22 ELI LILLY AND COMPANY Affordability We know innovative medicines are only helpful if patients can Changes in the U.S. health care system, such as the increase in afford them. No one should have to ration insulin when managing use of high-deductible health plans, are an ongoing challenge. their diabetes. To fill gaps in the current U.S. health care system, While these plans prioritize lower premiums, they have shifted a Lilly has introduced several insulin affordability programs greater burden of cost-sharing to consumers who need medicines – (referenced below) for people who are most likely to pay effectively causing the sick to subsidize the healthy. higher out-of-pocket costs. This includes those in high-deductible The rebates and discounts we pay to pharmacy benefit managers, insurance plans, the uninsured and seniors in the Medicare Part D insurers, the government and other supply chain entities have coverage gap. continued to grow over the years, not just for insulin but for Our programs are helping. In 2019, the average out-of-pocket our entire U.S. portfolio. We need to restructure the financial spend among people using our savings programs decreased more incentives of the entire pharmaceutical supply chain to ensure than 65%. Today, 95% of Humalog prescriptions at the retail that patients directly benefit from those rebates and discounts pharmacy cost patients $95 or less, and 43% cost nothing at all. at the pharmacy counter. From the first half of 2018 to the last half of 2019, the average You can read more at Lilly.com/access. patient out-of-pocket cost for Humalog at retail pharmacies decreased by 15% to $33.57 per prescription. Comparison of Lilly List and Net Price Changes for U.S. Product Portfolio1 (% change versus the prior year) 16.3% List Price2 Net Price3 14.0% 9.4% 9.7% 6.0% 5.5% 2.4% 3% -0.5% -3.3% 2015 2016 2017 2018 2019 1. U.S. Product Portfolio includes all human pharmaceutical products marketed in the U.S. for which Lilly is the holder of the new drug application (NDA). This represents approximately 94% of our total U.S. human pharmaceutical revenue. 2. List Price represents the weighted average year-over-year change in the wholesale acquisition cost (WAC). 3. Net Price represents weighted average year-over-year change in net price, which is WAC minus rebates, discounts and channel costs. CAPPING OUT-OF-POCKET COSTS* LOWER-PRICED INSULINS Lilly offers savings programs designed to limit out-of-pocket costs In 2019, Lilly launched Insulin Lispro Injection at a list price for Lilly insulins. The vast majority of commercially insured and 50% lower than Humalog U-100. As of January 2020, monthly uninsured patients can expect the out-of-pocket cost for their prescriptions for Insulin Lispro injection had reached more than prescription to be $95 or less at the retail pharmacy. 98,000, and Insulin Lispro made up nearly 14% of the *Pharmacies must participate and uninsured patients must enroll; Humalog family prescriptions. In January 2020, Lilly announced offer invalid for patients whose prescription claims are eligible to be two additional half-priced insulins – Humalog Mix75/25 KwikPen reimbursed by any governmental program; some limitations apply. and Humalog Junior KwikPen (expected availability in April 2020).