1985, Merck’s intensive, broad- immunization program managers with vaccine, to support vaccination programs based HIV and AIDS clinical research hands-on training in vaccine man- in the lowest-income, GAVI-eligible program has sought to address both agement and immunization services. countries during the next fi ve years. treatment and prevention. In addition, Initial centers were established in 2003 we have partnered with other researchers in Kenya and Mali. In 2007, The Merck More on our developing world immuni- and scientifi c organizations to acceler- Company Foundation expanded the pro- zation programs at www.merck.com/cr/ ate the search for new treatments and gram to two more immunization training accessvaccines. possible cures. centers in Uganda and Zambia. More on MVN–A at www.merck.com/cr/mvna. VACCINE PRIORITIES AND TARGETS In 1988, Merck scientists established FOR THE FUTURE the role of protease in the HIV life- MERCK-NICARAGUAN MINISTRY OF » Merck plans to continue to work cycle, were the fi rst to publish the crys- HEALTH ROTATEQ PARTNERSHIP with international groups such as the tal structure of HIV protease shortly Rotavirus is a leading cause of severe GAVI Alliance to facilitate intro- thereafter, and were among the fi rst to acute gastroenteritis in children and duction of our vaccines in the world’s discover and develop medicines for the results in more than 2 million hospi- poorest countries. treatment of HIV and AIDS, including talizations and nearly 600,000 deaths CRIXIVAN and STOCRIN. Merck’s among children under fi ve world- work in the early phase of HIV research wide each year.16 Eighty percent of played an important role in collaboration rotavirus-related deaths occur in with others in defi ning the principles for HIV AND AIDS ACCESS PERFORMANCE DATA SUMMARY 2006–2007

GLOBAL 2007 2006

Number of patients on Merck ARV therapy— 763,118 701,391 all formulations, all products (91) (93) (percentage in developing world)

Percentage of total patients on Merck 15 19 ARVs estimated to be children taking pediatric formulations

Percentage of total patients using Merck ARVs 82 74 at prices at which Merck does not proﬁt

Percentage of total patients using Merck ARVs 8 18 at signiﬁcantly discounted prices

combination ARV treatment to suppress UPDATE ON REGISTRATION Merck is the Global Fund’s engagement with the the virus to undetectable levels, which committed to rapid registration of our private sector through co-investment, continues to be the gold standard for ARVs, including in those countries most involvement in country coordinating treatment today. aff ected by HIV and AIDS. Currently, mechanisms, resource mobilization, Merck ARVs are registered or available policy and advocacy. In 2006, a partnership among Merck, through import in more than 160 coun- Bristol-Myers Squibb and Gilead to tries, including 124 developing countries, PERFORMANCE IN develop a once-daily single tablet regi- of which 69 are countries in which IMPROVING ACCESS TO OUR men to simplify HIV treatment resulted Merck sells our ARVs at a price at HIV AND AIDS MEDICINES in the U.S. approval of ATRIPLA. which we make no profi t and 40 are Merck believes that the most relevant Merck and Gilead are working to reg- countries in which we sell our ARVs at measure of the success of our ARV ister and distribute ATRIPLA in 106 signifi cant discounts. A complete list of access strategy is the number of patients developing countries where convenient country registrations is available at treated, and where they are treated treatment options are critical to patient www.merck.com/cr/accesshivaids. (developing versus developed countries). compliance and adherence to therapy. Starting in 2007, we began to track PUBLIC POLICY AND patients treated by pricing category, In 2007, Merck’s eff orts to address the STAKEHOLDER ENGAGEMENT region and registration status and plan to growing problem of multidrug resistance Merck actively engages with stakehold- report trend data in the future. led to the U.S. approval of ISENTRESS, ers involved in HIV and AIDS outreach the fi rst integrase inhibitor and the and public policy. In the United States, As of July 1, 2008, more than 777,000 fi rst ARV treatment to target the inte- we established an HIV Community patients in 125 countries and territories grase enzyme, which is essential for Advisory Board to discuss new data, were being treated with regimens con- HIV replication. clinical trial design, and marketing and taining at least one of Merck’s ARVs. access strategies. Merck also meets regu- About 80 percent obtained these ARVs Given the characteristic of HIV to larly with the European Community in the more than 80 countries in which develop resistance to treatment, con- Advisory Board of the European AIDS we sell them at a price at which Merck 25 tinued research into new therapies is Treatment Group to discuss similar does not profi t. An additional 7 per- critical. That is why Merck remains issues. Over and above this, we engage cent received Merck ARVs in countries focused on developing new treatments with stakeholders at scientifi c and policy where they are off ered at signifi cantly for millions of individuals who are events such as the International AIDS discounted prices. Nine out of 10 patients already infected with HIV. Key areas Conference of the International AIDS using Merck ARVs live in developing of focus include promising new ARV Society, and in initiatives to inform HIV countries in Africa, Asia, Latin America mechanisms, agents with improved and AIDS-related public policy discus- and the Caribbean. Of those being treated tolerability and combinations that enable sion, such as AIDS2031—a consortium with Merck ARVs, as of July 2008, there optimal compliance. of partners which aims to change the are an estimated 96,600 children using face of the pandemic by 2031.18 pediatric formulations, representing For Merck’s work on treatments for 13 percent of all patients on Merck ARVs. children living with HIV, go to In addition, as a member of the Private www.merck.com/cr/accesshivaids. Sector Delegation of the Global Fund since 2002, Merck has helped to expand

THE SEARCH FOR AN HIV VACCINE

Pharmaceutical and vaccine research and development are highly risky under takings and therefore setbacks are common. In September 2007, Merck announced that vaccination in a phase II clinical trial of the Company’s investigational HIV vaccine (V520) was being discontinued because the vaccine was not effective. While Merck’s decade-long effort to develop a HIV vaccine has ended, the Company remains deeply committed to analyzing the data and sharing it as broadly and as quickly as possible to add to the knowledge base for the entire ﬁ eld of HIV vaccine research. For more information, go to www.merck.com/cr/accessvaccines. CASE STUDY

This partnership has demonstrated to the world what can be done…

Stephen Lewis Special Advisor to the UN Secretary General on AIDS in Africa 2001–2006 African Comprehensive HIV/AIDS Partnerships (ACHAP)

ACHAP was founded in 2000 as a joint effort of the Government of Botswana, the Bill & Melinda Gates Foundation and The Merck Company Foundation/ Merck & Co., Inc. ACHAP aims to support and enhance Botswana’s response to the HIV and AIDS epidemic through a comprehensive approach to prevention, care, treatment and support. The Merck Company Foundation and the Gates Foundation each have committed $56.5 million to the partnership through the end of 2009. In addition, Merck is donating anti-retroviral medicines to Botswana’s national anti-retroviral (ARV) treatment program for the partnership’s duration.

From the beginning, Merck and the Gates Foundation sought to create a 20,000 patients per year to be tested, with a turnaround time to receive program that would leverage private-sector management expertise to test results dropping from about 6 weeks to just a few hours in many cen- resolve social and public health issues. They also hoped to create a suc- ters. Information technology systems have also been developed to track cessful pilot program that could serve as a model to inform and encourage patient adherence. others to address HIV and AIDS elsewhere. The partnership has collaborated with Harvard University and the In 2007, ACHAP expanded its support to target coinfection of HIV and Botswana Ministry of Health to provide training for more than 5,500 of tuberculosis (TB). Botswana’s health care workers on clinical care fundamentals. More than 3,200 physicians and other health care professionals have received clinic- PERFORMANCE AND IMPACT based training from international HIV and AIDS experts through ACHAP’s ACHAP demonstrates how public/private partnerships can make a mean- preceptorship program, which has now been incorporated into the ingful and lasting contribution to a national public health challenge. ongoing national clinical training program managed by the Government of Botswana. TESTING AND TREATMENT Botswana was the fi rst country in Africa to roll out a nationwide public ARV treatment program, which is today one of PREVENTION ACHAP has also supported a number of prevention efforts the largest on the African continent with 32 clinics and 60 satellite facili- and is supporting the development of a national plan to scale up preven- ties. As of April 2008: tion, under the leadership of the National AIDS Coordinating Agency. » More than 100,000 patients were receiving ARV treatment; this is There is still much to do. HIV antenatal prevalence rates have shown a approximately 85 percent of the population needing treatment, up from downward trend, particularly in the 15–19 age group, which has shown less than 5 percent when the program began. Botswana has one of the a 30 percent reduction in HIV prevalence among pregnant women (from highest ARV coverage rates in Africa and in the developing world. It is 24.7 percent to 17.2 percent) between 2001 and 2007. The percentage of one of only three African countries to have achieved universal access, HIV-positive infants born to HIV-positive mothers declined from 40 per- as defi ned by WHO and UNAIDS. cent to 4 percent between 1999 and 2006, in large part due to the success- » AIDS mortality and AIDS-related deaths have been halved since the ful ARV treatment program established for pregnant women as well as treatment program commenced. the use of routine (with opt-out) testing, fi rst used in Botswana in 2004 » At approximately 90 percent, adherence to treatment is among the and now widely adopted elsewhere around the world. highest in the world. FUTURE PRIORITIES AND CHALLENGES HEALTH WORKER TRAINING AND INFRASTRUCTURE DEVELOPMENT Priorities for ACHAP in 2008 and beyond include scaling up prevention To assist the national ARV program, the partnership has supported the efforts, continued strengthening of the ARV treatment program, incor- development of laboratory capacity to test and monitor patient response porating TB into the program, and further strengthening of testing and to treatment. Laboratory capacity has grown to enable more than post-test services. More on ACHAP at www.merck.com/cr/achap. PRIORITIES FOR processes, and government policies also make “headroom” for greater IMPROVING ACCESS TO OUR that seek to cut costs but can often access to innovative medicines.19 limit patient and physician choice. HIV AND AIDS MEDICINES » The European Health Forum Gastein, » Merck plans to continue to investigate a congress of stakeholders from gov- We believe that access can be increased opportunities to reduce the cost of our ernment, academe, industry, patients by expanding health care coverage that ARVs for people living in the world’s and the NGO community, that we allows citizens greater access through poorest countries and those hardest hit have supported for 10 years. In 2007, health insurance systems, by pricing by the pandemic, including through Merck organized a parallel forum our products responsibly, and, where partnering with external manufactur- on the increasing burden of chronic necessary, by donating our products ers and suppliers to achieve incremen- disease and the need for policies to those who lack health care cover- tal effi ciencies. that more effi ciently allocate health age. We also promote and participate in » We remain committed to continued care resources.20 public/private partnerships to address R&D investment in new treatments chronic disease and other complex » Merck supported the “Bremen for HIV. health challenges. Process” Declaration on HIV and AIDS in 2007, led by the German For details of the many other HIV and PUBLIC POLICY AND ADVOCACY Presidency of the European Union, AIDS partnerships and programs that we Our business approach is strongly sup- which called on public health stake- support, go to www.merck.com/cr/ ported by our health care reform advo- holders to work together to assist hivaidspartnerships. cacy eff orts. Merck advocates for rapidly poorer populations of Central and improving access to medicines, vaccines Eastern Europe.21 and quality health care, using health In the United States our public policy IMPROVING ACCESS IN care resources effi ciently, and supporting continued innovation and development focus is on health care coverage for DEVELOPED COUNTRIES of important new treatments. the uninsured: more than 45 million Americans—including 11 percent Even in the most developed coun- In Europe, Merck has advocated for children —who in 2007 did not have tries, not all people have access to the these goals through public policy forums health insurance and were at risk of medicines, vaccines and quality health and publications, such as: missed health care, premature death care they need. Despite sophisticated and medical debt.22 Merck believes that approval, regulatory and distribu- » The WHO Health for All (health all Americans —regardless of age or targets) initiative, encouraging a “man- tion processes, access to medicines income—should have access to quality, agement by objectives” approach to in developed countries can be hin- aff ordable health insurance coverage. dered by lack of insurance coverage, health policy decision making and the reimbursement and pricing approval effi cient use of resources, which would

CASE STUDY Merck Childhood Asthma Network (MCAN) 27 MCAN was established in 2005 to MCAN supports childhood asthma pro- the Head-off Environmental Asthma address the complex and growing prob- grams in New York City, Los Angeles, in Louisiana (HEAL) Project with the lem of pediatric asthma in the United Chicago, Philadelphia and San Juan, National Institute of Environmental Health States. Funded by The Merck Company Puerto Rico. An independent research Sciences and the National Center for Foundation, the mission of MCAN is to group is rigorously evaluating the pro- Minority Health and Health Disparities. support and advance evidence-based grams to provide important insight The HEAL project aims to evaluate the programs that improve the quality of life into the effectiveness of implementing effectiveness of interventions in a natural for children with asthma and their fami- evidence-based asthma interventions disaster setting and to learn about the lies and to reduce, through dissemina- in communities. effects of mold and other allergens on tion of effective interventions, the burden children with asthma.23 of the disease on them and society. Through a partnership managed by the Foundation for the NIH, MCAN supports More on MCAN at www.mcanonline.org.

MCAN PERFORMANCE 2006–2007

2007 2006

Number of children enrolled in evidence-based interventions implemented by MCAN grantees 793 337

Number of children/families who received asthma education through MCAN 1,144 1,036

Number of health care providers who received asthma education through MCAN 146 127 More on our public policy positions and to discounts of at least 15 percent eases that require long-term treatment. advocacy at www.merck.com/about/ on many Merck medicines through Here are some examples. public_policy/home.html. most U.S. pharmacies. Enrollment is free and there is no annual THE MERCK ALLIANCE TO REDUCE U.S. PHILANTHROPIC membership fee. DISPARITIES IN DIABETES In early INITIATIVES AND PROGRAMS 2008, The Merck Company Foundation » PARTNERSHIP FOR PRESCRIPTION Merck believes that donating medicines and launched this major multiyear program ASSISTANCE (PPA) This pharma- vaccines is not a sustainable solution to the with a $15 million commitment to ceutical industry initiative helps access challenge in the United States. We address the growing problem of health low-income, uninsured patients work with government and private sec- care disparities in the context of type 2 get free or nearly free brand-name tor partners to help fi nd long-term policy diabetes in the United States among medicines. The PPA website provides approaches that make health coverage avail- minority, low-income and underserved information and access to more than able to the people who need it. However, adult populations. The Alliance will 475 public and private patient assis- until there is agreement on these, Merck work with many partners to develop and tance programs, including some 200 has several programs to help. To learn more implement comprehensive, evidence- programs off ered by companies like about these programs or to apply, visit based diabetes programs that will help Merck. To date, the PPA has helped www.MerckHelps.com. decrease health care disparities and more than 5 million patients.24 enhance the quality of health care by » U.S. PATIENT ASSISTANCE improving diabetes prevention and man- PROGRAMS (PAP) Merck has pro- More on the performance and impacts agement services.25 vided those who cannot aff ord their of our prescription assistance initia- medicines and vaccines with more tives in the United States at www.merck. than 26 million free prescriptions and com/cr/usaaccess. IMPROVING CERVICAL CANCER vaccines, representing a total value EDUCATION AND RESOURCES Merck (Wholesale Acquisition Cost) of more PUBLIC/PRIVATE PARTNERSHIPS joined in April 2008 with other public than $1.7 billion in the past six years. IN THE UNITED STATES and private-sector organizations to estab- In the United States, many of the part- lish One4One, focused on empowering » MERCK PRESCRIPTION DISCOUNT women in the fi ght against cervical cancer.26 PROGRAM Uninsured patients regard- nerships we support address chronic dis- less of age or income have easy access

U.S. PATIENT ASSISTANCE PROGRAMS PERFORMANCE 2005–2007

2007 2006 2005

Number of patients utilizing Merck’s 350,000 540,240 730,000 patient assistance program*

Number of prescriptions ﬁlled >1.6M >3.4M 6.9M under Merck’s PAP

Total value of Merck medicines $161.5M $326M $502M dispensed under Merck’s PAP

* Decrease due in part to increasing number of patients with prescription drug coverage (including 28 through the Medicare Prescription Drug Program, which began January 1, 2006.)

FOCUS ON IMPROVING ACCESS TO HEALTH CARE INFORMATION

For more than 100 years, Merck has provided unbiased and independently reviewed health information through The Merck Manual to the public and to health care professionals. Today, The Merck Manual is the world’s best-selling medical text. Now in its 18th edition, the Manual has been translated into 17 languages. The Merck Manual – Home Edition provides the beneﬁ ts of The Merck Manual for the general public. Now in its second edition, it has been translated into 14 languages. Merck provides the content of The Merck Manuals on www.merck.com for free. For more information on our work to improve access to health care information, go to www.merck.com/cr/healthcareinformation.

» With the availability of many new have become available, including FUTURE CHALLENGES products, purchasers face a grow- the Global Fund for HIV/AIDS, TB ing challenge to prioritize and bal- and Malaria,27 the U.S. President’s FOR IMPROVING AND ance scarce health care resources. Emergency Plan for AIDS Relief ACCELERATING ACCESS To inform and enable customer (PEPFAR),28 the international drug WORLDWIDE decisions, we will continue to work purchase facility UNITAID,29 the with partners to demonstrate the Clinton HIV/AIDS Initiative30 and While much progress has been made, benefi ts of our products and to assess the GAVI Alliance.31 We support much remains to be done: health care infrastructure capacity these mechanisms, as well as Advance and needs, including immunization Market Commitments, priority » HEALTH CARE REFORM We will con- program eff ectiveness. review vouchers, the International tinue actively to support health system Financing Facility for Immunization reform worldwide. » Challenges to the patent system (IFFIM)32 bond fl oating and other remain, therefore we will continue » HEALTH CARE CAPACITY Lack of innovative mechanisms that hold great to advocate at the national and inter- skilled health care professionals will promise in expanding access to much- national level for strong intellectual continue to limit countries’ ability to needed vaccines in the developing property protection in developing and diagnose and treat disease and provide world. Despite these promising devel- developed countries. ongoing care to citizens. Merck will opments, fi nancing of medicines and continue to work through partner- » In recent years, new funding and vaccines globally is likely to remain ships to help strengthen health care collaboration mechanisms to help challenging for years to come. capacity worldwide. accelerate access to medicines and vaccines in the developing world

MORE INFORMATION ONLINE

You can ﬁ nd more information on the issues covered in this section, as well as on the following topics, at www.merck.com/cr/access. » MECTIZAN Donation Program » Product registration information » Merck Medical Outreach Program » Pediatric formulations and indications » Merck Vaccine Network — Africa » The Merck Alliance to Reduce Disparities in Diabetes » African Comprehensive HIV/AIDS Partnerships » The Merck Childhood Asthma Network » China-MSD HIV/AIDS Partnership » Responsible pricing of our products » Additional HIV and AIDS partnerships » Efforts to improve access to health care information » ROTATEQ and GARDASIL access programs

ENDNOTES

1 Efavirenz is marketed by Bristol-Myers the MECTIZAN Donation Program for the and health professionals. Geneva, World Squibb as Sustiva in the United States, Control of Onchocerciasis. Trop.Med.Int. Health Organization, 2007 Canada and certain European countries, Health 2008; 13(5):689-696 18 www.aids2031.org and by Merck in the rest of the world 10 World Economic Forum Press Release, as STOCRIN. 19 www.euro.who.int/observatory/ 2008 (available at www.weforum. Studies/20040310_2 2 ATRIPLA is marketed by Bristol-Myers org/en/media/Latest%20Press%20 29 Squibb and Gilead in the United States, Releases/LatestPressReleasesSearch/ 20 www.ehfg.org/home.html?&L=0 Canada and Europe. Merck and Gilead World_Leaders_Issue) 21 United Nations Press Release, are working to register and distribute 11 www.who.int/hiv/pub/prev_care/aai/en 2008(available at: www.un.org/News/ ATRIPLA in 106 developing countries Press/docs/2008/ga10719.doc.htm) around the world. 12 www.medicinestransparency.org 22 DeNavas Walt C, Proctor BD, Smith J. 3 Attaran A. How Do Patents And Economic 13 Private Sector Delegation to the Board Income, Poverty and Health Insurance Policies Affect Access To Essential of the Global Fund to Fight AIDS, TB Coverage in the United States: 2007. Medicines In Developing Countries? Health and Malaria. Mobilizing Additional U.S. Census Bureau, Current Population Affairs 2004;23(3):155-166 Resources for the Global Fund: A Reports, Washington, D.C., 2008 (available Planning Guide for the Private Sector. 4 World Health Organization. Global Health at: www.census.gov/prod/2008pubs/ Geneva, The Global Fund, 2005 (available Workforce Alliance. Scaling Up, Saving Lives. p60-235.pdf) at: www.theglobalfund.org/en/ﬁ les/ Geneva, WHO, GHWA, 2008 (available at: about/replenishment/private_sector_ 23 www.heal.niehs.nih.gov www.who.int/workforcealliance/documents/ report_3rdreplenishment.pdf) Global_Health%20SUMMARY.pdf) 24 www.pparx.org 14 www.aafsummit.org 5 www.weforum.org/en/initiatives/ 25 www.merck.com/cr/usdiabetesalliance globalhealth/index.htm 15 www.gavialliance.org 26 www.one4onepledge.org 6 www.pqmd.org 16 Parashar UD, Hummelman EG, Bresee 27 www.theglobalfund.org/en JS, Miller MA, Glass RI. Global illness 7 World Health Organization. Guidelines and deaths caused by rotavirus disease in 28 www.pepfar.gov for Drug Donations. Geneva, WHO, 1999 children. Emerg Infect Dis [serial online] (available at www.whqlibdoc.who.int/ 29 www.unitaid.eu 2003 (available at www.cdc.gov/ncidod/ hq/1999/WHO_EDM_PAR_99.4.pdf) EID/vol9no5/02-0562.htm) 30 www.clintonfoundation.org/what-we-do/ 8 www.ochaonline.un.org/Default. clinton-hiv-aids-initiative 17 World Health Organization, Department of aspx?alias=ochaonline.un.org/ Immunization, Vaccines and Biologicals. 31 www.gavialliance.org businesscontributions Human Papillomavirus and HPV vaccines: 32 www.iff-immunisation.org 9 Thylefors B, Alleman MM, Twum-Danso Technical information for policy makers NAY. Operational Lessons from 20 Years of KEY ISSUE Ensuring Confi dence in the Safety 3 and Quality of Our Products

We recognize that when people take our medicines and vaccines, they must have confi dence in their effi cacy and safety. Ensuring this confi dence is crucial for us.

