Sanofi Motion To Intervene

Electronically Filed
10/21/2019 11:05 AM
Steven D. Grierson
CLERK OF THE COURT
Case Number: A-19-799939-W

1 CERTIFICATE OF SERVICE
2 I certify that I am an employee of BAILEY KENNEDY and that on the 21st day of
3 October, 2019, service of the foregoing MOTION TO INTERVENE AND TO CONTINUE
4 HEARING, ON SHORTENED TIME was made by mandatory electronic service through the
5 Eighth Judicial District Court’s electronic filing system and/or by depositing a true and correct copy
6 in the U.S. Mail, first class postage prepaid, and addressed to the following at their last known
7 addresses:
8 MATTHEW J. RASHBROOK Email: [email protected]
ROBERT L. LANGFORD [email protected]
9 ROBERT L. LANGFORD & ASSOCIATES
616 South Eighth Street Attorneys for Petitioner
10 Las Vegas, Nevada 89101 THE NEVADA INDEPENDENT
11 AARON D. FORD Email: [email protected]
ATTORNEY GENERAL
12 STEVE SHEVORSKI Attorneys for Respondents
CHIEF LITIGATION COUNSEL RICHARD WHITLEY, in his official
13 OFFICE OF NEVADA ATTORNEY GENERAL capacity as the Director of the Nevada
555 East Washington Avenue, Suite 3900 Department of Health and Human
14 Las Vegas, Nevada 89101 Services, and THE STATE OF
NEVADA, ex rel. the NEVADA
15 DEPARTMENT OF HEALTH AND
HUMAN SERVICES
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18 __/s/ Josephine Baltazar

Employee of BAILEY KENNEDY
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EXHIBIT 1
EXHIBIT 1
EXHIBIT 2
EXHIBIT 2
1 DECLARATION OF JAMES BORNEMAN
2 I, James Borneman, declare as follows:
3 1. I am currently the Vice President and Head, Diabetes and Primary Care Sales, for
4 Sanofi US. From July 2014 — May 2017, I was Vice President, Strategic Pricing and Contract
5 Management, and from June 2017 — July 2018, I was the Head, Customer Engagement & Insights,
6 both for Sanofi US. In these capacities, I was responsible for and am knowledgeable about the
7 establishment of all gross and net pricing strategies for all Sanofi US pharmaceutical products to
8 include oversight of the organization’s gross-to-net investments. I am knowledgeable about Sanofi
9 US’s pricing and contracting for its prescription drugs, including its diabetes therapies.
10 2. Sanofi US is the U.S. affiliate of Sanofi, a global life sciences company committed to
11 improving access to healthcare and supporting the people we serve throughout the continuum of
12 care. From prevention to treatment, Sanofi transforms scientific innovation into healthcare solutions
13 in human vaccines, rare diseases, multiple sclerosis, oncology, immunology, infectious diseases,
14 diabetes and cardiovascular, consumer healthcare, established prescription products and generics.
15 More than 100,000 people at Sanofi are dedicated to making a difference in patients’ daily lives,
16 wherever they live, and enabling them to enjoy a healthier life.
17 3. Headquartered in Bridgewater, New Jersey, Sanofi US employs approximately
18 12,500 professionals throughout the country, including at a distribution center in Reno, Nevada. In
19 addition to Diabetes & Cardiovascular and General Medicines, our other businesses operating in the
20 United States include Sanofi Genzyme (specialty care), Sanofi Pasteur (vaccines), Winthrop
21 (generics) and Chattem (consumer healthcare).
22 4. Sanofi has a rich history of innovation dating back more than 100 years. We are
23 tremendously proud of our heritage, which over the years has combined steady growth and
24 expansion with an exceptional commitment to research and development.
25 5. For example, since the launch of Lantus (insulin glargine injection) 100 units/ml,
26 Sanofi has continued investing to better support clinical decision making for patients with diabetes
27 through comprehensive research including over 2200 full-text publications from results of
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Page 1 of 6
1 approximately 500 randomized controlled clinical trials, over 220 real-life patient studies and over
2 50 meta-analyses.
3 6. Sanofi holds or has had rights to patents protecting prescription drugs marketed and
4 sold by Sanofi US, including patents protecting Adlyxin, Admelog, Amaryl, Apidra, Diaβeta,
5 Lantus, Soliqua and Toujeo which are FDA-approved for the treatment of diabetes. I understand
6 that Sanofi is required to provide certain information to the Nevada Department of Health and
7 Human Services (“Department”) pursuant to Nevada Senate Bill No. 539 (“SB 539” or “the Act”)
8 for drugs that are “essential” to the treatment of diabetes, which includes the above products.
9 7. I understand that on at least January 15, 2019, April 1, 2019 and August 7, 2019,
10 pursuant to the requirements of the Act, Sanofi US confidentially reported substantial financial and
11 marketing information related to Adlyxin, Admelog, Amaryl, Apidra, Diaβeta, Lantus, Soliqua and
12 Toujeo to the Department (“Sanofi Reports”).
13 8. Pursuant to Section 3.8 of the Act, the Sanofi Reports included confidential
14 information regarding the above products in response to the following categories of information:
15 • The total cost of producing the drug;
16 • Total administrative expenditures relating to the drug;
17 • Profit manufacturer earned from the drug;
18 • Percentage of manufacturer’s total profit attributed to drug during marketing

period for drug sale;
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• Total amount of financial assistance provided through patient Prescription
20 Assistance Programs;
21 • Cost associated with consumer coupons for consumer Copayment Assistance

Programs;
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• Manufacturer cost attributable to redemption of consumer coupons and use of
23 consumer Copayment Assistance Program; and
24 • Aggregate amount of all rebates manufacturer provided to Pharmacy Benefit

Managers for drug sales in Nevada in dollars.
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Page 2 of 6
1 9. Pursuant to Section 4.0 of the Act, the Reports also included confidential information
2 regarding recent wholesale acquisition cost (“WAC”) increases for Adlyxin, Apidra, Lantus, Soliqua
3 and Toujeo in response to the following categories of information:
4 • A list of factors that has contributed to the increase;
5 • The explanation for the percent increase attributable to each factor; and
6 • An explanation of the role each factor played in the increase.
7 10. As part of the Sanofi Reports, Sanofi US also included letters (re: “Sanofi US Trade
8 Secret/Confidentiality Request Pursuant to Nevada SB 539”) pursuant to, and in reliance on, Nevada
9 Administrative Code §§439.730-740 regarding the trade secret status of Sanofi’s confidential
10 information. The letters, among other things, referenced the Defend Trade Secrets Act of 2016 and a
11 litigation captioned Pharmaceutical Research and Manufacturers of America v. Sandoval, et. al.,
12 United States District Court, District of Nevada, Case No. 2:17-cv-02315-JCM-CWH.
13 11. A true and correct copy of the Letter dated January 15, 2019 is attached hereto as
14 Exhibit 11. A true and correct copy of the Letter dated April 1, 2019 is attached hereto as Exhibit
15 12.
16 12. The Sanofi Reports comprise information that is of substantial independent economic
17 value to Sanofi US by virtue of being confidential and non-public. Information such as pricing
18 inputs and rationale is restricted internally, is only shared internally on a need-to-know basis, and is
19 subject to non-disclosure provisions in Sanofi US’s employment and other business agreements.
20 Employees are required to maintain the secrecy of this information, and are subject to discipline —
21 up to and including termination — by Sanofi US for its unauthorized disclosure.
22 13. Information such as the factors considered in setting and adjusting the prices of our
23 products and the percentage of our profits that derive from diabetes drugs are confidential and
24 proprietary. This information is not shared publicly, and access to it is restricted internally and only
25 shared internally on a need-to-know basis. It is subject to non-disclosure provisions in Sanofi US’s
26 employment and other business agreements. Employees are required to maintain the secrecy of this
27 information, and are subject to discipline — up to and including termination — by Sanofi US for its
28 unauthorized disclosure.
Page 3 of 6
1 14. I understand that the Department has received, from a reporter for The Nevada
2 Independent website, at least one request for information under the Nevada Public Records Act.
3 (Petition for Writ of Mandamus, at Ex. 2-1.)This request seeks, among other things, a disclosure of
4 the confidential information in the Sanofi Reports.
5 15. Disclosure of the Sanofi Reports to The Nevada Independent would significantly
6 harm Sanofi US. Once this information is publicly disclosed in Nevada, including to the readers of
7 the Nevada Independent, it is permanently public everywhere.
8 16. Our customers and competitors would gain an unfair competitive advantage over
9 Sanofi US if they were to obtain the financial and marketing information in the Sanofi Reports,
10 which have now been requested by The Nevada Independent. In particular, our customers would
11 learn how we develop our pricing, which in turn could be used against us in negotiations with
12 insurers and other intermediaries in the healthcare system — and ultimately negatively impact
13 patients, by discouraging innovations that would benefit them.
14 17. Likewise, our competitors would learn how we allocate our resources and set our
15 prices. This in turn could put Sanofi US at a significant disadvantage, especially if our competitors
16 do not make a diabetes drug and thus are not subject to SB 539’s disclosure requirements. We
17 consider the same or similar factors when setting prices for other products. Thus, the information
18 disclosed would significantly harm Sanofi US in competition involving non-diabetes products as
19 well.
20 18. These impacts will not just be felt in Nevada, but will be felt nationally. The prices
21 Sanofi US sets and the methods that it uses to set them are substantially the same from state-to-state.
22 Thus, the information disclosed under SB 539 would have implications on our negotiations with
23 customers and our competitive positioning nationwide.
24 19. For example, many of the other healthcare supply chain stakeholders are national
25 companies that negotiate national contracts. Healthcare purchasers such as the Culinary Union
26 #226, which was a major public proponent of SB 539, are affiliated with Unite Here, a national
27 union with affiliates in 37 states.
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Page 4 of 6
1 20. Sanofi US has a longstanding commitment to research in the diabetes space and there
2 is much remaining to be done in the diabetes space to ensure better outcomes for patients. Sanofi
3 invested significant capital in developing Adlyxin Admelog, Amaryl, Apidra, Diaβeta, Lantus,
4 Soliqua and Toujeo, despite the substantial risk that this investment would not bear fruit. Sanofi
5 obtained patents on these products, which gives Sanofi US the exclusive legal right to market these
6 drugs for the term of those patents. Such patent exclusivity enables Sanofi US to price Adlyxin
7 Admelog, Amaryl, Apidra, Diaβeta, Lantus, Soliqua and Toujeo at a level that helps to recoup the
8 investment in this research and development, given that many experimental products do not even
9 make it to the submission or approval stages. Now, however, if the Sanofi Reports were to be
10 subject to public disclosure, Sanofi faces the unenviable choice of either forgoing its right under the
11 patent laws to price the products at this level, or suffering the substantial penalty of disclosure of
12 trade secret information. The risks of competitive harm will lower the value of existing and future
13 patents on diabetes products, diminishing the incentive, or creating a disincentive, to invest in
14 developing and enhancing those drugs. Ultimately, this could slow or blunt the process of providing
15 better treatments for patients.
16 21. Disclosure of the Sanofi Reports also could have severe unintended consequences.
17 Given the significant investment required to fund research and development, such a focus could have
18 a chilling effect on Sanofi’s efforts in the diabetes space. For example, the lack of reporting
19 thresholds in Section 3.8 of the Act (other than the requirement that the drug be “essential” to
20 diabetes treatment) and a very low threshold for reporting price increases in Section 4 of the Act
21 (any price greater than the CPI for medical products) could result in lower return on the patent rights
22 and other innovations in the diabetes space than in other disease spaces. Further, Sanofi could be
23 placed at a competitive disadvantage relative to companies who do NOT manufacture diabetes
24 medicines, who reap an unexpected benefit by virtue of the publication of the Sanofi Reports. Given
25 that Sanofi US considers the same or similar factors when setting the prices for other products, the
26 information disclosed could disadvantage Sanofi US in competition involving non-diabetes products
27 as well.
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EXHIBIT 3
EXHIBIT 3
Case 2:17-cv-02315-JCM-CWH Document 1 Filed 09/01/17 Page 1 of 44
1 Pat Lundvall
Nevada Bar No. 3761
2 MCDONALD CARANO LLP
2300 West Sahara Avenue, Suite 1200
3 Las Vegas, NV 89102
Telephone: (702) 873-4100
4 [email protected]
5 Robert N. Weiner
Pending Admission Pro Hac Vice
6 Jeffrey L. Handwerker
7 R. Stanton Jones
8 ARNOLD & PORTER KAYE SCHOLER LLP
601 Massachusetts Avenue, NW
9 Washington, DC 20001
Telephone: (202) 942-5000
10 [email protected]
[email protected]
12
Attorneys for Plaintiffs Pharmaceutical
13 Research and Manufacturers of America and
Biotechnology Innovation Organization
14
15
UNITED STATES DISTRICT COURT
16 DISTRICT OF NEVADA
17
PHARMACEUTICAL RESEARCH AND Case No.:
18 MANUFACTURERS OF AMERICA, and
COMPLAINT FOR DECLARATORY
19 AND INJUNCTIVE RELIEF
BIOTECHNOLOGY INNOVATION
20 ORGANIZATION,
21 Plaintiffs,
22
vs.
23
BRIAN SANDOVAL, in his official capacity
24 as Governor of the State of Nevada, and
25 RICHARD WHITLEY, in his official capacity

