INVENTING WITH PURPOSECORPORATE RESPONSIBILITY REPORT (2018/2019)

OUR PURPOSE

NOVEMBER 2019

We have a legacy of saving and improving lives by creating sustainable impact.For more than a century, we have been inventing medicines and vaccines for many of the world’s most challenging diseases and we have built a company with the talent, tenacity and strength to take on some of the biggest threats to human and animal health.

Reflecting our commitment to managing environmental, social and governance (ESG) issues, we continue to focus our approach to corporate responsibility in four primary areas that are of greatest relevance to our business and society.

y Access to Health y Employees y Environmental Sustainability y Ethics & Values

We live our core commitment to sustainable impact by managing our business responsibly, following our calling to find solutions for some of the world’s most debilitating diseases, striving to reach those in need with our medicines and vaccines and helping to build robust, durable health systems worldwide through partnership, investment and innovation.

Operating responsibly as a business is at the very heart of our ability to deliver sustainable impact—driving long-term value for our company and society.We cultivate innovation and excellence by building a diverse and inclusive global workforce, who are empowered to succeed, personally and professionally. We anchor ourselves and our partners to the highest ethical and business standards, and we take

responsibility for using resources wisely and minimizing our environmental footprint.

Our approach to corporate responsibility is about the health, economic, social and environmental impact we have on individuals and communities around the world. We hold ourselves accountable to our many stakeholders, including patients, employees, customers and shareholders, whose perspectives help to define our corporate responsibility priorities.

Our Purpose Overview

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OUR PURPOSE | Overview

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OUR PURPOSE | Overview

Sustainable Development Goals (SDGs)In addition to responding to the needs of stakeholders, our corporate responsibility efforts also support the 17 Sustainable Development Goals (“SDGs”) adopted by the United Nations in 2015 to help end poverty, protect the environment and ensure prosperity.

We have joined global leaders to address the goals on health and well-being, clean water, climate change, diversity and inclusion, responsible consumption and production and others.

Our support of the SDGs is a testament to our company’s 125+ year legacy of inventing for life to create a healthier word for all. For more information, please visit our Sustainable Development Goals page.

PhilanthropyThrough our long history of philanthropy, we continue to demonstrate our commitment to sustainable impact. Our philanthropic contributions, product donations and employee volunteering efforts, help find solutions to key global health challenges and strengthen communities where our employees live and work.

Our program investments aim to support interventions that have shown evidence of effectiveness in advancing the quality of health services delivery, reducing health care disparities, fostering innovation in the delivery of health care, and empowering patients as active participants in managing their own health. Learn more about our approach to philanthropy.

$2.8B

Skills-BasedVolunteering

$3.1M

Cash Grants & Contributions

$84M

Product Donations $2.7B

Total Philanthropy 2018

Letter from Our CEO

DISCLOSURES IN THIS SECTIONGRI 102-14

At MSD, we have been committed to our mission of saving and improving lives for nearly 130 years. Over that time, we have been responsible for some of the most significant scientific advancements and improvements in public health.

Any one individual can make the scientific breakthrough needed to discover a new medicine. I’m reminded of our esteemed former colleague, Maurice Hilleman, the father of modern vaccines, whose centenary we celebrate this year. However, it takes the infrastructure of a company like MSD to translate invention into a product that can help millions of people every day. Operating responsibly as a business is at the very heart of our ability to do so.

Our 2018/2019 Corporate Responsibility Report reviews our progress against our four key areas of corporate responsibility: Access to Health, Employees,

Environmental Sustainability and Ethics & Values. It represents our commitment to widely recognized reporting frameworks that reflect key environmental, social and governance issues, and our support for the 10 universally accepted principles of the UN Global Compact.

Our industry is facing some challenging headwinds, but our commitment to corporate responsibility will not waiver. The number of health care and drug pricing reforms being considered is possibly at an all-time high. Health care costs, especially a patient’s out-of-pocket costs, need to be addressed. We want to help find a sustainable solution, and we will continue to work with stakeholders and be transparent about our efforts. We have a history of responsible pricing and publicly disclose information about our prices in the United States. This includes our pledge not to increase our average net prices across our portfolio by more than the rate of inflation annually.

Whatever may come, we remain steadfast in our focus on following the science to see where we can have the greatest impact on patients’ lives. After all, R&D is the main source of the biopharmaceutical industry’s value to society. As we look to the future, we’re making investments in our pipeline and manufacturing capability to help protect one billion more lives by 2030.

