Governance | 2023 Sustainability Report

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Business Ethics

Management Approach

At Lilly, we are committed to upholding high standards of corporate conduct in our business dealings around the world. Our code of business conduct and our policies, compliance management systems, human resource performance and promotion systems, training programs and communications initiatives are designed to work together to reinforce a culture of integrity and ethical behavior.

As part of our commitment to operating ethically and responsibly, we have and continue to improve our ethics and compliance program. The program is designed to promote ethical conduct and instill a culture of integrity. Lilly’s ethics and compliance organization supports our global anti-corruption, bioethics, business continuity, enterprise risk management and privacy efforts. Our comprehensive program includes board-level oversight, written standards, proactive risk assessments, monitoring and auditing, and trainings and communications designed to prevent fraud or other violations of Lilly’s policies.

A key component to our culture of ethics and integrity is transparency around how we work. Lilly collaborates with health care professionals and organizations focusing on improving the health and quality of patients’ lives. We believe being transparent about our relationships with these external groups, advocacy organizations and other stakeholders helps Lilly build trust and respect for how we work with others to benefit the people we serve.

Ethics and Compliance

We assess risks in our business functions and the geographies where we operate to help business leaders understand, prioritize and mitigate risks related to ethics, compliance and fraud. We have a robust investigation process, and we develop corrective and preventive action plans to address issues as appropriate. We also use available data to improve our programs to help leaders assess the risks they face.

Lilly’s chief ethics and compliance officer is responsible for developing and operating our ethics and compliance program. This includes reporting obligations to the CEO and regular updates to the Ethics and Compliance Committee and Audit Committee of the Board of Directors. The Board annually reviews the company’s prioritized enterprise risks, appropriate mitigation plans and the company’s overall state of compliance. To provide a comprehensive review, the overall state of compliance report blends key information from various groups within Lilly, including corporate audit services, ethics and compliance, health, safety, and environment, and global quality.

Enterprise Risk Management Framework

Our Code of Business Conduct, Policies & Procedures

Our code of business conduct, policies and procedures are designed to reinforce our core values and provide guidance on how we expect business to be conducted. They include processes for interacting with health care providers, government officials and others, and they are designed to be consistent with codes issued by other relevant organizations, including the International Federation of Pharmaceutical Manufacturers & Associations (IFPMA), the Pharmaceutical Research and Manufacturers of America (PhRMA), European Federation of Pharmaceutical Industry Associations (EFPIA), and the Japan Pharmaceutical Manufacturers Association (JPMA).

Our global procedures and processes support the ethical marketing and promotion of our products and require the review and approval of this content by relevant subject matter experts. We investigate potential violations of these procedures and, as warranted, take corrective and preventive actions including reporting to regulatory authorities as appropriate.

In 2023, we received no warning letters or untitled letters from the Office of Prescription Drug Promotion (OPDP), US Food and Drug Administration (US FDA) Center for Drug Evaluation and Research (CDER) or the Advertising and Promotional Labeling Branch (APLB) US FDA Center for Biologics Evaluation and Research. We received one untitled letter from OPDP in 2021 regarding a product campaign and one in 2022 regarding a social media post. Lilly applied the learnings from previous untitled letters to its review processes for future communications involving all marketed products.

We regularly update and disseminate our compliance-related expectations through The Red Book, our code of business conduct. Available in 18 languages, this document and associated trainings are designed to support a judgment-based approach emphasizing the company’s values and the importance of ethical decision-making. The code of business conduct and associated training includes our 11 corporate policies:

Our Ethical Foundation
Conducting Research and Development
Respecting People
Assuring Quality
Ethical Interactions: Communicating Honestly
Ethical Interactions: Preventing Corruption
Maintaining Financial Integrity
Respecting Personal Information and Privacy
Managing and Protecting Information
Protecting People, the Environment and Our Assets
Speaking Up: No Retaliation

We recognize the impact of people and the role of human behavior on our organization’s culture, and we aim to integrate these elements into our ethics and compliance program as part of our strategy to promote ethical behavior and decision-making. We believe all employees can play a role in the success of our ethics and compliance program, so we consider training and communications to be essential components of nurturing a culture of integrity and ethics throughout our business.