Medicines and vaccines are widely tested before they are approved for marketing. The studies show that all products have side effects, but not everyone will experience them. This is why pharmaceutical manufacturers make extensive information about their products available, enabling doctors to evaluate the risks as well as the beneﬁ ts of any treatment and discuss them with their patients.

Merck manufactures more than 30 different medicines and vaccines that are sold in more than 150 countries worldwide. As a research-based company dedicated to ﬁ ghting and preventing disease by developing innovative medicines and vaccines, we are committed to ensuring that we manufacture quality products, according to strict standards. We demand equivalent standards from our suppliers.

and vaccines. We do this not only before vaccines. In parallel, local pharmacovigi- 30 MERCK’S SAFETY a product can be approved but also after a lance teams at our subsidiaries worldwide product has begun to be prescribed. are responsible for ensuring that safety COMMITMENT information is collected and reported to CLINICAL TRIALS our Headquarters pharmacovigilance Nothing is more important to Merck We test our products extensively and for staff and to local regulatory authorities. than the safety and quality of our many years before they can be approved medicines and vaccines. We dedi- for marketing. This testing is governed by POST-MARKETING STUDIES cate millions of dollars each year and a comprehensive regulatory scheme and Merck continues to research the effi cacy extensive resources to ensuring the our own research policies. The U.S. Food and safety profi les of our products on an safety profi les of our products are and Drug Administration estimates that a ongoing basis. We conduct several types well characterized. The president compound entering Phase I clinical trials of studies after approval: of Merck Research Laboratories has has only an 8 percent chance of reaching ultimate responsibility for the analyses » POST-APPROVAL STUDIES ON NEW the market.1 Approval requires extensive and interpretations of safety data and INDICATIONS Some products may be data that demonstrate to stringent regula- safety-related decisions. eff ective for more than one indication. tory authorities the safety, effi cacy and For example, an oncology product can quality of the product. We disclose results In addition to the physicians and nurses be developed to treat several types of from our clinical trials in patients irre- we employ to oversee clinical trials, our cancer. In such cases, a clinical trial spective of the outcome. For more infor- pharmacologists analyze compounds must be conducted to determine the mation on our clinical trials, go to p. 13. chemically to determine potential eff ects safety and effi cacy of the drug in each in people, and epidemiologists assess the new patient population. SAFETY MONITORING prevalence of potential risks in a popula- Merck has an effi cient global system of » COMMITMENTS TO REGULATORY tion. We also engage with independent pharmacovigilance. Our global pharma- AUTHORITIES For some products, experts to collect, investigate and evaluate covigilance teams are responsible for the regulatory authorities require that information about the eff ects of medicines safety evaluation of our medicines and companies conduct additional studies after the product is approved. The THE WORLDWIDE WITHDRAWAL OF VIOXX study could be required for multiple reasons, including to examine the On September 30, 2004, Merck announced a voluntary worldwide withdrawal of long-term safety of the product. VIOXX® (rofecoxib), our arthritis and acute pain medication. Merck took this action because we believed it best served the interests of patients. Although we believed it » EPIDEMIOLOGY STUDIES Merck has a long history of working closely with would have been possible to continue to market VIOXX with labeling that would incor- external experts in pharmacoepide- porate the new data, given the availability of alternative therapies and the questions miology to examine the utilization raised by the data, we concluded that a voluntary withdrawal was the most respon- and safety profi les of many of our sible course of action. marketed products as they are used in clinical practice in several population- Following this, critics charged that Merck put profi ts over safety in the development, based health care systems. testing and marketing of VIOXX. These allegations were unfounded, but extremely troubling as they affected our reputation for integrity. In response, we said that we ADVERSE EXPERIENCE would continue vigorously to defend Merck and the scientifi c decisions we made; REPORTING (AER) we would continue to focus on researching and developing novel new medicines After a product has been approved and is and vaccines; and we would continue to do what we thought was right, based on the being prescribed to patients, regulatory scientifi c evidence. authorities require manufacturers to report adverse experience information received In the three years after the withdrawal of VIOXX, Merck was the subject of numer- from any source, including clinical trials, ous lawsuits. However, after prevailing in the majority of cases that were brought to health care providers, patients, published trial, we entered into an agreement to resolve the majority of the U.S. product liability literature and epidemiological or observa- lawsuits related to VIOXX. tional studies. Our staff of global pharmacovigilance professionals compile reports In November 2007, Merck agreed to pay a fi xed amount of $4.85 billion into a settle- of adverse experiences into our global ment fund for qualifying claims that enter into the resolution process. This was not a AER database and ensure the information class-action settlement. The agreement reached explicitly stated that there was no is submitted to regulatory authorities in admission by Merck of any wrongdoing. We continue to stand behind all of our scientifi c decisions. 31 accordance with their regulations.

In accordance with these regulatory Our dedicated VIOXX Information Center contains all major Company communica- requirements, Merck has developed a tions and other resources on the matter. For more information, go to written procedure to provide Merck www.merck.com/newsroom/vioxx. personnel worldwide with a consistent

On May 31, 2008, the Wall Street Journal published an opinion The rulings are evidence that some sanity still exists in the tort piece entitled “Vindicating Vioxx,” which brieﬂ y summarized system – at least at the appellate level. In Texas, the court’s Chief the status of legal rulings and noted their implications for Justice Adele Hedges said there was ‘no evidence’ that the patient pharmaceutical research, public health and tort law. Here is an had suffered a cardiovascular event as the result of a blood clot or excerpt of the article. that Vioxx was in any way related to the death. Those are strong words for a case that the trial bar had celebrated as the start of a “Texas and New Jersey may have different political cultures, but huge payday…. appeals courts in both states this week delivered a one-two punch to the liability suits against Merck for its Vioxx painkiller. In Texas, a Plenty of patients and doctors would like to see Vioxx back on the court overturned a $26 million 2005 jury verdict against the drug shelf as an option to ease otherwise intractable pain. All drugs have company, while New Jersey’s court whittled down an earlier verdict risks, and the danger in the Vioxx case was that a tort frenzy would to exonerate Merck from a ﬁ nding of consumer fraud and eliminate destroy an industry that provides jobs and vital therapies to millions punitive damages. of people. We’re glad the courts are allowing reason to prevail.” SAFETY PERFORMANCE DATA SUMMARY 2006–2007

GLOBAL 2007 2006

Number of GCP/PV audits by regulatory agencies of 35 36 Merck or clinical trial investigators

and thorough process for identifying, monitor information on our products reporting and processing adverse expe- and work with our product safety teams MERCK’S COMMITMENT riences occurring while patients are to develop or update product labeling. using Merck products (but not neces- We communicate relevant information TO PRODUCT QUALITY sarily due to their use). These proce- on an ongoing basis to regulatory agen- Our global quality systems are broad dures relate to the reporting of adverse cies worldwide. In addition, information in scope to ensure consistent prod- experiences originating in clinical leafl ets in our product packaging con- uct quality in our manufacturing studies and those associated with use of tain information on possible side eff ects processes worldwide. marketed products. Adherence to these and, if appropriate, how to avoid some procedures ensures the timely and accu- potential problems. We include contact QUALITY STANDARDS rate monitoring of the safety profi le of details for patients, care givers and health AND SYSTEMS Merck’s investigational and marketed professionals to report adverse experi- We establish and maintain a set of sys- products globally. ences in the United States on our corpo- tems, comprised of policies, processes rate website. Outside the United States, and procedures, required for the eff ec- Over time, rare adverse experiences may adverse events are reported according to tive planning and execution of business be detected as more patients use a prod- local laws and practices. activities to ensure product quality. We uct. Additionally, an adverse experience continuously work to enhance and inte- may be more frequent or more intense Currently we have eight epidemiology grate our systems to identify, measure, than initially observed in clinical trials. safety studies ongoing in partnership control and sustain quality excellence of Our safety teams, which include phy- with external academic and research our products. sicians and epidemiologists, review institutions. For more information post-marketing data and determine on our work on product safety, go to We strive to make continuous improve- whether actions need to be taken with www.merck.com/cr/productsafety. ments in quality through auditing of reference to the evolving safety profi le our quality practices and establishment of our products. CLINICAL TRIAL AUDITS Of of goals, programs and procedures that 71 Good Clinical Practice (GCP)/ enhance product quality and ensure PRODUCT LABELING AND Pharmacovigilance (PV) inspections current Good Manufacturing Practice 32 RISK COMMUNICATIONS conducted by the FDA and other (cGMP) compliance. Progress against Ongoing oversight and monitoring of regulatory agencies worldwide during these goals is regularly reviewed by divi- our product labels is a major focus of our 2006 and 2007, none resulted in sional and corporate management. safety eff orts. Our label review teams critical observations and none resulted in the rejection of any clinical study or regulatory fi ling.

REPORTING ADVERSE EXPERIENCES

To report an adverse experience to regulatory authorities, we need QUALITY MANAGEMENT minimal information: the name of a PERFORMANCE DATA SUMMARY 2006–2007 Merck medicine or vaccine involved, an adverse experience, an identiﬁ able 2007 2006 2005 patient and an identiﬁ able reporter. In addition to submitting individual, Number of product recalls in United States 2 0 1 adverse experience reports to regula- In 2007, we implemented two voluntary recalls in the United States: (i) a recall of tory authorities, either within 15 days three lots of the antibiotic INVANZ due to the fact that Merck was unable to exclude or periodically, we also use certain the possibility that glass fragments could be present in vials from these lots and (ii) reports that aggregate, information a recall of 10 lots of PEDVAXHIB and two lots of COMVAX vaccines because we were for as long as we market a product. unable to assure the sterility of the equipment on which these lots were made. ENSURING THE SUPPLY OF QUALITY VACCINES

The FDA recently inspected Merck’s West Point, Pennsylvania, Warning Letter did not affect any available product or Merck’s vaccines and biologics manufacturing facility. At the conclu- ability to continue to supply our vaccines. sion of the inspection, the FDA issued a report containing 49 observations from their visit. Subsequently, Merck received In July 2008, Merck received a letter from the FDA closing a Warning Letter from the FDA dated April 2008. out its inspection of the West Point facility. As always, we will continue to work with the Agency in a cooperative manner to Merck took the observations and the Warning Letter very ensure that public health is served by the continued supply of seriously and committed to addressing all concerns to our quality vaccine products. the Agency’s satisfaction. Importantly, the issuance of the

We are also involved in and support COMBATING THE THREAT is the best way to combat and deter this external industry and regulatory eff orts OF COUNTERFEITS illegal activity that risks public health. to develop and optimize further quality Counterfeit pharmaceutical medicines We also work with regulators and dis- and manufacturing standards worldwide, and vaccines are a growing global prob- tributors to remove counterfeit products including work with the International lem that can compromise patient health from the market and with regulators Conference on Harmonization. and safety. To keep our drug distribu- and law enforcement offi cials to attempt tion system safe and secure, we manage to trace counterfeit product back to its DEMANDING HIGH our supply chain carefully with strict original source. SUPPLIER STANDARDS policies and procedures. In the United Recent reports about quality control States, for example, Merck has imple- Working with industry groups, Merck issues concerning products manufac- mented terms and conditions of sale of supports increased enforcement of tured by other companies in developing our medicines and vaccines to reduce existing laws against counterfeiting and and emerging markets have resulted in the potential for counterfeit products the adoption of new public policies to customer questions about supply chains to enter the supply chain by requiring strengthen existing laws and enforce- of all pharmaceutical companies. We that customers purchase Merck prod- ment programs, including increased maintain strict quality standards and ucts directly from Merck or a Merck- criminal and civil penalties for counter- insist on the same from our suppliers and authorized distributor. Other practices feiters. To help achieve this aim, Merck licensees, regardless of their location. used by Merck to deter counterfeiting and other pharmaceutical companies More information on p. 50. include publishing the names of autho- created the Pharmaceutical Security rized distributors on Merck’s website Institute. The pharmaceutical industry and auditing of distributors. works closely with law enforcement and regulatory agencies in both developed When a counterfeiting incident is con- and developing countries to implement fi rmed, Merck promptly reports it to a multilayered security strategy focused regulatory and law enforcement agen- on both prevention and enforcement.2 THREAT OF COUNTERFEIT MEDICINES cies. This is the cornerstone of our anti- More on anticounterfeiting is at As counterfeiters have become more counterfeiting eff orts and we believe it www.merck.com/cr/anticounterfeiting. sophisticated, counterfeit products 33 are becoming increasingly similar in appearance to authentic products. Counterfeits can include wrong doses of active ingredient or no active ingredient or, in some cases, poisonous ingredients. Without laboratory testing, it can be diffi cult to tell the MORE INFORMATION ONLINE difference between real and counterfeit medicines. The WHO estimates You can fi nd more information on the issues covered in this section, as well as on the that counterfeit medicines represent following topics at www.merck.com/cr/productsafety. about 1 percent of sales in developed » Safety profi le of » Training for Merck » Anticounterfeiting countries to more than 30 percent in GARDASIL employees on moni- packaging initiatives some parts of Africa, Asia and Latin toring and reporting America where regulatory and legal adverse experiences oversight is weakest. Merck is committed to cooperating with all government agencies, other pharmaceutical ENDNOTES manufacturers, wholesalers, distributors, health professionals, con- 1 Food and Drug Administration. Innovation or Stagnation: Challenge and Opportunity on the sumer groups and key related Critical Path to New Medical Products. U.S. Department of Health and Human Services, organizations in the fi ght against FDA, March 2004. pharmaceu tical counterfeits. 2 www.psi-inc.org/index.cfm KEY ISSUE Conducting Ourselves 4 Ethically and Transparently

Adherence to the rule of law, ethical working practices, good corporate governance and transparency are critically important to our stakeholders and to our sustainable success.

But it takes more than the right mechanisms and standards to ensure an ethical business environment. At Merck, ethics are an integral part of our business decisions and inform how all employees conduct themselves every day.

Merck’s commitment to ethics extends beyond the Company’s boundaries. We actively promote the development of codes and standards for ethical and transparent business practices that can help to foster respect and promotion of human rights, limit corruption, ensure fair and open competition and encourage a better business environment, all of which are essential to economic growth.

Established in 1995, the Merck Offi ce All new employees are required to MERCK’S OFFICE OF of Ethics develops and oversees global complete Know the Code within initiatives designed to deter illegal, 30 days of hire. For information on ETHICS AND GLOBAL unethical and improper behavior related additional training courses that support 34 CODE OF CONDUCT to Merck’s business. The Offi ce of Ethics our ethical business practices, go to is responsible for our Code of Conduct www.merck.com/cr/ethics. Ethics and integrity are core values at training and for providing channels for Merck. They are underscored in the Merck employees worldwide to raise ETHICAL RESOURCES Company’s code of business conduct ethical questions or concerns.2 FOR EMPLOYEES known as Our Values and Standards, The Merck AdviceLine, a telephone line which was fi rst developed and distrib- ETHICS TRAINING AND available to employees around the world uted to Merck employees in 1999, and DEVELOPMENT 24 hours a day, seven days a week, is updated in 2002 and 2004. Our Code In 2007, the Offi ce of Ethics launched staff ed by an independent organization of Conduct applies one standard of a global compliance training series, that allows employees to remain anony- conduct to all employees worldwide consisting of online training programs mous in accordance with applicable legal and is available in 27 languages. to provide employees with tools and standards for operating whistle-blowing Every Merck employee is responsible resources for making responsible busi- hotlines. Multilingual report processing for adhering to business practices ness decisions. The fi rst course, Know with language interpretation is avail- that are in accordance with the letter the Code, complements the Company’s able in up to 150 languages, allowing and spirit of the law and with ethi- established classroom-style ethics train- employees to communicate in their cal principles that refl ect the highest ing and covers such topics as: native language to ensure accuracy of standards of corporate and individual reported information. In addition, the behavior. Ethical business practices » Can competitive information Merck Ombudsman Program off ers a are a key measure in annual perfor- obtained from a physician be shared? “safe haven” for U.S.-based employees mance evaluations of all our employ- » What is Merck’s policy on to express work-related issues without ees globally.1 human rights? fear of retaliation. This program confi - dentially addresses employees’ concerns » Can I give samples to a physician for his personal use? For information on how we enforce our code and train our employees, go to www.merck.com/cr/ethics.

OUR VALUES AND STANDARDS about conduct that may be inconsistent with Merck’s policies, practices, val- Merck’s Code of Conduct has been designed to deter wrongdoing and to foster: ues and standards. Outside the United States, employees may contact the Offi ce » Honest and ethical conduct, including the ethical handling of actual or of Ethics directly or use the AdviceLine potential conﬂ icts of interest between personal and professional relationships to raise concerns. » Protection of our conﬁ dential and proprietary information and that of customers and vendors ADDRESSING MISCONDUCT In 2008, » Compliance with Company policies, applicable governmental laws, rules and we implemented our global guidelines regulations for escalation, investigation, remediation and recognition of noncompliant » Prompt internal reporting of violations of this code activities or actions across our diff erent » Accountability for adherence to the values and standards set forth in this code divisions and geographies. When Merck substantiates allegations of ethical misconduct, it imposes a variety of disci- Our recent global employee survey — plinary actions on those responsible for the Merck/MSD Culture Assessment — the misconduct, such as dismissal from the showed high levels of understanding and Company, issuance of fi nal written acceptance of Merck’s Code of Conduct: warning letters and fi nancial penalties. Merck scored in the 93rd percentile on PERFORMANCE To date, 90 percent of employee agreement that there is an ethical Merck employees have taken the Know code that guides our behavior and tells us the Code training and we anticipate this right from wrong (up fi ve points from the will be nearly 95 percent by the end 2006 survey). of 2009. 35

The number of calls to the Offi ce of Ethics/Ombudsman has declined some- what since 2005, including a 30 percent ETHICAL BUSINESS PRACTICES PERFORMANCE DATA SUMMARY 2005–2007

GLOBAL 2007 2006 2005*

Percentage of required employees who took Know the Code training 90 N/A N/A†

Percentage of response to disclosure statement on conﬂicts of interest 9795 93

Number of calls to the Merck AdviceLine 149 77 80

Number of calls to Ofﬁce of Ethics/Ombudsman 600 597 770

Percentage of substantiated (including alternate ﬁndings) allegations to concerns/issues 9.5 8.3 10.2 raised in connection with our Code of Conduct through AdviceLine or Ofﬁce of Ethics/Ombudsman‡

* 2005 noted as baseline † Know the Code was first implemented globally in 2007. ‡ When Merck substantiates allegations of ethical misconduct, it imposes a variety of disciplinary actions on those responsible for the misconduct, such as dismissal from the Company, issuance of final written warning letters and financial penalties. KEY ETHICAL ISSUES FOR MERCK AND THE PHARMACEUTICAL INDUSTRY

As one of the leading global pharmaceutical ﬁ rms, over and above general ethical issues related to working practices, Merck faces the same set of ethical issues that have brought a growing amount of scrutiny to this industry: » Deciding what products to develop » Appropriate interactions with policy makers and other third parties » Assessing the beneﬁ ts and risks of products » Appropriate sales and marketing practices, including » The conduct of clinical trials and publication of results medical education, product sampling and direct-to- » Pricing, intellectual property rights and access to consumer advertising medicines and vaccines

reduction in calls about human Our interactions with health care pro- Marketing Practices3—and the resource-related issues. We believe this viders, other customers and consumers WHO’s Ethical Criteria for Medicinal can be attributed to our strengthened are governed by laws and regulations, Drug Promotion.4 performance management processes: and our long-standing global code more ongoing performance discussions of ethical conduct and guidance. We CONTINUING MEDICAL EDUCATION between managers and their reporting enforce these through our global busi- (CME) AND CONTINUING EDUCATION staff are preempting and resolving more ness practices and compliance program. (CE) Merck sponsors numerous educa- issues. The decrease in calls also refl ects tional programs aimed at sharing medi- the decrease in employee numbers in INFORMATION FOR HEALTH CARE cal and health economic information. recent years due, in part, to our restruc- PROFESSIONALS We inform health Our policy on continuing education turing program. The calls to the Merck care professionals about how our prod- for all types of health care professionals AdviceLine almost doubled from 2006 ucts should be used and what types of aims to ensure that our CME/CE pro- to 2007, due, in part, to greater aware- patients would benefi t most based on grams are educational, not promotional, ness of the AdviceLine as a result of the results of rigorous clinical stud- and have the goal of increasing physi- increased employee communications. ies. We provide this information cian awareness of the latest scientifi c through educational, promotional or data relating to health care advances and APPROPRIATE SALES AND scientifi c activities. patient care. CME programs supported MARKETING PRACTICES or sponsored by Merck are governed by Merck has actively supported the The basis of our interactions and content an internal policy and must be aligned strengthening of industry standards, must provide truthful, balanced and with appropriate standards such as the including enhancements to the PhRMA non-misleading information to health Accreditation Council for Continuing Code on Interactions with Health Care care professionals. Merck’s overall ethi- Medical Education standards for com- Professionals that were approved in cal values and standards have been the mercial support of CME in the United July 2008. basis of our principles for ethical business States, which specify independence, practices with the medical and scientifi c fi nancial disclosure and other require- Merck strives to provide accurate, bal- community, which are aligned with ments applicable to CME programs anced and useful information to enable national regulations worldwide, indus- sponsored by commercial entities, 36 prescribers to make the best decisions try codes—including the International including pharmaceutical manufac- for their patients, and to minimize the Federation of Pharmaceutical turers. In some cases, Merck provides potential for inappropriate activities. Manufacturers and Associations grants to organizations for profes- (IFPMA) Code of Pharmaceutical sional education initiatives, including