Our industry is facing some challenging headwinds, but our commitment to corporate responsibility will not waiver.We have a legacy of tackling urgent global health challenges. For example, MSD for Mothers, our global initiative to reduce maternal mortality around the world, empowers women to make informed choices; equips health care providers; and strengthens health

care systems. Working with more than 160 partners, our programs have improved access to quality care and modern contraception for more than nine million women in 48 countries.

I am proud that our investigational vaccine is being delivered and having an impact in areas of Central Africa affected by the Ebola virus. Some may say that investing to develop an Ebola vaccine doesn’t make good business sense, but I believe this is the kind of challenge that MSD was designed to tackle.

Corporate responsibility initiatives like MSD for Mothers and our investigative Ebola vaccine make us an attractive employer for people who want to change the world. And it adds to the sense of purpose that keeps us going.

That purpose was captured by our modern-day founder, George W. Merck, who said, “Medicine is for the people, not for the profits.” For me, only two metrics truly matter—how many people you help, and how much help you give those people.

Promoting enduring social good and securing business success are inextricably linked. While there is always more to do, I would like to thank all our employees, our suppliers and our partners for the work they do every day toward these goals. The activities highlighted in this report are a testament to the incredible impact they are having all around the world.

Sincerely,

Kenneth C. Frazier Chairman and Chief Executive Officer

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OUR PURPOSE | Letter from Our CEO

Our Business

DISCLOSURES IN THIS SECTIONGRI 102-2GRI 102-6

We are inspired by a shared vision and mission to save and improve lives.RESOURCES

10-K Product Pipeline

Our Corporate Website

Company Fact Sheet

With a steady focus on innovation and sound science, we work to deliver vaccines, medicines, and animal health products that can help millions around the world.

Our core product categories include diabetes, cancer, vaccines and hospital acute care.

Our businesses include pharmaceuticals, vaccines and animal health.We continue to focus our research on conditions that represent some of today’s most significant health challenges—like cancer, HIV, HPV, hepatitis C, cardio-metabolic disease, antibiotic-resistant infection and Alzheimer’s disease, and we are on the front lines in the fight against emerging global pandemics, such as Ebola.

We also devote extensive time and energy to increasing access to medicines and vaccines through far-reaching programs that donate and deliver our products to the people who need them.

We’re applying our global reach, financial strength and scientific excellence to doing more of what we’re passionate about: improving health and improving lives.

ProductsWe are a global health care company that delivers innovative health solutions through our prescription medicines, vaccines, biologic therapies and animal health products. View the list of products marketed in the United States.

Prescription productsOur core business is the discovery and development of prescription medicines for diseases and conditions that impact millions of people.

We invest billions of research dollars to find medicines that can help improve lives. Today, our company has more than 50 prescription products in key therapeutic areas such as cardiovascular disease, respiratory disease, oncology, neuroscience, infectious disease, immunology and women’s health.

$42.3B2018 revenue

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OUR PURPOSE | Our Business

We are a global health care company with a 125-year history of working to make a difference.VaccinesVaccines are one of the greatest public health success stories in history, and our company has played its part in that story.

We have been working to discover and develop vaccines for more than a century. Our unique vaccines have helped prevent a number of diseases, including some never thought to be preventable. Today, we remain dedicated to the complex business of researching and producing vaccines.

Animal HealthOur Animal Health business is a global leader in the research, development, manufacturing and sale of veterinary medicines. Our Animal Health business offers a broad choice of vaccines, anti-infective and antiparasitic drugs, a complete range of fertility management products, pharmaceutical specialty products, innovative delivery solutions, performance technologies and value-added programs, such as pet recovery services and livestock data management tools.

PipelineOur pipeline provides an overview of our late-stage clinical development programs and is updated quarterly. View the pipeline.

Senior leadershipOur chairman and CEO, Ken Frazier, is accountable to our company’s Board of Directors.

Learn more about our Board members, including committee charters and assignments. Our Executive Committee manages the business. These top leaders, representing diverse areas of the company, meet regularly to review progress against our company goals. View the list of Executive Committee members.

NameThe company, Merck & Co., Inc., Kenilworth, N.J., U.S.A., is known as MSD outside the United States and Canada and is listed on the New York Stock Exchange under the symbol “MRK.”

Visit our corporate website.

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OUR PURPOSE | Our Business

Economic Impact

DISCLOSURES IN THIS SECTIONGRI 102-7GRI 201-1

Long-term business success depends on making relevant, quality products through sustainable and ethical practices.RESOURCES

Investor Relations Financials

Globalization and the expanding reach of firms during the past decade have increased expectations that multinational enterprises will create more social value, beyond just regulatory compliance and philanthropic contributions. Corporate responsibility has evolved to be an important element of the private sector’s response to these expectations.

