In the Federal District Court of Oregon, the Pharmaceutical Research and Manufacturers of America (PhRMA) sought a declaration that a state law compelling the disclosure of trade secrets was unconstitutional. PhRMA is a trade group comprised largely of pharmaceutical and biotechnology companies.

The Oregon statute requires pharmaceutical and biotech companies to report certain information about drug pricing unless: “(1) the information is a trade secret under Oregon law and (2) the public interest does not require disclosure.” In the case of drugs for which the company has increased the price, the disclosure includes the factors that contributed to the price increase, the research and development costs associated with the drug, its manufacturing and marketing costs, the associated revenue and profit, and the prices charged for the same drug in foreign countries.

Before the District Court, PhRMA successfully argued that this statute violates the 5th Amendment as an unconstitutional taking, given that the required disclosures would destroy the value and existence of any responsive trade secrets. The Oregon Department of Consumer and Business Services, through its director Andrew Stolfi (Stolfi), appealed to the US Federal Court of Appeals for the Ninth Circuit seeking to overturn the District Court’s ruling on the constitutional takings issue (among others). In the currently pending appeal, Stolfi argues that the District Court applied the wrong legal standard when scrutinizing the constitutionality of a purported regulatory taking through a voluntary disclosure. PhRMA contends the District Court correctly analyzed the issues.

This dispute has captured the attention of many, with about twenty states, the Oregon Coalition for Affordable Prescriptions as well as the US Chamber of Commerce filing amicus briefs. Oral argument is set for February 5, 2024. We will report on the results of the Court of Appeals ruling on this case.