MERCK’S GLOBAL CODE OF CONDUCT AND GUIDANCE FOR INTERACTIONS WITH HEALTH CARE PROFESSIONALS

The key principles are: » Merck employees and others speak- Merck will update our policies and prac- ing on Merck’s behalf may provide tices in the United States by January 2009 » We provide current, accurate and bal- presentations and discussions specifi - to ensure compliance with the revised anced information about Merck prod- cally designed to provide the type of PhRMA Code, including a new require- ucts, we transmit sound scientifi c and information that practicing medical ment that professional sales representa- educational information, and we sup- and health care professionals have tives and their immediate managers will port medical research and education. indicated to Merck that they need and no longer offer physicians or their offi ce » Merck employees are prohibited from fi nd most useful in the treatment of staff noneducational reminder items, offering health care professionals items their patients, in accordance with FDA such as pens and notepads, which we of personal benefi t. We occasionally and other country regulations. In con- have sometimes used to promote prod- may provide health care professionals nection with such events, occasional ucts. Merck also intends to complete with approved educational items that modest meals may be offered, also in self-certifi cation in early 2009, after the are not of substantial monetary value, accordance with regulations. Code changes become effective, and pur- such as medical textbooks, medical sue external verifi cation following that. journals or anatomical models. FOSTERING A FAIR, TRANSPARENT AND OPEN BUSINESS ENVIRONMENT

Merck’s commitment to ethics extends beyond the Company’s » WORLD ECONOMIC FORUM CORPORATE GLOBAL boundaries. We actively promote the development of codes and CITIZENSHIP INITIATIVE Also in 2008, Merck joined 14 other standards for ethical and transparent business practices that companies in signing a leadership statement on “Partnering can help limit corruption, ensure fair and open competition and to Strengthen Public Governance — The Leadership encourage a better business environment, which are essential Challenge for CEOs and Boards,” which calls on businesses to economic growth and improved standards of living. to engage in public/private partnerships to strengthen and improve the effectiveness of public policies and institutions » WORLD ECONOMIC FORUM PARTNERING AGAINST as a key aspect of corporate global citizenship.9 CORRUPTION INITIATIVE (PACI) In 2008, Merck endorsed the PACI Principles, aimed at strengthening efforts to coun- For more examples of how we foster a fair, transparent and open ter corruption and bribery globally, encourage fair and open business environment, go to www.merck.com/cr/opentrade. competition, and lead to a better business environment.8

accredited continuing medical educa- regulations and guidelines governing » Merck plans to update our policies tion. In October 2008, Merck plans DTC promotion, ensuring all PhRMA and practices in the United States to begin reporting grants by Merck’s guidelines are met or exceeded, and fol- by January 2009 to ensure compli- Global Human Health division to U.S. lowing a comprehensive set of internal ance with the revised PhRMA Code organizations in support of independent policies and practices when we engage on Interactions with Health Care accredited educational programs for in DTC advertising. Merck has a long- Professionals. health care professionals. For more infor- standing policy to submit new DTC » In October 2008, Merck plans to mation on fi nancial inter actions with advertising campaigns voluntarily to begin reporting grants by Merck’s third parties, go to p. 55. the FDA for prereview; we do not run Global Human Health division to any DTC campaign until receiving a U.S. organizations in support of DIRECT- TO-CONSUMER (DTC) response from the FDA; and we modify independent accredited educational ADVERTISING Studies demonstrate the advertising, if necessary, consistent programs for health care professionals. that DTC advertising can have a posi- with any written FDA comments.7 More information on p. 56. tive impact on patient health in terms of diagnosis, treatment and adherence to PERFORMANCE In February 2008, prescribed therapies.5 Merck medicines Merck reached civil settlements with fed- address many unmet medical needs such eral and state authorities to resolve long- PROMOTING as high cholesterol and blood pressure, standing investigations related to disputes uncontrolled diabetes, osteoporosis and over the proper calculation of Medicaid AND PROTECTING asthma. DTC advertising is one channel rebates as well as certain past sales and HUMAN RIGHTS among many to help educate patients marketing activities that ended in 2001. about these conditions and can encour- For additional details, go to p. 35 of our Business has an important role to age consumers to speak with their doc- 2007 Annual Financial (10-K) report. play in protecting and promoting the tors. Ultimately, the decision of what advancement of fundamental human treatment, if any, a patient receives rests PRIORITIES FOR THE FUTURE rights. Supporting human rights with the physician, in consultation with AND TARGETS makes business sense too —companies the patient. » We want to achieve 95 percent that violate internationally recognized completion rate of new ethics training human rights are not sustainable. We 37 In 2008, to formalize our historical courses by required employee popula- also recognize the value in promoting practice of informing health care profes- tions, including Know the Code, by the human rights in the broader global sionals about our products before we end of 2009. community: furthering equal justice, advertise them to the consumer, Merck equal opportunity, and equal dignity » We want to increase awareness about adopted a policy requiring a mini- without discrimination where we Offi ce of Ethics resources among mum six-month time period following operate can help to promote economic Merck employees outside of the the approval of a new product before development, help us to build the basis United States. launching DTC broadcast advertising. In of our business, and help us to be rec- addition, Merck carries out comprehen- » We want to achieve a 100 percent ognized as one of the best employers. sive programs to educate physicians and response rate to the disclosure state- other prescribers about a new product ment on confl icts of interest by 2009. Merck is committed to respecting before commencing product-specifi c » We support the creation of a uniform, human rights defi ned in the United DTC broadcast advertising. These prin- national program for disclosing cer- Nations Universal Declaration of ciples and our practices are refl ected tain fi nancial relations between indus- Human Rights and its subsequent in the PhRMA Guiding Principles on try and physicians. Such a program, changes, the International Covenant on Direct to Consumer Advertisements implemented in consultation with Economic, Social and Cultural Rights, 6 about Prescription Medicines. industry and the physician commu- the International Covenant on Civil and nity, could provide helpful informa- Political Rights, the OECD Guidelines Merck strives to enable consumers to tion to the public. Even in the absence for Multinational Enterprises and the achieve better health outcomes by deliv- of a legislative requirement, however, core labor standards set out by the ering accurate, relevant information on in 2009, Merck plans to begin dis- International Labor Organization (ILO). disease prevention, identifi cation and closing payments to physicians in the Merck does not tolerate human rights treatment in an understandable manner. United States who speak on behalf of abuses in our business operations, and we We adhere to the letter and spirit of FDA Merck and our products. HEALTH AS A HUMAN RIGHT

For our perspective on health as a human right and our role in respecting and promoting it, go to www.merck.com/cr/human rights.

comply with national and international Business Conduct, Our Values and 2009 we plan to formalize a Global human rights laws and treaties. Standards, which addresses key topics Labor Relations Strategy that will that underscore the respect for human include global labor guidelines and Merck’s Vice President and Assistant dignity, including antidiscrimination, monitoring tools to ensure consis- General Counsel oversees Merck’s human anticorruption and bribery, and environ- tency worldwide. rights responsibilities and activities on ment, health, safety and privacy. » To assess our overall human rights Merck’s Corporate Responsibility risk and performance, we are explor- Council, working closely with our Vice PERFORMANCE ing human rights assessment tools and President, Chief Ethics and Compliance Given the high-tech, high-skilled nature frameworks. We are also working Offi cer. Compliance with specifi c human of pharmaceutical research and develop- with the Danish Institute for Human rights obligations is overseen globally by ment and the countries in which we have Rights and other pharmaceutical Merck’s Corporate Compliance facilities, we do not believe we face sig- companies to examine the need for a Committee and compliance committees nifi cant human rights risks related to our sector-specifi c tool. within each of Merck’s divisions. Merck’s labor practices. In fact, in 2006–2007, Chief Ethics and Compliance Offi cer Merck did not identify any operations at » We have begun to identify key stake- provides regular briefi ngs to Merck’s signifi cant risk of forced or compulsory holders to help in defi ning the role of Executive Committee on human rights- labor, incidents of child labor, or viola- business—and specifi cally the pharma- related issues, and provides an annual tions of the right to exercise freedom of ceutical industry—in supporting the update to the Audit Committee of the association and collective bargaining. right to health. Company’s Board of Directors. At the country level, local managing directors HUMAN RIGHTS PRIORITIES are responsible for ensuring compliance FOR THE FUTURE Merck believes in the fundamental with both Merck corporate policies, dignity of every human being and in » Although we do not believe we face Code of Conduct and national laws and respecting individual rights in all of signifi cant human rights risks related regulations. Respect for human rights our operations, according to the fol- to our labor practices, by the end of is embedded in Merck’s global Code of lowing principles: » We condemn the use of forced 38 OUR SPHERE OF INFLUENCE labor and exploitative child labor and expect our suppliers to respect We defi ne our sphere of infl uence through the following categories. this principle. EMPLOYEES We respect the human rights of our employees as established in the » We respect employees’ lawful ILO’s Declaration of Fundamental Principles and Rights at Work. freedom of association. SUPPLIERS, DIRECT BUSINESS PARTNERS AND OTHER THIRD-PARTY » We compensate our employees REPRESENTATIVES We incorporate appropriate principles from our Code of fairly to ensure that basic needs are Conduct into contracts with suppliers, business partners, licensees and dis- met and provide our employees with tributors, and monitor their adherence on a regular basis. Merck is also one the opportunity to improve their of the founding members of the Pharmaceutical Supply Chain Initiative (PSCI), skills and capabilities. designed to help ensure that working conditions in the pharmaceutical supply » We do not discriminate at any level chain are safe and that workers are treated with respect and dignity. of the organization on the basis of More on p. 51. race, gender, age, ethnicity, national COMMUNITIES We strive to serve as a positive infl uence in—and to respect the origin, sexual orientation, marital human rights of—the communities in which we operate. As a global corporate status, disability, genetics or reli- citizen, we go beyond legal requirements to work with partners including gov- gious beliefs. ernments and other stakeholders to support human rights in communities both » We provide a safe and healthy work locally and globally. The most basic way we do this is by offering medicines and environment. vaccines that can help improve the lives of people worldwide. We also seek to support human rights through public policy advocacy with governments to ensure » We respect individuals’ right to they live up to their international human rights obligations, and through public/ privacy in accordance with legal and private partnerships. ethical standards. REPORTING SUSPECTED HUMAN RIGHTS VIOLATIONS

There are several ways in which employees can report suspected violations, including: » As a fi rst step, seeking out an immediate supervisor or manager to discuss suspected violations. If concerns remain, employees are encouraged to pursue the issue with his or her next level of management, Human Resources or legal counsel. Additional confi dential mechanisms managed by Merck’s Chief Ethics and Compliance Offi cer include: » The Merck AdviceLine, a telephone line available to employees around the world 24 hours a day, seven days a week, staffed by an independent organization that allows employees to remain anonymous in accordance with applicable legal standards for operating whistle-blowing hotlines. » The Merck Ombudsman Program, which offers a “safe haven” for U.S. employees to express work-related issues without fear of retaliation. This program confi dentially addresses employees’ concerns about conduct that may be inconsistent with Merck’s policies, practices, values and standards.

» In 2009, we plan to implement a new particularly the right to the enjoyment of Secretary-General on business and training program for all employees the highest attainable standard of health. human rights.11 We believe his fi nal about respect in the workplace to report, Protect, Respect and Remedy: » Merck is supporting The World A Framework for Business and Human ensure all employees are adhering to Justice Project, a multinational, mul- Rights, provides a strong founda- the Company’s values and standards. tidisciplinary initiative to strengthen tion.12 The training will cover a variety of the rule of law worldwide and raise However, his mandate should topics such as diversity, culture, bully- awareness of the connection between continue to defi ne further the exact ing, harassment and discrimination, as the rule of law and the essentials of role of relevant actors and to provide practical guidance. well as respecting diff erences. people’s daily lives—their safety, jobs, health, education and infrastructure.10 » Merck has also provided formal INFORMING THE DEBATE ON comments to former U.N. Special » We support the process initi- BUSINESS AND HUMAN RIGHTS Rapporteur Paul Hunt regard- ated by the United Nations on Merck supports meaningful eff orts ing his draft U.N. Guidelines for human rights and the role of busi- and discussions with stakeholders on Pharmaceutical Companies in ness, and, specifi cally, the ongoing the appropriate role of business in pro- Relation to Access to Medicines.13 tecting and promoting human rights, work of Professor John Ruggie, the Special Representative of the U.N.

MORE INFORMATION ONLINE

You can fi nd more information on the issues covered in this section, as well as on the following topics at www.merck.com/cr/ethics. » Ethics training and development » Enforcing Merck’s guidance for interactions with health care professionals » Merck’s disclosure statement on confl icts of interest » Channels for escalation, investigation, remediation » Merck’s commitment to privacy and recognition of concerns and violations » Ensuring ethical standards among our external suppliers » Grants to third parties 39 » The development of Merck’s Offi ce of Ethics » Support of independent ethics centers » Prescription product samples » Merck’s role in respecting and promoting health as » Unapproved or “off-label” use of our medicines a human right and vaccines » Our response to former U.N. Special Rapporteur Paul Hunt » Promoting disease awareness

ENDNOTES

1 www.merck.com/about/code_of_ 6 www.merck.com/about/public_policy/ 12 Ruggie J. Promotion and Protection of All conduct.pdf docs/mercks_alignment_with_phrma_ Human Rights, Civil, Political, Economic, guiding_principles_ﬁ nal.pdf Social and Cultural Rights, Including 2 www.merck.com/about/conduct.html the Right to Development. Report of the 7 www.merck.com/about/public_policy/ 3 www.ifpma.org/ethicalpromotion/ Special Representative of the Secretary direct_to_consumer/home.html General on the issue of human rights and 4 mednet2.who.int/edmonitor/edition/ 8 www.weforum.org/en/initiatives/paci/ transnational corporations and other edm17a.html index.htm business enterprises. Geneva, U.N. 5 Aikin K, Swasy J, Braman A. Patient Human Rights Council, 2008 (available at: 9 www.weforum.org/en/initiatives/ and Physician Attitudes and Behaviors www.reports-and-materials.org/Ruggie- corporatecitizenship/index.htm Associated with DTC Promotion of report-7-Apr-2008.pdf) Prescription Drugs: Summary of FDA 10 www.abanet.org/wjp 13 Hunt P. Human Rights Guidelines for Survey Research Results, Final Report, 11 www.business-humanrights.org/ Pharmaceutical Companies in Relation U.S. Department of Health and Human Gettingstarted/UNSpecialRepresentative to Access to Medicines. Geneva, United Services, Food and Drug Administration, Nations, 2007 (available at: www2.essex. Center for Drug Evaluation and Research, ac.uk/human_rights_centre/index.shtm 19 November 2004. KEY ISSUE Managing Our 5 Environmental Footprint

Reducing our environmental impact and conserving key resources is consistent with our values as a health care company and makes business sense.

Merck believes that by being careful about consuming energy, water and raw materials, and minimizing the impact on the environment of our wastes, air emissions, water efﬂ uents and products, we will be in a better position to operate more efﬁ ciently and sustainably.

Merck assesses our environmental of our global operations, including our with all applicable country, regional and footprint across numerous measures offi ces, research and development, and local safety and environmental laws, including energy and water use, marketing. For many years, Merck has we strive for S&E performance that is greenhouse gas (GHG) and pollut- manufactured the majority of our prod- among the best in the pharmaceutical ant emissions to air and water, and ucts from early intermediates through industry. More on our S&E management waste generation and recycling rates. fi nished packaging. Recently, we have and compliance, see p. 49. We continue to seek opportunities to moved toward a supply model that also reduce our environmental footprint leverages external manufacturers to aug- Merck experienced four reportable and endeavor to provide a transparent ment our internal capabilities. spills in 2006. Three of these releases account of our performance most rel- that resulted in three Notices of evant to society and to our business. Merck’s corporate safety and environ- Violation occurred at one site over a mental (S&E) policies articulate our two-month period and resulted in a Our direct environmental footprint mission and values in relation to the settlement with the U.S. government. 40 is largely related to the resources and environment. In addition to compliance We entered into a Consent Decree materials we store, use and dispose of when we manufacture our products. Pharmaceutical compounds are complex organic molecules and therefore our ENVIRONMENTAL COMPLIANCE manufacturing processes are intricate, PERFORMANCE DATA SUMMARY 2004–2007 multistep, batch chemical operations that often require multiple solvent changes GLOBAL 2007 2006 2005 2004 and rigorous cleaning between batches. As a result, solvent use signifi cantly Environmental Inspections 76 88 N/D N/D aff ects our footprint in terms of waste Environmental Events generation and air and water emissions. We do not use ozone-depleting sub- » Reportable Spills and Releases* 26 4 4 4 stances in our products. Utilities, includ- » Water Permit Exceedances 6 5 3 7 ing the production of steam, are the » Air Permit Exceedances 28 19 25 44

largest sources of our CO2 emissions. Noncontact cooling water for our manu- Environmental Notices of Violations (NOVs) 13 11 N/D N/D facturing processes is our primary use of water. Environmental Fines Paid ($US) 31,515 10,652 281,025 N/D (number of fines) (6) (3) (4) Although manufacturing represents the majority of our direct footprint and is a * The increase in number of reportable spills is due primarily to a modified Pennsylvania Department of Environmental Protection interpretation in late 2006 that resulted in reporting of signifi cant focus area, our environmen- spills, such as chilled water spills into storm water drains, that were not previously required to tal initiatives also address other aspects be reported. with the United States of America, will also help to minimize the impact heating, ventilating and air conditioning the Pennsylvania Department of on Merck of anticipated regula- systems (HVAC) retro-commissioning Environmental Protection (PaDEP) tory requirements associated with eff orts, to ensure that we optimize and the Pennsylvania Fish and climate change. energy use. We also encourage our Boat Commission to resolve the large facilities to install submetering three incidents involving releases The majority of Merck’s demand for to measure energy use in each build- into the Wissahickon Creek from our energy occurs at manufacturing, ing. In addition, Merck has developed West Point, Pennsylvania, facility. The warehousing, laboratory and major a Best Practices Evaluation Tool to help settlement involved $1.575 million in offi ce facilities, and therefore we target sites assess performance and identify civil penalties, $9 million for supplemen- these facilities for energy reductions. We improvement opportunities. tal environmental projects and $10 mil- evaluate energy-saving technologies and lion for on-site improvement measures. approaches and implement capital proj- In early 2005, Merck adopted a cor- More information is on p. 40 of our ects, such as lighting modifi cations and porate goal to reduce the intensity of 2007 Annual Financial Report (10-K). our energy use by 25 percent per unit GREEN BUILDINGS area (measured in millions of BTUs Since that time, we have put a signifi cant [MMBtu/ft2]) by the end of 2008, from amount of eff ort into spill prevention and We have adopted a corporate-wide a baseline year of 2004. In 2007, Merck wastewater management at this site and commitment to build all new labora- used 15,197,000 million BTUs of energy have had no further signifi cant incidents. tories and offi ces so that they achieve worldwide, which represents a 19.6 per- The number of reportable spills increased LEED® Silver Certifi cation or its cent reduction from our 2004 baseline. signifi cantly in 2007, due primarily to equivalent globally. We have achieved a modifi ed regulatory interpretation by LEED certifi cation for existing build- Merck has been reporting our GHG the PaDEP that resulted in reporting of ings at our Seattle Rosetta Laboratory emissions annually through the Carbon events that were not previously reported, and have built our new administration Disclosure Project since 2005. In such as spills of chilled water. Such spills building in Durham, North Carolina, to February 2008, Merck announced accounted for more than 60 percent of the achieve LEED certifi cation. plans to reduce GHG emissions from spills reported in 2007. the Company’s global operations by 12 percent by the end of 2012, from a 41 Over the past two years, 57 percent of 2004 baseline.1 Merck worked closely the environmental Notices of Violation RENEWABLE ENERGY PROJECTS with the U.S. Environmental Protection received by Merck have been associated In 2006, Merck installed a 500-kilowatt Agency (EPA) Climate Leaders program with air emissions and permit condi- roof-mounted solar power system with to ensure our goal was both aggressive 2 tions, 30 percent with water and 13 per- more than 1,500 solar panels on the and achievable. Merck’s GHG targets are cent with waste. roofs of two buildings on our Rahway/ based on absolute reduction of 1.5 per- Linden, New Jersey, campus, one cent per year for eight years. Reducing of which already houses a hydrogen GHG gas emissions by 12 percent from fuel cell. The project is the fi rst of its 2004 will require addressing GHG emis- ENERGY USE kind to integrate fuel cell and solar sions from new or expanded operations AND CLIMATE CHANGE power at a pharmaceutical company in as well as our existing facilities.