as Director of the Nevada Department for
26
Health and Human Services,
27
Defendants.
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1 Plaintiffs Pharmaceutical Research and Manufacturers of America (“PhRMA”) and
2 Biotechnology Innovation Organization (“BIO”) (together, “Plaintiffs”), on behalf of themselves
3 and their members, for their Complaint against Brian Sandoval, in his official capacity as Governor
4 of the State of Nevada (the “State”), and Richard Whitley, in his official capacity as Director of the
5 Nevada Department of Health and Human Services (together, “Defendants”), allege as follows:
6 INTRODUCTION
7 1. Plaintiffs bring this action to block an unprecedented and unconstitutional Nevada
8 law that interferes with the federal patent and trade-secret laws, deprives manufacturers of their
9 property interest in their trade secrets, and improperly overrides the regulatory choices of every
10 other state. Because the new Nevada statute violates multiple provisions of the United States
11 Constitution, this Court has subject matter jurisdiction under 28 U.S.C. § 1331.
12 2. Nevada recently enacted Senate Bill No. 539 (“SB 539” or the “Act,” attached as
13 Exhibit A), a statute novel in its scope, ambition, and nationwide effect. As a penalty for exercising
14 rights protected under the U.S. patent laws, SB 539 strips pharmaceutical manufacturers of trade-
15 secret protection for confidential, competitively sensitive, proprietary information regarding the
16 advertising, cost, marketing, pricing, and production of their patented diabetes medicines. The Act
17 then compels manufacturers to disclose this information to the Nevada Department of Health and
18 Human Services (the “Department”), which must publish at least some of the information on its
19 website and may disseminate the rest as it pleases.
20 3. By extinguishing trade-secret protection for manufacturers’ confidential, proprietary
21 information, burdening the lawful exercise of longstanding federal patent rights, and interfering
22 with the national market for diabetes medicines, the Act violates the U.S. Constitution in at least
23 four ways.
24 4. First, SB 539 violates the Supremacy Clause because it conflicts with federal patent
25 law, including the Drug Price Competition and Patent Term Restoration Act of 1984, known as the
26 Hatch-Waxman Act. The federal patent laws allow a patent holder to exclude others from making,
27 using, or selling new inventions. The Hatch-Waxman Act adapts this system to pharmaceuticals
28 through a comprehensive federal scheme to provide broad access to affordable medicines while
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1 offering economic incentives sufficiently potent to motivate innovators to shoulder the enormous
2 costs and risks to develop pioneering new treatments. SB 539 upsets this legislative balance by
3 burdening a patent holder’s right to price its product in a manner reflecting the economic incentives
4 the federal patent laws are intended to ensure.
5 5. Second, SB 539 also conflicts with, and is therefore preempted by, federal trade-
6 secret law. Recognizing that protection of trade secrets is critical to the success of U.S. businesses,
7 Congress enhanced existing state-law safeguards by enacting the Defend Trade Secrets Act of 2016
8 (“DTSA”). The DTSA sets a federal baseline for trade-secret protection. SB 539 does not merely
9 fall below this baseline. It effectively nullifies federal protection for valuable trade secrets,
10 undermining innovation and competition in the American pharmaceutical industry.
11 6. Third, SB 539 violates the Takings Clause of the Fifth Amendment by depriving
12 affected manufacturers of trade-secret protection for their confidential information, forcing them to
13 disclose it to the State, and ensuring that much of it is disseminated on the Internet, including to
14 third-party payers and competitors. Before SB 539, these materials qualified as trade secrets under
15 the laws of every state, including Nevada. Trade secrets are property. SB 539 destroys the value of
16 that property without recompense. It thus deprives manufacturers of their property “without just
17 compensation,” in violation of the Takings Clause.
18 7. Fourth, SB 539 violates the dormant Commerce Clause because the penalty it
19 imposes in Nevada impedes commerce in other states. By tying penalties to the national list price
20 for a drug, SB 539 affects drug prices throughout the country, even for drugs bought and sold
21 entirely outside of Nevada. The Act also eviscerates trade-secret protection not only in Nevada, but
22 in every other state as well. Requiring disclosures, rescinding trade-secret protection for the
23 information disclosed, and mandating its publication on the Internet destroys its confidentiality.
24 Such disclosures cannot be undone—information cannot be undisclosed. SB 539 overrides the
25 protections of other states that treat the information as trade secrets, including states where the
26 affected manufacturers reside, pay taxes, and employ thousands of workers. Whatever purported
27 local benefit SB 539 might seek for Nevada purchasers of diabetes medicines is far less substantial
28 than the displacement of the laws of every other state in the Union. Only Congress has the authority
3
1 to override state trade-secret law or to impose national economic policies. Nevada cannot do so
2 unilaterally.
3 8. SB 539’s constitutional infirmities led Governor Brian Sandoval to veto a
4 substantially similar bill—Senate Bill 265 (“SB 265”)—just three months ago. Governor Sandoval
5 warned that provisions of the earlier bill “could be challenged under theories of federal preemption,
6 the Fifth Amendment’s prohibition on uncompensated takings, and the Dormant Commerce
7 Clause.” Veto Letter from Gov. Brian Sandoval to Sen. Maj. Leader Aaron Ford 3 (June 2, 2017)
8 (“Veto Letter,” attached as Exhibit B). The Governor was right, but SB 539 did not alleviate the
9 defects he identified.
10 9. Governor Sandoval further recognized that, beyond these constitutional defects, SB
11 265 could seriously harm Nevada residents suffering from diabetes. The bill, in the Governor’s
12 view, posed “serious risks of unintended and potentially detrimental consequences for Nevada’s
13 consumer patients, not the least of which is the possibility that access to critical care will become
14 more expensive, more restricted, and less equitable.” Id. at 2. He cautioned that the bill “could
15 cause more harm than good for Nevada’s families.” Id. “Before I support a bill [this] uncertain,”
16 he wrote, “which deals so directly and extensively with the health and well-being of countless
17 Nevadans, there must be compelling evidence that the benefits are worth the risks.” Id. at 3. There
18 was no such evidence, and the Legislature did not remedy that deficit in adopting SB 539.
19 10. Accordingly, Plaintiffs seek a declaration that the challenged provisions of SB 539
20 are preempted by federal law and also violate the Takings Clause and the dormant Commerce
21 Clause. Plaintiffs also seek an injunction prohibiting the defendants from implementing or
22 enforcing those provisions.
23 PARTIES
24 11. PhRMA is a non-profit corporation organized under Delaware law, with its
25 headquarters in Washington, D.C. PhRMA serves as the pharmaceutical industry’s principal public
26 policy advocate, representing the interests of its members before Congress, the Executive Branch,
27 state regulatory agencies and legislatures, and the courts. Among other objectives, PhRMA seeks to
28 advance public policies that foster continued medical innovation and to educate the public about the
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1 process for discovering and developing new drugs. PhRMA members are the leading research-
2 based pharmaceutical and biotechnology companies in America, devoted to discovering and
3 developing new medications that allow people to live longer, healthier, and more productive lives.1
4 12. BIO is the world’s largest trade association representing more than 1,000
5 biotechnology companies, academic institutions, state biotechnology centers and related
6 organizations across the United States and in more than 30 other nations. BIO members are
7 involved in the research and development of innovative healthcare, agricultural, industrial and
8 environmental biotechnology products.2
9 13. Defendant Brian Sandoval is the Governor of the State of Nevada and is sued in his
10 official capacity only. As Governor, Defendant Sandoval is responsible for the execution of SB
11 539.
12 14. Defendant Richard Whitley is the Director of the Department and is sued in his
13 official capacity only. As Director of the Department, Defendant Whitley is responsible for the
14 implementation and execution of SB 539, including the promulgation of rules and the assessment of
15 administrative penalties authorized by the Act. See SB 539, 2017 Leg., 79th Sess. §§ 7–8 (Nev.
16 2017).
17 JURISDICTION AND VENUE
18 15. Plaintiffs’ causes of action arise under 42 U.S.C. § 1983 and the United States
19 Constitution. The Court thus has jurisdiction under 28 U.S.C. § 1331.
20 16. Venue is proper in this district under 28 U.S.C. § 1391(b) because Plaintiffs’ claims
21 arise in this judicial district and because Defendants reside and perform their official duties in this
22 district.
23 17. An actual controversy exists between the parties within the meaning of 28 U.S.C.
24 § 2201, and this Court has the authority to grant declaratory and injunctive relief pursuant to 28
25 U.S.C. §§ 2201 and 2202.
26 1
A list of PhRMA members is available at Members, http://www.phrma.org/about/members.
27 2
A list of BIO members is available at BIO Member Directory, http://www.bio.org/bio-member-
directory.
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1 BACKGROUND
2 Plaintiffs’ Members Devote Billions of Dollars Each Year to Developing Innovative

Diabetes Medicines in Reliance on Patent and Trade-Secret Law
3
18. Diabetes is an epidemic in the United States, with more than 30 million Americans
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diagnosed with either Type 1 or Type 2 diabetes. Type 1 diabetes is an autoimmune disease in
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which the immune system attacks the insulin-producing cells of the pancreas, and the body as a
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result produces too little insulin, the principal hormone regulating the body’s absorption of glucose
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(sugar) from the blood. In Type 2 diabetes, the body resists the effects of insulin and, although the
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pancreas produces abnormally high levels of insulin to overcome this resistance, blood glucose rises
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to higher levels than normal. About 5 to 10% of diabetes diagnoses are Type 1, and 90 to 95% are
10
Type 2. See What Is Diabetes?, Nat’l Inst. of Diabetes & Digestive & Kidney Diseases, Nat’l Insts.
11
of Health, https://www.niddk.nih.gov/health-information/diabetes/overview/what-is-diabetes. High
12
levels of glucose in the blood can result in a number of complications, including vision loss, kidney
13
disease, and cardiovascular disease. Id.
14
19. Diabetes is the seventh leading cause of death in the United States. In addition to the
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30 million Americans diagnosed with the disease itself, another 84 million have pre-diabetes—
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abnormally high blood sugar levels that increase the risk of developing diabetes in the future. All
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told, over half the adults in the United States have either diabetes or pre-diabetes. See A. Menke et
18
al., Prevalence of and Trends in Diabetes Among Adults in the United States, 1988-2012, 314
19
JAMA 1021 (2015), www.jamanetwork.com/journals/jama/fullarticle/2434682.
20
20. For a century, Plaintiffs’ members have been at the forefront of the fight against
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diabetes, starting with the mass production of early animal-based insulins by Eli Lilly in 1922.
22
Before the discovery of insulin as a diabetes treatment, a diagnosis of diabetes was a swift death
23
sentence. Even with a strict diet, a patient typically survived “no more than three or four years.”
24
Diabetes Que., Treating Diabetes: 1921 to the Present Day (Nov. 2016),
25
http://www.diabete.qc.ca/en/understand-diabetes/all-about-diabetes/history-of-diabetes/treating-
26
diabetes-1921-to-the-present-day. In 1897, the average life expectancy of a 10-year-old child
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diagnosed with diabetes was just one year and, for a 30-year-old, only four years. See Dawn
28
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1 Swidorski, Diabetes History, Defeat Diabetes Found. (Jan. 22, 2014),
2 https://www.defeatdiabetes.org/diabetes-history. Their quality of life was also poor. Blood vessel
3 or nerve damage resulted in dizziness and fainting, frequent urination, blindness, kidney failure, and
4 infections leading to amputation.
5 21. While the disease “is still associated with a reduced life expectancy, the outlook for
6 patients with th[e] disease has improved dramatically,” Kenneth S. Polonsky, The Past 200 Years in
7 Diabetes, 367 New Eng. J. Med. 1332, 1332 (2012),
8 http://www.nejm.org/doi/full/10.1056/NEJMra1110560, owing significantly to the enormous
9 investments by Plaintiffs’ members in research and development of innovative diabetes treatments.
10 Many innovative treatments have broken new scientific ground and significantly improved patients’
11 life expectancy and quality of life.
12 22. In 1921, a pair of scientists discovered that they could reverse diabetes in dogs by
13 injecting them with an extract—insulin—from the pancreatic islets of healthy dogs. See Brian Wu,
14 History of Diabetes: Past Treatments and New Discoveries, Med. News Today (May 2017),
15 http://www.medicalnewstoday.com/articles/317484.php. The following year, Eli Lilly began mass
16 producing animal-based insulin and, in 1925, Novo Nordisk gained the rights to produce insulin
17 outside North America, allowing diabetes patients across the world to better manage their condition.
18 Id.; Novo Nordisk, The Founders, www.novonordisk.com/about-novo-nordisk/novo-nordisk-
19 history/the-founders.html.
20 23. Since then, pharmaceutical manufacturers have devoted very substantial resources to
21 improving insulin treatment and otherwise controlling diabetes. For example:
22  In 1936, a scientist discovered that adding protamine prolonged the effects of

23 injected insulin.
 In 1950, Novo Nordisk introduced Neutral Protamine Hagedorn (“NPH”) Insulin,
24 a drug so important in treating diabetes that it is on the World Health
25 Organization model list of essential medicines. See WHO Model List of
Essential Medicines, World Health Org. (20th ed.) (Mar. 2017),
26 http://www.who.int/medicines/publications/essentialmedicines
/20th_EML2017.pdf.
27
 In 1964, the Ames Company, a subsidiary of the Dr. Miles Medical Company
28 that later merged into Bayer AG, introduced the first strips for testing blood
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glucose, which allowed diabetes patients to monitor and regulate their glucose
1 levels frequently and conveniently. See Am. Diabetes Ass’n, 75th Anniversary
2 Timeline, http://www.diabetes.org/about-us/75th-anniversary/timeline.html
(“75th Anniversary Timeline”). By 1981, the Ames Company introduced home
3 glucose meters, allowing patients to accurately check their own blood glucose
levels without having to visit a doctor’s office. S.F. Clarke & J.R. Foster, A
4 History of Blood Glucose Meters and Their Role in Self-Monitoring of Diabetes
Mellitus, 69 Brit. J. of Biomed. Sci. 83, 86 (2012).
5
 In 1982, FDA approved Eli Lilly’s Humulin, the first human insulin product,
6 freeing the world’s supply of insulin from its supply using animal sources. See
Lawrence K. Altman, A New Insulin Given Approval for Use In U.S., N.Y.
7
Times, Oct. 30, 1982, http://www.nytimes.com/1982/10/30/us/a-new-insulin-
8 given-approval-for-use-in-us.html?mcubz=0.
 In 1985, Novo Nordisk developed, introduced, and marketed the first insulin pen,
9
which allows patients to vary the injected dose and to administer insulin
10 discreetly. Since 1985, innovators have made significant investments into
designing insulin pens that improve patient satisfaction and safety.
11
 In 1994, Bristol Myers Squibb became the first company to secure FDA approval
12 for the drug metformin, an oral biguanide that prevents glucose production in the
liver. Press Release, U.S. Food & Drug Admin., FDA Approves New Diabetes
13 Drug (Dec. 30, 1994),
https://web.archive.org/web/20070929152824/http://www.fda.gov/bbs/topics/AN
14 SWERS/ANS00627.html. Metformin is the recommended first line of treatment
for Type 2 diabetes after diet and exercise. See Randy Dotinga, Metformin Still
15
Best as First Type 2 Diabetes Treatment, WebMD (Jan. 2, 2017),
16 http://www.webmd.com/diabetes/news/20170102/metformin-still-best-choice-
for-first-type-2-diabetes-treatment.
17
 In 2000, Aventis Pharmaceuticals, a predecessor company of Sanofi U.S., received FDA
18 approval for Lantus, the first FDA approved long-acting (basal) recombinant human
insulin analog with a once-daily administration. See 75th Anniversary Timeline. With
19 Lantus, the reduced risk of nighttime hypoglycemia and the flexibility of once-daily
dosing made insulin a more acceptable option for patients to start insulin earlier and
20 intensify their insulin sooner, leading to long-term improvements and reducing
21 complications in diabetes.
 In 2005, FDA approved the first patient-use continuous glucose monitoring system,
22 which automatically reads blood sugar levels every 5 to 15 minutes and can detect trends
23 and patterns. See id.
 Also in 2005, Eli Lilly and Amylin Pharmaceuticals received FDA approval for Byetta, a
24 first-in-class glucagon-like peptide-1 (GLP-1) receptor agonist that improves glycemic
25 control and delays or reduces the need for insulin in patients with Type 2 diabetes. Id.
Significant innovation in the GLP-1 space has continued since, including, for example,
26 the development of once-weekly agents that can significantly increase patient adherence.
27  In 2006, Merck & Co. received FDA approval for Januvia, a first-in-class
dipeptidyl peptidase 4 (DPP-4) inhibitor that enhances the body’s ability to lower
28
8
elevated blood sugar by increasing incretin levels, thereby inhibiting glucagon

1 release and decreasing blood glucose levels. Id.
2  In 2013, Janssen, a Johnson & Johnson subsidiary, secured FDA approval for
Invokana, a first-in-class sodium/glucose cotransporter 2 (SGLT-2) inhibitor that
3 prevents the kidneys from reabsorbing glucose back into the blood, allowing
4 them to lower blood glucose levels and remove excess blood glucose through
urination. Id.
5
 Also in 2013, Takeda Pharmaceuticals obtained FDA approval for Nesina, a new
6 “DPP-4 inhibitor” that allows the pancreas to secrete insulin and better manage
blood glucose levels. See Press Release, Takeda Receives FDA Approval for
7 Three New Type 2 Diabetes Therapies, Takeda (Jan. 26, 2013),
http://www.takeda.us/newsroom/press_release_detail.aspx?year=2013&id=269.
8
 In 2015, Novo Nordisk and Sanofi U.S. received FDA approval for Tresiba and Toujeo,
9 respectively, which are ultra-long-acting insulins. These latest advances offer a more
stable delivery of insulin and afford patients more flexibility in dosing. See Press
10 Release, Novo Nordisk Receives FDA Approval for Tresiba® (insulin degludec
injection) for Adults with Type 1 and Type 2 Diabetes, Novo Nordisk (Sept. 25, 2015),
11
http://press.novonordisk-us.com/2015-09-25-Novo-Nordisk-Receives-FDA-Approval-
12 for-Tresiba-insulin-degludec-injection-for-Adults-with-Type-1-and-Type-2-Diabetes;
Press Release, Sanofi Receives FDA Approval of Once-Daily Basal Insulin Toujeo®,
13 Sanofi (Feb. 25, 2015), http://www.news.sanofi.us/2015-02-25-Sanofi-Receives-FDA-
Approval-of-Once-Daily-Basal-Insulin-Toujeo.
14
24. All told, FDA has approved 39 diabetes medicines since 2000. These 39 medicines
15
are the product of decades of investment in research and development, including both successes and
16
failures. As shown in the chart below, Plaintiffs’ members were responsible for developing the vast
17
majority of these medicines.
18
19 Drug name Type of drug Manufacturer Approval year

20 Adlyxin Glucagon-like peptide Sanofi U.S. 2016
21 Soliqua Injectable combination Sanofi U.S. 2016
22 therapy
23 Xultophy Injectable combination Novo Nordisk 2016
24 therapy
25 Basaglar Long-acting insulin Eli Lilly and Boehringer 2015
26 Ingelheim
27 Pharmaceuticals
28 Tresiba Long-acting insulin Novo Nordisk 2015
9
1 Ryzodeg Combination insulin Novo Nordisk 2015

2 Toujeo Long-acting insulin Sanofi U.S. 2015
3 Glyxambi Combination SGLT-2 Eli Lilly and Boehringer 2015
4 inhibitor and DPP-4 Ingelheim
5 inhibitor Pharmaceuticals
6 Trulicity Glucagon-like peptide Eli Lilly 2014
7 Invokamet Combination SGLT-2 Janssen Pharmaceuticals 2014
8 inhibitor and biguanide
9 Jardiance SGLT-2 inhibitor Boehringer Ingelheim 2014
10 Pharmaceuticals
11 Afrezza Inhalation Inhaled insulin Sanofi U.S. and 2014
12 Powder MannKind
13 Tanzeum Glucagon-like peptide GlaxoSmithKline 2014
14 Xigduo XR Combination AstraZeneca 2014
15 Dapagliflozin and
16 Metformin
17 Farxiga SGLT-2 inhibitor AstraZeneca and Bristol- 2014
18 Myers Squibb
19 Invokana SGLT-2 inhibitor Janssen Pharmaceuticals 2013
20 Nesina DPP-4 inhibitor Takeda Pharmaceuticals 2013
21
Janumet XR DPP-4 inhibitor Merck 2012
22
Jentadueto Combination DPP-4 Eli Lilly and Boehringer 2012
23
inhibitor and biguanide Ingelheim
24
Pharmaceuticals
25
Bydureon Glucagon-like peptide Amylin Pharmaceuticals 2012
26
and Alkermes PLC
27
Juvisync Combination statin and Merck 2011
28
10
1 DPP-4 inhibitor
2 Tradjenta DPP-4 inhibitor Eli Lilly and Boehringer 2011
3 Ingelheim
4 Pharmaceuticals
5 Kombiglyze XR Combination DPP-4 AstraZeneca and Bristol- 2010
6 inhibitor and biguanide Myers Squibb
7 Victoza Glucagon-like peptide Novo Nordisk 2010
8 Onglyza DPP-4 inhibitor AstraZeneca and Bristol- 2009
9 Myers Squibb
10 PrandiMet Combination repaglinide Sciele Pharma and Novo 2008
11 and biguanide Nordisk
12 Janumet DPP-4 inhibitor and Merck 2007
13 Biguanide
14 Januvia DPP-4 inhibitor Merck 2006
15 Duetact Combination Takeda Pharmaceuticals 2006
16 pioglitazone (directly
17 targets insulin resistance)
18 and sulfonylurea
19 (increases amount of
20 insulin produced by
21 pancreas)
22 ACTOplus met Combination Takeda Pharmaceuticals 2005
23 pioglitazone and
24 biguanide
25 Levemir Long-acting insulin Novo Nordisk 2005
26 Byetta Glucagon-like peptide Amylin Pharmaceuticals 2005
27 and Eli Lilly
28
11
1 Symlin Antihyperglycemic drug Amylin Pharmaceuticals 2005