While it can be seen either as a way to improve corporate reputation or simply as a response to a moral imperative to do good, we believe that corporate responsibility is critical to our business success and can provide us with new opportunities to create shared, or integrated, value—that is, addressing social issues

PerformanceFINANCIAL INFORMATION 2014 2015 2016 2017 2018

Sales (in millions) $42,237 $39,498 $39,807 $40,122 $42,294

Research and development expenses (in millions)1

$7,290 $6,796 $10,261 $10,339 $9,752

Number of employees (approximate) 70,000 68,000 68,000 69,000 69,000

Number of stockholders of record 142,000 135,500 129,500 121,700 115,800

Annual cash dividend paid per share $1.77 $1.81 $1.85 $1.89 $1.99

Global tax expense as reported on income statement (in millions)

$5,349 $942 $718 $4,103 $2,508

1 Excludes restructuring and merger-related expenses.

through business solutions. At the most basic level of delivering integrated value, our principal economic contribution to society is made through the discovery, development, manufacturing and marketing of our products, which directly improve and maintain the health of individuals and communities around the world, helping them to lead more productive lives.

For additional information about our business and economic performance, please see our Form 10-K for the year ended December 31, 2018.

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OUR PURPOSE | Economic Impact

Corporate Governance

DISCLOSURES IN THIS SECTIONGRI 102-18GRI 102-21

GRI 102-22GRI 102-23

GRI 102-26

We believe good governance is integral to achieving long-term shareholder value.RESOURCES

Board Governance Governance Committee Charter

2019 Proxy Statement

We are committed to governance policies and practices that serve the interests of our company and its many stakeholders. In exercising our fiduciary duty to our shareholders, we take a long-term perspective on shareholder value that takes into account our company’s relationship with society as a whole and the interests of our many diverse stakeholders.

The BoardThe primary mission of our Board is to represent and protect the long-term interests of our company’s shareholders. The Board meets, at minimum, six times per year to provide strategic direction and to review our progress on a wide variety of measures.

In overseeing the affairs of the company, including our governance, the Board has established four committees, each of which is composed solely of independent directors. The four committees are: Audit, Compensation and Benefits, Governance and Research. All of our standing committees are governed by Board-approved charters, which are available on our corporate website.

While it is our company’s philosophy that the full Board should consider and act on matters of significance, these committees assist it in carrying out its responsibilities and provide greater focus in key areas:

1. The Audit Committee charter provides that its primary functions are to, among other things, oversee the company’s accounting and financial reporting processes, internal controls and audits, cybersecurity and to consult with management, the internal auditors and the independent registered public accounting firm (the independent auditors) on, among other items, matters related to the annual audit, the published financial statements and the accounting principles applied.

2. The Compensation and Benefits Committee charter provides that its primary functions are to, among other things, establish and maintain a competitive portfolio of executive compensation and benefits programs designed to attract, motivate and retain executives on behalf of the company and to attract the talent necessary to execute the Company’s long-term strategic plan.

3. The Governance Committee charter provides that its primary functions are to, among other things, consider the size, composition and effectiveness of the Board and recommend individuals qualified to become directors. The Committee also reviews social, political and economic trends that affect our business, our Good Manufacturing Practice compliance, including internal and external audits, our environmental, health and safety practices, our supply chain manufacturing strategy and governance, as well as our third-party sourcing program, our business continuity plans and our privacy policies and practices.

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OUR PURPOSE | Corporate Governance

4. The Research Committee charter provides that its primary functions are to, among other things, assist the Board in its oversight of matters pertaining to our strategies and operations for the research and development of pharmaceutical products and vaccines.

Additional information on our company’s standing committees can be found in our company’s 2019 Proxy Statement (pages 20–22).

Our Board possesses broad expertise, skills, experience and perspectives that facilitate the strong oversight and strategic direction required to govern the company’s business and strengthen and support senior management.

In its regular discussions regarding Board composition—and especially in conjunction with the annual Board and committee evaluations—the Governance Committee works with the Board to determine the appropriate mix of professional experience, expertise, educational background and other qualifications that are particularly desirable for our directors to possess in light of our current and future business strategies. The Governance Committee uses this input in its planning and director search process.

The Governance Committee considers diversity as an important factor when identifying prospective nominees for our Board. In 2019, the Governance Committee recommended, and the full Board adopted, a formal diversity policy. The policy reflects the Board’s long-standing commitment to ensure that directors represent diverse perspectives and areas of expertise important to fostering the company’s business success. Our new diversity policy provides that the Board does

not discriminate against potential directors on the basis of gender, race, age, sexual orientation or ethnic and national background and further provides that having a board composed of diverse individuals is an important contributor to the Board’s overall effectiveness.