New Jersey and is reducing CO2 emis- Numerous studies supported by lead- sions by more than 100 metric tons per Merck tracks four greenhouse gases: carbon dioxide (CO ), methane, nitrous ing scientists worldwide have con- year. In addition, solar hot water pan- 2 cluded that a gradual warming of our els installed at our research facility in oxide and hydrofl uorocarbons. The climate is under way and is largely the Rome, Italy, in 2007 save 108,000 kWh vast majority of our GHG emissions are associated with CO . Perfl uorocarbons result of human activity. To address per year and avoid generating 2 this serious concern, Merck is tak- (PFCs) and sulfur hexafl uoride (SF6) 20,520 kg of CO2 emissions. A photo- ing proactive steps to adopt respon- voltaic grid at the same site generates are not tracked because they are sible policies and practices to reduce 53,000 kWh per year of electricity and typically not used at Merck facilities. greenhouse gas (GHG) emissions. We avoids the generation of 22,790 kg of Between 2004 and 2007, we reduced believe that taking early action to our annual GHG emissions by almost CO2 emissions. reduce energy use and GHG emissions 10 percent, representing a reduction of ENERGY USE AND GHG EMISSIONS PERFORMANCE DATA SUMMARY 2004–2007

GLOBAL 2007 2006 2005 2004*

Energy » Total Energy Use (million BTUs x 106) 15.2 15.5 17.5 18.5 » Energy Intensity (MMBTU/sq ft) 0.52 0.54 0.61 0.65 » Energy Source, percentage of total » Purchased Electricity 28 26 21 21 » Natural Gas 69 72 75 74 » Fuel Oil 3 2 4 5 » Coal 0 0 0 0 » On-site Renewable Energy Sources N/D N/D N/D N/D

†‡ Total GHG emissions (as C02 eq, million metric tons) 1.36 1.36 1.44 1.50

* 2004 noted as baseline † In accordance with U.S. EPA Climate Leaders protocol, GHG generation baseline data have been adjusted to remove facilities that have been sold. ‡ Merck recalculated its GHG emissions for the years 2004 through 2007 based on new emissions factors released by EPA in April of 2007 (based on 2004 energy generation data), which resulted in reporting increased emissions for 2004, 2005 and 2006.

145,000 metric tons of CO2 equivalents economic disruptions and the ineffi cien- Merck’s water reduction eff orts parallel from our baseline year. cies of disparate local, state or regional our energy reduction program. requirements. Details of Merck’s GHG Although voluntary programs to reduce emissions reduction plan, goals and initia- Much of the water Merck uses is for util- GHG emissions can be eff ective, Merck tives are available online in our climate ity systems in our manufacturing plants believes that national and even multi- change public policy statement.3 that produce active pharmaceutical national frameworks will be required to ingredients, which require large volumes address climate change. We support a of cooling water. In 2007, approximately global approach that stimulates the devel- 45 percent of the water we used glob- opment and broad use of energy-effi cient WATER USE ally was for once-through noncontact technologies and avoids unnecessary cooling, where water is pumped into the In recent years, industrialization, plant, circulated through heat exchange KEY ENERGY AND CLIMATE urbanization and increasing popula- piping to cool processes and then dis- CHANGE INITIATIVES tion growth have put pressure on charged at a higher temperature. Merck the availability and quality of fresh initiatives to reduce water use include Merck is engaged in numerous initia- water supplies, leading to increas- carefully controlling cooling systems tives worldwide to improve energy use ing concern and eff orts to ensure operations and recovering steam con- and reduce GHG emissions from our sustainable water use. We recognize densate and water purifi cation reject operations, including the U.S. EPA’s that the availability of suffi cient water for reuse. We also avoid water use ENERGY STAR partnership, which clean water is critical to sustaining in mechanical seals, such as in pumps, provides a useful and broad energy both human health and the envi- and we consider the total cost of water in 42 management framework for measur- ronment. Therefore, we are taking new projects. ing our current energy performance. steps to improve our overall water Merck was among the corporations use effi ciency. In 2005, Merck established a goal to that collaborated with Energy Star reduce the total amount of water used in 2007 to develop the position paper Merck’s strategy for improving our by 15 percent by the end of 2008 from “Energy Strategy for the Road Ahead.” water use effi ciency includes reduc- the baseline year of 2004. At the end of We also participate in EPA’s Climate ing our overall demand for water and 2007, we had reduced our demand for Leaders program and in the Business controlling our water discharges (see water at Merck facilities worldwide by Roundtable Climate RESOLVE Emission, Effl uents and Waste section). 24.6 percent; 13.6 percent of this was (Responsible Environmental Because of the strong interdependency due to effi ciency improvements and the Steps, Opportunities to Lead by between our water and energy use, remainder to the closure of a water- Voluntary Efforts). intensive production process.

WATER USE PERFORMANCE DATA SUMMARY 2004–2007

GLOBAL 2007 2006 2005 2004*

Total water usage, billion gallons 8.8 9.6 10.1 11.7 (percentage reduction versus prior year) (8.3) (5) (13.6) » Purchased Water (billion gallons) 1.6 1.6 1.8 1.9 » Pumped Water (surface and ground, billion gallons) 7.2 8.0 8.3 9.7

* 2004 noted as baseline AIR EMISSIONS campaign nature of our business and EMISSIONS, EFFLUENTS Energy production and use at our facili- variability in the amount of solvents ties are our largest source of air emis- required for diff erent products, the AND WASTE decreases in air emissions were primar- sions, the majority of which are CO2. Power and steam generation, thermal ily due to the closure of one Merck site. We recognize that for the commu- oxidizers used to control emissions from Despite signifi cant growth at Merck nities where we operate, emissions, our production facilities and incinerators during the past 12 years, we have main- effl uents and other wastes from our used to treat solid wastes also result in tained our 90 percent reduction in TRI facilities are an important environ- emissions of nitrogen oxides (NO ) and emissions from 1987 levels. mental consideration. To minimize X sometimes sulfur oxides (SO ), depend- this footprint, we focus on prevent- X ing on the fuels used. WASTEWATER EFFLUENTS ing waste creation, reducing volume, As part of the drug development process, reusing or recycling waste. When From 2005 through 2007, we decreased Merck assesses the potential environ- other approaches are not practicable, NO emissions from Merck facilities by mental and human health eff ects of our we apply additional controls and X 35 percent and SO emissions by 31 per- products. We have developed procedures treatment technologies. X cent. Energy conservation measures to evaluate the wastewater discharges at our facilities accounted for almost from our facilities and prevent dis- Our preferred method of footprint one-third of the decreases. Purchase of charges containing potentially harmful reduction begins with the original electricity at one site (rather than on-site product residues. design of our pharmaceutical manu- generation) and switching from fuel oil facturing processes to prevent the cre- to natural gas at another site also con- All of Merck’s process wastewater is ation of emissions, effl uents and wastes. tributed signifi cantly to the reductions. treated prior to discharge. Merck oper- Solvents are the primary waste compo- The remaining reductions were related ates our own biological wastewater nent that we manage. Therefore, where to the closure of certain manufacturing treatment plants at six of our produc- practical, we reuse and recycle our used operations and the sale of one site. tion facilities; the remainder of our solvents or fi nd other benefi cial uses for production sites send their wastewater them. In addition, we seek to use water- The largest source of air emissions from to local municipal wastewater treatment based methods for equipment cleaning our manufacturing processes is solvent facilities. We reported increases in TRI when they are equally eff ective. To use. Our emissions to air of volatile emissions to water for 2006 and 2007. reduce our solvent emissions, we employ organic compounds (VOC) and Toxic Nearly all of these increases were associ- in-process and end-of-pipe treatment Release Inventory (TRI) compounds, ated with a requirement to assess nutri- technologies and controls. Despite our both of which are primarily solvents, ent discharges to surface water in one eff orts to reduce our solvent use, Merck decreased slightly between 2005 and watershed, which resulted in increased still purchases approximately 30 million 2007. Although our solvent emissions reporting of nitrates at one facility. kilograms of solvents in a typical year. vary from year to year due to the batch WASTE Merck’s total hazardous waste generation decreased 11 percent from 2005 to 2007. Nonetheless, in 2007 Merck still managed more than 80,000 metric EMISSIONS, EFFLUENTS AND WASTE tons of solid wastes from our operations, PERFORMANCE DATA SUMMARY 2004–2007 54,000 metric tons of which was classifi ed as hazardous or special waste. The GLOBAL 2007 2006 2005 2004 primary component of our hazardous wastes is solvent from our manufactur- Air pollutant emissions by type (metric tons) 43 ing operations. » Ozone-depleting substances (ODS)* 1.4 N/D N/D N/D » Nitrogen Oxides (NO ) 303 306 468 513 Of the solvent streams that Merck can- x not reuse, 23 percent are recovered and » Sulfur Oxides (SOx) 58 76 84 110 used by other industries with lower » Volatile Organic Compounds (VOCs)† 401 427 411 510 solvent purity requirements. Another » TRI Emissions (metric tons to 270 242 163 155 32 percent are burned for energy instead air and water) of fossil fuels. After reuse and recycling, only 44 percent of the hazardous wastes » TRI Emissions to air 97 123 104 148 we generate must be treated and dis- » TRI Emissions to water 173 119 59 7 posed. Most of this waste is incinerated. Less than 4 percent of our total hazard- Waste generated (metric tons) ous waste, none of which is liquids, is » Hazardous Waste Generated 54,000 62,300 60,900 64,000 sent to landfi lls. Merck has a program to » Percentage of Hazardous 23 29 37 25 ensure that the wastes we send off site are Waste Recycled managed by environmentally responsible waste suppliers. » Percentage of Other Beneficial Reuse 32 32 18 N/D » Nonhazardous Waste Generated‡ 31,600† N/D N/D N/D In 2007, we began to track our genera- » Percentage of Nonhazardous 42† N/D N/D N/D tion of nonhazardous waste. We are still Waste Recycled‡ fi nalizing protocols for quantifying the wastes. However, we have found that * Data unavailable for a site sold at the end of 2007. of the estimated 31,600 metric tons of † Data reflect a correction from previous reports also affecting 2003 and 2004 VOCs, nonhazardous wastes we generate, we 415 tons and 510 tons, respectively. ‡ 2007 was the first year Merck collected nonhazardous waste generation and recycling data. recycle approximately 42 percent. Data should be considered estimates. STUDYING PHARMACEUTICALS IN THE ENVIRONMENT Studies of waters in Europe and North America have detected traces of ingredients found in pharmaceuticals and other consumer products used by the general public. Known as Pharmaceuticals in the Environment (PIE), these traces of medicines come primarily from patient use after a portion of these pharmaceuticals pass through the human body without being completely metabolized. Some of these compounds make their way through municipal wastewater treatment systems and are discharged into the environment. To date, scientists have found no evidence of adverse human health effects from the trace levels, but more research is required to evaluate fully the potential impacts on aquatic organisms and the environment. Merck is a sponsor of the Water Environment Research Foundation,3 which conducts research into new wastewater treatment technologies, including those that could improve removal of trace pharmaceuticals from wastewater.

ENVIRONMENTAL REMEDIATION green chemistry program has resulted in Merck scientists collaborate with other With research and manufacturing opera- pharmaceutical manufacturing innova- pharmaceutical companies, governmen- tions dating back more than 100 years, tions that signifi cantly reduce the use tal agencies and universities to foster some Merck facilities were operated of raw materials, avoid generation of greater awareness and use of the scien- during times when regulations and hazardous and nonhazardous waste and tifi c methods used to assess the poten- environmental practices were not what minimize use of energy and water. tial impacts of pharmaceuticals in the they are today. As a result, Merck has environment and to increase the under- instituted investigations and projects to Merck is a founding member of the standing of such impacts. For example, ensure appropriate cleanup actions where ACS GCI Pharmaceutical Roundtable, Merck participated in the development Merck bears responsibility. Expenditures which is a partnership between the of an environmental classifi cation system for remediation and environmental American Chemical Society’s Green for pharmaceuticals in Sweden. Merck liabilities at formerly owned and oper- Chemistry Institute® and member phar- voluntarily provides environmental risk ated sites were $12.6 million in 2006 and maceutical companies. More on our data on our products to the Swedish $19.5 million in 2007. These amounts do green chemistry at www.merck.com/cr/ system, publicly available online at not consider potential recoveries from productstewardship. www.fass.se. Merck scientists are also other parties. In addition, Merck cur- collaborating with governmental agency rently is a potentially responsible party at RECOGNIZING GREEN CHEMISTRY and university scientists from Canada on 20 multiparty Superfund sites in the the Canadian Environmental Impact ini- United States; we spent $20,000 in 2006 Merck was recognized by the EPA with tiative to develop environmental assess- and $37,000 in 2007 in settlements the Presidential Green Chemistry ment regulations for products regulated associated with these sites. Challenge Award in 2005 and 2006, under the Canadian Food and Drug Act. and the AstraZeneca Award for Excellence in Green Chemistry and PHARMACEUTICALS IN THE Engineering by The Institution of ENVIRONMENT (PIE) PRODUCT STEWARDSHIP Chemical Engineers (IChemE) in 2005 In November 2007, Merck adopted a for developing new processes that formal public policy on PIE, which Merck is committed to understand- reduce waste streams, raw materials describes our eff orts to work with gov- 44 ing and managing the environmental and production requirements. Our ernment agencies, the scientifi c com- impacts of our products from discov- green chemistry initiatives clearly munity and other stakeholders to ery through manufacturing, patient demonstrate that more sustainable understand and evaluate this issue.4 use and disposal. This commitment solutions can also be cost-effective. Merck participates in many stakeholder starts early in the drug development collaborations aimed at developing process and continues throughout the and implementing a science-based product life cycle. ENVIRONMENTAL RISK approach to PIE, including the ASSESSMENTS Knowledge and Need Assessment GREEN CHEMISTRY In many countries, an Environmental on Pharmaceutical Products in Merck recognizes that the most eff ective Risk Assessment must be conducted and Environmental Waters forum funded way to reduce our environmental foot- submitted to regulatory authorities as by the European Commission. And, print is to improve how we manufacture part of the marketing approval or new through our association with the products. Merck considers material substance notifi cation processes. To this Graham Environmental Sustainability effi ciency (E Factor) in the selection of end, Merck puts our medicines through Institute,5 Merck is working with the best process for manufacturing each a battery of environmental fate and researchers at the University of Michigan new product. E Factors are a measure of eff ects tests. Environ mental risk assess- and PhRMA to assess the environmental the amount of materials used to produce ments to date indicate that our products footprints associated with methods of a certain amount of product and are do not pose an unacceptable risk to disposal of unused medicines. an indicator of process effi ciency. Our human health or the environment. Proper disposal of unused medicines SUPPLIER MANAGEMENT » We are committed to reducing the is also an important aspect of address- Merck was one of the fi rst companies Company’s total global GHG emis- ing PIE because the common practice to support the Pharmaceutical Industry sions by 12 percent by the end of of fl ushing unused medicines down Principles for Responsible Supply 2012, from a 2004 baseline. By the household drains contributes to the trace Chain Management, which will help end of 2007, we had already reduced concentrations detected in the environ- ensure environmentally responsible our annual GHG emissions by almost ment. Through our membership in the manufacturing processes by suppliers. 10 percent. PhRMA PIE Task Force, Merck has More on p. 51. » We have already achieved our 2008 worked to develop and implement the goal of reducing water use by 15 per- SMARxT Disposal Program6 designed ENVIRONMENTAL FOOTPRINT cent from a 2004 baseline and are to provide the general public with infor- PRIORITIES FOR THE FUTURE working on a new longer-term water mation on proper disposal of medicines. AND TARGETS use reduction goal. » We strive for 100 percent compliance » We will continue to monitor TRI and PRODUCT PACKAGING with applicable laws and regulations. The packaging we use for our fi nished VOC emissions to maintain reductions products and for our in-process materi- » A major goal is zero signifi cant envi- from past initiatives. als must preserve the sterility, purity and ronmental events. » Merck will continue to work with effi cacy of our products. Many of our » We are on track to meet our objective stakeholders on the issue of PIE to fi nished products must also be child safe to reduce energy demand by 25 per- identify additional data needs and to and tamper-evident. Without compro- cent (measured in BTUs per unit area) conduct our own environmental risk mising these factors, we are working to by the end of 2008 from a 2004 base- assessments based upon the best avail- eliminate packaging scrap. line. We also strive to increase our use able science. of renewable energy. 45

MORE INFORMATION ONLINE

You can ﬁ nd more information and data on the issues covered in this section, as well as on the following topics at www.merck.com/cr/environmentalfootprint. » Additional years of environmental data » Key initiatives to reduce energy and water usage » Governance of environment and safety at Merck and related » Environmental remediation compliance measures » Environmental risk assessments » Internal auditing approach

ENDNOTES

1 www.merck.com/cr/docs/Greenhouse_ 3 www.merck.com/cr/docs/climate_ 5 www.graham.umich.edu Gas_Emissions_Release_Feb_2008.pdf change_statement_Jan_20.pdf 6 www.smarxtdisposal.net 2 www.epa.gov/stateply 4 www.merck.com/cr/docs/PIE_PUBLIC_ statement.pdf Executing the Basics

While our CR reporting is focused on priority environmental, social and governance issues that emerged from our materiality analysis, we recognize that certain fundamental elements of our business also merit inclusion as part of our reporting.

In this section, we provide a description of our corporate governance structure and approach, we discuss how Merck ensures that we continue to attract and retain the right employees, we review our health and safety performance, and we provide insights into our supply chain management.

CORPORATE GOVERNANCE CORPORATE GOVERNANCE DATA SUMMARY 2005–2007

Corporate governance is more than 2007 2006 2005 just Merck’s relationship to our shareholders. It also underpins our rela- Number of independent directors on 12 (92) 11 (92) 11 (92) tionship to society, because issues the Merck Board (percentage) 46 that matter to our key stakeholders can very quickly become important Separate Chairman of the Board and CEO No N/A* N/A* issues for our shareholders. As such, our corporate governance objective is Lead independent director Yes No No to balance fi duciary duty to generate Independent Audit Committee Yes Yes Yes shareholder value, while also considering in a transparent manner the Independent Compensation Committee Yes Yes Yes feedback from other stakeholders. Independent Committee on Public Policy Yes Yes Yes We want our policies and activi- and Social Responsibility ties to support our goals, initiatives and business values, and we want to Number of Board meetings held†1113 8 promote the rule of law. To this end, we have meaningful policies and an * There was no Chairman of the Board from May 2005 to April 2007. eff ective corporate governance struc- † Meetings were held in person and via telephone. ture to help us implement ethical business practices.

PRIORITIES FOR THE FUTURE » We intend to publish an annual corporate responsibility report, approved by the Merck Board. KEY CORPORATE GOVERNANCE ISSUES

ENGAGEMENT AND SUPPORT OF OPEN Merck’s Corporate DIALOGUE WITH OUR SHAREHOLDERS Merck strongly supports productive dia- Governance Structure logue and engagement with shareholders and has a long, recognized track record of constructive engagement through discussions and periodic meetings on key issues with our shareholders.

