2012 POLITICAL CONTRIBUTIONS 2012 Lilly Political Contributions 2 Public Policy As a biopharmaceutical company that treats serious diseases, Lilly plays an important role in public health and its related policy debates. It is important that our company shapes global public policy debates on issues specific to the people we serve and to our other key stakeholders including shareholders and employees. Our engagement in the political arena helps address the most pressing issues related to ensuring that patients have access to needed medications—leading to improved patient outcomes. Through public policy engagement, we provide a way for all of our locations globally to shape the public policy environment in a manner that supports access to innovative medicines. We engage on issues specific to local business environments (corporate tax, for example). Based on our company’s strategy and the most recent trends in the policy environment, our company has decided to focus on three key areas: innovation, health care delivery, and pricing and reimbursement. More detailed information on key issues can be found in our 2011/12 Corporate Responsibility update: http://www.lilly.com/Documents/Lilly_2011_2012_CRupdate.pdf Through our policy research, development, and stakeholder dialogue activities, Lilly develops positions and advocates on these key issues. U.S. Political Engagement Government actions such as price controls, pharmaceutical manufacturer rebates, and access to Lilly medicines affect our ability to invest in innovation. Lilly has a comprehensive government relations operation to have a voice in the public policymaking process at the federal, state, and local levels. Lilly is committed to participating in the political process as a responsible corporate citizen to help inform the U.S. debate over health care and pharmaceutical innovation. As a company that operates in a highly competitive and regulated industry, Lilly must participate in the political process to fulfill its fiduciary responsibility to its shareholders, and its overall responsibilities to its customers and its employees. When engaging in lobbying efforts or making political contributions, we comply with the laws that govern such activities. All financial support and lobbying activity are overseen at the Board level by the Public Policy and Compliance Committee (PPCC), which is composed entirely of outside directors. The PPCC members receive a copy of the “Lilly Report of Political Financial Support” annually and a detailed briefing on company political engagement every two years in alignment with the U.S. election cycle. We lobby and make political contributions only where allowed under law. All decisions are made without regard for the private personal preferences of the company’s officers and executives. All of our employees must also comply with the policies in our written “Code of Business Conduct,” The Red Book, which includes Lilly’s core values, legal obligations, and global policies, including our “Global Policy on Political Financial Support and Involvement.” All individuals who recommend political contributions in the U.S. are trained on our policies on corporate political contributions and LillyPAC contributions. 2012 Lilly Political Contributions 3 Financial Support Elected officials, no matter what level, have an impact on public policy issues affecting Lilly. In the U.S., we are committed to backing candidates of any party who support public policies that contribute to the health needs of the patient, pharmaceutical innovation, and the interests of our company. In addition to disclosing support for individual candidates and independent expenditures, Lilly will disclose any company contributions to the political process via 527 organizations (e.g., political action committees for individuals or parties). Lilly will only fund other non-candidate expenditures by exception (e.g., certain ballot initiatives) and those contributions will be disclosed. The General Counsel and the Chief Financial Officer, or their designees, must approve all corporate political contributions before they are made. Our annual “Report of Political Financial Support” provides details of our company’s independent-political contributions; the activities of our political action committee, LillyPAC, which is funded solely by eligible employee contributions; and the governance processes for both. The LillyPAC Governing Board (the board) oversees all contributions made by LillyPAC. The board is comprised of 13 U.S.