Training and Development
Each year, we require our employees to complete training in ethical business practices. This includes requiring all Lilly employees and key contractors to complete training on The Red Book and certify they have read, understood and will abide by its requirements. More than 99% of employees completed this annual training prior to the internal due date in 2023. Most employees also receive additional targeted ethics and compliance training related to their specific role. Employees who do not complete required ethics and compliance training receive HR discipline, as appropriate. Additionally, each year senior leaders are required to confirm their organizations are compliant with the code of business conduct and applicable policies and procedures.

As part of our focus on nurturing a culture of integrity, we supplement our ethics and compliance training with case studies. Our goal is to help our leaders and employees understand the role pressure can play in rationalizing poor decisions and techniques they can use to mitigate this risk for themselves and within their teams. Additionally, we share details of real situations to reinforce with employees the behaviors and best practices that have led to ethical decision-making, as well as the lessons learned from past missteps. We want to help employees apply our principles, policies and procedures in their day-to-day work.

In addition to having core ethics and compliance subject matter experts as part of the ethics and compliance function, we also regularly provide high-potential employees with development assignments within the ethics and compliance function. We gain valuable insights from these participants, and we believe they return to their roles in the business with a renewed understanding of our commitment to integrity and the programs in place to support it.

Communications
We further strengthen our culture with robust communications to help ensure employees are aware of their responsibilities under our policies, know where to find resources to help them do their jobs and understand lessons we have learned as an organization. We provide leaders with resources designed to help them recognize their vital role in creating an environment that encourages ethical behavior. We also regularly publish articles on our internal website to communicate and support our commitment to integrity, as well as ethical decision-making and interactions.

We have worked to build and nurture a culture where people notice and speak up about mistakes or concerns, ask questions when they don’t know the right course of action to take and listen when someone raises a concern or question. Our Speaking Up: No Retaliation policy supports this mindset, and we've created a comprehensive set of resources to help employees understand how we define retaliation, why we do not tolerate it in any form and the channels available to them to support speaking up.

Tracking Our Progress
We track our progress in many ways, including reviewing the results of our annual employee surveys. Results from the 2023 surveys show that approximately 96% of survey respondents say they would report a suspected ethical violation if observed, and 95% know how to access the proper channels to report a potential violation.

To help identify possible compliance issues, we maintain an internal disclosure system that includes a mechanism for anonymous reporting (where permitted by local law). We also review business actions through a system of monitoring and audits.

Internal Reporting – Lilly employees are required to report known or suspected violations of the law, The Red Book, company policies or official orders or decrees applicable to our business. We recognize speaking up is our right and responsibility, and we encourage employees to report any ethical concerns or issues, including harassment and discrimination. The Lilly Ethics and Compliance Hotline is staffed by an independent firm, 24 hours a day, seven days a week and is available online to employees and the public globally (subject to local law). The hotline website also lists up-to-date local toll-free phone numbers for most countries, where available. Translation services are available, if needed, and reports may be made anonymously (subject to local law). In addition, employees or the public may submit reports of misconduct, inquiries or other allegations to Lilly via email. Employees are actively encouraged to bring concerns to supervisors, leaders and representatives of ethics and compliance, legal and human resources. As our Speaking Up: No Retaliation policy states: “We share concerns openly and honestly, knowing that Lilly will not tolerate acts of retaliation.”

Monitoring – We maintain a risk-based ethics and compliance monitoring program. Key components of the program include a global monitoring strategy, risk assessments, monitoring plans and standardized tools and processes for reporting metrics to our business and functional leaders. We are increasingly utilizing data and analytics to detect risks as a core element of our monitoring program.

Corporate Auditing – Our internal corporate auditing functions conduct financial, nonfinancial and quality audits of Lilly affiliates, functions, manufacturing, research and certain third parties to evaluate compliance with our policies and procedures. Audits are determined based on prioritization of the risk landscape using a risk-based methodology, leveraging data analytics, and are influenced by the results of the annual Enterprise Risk Management (ERM) process aligned with the company’s strategic plan. Audits include reviews of our anti-corruption program, privacy and other policies related to ethical interactions (e.g., off-label promotion).