BOARD INDEPENDENCE AND MERCK SHAREHOLDERS PERFORMANCE Some shareholders have expressed a desire for complete independence of the Merck Board. Our policy is that the Merck Board should consist of a substantial majority of independent directors in accordance with the standard for independence set forth, in our Policies of the Board.1 Currently, all directors other than the CEO are considered to be independent directors. In 2007, Dr. Samuel Thier was appointed MERCK BOARD OF DIRECTORS Lead Director to provide independent leadership of the Board when necessary.2

SHAREHOLDER ADVISORY VOTES ON EXECUTIVE AND BOARD MERCK CEO COMPENSATION Some shareholders are asking for the ability to provide a non- binding vote on executive compensation of executives as a way of voicing their views on performance. Merck believes MERCK EXECUTIVE COMMITTEE this is unnecessary and not in the best interests of the Company and its shareholders in view of the numerous complex and interrelated considerations that are used to set compensation levels, the confi dential nature of some information CORPORATE OFFICE OF DISCLOSURE COMPLIANCE OFFICE OF about the Company’s strategies and per- AUDIT AND ETHICS COMMITTEE TEAM CORPORATE ASSURANCE RESPONSIBILITY formance that is used to assess executive SERVICES performance and set compensation, and other means available for shareholders to express their opinions on the Company’s executive compensation strategy.3 Merck Chairman, President and CEO Richard T. Clark is accountable to the Merck Board. Mr. Clark has established Merck’s Executive Committee to manage the business of Merck. Executive Committee meets monthly and as needed to review Company progress against the Plan to Win, our strategy established in 2005 to guide the Company to 2012, and other Company matters.4 Merck conducts a rigorous and transpar- excluding benefi ts. Merck’s global com- ENSURING MERCK ent annual performance review of all pensation and reward program also includes employees at all levels globally to guide an incentive plan of cash stock options and HAS THE RIGHT SKILLS Company decisions relating to com- rewards based on performance. FOR LEADERSHIP pensation and rewards, and to inform discussions on employee development Worldwide, Merck off ers competitive To achieve our business goals, we rely opportunities. We seek to emphasize not retirement benefi ts. In many coun- on the integrity, knowledge, imagina- just what an employee achieves, but also tries, we off er health insurance, life and tion, skill, diversity and teamwork how he or she achieves it. The annual injury insurance, disability insurance and of Merck’s nearly 60,000 employees incentive bonus of management-level insurance for business travel. At certain worldwide. We strive to attract and employees is determined, in part, by Merck sites, including our corporate retain the best talent by reward- the leadership that each demonstrates in headquarters, employees can see a health ing performance, building a positive terms of expected behaviors. care professional on-site, usually on the working environment, and responding day they need to, for such services as to employee needs. COMPENSATION AND BENEFITS immunizations and health screenings. In Overall compensation at Merck is addition, at many of our sites we provide LEADERSHIP STANDARDS, EMPLOYEE directly dependent on our corporate per- subsidized cafeterias, oil change, dry DEVELOPMENT AND PROFESSIONAL formance and on internal metrics related cleaning and gyms. GROWTH In 2007, Merck introduced to the performance of an individual and new employee behavior standards closely their functional group. Employees at all DIVERSITY AND INCLUSION As our aligned with the Company’s business levels have objectives against which they markets become increasingly diverse, we strategy and our Code of Conduct. These are assessed by their supervisor. believe that our diversity, managed suc- Leadership Standards build on prior guide- cessfully, will make Merck more innova- lines and describe the behaviors expected In 2007, Merck paid our employees a tive, agile and profi table. In 2007, Merck of our employees and their managers. total of $5.56 billion in payroll expenses, initiated a new global diversity strategy, by which the compensation of our man- BUILDING A POSITIVE WORK ENVIRONMENT agers and leaders is linked to diversity and inclusion performance measures. Merck’s PERFORMANCE SUMMARY 2005–2007* policy is to promote equal opportunity globally. Merck’s management is respon- 2007 2006 2005 sible for enforcing this policy by making thoughtful and equitable eff orts to correct Total compensation paid to employees/payroll 5.56B 5.14B 4.84B imbalances in our workforce globally. excluding benefits (US$) To this end, we have Affi rmative Action Percentage of women in workforce (globally) 48 49 49 Plans and diversity objectives on our Company scorecard. Merck has publicly Percentage of women on the Board 23 25 25 disclosed EEO-1 information since 1999. Percentage of women in executive roles** (U.S.) 27 26 28 Percentage of women on senior 31 29 29 FLEXIBLE WORK ARRANGEMENTS management team (U.S.) Merck has off ered fl exible work arrange- Percentage of women in workforce (U.S.) 49 50 50 ments for several years. Well-managed fl exibility can enhance employee com- Percentage of women in management roles (U.S.) 41 41 38 mitment to the Company, increase manager eff ectiveness and improve customer Percentage of under-represented ethnic groups 17 17 17 satisfaction. Merck works to ensure that on the Board 48 fl exibility across the organization is con- Percentage of under-represented ethnic groups 11 12 11 sistently implemented and strengthens in executive roles** (U.S.) our competitive advantage. Percentage of under-represented ethnic groups 14 15 14 on senior management team (U.S.) EMPLOYEE COMMUNICATION AND Percentage of under-represented ethnic groups 20 20 21 ENGAGEMENT Engagement with our in workforce (U.S.) employees is fundamental to fostering commitment and performance. One of Percentage of under-represented ethnic groups 20 19 18 the many tools we use to this end is our in management roles (U.S.) annual Culture Assessment, which also Percentage of employee response rate to 72 77 N/A† informs our strategic business decisions. Merck Culture Assessment survey MERCK’S RESTRUCTURING PROGRAM Number of position eliminations through 2,400 3,700 1,100 As part of our business strategy, Merck is Merck's restructuring program changing how we approach every aspect of our business to regain an industry lead- Overall Turnover Rate‡ 10.7 11.9 10.6 ership position. In 2005 we announced a restructuring program to reduce the Overall Voluntary Turnover Rate‡ 6.6 7.1 7.1 Company’s cost structure, increase effi - ciency and enhance competitiveness. Involuntary Termination Rate 4.1 4.8 3.5 Through these diffi cult but necessary actions, the Company is committed * All data pertains to representation in Merck's workforce. to treating employees with fairness and ** Executives refer to the level of vice president. † Survey not conducted prior to 2006. respect. Go to www.merck.com/cr/ ‡ Overall turnover includes all types of turnover; overall voluntary turnover excludes any involuntary restructuring for more information. terminations for performance or restructuring. POSITIVE WORK ENVIRONMENT programs based on the highest stan- TARGETS AND PRIORITIES FOR dards of medical care and regulatory FOCUS ON EMPLOYEE HEALTH THE FUTURE requirements. In addition, we dedi- Merck’s Integrated Health Management group offers cate signifi cant resources to providing health programs and resources, including preventive » Our target is to increase global female a safe working environment, focusing occupational health programs, work-related injury and ill- representation at the senior manager on prevention and closely tracking ness management, treatment for acute episodic conditions level from 31 percent to 36 percent by any accidents or injuries so that we occurring during work hours, disability management, 2012. In the United States we want to can address problems promptly and reproductive health and pregnancy advice, a business increase senior manager level employees work toward eliminating occupational travel program, immunizations, lab and X-ray services. from under-represented ethnic groups injuries or illness. from 14 percent to 18 percent by 2012. In 2007, for U.S.-based employees, Merck introduced HEALTH, SAFETY AND ENVIRONMENTAL Health Matters to raise awareness of health issues and » In 2008, Merck is launching a con- MANAGEMENT Health, safety and envi- motivate employees to manage and improve their health sistent global approach to fl exible ronmental (HSE) matters are closely and well-being. The program includes a health website, work arrangements. We want to raise connected and therefore we manage a confi dential health assessment and interactive health awareness of our policy and increase these through a collaborative approach tools. Anyone who takes the assessment and wants to employee satisfaction with fl exible across numerous Merck functions that work on an identifi ed health risk has confi dential access work opportunities provided. Merck focus on employee health- and safety- to a telephonic coach who provides advice and monitors will begin tracking global use of our related issues. HSE performance is progress on an ongoing basis. fl exible work arrangements in 2009. also an important consideration in our » We want to score at or above annual assessment of scorecard perfor- 75th percentile or higher in each mance, which is tied to compensation. for more than 20 years, Merck has con- of the dimensions of our annual ducted corporate safety and environ- Culture Assessment by 2010. Merck’s Executive Committee sets the mental audits of our facilities worldwide. strategic direction for health, safety and We recently enhanced our corporate the environment within the Company audit practices to make our audits even and its divisions and periodically more detailed and rigorous. FOSTERING SAFETY assesses progress reported by Merck’s AND HEALTH IN THE Vice President of Global Safety and the SAFETY OF OUR EMPLOYEES Merck WORKPLACE AND Environment, who also is responsible is committed to providing a safe and for recommending long- and short-term healthy workplace for all of our employees, IN OUR COMMUNITIES goals, objectives and metrics. contractors and visitors around the world. We also expect each employee to conduct A healthy and safe workforce is a We have numerous policies, procedures his or her job without compromising the more productive workforce. We strive and guidelines to direct our sites and safety and well-being of our workforce or to enhance the health and well-being operating organizations on expecta- the communities in which we operate. of our employees by providing health tions and implementation. In addition, Merck strives for full compliance with all applicable country and local safety GLOBAL RECORDABLE & LOST-TIME INJURY RATES laws and regulations and to eliminate work-related injuries and illnesses from our operations globally. To this end, 0.0 0.5 1.0 1.5 2.0 Merck health, safety and environment RIR 2007 1.12 staff in our facilities and sales organiza- 0.48 LTIR tions implement programs, procedures 1.11 and training to ensure compliance and 49 2006 0.43 address health and safety throughout our operations. In addition, most of 2005 1.21 0.44 our manufacturing and research sites 1.63 have active safety committees that help 2004 0.51 engage employees and promote health 1.84 and safety awareness. 2003 0.55 Globally, we require that all reported injuries, illnesses and incidents be GLOBAL MOTOR VEHICLE ACCIDENTS reported and investigated to determine the causal factors of each event and that PER MILLION MILES (APMM) actions be taken to prevent recurrence. For consistency across the Company, and 03691215to enable performance comparisons, we use the U.S.-based Occupational Safety 2007 9.64 and Health Administration (OSHA) injury and illness record-keeping system. 2006 9.95 In 2007, our workplace injury and illness rates increased more than 2006. Our 2005 10.41 total recordable injury rate is still down 7.4 percent from the end of 2005, but 2004 11.30 our lost-time injury rate is up 9.1 percent since 2005. This increase in lost-time 2003 12.45 injuries coincides with a concerted eff ort SAFETY AND HEALTH We recognize our responsibility to infl uence our suppliers and licens- PERFORMANCE DATA SUMMARY 2005–2007 ees to respect human rights standards defi ned in the Universal Declaration of 2007 2006 2005 Human Rights of the United Nations Workplace Safety* and the core labor standards set out by the International Labor Organization. » Safety Inspections 41 65 N/D Beginning in 2007, to help identify » Notices of Safety Violations/Citations 3 8 N/D signifi cant ethical or human rights » Safety Fines Paid ($US) 1,500 1,975 1,000 concerns Merck’s Global Procurement (number of fines) (1) (2) (2) department introduced a new, detailed Supplier Ethical Assessment preselection » Reportable Injury Rate (RIR) 1.12 1.11 1.21 questionnaire for all new suppliers of » RIR Percentage Change 0.9 -8.3 -25.8 new products and services globally. » Lost-Time Incident Rate (LTIR) 0.48 0.43 0.44 » LTIR Percentage Change 11.6 -2.3 -13.7 In the future, Merck’s Global Procurement department will continue to apply a risk- » Fatalities 1 0 0 based approach to managing existing sup- Accidents Per Million Miles (APMM) 9.64 9.92 10.40 pliers, concentrating on those that provide the most critical goods and services. All Capital Projects Construction Safety*† suppliers are required to conduct business activities related to Merck in accor- » Reportable Injury Rate (RIR) 1.45 0.92 1.12 dance with applicable laws and Merck’s ‡ ‡ ‡ » DART /Lost-Time Incident Rate (LTIR) 0.39 0.07 0.15 ethical business policies, practices and » Fatalities 0 0 1 standards. To reinforce our procurement standards, we are developing an awareness Number of U.S. employees who belong to a 3,051 2,757 2,952 program for Merck Procurement profes- Merck fitness center sionals that will supplement our Code of Conduct training. Number of U.S. employees who used 2,350 N/A N/A Health Matters§ EXTERNAL MANUFACTURERS OF OUR PRODUCTS * LTIR/RIR: Calculated per OSHA methodology. Recent media reports about quality con- † Reflects all capital projects over $100,000 as well as some smaller projects managed by our global engineering group. trol issues concerning various products ‡ DART: Days Away, Reassignment or Transferred calculated per Construction Users Round Table manufactured in developing and emerg- (CURT) methodology. ing markets have resulted in customer § Health Matters not launched until 2007. questions about supply chains of all pharmaceutical companies. Merck employs internal standards and multiple controls to assure the safety of our products, to improve injury reporting by our fi eld regardless of where the fi nished product sales force outside of the United States. OUR SUPPLY CHAIN AND and active pharmaceutical ingredients For more information, go to are sourced. www.merck.com/cr/employeesafety. HOW WE MANAGE IT In conducting our business, approxi- We conduct due diligence and pre- TARGETS AND PRIORITIES 50 mately 1,000 suppliers make up about contract audits of every potential FOR THE FUTURE 80 percent of our approximately new supplier of active pharmaceutical $7.7 billion spend on goods and ser- ingredients or formulated products to » We strive for full compliance with vices worldwide. Merck purchases determine their acceptability, including applicable laws and regulations. goods and services ranging from the whether the potential supplier oper- » Our major safety goal is zero fatali- active pharmaceutical ingredients and ates in accordance with current Good ties. In addition, we want to reduce intermediates used in manufacturing Manufacturing Practices (cGMPs). As Company-wide recordable and lost- our products, to offi ce furniture, pro- part of these audits, Merck reviews the time injury rates by 15 percent in motional items and supplies, to print- systems that the potential supplier uses 2008 vs. 2007 performance. ing services and waste treatment and to assure the quality of materials it pur- » Another important target is to disposal services. We also work with chases for use in products that it hopes reduce the motor vehicle acci- numerous licensees worldwide who to supply to Merck. Only if the supplier dent rate by 10 percent in 2008 vs. market and distribute our products. meets Merck’s stringent criteria, which 2007 performance. include a review of the fi rm’s regula- Merck follows a global sourcing and tory inspection and outcome history, » We want to enhance our audit, self relationship management strategy will Merck then negotiate a commercial assessment and inspection programs, for materials and services worldwide agreement with that supplier. Our con- and also the safety and environment with a special focus on the top suppli- tracts with suppliers also stipulate that training for S&E professionals, opera- ers of critical goods and services. We Merck will periodically audit the facili- tions managers and employees. maintain strict quality, environmental, ties in which they conduct manufactur- ethical, health and safety, and labor ing for Merck further to ensure that the standards in our own operations — and supplier consistently meets cGMPs. we insist on responsible standards from our suppliers and licensees as well. SUPPLY CHAIN MANAGEMENT segments of the business community. PERFORMANCE DATA SUMMARY 2005–2007 This includes minority-, women-, vet- eran-, service-disabled-, HUBZONE and gay- and lesbian-owned business 2007 2006 2005 enterprises. We believe that working Percentage of completed Pharmaceutical 54 N/A N/A* with qualifi ed suppliers from diverse Supply Chain Initiative (PSCI) surveys received (64) segments of the business community from existing manufacturers (#) supports our business objectives and the economic development in the diverse Percentage of facility visits conducted 100 N/A N/A* communities that we serve. In 2008, of potential external manufacturers of (19) Merck expanded our supplier diver- new business (#) sity program to the United Kingdom and Canada. Percentage spending on diverse suppliers 12 8 5 SUPPLY CHAIN MANAGEMENT Percentage of Merck procurement employees 100 100 N/R TARGETS AND PRIORITIES trained in supplier diversity FOR THE FUTURE

* PSCI survey ﬁrst implemented in 2007. » 100 percent completion of pre- Update to full-year 2007 data: As of mid-2008, we have inspected 32 (100 percent) external manufacturers for new business proposed since the beginning of 2007 for any major safety, selection Detailed Suppliers Ethical environmental or human rights issues. We disqualiﬁed certain potential suppliers because of EHS Assessment by potential suppliers of issues during this 18-month time period. Merck had received completed PSCI surveys from approximately 85 percent of existing external manufacturer suppliers and is actively following-up new business globally by 2010. with the remaining companies. » Annual supplier supplemental ethics standards training for each procurement employee by 2010. In addition to audits and inspections, treated with respect and dignity, and that » 100 percent completion of Pharmaceutical Merck performs quality tests on all manufacturing processes are safe and Supply Chain Initiative (PSCI) survey active pharmaceutical ingredients that environmentally responsible. We believe by existing external suppliers of phar- the Company purchases as part of our that respect for these principles will help maceutical intermediates and com- overall supplier qualifi cation process, assure the quality and continuity of sup- pounds by end of 2008. and performs further tests during sub- ply, as well as the conduct by our suppli- » We plan to develop formal mitiga- sequent stages of manufacturing. Merck ers of ethical business practices. tion plans for those items sourced also performs quality tests on all formu- externally that are critical to ensuring lated products before we release them ENSURING CONTINUITY OF SUPPLY our ability to supply fi nished product to the marketplace. These quality tests Millions of people worldwide depend on without interruption. Our target is to are performed to assure materials meet our medicines and vaccines every day, have plans for 20 percent, 60 percent appropriate specifi cations. many of which need to be available with- and 100 percent of suppliers that fi t out interruption. Therefore, we employ within this category for 2008, 2009 ENSURING RESPONSIBLE numerous mechanisms to minimize the and 2010, respectively. ENVIRONMENTAL, LABOR AND HUMAN risk of supply interruption among our RIGHTS STANDARDS AMONG EXTERNAL critical external suppliers, including risk » In 2008, Merck’s CEO and Executive MANUFACTURERS In 2006, Merck was mitigation plans and alternative sourcing Committee signed a supplier diver- one of the fi ve initial companies publicly arrangements where feasible. sity commitment to reach 14 percent to support the Pharmaceutical Industry in 2008 and 17 percent by 2010 as a Principles for Responsible Supply Chain SUPPLIER DIVERSITY With our Supplier percentage of total applicable spend in 51 Management, designed to ensure that Diversity Program, we cast a wide net the United States and Puerto Rico. working conditions in the pharmaceuti- in our search for talent, seeking quali- To reach these aggressive goals, sup- cal supply chain are safe, that workers are fi ed suppliers, large and small, from all plier diversity is now a corporate objective for all divisions.

MORE INFORMATION ONLINE

You can ﬁ nd more information on the issues covered in this section, as well as on the following topics at www.merck.com/cr/basics. » Corporate governance, including compliance, risk manage- Groups, and other major diversity initiatives including the ment, disclosures, and other governance functions, including One Merck Diversity and Inclusion Award safety & environment, patient safety and our research and » Results of Merck’s global survey of ﬂ exible working practices development practices » Additional employee safety information on motor vehicle » Merck’s Diversity and Work Environment Center of safety, ergonomics, process safety and industrial hygiene, as Excellence, Global Constituency Groups, Employee Resource well as additional years of safety data

ENDNOTES

1 www.merck.com/about/corporate 3 For further details, see p. 70 of Merck’s 4 www.merck.com/newsroom/press_ governance/docs/policy_board.pdf 2008 Proxy Statement. releases/corporate/2007_0424.html 2 For further details, see p. 75 of Merck’s 2008 Proxy Statement. Advocacy and Outreach Relating to our Corporate Responsibilities

Public policy advocacy and engagement on critical issues are major elements of our CR approach and practices.

We engage with many stakeholders both to raise awareness and inform policy debates and to work collaboratively to address societal challenges. This engagement is fundamental to our understanding of—and developing responses to—society’s expectations of our Company. It guides our business strategy and decisions and we believe it also enhances understanding of—and trust in—our business.

Merck has pioneered far-reaching programs and partnerships, the results of which demonstrate that working together can achieve more than individual stakeholders working alone to help further economic development and promote a healthier society.

accordance with our Code of Conduct, communication of policy positions on OUR ADVOCACY AND and is focused on the following key areas: major issues based on input from internal business leaders and external stake- 1 Improving patient access to medicines PUBLIC POLICIES holders. Merck’s Global Public Policy and vaccines based on the principles Network helps to develop and imple- of innovation, competition and con- Merck believes it is our responsi- ment our policy program. This Network sumer choice; 52 bility to work with policy makers includes business managers, policy prac- and other stakeholders—including 2 Protection of intellectual property titioners and other employees worldwide payors, international organizations, rights as a core component of our with responsibility for external aff airs. nongovernmental organizations and ability to innovate; We manage stakeholder engagement and other third parties —to explain our 3 Creating and maintaining a fair, pre- advocacy activities at the regional, coun- views ethically and transparently, try or local level, with active involve- provide analyses of the issues at stake, dictable and evidence-based system of research and product regulation; and ment from regional presidents, country and share information that can help managing directors and both regional clarify complex topics and dispel 4 Establishing global operating climates and country policy staff . Merck posts on misconceptions. We monitor policy that are transparent and conducive to our website our position statements on developments and contribute to free trade and free-market principles. key public policy issues.3 numerous debates at local, national, regional and global levels. We seek GOVERNANCE OF MERCK’S WORKING WITH INDUSTRY to remain consistent and transpar- ADVOCACY AND PUBLIC POLICY AND TRADE ASSOCIATIONS ent about the policies for which we Merck’s Executive Committee has Merck is a member of numerous industry advocate, recognizing the complexity overall governing responsibility for and trade groups. We work with these and sophistication of a policy land- Merck’s public policy program, guided groups because they represent the phar- scape that often does not lend itself to by the Board Committee on Public maceutical industry and business com- 2 simple explanations. We believe that Policy and Social Responsibility. Our munity in debates led by governments our positions support the sustainabil- policy priorities are set by senior man- and other stakeholders, and because they ity of our business and are benefi cial agement, including presidents respon- are important in helping to reach indus- 1 to society as a whole. sible for geographic regions. Merck’s try consensus on policy issues. At times Global Public Policy Leadership Team, we may not share the views of our peers Merck’s advocacy approach supports the headed by the Vice President of Global or associations. Merck representatives on mission of our business, is conducted in Public Policy, leads the development and the boards and committees of industry The credibility of [the pharmaceutical] industry, and in fact, of much of science and medicine, is being called into question. We must restore trust in order to be respected voices in health care policy. We must do this not only for our sake, but for the good of the patients we serve.