2 Apidra Rapid-acting insulin Aventis Pharmaceuticals 2004
3 Metaglip Combination glipizide Bristol-Myers Squibb 2002
4 and biguanide
5 Avandamet Combination GlaxoSmithKline 2002
6 rosiglitazone and
7 biguanide
8 Novolog 70/30 Combination insulin Novo Nordisk 2001
9 Lantus Long-acting insulin Aventis Pharmaceuticals 2000
10 Novolog Rapid-acting insulin Novo Nordisk 2000
11 See U.S. Food & Drug Admin., FDA-Approved Diabetes Medicines,
12 https://www.fda.gov/forpatients/illness/diabetes/ucm408682.htm.
13 25. Although there have been substantial advances in diabetes treatments, 1.7 million
14 people are newly diagnosed with diabetes in the United States every year. Developing innovative
15 new diabetes treatments and improving existing treatments requires continuing research. To that
16 end, Plaintiffs’ members invest billions each year. See, e.g., 2016 Biopharmaceutical Research
17 Industry Profile, PhRMA (April 2016), phrma-
18 docs.phrma.org/sites/default/files/pdf/biopharmaceutical-industry-profile.pdf; David Thomas &
19 Chad Wessel, Emerging Therapeutic Company Investment and Deal Trends, BIO (June 2017),
20 https://www.bio.org/sites/default/files/BIO%20Emerging%20Therapeutic%20Company%20Report
21 %202007-2016.pdf. In 2016 alone, more than 170 medicines for diabetes and related conditions
22 were in development. See Medicines in Development for Diabetes: A Report on Diabetes and
23 Related Conditions, PhRMA (2016), phrma-docs.phrma.org/files/dmfile/medicines-in-
24 development-report-diabetes.pdf. The vast majority of drugs in development are potentially “first-
25 in-class medicines” that offer a new approach to fighting the disease. See, e.g., Genia Long,
26 Analysis Grp., The Biopharmaceutical Pipeline: Innovative Therapies in Clinical Development
27 (July 2017),
28 http://www.analysisgroup.com/uploadedfiles/content/insights/publishing/the_biopharmaceutical_pi
12
1 peline_report_2017.pdf (noting that 69% of diabetes drugs in development were potential first-in-
2 class medicines).
3 26. Among the approximately 170 medicines in the development pipeline, innovations
4 include a potential first-in-class oral medicine that provides a new way for addressing Type 1 and
5 Type 2 diabetes; a fully recombinant monoclonal antibody that treats patients with newly diagnosed
6 Type 1 diabetes; and a medicine for diabetic nephropathy, damage to the kidneys from Type 1 or 2
7 diabetes. Many new innovations improve the convenience of dosing and thus increase adherence,
8 which helps patients with diabetes avoid emergency room visits and hospitalizations, and could
9 save the healthcare system as much as $8.3 billion annually. Ashish Jha et al., Greater Adherence
10 to Diabetes Drugs Is Linked to Less Hospital Use and Could Save Nearly $5 Billion Annually, 31
11 Health Aff. 1836, 1836 (2012). For instance, oral versions of both insulin and GLP-1 agents are
12 included in the development pipeline of several manufacturers, and these have the potential to
13 significantly increase adherence to these much needed diabetes therapies for millions of patients in
14 the U.S. New diabetes therapies have also had beneficial secondary effects, including weight loss, a
15 reduction in cardiovascular disease, and improved renal function. See A. Kuhn et al., Intensifying
16 Treatment Beyond Monotherapy in Type 2 Diabetes Mellitus: Where Do Newer Therapies Fit?,
17 Current Cardiology Reports (March 2017).
18 27. Another emphasis in diabetes research and development is prevention: researchers at
19 top universities, hospitals, and pharmaceutical companies devote significant time and resources to
20 developing a vaccine that could teach the immune system not to react to and attack beta cells (the
21 cells in the pancreas that produce insulin), thus preventing the onset of Type 1 diabetes. In fact, a
22 trial at a Massachusetts General Hospital lab is aimed not only at preventing Type 1 diabetes, but
23 also reversing it in patients who have had the disease for under 5 years. See Andrew Curry,
24 Pathways to a Type 1 Vaccine, Diabetes Forecast (July 2016),
25 http://www.diabetesforecast.org/2016/jul-aug/vaccines.html. Congress recognized the importance
26 of prevention and adherence in the Affordable Care Act by establishing Diabetes Prevention
27 Programs that offer lifestyle interventions for individuals at risk for diabetes, providing grants to
28 states for prevention activity initiatives, and requiring the U.S. Department of Health and Human
13
1 Services to prepare a biannual diabetes report card that assesses quality of care indicators, including
2 adherence, in each state.3
3 28. Many potentially first-in-class medicines may reach the market in the next few years.
4 Sanofi and Lexicon are developing sotagliflozin, a SGLT-1/SGLT-2 dual inhibitor, which has
5 shown promising Phase 2 and 3 results in Type 1 diabetes. The drug advanced into Phase 3 trials
6 for Type 2 diabetes in March 2017. Merck and Pfizer are developing ertugliflozin, an SGLT-2
7 inhibitor. Novo Nordisk is developing semaglutide, a GLP-1 receptor agonist, in a once-weekly,
8 injected formulation and a once-daily oral formulation that are both active in lowering glucose and
9 improving weight loss for Type 2 diabetes patients. And researchers at the University of North
10 Carolina are working on developing glucose-responsive “smart” insulin, which is an injection that
11 releases insulin only when glucose levels are too high. See John B. Buse & Mark Harmel, New
12 Diabetes Drugs in Development, Medscape (Mar. 10, 2017),
13 www.medscape.com/viewarticle/876853.
14 29. Meanwhile, costly and labor-intensive research continues to lay the groundwork for
15 the next generation of treatments. Researchers at the Harvard Stem Cell Institute discovered a
16 hormone that can stimulate insulin-secreting pancreatic cells to reproduce at up to 30 times the
17 normal rate in mice. See Harvard Stem Cell Inst., From Stem Cells to Billions of Human Insulin-
18 Producing Cells (Oct. 9, 2014), https://hsci.harvard.edu/news/stem-cells-billions-human-insulin-
19 producing-cells. Recreating this effect in diabetes patients could lead to the body’s natural
20 regulation of insulin as the new cells produce insulin only as needed. Id.
21 30. The cost of developing these innovative diabetes medicines is staggering. On
22 average, a manufacturer spends between 10 and 15 years—and $2.6 billion—developing a new
23 medicine. Developing diabetes medicines is particularly costly, as all new medicines must comply
24
3
See Patient Protection and Affordable Care Act, Pub. L. No. 111-148, §§ 4108, 4202, 10407,
25 10501, 124 Stat. 119 (2010); Nat’l Conference of State Legislatures, Federal Health Reform
26 Provisions Related to Diabetes (May 2011),
http://www.ncsl.org/portals/1/documents/health/DiabetesinHR511.pdf; Ctr. for Disease Control &
27 Prevention, Diabetes 2014 Report Card (2014),
https://www.cdc.gov/diabetes/pdfs/library/diabetesreportcard2014.pdf.
28
14
1 with FDA’s 2008 guidance requiring new diabetes medicines to undergo costly testing on
2 cardiovascular risk that other new medicines need not undergo. These costs are all the more
3 daunting given the very small success rate. Between 1988 and 2014, on average only 12% of drug
4 candidates that entered clinical testing were approved for use. From May 27 to December 29, 2016,
5 ten different advanced drug candidates for FDA approval in different drug product areas
6 experienced setbacks ranging from manufacturing issues, FDA requirements to conduct new trials,
7 failing Phase II or Phase III trials altogether, and patient deaths during trial. See Lisa M. Jarvis, The
8 Year in New Drugs, Chem. & Eng’g News (Jan. 30, 2017),
9 http://cen.acs.org/content/cen/articles/95/i5/year-new-drugs.html.
10 31. Even when a product reaches the market, there is no guarantee that the manufacturer
11 will earn back the cost of research and development. In 2015, for example, FDA approved Afrezza,
12 the only available inhalable insulin, manufactured by Sanofi in partnership with another
13 pharmaceutical company. Press Release, Sanofi and MannKind Announce Afrezza®, the Only
14 Inhaled Insulin, Now Available in the U.S., Sanofi (Feb. 3, 2015),
15 en.sanofi.com/images/38264_20150203_Afrezza_en.pdf. However, Afrezza appealed only to a
16 small segment of the market and suffered from lackluster sales. Ed Silverman, Breathe Deeply:
17 Sanofi Will No Longer Market Afrezza Inhaled Insulin, Stat (Jan. 6, 2016),
18 https://www.statnews.com/pharmalot/2016/01/05/insulin-sanofi-diabetes/. It is unlikely that
19 Afrezza will ever generate enough revenue to cover the cost of its development.
20 32. Pharmaceutical manufacturers can invest these billions of dollars each year in
21 research and development only if they have an appropriate opportunity to recoup that investment
22 through the sales of the small fraction of products that ultimately make it to market. Patents are
23 especially important to the biotechnology industry, as they are often the sole or the most valuable
24 asset of a start-up venture. See Charles W. Wessner, Capitalizing on New Needs and New
25 Opportunities: Government-Industry Partnerships in Biotechnology and Information Technologies
26 40 (2001), https://www.ncbi.nlm.nih.gov/books/NBK208686/pdf/Bookshelf_NBK208686.pdf.
27
28
15
1 Overview of Nevada Senate Bill 539
2 33. Like all states, Nevada over the past 20 years has seen a marked increase in the
3 number of adults living with diabetes. In 1995, the estimated diabetes rate in Nevada was 4.7%.
4 Today, an estimated 12.4% of Nevada’s adult population—281,355 people—have diabetes. An
5 additional 787,000 people in Nevada, 38.5% of Nevada’s adult population, have pre-diabetes, with
6 abnormally high blood glucose levels, but not at a level warranting a diabetes diagnosis.
7 34. SB 265, introduced in the Nevada Senate in February 2017, “sought to lower the cost
8 of certain essential diabetes drugs, such as insulin, by requiring companies that manufacture them
9 [to] report the costs of producing and marketing the drug along with any rebates that they provide
10 for the drugs.” Megan Messerly, Sandoval Vetoes Major Pharmaceutical Transparency Legislation
11 Citing Concerns Over “Nascent, Unproven and Disruptive” Changes, Nev. Indep., (June 2, 2017,
12 10:12 PM), https://thenevadaindependent.com/article/sandoval-vetoes-major-pharmaceutical-
13 transparency-legislation-citing-concerns-over-nascent-unproven-and-disruptive-changes. SB 539
14 later incorporated many of SB 265’s provisions.
15 35. As the legislative history of SB 265 shows, the State’s primary focus was on
16 controlling the list prices of insulin and other patented diabetes medicines. At the very outset of the
17 first Senate hearing on SB 265, its author cited a putative class action lawsuit charging insulin
18 manufacturers with antitrust violations. Hearing on S.B. 265 Before the Sen. Comm. on Health &
19 Human Servs., 2017 Leg., 79th Sess. 33 (Nev. Mar. 29, 2017) (“Mar. 29 Mins.”) (statement of Sen.
20 Yvanna D. Cancela). Proponents repeatedly criticized the prices of patented diabetes drugs as the
21 main target of the bill, complaining that “competition has not led to lower [insulin] prices” and
22 asserting that manufacturers would simply “tweak” insulin “to keep it under patent status, so the
23 patent does not expire and become eligible for generic versions.” Id. at 36 (statement of Bobette
24 Bond, Exec. Dir., Nev. Healthcare Policy, Unite Here Health); see also id. at 58–60 (discussion of
25 patent protection). In reference to the patented diabetes medicines Janumet and Jardiance, one
26 proponent argued that he “should not [have to] depend on [manufacturer] coupons on the Internet to
27 offset the cost of diabetic medications.” Id. at 45 (statement of Ruben R. Murillo, Nev. State Educ.
28 Ass’n). As another explained, the bill was designed to “hit directly to the root of the problem” of
16
1 high diabetes drug prices because “pharma will react accordingly with rebate dollars and trying to
2 unwind what has been done” in order to “meet the terms of what [SB 265] puts out.” Id. at 37
3 (testimony of Kevin Hooks, a managed care clinical pharmacist).
4 36. SB 265 sought to achieve these goals in several ways. First, SB 265 directed the
5 Department to compile a list of prescription drugs “essential” for treating diabetes. SB 265, 2017
6 Leg., 79th Sess. § 6 (Nev. 2017). It then compelled the manufacturers of those drugs to submit to
7 the Department a report disclosing certain cost and pricing information for each of their essential
8 diabetes drugs. Id. § 7(1). SB 265 excluded this cost and pricing information from the definition of
9 “trade secret” under Nevada law, id. § 27.5(5), and it required the Department to compile and
10 publish on its website a report concerning the prices of essential diabetes drugs and the effect of
11 those prices on overall spending on health care in Nevada, id. § 7(2). SB 265 also required
12 manufacturers to provide the Department with 90 days’ notice of any planned increase in the
13 national list price, also known as the wholesale acquisition cost or “WAC,” of any essential diabetes
14 drug. Id. § 8.
15 37. On May 16, 2017, a second bill targeting list price increases for diabetes drugs was
16 introduced, SB 539. Originally a “complement” to SB 265, see Hearing on S.B. 265 Before the Sen.
17 Comm. on Health & Human Servs., 2017 Leg., 79th Sess. 3 (Nev. May 26, 2017) (“May 26 Mins.”),
18 SB 539 added requirements that “Pharmacy Benefit Managers” (PBMs)—intermediaries between
19 manufacturers and payers—disclose, among other things, the amount of rebates received from
20 manufacturers during the preceding calendar year. See id. at 5. The author of SB 539 justified the
21 legislation on the ground that the “retail price [of prescription diabetes medicine] paid by patients is
22 unpredictable and can escalate to unaffordable levels over short periods.” Id. at 3.
23 38. On May 19, 2017, the Nevada State Senate passed the first bill, SB 265. On May 25,
24 2017, the Nevada State Assembly passed SB 265 and sent the bill to the Governor for approval.
25 39. On June 2, 2017, Nevada Governor Brian Sandoval vetoed SB 265. His explanation
26 acknowledged that SB 265 was “well-intentioned,” but concluded that the bill “poses serious risks
27 of unintended and potentially detrimental consequences for Nevada’s consumer patients, not the
28 least of which is the possibility that access to critical care will become more expensive, more
17
1 restricted, and less equitable.” Veto Letter at 2. The bill, he wrote, “could cause more harm than
2 good for Nevada’s families.” Id.
3 40. Governor Sandoval also concluded that “constitutional and other legal concerns”
4 rendered the bill “problematic.” Id. at 3. He found the bill vulnerable to “challenge[s] under
5 theories of federal preemption, the Fifth Amendment’s prohibition on uncompensated takings, and
6 the Dormant Commerce Clause.” Id. at 2.
7 41. On June 5, 2017, just three days after Governor Sandoval vetoed SB 265, both the
8 Nevada Senate and the Nevada State Assembly passed SB 539, which, as amended, included almost
9 all the same provisions as SB 265. With respect to the drug pricing and reporting provisions, the
10 primary exception was the 90-day notice period for increasing the WAC of an essential diabetes
11 drug, to which Governor Sandoval had objected on the ground that it could lead to purchasers
12 stockpiling drugs that they knew would have price increases in 90 days. See id.
13 42. Aside from the lack of the 90-day notice period, SB 539 essentially replicated
14 SB 265. Even though SB 539 did not remedy the constitutional problems that Governor Sandoval
15 had identified, he signed the bill on June 15, 2017.
16 43. Like SB 265, SB 539 directs the Department to compile, by February 1 of each year,
17 “[a] list of prescription drugs . . . essential for treating diabetes.” SB 539 § 3.6(1). The Act does
18 not define “essential,” but the list “must include, without limitation, all forms of insulin and
19 biguanides marketed for sale in this State.” Id.4
20 44. In August 2017, the Nevada State Primary Care Office distributed a draft list of
21 “essential diabetes drugs” with 46 major drug products, including Afrezza, Byetta, Duetact, Farxiga,
22 Humulin, Invokana, Janumet, Januvia, Jardiance, Lantus, Nesina, Novolog, PrandiMet, Trulicity,
23 and others. See Exhibit C, Draft List of Essential Diabetes Drugs.
24
4
Both insulin and biguanides seek to lower blood glucose levels. Insulin injections replace the
25 insulin that the body would produce naturally in patients with diabetes who do not produce enough
26 insulin. Biguanides, such as metformin, lower blood sugar by decreasing the amount of sugar
produced by the liver, increasing the amount of sugar absorbed by muscle cells, and decreasing the
27 body’s need for insulin. See Biguanides (Metformin) for Prediabetes and Type 2 Diabetes,
WebMD, http://www.webmd.com/diabetes/biguanides-for-type-2-diabetes.
28
18
1 45. Once the Department releases its final list of “essential” diabetes drugs, Section 3.8
2 of the Act requires manufacturers of those drugs to “prepare and submit to the Department,” by
3 April 1 of each year, a “report which must include”:
4  “[t]he costs of producing the drug”;