Assurance Governance – To effectively align and integrate our companywide audit, assessment and monitoring activities to provide a focus on enterprise risks, we operate an Assurance Governance Forum. The forum is comprised of leadership from multiple assurance functions including ethics and compliance, audit, quality and information security. This objective is to provide integrated leadership to ensure that our risk and compliance programs meet the expectations of stakeholders and that our programs are integrated across the company to deliver maximum value and efficiency. The forum shares its learnings and insights with senior leadership and the Board of Directors.

Anti-Corruption Compliance

Lilly’s commitment to operating with high ethical standards includes complying with applicable Anti-Bribery and Anti-Corruption (ABAC) laws and regulations, and it extends to business relationships, dealings and activities all over the world. Our global policies prohibit bribery, fraud and other acts of dishonesty, including that we do not offer, provide, authorize or accept anything of value – or give the appearance that we do – to inappropriately influence a decision or gain an unfair advantage. This also extends to our work with third parties. We use a risk-based anti-corruption due diligence process to evaluate certain third parties, as appropriate, before engaging them, including the following:

third parties who may be authorized by Lilly to interact with health care providers or government officials on the company’s behalf
prospective recipients of grants and donations
prospective business development partners.

When appropriate, as determined through our risk evaluation process, third parties are required to follow anti-corruption policy and procedure requirements and participate in anti-corruption training. As part of our ongoing monitoring efforts, we conduct independent ABAC assessments of certain third parties, which often includes site visits and transaction testing. We also conduct an annual global anti-corruption risk assessment to identify potential risks and develop appropriate risk mitigation plans.

In addition, employees who are in positions most likely to interact with third parties are required to complete additional scenario-based training above and beyond our annual code of business conduct training. This training, which includes anti-corruption training, is designed to reinforce our policies, procedures and processes that promote ethical interactions. In 2023, more than 99% of required employees completed this additional training prior to the internal due date. Employees who do not complete required ethics and compliance training receive HR discipline, as appropriate.

Respecting Privacy

Privacy is a top priority for Lilly, as reflected by our longstanding global privacy program. At its core, our privacy program reflects our commitment to being open and honest about how we collect, manage, use and disclose personal information. We are intentional about protecting personal information and strive to use the minimum amount necessary to do our work. We share personal information only with those who are authorized and have a legitimate business need to see it, and we insist our suppliers and third parties handle personal information in accordance with core privacy expectations, as well as applicable laws and regulations.

At Lilly, we expect our employees, suppliers and anyone working on our behalf to work responsibly and protect the personal information that is entrusted to us. These expectations are stated in our global Respecting Personal Information and Privacy policy, as well as our Respecting Privacy procedure, and are emphasized in enterprise-wide training on the responsible use of personal information.

Governance of Privacy

The Global Privacy Office oversees the privacy program for our operations around the world and is led by our chief privacy officer, working with a team of global and local privacy experts. As the volume of data grows exponentially and as comprehensive data privacy laws proliferate in the U.S. and worldwide, privacy is a board-level priority. In addition to running its standard risk assessment process, the privacy team is actively engaged with relevant external constituents to stay abreast of new privacy laws, related risks and potential impacts of noncompliance, as appropriate, and to inform leadership of such developments as warranted. The privacy team also shares developing privacy requirements and identifies key privacy risks to our broader ethics and compliance organization, as well as to other key internal stakeholders, including our corporate audit team partners.

Bioethics

Our investment in bioethics capabilities reflects our company values and purpose to improve people’s lives and communities around the world. We were one of the first pharmaceutical companies to establish a standing bioethics committee in 1999. Our bioethics program is designed to address the increasingly complex and fast-paced ethical challenges of global pharmaceutical research, development and commercialization. Our focus is to protect and advocate for the rights and well-being of research participants and patients, as well as the integrity of the scientific process and its applications for health care.

Our bioethics program provides Lilly employees with resources including the Lilly Bioethics Framework for Human Biomedical Research, position papers on major bioethical issues, a bioethics consultation service, and bioethics education and training opportunities. We also sponsor an annual bioethics lecture. Additionally, our staff and the Bioethics Advisory Committee provide input into policy decisions that have bioethical implications, and we collaborate externally to establish best practices in applying bioethics across the industry. Focus areas for work in 2023 included continued access to investigational medicines, artificial intelligence and gene editing.