From time to time and including in 2018, the Governance Committee has retained independent search firms to assist in identifying candidates that reflect its director succession priorities, including these diversity objectives. At present, we have two members on our Board who represent members of underrepresented ethnic groups.

The Governance Committee also considers recommendations for director candidates made by shareholders and evaluates them using the same criteria as for other candidates. The Board, along with the Governance Committee, takes into account, among other things, the needs of the Board and the company in light of the overall composition of the Board, with a view toward achieving a balance of the skills, experience and attributes that are essential to the Board’s oversight role.

Board independence and leadershipKen Frazier, our company’s chairman of the Board, president and chief executive officer, is the only company executive serving on the Board. Leslie A. Brun serves as the Board’s independent lead director. As lead director, Mr. Brun confers with management on matters involving the Board and serves as a liaison to shareholders on investor matters. Mr. Frazier is not a member of any of the Board’s committees; only independent directors serve on those committees.

The Board believes that the company and its shareholders are well-served by the Board’s current leadership structure. The independent lead director is appointed by the Board of Directors to a three-year term. Having an independent lead director vested with key duties and responsibilities and four independent Board committees chaired by independent directors promotes strong independent oversight of the chairman and chief executive officer and the rest of our management team.

For additional details on our Board’s leadership structure, please see our company’s 2019 Proxy Statement (pages 15–16).

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OUR PURPOSE | Corporate Governance

Corporate managementOur company’s chairman and chief executive officer, Ken Frazier, is accountable to the Board. Our company’s Executive Committee, an internal management committee of senior company executives chaired by Mr. Frazier, meets regularly to review our progress and to attend to other matters affecting our company.

Shareholder engagementWe regularly communicate with our shareholders to better understand their perspectives and have established a shareholder engagement program that is proactive and cross-functional. Throughout the year, members of Investor Relations, the Office of the Corporate Secretary, Human Resources, and the Office of Corporate Responsibility, along with other subject-matter experts within the company, engage with our shareholders to remain well-informed regarding their perspective on current issues and to address any questions or concerns. These teams serve as liaisons between shareholders, members of senior management and the Board. From time to time, our directors also participate directly in these engagements.

This open and constructive dialogue with our shareholders has led us to make certain governance- and compensation-related changes over the past few years, including the adoption of proxy access, lowering of the threshold required for shareholders to call special meetings and various changes in the design of our long-term incentive plan. For additional details on shareholder engagement, please see our company’s 2019 Proxy Statement (page 24).

ComplianceOur company’s Board of Directors and senior management, including the company’s chief ethics and compliance officer and the Corporate Compliance

Committee, oversee our company’s Ethics and Compliance Program. Our compliance program is designed to maintain a culture that promotes the prevention, detection and resolution of potential violations of law or company policies. The program is dynamic, involving regular assessments to ensure that it is responsive to the company’s evolving business and associated compliance risks.

The Ethics and Compliance Office is led by the senior vice president and chief ethics and compliance officer, who reports directly to the chief executive officer and provides regular quarterly updates to the Audit Committee of the Board of Directors on the state of ethics and compliance at our company. This reporting structure supports open communications with senior leadership and the Board regarding important developments that relate to ethics and compliance.

Environment, health and safety governanceWe are committed to full compliance with all environmental and employee health and safety laws and regulations, to engaging with our stakeholders concerning these issues, and to actively identifying, understanding and addressing potential environmental, health and safety (EHS) risks.

Our Executive Committee has established the EHS Council to provide enterprise-wide leadership and governance of our EHS compliance and performance. In addition to a corporate EHS policy, we are continuing to implement and sustain a robust compliance management program that effectively oversees and manages EHS issues affecting the company, in order to meet our responsibilities and commitments and to improve our performance. Furthermore, the Governance Committee also has oversight over the company’s EHS practices as set forth in its charter.

Risk managementThe Board has two primary methods of overseeing risk. The first method is through its Enterprise Risk Management (ERM) process which allows for full Board oversight of the most significant risks facing the company. The second is through the functioning of the Board committees.