Richard T. Clark Merck Chairman, President and Chief Executive Ofﬁ cer, Merck & Co., Inc. Health Affairs Policy Summit, Washington, D.C., November 1, 2007

groups and associations ensure that we including the Safeguarding America’s » Advanced increased access to innovative medicines in voice questions or concerns we may have Pharmaceuticals Act. many countries by supporting bilateral and multilateral about policy or related activities. We » Supported increased federal and state trade agreements promoting more open and transparent may even recuse ourselves from related funding for vaccine programs. markets. For example, Merck supports the U.S.-Korea association and industry group activities. Free Trade Agreement, which, if ratifi ed by both coun- » Supported legislation creating an tries, would address discriminatory barriers to innovative In April 2008, Merck Chairman Richard independent entity that conducts pharmaceuticals in South Korea. T. Clark was elected board chairman of science-based comparative eff ective- PhRMA and will serve a one-year term. ness research as a means to achieve » Supported strong intellectual property protections in For a list of the major industry and trade greater value and effi ciencies in the Europe, Asia Pacifi c and Latin America. groups that we work with globally, go to U.S. health care system. » Promoted policies that would support innovation and www.merck.com/cr/advocacy. » Opposed legislation that would legal- competitiveness in Mexico and other Latin America ize the importation of pharmaceuticals countries. For example, Merck supports the Global MAJOR POLICY 5 from certain industrialized countries. Initiative of the Council on Competitiveness. ACTIVITY WORLDWIDE Merck opposes importation because In the past two years, we have contrib- » Supported eff orts to strengthen anti-counterfeiting laws, we believe it would compromise pub- uted to public policy debates on numer- including in the Philippines where we are working with lic trust in the manufacture and dis- ous and varied issues, including: the local and research-based pharmaceutical associations tribution of our medicines and harm to form the Safe Medicines Network to advocate against IN THE UNITED STATES research incentives.4 counterfeit medicines. » Supported the Physician Payments Sunshine Act legislation to create a INTERNATIONALLY POLITICAL CONTRIBUTIONS AND SPENDING uniform, national program for disclos- » Promoted health care system reform, Merck has been working with the Center for Political ing certain fi nancial relations between including initiatives to address pric- Accountability (CPA) in the past year on the development industry and physicians. ing and reimbursement conditions for of best practices related to spending for political activi- innovative products in the European 6 » Supported eff orts to strengthen ties. We believe we are generally compliant in all material Union, Asia Pacifi c and Latin America. anti-counterfeiting laws, respects with all major provisions of the CPA’s “Model Code of Conduct for Corporate Political Spending” (see table on page 54). The Merck Board of Directors recognizes that ENSURING ETHICAL INTERACTIONS WITH GOVERNMENT OFFICIALS WORLDWIDE the use of Company resources in the political process is an important issue for shareholders. We monitor our contribu- All Merck employees are required to adhere to Merck’s high standards and act tions to political candidates closely, in accordance with cor- with integrity when interacting with government agents or engaging in any conduct porate policy. We seek approval by the Company’s General related to governmental health care programs. This includes ensuring that all Counsel and report our spending regularly to the Board.7 information provided to governmental entities is complete and accurate to the best of To improve access to information about Merck’s corporate the employee’s knowledge and belief. Merck’s standards for governing interactions political contributions in the United States, Merck annually with government offi cials include guidelines concerning the U.S. Foreign Corrupt posts on our website our contributions categorized by state, Practices Act to ensure employees strictly adhere to Company policies and candidate and amount. Merck also discloses any contribu- procedures, local laws and U.S. laws when interacting with government offi cials, tions to committees known as 527 organizations.8 their family members and their representatives. The standards state: PRIORITIES AND TARGETS “Merck’s Ethical Business Practices Policy and these standards prohibit payments, » In 2008, Merck plans to begin disclosing on our website including payments of Company funds or other assets, directly or indirectly, to government the portion of dues that major U.S.-based trade associa- offi cials (including Foreign Offi cials) or persons acting on their behalf for the purpose of tions report to us as being used for advocacy and/or politi- improperly infl uencing decisions or actions respecting Merck’s business… Failure by cal activity purposes where dues are greater than $50,000.9 employees to comply with these standards may have severe internal consequences, up to and including termination from the Company, as well as external consequences, including » In 2009, Merck plans to begin to include on our website all possible criminal prosecution and/or signifi cant fi nes.” dollars spent globally on political campaign contributions. » In 2009, Merck plans to report externally on adherence As part of Merck’s global ethics and compliance training, in 2008, we are rolling out to ethical business practices related to corporate political a new e-learning course on anticorruption and bribery designed to help employees spending, as recommended in the model code of conduct understand our corporate policy on ethical business practices and compliance with from the CPA. the U.S. Foreign Corrupt Practices Act. CENTER FOR POLITICAL ACCOUNTABILITY10 MERCK IN MODEL CODE OF CONDUCT FOR CORPORATE POLITICAL SPENDING COMPLIANCE

1 Political spending shall reﬂect the company’s interests and not those of its individual ofﬁcers or directors.

The company will disclose publicly all expenditures of corporate funds on political activities. The 2 disclosure will include regular reports on the company’s website.

The company will disclose dues and other payments made to trade associations and other tax-exempt organizations that are or that it anticipates will be used for political expenditures. The disclosures shall 3 describe the political activities undertaken. In the case of trade association payments, the disclosures will * involve some element of pro-rating of the company’s payments that are or will be used for political purposes.

Company disclosure of political expenditures shall include direct and indirect political contributions (including in-kind contributions) to candidates, political parties or political organizations; independent 4 expenditures; electioneering communications on behalf of a federal, state or local candidate; and the use of company time and resources for political activity.

The board of directors or a committee of the board shall monitor the company’s political spending, † 5 receive regular reports from corporate ofﬁcers responsible for the spending, supervise policies and procedures regulating the spending, and review the purpose and beneﬁts of the expenditures.

All corporate political expenditures must receive prior written approval from the General Counsel ‡ 6 or Legal Department, and the company shall identify all senior management ofﬁcials responsible for approving corporate political expenditures.

In general, the company will follow a preferred policy of making its political expenditures directly rather than through third party groups. In the event that the company is unable to exercise direct control, 7 the company will monitor the use of its dues or payments to other organizations for political purposes to assure consistency with the company’s stated policies, practices, values and long-term interests.

8 No contribution will be given in anticipation of, in recognition of, or in return for an ofﬁcial act.

Employees will not be reimbursed directly or through compensation increases for personal political 9 contributions or expenses.

The company will not pressure or coerce employees to make personal political expenditures or take any 10 retaliatory action against employees who do not.

Future 11 The company shall report annually on its website on its adherence to its code for corporate political spending. Target

* Disclosure of dues for advocacy purposes for major U.S. national and regional associations where dues are > $50,000. Links on our website to these organizations provide information on political activities undertaken. 54 † Merck has been providing annual reports on its corporate political spending globally (where allowed by law) to its Board of Directors since 1996; starting in 1Q 2009, we will begin to report to the Board the portion of dues that major U.S.-based trade associations report to us as being used for advocacy and/or political activities. ‡ Excluding trade association funds. Merck lists titles of senior management ofﬁcials on our website.

ADVOCACY PERFORMANCE DATA SUMMARY 2005–2007

2007 2006 2005

Corporate political contributions—United States, Australia, US: 470,625 US: 611,975 US: 337,140 Canada ($US)*, † AUS: 19,195 AUS: 20,292 AUS: 12,137 CAN: 58,396 CAN: 45,765 CAN: 46,700

Portion of dues that major U.S.-based trade associations report 6.9M paid N/A N/A to us as being used for advocacy and/or political activities in the to 8 groups U.S. ($US)‡ where dues are > $50,000

Compliance with political contribution evaluation criteria used by 10 of 11 N/A N/A the Center for Political Accountability§ principles

* Totals reﬂect corporate contributions; employee contributions through the Merck Political Action Committee are not included. † Political contributions in the United States, which are for state candidates, are always much greater in even-numbered calendar years, because that is when the overwhelming number of states hold their elections for state legislatures and governors. ‡ Because the U.S. tax law that requires this reporting does not apply outside the United States, trade associations that are not subject to this do not provide breakouts of lobbying expenditures from membership dues. Thus, at this time, Merck is unable to report these data for such lobbying expenses in other countries. § Merck was in compliance with 10 of the 11 Center for Political Accountability criteria. We plan to address the 11th principle —The Company shall report annually on our website on adherence to our code for corporate political spending—in 2009. MERCK’S MANY AND DIVERSE STAKEHOLDERS ENGAGING WITH OUR STAKEHOLDER GROUPS PATIENTS AND THEIR FAMILIES Everything we do is ultimately for the patient. We work hard to ensure that our innovative products meet the health needs of patients.

Merck recognizes that the sustainability DOCTORS, HEALTH CARE PROFESSIONALS AND SCIENTISTS We aim to inform of our business is dependent upon our doctors and other health care professionals in a balanced way about our products and awareness, understanding and responses about our ongoing research efforts. During the course of our business we interact daily to society’s expectations of our Company with physicians, health care professionals and researchers on research and clinical across many dimensions of our global trials, to share information and to gain new perspectives on needs and opportunities. activities, including our products and their eff ectiveness and safety profi les, PAYORS We are aware of payors’ concerns about rising health care costs and how we make those products available, limited budgets, and of the debates on how to make medicines and vaccines more employment and ethical business prac- affordable and accessible. We work with payors worldwide to ensure they under- tices, and our societal contributions and stand that the price of our products refl ect the value of those products and we also general impact. From discovery and develop programs with payors to ensure our products can reach the people who development to distribution, our engage- need them most. ment with stakeholders guides our business strategy and decisions. We believe it GOVERNMENTS, MULTILATERAL ORGANIZATIONS AND REGULATORS We are also enhances understanding of —and committed to conducting our business according to the letter and spirit of the law and trust in —our business. regulations as well as the various standards of business practice that we endorse. When laws or regulations do not exist or are inadequate, we have created our own As with any relationship, a lack of com- standards and used these to guide our practices. We work with policy makers, legis- mitment can lead to distrust. This can be lators, multilateral organizations and governments worldwide to ensure that policy damaging and diffi cult to restore. But by and regulatory environments foster patient access to medicines and vaccines, and actively engaging with our stakeholders, that they are conducive to ethical business practices, science and innovation. taking responsible actions and maintaining our commitments, we believe we can SHAREHOLDERS We aim to create shareholder value by identifying opportuni- build trust and support. Over time, this ties to meet customer needs, and by managing our business responsibly to achieve can reduce fi nancial and other enterprise superior fi nancial results. In 2008, Merck’s investor relations team was named most risks and costs. Therefore, when we shareholder-friendly in the pharmaceutical sector by Institutional Investor magazine, decide to engage, we see the relationship a direct result of our efforts to foster dialogue and interaction with our shareholders. as long-term. We engage stakeholders by: COMMUNITIES WHERE WE OPERATE We strive to make a positive contribution SUPPORTING In cases where multi- to the communities where we work and on which we depend, through safe and stakeholder partnerships are not fea- responsible operations that have positive economic impacts, and socially through sible or appropriate, Merck provides our philanthropy. fi nancial and technical support to appropriate stakeholders. ISSUE EXPERTS IN ACADEME, NONGOVERNMENTAL ORGANIZATIONS AND MULTILATERAL ORGANIZATIONS We work with many organizations and individu- DIALOGUE AND ADVOCACY We engage als both to inform debates on pressing issues and to address societal challenges in actively in dialogue with numerous stake- partnership, especially for improving global health, but also in such areas as health holders with varying perspectives and and science education, environmental protection and ethical business practices. opinions to inform debates constructively and to foster progress toward solutions ENVIRONMENTAL STAKEHOLDERS We work hard to manage our environmental that benefi t society more broadly. footprint and to promote responsible environmental practices within the Company, 55 by our partners and throughout our supply chain. FINANCIAL SUPPORT WITH INDEPENDENT EMPLOYEES We want our workplaces to be productive, safe and professional so THIRD-PARTY GROUPS that all employees can offer their best. To this end, we foster positive working envi- We strongly believe that our relationships ronments supported by teamwork, embracing diversity and inclusion, and encour- with the medical community are vital to aging professional development. the advancement of science, medicine and the well-being of patients. Discovering, INVESTORS COMMITTED TO SUSTAINABLE INVESTING A growing number of inves- developing and bringing innovative vac- tors are considering companies’ environmental, social and governance performance cines and medicines to the market is our in their investment decisions. Merck seeks to engage with these investors in open fi rst responsibility. That mission cannot be and transparent dialogue. As of August 2008, Merck was listed on the FTSE4Good accomplished without sustained relation- Index, KLD Global Sustainability Index and the Access to Medicines Index. ships with a wide range of external orga- We seek out the best suppliers and part- nizations and health care providers. As we SUPPLIERS AND BUSINESS PARTNERS ners with whom to research, develop, produce and distribute our medicines and ask them to work with us, this work nor- vaccines. We strive to foster basic protections in labor, employment, health and mally needs to be compensated or funded. safety, ethics, diversity and protection of the environment throughout our supply chain and we are committed to working with our partners to ensure that our policies FUTURE COMMITMENTS on corporate responsibility have broader impact. » In an eff ort to increase transparency in how we operate, in October 2008, TRADE AND INDUSTRY ASSOCIATIONS Merck engages with stakeholders through Merck plans to begin reporting grants numerous organizations in which we are members. Within these groups, we aim by Merck’s Global Human Health divi- to inform related debates in ways that are constructive and that ultimately foster sion to U.S. organizations in support improved access to medicines and vaccines globally. of independent accredited educational programs for health care professionals. » It is our intent to disclose over time small collaborations focused on distribut- our fi nancial support to medical, MERCK AND PUBLIC/ ing one product to larger entities fi ghting a scientifi c and patient organizations global disease. Our objectives vary also; for globally. (For a list of organiza- PRIVATE PARTNERSHIPS example, with the Medicines for Malaria tions by type we will disclose, go to Venture we want to develop a product; Many of the problems faced by society, www.merck.com/cr/fi nancialsup- with the Merck MECTIZAN Donation particularly in developing countries, are portprinciples). We are beginning Program we donate a product to treat river so daunting and the fi nancial resources in the United States as this is where blindness; with the African Comprehensive required so substantial that new ways the largest amount of our support is HIV/AIDS Partnerships we strengthen of working are essential. Sustainable directed. In 1Q 2009, Merck plans national and local health services; and with solutions to societal challenges such to begin reporting other grants/pay- the Merck Institute for Science Education as disease, lack of education, environments to U.S. organizations as well as our focus is on increasing the number of mental problems and corruption must grants made in Europe and Canada. students electing to study science. come from approaches that leverage the Information provided on our website expertise of all stakeholders. Merck has will include the name of the organiza- In the past, Merck, like others in the pri- pioneered far-reaching programs and tion, along with a description of the vate sector, might have just written a check partnerships, the results of which demon- activity and the amount of the grant and taken a more passive role. Today, we strate that working together can achieve provided. Merck will update this list feel it is important to go beyond traditional more than individual partners alone, and quarterly in the United States, and philanthropy and to be far more involved truly make a sustainable diff erence. annually for ex-U.S. jurisdictions. We in the development, implementation, will continue to expand our disclosure management and evaluation of partnership Merck has many decades of experience into other regions as we work to build programs to address critical societal issues, in developing public/private partnerships the infrastructure and systems neces- off ering insights and capabilities that have (PPPs), especially those focused on improv- sary to allow us to report this infor- worked well in the private sector to tackle ing global health, but also on health and mation on a global basis. analogous problems. In our partnerships, science education, environmental protec- Merck provides expertise such as in R&D, » In addition, in the United States, Merck tion and ethical business practices. Our technology, manufacturing, distribution, has made a commitment to disclose partnerships include a variety of initiatives, marketing and management. In some cases payments of $500 or more made to U.S. with diverse arrangements and participants, we also make a product or service available nonprofi t organizations. The Merck various legal statuses and modes of gover- to the developing world through donations Company Foundation will disclose their nance and management, assorted priori- or, more sustainably, at an aff ordable price. grants separately starting in early 2009 ties and contributions by participants, and at www.merck.com/cr/philanthropy. many diff erent impacts. They range from Although our partnerships are wide- MERCK’S PRINCIPLES FOR PROVIDING FINANCIAL SUPPORT TO MEDICAL, ranging and diverse, Merck’s approach SCIENTIFIC AND PATIENT ORGANIZATIONS is the same, stemming from decades of experience: We engage with partners INDEPENDENCE Merck respects the independence of medical, scientifi c and patient who share common goals —even though organizations and refrains from using our fi nancial support to infl uence the policies we may not agree on everything. of organizations or to promote specifi c medicines. To support independence, Merck will support only organizations that obtain funding from a variety of sources. PARTNERSHIP PRIORITIES TRANSPARENCY Merck supports transparency of our interactions with medical, FOR THE FUTURE scientifi c and patient organizations including fi nancial support that we provide them. » We are working to ensure that all of We believe this is an important step in building public trust with both Merck and the major PPPs in which we partici- those with whom we work. Making public our support also enhances the visibility of pate have clear annual performance Merck’s commitment to help advance health and science. requirements, where possible linked to 56 the Millennium Development Goals. COMPLIANCE WITH LOCAL LAWS In providing fi nancial support to medical, scientifi c By 2010, we want to be able to report and patient organizations, Merck will comply with all relevant local laws and regulations. on the percentage of PPPs that report annually against such requirements.

MORE INFORMATION ONLINE

You can ﬁ nd more information on the issues covered in this section, as well as on the following topics at www.merck.com/cr/outreach. » Role of Merck Government Affairs professionals » Merck Action Network and Merck Employees Political Action Committee » Merck’s corporate political contributions for 2007 » Program on Pharmaceutical Policy Issues » Portion of dues that major U.S.-based trade associations report to us as being used for advocacy and/or » Principles for stakeholder engagement and working with political activities patient groups

ENDNOTES

1 Nelson J. CSR and Public Policy: New 4 www.merck.com/about/public_policy/ 9 www.merck.com/about/public_policy/ Forms of Engagement between Business importation/home.html political_contributions/home.html and Government. John F. Kennedy School of 5 www.compete.org/about-us/initiatives/gii 10 Freed BF, Carroll J. Open Windows: How Government, Harvard University, Working Codes of Conduct Regulate Corporate Paper 45; May 2008 (available at: www.hks. 6 www.politicalaccountability.net Political Spending and a Model Code harvard.edu/m-rcbg/CSRI/publications/ 7 www.merck.com/about/public_policy/ to Protect Company Interests and workingpaper_45_nelson.pdf) political_contributions/home.html Shareholder Value. Center for Political 2 www.merck.com/about/corporate Accountability, Washington, D.C., 2007 8 www.merck.com/about/public_policy/ governance/docs/charter_pubsocres.pdf (available at: www.politicalaccountability. docs/2007_corporate_political_ net/ﬁ les/OpenWindows03-22-07.pdf 3 www.merck.com/about/public_policy contributions.pdf Merck’s Approach to Corporate Responsibility

Merck’s vision of CR is founded upon Merck’s values and an approach to business articulated by our founder’s son George W. Merck in 1950:

“We try never to forget that medicine is for the people. It is not for the proﬁ ts. The proﬁ ts follow, and if we have remembered that, they have never failed to appear. The better we have remembered it, the larger they have been….

… How can we bring the best of medicine to each and every person?… We cannot step aside and say that we have achieved our goal by inventing a new drug or a new way by which to treat presently incurable diseases… We cannot rest till the way has been found, with our help, to bring our ﬁ nest achievements to everyone.”1

» By conducting our business with high OUR APPROACH ethical standards MATERIALITY » By engaging in activities to expand ASSESSMENT PROCESS George W. Merck’s philosophy remains access to quality health care around the foundation of our approach to CR the world In 2008, Merck conducted a mate- today. Although Merck has long operated » By making a positive and sustainable riality assessment, based, in part, on 57 by these beliefs, our processes for manag- 3 impact on the communities and soci- standards for sustainability reporting, ing some aspects of CR have not always eties where we live and work that included discussions with both been formal. We are changing that. We internal and external stakeholders to recognize that managing social, ethical » By meeting the needs of our employ- identify those environmental, social and environmental issues well involves ees in a fair and just manner and governance (ESG) issues of great- everyone at Merck. For this reason we est signifi cance to multiple stakehold- have established new Company-wide Integrated into Merck’s approach is a ers and to Merck’s future success, and processes for identifying what CR issues commitment to transparency and con- those that we have the ability to con- are important to our business success and structive engagement with stakeholders. trol or infl uence. to our stakeholders, and for more for- We recognize that issues that matter mally managing those issues in terms of to key stakeholders can very quickly To identify the key ESG issues, we fi rst performance and targets. become material issues for our share- compiled information on economic, holders. Therefore, we seek to balance environmental, governance and social our responsibilities in ways that support issues that were relevant to Merck’s busi- our fi duciary duty to generate long-term ness and stakeholders. To this end, we CR PRINCIPLES shareholder value, while also considering reviewed numerous sources, including: the needs of other stakeholders.2 Merck’s core business is to discover and » Merck corporate plans, objectives develop new medicines and vaccines that and strategies make a diff erence in people’s lives. Our » Company policies and initiatives commitment to CR extends to how we » Employee surveys and other inputs achieve this goal: from employees MATERIALITY APPROACH IS THIS ISSUE MATERIAL AND SHOULD WE REPORT ON IT?

