2 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 2012/13 Corporate Responsibility update: http://www.lilly.com/Documents/Lilly_2012_2013_CRupdate.pdf Through our policy research, development, and stakeholder dialogue activities, Lilly develops positions and advocates on these key issues. 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. 3 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: • 2013 Lilly Report of Political Financial Support: (You are now viewing this report) • 2012 Lilly Report of Political Financial Support: http://www.lilly.com/SiteCollectionDocuments/pdf/2012-Lilly-Political- Contributions.pdf • 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 The quarterly reports in the current year for LillyPAC and corporate political contrbutions can be found at this website: http://www.lilly.com/Responsibility/ethical-business/Pages/public-policy.aspx 4 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 2013 U.S. Congress Lobbying Disclosure: View Now • Q3 2013 U.S. Congress Lobbying Disclosure: View Now • Q2 2013 U.S. Congress Lobbying Disclosure: View Now • Q1 2013 U.S. Congress Lobbying Disclosure: View Now • 2013 State Lobbying Disclosure View Now In addition to direct political contributions, Lilly maintains memberships in certain 501(c)4s - 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 noted. 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. 5 Bentley, Robert Dr. Robert Bentley for Governor AL R Governor $12,500 Blackwell, Slade Slade for Senate, Inc. AL R State Senate $1,000 Alabama 2014 AL R $6,000 Alabama Republican Party - Non Federal Account AL R State Party $1,500 Alabama Republican Party - Non Federal Account AL R State Party $2,500 STORM PAC AL R State House $1,500 Armstrong, Eddie Eddie Armstrong Campaign AR D State House $200 Branscum, David David Branscum Campaign AR R State House $200 Broadway, Mary Mary Broadway Campaign AR D State House $200 Burkhalter, John John Burkhalter Campaign AR D Lt. Governor $250 Catlett, John Catlett for House District 73 AR D State House $200 Chesterfield, Linda Linda Chesterfield Campaign AR D State Senate $350 Copenhaver, Harold Harold Copenhaver Campaign AR D State House $200 Cozart, Bruce Cozart for House District 24 AR R State House $200 Davis, Andy Andy Davis Campaign AR R State House $200 Dotson, Jim Jim Dotson Campaign AR R State House $200 Douglas, Dan Dan Douglas Campaign AR R State House $200 Ferguson, Deborah Deborah Ferguson Campaign AR D State House $200 Gillam, Jeremy Jeremy Gillam Campaign AR R State House $250 Gossage, Bill Bill Gossage Campaign AR R State House $200 Hawthorne, Fonda Fonda Hawthorne Campaign AR D State House $200 Hickerson, Prissy Prissy Hickerson Campaign AR R State House $200 Holcomb, Mike Mike Holcomb Campaign AR D State House $200 Jett, Joe Joe Jett Campaign AR D State House $200 Kizzia, David Kizzia for House AR D State House $200 Leding, Greg Leding for House District 86 AR D State House $300 Linck, Kelley Linck for House District 99 AR R State House $300 Love, Fred Fred Love Campaign AR D State House $250 Meeks, David David Meeks Campaign AR R State House $200 Miller, Josh Miller for House AR R State House $200 Murdock, Reginald Reginald Murdock Campaign AR D State House $200 Overby, Betty Campaign to Elect Betty Overby AR D State House $200 Richey, Chris Chris Richey Campaign AR D State House $200 Ross, Mark Mark Ross for Governor Campaign AR D Governor $500 Scott, Sue Sue Scott Campaign AR R State House $200 Thompson, Tommy Thompson for House District 65 AR D State House $250 Vines, John Vines for House District 25 AR D State House $200 Wagner, Wes Wes Wagner Campaign AR D State House $200 Womack, Richard Richard Womack Campaign AR R State House $200 6 Word, James James Word Campaign