Management has established an ERM process to ensure a complete company-wide approach to evaluating risk over six distinct but overlapping core areas:

1. Responsibility and Reputation: Risks that may impact the well-being of the company, its employees, customers, patients, communities or reputation

2. Strategy: Macro risks that may impact our ability to achieve long-term business objectives

3. Operations: Risks in operations and cybersecurity that may impact our ability to achieve business objectives

4. Compliance: Risks related to compliance with laws, regulations and company values, ethics and policies

5. Reporting: Risks to maintaining accurate financial statements and timely, complete financial disclosures

6. Safety: Risks to employee, patient or community health and safety

Our company’s Corporate Audit and Assurance Services group is accountable to the Audit Committee of the Board of Directors for assessing the adequacy and effectiveness of the company’s control environment in relation to the aforementioned core areas. This responsibility includes the appropriate management and oversight of key company risks, in accordance with our corporate policy on audit, control and risk management.

The goal of the ERM process is to provide an ongoing review, implemented across the company and aligned to company values and ethics, to identify and assess risk, and to monitor risk and agreed-upon mitigating action. Furthermore, if a risk transforms into an incident, the ERM process is utilized to provide an

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OUR PURPOSE | Corporate Governance

effective response and business continuity plans are in place. If the ERM process identifies a material risk, it will be elevated through our CEO and our company’s Executive Committee to the full Board of Directors for its consideration.

The Audit Committee periodically reviews the ERM process to ensure that it is robust and functioning effectively. The Audit Committee oversees our company’s risk management program relating to cybersecurity; however, the full Board participates in periodic reviews and discussion dedicated to our company’s cyber risks, threats and protections.

For additional details on risk management, please see our company’s 2019 Proxy Statement (pages 19–20).

DisclosureWe are committed to a policy of full, accurate and timely disclosure of all material information in order to keep shareholders and the investing public informed about the company’s business and operations. Accordingly, we have established a corporate disclosure policy that articulates the standards, processes and governance for the company’s disclosure practices. Pursuant to the policy, our Disclosure Committee oversees the company’s disclosure practices and disclosure obligations.

Executive compensationOur company’s compensation programs are designed to align the interests of our executives with the interests of our shareholders. Each year, the Board of Directors considers the outcome of shareholder advisory votes on executive compensation when making decisions relating to the compensation of the company’s executive officers, including the chief executive officer, and to our executive compensation program and policies.

In 2019, shareholders continued their strong support of our executive compensation programs, with 93 percent of the votes cast for approval of the “say on pay” proposal at the 2019 Annual Meeting of Shareholders. The Board believes that the voting results demonstrate our shareholders’ support of the philosophy, strategy and objectives of our executive compensation programs. Furthermore, we continue to engage in direct constructive dialogue with our shareholders regarding our executive compensation programs and policies to ensure that investors understand how these programs and policies support our long-term strategic objectives.

Additional information on our company’s executive compensation programs, policies and practices can be found in our company’s 2019 Proxy Statement (pages 42–56).

Governance of our research agendaThe Research Leadership Team, headed by the president of our company’s research laboratories, develops the divisional strategy, allocates resources, and manages the research and development portfolio. The Research Leadership Team is made up of the heads of functional areas within our research laboratories. Each area provides expert support of our medicine and vaccine candidates during the discovery and development process. Furthermore, the Research Committee assists the Board in its oversight responsibilities to ensure compliance with the highest standards of scientific integrity in the conduct of our company’s research and development as set forth in its charter.

Safety monitoringOur Global Clinical and Pharmacovigilance organization collects, medically reviews and evaluates and reports adverse experiences to global health authorities in compliance with global regulatory reporting requirements. The global product safety teams within our research laboratories are responsible for monitoring the evolving safety profile of our medicines and vaccines. In parallel, at the country level, local Pharmacovigilance teams at our subsidiaries worldwide are responsible for ensuring that adverse experience information is collected and reported to our global product safety staff at headquarters and to local regulatory authorities.

Corporate responsibility governanceWe are committed to governance policies and practices that serve the interests of the company and its shareholders. Our reporting and governance structure is an integral part of this commitment.

The Board Governance Committee has responsibility for overseeing the company’s corporate responsibility and public policy issues. Additional information on the Governance Committee’s responsibilities can be found in our company’s 2019 Proxy Statement (page 22) or in its committee charter available on our corporate website.

The Office of Corporate ResponsibilityThe Office of Corporate Responsibility is responsible for raising the visibility of corporate responsibility issues and activities across the company and fosters connections across business units and functional areas to integrate our corporate responsibility principles into business policies, strategies and practices, including the ERM process, and brings the voice of external stakeholders into decision-making processes.

The Office of Corporate Responsibility also coordinates the development, implementation and communication of our global approach and, with strategic guidance from

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OUR PURPOSE | Corporate Governance

the Public Policy and Responsibility Council (PPRC), Executive Committee and the Board Governance Committee, is responsible for publishing the annual corporate responsibility report. If you have further questions, you may contact the Office of Corporate Responsibility.