Governance of Bioethics

Our bioethics program reports into the chief ethics and compliance officer and works closely with the office of the chief medical officer. Our bioethics staff, which has specialized training and expertise, provides education and training for the cross-functional Bioethics Advisory Committee, which includes external bioethics experts. This committee serves as a resource for Lilly employees and is a place where they can seek guidance on bioethics considerations, discuss potential alternative courses of action and receive recommendations on potential paths forward.

We consistently apply the principles in the Lilly Bioethics Framework in ways that influence our research study design, informed consent processes and content, selection of countries for clinical trial sites, requests for access to investigational treatments outside of clinical trials, animal care and use, engagement of special populations (e.g., pediatrics), as well as timing and content of research publications, among other matters.

Bioethics Program

Our bioethics program has four core activities: consultation, education and training, development of bioethics positions, and collaboration.

Our bioethics staff provides consultations for employees seeking advice regarding bioethics and research ethics issues. To increase workforce knowledge about bioethics, we have developed the Bioethics Leadership Academy (BELA) that provides a specialized curriculum in bioethics for Lilly employee development. In 2023 we established Lilly’s first bioethics practicum, which provides a new training opportunity for graduate students to learn about how bioethics is applied in a corporate setting.

Our Bioethics Framework for Human Biomedical Research and our Principles of Medical Research provide a bioethics foundation for the company’s positions on bioethics issues, promoting alignment with broadly accepted ethics principles and Lilly’s core values of integrity, excellence and respect for people. Our bioethics program aims to work with other companies to establish best practices and to bring an industry perspective to bioethics discussions.

Our bioethics program advocates for the rights and well-being of research subjects and patients who use our medicines. Lilly applies a single global standard to the conduct of medical trials involving human subjects. This standard is based on well-respected ethics guidance and other requirements including:

The World Medical Association’s Declaration of Helsinki
The Council for International Organizations of Medical Sciences’ International Ethical Guidelines for Biomedical Research Involving Human Subjects
The International Conference on Harmonisation’s Guideline for Good Clinical Practice
The Pharmaceutical Research and Manufacturers of America’s Principles on Conduct of Clinical Trials
Applicable laws and regulations of the country or countries in which a study is conducted.

Lilly conducts clinical studies in countries or communities in which the benefits of research can be made reasonably available for research participants and the host country or community. Sometimes an investigational medicine is not locally commercially available at the conclusion of a clinical study and as a result, clinical study patients who are benefiting from an investigational medicine are not able to access the treatment. Under certain conditions Lilly may offer continued access (otherwise known as post-trial access) to an investigational medicine after a patient's participation in a clinical study has ended.

Learn more about our approach to continued access to investigational medicines and multinational clinical studies.

Transparency, Disclosure and Political Engagement

We support various transparency initiatives globally, provided:

that they are respectful of local laws related to intellectual property, trade secrets, competition and privacy
the disclosure of information does not undermine our ability to compete effectively
that information is communicated with appropriate context in an easily understood manner.

We seek to collaborate with policy makers, industry colleagues and key stakeholders to align on approaches that achieve these objectives.

Clinical Trials Data Transparency

Lilly is committed to the transparency of our clinical studies, and we recognize that responsible sharing of clinical study data can enhance public health. Since 2014, Lilly has enhanced our transparency initiatives in alignment with the PhRMA/EFPIA Principles for Responsible Clinical Trial Data Sharing. Lilly registers and posts results of clinical trials on clinicaltrials.gov in addition to any legally required clinical trial registries. For Phase 2 and 3 trials that completed after 2019, Lilly submits results to clinicaltrials.gov one year after the completion of the trial regardless of the medicine’s approval status.

Lilly makes anonymized patient-level data available from Lilly-sponsored trials on marketed drugs for approved uses following acceptance for publication. Lilly is one of several companies that provide this access through a third-party website where qualified researchers can submit research proposals and request anonymized data to test new hypotheses.

In 2013, Lilly began conducting pilot projects creating summaries of Phase 2 and 3 clinical trial results in patient-friendly language using simple, everyday terms. Since 2021, Lilly has created plain language summaries of Phase 2-4 clinical trial results in English.

Payments to Physicians and Healthcare Organizations

Read about our approach to payments to health care professionals and health care organizations.

Political and Policy Participation

Read about our disclosures on political and policy participation.