-based employees who represent components throughout the company. LillyPAC meets all disclosure requirements and is audited annually by Ernst and Young. For more information, view the reports for the current year and for four years of history: • 2012 Lilly Report of Political Financial Support: (You are now viewing this report) • 2011 Lilly Report of Political Financial Support: http://www.lilly.com/SiteCollectionDocuments/pdf/2011-Lilly-Political- Contributions.pdf • 2010 Lilly Report of Political Financial Support: http://www.lilly.com/SiteCollectionDocuments/pdf/2010-Lilly-Political- Contributions.pdf • 2009 Lilly Report of Political Financial Support: http://www.lilly.com/SiteCollectionDocuments/pdf/2009-Lilly-Political- Contributions.pdf • 2008 Lilly Report of Political Financial Support: http://www.lilly.com/SiteCollectionDocuments/pdf/2008-Lilly-Political- Contributions.pdf The quarterly reports in the current year for LillyPAC and corporate political contributions can be found at this website: http://www.lilly.com/Responsibility/ethical-business/Pages/public-policy.aspx 2012 Lilly Political Contributions 4 Lobbying Lilly invests in direct lobbying efforts at the federal, state, and local levels to educate policymakers on the specific implications that various legislation may have on the company, our community, and patients. Information on our federal lobbying activities is reported to the U.S. Congress in accordance with the Lobbying Disclosure Act of 1995. Information on our state lobbying activities is reported as required in those states where we engage in lobbying activities. For more information, view the following reports: • Q4 2010 U.S. Congress Lobbying Disclosure: http://disclosures.house.gov/ld/pdfform.aspx?id=300344178 • Q3 2010 U.S. Congress Lobbying Disclosure: http://disclosures.house.gov/ld/pdfform.aspx?id=300315815 • Q2 2010 U.S. Congress Lobbying Disclosure: http://disclosures.house.gov/ld/pdfform.aspx?id=300300874 • Q1 2010 U.S. Congress Lobbying Disclosure: http://disclosures.house.gov/ld/pdfform.aspx?id=300275057 • 2012 State Lobbying Disclosure View now Memberships In addition to direct political contributions, Lilly maintains memberships in trade associations that report lobbying activity to the U.S. government. We support organizations that champion public policies that contribute to pharmaceutical innovation, healthy patients, and a healthy business climate. The “Lilly Report of Political Financial Support” also notes our memberships in trade associations that report lobbying activity to the U.S. government and to which we contribute $50,000 per year or more. Organizations where Lilly has a board seat are also noted. Memberships in 2012: American Feed Industry Association (board seat), Animal Health Institute (board seat), Biotechnology Industry Organization (board seat), Business Roundtable, Greater Indianapolis Chamber of Commerce (board seat), Healthcare Leadership Council (board seat), Indiana Chamber of Commerce (board seat), National Association of Manufacturers (board seat), PhRMA (board seat), and U.S. Chamber of Commerce. 2012 Lilly Political Contributions 5 Lilly Corporate Contributions 2012 Candidate Organization / Committee State Party Office Amount Butler, Mack Committee to Elect Mack Butler AL R State House $500 Standridge, David David Standridge Campaign AL R State House $500 Alabama 2014 AL R $6,000 Alabama Republican Party - Non Federal Account AL R $5,000 Alabama Republican Party - Non Federal Account AL R $500 KAWPAC - Keep Alabama Working AL $5,000 Baine, John Baine for House District 7 AR D State House $200 Baltz, Scott Baltz for House AR D State House $400 Caldwell, Ronald Ronald Caldwell for State Senate AR R State Senate $500 Carmine, Les Carmine for House District 90 AR R State House $250 Carter, Davy Carter for House District 43 AR R State House $250 Catlett, John Catlett for House District 73 AR R State House $250 Cheatham, Eddie Cheatham for State Senate AR D State Senate $500 Cheatham, Eddie Cheatham for State Senate AR D State Senate $300 Clark, Alan Clark for State Senate AR R State Senate $500 Cozard, Bruce Cozart for House District 24 AR R State House $250 Dale, Robert Dale for House District 68 AR R State House $300 Dickinson, Jody Dickinson for House District 47 AR D State House $250 Douglas, Charlotte Douglas for House AR R State House $400 Edwards, John Edwards for House District 35 AR D State House $300 Elliott, Joyce Joyce Elliott for State Senate AR D State Senate $400 Flowers, Stephanie Flowers for State Senate AR D State Senate $350 Graves, Barbara Graves for House District 32 AR D State House $250 Harrelson, Steve Steve Harrelson State Senate Campaign AR D State Senate $350 Holland, Bruce Bruce Holland Campaign AR R State Senate $500 Holland, Bruce Bruce Holland Campaign AR R State Senate $300 Hopper, Karen Hopper for House District 100 AR R State House $250 Hyde, Barry Hyde for State Senate AR D State Senate $400 Ingram, Keith Ingram for State Senate AR D State Senate $500 Irvin, Missy Missy Irvin