The Public Policy and Responsibility Council (PPRC)The PPRC is a high-level forum for strategic input and guidance on our social business investments, corporate responsibility approach and public policy issues and positions. The diverse, cross-functional membership of the PPRC provides vision, leadership and cross-divisional input and alignment on policy and responsibility strategy, issues and initiatives. Specifically, the company’s PPRC enables policy and corporate responsibility issue identification and debate; makes decisions on policy and corporate responsibility issues or makes recommendations to the Executive Committee, as necessary; informs policy and corporate responsibility strategy; and reviews performance and reporting against defined objectives. Overall, the PPRC promotes further integration of corporate responsibility and policy considerations into our business activities.

The Corporate Responsibility Report Working GroupThe members of the Corporate Responsibility Report Working Group, a diverse selection of employees from all divisions of the company, serve as subject matter experts in their respective areas and work closely with the Office of Corporate Responsibility to help set goals and develop metrics that support and measure our overall corporate responsibility strategy and objectives. Individual members have been chosen to be active advocates for corporate responsibility within their respective areas.

PerformanceCORPORATE GOVERNANCE 2014 2015 2016 2017 2018

Independent directors on the Board 11 13 12 12 12

Percentage of Board members who are independent 92% 93% 92% 92% 92%

Separate chairman of the Board and CEO1 No No No No No

Lead independent director Yes Yes Yes Yes Yes

Independent audit committee Yes Yes Yes Yes Yes

Independent compensation and benefits committee Yes Yes Yes Yes Yes

Independent governance committee Yes Yes Yes Yes Yes

Number of Board meetings scheduled or held1 8 8 8 8 6

Shareholder support of the advisory vote on executive compensation

96% 95% 94% 95% 95%

1 Meetings held in person or via telephone.

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OUR PURPOSE | Corporate Governance

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OUR PURPOSE | Public Policy

Public Policy

DISCLOSURES IN THIS SECTIONGRI 102-13GRI 415-1

We are committed to participating constructively and responsibly in the political process, and to providing clarifying analysis and information regarding the issues that affect our business and patient care.RESOURCES

Public Policy Statements

A major element of our corporate responsibility approach is our public policy advocacy work and our outreach to stakeholders at the federal, state and global levels. We advocate for public policies that foster research into innovative medicines and improve access

to medicines, vaccines and health care. We believe this engagement is fundamental to our understanding of—and response to—society’s expectations of our company. Our engagement with stakeholders guides our business strategy and decisions, and strengthens stakeholders’ understanding of—and trust in—our business.

The company’s advocacy priorities are presented regularly to the members of our Executive Committee and the Governance Committee of the Board of Directors, with periodic updates throughout the year.

We recognize that our outreach can help highlight and address important issues, leveraging the expertise of our stakeholders to develop sustainable solutions to such challenges as disease, lack of education, environmental challenges and corruption. We continue to pioneer far-reaching programs and partnerships, the results of which demonstrate that more can be achieved by working together than by individual stakeholders working alone—and that we can make a sustainable difference.

Government proposals to regulate the health care system may directly affect our business and our incentives for pharmaceutical innovation. Important policy initiatives can also increase patient access to medicines and vaccines and to health care insurance coverage—particularly for patients in disadvantaged communities and regions.

Consequently, the company has chosen to help inform the debate on these issues in the U.S. and other countries. Our participation in the political process is guided by the following principles:

y Improve patient access to health care, including medicines and vaccines

y Encourage innovation by protecting intellectual property rights, advocating for government support of basic research, and supporting efficient and effective regulatory systems, among other issues

Our company’s Executive Committee has overall governing responsibility for our public policy strategy, as guided by the Governance Committee of the Board of Directors. Our Global Public Policy Leadership Team leads the development and communication of policy positions on major issues. Statements summarizing our position on key public policy issues are posted on our corporate headquarters’ website.

We engage in public policy debates primarily by communicating information to government officials and policy makers in both Washington, D.C. and state capitals across the U.S. and in the capitals of foreign governments where we operate.

Our U.S. Federal Policy and Global Government Relations office in Washington, D.C., is responsible for advocacy activities with the U.S. Congress and other bodies of the federal government and with foreign embassies. Advocacy at the state level is managed by our State Government Affairs & Policy organization.

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OUR PURPOSE | Public Policy

Additionally, outside of the U.S., advocacy activities are managed at the country level or local level, with support from regional and Global Policy staff.

