WHEREAS, we believe in full disclosure of Lilly’s direct and indirect lobbying activities and expenditures to assess whether Lilly’s lobbying is consistent with its expressed goals and in the best interests of shareholders.



RESOLVED, the shareholders of Lilly request the preparation of a report, updated annually, disclosing:|



1. Company policy and procedures governing lobbying, both direct and indirect, and grassroots lobbying communications.

2. Payments by Lilly used for (a) direct or indirect lobbying or (b) grassroots lobbying communications, in each case including the amount of the payment and the recipient.

3. Lilly’s membership in and payments to any tax-exempt organization that writes and endorses model legislation.

4. Description of management’s and the Board’s decision-making process and oversight for making payments described in sections 2 and 3 above.



For purposes of this proposal, a “grassroots lobbying communication” is a communication directed to the general public that (a) refers to specific legislation or regulation, (b) reflects a view on the legislation or regulation and (c) encourages the recipient of the communication to take action with respect to the legislation or regulation. “Indirect lobbying” is lobbying engaged in by a trade association or other organization of which Lilly is a member.



Both “direct and indirect lobbying” and “grassroots lobbying communications” include efforts at the local, state and federal levels.



The report shall be presented to the Public Policy and Compliance Committee and posted on Lilly’s website.



Supporting Statement: Lilly spent $75,472,000 from 2010 – 2018 on federal lobbying.1 This does not include state lobbying expenditures in the 48 states where Lilly lobbies2 but disclosure is uneven or absent. Lilly also lobbies abroad, spending between €700,000–799,000 on lobbying in Europe for 2018.3



Lilly sits on the board of the Pharmaceutical Research and Manufacturers of America (PhRMA) and belongs to the Chamber of Commerce, which together have spent over $1.9 billion on lobbying since 1998.4 Lilly does not disclose its payments to trade associations, or the amounts used for lobbying. And Lilly does not disclose its contributions to tax-exempt organizations that write and endorse model legislation, such as its membership in the American Legislative Exchange Council (ALEC).



We are concerned that Lilly’s lack of disclosure presents reputational risk when its lobbying contradicts company public positions. For example, Lilly states it works to makes medicine more affordable, yet funds PhRMA’s opposition to lower drug price initiatives.5 In a 2019 Gallup poll, the pharmaceutical industry was ranked last in reputation out of 25 industries in part due to “generating the highest drug costs in the world.”6 And Lilly’s ALEC membership has drawn negative scrutiny.7 At least 110 companies have publicly left ALEC, including Amgen, GlaxoSmithKline and Merck. 8



We believe the reputational damage stemming from this misalignment between general policy positions and actual direct and indirect lobbying efforts harms long-term value creation by Lilly. Thus, we urge Lilly to expand its lobbying disclosure.

1 https://www.opensecrets.org/lobby/clientsum.php?id=D000000166&year=2019

2 https://publicintegrity.org/federal-politics/state-politics/here-are-the-interests-lobbying-in-every-statehouse/

3 https://lobbyfacts.eu/representative/f98e6e3980944c0f9171355ef137d799

4 https://www.opensecrets.org/lobby/clientsum.php?id=D000019798; https://www.opensecrets.org/lobby/clientsum.php?id=d000000504

5 https://www.cnn.com/2019/01/23/health/phrma-lobbying-costs-bn/index.html

6 https://news.gallup.com/poll/266060/big-pharma-sinks-bottom-industry-rankings.aspx

7 https://www.prwatch.org/news/2017/10/13289/alec-corporate-sponsors-top-nation-lawbreaker-list

8 https://www.sourcewatch.org/index.php/Corporations_that_Have_Cut_Ties_to_ALEC