LOS ANGELES — Big pharma price hikes -- in the thousands of percentage points in recent years -- are not trade secrets that need to be kept confidential, a state appeals court ruled earlier this month.
In its the 38-page decision and reversal issued April 9, a California Second District Court of Appeal three-justice panel ruled that purchasers who receive state-required notice of those increases, including public health care and pension providers, can disclose information about those notices.
Those increases are never trade secrets, as plaintiff drug company Amgen asserted, the decision said.
"Amgen argues that 'public disclosure of trade secret information constitutes irreparable harm as a matter of law'," the decision's conclusion said. "This argument presupposes that Amgen's price increase notice remained a trade secret after its disclosure to the registered purchasers and customers of pharmacy benefit managers. As we have already explained, we disagree with that assertion."
Appeal Court Justice Helen I. Bendix wrote the decision and reversal in which Justice Frances Rothschild and Superior Court Judge Gregory J. Weingart, who sits on the bench on Los Angeles Superior Court, was assigned to sit in one the Amgen case.
Amgen, along with Ipsen Biopharmaceuticals and GlaxoSmithKline, sued California Correctional Health Care Services (CCHCS) and the state's largest pension fund, California Public Employees’ Retirement System (CalPERS), in an alleged effort to keep private information private.
The pharmaceutical companies challenged a portion of the state's landmark drug pricing bill, Senate Bill No. 17, which passed in 2017, that orders drug manufacturers to notify the state prior to raising prices. The legislation was aimed at fending off big pharma surprise price hikes that, in recent years, have spiked to 2,000 percent and more.
"That statutory section further mandates that registered purchasers who are pharmacy benefit managers give notice to certain of their customers, irrespective of whether those customers are registered purchasers," the decision said. "Senate Bill No. 17 does not impose any confidentiality obligations on the recipients of the price increase notices or restrict their use of the information provided in the notices."
Amgen and the other pharmaceutical plaintiffs argued that their soaring price increases amounted to "trade secrets" exempt from disclosure.
During trial before Los Angeles County Superior Court Judge Mitchell L. Beckloff, CCHCS provided a list of about 170 "registered recipients" who received price-increase notices. The registered recipients included more than 70 public and private entities, including the California Department of Public Health, Los Angeles County, CalPERS, Blue Shield, Kaiser Permanente and CVS Health.
"It appears from the list provided by CCHCS that multiple employees of a single entity have registered for receipt of the price increase notices," a footnote in the decision said.
In February 2019, Beckloff ruled that the drug companies are not required to disclose their scheduled price hikes and that CCHCS could choose not to release information about those price increases prior to the increases. Beckloff also ordered defendants to pay attorneys' fees.
CCHCS appealed.
"On the merits, we agree with CCHCS," the decision said. "Amgen has failed to demonstrate that once it disclosed its price increase information pursuant to Senate Bill No. 17, that information retained whatever status it may previously have had as a trade secret."
Amgen has failed to show that its disclosure was limited under Senate Bill No. 17 and offered no explanation about why registered purchasers should be allowed to take advantage of the disclosed information, including finding cheaper alternatives.
"Given Amgen's failure to show its price increase information was still a trade secret after disclosure to the registered purchasers, we further conclude that the trial court abused its discretion in finding that the balance of harms favored Amgen," the decision said.