To assist in our advocacy and policy analysis work, our company and our affiliates contract with a range of private firms specializing in U.S. and global government affairs advocacy. These firms employ government affairs consultants with expertise on issues of importance to our company. Our U.S. Action Network also informs our U.S.-based employees and retirees about important legislative issues and serves as a conduit through which they can communicate with their representatives in Congress.

All of our employees must abide by our global corporate Code of Conduct, “Our Values and Standards,” which applies to our interactions with government officials and to advocacy activities on public policy issues. This code is intended to ensure that all information provided to government entities is complete and accurate to the best of an employee’s knowledge and belief. In the U.S., we also comply with important federal and state lobbying-registration and disclosure laws.

Our corporate policy on ethical business practices includes guidelines conforming to the U.S. anti-kickback laws and Foreign Corrupt Practices Act, making clear that no illegal payments of any kind (monetary or otherwise) are to be offered or made to individuals or entities—including local, state or federal government or political party officials or candidates in the U.S.; government or political party officials or candidates of any other nation; or officials of public international organizations—at any time or under any circumstances.

To improve access to information about our advocacy activities, we disclose costs associated with lobbying in the EU and the U.S. For more information, please see our 2018 reporting to the EU Transparency Register. Costs reflect the pro rata salary costs of MSD staff and the proportion of employee time and outsourcing spent on initiatives involving interest representation to European institutions.

In the U.S., in compliance with the Lobbying Disclosure Act we file quarterly reports with the U.S. Congress disclosing the issues we are lobbying about and the amount of money spent each quarter. These reports incorporate the expenses associated with lobbying the federal government, including those incurred by our U.S. Federal Policy and Government Relations office, and the portion of our trade association dues associated with federal lobbying.

Our top lobbying issuesIn the U.S. in 2018, the top issues at the federal level for which our company lobbied were:

y Defense of Medicare Part B y Defense of Medicare Part D y The 340B drug pricing program

In the U.S. in 2018, our company lobbied at the state level for these key issues:

y Drug price transparency and price controls y Market-based solutions for access to innovative

pharmaceutical, vaccine and biologic products y Support for a strong immunization infrastructure y Removal of legislative and regulatory restrictions for

animal health products y Maintaining a strong business environment for U.S.

operations in the states y Product stewardship/take-back of unused medicines

In Europe in 2018, our advocacy focused on:

y Fostering a framework for a sound pricing and procurement regime in and across diverse EU member state economies

y Support for government vaccination, hepatitis and diabetes programs

y Launch dialogue for sustainable models to fund future cancer care

y Standards for health technology assessment and health literacy

y Science-based policies for biological medicines

Political contributionsWhere permitted by law in the U.S., Canada, Japan and Australia, our company makes corporate political contributions.

Our U.S. employees can participate in the political process by joining a nonpartisan political action committee through which they can pool their financial resources to support federal and state candidates. Except for administrative expenses, our Political Action Committee (PAC) is funded completely by voluntary contributions from eligible employees. The PAC supports legislators from both major parties who understand and appreciate our work to discover and develop medicines and to make them available to the patients who need them.

In addition to our corporate policy governing corporate and PAC contributions, we have developed Principles Governing Corporate and Political Action Committee Spending. These principles are modeled on provisions in the Model Code for Spending, established by the Center for Corporate Political Accountability, and are intended to promote corporate accountability.

Our Contributions Committee approves the budgets for PAC and corporate political contributions and provides oversight over such spending. The Committee is chaired by our Senior Vice President and Corporate Secretary and includes senior managers representing different divisions and corporate functions. The Senior Vice President and Corporate Secretary reviews and approves all political contributions.

To ensure compliance with our company policy and federal and state law, outside legal counsel provides ongoing guidance to our company on its political activities and required disclosure. We also perform periodic audits to assess and enforce compliance

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OUR PURPOSE | Public Policy

with our policy governing our corporate and PAC contributions, and we require those individuals who recommend corporate political contributions in the U.S. to certify their knowledge of and adherence to our corporate Policy and Principles Governing Corporate Political and Political Action Committee Contributions.

As required by our company policy and procedures, our Senior Vice President and Corporate Secretary sends a report twice a year on the company’s corporate political contributions to the Board of Directors. The report discloses every contribution, including the name of each candidate, committee or event contributed to and the amount disbursed. It also includes all trade association dues spent on lobbying and political activity in the U.S. that are greater than $25,000. Our contributions, policies and practices are reviewed and overseen by the Governance Committee of the Board of Directors.

