PhRMA and BIO Drop their Lawsuit Challenging Nevada’s Drug Price Transparency Law

On June 28, 2018, the Pharmaceutical Research and Manufacturers of America (PhRMA) and Biotechnology Innovation Organization (BIO) dropped their lawsuit challenging the constitutionality of Nevada’s recent drug price transparency law. The Nevada law requires manufacturers to disclose pricing and rebate information for diabetes drugs, such as insulin. Arent Fox previously summarized the law’s requirements in a June 27, 2017 alert.

In their lawsuit, PhRMA and BIO argued that the Nevada law’s disclosure requirements violate federal trade secrets law, the Takings Clause by depriving manufacturers of their interest in their trade secrets, and the Commerce Clause by overriding trade-secret protection laws in other states. But, on May 31, 2018, Nevada’s Department of Health and Human Services (DHHS) adopted implementing regulations that allow manufacturers and pharmacy benefit managers (PBMs) to request that certain information in their drug price reports to the state be kept confidential based on their believe that disclosure would constitute a misappropriation of a trade secret. Under the regulations, if the DHHS receives a public records request to release that information, DHHS will make an initial decision whether the information constitutes a trade secret and then will provide manufacturers 30 days’ notice to take action in court to prevent the disclosure of the information. 

PhRMA and BIO moved for voluntary dismissal after the parties filed a joint status report, which outlines the parties’ understanding that the DHHS’s regulations mitigate PhRMA and BIO’s constitutional concerns. Importantly, in the joint status report, the DHHS represents that it “will not bring any enforcement actions against any manufacturer based on the submission of an incomplete report or no report … as long as the manufacturer submits a compliant report on or before January 15, 2019.”

PhRMA and Bio’s voluntary dismissal of the lawsuit is without prejudice, meaning that the parties are allow to reinitiate the litigation should there be any changes to the trade secret protections included in the adopted regulations or interpretations set forth in the joint status report. PhRMA also released a statement on its agreement to dismiss the lawsuit, which is available here.

The Arent Fox Health Care Group regularly monitors developments regarding the evolving prescription drug price regulatory environment, as well as other issues affecting the pharmaceutical industry. If you have any questions regarding this topic, please contact Stephanie Trunk in our Washington, DC office, Thomas Jeffry in our Los Angeles office, or the Arent Fox professional who regularly handles your matters.