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Frierson directs legislative attorneys to intervene in Big Pharma suit

Megan Messerly
Megan Messerly
Health CareLegislature
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The Legislature has asked a federal judge to allow it to intervene in a lawsuit filed by two major pharmaceutical industry lobbying groups challenging the constitutionality of the state’s first-in-the-nation insulin transparency law passed during the last legislative session.

The Legislature, in a motion filed in federal court on Wednesday, argues that it has a right to “defend its sovereign powers” to create laws for the public health, safety and welfare of the residents of Nevada, a “substantial interest” that will be “impaired” should the body not be allowed to play a role in the lawsuit. Legislative attorneys filed the motion at the direction of Assembly Speaker Jason Frierson in his capacity as chair of the Legislative Commission, which conducts legislative business between the state’s biannual sessions.

In the motion, legislative attorneys contend that the Legislature’s “independent legal interest” in defending the constitutionality of the laws it creates is separate from the responsibility Gov. Brian Sandoval and Department of Health and Human Services Director Richard Whitley, the named defendants in the suit, bear for carrying out those laws. They argue that while the defendants' concerns are focused on the implementation of the legislation, the Legislature’s concern is the “facial validity of the legislation under the historic and traditional balance of powers” between the state and federal government.

“As a consequence, this case strikes at the heart of the Legislature’s sovereign powers under our federal system of shared government, and this case will have significant impacts on the historic and traditional balance of powers between the Federal Government and the State Legislature to regulate for the benefit of public health, safety and welfare,” the motion states.

Under Nevada law, the Legislature has the authority to defend the constitutionality of its laws and elect to intervene in any action or proceeding where someone has alleged the Legislature has violated the federal or state Constitution. The motion notes that the U.S. Supreme Court has previously recognized state legislatures’ authority to defend the constitutionality of their legislation in federal court when state law gives Legislatures the authority to intervene in litigation.

In the lawsuit, the Pharmaceutical Research and Manufacturers of America, or PhRMA, and the Biotechnology Innovation Organization, BIO, argue that Nevada’s insulin transparency law creates an “effective cap” on insulin prices in violation of the U.S. Constitution. The arguments made by the industry in its complaint strongly echo the arguments made during the legislative session against an earlier draft of the legislation that would have created an actual cap on insulin prices, while the final version of the bill only mandates transparency from drug companies about certain price increases.

Representatives of the pharmaceutical industry spoke with legislative legal counsel about their concerns with the bill as it wound its way through the legislative process. Though the industry raised a number of concerns, it was the opinion of legislative legal counsel that the concerns “would not result in the bill being struck down in court” and that “all provisions of Senate Bill 265 are legally defensible.”

The legislation ultimately passed was a chimera of Democratic Sen. Yvanna Cancela’s SB265, which focused primarily on requiring transparency from insulin manufacturers about their drug prices, and Republican Senate Leader Michael Roberson’s SB539, which required a similar level of transparency from the middlemen in the drug pricing process known as pharmacy benefit managers. The pharmaceutical industry is only challenging the portions of the bill requiring companies to disclose details about how they set the prices of insulin drugs.

Frierson confirmed on Wednesday that he directed the Legislative Counsel Bureau to appear in the lawsuit on behalf of the Legislature. Asked for specific details about why he chose to do so, Frierson said in a text message that he was out of town and did not respond to further requests for comment.

Under state law, the chair of the Legislative Commission has the authority to direct legislative attorneys to take action in a lawsuit requiring action before the next meeting of the commission is scheduled to be held. At a meeting of the commission last week, legislative attorney Brenda Erdoes said the legal division had sought and received direction and authorization from Frierson to defend the law “under the expedited schedule” — with a hearing scheduled for Oct. 17 — and that they were researching and drafting a response on behalf of the Legislature.

The plaintiffs, in a motion filed Sept. 13, initially asked the court to issue a temporary restraining order to prevent the state from implementing the sections of insulin transparency law they are challenging, some of which go into effect on Oct. 1 and others which go into effect either later this year or next year. They asked the court to issue the restraining order and then quickly schedule a hearing before Oct. 1 to enjoin the sections of law, saying they will cause “irreparable harm” to pharmaceutical companies.

U.S. District Court Judge James Mahan swiftly denied the pharmaceutical companies’ motion for a temporary restraining order, saying in his order that they did not demonstrate there would be significant harm done before the state could argue its opposition at a hearing. He also noted that the first round of transparency disclosures required by certain pharmaceutical companies aren’t due until the beginning of July and said the plaintiffs had not demonstrated why any harm would come to them in October.

The state, in its response to the pharmaceutical companies’ motion filed earlier this week, argued that the request for the injunction is premature because the department hasn’t yet gone through the public rulemaking process to implement the new law.

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