We believe our new approach to managing our CR will help to: MERCK CANNOT MERCK CANNOT INFLUENCE INFLUENCE » Set CR aspirations » Measure Merck performance in numerous areas across MERCK CAN MERCK CAN the Company INFLUENCE INFLUENCE » Inform Company understanding and develop consensus on complex issues

MERCK CANNOT MERCK CANNOT » Identify and clarify the key issues INFLUENCE INFLUENCE for us and deﬁ ne the scope of the Company’s responsibility for these issues and possible solutions, and

MERCK CAN MERCK CAN » Inspire our employees INCREASING STAKEHOLDERS TO CONCERN INFLUENCE INFLUENCE

INCREASING IMPACT ON MERCK’S ABILITY TO EXECUTE BUSINESS STRATEGY

Issues in these boxes are material and the focus of reporting Issues in these boxes are optional for reporting Issues in these boxes are not currently covered by reporting

» Customer feedback obtained through following broad issues are of greatest sig- process will evolve as we learn from focus groups and other methods nifi cance to Merck stakeholders and pose experience and stakeholder feedback. » Shareholder resolutions and other both risks and opportunities to Merck’s feedback received through ongoing future success: In addition to the key issues, Merck recognizes that many other ESG issues dialogue with shareholders a) Researching and developing new are of interest to stakeholders. For this medicines and vaccines that address » Input from investors and investor reason, Merck will continue to report unmet needs groups committed to sustainable and communicate on additional ESG investing, partners, nongovernmental b) Improving access to medicines, vac- issues on our CR website and through organizations, suppliers and cines and health care dialogue with individual stakeholders. other stakeholders c) Ensuring confi dence in the safety and » Media coverage quality of our products EXTERNAL STAKEHOLDER REVIEW OF OUR REPORTING APPROACH In » Stakeholder feedback on prior d) Conducting ourselves ethically June–July 2008, Merck spoke with more CR reporting 58 and transparently than 20 external stakeholders represent- » Industry benchmarking e) Managing our environmental footprint ing a variety of constituencies. In one- » The Global Reporting Initiative (GRI), on-one discussions, we talked about our Access to Medicines Index and other Merck is committed to increasing the planned approach to reporting, Merck’s guidelines transparency of our reporting in terms of materiality assessment process and the the challenges we face, our strategy and broad material headings we had identi- Merck’s Corporate Responsibility our performance with respect to each of fi ed. We also shared with them a draft Council, a senior, cross-functional group these fi ve issues. Following this process, outline of our CR report, and our ideas with responsibility for the governance of Merck’s CR Council began a systematic for key performance indicators, metrics the Company’s CR, assessed these issues process to develop specifi c goals, targets and targets. based on three parameters: 1) impact on and key performance indicators (KPIs) Merck’s ability to achieve our business with which to measure Merck’s perfor- Our goal in these discussions was to strategy;4 2) level of concern to external mance in each of these areas. We aim listen to our stakeholders’ perspectives stakeholders; and 3) the degree to which to review them annually with Merck’s and recommendations. We have refl ected Merck can infl uence the topic or issue. Executive Committee and Board of their comments where feasible and appro- We weighted issues raised based on their Directors, beginning in 2008. Merck is priate in our website and CR report. We position on the chart and we combined also committed to disclosing this infor- will use the insights gained through these this assessment with weighted analyses of mation through its annual CR Report. and ongoing discussions with our stake- media coverage, shareholder questions, holders to inform future reporting. For a and the presence of the issues in the We will continue to use the materiality list of the stakeholders we spoke with and GRI and other relevant indices. From process to refi ne our key CR issues in the changes we made in our reporting, go this exercise we determined that the future reports, and anticipate that our to www.merck.com/cr/externalinput. THE CR COUNCIL In addition to the issues submitted by shareholders for CR GOVERNANCE OCR, Merck has established the CR inclusion in the Company’s proxy mate- Council, a formal governance body for rials and also reviews Merck’s public AND PERFORMANCE Merck’s CR approach, the membership policy positions and strategies.8 MANAGEMENT of which includes senior Merck leaders across all divisions and major functions.6 In addition to the Board Committee on In 2007–2008, Merck’s governance of Public Policy and Social responsibility, CR began to change, with the goal EXECUTIVE COMMITTEE Merck’s other Board committees oversee aspects of improving integration of CR-related Executive Committee includes nine of CR-related issues, such as corporate processes and increasing accountability senior leaders representing the Company governance, audit and compliance and for performance across the Company. divisions and corporate functions. It is executive compensation.9 headed by Merck Chairman, President THE OFFICE OF CORPORATE and CEO Richard T. Clark. With RESPONSIBILITY Merck’s CR per- respect to CR, the Executive Committee formance is dependent on all Merck is responsible for reviewing Merck’s CR MERCK’S APPROACH TO employees and functions—from Merck’s approach and related Company perfor- PHILANTHROPY Chairman and Executive Committee, mance, for approving the CR report and through each business unit, subsidiary, for ensuring that CR matters are consid- Philanthropy is a major element of manufacturing plant and research labo- 7 ered in business decisions. Merck’s commitment to CR. Through ratory. All of us at Merck are aware of our philanthropic programs we have our ethical responsibilities through Our BOARD COMMITTEE ON PUBLIC POLICY the ability to make a positive impact Values and Standards—Merck’s Code of AND SOCIAL RESPONSIBILITY Five on health, science and quality of life Conduct.5 But we recognize that a cen- independent directors comprise Merck’s issues facing the world’s communi- tral coordinating function is necessary Board Committee on Public Policy ties. We believe that improving global to optimize our performance, man- and Social Responsibility. Chaired by health is one of the most responsible aged through the Offi ce of Corporate Professor Johnnetta Cole, President and important contributions we can Responsibility (OCR). The OCR is Emerita of Spelman College and make to societies around the world. responsible for coordinating the develop- Bennett College for Women, the group ment, implementation and communica- is responsible for advising the Board of Merck’s philanthropic investments and tions of Merck’s global CR approach and Directors and management on Company program portfolio are guided by several policy, and, with the CR Council, for policies and practices that pertain to the key principles. We seek to: reporting on Merck’s CR performance. Company’s responsibilities as a global The OCR does this in parallel with its corporate citizen, our special obligations » Address social issues that matter to stakeholder engagement program. as a pharmaceutical company whose Merck’s business and our stakeholders products and services aff ect health and » Collaborate eff ectively with key part- Since its inception in March 2007, the quality of life around the world, and ners for optimal impact and success OCR has brought new focus and coher- our commitment to the highest stan- » Leverage not only cash and prod- ence to the Company’s approach to CR dards of ethics and integrity in all its uct donations but also the knowl- and has established more systematic dealings. Among its responsibilities, the edge and technical expertise across processes for data gathering, analysis Committee makes recommendations our Company and collaborations. We expect the work to the Board on proposals that relate to of the OCR to support the Company’s public policy and/or social responsibility » Measure and manage our progress in business strategy. The OCR is account- meeting societies’ needs able for producing an annual CR report. 59

WE MANAGE OUR PHILANTHROPIC GIVING THROUGH THREE MECHANISMS WITHIN THE OFFICE OF CORPORATE RESPONSIBILITY

» OFFICE OF CONTRIBUTIONS the Offi ce of Contributions coordi- » THE MERCK COMPANY FOUNDATION Supports charitable work that con- nates Merck’s response to disasters A U.S.-based private charitable foun- tributes not only to the health and throughout the world. dation funded entirely by Merck. For well-being of people around the world, more than 50 years, the Foundation » GLOBAL HEALTH PARTNERSHIPS but also to Merck employees, our has served as the Company’s chief Engages with a range of stake- neighbors and others in communities source of funding support to quali- holders on initiatives that build health where employees live and work and fi ed nonprofi t charitable and philan- care capacity and provide Merck’s where the Company conducts busi- thropic organizations whose initiatives medicines and vaccines free of charge, ness. This is accomplished through address important societal needs primarily in the developing world. The cash donations, the skills and exper- and whose goals are consistent with group coordinates the Merck Medical tise of our employees and through the Merck’s overall mission to enhance Outreach Program, the primary donation of in-kind services. Members the health and well-being of people mechanism through which Merck of the Offi ce of Contributions, along around the world. Since its incep- donates our pharmaceuticals and with other groups within the Offi ce of tion, the Foundation has contributed vaccines for humanitarian assistance Corporate Responsibility, help guide more than $524 million to projects in the developing world and in sup- the strategic direction of Merck’s phil- and partnerships around the world. port of disaster relief and emergency anthropic efforts and, in collaboration Merck’s Board of Directors serve as situations worldwide. Global Health with internal and external partners, the Foundation’s Trustees. Partnerships also manages the Merck participate in the implementation MECTIZAN Donation Program and our of charitable activities. Additionally, HIV and AIDS partnerships. STRATEGY FOR CORPORATE GIVING

In 2007, Merck conducted a comprehensive review of our philanthropic portfolio and giving strategy, which included interviews with more than 130 internal and external individuals who have a common interest in our philanthropic undertakings and the principles and strategies that guide them. This process helped Merck reﬁ ne our approach, leading to the adoption of a new corporate philanthropy strategy in 2008 designed to help increase the effectiveness of Merck’s philanthropy and achieve measurable social impact. The strategy includes ﬁ ve priority areas that will guide the Company’s philanthropic activities:

1) Increasing access to medicines, vaccines and health care for underserved populations. Key initiatives include: » Merck MECTIZAN Donation Program » Merck Medical Outreach Program » Merck Childhood Asthma Network » The Merck Alliance to Reduce Disparities in Diabetes

2) Building health care capacity. Key initiatives include: » The African Comprehensive HIV/AIDS Partnerships » China-MSD HIV/AIDS Partnership » The Merck Vaccine Network–Africa

3) Developing a diverse pool of world-class scientists. Key initiatives include: MERCK RANKED 2ND LARGEST » The Merck Institute for Science Education CORPORATE DONOR » The UNCF/Merck Science Initiative » AAAS/Merck Undergraduate Science Research Program The Chronicle of Philanthropy ranked » The Alliance/Merck Ciencia (science) Hispanic Scholars Program Merck as the second largest corporate donor in the United States in its 2007 4) Promoting a policy environment that supports innovation. Key initiatives include: annual charitable giving survey based » Program on Pharmaceutical Policy Issues on Merck’s 2007 corporate giving. » Ethics Resource Centers Annually since 1999, the Chronicle of Philanthropy has produced a rank- 5) Addressing the critical needs of Merck communities. Key initiatives include: ing, based on charitable giving, of » Champions for the Environment 150 of the largest corporations in the » Disaster Relief United States (as ranked according » Neighbor of Choice Program to annual revenue in Fortune maga- » Partnership for Giving zine’s Fortune 500). Merck has ranked 60 consistently among the top two cor- Employee Giving: Over and above our corporate philanthropy, our employees want porate donors in the United States to contribute to their communities. Merck also encourages that as a way for the in this annual ranking over the past Company to be an integral part of communities worldwide.10 several years.

GOVERNANCE In 2008, the Company Working closely with our partners, we We routinely engage external advisory established the Merck Philanthropy formulate specifi c goals and metrics for boards to help provide oversight and Advisory Council (MPAC) to provide the major initiatives in which we are direction for many of our major initia- senior management oversight, stra- involved, and we track these over time. tives and partnerships. We also commis- tegic counsel and regular review of We have rigorous oversight mechanisms sion third-party evaluations to assess the Merck’s overall corporate philanthropy in place for all of our programs, includ- overall impact of these initiatives, such portfolio. In addition to the MPAC’s ing such major initiatives as the Merck as research performed over a 15-year guidance, our corporate philanthropic Institute for Science Education, the period, fi rst by the Consortium for activities are reviewed regularly by Merck Childhood Asthma Network, Policy Research in Education and sub- Merck’s Executive Committee and the the Merck MECTIZAN Donation sequently by Horizon Research, Inc., to Board Committee on Public Policy and Program, the African Comprehensive evaluate the Merck Institute for Science Social Responsibility. HIV/AIDS Partnerships and the Education.11 China-MSD HIV/AIDS Partnership. MERCK CONTRIBUTIONS AND DONATIONS

DOLLARS (MILLIONS)

2007 62 161 605 $828

2006 58 326 442 $826*

2005 60 542 437 $1,039

2004 58 490 431 $979

2003 54 393 396 $843

2002 58 258 317 $633

2001 57.6 160 283 $500.6

MERCK MEDICAL OUTREACH PROGRAM U.S. PATIENT ASSISTANCE PROGRAM CASH CONTRIBUTIONS†

* Our philanthropic giving decreased after 2005 because of a reduction in the use of Merck's Patient Assistance Program, due mainly to an increasing number of patients with prescription drug coverage, including the Medicare Prescription Drug Program, which began January 1, 2006, and from the removal of ZOCOR® (simvastatin) and PROSCAR® (ﬁnasteride) from the eligible products list in 2007 once patients had broad access to lower-cost generic equivalents. † Total Merck cash contributions are the sum of contributions from The Merck Company Foundation and Merck & Co., Inc.

Additionally, we aim to apply uniform Merck also will continue to imple- us, and enhancing our value and the guidelines and processes in our grant- ment recommendations from a strategic reputation of Merck. making and in the selection of program philanthropy review we conducted in » Building on successes such as the partners. We require our grantees to 2007, including: Merck MECTIZAN Donation submit regular (usually annual) reports » Integrating the guiding principles, Program and the African describing how Merck funds or products values and priorities for Merck’s phi- Comprehensive HIV/AIDS 61 were used and the results achieved. lanthropy into transparent and uni- Partnerships to develop new long- form grantmaking processes. term, multi-stakeholder partner- PRIORITIES AND GOALS FOR THE ships that deliver positive impact » Improving evaluation approaches by FUTURE Merck plans to begin reporting and results. on our website by 1Q 2009 all philan- incorporating performance measurement tools into all programs. thropic grants made through The Merck For further details on our Company Foundation and the Offi ce of » Exploring how best to implement a philanthropy approach, go to Contributions. Information provided on more formal and global volunteerism www.merck.com/cr/philanthropy. our website will include the name of the strategy that will benefi t communities recipient organization, program name/ and help develop our employees. description, and the amount of the grant » Enabling more in-depth relation- provided. Merck will update this list ships with organizations and partners quarterly. who share a common interest with

ENDNOTES

1 www.merck.com/newsroom/executive_ 4 For details on business strategy, see: 8 www.merck.com/about/corporate speeches/120150.html http://www.merck.com/newsroom/ governance/docs/charter_pubsocres.pdf executive_speeches/2007_1211.html 2 www.merck.com/cr/principles 9 www.merck.com/about/corporate 5 www.merck.com/about/conduct.html governance/committees.html 3 For example, the materiality standard in the GRI Reporting Guidelines available 6 www.merck.com/cr/crgovernance 10 www.merck.com/cr/employeegiving at www.globalreporting.org/NR/ 7 www.merck.com/about/executive_ rdonlyres/ED9E9B36-AB54-4DE1-BFF2- committee/home.html 5F735235CA44/0/G3_GuidelinesENU.pdf KEY PERFORMANCE INDICATORS

2007 2006 2005

Economic indicators Sales ($USM) 24,197.7 22,636.0 22,011.9 Annual cash dividend paid per share ($US) 1.52 1.52 1.52 Global tax expense as reported on income statement ($USM)[a] 95.3 1,787.6 2,732 Researching new medicines and vaccines to address unmet needs Merck’s investment in R&D programs ($US)[b] 4.9B 4.8B 3.8B Number of new products approved (Number of compounds in the 2 (49) 5 (57) 2 (58) pipeline—Phases I–III plus under regulatory review) % of top 20 global burdens of illness addressed by our products and 60 N/R N/R pipeline (as defi ned by WHO and excluding accidents, premature birth and self-infl icted injuries) Phase II–V clinical trials conducted (in number of countries) 58 (54) 50 (49) N/R Manuscripts of clinical trial results and related papers submitted 172 172 N/R to peer-reviewed journals Improving access to medicines, vaccines and health care Number of Merck products for which not-for-profi t prices are 6 2 2 offered to least developed countries Number of patients on Merck ARV therapy—all formulations, 763,118 (91) 701,391 (93) N/D all products (% in developing world) % of total patients on Merck ARVs estimated to be children taking 15 19 N/D pediatric formulations of Merck’s ARVs Number of countries where Merck has committed to no-profi t 72 N/R N/R prices for ROTATEQ and GARDASIL Number of low and middle income countries using Merck’s vaccines 11 N/R N/R in their public sectors Number of country registrations of GARDASIL and ROTATEQ globally 62 (164) 101 (102) 1 (and cumulative) Product donations ($USM) (% in the developing world)[c] 766 (79) 768 (58) 979 (45) Millions of treatments approved for river blindness through the 128 118 114 MECTIZAN Donation Program (at 3 tablets per treatment) Patients utilizing Merck’s Patient Assistance Program[d] (total value 350,000 ($161.5M) 540,240 ($326M) 730,000 ($502M) of Merck medicines dispensed under Merck’s PAP) Major PPPs to improve access to medicines, vaccines or health care[e] 13 12 10 Ensuring confi dence in the safety and quality of our products Product recalls in United States 2 0 1 Conducting ourselves ethically and transparently % of required employees who took Know the Code training[f] 90 N/A N/A % of response to disclosure statement on confl icts of interest 97 95 93 Calls to the Merck AdviceLine 149 77 80 Calls to the Offi ce of Ethics/Ombudsman 600 597 770 % of substantiated (including alternate fi ndings) allegations to 9.5 8.3 10.2 concerns/issues raised in connection with our Code of Conduct through AdviceLine or Offi ce of Ethics/Ombudsman[g] 62 Merck operations at signifi cant risk of forced or compulsory labor, 0 0 N/D incidents of child labor, or violations of the right to exercise freedom of association and collective bargaining Managing our environmental footprint Environmental inspections 76 88 N/D Environmental events[h] 60 28 32 Environmental notices of violation 13 11 N/D Environmental fi nes paid ($US) 31,515 10,652 281,025 Total energy use (million BTUs x 106) 15.2 15.5 17.5 Energy intensity (MMBTU/sq ft) 0.52 0.54 0.61 [i] Total GHG emissions (as C02 eq—million metric tons) 1.36 1.36 1.44 Total water usage (billion gallons) (% reduction versus prior year) 8.8 (8.3) 9.6 (5) 10.1 (13.6) Emissions of ozone-depleting substances (metric tons) 1.4 N/D N/D

Nitrogen oxides (NOx) emissions (metric tons) 303 306 468

Sulfur oxides (SOx) emissions (metric tons) 58 76 84 Emissions of volatile organic compounds (VOCs) (metric tons)[j] 401 427 411 TRI emissions (metric tons to air and water) 270 242 163 Hazardous waste generated in metric tons (% recycled) 54,000 (23) 62,300 (29) 60,900 (37) Metric tons non-hazardous waste generated[k] 31,600 N/D N/D % of nonhazardous waste recycled[l] 42[l] N/D N/D 2007 2006 2005

Valuing our employees Number of employees 59,800 60,000 61,000 Total compensation paid to employees/payroll excluding benefi ts ($US) 5.56B 5.14B 4.84B % of women in workforce (globally) 48 49 49 % of women on the Board 23 25 25 % of women in executive roles (U.S.) 27 26 28 % of under-represented ethnic groups on the Board 17 17 17 % of under-represented ethnic groups in executive roles (U.S.) 11 12 11 % of employee response rate to Merck Culture Assessment survey[m] 72 77 N/A Overall turnover rate 10.7 11.9 10.6 Safety inspections 41 65 N/D Notices of safety violations/citations 3 8 N/D Safety fi nes paid in ($US) (Number of fi nes) 1,500 (1) 1,975 (2) 1,000 (2) Lost-Time Incident Rate (LTIR)[n, o] 0.48 0.43 0.44 LTIR % change 12 -2.3 -14 Reportable Injury Rate (RIR)[n] 1.12 1.11 1.21 RIR % change 0.9 -8.3 -25.8 Fatalities 1 0 0 Accidents Per Million Miles (APMM) 9.64 9.92 10.40 Supply chain management % of spending on diverse suppliers in the U.S. 12 8 5 Percentage of completed PSCI surveys received from existing 54 (64) N/A N/A external manufacturers (#)[p] Percentage of facility visits conducted of potential external 100 (19) N/A N/A manufacturers of new business (#) Philanthropy Merck’s philanthropic contributions (total cash and product) 828 826 1,039 ($USM)[c, q] Cash contributions ($USM) 62 58 60 Advocacy and outreach Political contributions (U.S., AUS, CAN)[r] US: $470,625 US: $611,975 US: $337,140 AUS: $19,195 AUS: $20,292 AUS: $12,137 CAN: $58,396 CAN: $45,765 CAN: $46,700 Portion of dues that major U.S.-based trade associations report to us 6.9M paid N/A N/A as being used for advocacy and/or political activities in the U.S. ($US) to 8 groups where dues are >$50,000[s]

