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Senate Minority Leader James Settelmeyer on the Senate floor on the first day of the Nevada Legislature's 80th Session on Monday, Feb. 4, 2019 in Carson City, Nev. (David Calvert/The Nevada Independent)

A Democratic-controlled Senate rejected on Wednesday an amendment backed by their Republican colleagues that would have removed a carveout in state trade secret law long opposed by the national drug lobby.

In a speech on the floor, Senate Republican Leader James Settelmeyer framed the amendment as an attempt to codify an agreement reached between drug companies and the state following a lawsuit over Nevada’s first-in-the-nation diabetes drug pricing transparency law passed in 2017, which required manufacturers and drug pricing middlemen to disclose to the state certain costs and profits associated with the manufacture and sale of diabetes drugs. As part of that agreement, the state mapped out a process in regulation to protect information that drug companies believe to be trade secret protected from public disclosure.

But as lawmakers are looking to expand that law to also apply to asthma drugs this session, drug companies have raised concerns that those regulatory protections don’t go far enough because they specifically refer to the 2017 bill.

“The framework for protection of trade secrets in the regulations adopted for diabetes transparency reporting applies to disclosures under statute but were written by referencing the specific bill that created those sections,” the drug lobbying organization Pharmaceutical Research and Manufacturers of America (PhRMA) said in a statement opposing the asthma bill. “The confidentiality language in the regulations for the diabetes transparency bill should be adopted in SB 262 to clarify that the requirements and considerations apply to disclosures required by those sections of statute generally and not just pursuant to any specific bill.”

Settelmeyer, in a brief interview after the vote, said that’s what he was trying to accomplish through bringing forward the amendment. He said it is a concern that he has “had for awhile” and that he spoke with PhRMA about it after the fact.

“I said, ‘Aren't we just wasting more money?’ and they said, ‘Yeah, it's probably going to end up in litigation again,’ and I said, ‘Well why do that again? Why expect a different result?’” Settelmeyer said.

He said he didn’t want to see the state throw taxpayer dollars away on another costly lawsuit if it passes the new asthma pricing transparency bill, SB262, this session.

“That regulation was only specific to the insulin,” Settelmeyer said. “So if it's only specific to the insulin, then the only way to have this apply without going through litigation would be to present an amendment.”

But the regulations didn’t actually void the 2017 bill's carveout in trade secret law for information required to be disclosed to the state, as the amendment seeks to do. The regulations instead required the state to make an initial determination about whether any information requested to be disclosed under the state's public records law could constitute a trade secret under federal law; if they believe it does, the requestor is required to go to court to prove their case and explain why it should be subject to public disclosure.

Democratic state Sen. Yvanna Cancela, who sponsored both the diabetes and asthma drug pricing bills, said on the floor that she believed the proposed amendment would weaken the state’s drug pricing transparency statute and pointed to the existing regulatory framework in place.

“The regulations addressed the concerns the parties brought forward,” Cancela said. “I'm hopeful that those regulations, that regulatory process would allow for the discussion to happen.”

Settelmeyer said he doesn’t know how he’s going to vote on the legislation when it returns to the Senate floor on Thursday. He and the majority of his Republican colleagues voted in favor of the diabetes drug transparency legislation two years ago, but he said that the new bill is “bad policy knowing where it’s headed.”

He said he still supports the overall goal of “trying to get to the bottom of lower costs for people” but questioned whether last session’s bill had done anything to reveal the actual costs of diabetes drugs.

A report released by the state last month found wide variations in the profitability of drugs used to treat diabetes because of the requirement to aggregate data so as to not reveal drug company identities.

“I agree with transparency, but only if it works,” Settlemeyer said. “In other words, put it this way: I regret voting for any bill that doesn't work because we just added pages to the Nevada Revised Statutes that have not done anything, and I find that offensive.”

He did, however, say that he expects some members of his caucus to support the legislation.

In the wake of the 2017 legislation, drug companies gave $1.7 million to Nevada lawmakers, parties and political action committees, including $1.3 million to Republicans and $330,000 to Democrats. In total, 16 Democratic and 21 Republican candidates received contributions from the pharmaceutical industry over the 2018 cycle.

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