5  “marketing and advertising costs” associated with the drug;
6  profit “earned from the drug” and “the percentage of the manufacturer’s total
profit . . . attributable to the drug”;
7
 the amount spent on “patient prescription assistance program[s]”;
8  “[t]he cost associated with coupons provided directly to consumers and for
9 programs to assist consumers in paying copayments, and the cost to the
manufacturer attributable to the redemption of those coupons and the use of those
10 programs”;
11  the “wholesale acquisition cost of the drug,” defined as “the manufacturer’s list
price for a prescription drug to wholesalers or direct purchasers in the United
12 States, not including any discounts, rebates or reductions in price, as reported in
wholesale price guides or other publications of drug pricing date”;
13
 “[a] history of any increases in the wholesale acquisition cost of the drug over the
14 5 years immediately preceding the date on which the report is submitted,
including the amount of each such increase expressed as a percentage of the total
15 wholesale acquisition cost of the drug, the month and year in which each increase
became effective any explanation for the increase”;
16
 “[t]he aggregate amount of all rebates” in Nevada; and
17
 “[a]ny additional information prescribed by regulation . . . for the purpose of
18 analyzing the cost of prescription drugs . . . on the list.”
19 Id. § 3.8.
20 46. Beyond these disclosures, any manufacturer that increases the WAC of an
21 “essential” diabetes drug by more than the “Consumer Price Index, Medical Care Component”
22 (“CPI”) during the preceding year, or by double the percentage increase in the CPI for Medical Care
23 over the previous two years, must make additional disclosures pursuant to Section 4 of the Act.
24 These disclosures include:
25  “[a] list of each factor that has contributed to the increase”;

 “[t]he percentage of the total increase that is attributable to each factor”;
26
 “[a]n explanation of the role of each factor”; and
27
 “[a]ny other information prescribed by regulation.”
28
19
1 Id. §§ 3.6(2), 4.
2 47. For many manufacturers, the types of information that must be disclosed under
3 Sections 3.8 and 4 are generally factors relevant to pricing decisions for all of their pharmaceutical
4 products, not just the essential diabetes medicines they produce.
5 48. By tying these disclosures to the CPI for Medical Care, the Act penalizes those
6 manufacturers whose diabetes drug prices exceed the index. This penalty is especially harsh, as the
7 CPI for Medical Care includes the list prices of not only pharmaceutical products, but also
8 professional and hospital services. Successful diabetes therapies improve the convenience and
9 efficacy of treatment, which reduces doctor and hospital visits, which, in turn, lowers the costs
10 factored into the CPI for Medical Care. Thus, the more successful a product is at reducing or
11 preventing medical costs, the lower the prices the manufacturer can charge and still avoid the
12 penalty of disclosing its confidential information. While the CPI for Medical Care is a useful
13 benchmark for certain purposes relating to overall health care spending, it is not an appropriate
14 measuring stick for imposing penalties on manufacturers for price increases on drug products.
15 49. Once manufacturers have submitted the disclosures required by Sections 3.8 and 4,
16 the Department must, by June 1 of each year, “analyze the information submitted . . . and compile a
17 report on the price of the prescription drugs that appear on the most current lists . . . , the reasons for
18 any increases in those prices and the effect of those prices on overall spending on prescription drugs
19 in this State.” Id. § 4.3.
20 50. The Department must post the report on its website, id. § 6(a)(5), “organized so that
21 each individual . . . manufacturer . . . has its own separate entry,” id. § 6(b).
22 51. Critically, SB 539 does not prevent the Department from publishing the information,
23 sharing it with other entities, or using it for other purposes such as the Department’s own rebate
24 negotiations with manufacturers.
25 52. What is more, SB 539 expressly eliminates trade-secret protection for all information
26 manufacturers must disclose concerning “essential” diabetes drugs. Id. § 4.3. Specifically, the Act
27 alters the definition of “trade secret” in NRS 600A.030 to exclude “any information that a
28
20
1 manufacturer is required to report pursuant to section 3.8 or 4 of [the Act], . . . to the extent that
2 such information is required to be disclosed by [that] section[].” Id. § 9(5)(b).5
3 53. Any manufacturer that fails to disclose the required information is subject to “an
4 administrative penalty of not more than $5,000 for each day of such failure.” Id. § 8(2).
5 54. The provisions of SB 539 relevant to this lawsuit “become effective upon passage
6 and approval for the purpose of adopting regulations and performing any other administrative tasks
7 that are necessary to carry out the provisions of this act and on October 1, 2017, for all other
8 purposes.” Id. § 28(3). Thus, while the Department has until February 1, 2018 to publish its first
9 list of “essential” diabetes drugs, it could publish the list as early as October 1, 2017, and, in fact,
10 the Department has represented that it intends to publish the list on October 15, 2017.
11 SB 539’s Harm to Plaintiffs’ Members and Innovation of Diabetes Treatments
12 55. SB 539, if implemented, will seriously harm Plaintiffs’ members, including the
13 largest U.S. manufacturers of insulin and other diabetes medicines. Several of Plaintiffs’ members
14 produce drugs that appear on the Department’s draft list of “essential” diabetes drugs. None of
15 these companies is headquartered in Nevada.
16 56. For example, Eli Lilly and Company manufactures the diabetes drugs Basaglar (a
17 long-acting insulin), Glyxambi (a combination drug of SGLT-2 inhibitor and DPP-4 inhibitor),
18 Humalog, Humulin, Jardiance (a SGLT-2 inhibitor), Jentadueto (a combination DPP-4 inhibitor
19 with metformin), Synjardy, Tradjenta (a DPP-4 inhibitor), and Trulicity (a glucagon-like peptide).
20 The drugs Glyxambi, Jardiance, Jentadueto, Synjardy, Tradjenta, and Trulicity are patented.
21 Patients administer Humalog and Humalin using a patented device. And the clinical testing for
22 Basalgar and Trulicity is protected by test data exclusivity—i.e., because this information is costly
23 to produce, FDA maintains its confidentiality for a number of years to prevent competitors from
24 benefitting at Lilly’s expense. Eli Lilly is headquartered in Indianapolis, Indiana and employs
25
5
26 By contrast, every other state to legislate on pharmaceutical price transparency has acknowledged
the trade-secret status of the information to be disclosed, erecting safeguards to prevent its
27 dissemination. See, e.g., Vt. Stat. Ann., tit. 18, § 4635(e); H.B. 631, Gen. Assemb., 437th Sess. § 1,
2-803(F) (Md. 2017).
28
21
1 approximately 12,600 people in Indiana. Indiana law confers trade-secret protection for the
2 confidential information concerning advertising, cost, marketing, pricing, and production that SB
3 539 requires Eli Lilly to disclose. See Hydraulic Exch. & Repair, Inc. v. KM Specialty Pumps, Inc.,
4 690 N.E.2d 782, 786 (Ind. Ct. App. 1998) (holding that customer and pricing information, including
5 compilations of profits and sales, were trade secrets under Indiana Uniform Trade Secrets Act);
6 Ackerman v. Kimball Int’l, Inc., 634 N.E.2d 778, 783 (Ind. Ct. App. 1994) (affirming trial court
7 conclusion that pricing information was a trade secret).
8 57. Johnson & Johnson manufactures the diabetes drugs Invokamet (a combination
9 SGLT-2 inhibitor with metformin), Invokamet XR (extended release), and Invokana (an SGLT-2
10 inhibitor). The drugs Invokamet, Invokamet XR, and Invokana are patented. Johnson & Johnson is
11 headquartered in New Brunswick, New Jersey and employs approximately 9,300 people in New
12 Jersey. New Jersey law confers trade-secret protection for the confidential information that SB 539
13 requires Johnson & Johnson to disclose. See Commc’ns Workers of Am. v. Rousseau, 9 A.3d 1064,
14 1076 (N.J. Super. Ct. App. Div. 2010) (“A trade secret may also include pricing and marketing
15 techniques.”); Lamorte Burns & Co. v. Walters, 770 A.2d 1158, 1166 (N.J. 2001) (citing with
16 approval treatise stating that “information relating to customers, merchandising, costs, and pricing
17 may be considered trade secrets” (citing 1 Roger M. Milgrim, Milgrim on Trade Secrets § 2.09
18 (1995))).
19 58. Merck Sharp & Dohme Corp. manufactures the diabetes drugs Januvia (sitagliptin)
20 (a dipeptidyl peptidase 4 (DPP-4) inhibitor), Janumet (sitagliptin and metformin HCI) and Janumet
21 XR (sitagliptin and metformin HCI extended release). The drugs Januvia, Janumet, and Janumet
22 XR are patented. Merck is headquartered in Kenilworth, New Jersey and employs approximately
23 5,200 people in New Jersey. As noted, New Jersey law confers trade-secret protection for the
24 confidential information that SB 539 requires Merck to disclose.
25 59. Novo Nordisk Inc. markets, sells, and distributes the diabetes drugs Levemir (insulin
26 detemir, a long-acting recombinant human insulin analog), Victoza (liraglutide, a long-acting,
27 acylated glucagon-like peptide-1 (GLP-1) analog), Tresiba (insulin degludec, an ultralong-acting
28 basal human insulin analog), Ryzodeg 70/30 (insulin degludec and insulin aspart injection, a
22
1 combination of a long-acting basal human insulin analog and a fast-acting human insulin analog),
2 and Xultophy 100/3.6 (insulin degludec and liraglutide injection, a combination of an ultralong-
3 acting basal human insulin analog and a long-acting, acylated glucagon-like peptide-1 (GLP-1)
4 analog). The drugs Levemir, Victoza, Tresiba, Ryzodeg 70/30 and Xultophy 100/3.6 have U.S.
5 patent protection. Novo Nordisk Inc. is headquartered in Plainsboro, New Jersey. As noted, New
6 Jersey law confers trade-secret protection for the confidential information that SB 539 requires
7 Novo Nordisk to disclose.
8 60. Sanofi U.S. markets, sells, and distributes the diabetes drugs Lantus (insulin
9 glargine, a long acting human insulin analog), Apidra (insulin glulisine, a fast acting, mealtime
10 insulin), Toujeo (insulin glargine, a long acting human insulin analog), Adlyxin (lixisenatide, a
11 GLP-1 receptor agonist) and Soliqua 100/33 (insulin glargine and lixisenatide injection, a
12 combination of long acting insulin and GLP-1). The drugs Lantus, Apidra, Toujeo, Adlyxin and
13 Soliqua 100/33 are patented. Sanofi U.S. is headquartered in Bridgewater, New Jersey and employs
14 approximately 2,500 people in New Jersey. As noted, New Jersey law confers trade-secret
15 protection for the confidential information that SB 539 requires Sanofi to disclose.
16 61. Section 3.8 of SB 539 requires these manufacturers and other PhRMA and BIO
17 members that manufacture “essential” diabetes medicines to report advertising, cost, marketing,
18 pricing, and production information related to those drugs to the Department. The required
19 disclosures include information that qualifies as trade secret under federal law and the law of every
20 state—including Nevada until SB 539 takes effect.
21 62. These companies face additional reporting requirements under Section 4 of SB 539 if
22 the list prices for the diabetes drugs they manufacture increased during the prior year by a
23 percentage greater than the CPI for Medical Care, or increased over the last two years by a
24 percentage more than twice the two-year increase for that index. The additional disclosures
25 required under Section 4 of the Act include information that qualifies as a trade secret under federal
26 law and the law of every state—including Nevada until SB 539 takes effect.
27 63. Plaintiffs’ members zealously guard the secrecy and confidentiality of the trade-
28 secret information that SB 539 requires them to disclose. Among other things, Plaintiffs’ members
23
1 require their employees to sign confidentiality agreements and nondisclosure agreements requiring
2 them to hold this information in confidence. These companies also use a variety of security
3 measures to ensure that such information is kept secret, including video camera monitoring,
4 restricting access to their facilities, limiting computer system access, marking documents that reflect
5 such information as confidential or proprietary, training their employees on the importance of not
6 disclosing such information, adopting policies that prohibit employees from removing such
7 information from company property, and imposing other internal controls.
8 64. Plaintiffs’ members expend significant resources determining how to allocate their
9 resources and set prices for their products. This information would be extremely valuable to
10 competitors, who could use the information to allocate their own resources and set their own prices
11 without expending the same level of resources. As a consequence, the companies that lost trade-
12 secret protection would suffer serious competitive harm. This harm would undermine competition
13 involving non-diabetes products as well, because manufacturers consider similar factors
14 manufacturers in setting prices for non-diabetes products.
15 65. Similarly, third-party payers who learn how a manufacturer prices its diabetes drugs
16 would gain an advantage over the manufacturer in purchase or rebate negotiations for all of the
17 manufacturer’s products.
18 66. The economic harm from SB 539 will spread to the entire Nation. Because the
19 WAC is a national list price, SB 539’s effective cap on a drug’s WAC will apply throughout the
20 country. And because drug prices and the way manufacturers set them generally apply nationally,
21 the information disclosed under SB 539 will affect a company’s negotiations and competitive
22 positioning nationwide. Similarly, because trade-secret protection is moot in every state once the
23 information becomes public in Nevada, the impact of SB 539 will extend across the Nation.
24 67. The competitive harm arising from SB 539’s punitive and coercive effects will
25 undermine the incentives that trade secret and patent law provides for Plaintiffs’ members to invest
26 in developing innovative diabetes medicines. Absent judicial intervention, SB 539 could force
27 innovators into the unfortunate position of having to review and revise their research and
28 development priorities for diabetes products, including projects underway.
24
1 SB 539’S CONSTITUTIONAL DEFECTS
2 The Constitution Vests Congress With Sole Authority To Establish Patent Policy
3 68. The Framers of the Constitution understood Congress’s paramount role in setting
4 national patent policy. Article I vests Congress with the power to “secur[e] for limited Times to
5 Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” U.S.
6 Const. art. I, § 8, cl. 8. The stated objective of this clause is to “promote the Progress of Science
7 and useful Arts.” Id. As James Madison observed in The Federalist:
8 The utility of this power will scarcely be questioned. The copyright of authors has
been solemnly adjudged, in Great Britain, to be a right of common law. The right to
9 useful inventions seems with equal reason to belong to the inventors. The public
good fully coincides in both cases with the claims of individuals. The States cannot
10 separately make effectual provisions for either of the cases, and most of them have
11 anticipated the decision of this point, by laws passed at the instance of Congress.
The Federalist No. 43 (James Madison).
12
69. “From their inception, the federal patent laws have embodied a careful balance
13
between the need to promote innovation and the recognition that imitation and refinement through
14
imitation are both necessary to invention itself and the very lifeblood of a competitive economy.”
15
Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 146 (1989). The patent laws achieve
16
this balance first by granting an inventor the exclusive right to make, use, and sell its patented
17
invention for a limited period of time. 35 U.S.C. § 154. Then, once the exclusivity period expires,
18
others may enter the market and compete with the patent holder, driving down the cost of the
19
patented product and, in turn, stimulating further innovation in the search for greater returns.
20
Critically here, Congress has long recognized that “the right to exclude others from making, using,
21
or selling an invention . . . enable[s] innovators to obtain greater profits than could have been
22
obtained if direct competition existed,” and that “[t]hese profits act as incentives for innovative
23
activities.” H.R. Rep. No. 98-857(I), at 17 (June 21, 1984), as reprinted in 1984 U.S.C.C.A.N.
24
2647, 2650 (Committee on Energy and Commerce).
25
70. During the exclusivity period, a patent holder may set the price for its product in a
26
manner that takes into account the patent holder’s ability to preclude others from marketing an
27
infringing product. The United States Court of Appeals for the Federal Circuit has described the
28
25
1 increased return on innovation investment due to the patent holder’s legal monopoly as the “carrot”
2 that incentivizes would-be inventors to expend the substantial resources and to take the significant
3 research and development risks required to invent a new product. King Instruments Corp. v.
4 Perego, 65 F.3d 941, 950 (Fed. Cir. 1995). As the Federal Circuit has noted, “the only limitation on
5 the size of the carrot should be the dictates of the marketplace.” Id.
6 71. Patent protection is particularly necessary to promote the research and development
7 of pharmaceutical products because it is extraordinarily difficult, costly, and rare to discover a
8 successful new drug. By one estimate focusing on the most prolific developers of new drugs, “95%
9 of the experimental medicines that are studied in humans fail to be both effective and safe. . . .
10 [B]ecause so many drugs fail, large pharmaceutical companies . . . spend $5 billion per new
11 medicine.” Matthew Herper, The Cost of Creating A New Drug Now $5 Billion, Pushing Big
12 Pharma To Change, Forbes.com (Aug. 11, 2013, 11:10 AM),
13 http://www.forbes.com/sites/matthewherper/2013/08/11/how-the-staggering-cost-of-inventing-new-
14 drugs-is-shaping-the-future-of-medicine. Even drugs that are ultimately approved cost billions of
15 dollars to research and develop. See Rick Mullin, Tufts Study Finds Big Rise in Cost of Drug
16 Development, Chem. & Eng’g News (Nov. 20, 2014),
17 http://cen.acs.org/articles/92/web/2014/11/Tufts-Study-Finds-Big-Rise.html (study found that
18 “developing a prescription drug that gains market approval [costs] $2.6 billion, a 145% increase”
19 from 2003).
20 72. In 1984, Congress enacted the Drug Price Competition and Patent Term Restoration
21 Act of 1984, commonly known as the Hatch-Waxman Act. Pub. L. No. 98-417, 98 Stat. 1585
22 (1984). In light of the unique economic challenges to pharmaceutical research and development,
23 the Hatch-Waxman Act extended the patent term for pharmaceuticals to “create a significant, new
24 incentive which would result in increased expenditures for research and development, and
25 ultimately in more innovative drugs.” H.R. Rep. No. 98-857(I), at 18; see also Biotech. Indus. Org.
26 v. District of Columbia (“BIO”), 496 F.3d 1362, 1373 (Fed. Cir. 2007). President Reagan reiterated
27 this goal when he signed the bill into law: “The bill will promote medical breakthroughs and drug
28 innovation by granting drug companies up to 5 more years of patent protection for new drugs. And
26
1 this extension will help compensate for the years of patent life lost due to the time-consuming, but
2 essential, testing required by the Food and Drug Administration.” Presidential Statement on
3 Signing S. 1538 Into Law, 20 Weekly Comp. Pres. Doc. 1359 (Sept. 24, 1984).
4 73. Balancing consumer access to affordable medication against the critical need for
5 sufficient economic incentives to invest in innovation, the Hatch-Waxman Act allows other
6 manufacturers to sell generic versions of an innovator’s drug after the period of patent exclusivity
7 expires. This carefully crafted framework provides substantial incentives for innovators to invest in
8 research and development of new life-saving and life-enhancing treatments that will benefit patients
9 while also “‘get[ting] generic drugs into the hands of patients at reasonable prices—fast.’” Andrx
10 Pharms., Inc. v. Biovail Corp. Int’l, 256 F.3d 799, 809 (D.C. Cir. 2001) (quoting In re Barr Lab.,
11 Inc., 930 F.2d 72, 76 (D.C. Cir. 1991)).
12 74. Congress, moreover, has bestowed patent protection on “[w]hoever invents or
13 discovers any new and useful process, machine, manufacture, or composition of matter, or any new
14 and useful improvement thereof.” 35 U.S.C. § 101. Thus, the federal patent system, including the
15 Hatch-Waxman Act, encourages not only the discovery of new pharmacological compounds, but
16 also new methods of manufacturing or improving the effectiveness of existing drugs.
17 75. Under the Supremacy Clause of the United States Constitution, federal statutes are
18 “the supreme Law of the Land.” U.S. Const. art. IV, cl. 2. And under settled principles of federal
19 “conflict” preemption, no state law may “stand[] as an obstacle to the accomplishment and
20 execution of the full purposes and objectives of Congress.” Hines v. Davidowitz, 312 U.S. 52, 67
21 (1941).
22 76. State laws penalizing patent holders for exercising the right to set prices that the
23 patent affords and coercing them to forgo those rights “stand as an obstacle to the federal patent
24 law’s balance of objectives as established by Congress” and thus are invalid under the Supremacy
25 Clause. BIO, 496 F.3d at 1374. In BIO, the Federal Circuit struck down a District of Columbia
26 statute that prohibited pharmaceutical manufacturers from selling or supplying a “patented
27 prescription drug that results in the prescription drug being sold in the District for an excessive
28 price.” Id. at 1365. The court held that the statute was a “clear attempt to restrain . . . excessive
27
1 [drug] prices, in effect diminishing the reward to patentees in order to provide greater benefit to
2 District drug consumers.” Id. at 1374. Because Congress—and Congress alone—is the
3 “promulgator of patent policy,” federal law preempted the District’s attempt to “re-balance the
4 statutory framework of rewards and incentives insofar as it relates to inventive new drugs.” Id. at
5 1373–74.
6 77. Just like the District of Columbia statute invalidated in BIO, SB 539 “attempt[s] to
7 restrain . . . excessive [essential diabetes drug] prices, in effect diminishing the reward to patentees
8 in order to provide greater benefit to [Nevada] drug consumers.” Id. at 1374. In purpose and effect,
9 the Act punishes manufacturers for the price of their “essential” diabetes drugs as well as for list
10 price increases by more than the “percentage increase in the Consumer Price Index, Medical Care
11 Component during the immediately preceding calendar year; or . . . [t]wice the percentage increase
12 in the Consumer Price Index, Medical Care Component during the immediately preceding 2
13 calendar years.” SB 539 §§ 3.6(2), 4. If an essential diabetes drug’s list price increases by more
14 than these benchmarks, then the Act compels the manufacturer to report to the Department
15 additional confidential, competitively sensitive, proprietary information about that price increase,
16 including a list of “factors” that contributed to the increase and an “explanation” of the role of each
17 factor. Id. § 4. The Act also strips trade-secret protection for that information. Id. § 9. The only
18 way a manufacturer can avoid forfeiting trade-secret protection for the “factors” of a price increase
19 is by limiting its list prices to the Act’s effective cap. SB 539 thus restrains patent holders from
20 setting list prices in a manner that the federal patent laws secure in order to incentivize innovation.
21 78. Further, the Act impermissibly burdens the federal patent rights of diabetes drug
22 manufacturers by requiring disclosure of trade secrets associated with these patented products—and
23 hence it eliminates trade-secret protection in retaliation for pricing diabetes drugs as the patent laws
24 specifically allow. See BIO, 496 F.3d at 1374 (holding invalid District of Columbia law that had
25 the effect of “diminishing the reward” federal law grants to patentees). The mandatory disclosures
26 chill the exercise of patent rights by penalizing past exercises and forcing manufacturers either to
27 charge less than the patent laws permit or to furnish their proprietary information to third-party
28 payers and competitors and thereby suffer significant economic loss.
28
1 79. As a result of SB 539, innovators cannot raise list prices without being stripped of
2 valuable trade-secret protection for their confidential, proprietary information. SB 539 thus
3 interferes with the objectives of the patent laws by undermining, if not defeating altogether, affected
4 manufacturers’ ability to recover the enormous up-front costs to research and develop diabetes
5 medicines.
6 80. The Act’s burdens on federal patent rights will discourage research and development
7 of new diabetes drugs—a chilling of innovation itself. See, e.g., Tyco Healthcare Grp. LP v. Mut.
8 Pharm. Co., 762 F.3d 1338, 1351–53 (Fed. Cir. 2014) (Newman, J., dissenting) (quoting Octane
9 Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749, 1757 (2014)) (burdening patentees
10 who file infringement claims with threat of antitrust liability chills innovation); In re Microsoft
11 Corp. Antitrust Litig., 274 F. Supp. 2d 743, 745 (D. Md. 2003) (finding that “to require one
12 company to provide its intellectual property to a competitor would significantly chill innovation”).
13 81. The Nevada Legislature jettisoned concerns that “transparency in prescription drug
14 pricing will stifle innovation.” Mar. 29 Mins. at 34. They chose to elevate other, insular
15 considerations over the law’s interference with federal innovation incentives. But whether the
16 Nevada Legislature’s judgment is right or wrong is beside the point. The policy choice of whether
17 the benefits of innovation in the treatment of diabetes justify the prices of existing drugs is reserved
18 exclusively to the United States Congress, not to the State of Nevada. See BIO, 496 F.3d at 1374;
19 H.R. Rep. 98-857(I), at 17–18. Congress exercised that choice through the patent laws. Nevada
20 cannot unilaterally displace it.
21 SB 539 Conflicts with Federal Trade-Secret Law
22 82. Federal and state trade-secret laws play a similarly important role in fueling the
23 American economy. Legal protection for trade secrets “encourage[s] invention in areas where
24 patent law does not reach, and . . . prompt[s] the independent innovator to proceed with the
25 discovery and exploitation of his invention.” Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 485
26 (1974). “Competition is fostered and the public is not deprived of the use of valuable, if not quite
27 patentable, invention.” Id.
28
29
1 83. Every state in the nation protects trade secrets. Initially, the common law provided
2 safeguards “for the advantage of the public, to encourage and protect invention and commercial
3 enterprise.” Peabody v. Norfolk, 98 Mass. 452, 457 (1868). “Traditionally defined as relating to
4 technical matters in the production of goods, trade secrets now encompass non-technical aspects of
5 a business including, customer lists, price codes economic studies, costs reports, customer tracking
6 and marketing strategies.” First Mfg. Co. v. Young, 3 N.Y.S.3d 284, at *3 (Sup. Ct. 2014).
7 84. In evaluating whether information is a trade secret under the common law, courts
8 consider, among other things, “[1] the extent of measures taken by the employer to guard the
9 secrecy of the information; [2] the value of the information to the employer and to his competitors;
10 [3] the amount of effort or money expended by the employer in developing the information; and [4]
11 the ease or difficulty with which the information could be properly acquired or duplicated by
12 others.” Jet Spray Cooler, Inc. v. Crampton, 385 N.E.2d 1349, 1355 n.9 (Mass. 1979) (citation
13 omitted); Frantz v. Johnson, 999 P.2d 351, 358–59 (Nev. 2000) (“Factors to be considered include:
14 (1) the extent to which the information is known outside of the business and the ease or difficulty
15 with which the acquired information could be properly acquired by others; (2) whether the
16 information was confidential or secret; (3) the extent and manner in which the [company] guarded
17 the secrecy of the information; and (4) . . . whether this information is known by the [company’s]
18 competitors.”).
19 85. Forty-eight states, including Nevada, have adopted, with slight variations in some
20 states, the Uniform Trade Secrets Act (“UTSA”), which “codifie[d] the common law elements of
21 misappropriation of confidential information.” Frantz, 999 P.2d at 357–58. The UTSA defines a
22 “trade secret” as:
23 [I]nformation, including a formula, pattern, compilation, program, device, method,