We are also highly transparent with the public. We post our corporate political and PAC contributions in the U.S. categorized by state, candidate and amount to this website semiannually.

Our corporate political contributionsIn 2018, we contributed a total of $901,300 to support the campaigns of 521 candidates for state-level offices in 23 states plus the District of Columbia. We also supported state legislative leadership committees of both parties, industry-affiliated PACs, and national organizations representing elected state officials that meet periodically to discuss policy issues. Our representatives involved in state-government-affairs activities made the recommendations for specific contributions based on the budget and priorities approved by the Contributions Committee.

y Corporate and PAC contributions made within the U.S. during 2018.

Outside legal counsel conducted a thorough review of all proposed contributions to ensure that they were permitted under state law. Final approval was provided by the Corporate Secretary.

We also provide grants to organizations whose role is to represent elected officials in support of public policy advocacy. State Government Affairs & Policy reviews its grants and corporate memberships on an annual basis to decide which of them may be considered for the upcoming calendar year, considering budget constraints and policy priorities. We disclose all public policy grants as part of our general grants disclosure.

The only other countries in which we provide corporate contributions to candidates or political parties are Canada and Australia. These contributions are subject to the same policies and governance procedures discussed above.

y Contributions made in Australia during 2018 y Archived corporate political contribution reports

Industry associationsOur company is a member of numerous industry and trade groups. We work with these groups because they represent the pharmaceutical industry and business community in debates led by governments and other stakeholders, and because they help the industry reach consensus on policy issues.

When our trade associations actively lobby on our core business issues, we seek to align their positions with our own. There are times, however, when we may not share the views of our peers or associations—both on issues that are central to our business and on those that, while

important, are not directly material to our mission. With representatives on the boards and committees of industry groups and trade associations, we can voice questions or concerns we may have about policy or related activities. We may even recuse ourselves from related trade association or industry group activities when appropriate.

The Corporate Secretary sends an annual report to our company’s Board of Directors on trade association dues greater than $25,000 that were spent in the previous year on lobbying and political activity in the U.S. The Governance Committee of the Board of Directors has ongoing oversight of the company’s membership in trade associations and grassroots lobbying activities.

For a list of industry and trade groups of which we are a member, and our trade association dues (those greater than $25,000) that are used for political purposes.

Through our top three trade associations (listed below), we engaged on the following policy issues in 2018:

y Pharmaceutical Research and Manufacturers of America (PhRMA): Defend the Medicare Part D program, Defend the Medicare Part B program, the 340 Drug Discount Program, Defend Intellectual Property Rights and government pricing reforms in Japan and Canada

y U.S. Chamber of Commerce: Defend Intellectual Property Rights

y Biotechnology Industry Organization (BIO): Defend the Medicare Part D program, Defend the Medicare Part B program, the 340 Drug Discount Program and Defend Intellectual Property Rights

This communication of Merck & Co., Inc., Kenilworth, N.J., U.S.A. (the “company”) includes “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based upon the current beliefs and expectations of the company’s management and are subject to significant risks and uncertainties. There can be no guarantees with respect to pipeline products that the products will receive the necessary regulatory approvals or that they will prove to be commercially successful. If underlying assumptions prove inaccurate or risks or uncertainties materialize, actual results may differ materially from those set forth in the forward-looking statements.

Risks and uncertainties include, but are not limited to, general industry conditions and competition; general economic factors, including interest rate and currency exchange rate fluctuations; the impact of pharmaceutical industry regulation and health care legislation in the United States and internationally; global trends toward health care cost containment; technological advances, new products and patents attained by competitors; challenges inherent in new product development, including obtaining regulatory approval; the company’s ability to accurately predict future market conditions; manufacturing difficulties or delays; financial instability of international economies and sovereign risk; dependence on the effectiveness of the company’s patents and other protections for innovative products; and the exposure to litigation, including patent litigation, and/or regulatory actions.

The company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Additional factors that could cause results to differ materially from those described in the forward-looking statements can be found in the company’s 2018 Annual Report on Form 10-K and the company’s other filings with the Securities and Exchange Commission (SEC) available at the SEC’s Internet site (sec.gov).

Visit MSDresponsibility.com to learn more.

The Office of Corporate Responsibility 2000 Galloping Hill Road (K1-3181) Kenilworth, N.J., U.S.A.

Copyright © 2019 Merck Sharp & Dohme Corp., a subsidiary of Merck & Co., Inc., Kenilworth, N.J., U.S.A. All rights reserved.Merck & Co., Inc., Kenilworth, N.J., U.S.A., is known as MSD outside the United States and Canada.

FORWARD-LOOKING STATEMENT