The Nevada Supreme Court ruled Thursday that the state’s public records law does not require the disclosure of drug pricing information that could violate a federal trade secrets law, affirming a lower court ruling in an ongoing lawsuit filed by The Nevada Independent in 2019. 

Weighing laws and regulations that allow businesses to keep competitive records confidential, the court’s order limits the public release of information on high insulin prices, including the cost of producing diabetes drugs, administrative expenses and profits reaped by drug companies.

“Nevada’s public records law shines a light on government conduct,” the order signed by Justice Lidia Stiglich and filed Thursday states. “It permits Nevadans insight into whether the officials they elected are holding true to their promises. But this law’s illumination ends where statutory confidentiality provisions begin.”

The case went before a panel of three Supreme Court justices. Chief Justice Ron Parraguirre and Justice Abbi Silver, the other two justices on the panel, joined Stiglich in the decision. The Nevada Independent does not plan to request reconsideration before the full court.

“We are obviously disappointed in this outcome,” said Nevada Independent Editor Elizabeth Thompson. “We sought to obtain drug pricing information that could clarify cost structures and inform public policy to the benefit of many Nevadans. We respectfully disagree that the information sought impinges on the privacy or economic interests of involved parties, and further disagree that the Department of Health and Human Services has demonstrated adequate reason for withholding the information.”

The dispute over drug transparency records stems from a 2017 law, passed by the Legislature and signed by then-Gov. Brian Sandoval. The statute required diabetes drug manufacturers and other companies involved in pricing, known as pharmacy benefit managers (PBMs), to disclose information about pricing for insulin, a medication that often costs patients thousands of dollars each year.

After the state law was approved, two drug lobbying groups sued the state, alleging that it violated the Defend Trade Secrets Act (DTSA), a federal law that protects against the disclosure of certain competitive information. Under the federal law, trade secrets include information a company has taken “reasonable measures” to protect and information with “independent economic value.” 

The pharmaceutical industry case was dismissed, however, after the Department of Health and Human Services approved a regulation allowing drug companies to exempt certain confidential information from disclosure if it was requested under the Nevada Public Records Act (NPRA). 

In 2019, The Nevada Independent reporter Megan Messerly filed a public records request with the state health agency. The state responded to the request, but it largely denied the release of information about the cost-structure of diabetes drugs, as the agency believed it would violate the DTSA. The Nevada Independent filed a lawsuit asking a court to compel the disclosure of the records in question. A District Court judge denied the request, arguing that the documents were exempt from the public records act as trade secrets protected under the federal law. 

At the Nevada Supreme Court, The Nevada Independent challenged the decision to deny the release of the documents and the validity of the state health agency’s regulation regarding what information they would release under the law. The publication argued that the state’s regulation, in allowing drug companies to protect certain trade secrets from disclosure, deviated from the Legislature’s intent with its 2017 law and “operate[d] as a line-item veto over the NPRA.”

The Nevada Supreme Court disagreed. The judges said the state health agency was acting within its legislative mandate to create a regulation to “harmonize” an array of rules, including the DTSA and the public records act, balancing legally required confidentiality with disclosure. 

The Nevada Independent had also argued that the state District Court had erred when it denied the publication’s request to compel the release of the drug manufacturing records. In a brief to the Supreme Court, Nevada Independent attorney Matthew Rashbrook argued the requested public records were not trade secrets under the DTSA, and they are not confidential information.

“The public records sought herein are not trade secrets,” Rashbrook wrote in his opening brief. “They are not made confidential by any law, including the DTSA or Nevada trade secret law.”

But the Nevada Supreme Court said that a lower court correctly determined that the requested information was protected as a trade secret under the DTSA and thus could be withheld. 

“The NPRA permits the disclosure of government documents that are not declared by law to be confidential,” the court ruled. “In this opinion, we hold that the requested documents are confidential under the DTSA and are thus exempted from disclosure under the NPRA.” 

In an interview, Rashbrook noted that Congress passed the DTSA in 2016, and because it is a new law, there are few legal precedents, especially looking at the intersection between the federal law and state public records statutes. Still, Rashbrook said  the Nevada Supreme Court’s ruling clashed with court opinions in other jurisdictions. 

And in practice, he said the court’s opinion effectively invalidated a central intention of the state law passed in 2017 — to bring more transparency to increasing prices for diabetes medications. 

“If the point of the [state law] was to create transparency in this market, I don't know how that can happen when the court's ruling essentially says that only aggregated and anonymized data can be produced” as a public record, Rashbrook said.