technique, or process, that: (i) derives independent economic value, actual or
24 potential, from not being generally known to, and not being readily ascertainable by
proper means by, other persons who can obtain economic value from its disclosure
25 or use, and (ii) is the subject of efforts that are reasonable under the circumstances to
26 maintain its secrecy.”
UTSA, § 1(4).
27
28
30
1 86. Courts in UTSA jurisdictions routinely hold that confidential information concerning
2 advertising, cost, marketing, pricing, and production constitutes a trade secret. See, e.g., Finkel v.
3 Cashman Prof’l, Inc., 270 P.3d 1259, 1263 (Nev. 2012) (holding that “confidential pricing
4 structures and marketing plans” were trade secrets); Frantz, 999 P.2d at 359 (holding pricing
5 information was trade secret because “its secrecy was guarded, and it was not readily available to
6 others because the plastic gaming card industry is highly specialized”); Aerodynamics Inc. v.
7 Ceasars Entm’t Operating Co., No. 2:15-CV-01344, 2015 WL 5679843, at *8 (D. Nev. Sept. 24,
8 2015) (a company’s “confidential pricing information, . . . marketing strategies, . . . exact pricing
9 for [certain] bid[s], payment terms, and credits and discounts provided” are trade secrets); accord In
10 re Dana Corp., 574 F.3d 129, 152 (2d Cir. 2009) (recognizing that under New York law,
11 “[c]onfidential proprietary data relating to pricing, costs, systems, and methods are protected by
12 trade secret law”); S.I. Handling Sys., Inc. v. Heisley, 753 F.2d 1244, 1260 (3d Cir.1985) (same
13 under Pennsylvania law); Burbank Grease Servs., LLC v. Sokolowski, 693 N.W.2d 89, 96 (Wis.
14 App. 2005) (“Generally, it appears that when prices are based on complicated or unique formulas
15 that the customers do not know about, courts conclude the information meets the standard embodied
16 in [the UTSA].”), aff’d in part, rev’d in part, 717 N.W.2d 781 (Wis. 2006); Whyte v. Schlage Lock
17 Co., 101 Cal. App. 4th 1443, 1455 (2002) (“[P]ricing, profit margins, costs of production, pricing
18 concessions, promotional discounts, advertising allowances, volume rebates, marketing
19 concessions, payment terms and rebate incentives” have independent economic value as trade
20 secrets).
21 87. In 2016, Congress enacted the Defend Trade Secrets Act (“DTSA”), creating for the
22 first time a federal private right of action for misappropriation of trade secrets “related to a product
23 or service used in, or intended for use in, interstate or foreign commerce.” Pub. L. No. 114-153,
24 130 Stat. 376 (2016) (codified at 18 U.S.C. § 1836(b)).
25 88. Congress enacted the DTSA because “trade secrets are increasingly becoming the
26 foundation of businesses across the country, with one estimate placing the value of trade secrets in
27 the United States at $5 trillion. . . . With so much at stake, it is absolutely vital . . . [to] include
28 strong protections against theft of trade secrets.” 162 Cong. Rec. H2028-01, H2033 (Apr. 27, 2016)
31
1 (comments of Rep. Nadler). “By improving trade secret protection,” Congress intended the DTSA
2 to “incentivize future innovation while protecting and encouraging the creation of American jobs.”
3 S. Rep. No. 114-220, at 3 (2016).
4 89. Although every state protects confidential and proprietary advertising, cost,
5 marketing, pricing, and production information, Congress intended the DTSA to provide businesses
6 engaged in interstate commerce with a uniform remedy for misappropriation. Congress expressed
7 concerns that “state laws vary in a number of ways and contain built-in limitations that make them
8 not wholly effective in a national and global economy.” H.R. Rep. No. 114-529, at 4 (Apr. 26,
9 2016) (Committee on the Judiciary). Congress acknowledged that “trade secret cases often require
10 swift action by courts across state lines to preserve evidence.” Id. “[U]nlike patents, once this
11 information is disclosed it instantly loses its value and the property right itself ceases to exist.” 162
12 Cong. Rec. H2034 (comments of Rep. Jackson Lee). Thus, the DTSA allows businesses “to move
13 quickly to Federal court . . . to stop trade secrets from winding up being disseminated and losing
14 their value.” H.R. Rep. No. 114-529, at 6; accord S. Rep. No. 114-220, at 3. The primary goal was
15 to create “remedies that, first, halt the misappropriator’s use and dissemination of the . . . trade
16 secret.” H.R. Rep. No. 114-529, at 13.
17 90. Congress likewise modeled the DTSA definition of “trade secret” on the UTSA, as
18 did Nevada—that is, until SB 539. Compare UTSA § 1, with 18 U.S.C. § 1839(4), and Nev. Rev.
19 Stat. § 600A.030(5) (1999); see also H.R. Rep. 114-529, at 14 (“[T]he Committee does not intend
20 for the definition of a trade secret to be meaningfully different from the scope of that definition as
21 understood by courts in States that have adopted the UTSA.”). Reflecting Congress’s intention to
22 provide a uniform remedy, the DTSA makes information related to advertising, cost, marketing,
23 pricing, and production a protectable trade secret, just as it is in UTSA jurisdictions. See supra,
24 ¶ 86.
25 91. SB 539 compels manufacturers to disclose to the Department confidential and
26 proprietary advertising, cost, marketing, pricing, and production information that derives
27 independent value from not being generally known to third parties and competitors. This valuable
28
32
1 information constitutes a trade secret under the DTSA—and also under Nevada law until SB 539
2 takes effect.
3 92. Further, the Act amends Nevada’s trade-secret statute expressly to eliminate trade-
4 secret protection for all information “that a manufacturer is required to report” to the Department.
5 SB 539 § 9. Thus, the manufacturer loses trade-secret protection the moment the Department issues
6 its annual list of “essential” diabetes drugs, even before the manufacturer actually turns the
7 information over to the State.
8 93. Furthermore, the Act places no restriction on how the Department may use or
9 disseminate the information disclosed. To the contrary, SB 539 affirmatively requires the
10 Department to publish a report on its website that identifies the information belonging to each
11 manufacturer. Id. § 6(a)(5), (b). Once published on the Internet or otherwise publicly disseminated
12 under the authority of SB 539, the information no longer constitutes a trade secret under either the
13 UTSA or the DTSA. See, e.g., 18 U.S.C. § 1839. As a practical matter, even if there were some
14 residual trade-secret protection from the laws of other states, it would be ineffective once the
15 previously protected information is in the public domain for all to see.
16 94. The destruction of trade-secret protection in Nevada will thwart the ability of
17 manufacturers subject to the Act’s disclosure requirements to sue for misappropriation in any
18 jurisdiction, including in federal court under the DTSA.
19 95. In effect, SB 539 alters the operation of the DTSA—and the laws of every other
20 jurisdiction in the nation—to eliminate trade-secret protection for confidential advertising, cost,
21 marketing, pricing, and production information associated with diabetes drugs. This, in turn,
22 undercuts both of Congress’s goals in enacting the DTSA—to “incentivize future innovation while
23 protecting and encouraging the creation of American jobs.” S. Rep. No. 114-220, at 3.
24 96. Thus, SB 539 “stands as an obstacle to the accomplishment and execution of the full
25 purposes and objectives of Congress.” Hines, 312 U.S. at 67. Indeed, the Act jeopardizes the $5
26 trillion worth of trade secrets that Congress enacted the DTSA to protect.
27
28
33
SB 539’s Uncompensated Elimination of Trade-Secret Protection for Valuable