KEY

N/A: not applicable; N/D: no data; N/R: not reported; many of these indicators are new for Merck and for this reason some prior year data points are not reported. [a] The tax expense in 2007 refl ected the reduction in domestic pre-tax income primarily resulting from the U.S. VIOXX settlement charge. For more information, please see our Form 10-K for the year ended December 31, 2007. 63 [b] Research activities and investments include all Merck divisions. [c] We value our product donations based on the U.S. wholesale price. [d] Totals include the U.S. Merck Vaccine Patient Assistance Program and are based on the U.S. wholesale price. [e] Major is defi ned as with an investment by Merck of more than $500,000 per year and/or engagement with a national government. Therefore, these include MDP, MMOP, AAI, ACHAP, C-MAP, MVNA, ROTATEQ Partnership, GARDASIL Access Program, Nursing Libraries, MCAN, Diabetes Alliance, Blueprint and DHL Partnership. [f] Know the Code was fi rst implemented globally in 2007. [g] When Merck substantiates allegations of ethical misconduct, it imposes a variety of disciplinary actions on those responsible for the misconduct, such as dismissal from the Company, issuance of fi nal written warning letters and fi nancial penalties. [h] The increase in the number of events is due primarily to a modifi ed regulatory interpretation in late 2006 that requires reporting for spills that were not previously required to be reported. [i] In accordance with U.S. EPA Climate Leaders protocol, GHG generation baseline data have been adjusted to remove facilities that have been sold. In addition, Merck recalculated its GHG emissions for the years 2004 through 2007 based on new emissions factors released by EPA in April of 2007 (based on 2004 energy generation data), which resulted in reporting increased emissions for 2004, 2005 and 2006. [j] Previously reported VOC data have been corrected. [k] Data unavailable for a site sold at the end of 2007. [l] 2007 was the fi rst year we collected nonhazardous waste generation and recycling data. Data should be considered estimates. [m] Survey not conducted prior to 2006. [n] LTIR/RIR: Calculated per OSHA methodology. [o] Data refl ect a correction from previous reports also impacting 2003 and 2004 LTIR, 0.55 and 0.51, respectively. [p] Pharmaceutical Supply Chain Initiative (PSCI) survey fi rst implemented in 2007. [q] Our philanthropic giving decreased after 2005 because of a reduction in the use of Merck’s Patient Assistance Program, due mainly to an increasing number of patients with prescription drug coverage, including the Medicare Prescription Drug Program, which began January 1, 2006, and from the removal of ZOCOR® (simvastatin) and PROSCAR® (fi nasteride) from the eligible products list in 2007 once patients had broad access to lower-cost generic equivalents. [r] Total refl ects corporate contributions; employee contributions through the Merck PAC are not included. [s] Because the U.S. tax law that requires this reporting does not apply outside the United States, trade associations that are not subject to this do not provide breakouts of lobbying expenditures from membership dues. Thus, at this time, Merck is unable to report these data for such lobbying expenses in other countries. TOPIC INDEX

A Energy use 41–42,62 M Q Access to medicines, Environmental footprint 7,40–45, Manufacturing and Quality of products Inside front vaccines and health care 18–29 55,58,62 supply chain 6,19,20,32,33, cover, 1,6,20,21,22, developed world 27–28 Environment, health and 50–51,63 30,32–33,50–51,58 developing world and safety (EHS) external manufacturers 6,13,20, 27, Quality standards emerging markets 20–27 compliance and 40,50–51,63 and systems 19,30,32–33,50–51 future challenges 29 management 40,45,49,50 Materiality assessment R Environmental remediation 44 process 57–58 policy 22,25,27 Regenerative medicines research 12 priorities and targets 22,24,27,29 Environmental Merck Advice Line 34–36,39,62 risk assessments 7,44–45 Merck Alliance to Reduce Registration of products 1,3,6,18, strategy 19–20 20,21,23,25,62 Access to Medicines Index 20 EPA Climate Leaders 41,42 Disparities in Diabetes 28,60 EPA Presidential Green Merck Childhood Regulatory compliance Inside Adverse Experience front cover,6–7,13, Reporting 31–33 Chemistry Award 44 Asthma Network 27,60 Ethics and compliance 6,34–39, 32,34–39,40,45, African Comprehensive Merck Company 47,49,50,52,56,59 HIV/AIDS Partnerships 26 53,59,62 Foundation, The 15,16,24,26,27, issues for Merck and the 28,56,59,61 Renewable technologies/ Animals research 12 resources 2,7,41,42,45 pharmaceutical industry 36 Merck franchise areas B training and development 6,34–35 of focus 11, Inside back cover Research and 38–39,50–51,53,62 development 1,6,8–17, Biomedical innovation 20,52,60 Merck, George W. Inside front 38,40,58,62 resources for employees 34 cover, 57 Bioprospecting 12 agenda and strategy 8 Executive Merck Institute of Science C compensation 7,47–48,59 Education 15–17,56,60,61 governance 8–9 Carbon Disclosure Project 41 Executive Committee 7,18,38,47, Merck leadership standards 48 pipeline 1,4,6,10,11,14,62 Center for Political 49,51–52,58–60 Merck MECTIZAN priorities for the future 14 Accountability 7,53–54 Restructuring program 36,48 F Donation Program 6,11,20,21, Chronicle of Philanthropy, The 60 56,59,60,61,62 ROTATEQ Clark, Richard T. Financial information 4 Merck Medical Access Partnership 2,6,24 (Merck Chairman) 2,47,53,59 Flexible work Outreach Program 20,21,59,60 S Climate change 2,7,41,42 arrangements 7,48–49 Merck medicines and FTSE4Good 55 Safety, products Inside front cover, Climate Resolve 42 vaccines list Inside back cover 1,2,3,4,6,12,13, Clinical trials 4,6,13–14, G Merck Sharp & 19,30-33,58,62 Dohme (MSD) Inside front cover 30–32,55,62 GARDASIL Access monitoring 30,32 conduct and governance 13 Program 2,6,24 Merck Vaccines studies, post-marketing 30–31 Network–Africa 22,24,60 disclosure policy 13–14 GAVI Alliance 6,10,22,24,29 Sales force informed consent 13 Millennium Development Genetic research 12 Goals Table of contents, 20,26 global code of conduct 36 performance 13 Global Reporting Science education 15–17,55, registration and registries 14 Initiative (GRI) Inside cover, N 56,60,61 quality assurance auditing 13,32 table of contents National Institutes Stakeholders 1,3,5,7,10,15–17 Code of Conduct 34–38,48,50, Good Clinical Practices of Health 9,14,27 18,22,27,34,38,44,45 52–53,59,62 (GCP) Guidelines 13,32 Neglected tropical diseases 11,15,21 46,52,56,57–58,59 Community, supporting 5 Good Manufacturing Neighbor of Choice 5,60 engagement 55 Consent Decree 40 Practices (GMP) 32,50 O input on reporting approach 58 Conserving water 7,40–42, Green buildings 41 Stem cell policy 12 44–45,62 Green chemistry 44 Offi ce of Ethics 6,34–35,37,47,62 Stockholders/ Contacts CR Back cover Greenhouse gases 2,7,40–42,45,62 Ombudsman Program 34,35,39,62 shareholders Inside front cover,4 Continuing Medical Guidance for interactions with OSHA 49 20,46,47,53,55,57,58,59 Education 36 health care professionals 36 Ozone-depleting compounds 40,62 Suppliers Corporate Governance 34, H P approach 5,6,7,20,27,30,33,38 46–47,59 43,45,50–51,55,58,63 Partnership for Giving 60 Counterfeiting of medicines 33,52 Hazardous waste 43–44,62 continuity of supply 51 Partnership for Prescription Corporate responsibility, Health care diversity 7,51,55 approach 57–61 capacity-building 1,18,20–21, Assistance 28,62 ethics and human rights 38 about the report Inside front cover 23,29,59,60 Partnership for Quality quality 20,33,50–51 Board of Directors’ PPSR Health care information 28 Medical Donations 21 Committee 52,59,60 Health coverage 1,18,27–28 Patents 12,20 Sustainable PATH 10 solutions Inside front cover, CR Council 58,59 Health disparities 27,28 18,20,24,28,44,56,57 integration in our business 4,57,59 Health Matters 7,49,50 Pediatric formulations Offi ce of Corporate HIV/AIDS 1,6,24–27,59 and indications 13,22,25,62 T 64 Responsibility 19,47,49 access to medicines for 24–27 PEPFAR 29 Tax expense 4,5,62 Principles 57 prevention 24,26 Pharmaceutical Research Total Injury and Illness Rate and Manufacturers reporting approach Inside front priorities for improving access 6,27 U cover,3,46,57–58 research and development 24–25 of America 2,6,36,37,44,45,53 UNCF/Merck vaccine 25 Guiding Principles on Direct-to- D Consumer Advertisements about Science Initiative 15,16,17,60 Developing world diseases 6, Human rights 5,18,34,36–39,50–51 Prescription Medicines 37 Uninsured 1,27,28 business and 37–39 10–11,15 Pharmaceuticals in V Direct-to-consumer (DTC) of our employees 37–38 the environment 7,44 advertising 37 priorities 38 Philanthropy Inside front cover, Vaccines Inside front cover, 1–3,5, Disaster relief 21,27,59,60 right to health 3,38 5,18,55,56,59-61,63 6,9–14,18–24,27–29,30,33 51,55,58,69,62,inside back cover Diversity and inclusion 17,16,38, Photovoltaic solar panels 41 I resource-constrained settings 2,23 48–49 Pipeline 1,4,6,9–11,14,62 supplier diversity 7,51,55 Intellectual property Values and Standards protection 2,18,20,29,36,52,53 Post-marketing Dividend 4,62 (Code of Conduct) 34–36,38,39,59 International Conference studies 30,32,62 Donations policy 59 VIOXX withdrawal 31 on Harmonization 13 Prescription medicine Volatile organic compounds 43,62 Product 20–21,22,61 International Federation of advertising 6,36–37 Cash 59–61 Pharmaceutical Manufacturers Pricing 1,6,18,19–21,22, W WHO Guidelines 21 and Associations Code of 25,27,36,53 Waste and Drug importation 53 Pharmaceutical Product waste reduction 7,40,41,43,44,62 E Marketing Practices 36 labeling and World Economic Forum K risk communications 31,32 and related initiatives 21,22,37 Economic contribution 4–5 packaging 19,23,32,45 World Health Effl uents 43 Key issues 2,58 stewardship 44–45 Organization 1,6,8,9,10,11,18, Emissions 2,6,40–43,45,62 Key Performance Public policy 1,15,17,18,19,20,25, 19,20,21,27,33,36,62 Employee relations 48–50 Indicators 62–63 27,38,42,44,52–56,59 Ethical Criteria for communications and engagement 48 KLD Indices 55 access to medicines Medicinal Drug Promotion 36 compensation and benefi ts 48 L developing world 22,25 prequalifi cation of development and Leadership in Energy and HIV and AIDS 25 medicines and vaccines 18 professional growth 48 Environmental Design (LEED) 41 research and innovation 15,52–53 Special Program for Research and giving 60 Licensing 8,9,20 science education 17 Training in Tropical Diseases 11 health 49–50 Lost-Time Injury and Public/private partnerships 1,7,15, World Justice Project 39 rights 37–38 Illness Rate 7,49,63 18,20,21,22,23,24, safety 49–50,63 26,27,28,37,38,56 training 6,33–35,37–38, developing world 20–27 49–51,53,62 HIV and AIDS U.S.-based 28 vaccine demonstration projects 24 Our Medicines and Vaccines

PRODUCT NAME THERAPEUTIC AREA

ATHEROSCLEROSIS & CARDIOVASCULAR

Cozaar® (losartan potassium) High blood pressure

Hyzaar® (losartan potassium and hydrochlorothiazide) High blood pressure

Vytorin® (ezetimibe/simvastatin)* High cholesterol

Zetia® (ezetimibe)* High cholesterol

DIABETES & OBESITY

Janumet® (sitagliptin/metformin HCI) Type 2 diabetes

Januvia® (sitagliptin phosphate) Type 2 diabetes

INFECTIOUS DISEASES

Atripla® (efavirenz 600mg/emtricitabine 200 mg/tenofovir disoproxil fumarate 300 mg)† HIV infection

Cancidas® (caspofungin acetate) Certain fungal infections

consequat,Crixivan vel® (indinavir illum sulfate) dolore eu feugiat ullamcorper suscipit lobortis nisl utHIV infectionullamcorper suscipit lobortis nisl ut nulla Invanzfacilisis.® (ertapenem sodium) aliquip ex ea commodo consequat.Certain bacterialaliquip infections ex ea commodo consequat.

Isentress® (raltegravir) HIV infection volutpat. Ut wisi enim ad minim Duis autem vel eum iriure dolor in Duis autem vel eum iriure dolor in veniam,Primaxin quis® (imipenemnostrud andexerci cilastatin) tation hendrerit in vulputate velit esse molestieCertain bacterialhendrerit infections in vulputate velit esse molestie Duis Stocrinautem® (efavirenz)vel eum‡ iriure dolor in consequat, vel illum dolore eu feugiatHIV infection consequat, vel illum dolore eu feugiat hendrerit in vulputate velit esse molestie nulla facilisis. nulla facilisis. NEUROSCIENCE & OPHTHALMOLOGY consequat, vel illum dolore eu feugiat nulla Cosoptfacilisis.® (dorzolamide hydrochloride and timolol maleate)Lorem ipsum dolor sit amet, consect-Elevated intraocularLorem pressure ipsum dolor sit amet, consect- Maxalt® (rizatriptan benzoate) etuer adipiscing elit, sed diam nonummyAcute migraine etuer adipiscing elit, sed diam nonummy

LoremTimoptic-XE ipsum dolor® (timolol sit maleate amet, ophthalmic consect- gel formingnibh solution) euismod tincidunt ut laoreet Elevated intraocularnibh euismod pressure tincidunt ut laoreet etuer adipiscing elit, sed diam nonummy dolore magna aliquam erat volutpat. Ut dolore magna aliquam erat volutpat. Ut ® nibh euismodTrusopt (dorzolamide tincidunt hydrochloride) ut laoreet wisi enim ad minim veniam, quis nos-Elevated intraocularwisi enim pressure ad minim veniam, quis nos- doloreONCOLOGY magna aliquam erat volutpat. Ut trud exerci tation ullamcorper suscipit trud exerci tation ullamcorper suscipit

wisi enimEmend ad® (aprepitant) minim veniam, quis nos- lobortis nisl ut aliquip ex ea commodoPrevention oflobortis postoperative nisl or ut chemotherapy-induced aliquip ex ea commodo nausea and vomiting trud exerci tation ullamcorper suscipit consequat. consequat. ® lobortisEmend nisl for ut Injection aliquip (fosaprepitant ex ea commodo dimeglumine) Intravenous prevention of chemotherapy-induced nausea and vomiting consequat.Zolinza® (vorinostat) Duis autem vel eum iriure dolor inCancer [cutaneousDuis T-cellautem lymphoma vel eum (CTCL)] iriure dolor in

RESPIRATORY, BONE, ARTHRITIS & ANALGESIA hendrerit in vulputate velit esse molestie hendrerit in vulputate velit esse molestie Duis autem vel eum iriure dolor in consequat, vel illum dolore eu feugiat consequat, vel illum dolore eu feugiat Arcoxia® (etoricoxib) Pain and arthritis rdecker Writing support: Zoe Bell Consulting rdecker hendrerit in vulputate velit esse molestie nulla facilisis at vero eros et accumsan et nulla facilisis at vero eros et accumsan et consequat,Fosamax vel® (alendronate illum dolore sodium) eu feugiat iusto odio dignissim qui blandit praesentOsteoporosis iusto odio dignissim qui blandit praesent

nulla Fosamaxfacilisis Plus at veroD® (alendronate eros et accumsansodium/cholecalciferol) et luptatum zzril delenit augue duis doloreOsteoporosis luptatum zzril delenit augue duis dolore iusto odio dignissim qui blandit praesent te feugait nulla facilisi. Lorem ipsum te feugait nulla facilisi. Lorem ipsum ® luptatumSingulair zzril (montelukast delenit augue sodium) duis dolore dolor sit amet, consectetuer adipiscingAsthma, indoordolor and outdoorsit amet, allergies consectetuer adipiscing te feugaitSPECIALTY nulla facilisi. Lorem ipsum elit, sed diam nonummy nibh euismod elit, sed diam nonummy nibh euismod

dolorPropecia sit amet,® (ﬁnasteride) consectetuer adipiscing tincidunt ut laoreet dolore magna ali-Male patterntincidunt hair loss ut laoreet dolore magna ali- elit, sed diam nonummy nibh euismod quam erat volutpat. quam erat volutpat. Ut wisi enim ad tinciduntVACCINES ut laoreet dovlore magna minim veniam, quis nostrud exerci aliquamComvax erat® [Haemophilusvolutpat. Ut b conjugate wisi enim (meningococcal Utprotein wisi conjugate) enim adand minim hepatitis Bveniam, quisHaemophilus tation inﬂuenzae ullamcorper type b and hepatitis suscipit B lobortis nisl ad minim(recombinant) veniam, vaccine] quis nostrud exerci nostrud exerci tation ullamcorper sus- ut aliquip ex ea commodo consequat. tationGardasil ullamcorper® [human papillomavirussuscipit lobortis quadrivalent nisl (typescipit 6, 11, lobortis 16, 18) vaccine, nisl recombinant]ut aliquip ex ea com-Cervical cancer,Duis cervical autem lesions, vel vulvareum lesions, iriure vaginal dolor lesions in and genital warts caused by ut aliquip ex ea commodo consequat. modo consequat. Duis autem vel eumHPV types 6, hendrerit11, 16 and 18 in vulputate velit esse molestie Duis M-M-Rautem® IIvel (measles, eum iriuremumps anddolor rubella in virus vaccineiriure live) dolor in hendrerit in vulputateMeasles, mumps,consequat, rubella (German vel illum measles) dolore eu feugiat

hendreritPedvaxHIB in vulputate® [Haemophilus velit b conjugate esse molestie vaccine (meningococcal velit esse protein molestie conjugate)] consequat, vel illumHaemophilus nulla inﬂuenzae facilisis type b at vero eros et accumsan et consequat, vel illum dolore eu feugiat dolore eu feugiat nulla facilisis at vero iusto odio dignissim qui blandit praesent ® nulla Pneumovaxfacilisis at 23 vero (pneumococcal eros et accumsan vaccine polyvalent) et eros et accumsan et iusto odio dignis-Pneumococcalluptatum disease zzril delenit augue duis dolore iusto ProQuadodio dignissim® [measles, mumps,qui blandit rubella praesent and varicella (Oka/Merck)sim qui blandit virus vaccine praesent live] luptatum zzrilMeasles, mumps,te feugait rubella (Germannulla facilisi. measles) and chickenpox

luptatumRecombivax zzril HBdelenit® [hepatitis augue B vaccine duis (recombinant)] dolore delenit augue duis dolore te feugaitHepatitis nulla B te feugait nulla facilisi. facilisi. Nam liber tempor cum soluta nobis ® RotaTeq (rotavirus vaccine, live, oral pentavalent) Rotavirus eleifend option congue nihil imperdiet Nam Vaqtaliber® (hepatitistempor A cum vaccine soluta inactivated) nobis Nam liber tempor cum soluta nobisHepatitis A doming id quod mazim placerat facer

eleifendVarivax option® [varicella congue virus vaccinenihil imperdietlive (Oka/Merck)] eleifend option congue nihil imperdietChickenpox possim assum. Lorem ipsum dolor sit doming id quod mazim placerat facer doming id quod mazim placerat facer amet, consectetuer adipiscing elit, sed ® possimZostavax assum. (zoster Lorem vaccine ipsum live) dolor sit possim assum. Lorem ipsum dolor Shinglessit diam nonummy nibh euismod tinci- amet, consectetuer adipiscing elit, sed amet, consectetuer adipiscing elit, sed dunt ut laoreet dolore magna aliquam * Vytorin (marketed as Inegy outside the United States) and Zetia (marketed as Ezetrol outside the United States) are marketed through a partnership with diam Schering-Ploughnonummy Corporation.nibh euismod tinci- diam nonummy nibh euismod tinci- erat volutpat. Ut wisi enim ad minim † Atripla is marketed by Bristol-Myers Squibb and Gilead in the United States, Canada and Europe. Merck and Gilead are working to register and distribute Atripla in dunt ut 106 laoreetdeveloping countriesdolore around magna the world. aliquam dunt ut laoreet dolore magna aliquam veniam, quis nostrud exerci tation ‡ Efavirenz is marketed by Bristol-Myers Squibb as Sustiva in the United States, Canada and certain European countries, and by Merck in the rest of the world as Stocrin. erat volutpat. Ut wisi enim ad minim erat volutpat. Ut wisi enim ad minim ullamcorper suscipit lobortis nisl ut veniam, quis nostrud exerci tation veniam, quis nostrud exerci tation aliquip ex ea commodo consequat. Design by Addison www.addison.com Photography from Susan Alderfer, the Carter Center, Bob Cimmino, Tom Maday and Bill Vande Bob Cimmino, Tom Center, the Carter Susan Alderfer, from Photography Design by Addison www.addison.com Contact us: GRI APPLICATION LEVEL Send us your comments and feedback about this report at: We are pleased to have achieved a reporting level B on the Global Reporting Initiative www.merck.com/cr/contacts (GRI) G3 Guidelines, and our self-assessment has been checked by the GRI as shown in the grid below: Or write to us at: Merck & Co., Inc. Offi ce of Corporate Responsibility CC+BAA+B+ WS 2A-55 1 Merck Drive PO Box 100 Self Whitehouse Station, NJ 08889 declared USA MANDATORY

Third Party Checked OPTIONAL GRI REPORT EXTERNALLY ASSURED REPORT EXTERNALLY ASSURED REPORT EXTERNALLY ASSURED Checked

More information can be found on the GRI at www.globalreporting.org.

MERCK & CO., INC. CORPORATE RESPONSIBILITY 2006–2007 REPORT Environmental Savings

Based on 5,100 lbs. of Mohawk Via Cool White 100% PC Recycled Paper, actual environmental savings are as follows:

» 48.96 trees saved » 20,797 gallons of waste water ﬂ ow saved » 4,531 pounds of net greenhouse gases prevented » 2,354 pounds of air emissions not generated » 141.38 pounds of water-borne waste not created Cert no. SW-COC-OO2270 » 2,301 pounds of solid waste not generated » 34,680,000 BTUs of energy not consumed » 5,601 cubic feet of natural gas unused

GEN-2008-WS-10007-PU