1 Information Violates the Fifth Amendment Takings Clause
2
97. The Fifth Amendment provides that “private property [shall not] be taken for public
3
use, without just compensation.” U.S. Const. amend. V. This proscription applies to the states
4
through the Fourteenth Amendment.
5
98. Government regulation of private property can constitute a taking. See Lucas v. S.C.
6
Coastal Council, 505 U.S. 1003, 1015 (1992). “Private property” includes not only tangible
7
property, but also intangible property, such as trade secrets. Ruckelshaus v. Monsanto Co., 467 U.S.
8
986, 1002–04 (1984). A state’s “failure to provide adequate protection to assure [a trade secret’s]
9
confidentiality, when disclosure is compelled . . . , can amount to an unconstitutional taking of
10
property by destroying [the trade secret], or by exposing it to the risk of destruction by public
11
disclosure or by disclosure to competitors.” St. Michael’s Convalescent Hosp. v. California, 643
12
F.2d 1369, 1374 (9th Cir. 1981) (alteration omitted) (quoting Wearly v. FTC, 462 F. Supp. 589, 598
13
(D.N.J. 1978)).
14
99. There are two kinds of regulatory takings: (1) categorical and (2) noncategorical.
15
See Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 538 (2005). A categorical taking occurs where a
16
state statute “denies all economically beneficial or productive use” of property. Lucas, 505 U.S. at
17
1015. By contrast, a noncategorical taking may occur where a regulation “fall[s] short of
18
eliminating all economically beneficial use,” Palazzolo v. Rhode Island, 533 U.S. 606, 617 (2001),
19
yet still goes “too far” for purposes of the Fifth Amendment, Lucas, 505 U.S. at 1014–15 (quoting
20
Pa. Coal Co. v. Mahon, 260 U.S. 393, 415 (1922)). To determine whether a noncategorical
21
regulatory taking goes “too far,” courts apply the three-part test articulated in Penn Central
22
Transportation Co. v. City of New York, 438 U.S. 104 (1978), and its progeny. That test assesses:
23
“[1] the character of the governmental action, [2] its economic impact, and [3] its interference with
24
reasonable investment-backed expectations.” Ruckelshaus, 467 U.S. at 1005.
25
100. SB 539 works as a categorical taking of property rights. “With respect to a trade
26
secret, the right to exclude others is central to the very definition of the property interest.” Id. at
27
1011. SB 539 does not merely “expos[e] [manufacturers’ trade secrets] to the risk of destruction by
28
34
1 public disclosure or by disclosure to competitors.” St. Michael’s, 643 F.2d at 1374 (emphasis
2 added). Rather, the Act strips trade-secret protection and mandates public disclosure of
3 manufacturers’ confidential advertising, cost, marketing, pricing, and production information on the
4 Department’s website, see SB 539 §§ 6(a)(5), 9, thus destroying for all time any trade-secret
5 protection for the information disclosed. The normal operation of the Act ensures that
6 manufacturers lose any claim of confidentiality, the sine qua non of what makes a trade secret
7 valuable. See Ruckelshaus, 467 U.S. at 1011–12; see also 162 Cong. Rec. H2034 (“[U]nlike
8 patents, once this information is disclosed it instantly loses its value and the property right itself
9 ceases to exist.” (comments of Rep. Jackson Lee in support of DTSA)).
10 101. In the alternative, even if SB 539 did not work a categorical taking by destroying
11 manufacturers’ property interests in their trade secrets, the Act would still constitute an
12 impermissible regulatory taking under the three-part test articulated in Penn Central.
13 102. First, the “character” of Nevada’s legislative action weighs heavily against sustaining
14 the Act. It prevents pharmaceutical manufacturers from “exclud[ing] others from their trade
15 secrets,” causing the trade secrets to “lose all value.” Philip Morris, Inc. v. Reilly, 312 F.3d 24, 41
16 (1st Cir. 2002) (en banc) (citing this aspect of state disclosure statute’s “character” to show a
17 regulatory taking). “Therefore, if the [pharmaceutical manufacturers] comply with the requirements
18 of [SB 539], their property right will be extinguished.” Id. at 42. “[T]his is precisely what the
19 Takings Clause is designed to prevent.” Id. at 43.
20 103. Second, eliminating trade-secret protection for confidential advertising, cost,
21 marketing, pricing, and production information relating to diabetes drugs will have a devastating
22 “economic impact” not only on manufacturers subject to the disclosure requirements, but also on
23 the market for diabetes drugs. See Penn Cent., 438 U.S. at 124. Manufacturers forced to disclose
24 such information will be at a severe disadvantage against competing diabetes-drug manufacturers
25 not subject to the Act. These competitors will be able to obtain the information that Sections 3.8
26 and 4 of the Act require to be disclosed, and will gain a competitive advantage by knowing how the
27 manufacturer allocates its resources and sets its prices. Because manufacturers consider similar
28 factors in setting prices for non-diabetes products, disclosure of pricing information under SB 539
35
1 will also impair the ability of the affected manufacturers to compete with regard to non-diabetes
2 products. Similarly, the Act disadvantages affected manufacturers in their dealings with third-party
3 payers, who will be able to use the manufacturer’s pricing information against it in negotiations.
4 104. These adverse effects are not confined to Nevada, but rather will be nationwide. A
5 trade secret published in Nevada may be used in New York, Ohio, Florida, or any other state, as a
6 trade secret must in fact be “secret” to be protected. See, e.g., UTSA § 1(4) (restricting definition of
7 “trade secret” to information “not . . . generally known” or “readily ascertainable by proper
8 means”); 18 U.S.C. § 1839(3) (same). Thus, losing trade-secret protection anywhere means losing
9 it everywhere. This substantial competitive harm increases the penalty for Plaintiffs’ members who
10 exercise their patent rights to set prices on their diabetes products, thereby diminishing the incentive
11 to invest in the development of diabetes drugs. See supra ¶¶ 77–81.
12 105. Third, manufacturers investing in diabetes treatments had the reasonable
13 “investment-backed expectation” that their confidential and proprietary information would remain
14 secret. See Penn Cent., 438 U.S. at 124. For many years Nevada has treated confidential
15 advertising, cost, marketing, pricing, and production information as entitled to trade-secret
16 protection without any exception for manufacturers of diabetes drugs, as has virtually every other
17 state. See, e.g., Nev. Rev. Stat § 600A.030 (1987); Finkel, 270 P.3d at 1263; Frantz, 999 P.2d at
18 359. Manufacturers thus had reasonable investment-backed expectations in the secrecy of this
19 information, because of longstanding trade-secret protection and because no state has ever required
20 such intrusive disclosures. See Reilly, 312 F.3d at 40. Manufacturers did not expect and could not
21 reasonably have expected the economic impact detailed above, or the erosion of the anticipated
22 returns on their investments in researching, developing, and marketing their diabetes drugs, in
23 reliance on the protection of their valuable trade secrets.
24 106. Thus, under any Takings analysis, SB 539’s disclosure requirements destroy
25 valuable trade secrets related to diabetes drugs without any compensation, let alone just
26 compensation, in violation of the Takings Clause. U.S. Const. amends. V, XIV.
27
28
36
SB 539 Violates the Commerce Clause by Overriding the Laws of Every Other State
1
107. The Constitution grants Congress the power “[t]o regulate Commerce . . . among the
2
several States.” U.S. Const. art. I, § 8, cl. 3. The Commerce Clause “reflect[s] a central concern of
3
the Framers . . . : the conviction that in order to succeed, the new Union would have to avoid the
4
tendencies toward economic Balkanization that had plagued relations among the Colonies and later
5
among the States under the Articles of Confederation.” Hughes v. Oklahoma, 441 U.S. 322, 325
6
(1979).
7
108. Thus, the Supreme Court has “long interpreted the Commerce Clause as an implicit
8
restraint on state authority, even in the absence of a conflicting federal statute.” United Haulers
9
Ass’n v. Oneida-Herkimer Solid Waste Mgmt. Auth., 550 U.S. 330, 338 (2007). This is the “so-
10
called ‘dormant’ aspect of the Commerce Clause.” Id.
11
109. When a state “directly regulates” interstate commerce, the Supreme Court has
12
“generally struck down the statute without further inquiry.” Brown-Forman Distillers Corp. v. N.Y.
13
State Liquor Auth., 476 U.S. 573, 579 (1986); see also Edgar v. MITE Corp., 457 U.S. 624, 640
14
(1982) (“The Commerce Clause, however, permits only incidental regulation of interstate
15
commerce by the States; direct regulation is prohibited.”). By contrast, when a state law directly
16
regulates only intrastate commerce, the regulation will not survive scrutiny if “the burden imposed
17
on [interstate] commerce is clearly excessive in relation to the putative local benefits” of the statute.
18
Pike v. Bruce Church, Inc., 397 U.S. 137, 142 (1970).
19
110. SB 539 imposes a burden on interstate commerce that “is clearly excessive in
20
relation to [its] putative local benefits.” Id. The Act strips trade-secret protection for broad
21
categories of proprietary information belonging to “essential” diabetes drug manufacturers, none of
22
whom is headquartered in Nevada. By doing so, the Act directly negates the trade-secret laws of
23
every other state and the federal government. The extraterritorial effects of SB 539 are substantial
24
and unavoidable because the market for diabetes drugs—especially “essential” diabetes drugs—is
25
inherently national. See Nat’l Ass’n of Optometrists & Opticians v. Harris, 682 F.3d 1144, 1148
26
(9th Cir. 2012) (“[S]ignificant burdens on interstate commerce generally result from inconsistent
27
regulation of activities that are inherently national or require a uniform system of regulation.”). SB
28
37
1 539 will prevent manufacturers from protecting and enforcing their trade secrets in every state.
2 This in turn will impose significant burdens on other states that host a substantial part of these
3 manufacturers’ operations. Those jurisdictions have a legitimate interest in promoting the economic
4 success of these manufacturers by protecting their trade secrets. See Healy v. Beer Inst., Inc., 491
5 U.S. 324, 336–37 (1989); Rocky Mtn. Farmers Union v. Corey, 730 F.3d 1070, 1101 (9th Cir.
6 2013).
7 111. Take, for example, Eli Lilly—one of the major manufacturers of diabetes drugs. Eli
8 Lilly is headquartered in Indianapolis, Indiana. It has no offices or operations in Nevada. The State
9 of Indiana and the other states where Eli Lilly has operations protect Eli Lilly’s trade secrets—
10 including its pricing and cost information for essential diabetes drugs. See, e.g., Hydraulic Exch. &
11 Repair, 690 N.E.2d at 786. These states have an interest in protecting Eli Lilly’s trade secrets in
12 order to promote the company’s growth, which creates local jobs and fuels the local economy. SB
13 539, however, overthrows the protection these other states provide by compelling Eli Lilly to
14 disclose the information that the other states protect as trade secrets. By enacting SB 539, Nevada
15 legislators have told legislators in every other state that Nevada knows best, and its decision
16 controls, when balancing the interest in protecting trade secrets against the interest in price
17 transparency. The dormant Commerce Clause does not tolerate such efforts by one state to impose
18 its preferred regulation on every other state.
19 112. Furthermore, because WAC is a national list price, SB 539’s effective cap on a
20 drug’s WAC will apply throughout the country, including to drugs that are bought and sold outside
21 of Nevada. A manufacturer of essential diabetes drugs based in New York selling to a purchaser in
22 California will not be able to raise list prices without having the state of Nevada stripping the New
23 York manufacturer of its valuable trade secrets.
24 113. These substantial effects on interstate commerce will clearly exceed any putative
25 local benefit to the residents of Nevada. While the purpose of the Act is apparently to control prices
26 for diabetes drugs, neither the Act nor its legislative history explain how transparency will lower
27 prices apart from impermissibly burdening manufacturers’ lawful exercise of federal patent rights.
28 The Act is precisely the kind of attempt by a state to “extend [its] police power beyond its
38
1 jurisdictional bounds” that offends the dormant Commerce Clause. C & A Carbone, 511 U.S. at
2 393.
3 114. In fact, SB 539’s publication of competitively sensitive price and cost information
4 may lead to unintended anticompetitive effects that prevent drug prices from falling as quickly as
5 they would have without the Act. “Too much transparency can harm competition in any market,
6 including in health care markets. . . . [W]hen information disclosures allow competitors to figure
7 out what their rivals are charging, [it] dampens each competitor’s incentive to offer a low price, or
8 increases the likelihood that they can coordinate on higher prices.” Tara Isa Koslov & Elizabeth
9 Jex, Price Transparency or TMI?, Fed. Trade Comm’n (July 2, 2015, 2:31 PM),
10 https://www.ftc.gov/news-events/blogs/competition-matters/2015/07/price-transparency-or-tmi.
11 The Congressional Budget Office has found that compelled disclosure of drug pricing information,
12 specifically rebates, “could set in place conditions for tacit collusion, as manufacturers would find it
13 more difficult to set prices below their competitors’ without detection.” Cong. Budget Office,
14 Increasing Transparency in the Pricing of Health Care Services and Pharmaceuticals 6 (June 5,
15 2008), https://www.cbo.gov/sites/default/files/110th-congress-2007-2008/reports/06-05-
16 pricetransparency.pdf.
17 115. The Federal Trade Commission has also explained, “If, for example, pharmaceutical
18 manufacturers know the precise details of rebate arrangements offered by their competitors, then
19 tacit collusion among them may be more feasible. Absent such knowledge, manufacturers have
20 powerful incentives to bid aggressively for formulary position, because preferential formulary
21 treatment may yield increased sales. Unprotected disclosures thus may raise the price that . . .
22 consumers pay for pharmaceutical coverage by undermining competition among pharmaceutical
23 companies for preferred formulary treatment.” Letter from James Cooper, Pauline M. Ippolito, &
24 David P. Wales of the Fed. Trade Comm’n to Hon. James L. Seward (Mar. 31, 2009),
25 https://www.ftc.gov/sites/default/files/documents/advocacy_documents/ftc-staff-comment-
26 honorable-james-l.seward-concerning-new-york-senate-bill-58-pharmacy-benefit-managers-
27 pbms/v090006newyorkpbm.pdf.
28
39
1 116. In sum, the Act excessively burdens interstate commerce without a commensurate
2 local benefit. The Constitution entrusts national economic policy to Congress precisely to avoid
3 such outcomes. U.S. Const. art. I, § 8, cl. 3.
4 CLAIMS FOR RELIEF
5 FIRST CLAIM FOR RELIEF
6 (Declaratory/Injunctive Relief – SB 539 Is Preempted By Federal Patent Law

In Violation Of The Supremacy Clause Of The U.S. Constitution)
7
117. Plaintiffs reallege and incorporate by reference all prior and subsequent paragraphs.
8
118. Under the Supremacy Clause of the United States Constitution, federal statutes are
9
“the supreme Law of the Land.” U.S. Const. art. IV, cl. 2. No state law may “stand[] as an obstacle
10
to the accomplishment and execution of the full purposes and objectives of Congress.” Hines, 312
11
U.S. at 67.
12
119. The federal patent laws embody “a careful balance between the need to promote
13
innovation and the recognition that imitation and refinement through imitation are both necessary to
14
invention itself and the very lifeblood of a competitive economy.” Bonito Boats, 489 U.S. at 146.
15
Federal patent laws, including the Hatch-Waxman Act, grant an inventor the exclusive right to
16
make, use, and sell his patented invention for a limited period of time. During this exclusivity
17
period, a patent holder may set the price for its product in a manner that takes into account the
18
patent holder’s ability to preclude others from marketing an infringing product. See BIO, 496 F.3d
19
at 1373–74. This protection extends to “[whom]ever invents or discovers any new and useful
20
process, machine, manufacture, or composition of matter, or any new and useful improvement
21
thereof.” 35 U.S.C. § 101. By this means, the federal patent system, including the Hatch-Waxman
22
Act, encourages not only the discovery of new pharmacological compounds, but also new methods
23
of manufacturing or improving the effectiveness of drugs already discovered.
24
120. Federal patent law preempts SB 539 because the Act stands as an obstacle to the
25
accomplishment and execution of the full purposes and objectives of the federal law. The Act
26
impermissibly burdens the federal patent rights of diabetes drug manufacturers by requiring the
27
28
40
1 disclosure of trade secrets associated with these patented products if manufacturers raise the list
2 prices of those patented drugs.
3 121. Accordingly, the Act constitutes an impermissible and “clear attempt to restrain . . .
4 excessive [drug] prices, in effect diminishing the reward to patentees in order to provide greater
5 benefit to [Nevada] drug consumers.” BIO, 496 F.3d at 1374.
6 SECOND CLAIM FOR RELIEF
7 (Declaratory/Injunctive Relief – SB 539 Is Preempted By Federal Trade-Secret Law

In Violation Of The Supremacy Clause Of The U.S. Constitution)
8
9
123. SB 539 violates the Supremacy Clause for the independent reason that eliminating
10
trade-secret protection for the information disclosed by manufacturers stands as an obstacle to the
11
accomplishment and execution of the full purposes and objectives of, and is therefore preempted by,
12
the federal Defend Trade Secrets Act of 2016.
13
124. SB 539 compels manufacturers to disclose to the Department confidential and
14
proprietary advertising, cost, marketing, pricing, and production information that derives
15
independent value from not being generally known to third-party payers and competitors. These
16
categories of information are “trade secrets” under the DTSA. SB 539, however, removes trade-
17
secret protection from these categories of information by requiring their disclosure and by amending
18
Nevada’s trade-secret statute expressly to eliminate trade-secret protection for all information “that
19
a manufacturer is required to report.” SB 539 § 9. These provisions stand as an obstacle to the
20
purposes and objectives of the DTSA.
21
125. Although the DTSA provides that it “shall not be construed to preempt or
22
displace any other remedies . . . provided by . . . [s]tate . . . law for the misappropriation of a trade
23
secret,” 18 U.S.C. § 1838, that provision has no applicability here. SB 539 does not merely provide
24
a different remedy for the misappropriation that must be disclosed. Rather, SB 539 eliminates all
25
remedies, not only in Nevada, but throughout the Nation. Thus, the rule of construction set forth in
26
Section 1838 does not save SB 539 from federal preemption.
27
28
41
1 THIRD CLAIM FOR RELIEF
2 (Declaratory/Injunctive Relief – The Act Works A Taking Without Just Compensation

In Violation Of The Fifth And Fourteenth Amendments To The U.S. Constitution)
3
4
127. The Fifth Amendment to the United States Constitution, applicable to the states
5
through the Fourteenth Amendment, provides that “private property [shall not] be taken for public
6
use, without just compensation.”
7
128. SB 539 constitutes a categorical taking of Plaintiffs’ members’ intellectual property
8
rights because it guarantees public disclosure of their trade secrets, which in turn negates the value
9
of those trade secrets.
10
129. Alternatively, the Act works a regulatory taking under the three-part test set out in
11
Penn Central. First, SB 539 has the “character” of a total interference with manufacturers’ property
12
rights in their trade secrets. Penn Cent., 438 U.S. at 124–25. Second, eliminating all trade-secret
13
protection for the confidential advertising, cost, marketing, pricing, and production information for
14
diabetes drugs will have a devastating “economic impact” not only on manufacturers subject to the
15
disclosure requirements, but also on the market for diabetes drugs. Id. at 124. Third, manufacturers
16
invest in diabetes treatments with the reasonable “investment-backed expectation” that their
17
confidential and proprietary information will remain a secret. Id. at 124, 127.
18
130. Thus, SB 539’s disclosure requirements destroy valuable trade secrets related to
19
diabetes drugs without any compensation, let alone just compensation, in violation of the Takings
20
Clause. U.S. Const. amends. V, XIV.
21
FOURTH CLAIM FOR RELIEF
22
23 (Declaratory/Injunctive Relief – The Act Imposes An Excessive Burden On Interstate

Commerce In Violation Of The Commerce Clause Of The U.S. Constitution)
24
25
132. The Constitution grants Congress the power “[t]o regulate Commerce . . . among the
26
several States.” U.S. Const. art. I, § 8, cl. 3. The Commerce Clause places an implicit restraint,
27
known as the dormant Commerce Clause, on state laws that are inimical to national commerce.
28
42
1 133. SB 539 violates the dormant Commerce Clause because the burden it imposes on
2 interstate commerce is clearly excessive in relation to any putative local benefits. Because WAC is
3 a national list price, SB 539’s effects will be felt throughout the country. SB 539 also will prevent
4 manufacturers from protecting and enforcing their trade secrets in every state. These other
5 jurisdictions, especially those in which manufacturers reside, have a legitimate interest in promoting
6 the economic success of manufacturers. These substantial effects on interstate commerce clearly
7 exceed any putative local benefit to the residents of Nevada. While the purpose of the Act is to
8 control prices for diabetes drugs, neither the Act nor its legislative history explain how transparency
9 will lower prices apart from impermissibly burdening manufacturers’ lawful exercise of federal
10 patent rights. The Constitution entrusts national economic policy to Congress precisely to avoid
11 such outcomes. U.S. Const. art. I, § 8, cl. 3.
12
13 PRAYER FOR RELIEF
14 NOW, THEREFORE, Plaintiffs request a judgment in their favor against Defendants as
15 follows:
16 1. A declaration that Sections 3.6–4, 4.3, 6, 7, 8, 9, and all related sections or
17 subsections of SB 539 are unconstitutional and void;
18 2. A preliminary and permanent injunction preventing Defendants from implementing
19 or enforcing Sections 3.6–4, 4.3, 6, 7, 8, 9, and all related sections or subsections of
20 SB 539;
21 3. That Plaintiffs be awarded attorneys’ fees and costs, plus interest accruing thereon,
22 in their favor at the maximum rate allowed by law; and
23 ///
24 ///
25 ///
26 ///
27 ///
28 ///
43
1 4. That the Court award such other and further relief as it may deem appropriate.
2 DATED this 1st day of September, 2017.
3 Respectfully submitted,
4 /s/ Pat Lundvall
Pat Lundvall
5 Nevada Bar No. 3761
MCDONALD CARANO LLP
6 2300 West Sahara Avenue, Suite 1200
Las Vegas, NV 89102
7 Telephone: (702) 873-4100
[email protected]
8
Robert N. Weiner
9 Pending Admission Pro Hac Vice
Jeffrey L. Handwerker
R. Stanton Jones
ARNOLD & PORTER KAYE SCHOLER LLP
12 601 Massachusetts Avenue, NW
Washington, DC 20001
13 Telephone: (202) 942-5000
[email protected]
[email protected]
15
Attorneys for Plaintiffs Pharmaceutical Research
16
and Manufacturers of America and Biotechnology
17 Innovation Organization
18
19
20
21
22
23
24
25
26
27
28
44
EXHIBIT 4
EXHIBIT 4
Case 2:17-cv-02315-JCM-CWH Document 26-6 Filed 09/13/17 Page 2 of 11
EXHIBIT 5
EXHIBIT 5
1 UNITED STATES DISTRICT COURT

3
4 PHARMACEUTICAL RESEARCH AND ) Case No. 2:17-cv-02315-JCM-CWH
MANUFACTURERS OF AMERICA, et al., )
5 )
Plaintiffs, )
6 )
v. )
7 ) ORDER
BRIAN SANDOVAL, et al., )
8 )
Defendants. )
9 _______________________________________ )
10 Presently before the Court is proposed Intervenor-Defendant Nevada Legislature’s motion to
11 intervene (ECF No. 39), filed on September 26, 2017. Plaintiffs filed a response (ECF No. 41) on
12 September 29, 2017, in which they informed the Court that they do not oppose the Nevada
13 Legislature’s motion.
14 Under Local Rule 7-2(d), the “failure of an opposing party to file points and authorities in
15 response to any motion, except a motion under Fed. R. Civ. P. 56 or a motion for attorney’s fees,
16 constitutes a consent to the granting of the motion.” The Court will therefore grant the Nevada
17 Legislature’s motion to intervene.
18 IT IS THEREFORE ORDERED that proposed Intervenor-Defendant Nevada Legislature’s
19 motion to intervene (ECF No. 39) is GRANTED.
20 DATED: October 3, 2017
21
22 _________________________________
C.W. Hoffman, Jr.
23 United States Magistrate Judge
24
25
26
27
28
1
1 Pat Lundvall
Nevada Bar No. 3761
2 McDONALD CARANO LLP
Telephone: (702) 873-4100
4 [email protected]
5 Robert N. Weiner
7 R. Stanton Jones
2300 WEST SAHARA AVENUE, SUITE 1200 • LAS VEGAS, NEVADA 89102 PHONE
Telephone: (202) 942-5000

[email protected]
McDONALD CARANO LLP
12 Attorneys for Plaintiffs Pharmaceutical

Research and Manufacturers of America and
13 Biotechnology Innovation Organization
14
(702) 873-4100 • FAX (702) 873-9966
15 UNITED STATES DISTRICT COURT

DISTRICT OF NEVADA
16
PHARMACEUTICAL RESEARCH AND Case No.: 2:17-cv-02315-JCM-CWH
17 MANUFACTURERS OF AMERICA and
PLAINTIFFS’ MOTION FOR
18 BIOTECHNOLOGY INNOVATION TEMPORARY RESTRAINING ORDER
ORGANIZATION, AND PRELIMINARY INJUNCTION, AND
19 SUPPORTING MEMORANDUM OF
Plaintiffs, POINTS AND AUTHORITIES
20
vs. EXPEDITED TREATMENT REQUESTED
21 (RELIEF NEEDED BY OCTOBER 1, 2017)
BRIAN SANDOVAL, in his official capacity
22 as Governor of the State of Nevada, and ORAL ARGUMENT REQUESTED
23 RICHARD WHITLEY, in his official capacity
as Director of the Nevada Department for
24 Health and Human Services,
25 Defendants.
26
27
28
1 MOTION FOR TEMPORARY RESTRAINING ORDER AND PRELIMINARY
2 INJUNCTION
4 Biotechnology Innovation Organization (“BIO”) hereby move pursuant to Federal Rule of Civil
5 Procedure 65 for a temporary restraining order requiring Defendants Brian Sandoval, in his official
6 capacity as Governor of the State of Nevada, and Richard Whitley, in his official capacity as
7 Director of the Nevada Department of Health and Human Services (together, “Defendants”), to
8 immediately cease and desist all action implementing or enforcing Sections 3.6–4, 4.3, 6, 7, 8, 9,
9 and all related sections or subsections of Nevada Senate Bill No. 539 (“SB 539” or the “Act”),
10 which will impose irreparable injury on Plaintiffs beginning on October 1, 2017—the date that the
11 challenged provisions of SB 539 go into effect. Such a temporary restraining order will preserve
12 the status quo until the Court can rule on Plaintiffs’ motion for a preliminary injunction. Pursuant
McDONALD CARANO LLP
13 to Rule 65(b), sufficient grounds exist to issue a temporary restraining order. Plaintiffs further
14 move for a preliminary injunction barring implementation or enforcement of the Sections of the Act
(702) 873-4100 • FAX (702) 873-9966
15 identified above. Should this Court not enter a temporary restraining order, Plaintiffs ask the Court
16 to set a briefing schedule on the motion for a preliminary injunction allowing sufficient time for a
17 ruling before October 1, 2017. Defendants were notified of Plaintiffs’ intent to seek preliminary
18 injunctive relief on August 25, 2017. Through the meet and confer process since then, the parties’
19 counsel discussed a potential resolution to avoid this motion, but on September 12, 2017,
20 Defendants’ counsel advised that Defendant Sandoval would prefer that Plaintiffs proceed with the
21 filing of a motion.
22
23
24
25
26
27
28
1
1 In support of this motion, Plaintiffs respectfully submit the accompanying memorandum of
2 points and authorities, affidavits, and exhibits detailing the grounds entitling them to relief.
3 Dated this 13th day of September, 2017.

4
MCDONALD CARANO LLP
5
6
By: /s/ Pat Lundvall
7 Pat Lundvall
Telephone: (702) 873-4100
9
Facsimile: (702) 873-9966
10
Robert N. Weiner
R. Stanton Jones
McDONALD CARANO LLP

Telephone: (202) 942-5000
14 Facsimile: (202) 942-5999
(702) 873-4100 • FAX (702) 873-9966
15
Attorneys for Plaintiffs Pharmaceutical Research
16 and Manufacturers of America and Biotechnology
Innovation Organization
17
18
19
20
21
22
23
24
25
26
27
28
2
TABLE OF CONTENTS
1
Page
2 INTRODUCTION ............................................................................................................................... 1
3 BACKGROUND ................................................................................................................................. 3
4 A. Plaintiffs’ Members Spend Billions Each Year Developing Innovative
Diabetes Medicines in Reliance on Patent and Trade-Secret Protections.................... 3
5
B. History and Overview of Nevada Senate Bill 539 ....................................................... 4
6
C. SB 539’s Harm to Plaintiffs’ Members and Innovation of Diabetes
7 Treatments .................................................................................................................... 8
8 ARGUMENT ....................................................................................................................................... 9
9 I. PLAINTIFFS ARE LIKELY TO SUCCEED ON THE MERITS ........................................ 10
10 A. SB 539 Is Preempted By Federal Patent and Trade-Secret Law................................ 10

11 1. SB 539 Conflicts with Federal Patent Law .................................................... 11
12 2. SB 539 Conflicts with Federal Trade-Secret Law ......................................... 15
McDONALD CARANO LLP
13 B. SB 539’s Uncompensated Abolition of Trade-Secret Protection for

Valuable Information Violates the Fifth Amendment Takings Clause...................... 17
14
C. SB 539 Violates the Commerce Clause by Overriding Every Other State’s
(702) 873-4100 • FAX (702) 873-9966
15 Laws ........................................................................................................................... 19

16 II. PLAINTIFFS’ MEMBERS WILL SUFFER IRREPARABLE HARM ABSENT
A TEMPORARY RESTRAINING ORDER AND PRELIMINARY
17 INJUNCTIVE RELIEF .......................................................................................................... 22
18 III. THE BALANCE OF EQUITIES AND THE PUBLIC INTEREST SUPPORT A
TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION .............. 22
19
CONCLUSION .................................................................................................................................. 23
20
21
22
23
24
25
26
27
28
i
TABLE OF AUTHORITIES
1
Page(s)
2
CASES
3
Aerodynamics Inc. v. Caesars Entm’t Operating Co.,
4 No. 2:15-CV-01344, 2015 WL 5679843 (D. Nev. Sept. 24, 2015) ....................................... 16, 22
5 All. for the Wild Rockies v. Cottrell,

632 F.3d 1127 (9th Cir. 2011).................................................................................................. 9, 20
6
Amoco Prod. Co. v. Vill. of Gambell,
7
480 U.S. 531 (1987) ....................................................................................................................... 9
8
Andrx Pharms., Inc. v. Biovail Corp. Int’l,
9 256 F.3d 799 (D.C. Cir. 2001) ..................................................................................................... 12
10 Ariz. Dream Act Coal. v. Brewer,

757 F.3d 1053 (9th Cir. 2014)...................................................................................................... 21
11
Ashland Mgmt. Inc. v. Janien,
12 624 N.E.2d 1007 (N.Y. 1993) ...................................................................................................... 15
McDONALD CARANO LLP
13
Bonito Boats, Inc. v. Thunder Craft Boats, Inc.,
14 489 U.S. 141 (1989) ..................................................................................................................... 11
(702) 873-4100 • FAX (702) 873-9966
15 Broadcom Corp. v. Qualcomm Inc.,

No. SACV 05-468, 2005 WL 5925584 (C.D. Cal. Oct. 19, 2005) ................................................ 9
16
C & A Carbone v. Town of Clarkstown,
17 511 U.S. 383 (1994) ..................................................................................................................... 21
18 Excellence Cmty. Mgmt., LLC v. Gilmore,
19 351 P.3d 720 (Nev. 2015) ............................................................................................................ 21
20 Finkel v. Cashman Prof’l, Inc.,

270 P.3d 1259 (Nev. 2012) .............................................................................................. 16, 18, 21
21
Flex-Foot, Inc. v. CRP, Inc.,
22 238 F.3d 1362 (Fed. Cir. 2001) ...................................................................................................... 9
23 Frantz v. Johnson,
24 999 P.2d 351 (Nev. 2000) ...................................................................................................... 14, 18
25 FTC v. Actavis, Inc.,

133 S. Ct. 2223 (2013) ................................................................................................................. 10
26
Gade v. Nat’l Solid Wastes Mgmt. Ass’n,
27 505 U.S. 88 (1992) ....................................................................................................................... 10
28
ii
Healy v. Beer Inst.,

1 491 U.S. 324 (1989) ......................................................................................................... 19, 20, 21
2
Hines v. Davidowitz,
3 312 U.S. 52 (1941) ........................................................................................................... 10, 14, 16
4 Hughes v. Oklahoma,
441 U.S. 322 (1979) ..................................................................................................................... 19
5
Hydraulic Exch. & Repair, Inc. v. KM Specialty Pumps, Inc.,
6 690 N.E.2d 782 (Ind. Ct. App. 1998) ........................................................................................... 21
7
Johnson v. Nguyen,
8 No. 3:12-CV-00538, 2015 WL 105826 (D. Nev. Jan. 7, 2015) ..................................................... 9
9 Kewanee Oil Co. v. Bicron Corp.,

416 U.S. 470 (1974) ............................................................................................................... 10, 14
10
King Drug Co. of Florence, Inc. v. SmithKline Beecham Corp.,
11 791 F.3d 388 (3d Cir. 2015) ......................................................................................................... 10
12
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King Instruments Corp. v. Perego,

13 65 F.3d 941 (Fed. Cir. 1995) ........................................................................................................ 11
14 Kuryakyn Holdings, LLC v. Ciro, LLC,

No. 15-CV-703-JDP, 2017 WL 1026025 (W.D. Wis. Mar. 15, 2017) ........................................ 16
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15
Lucas v. S.C. Coastal Council,
16 505 U.S. 1003 (1992) ................................................................................................................... 18
17 Mikohn Gaming Corp. v. Acres Gaming, Inc.,
165 F.3d 891 (Fed. Cir. 1998) ........................................................................................................ 9
18
19 of Nashville, Inc. v. Metro. Gov’t of Nashville & Davidson Cty.,

274 F.3d 377 (6th Cir. 2001)........................................................................................................ 22
20
Nelson v. NASA,
21 530 F.3d 865 (9th Cir. 2008), rev’d on other grounds, 562 U.S. 134 (2011) .............................. 22
22 Peabody v. Norfolk,
98 Mass. 452 (1868)..................................................................................................................... 15
23
24 Penn Cent. Transp. Co. v. City of New York,

438 U.S. 104 (1978) ..................................................................................................................... 18
25
Perez v. Campbell,
26 402 U.S. 637 (1971) ..................................................................................................................... 13
27 Pharm. Research & Mfrs. of Am. v. District of Columbia (PhRMA),

406 F. Supp. 2d 56 (D.D.C. 2005), aff’d sub nom. Biotech. Indus. Org. v. District
28 of Columbia (BIO), 496 F.3d 1362 (Fed. Cir. 2007) ....................................................... 10, 19, 20
iii
Philip Morris, Inc. v. Reilly,

1 312 F.3d 24 (1st Cir. 2002) (en banc) .............................................................................. 16, 17, 18
2
Pike v. Bruce Church, Inc.,
3 397 U.S. 137 (1970) ..................................................................................................................... 19
4 Preminger v. Principi,
422 F.3d 815 (9th Cir. 2005)........................................................................................................ 23
5
Prot. Techs., Inc. v. Ribler,
6 2017 WL 923912 (D. Nev. Mar. 8, 2017).................................................................................... 23
7
Ruckelshaus v. Monsanto Co.,
8 467 U.S. 986 (1984) ......................................................................................................... 16, 17, 18
9 Saini v. Int’l Game Tech.,

434 F. Supp. 2d 913 (D. Nev. 2006) ...................................................................................... 21, 22
10
Sears, Roebuck & Co. v. Stiffel Co.,
11 376 U.S. 225 (1964) ..................................................................................................................... 11
12
McDONALD CARANO LLP
Sorrell v. IMS Health Inc.,

13 564 U.S. 552 (2011) ..................................................................................................................... 13
14 St. Michael’s Convalescent Hosp. v. California,

643 F.2d 1369 (9th Cir. 1981)...................................................................................................... 17
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15
Sw. Voter Registration Educ. Project v. Shelley,
16 344 F.3d 882 (9th Cir.), rev’d on other grounds, 344 F.3d 914 (9th Cir. 2003) ......................... 23
17 United Haulers Ass’n v. Oneida-Herkimer Solid Waste Mgmt. Auth.,
550 U.S. 330 (2007) ..................................................................................................................... 19
18
19 Wearly v. FTC,
462 F. Supp. 589 (D.N.J. 1978) ................................................................................................... 17
20
Winter v. Nat. Res. Def. Council, Inc.,
21 555 U.S. 7 (2008) ........................................................................................................................... 9
22 STATUTES
23 Defend Trade Secrets Act, Pub. L. No. 114-153, 130 Stat. 376 (2016)
24 (codified at 18 U.S.C. § 1836(b))
...................................................................................................................................... 1, 15, 16, 23
25
Drug Price Competition and Patent Term Restoration Act of 1984 .............................................. 1, 11
26
Nev. Rev. Stat § 600A.030 (1987) ................................................................................................. 7, 18
27
Uniform Trade Secrets Act .................................................................................................... 14, 16, 23
28
iv
OTHER AUTHORITIES
1
162 Cong. Rec. H2028-01 (Apr. 27, 2016) .................................................................................. 15, 18
2
3 Andrew Curry, Pathways to a Type 1 Vaccine, Diabetes Forecast (July 2016),

http://www.diabetesforecast.org/2016/jul-aug/vaccines.html ........................................................ 4
4
Ashish Jha et al., Greater Adherence to Diabetes Drugs Is Linked to Less Hospital
5 Use and Could Save Nearly $5 Billion Annually, 31 Health Aff. 1836 (2012) ............................. 3
6 Diabetes: Past Treatments and New Discoveries, Med. News Today (May 2017),
http://www.medicalnewstoday.com/articles/317484.php .............................................................. 3
7
8 Diabetes Que., Treating Diabetes: 1921 to the Present Day (Nov. 2016),
https://tinyurl.com/yaqszq7s .......................................................................................................... 3
9
Diabetes, WebMD, http://www.webmd.com/diabetes/biguanides-for-type-2-diabetes ...................... 6
10
Genia Long, Analysis Grp., The Biopharmaceutical Pipeline: Innovative Therapies
11 in Clinical Development (July 2017) ............................................................................................. 3
12 H.R. Rep. No. 114-529 (2016) ............................................................................................... 14, 15, 16
McDONALD CARANO LLP
13 H.R. Rep. No. 98-857(I) (1984) ......................................................................................................... 11

14
Hearing on S.B. 265 Before the Sen. Comm. on Health & Human Servs., 2017 Leg.,
(702) 873-4100 • FAX (702) 873-9966
15 79th Sess. (Nev. May 26, 2017) ..................................................................................................... 5
16 Hearing on S.B. 265 Before the Sen. Comm. on Health & Human Servs., 2017 Leg.,
79th Sess. (Nev. Mar. 29, 2017) .................................................................................................... 4
17
Hearing on S.B. 265 Before the Sen. Comm. on Health & Human Servs., 2017 Leg.,
18 79th Sess. (Nev. May 3, 2017) ....................................................................................................... 4
19 Matthew Herper, The Cost of Creating A New Drug Now $5 Billion, Pushing Big
20 Pharma To Change, Forbes.com (Aug. 11, 2013) ....................................................................... 11
21 Medicines in Development for Diabetes: A Report on Diabetes and Related

Conditions, PhRMA (2016), https://tinyurl.com/ydfnrxq7 ............................................................ 3
22
Nevada Senate Bill No. 539 ............................................................................................................. 1, 2
23
Presidential Statement on Signing S. 1538 Into Law, 20 Weekly Comp. Pres. Doc.
24 1359 (Sept. 24, 1984) ............................................................................................................. 12, 13
25
Recent Developments Which May Impact Consumer Access to, and Demand for,
26 Pharmaceuticals: Hearing Before the Subcomm. on Health of the House Comm.
on Energy and Commerce, 107th Cong. (June 13, 2001) (statement of Rep.
27 Barbara Cubin) ............................................................................................................................. 12
28
v
Rick Mullin, Tufts Study Finds Big Rise In Cost Of Drug Development, Chem. &
1 Eng’g News (Nov. 20, 2014) ....................................................................................................... 11
2
S. Rep. No. 114-220 (2016) ........................................................................................................ 15, 16
3
Senate Bill No. 265 .............................................................................................................................. 4
4
U.S. Const., amend. V ........................................................................................................................ 17
5
U.S. Const., amend. XIV ................................................................................................................... 17
6
U.S. Const. art. I, § 8, cl. 3 ................................................................................................................. 19
7
U.S. Const. art. I, § 8, cl. 8 ................................................................................................................. 10
8
9 U.S. Const. art. VI, § 1, cl. 2 .............................................................................................................. 10

10
11
12
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vi
1 MEMORANDUM OF POINTS AND AUTHORITIES
2 INTRODUCTION
3 Plaintiffs bring this action to prevent Nevada Senate Bill No. 539 (“SB 539” or the “Act,”
4 attached as Ex. A) from inflicting serious, nationwide injuries. This unprecedented, overreaching,
5 and unconstitutional statute undermines federal law, devalues intellectual property, and dictates
6 patent and trade secret protection to the entire nation. The challenged provisions of SB 539 will
7 irreparably harm Plaintiffs’ members who invent and manufacture diabetes drugs. Plaintiffs
8 therefore seek a temporary restraining order and preliminary injunction barring implementation or
9 enforcement of those provisions.

10 SB 539, signed on June 15, 2017, is novel in scope, ambition, and nationwide effect. As a
11 penalty for exercising rights protected under the U.S. patent laws, SB 539 strips pharmaceutical
McDONALD CARANO LLP
12 manufacturers of trade secret protection for confidential, competitively sensitive, proprietary
13 information regarding the production, cost, pricing, marketing, and advertising of their patented
14 diabetes medicines. The Act then requires manufacturers to disclose this information to the Nevada
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15 Department of Health and Human Services (the “Department”), which must publish some of the
16 information on its website and can disseminate the rest as it sees fit.
17 SB 539 violates the Constitution in at least four ways. First, SB 539 conflicts with federal
18 patent law, including the Drug Price Competition and Patent Term Restoration Act of 1984
19 (“Hatch-Waxman Act”) and is thus invalid under the Supremacy Clause. Federal law allows a
20 patent holder to exclude others from making, using, or selling new inventions. For pharmaceuticals,
21 the Hatch-Waxman Act adapts this system to ensure broad access to affordable medicines while
22 offering innovators economic incentives sufficiently potent to surmount the enormous costs and
23 risks of developing new treatments. SB 539 upsets this legislative balance by burdening a patent
24 holder’s right to set prices reflecting the incentives the federal patent laws provide.
25 Second, SB 539 is also preempted by federal trade-secret law. Recognizing that trade secrets
26 are critical to U.S. businesses, Congress enhanced existing state-law safeguards by enacting the
27 Defend Trade Secrets Act of 2016 (“DTSA”). The DTSA sets a federal baseline for trade-secret
28
1
1 protection. SB 539 not only falls below this baseline; it effectively nullifies federal protection for
2 trade secrets, undermining innovation and competition in the American pharmaceutical industry.
3 Third, SB 539 violates the Takings Clause of the Fifth Amendment by depriving affected
4 manufacturers of trade-secret protection, forcing them to disclose confidential information to the
5 State, and mandating its dissemination on the Internet. Before SB 539, every state, including
6 Nevada, treated these materials as trade secrets. They are property, and SB 539 destroys their value
7 without recompense. It thus takes manufacturers’ property “without just compensation.”
8 Fourth, SB 539 violates the dormant Commerce Clause because the penalty it imposes in
9 Nevada impairs interstate commerce. By tying penalties to the national benchmark price for a drug,
10 SB 539 affects drug prices nationwide, even for transactions entirely outside Nevada. The
11 abrogation of trade-secret protection likewise extends to every state. Rescinding trade-secret
12 protection, mandating disclosures, and requiring online publication of information destroys its
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13 confidentiality—everywhere. Such disclosures cannot be undone—information cannot be
14 undisclosed. SB 539 overrides the laws of other states protecting the information as trade secrets,
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15 including states where the affected manufacturers reside, pay taxes, and employ thousands. Only
16 Congress can override state trade-secret law or impose national economic policies. Nevada cannot.
17 These issues are not only ripe, but urgent. The Department plans to publish its list of
18 “essential” diabetes drugs on October 15, 2017, stripping away trade-secret protection and raising
19 the risk of misappropriation. The Act also compels disclosures that will undermine manufacturers’
20 ability to compete. See Veto Letter from Gov. Sandoval to Sen. Maj. Leader Ford (June 2, 2017), at
21 2-3 (“Veto Letter,” attached as Ex. B). The harm to Plaintiffs’ members and the public far
22 outweighs any inconvenience to Defendants from delayed implementation of SB 539. And
23 maintaining the status quo while this Court considers the constitutional issues is in the public
24 interest. Plaintiffs therefore ask the Court to temporarily restrain Defendants from implementing or
25 enforcing the challenged provisions of SB 539 pending resolution of Plaintiffs’ motion for a
26 preliminary injunction, and that the Court enjoin such implementation or enforcement pending
27 resolution of this action.
28
2
1 BACKGROUND
2 A. Plaintiffs’ Members Spend Billions Each Year Developing Innovative Diabetes

Medicines in Reliance on Patent and Trade-Secret Protections
3
More than 30 million Americans live with diabetes. An additional 84 million have pre-
4
diabetes, with blood sugar levels higher than normal, increasing the risk they will develop diabetes.
5
The disease is the seventh leading cause of death in the United States. It is, in short, an epidemic.1
6
Before 1922, a diagnosis of diabetes was a swift death sentence. Even with a strict diet, a
7
patient typically survived “no more than three or four years,” with miserable quality of life.2 Blood
8
vessel and nerve damage resulted in dizziness and fainting, sexual issues, frequent urination,
9
blindness, kidney failure, and infections leading to amputation. In 1921, two scientists were able to
10
reverse diabetes in dogs by injecting them with insulin from the pancreatic islets of healthy dogs.3
11
The following year, Eli Lilly began mass producing early animal-based insulins, which allowed
12
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many patients to manage their diabetes.4

13
Since then, pharmaceutical manufacturers have devoted enormous resources to improving
14
insulin treatment and controlling diabetes. They have produced human insulin and developed other
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15
ways to treat diabetes and to reduce its risks. They have made diabetes medication easier to use,
16
increasing patients’ adherence to their prescribed dosing, thereby reducing emergency room visits
17
and hospitalizations, saving $8.3 billion a year.5 Since 2000, FDA has approved 39 diabetes
18
medicines. See Ex. C, Chart of FDA-Approved Diabetes Medicines; Compl. ¶ 24.
19
Despite these advances, 1.7 million Americans a year receive a new diagnosis of diabetes.
20
Developing innovative new diabetes treatments and improving existing ones requires continuing
21
22
1
See Medicines in Development for Diabetes: A Report on Diabetes and Related Conditions,
23 PhRMA (2016) (“PhRMA 2016 Report”), https://tinyurl.com/ydfnrxq7.
2
24 Diabetes Que., Treating Diabetes: 1921 to the Present Day (Nov. 2016),
https://tinyurl.com/yaqszq7s.
25 3
See Brian Wu, History of Diabetes: Past Treatments and New Discoveries, Med. News Today
(May 2017), http://www.medicalnewstoday.com/articles/317484.php.
26 4
Id.
27 5
Ashish Jha et al., Greater Adherence to Diabetes Drugs Is Linked to Less Hospital Use and Could
Save Nearly $5 Billion Annually, 31 Health Aff. 1836, 1836 (2012).
28
3
1 research. In 2016 alone, more than 170 medicines for diabetes and related conditions were in
2 development. See PhRMA 2016 Report. Most reflect a potential new approach to fighting the
3 disease.6 The development pipeline includes a potential “first-in-class” oral medicine for Types 1
4 and 2 diabetes, a fully recombinant monoclonal antibody to treat patients with newly diagnosed
5 Type 1 diabetes, and a medicine for nephropathy (kidney damage) from Type 1 or 2 diabetes.
6 Diabetes research and development also focuses on prevention: top universities, hospitals,
7 and pharmaceutical companies devote significant time and resources to developing a vaccine that
8 could teach the immune system not to attack pancreatic beta cells (which produce insulin), thus
9 preventing Type 1 diabetes. In fact, a trial at Massachusetts General Hospital aims not only to
prevent Type 1 diabetes, but to reverse it in patients who have had the disease under 5 years.7
10
11 The cost of such innovation is staggering. It takes on average 10-15 years and $2.6 billion to
12 develop a new medicine, with low odds of success. From 1988-2014, only 12% of drugs that
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13 entered clinical trials were approved for use. Manufacturers can invest billions of dollars each year
14 in research and development only if they have an appropriate opportunity to recoup that investment
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15 through sales of the small fraction of products that make it to market.
16 B. History and Overview of Nevada Senate Bill 539
17 As in all states, the number of adults in Nevada with diabetes has skyrocketed over the last
18 20 years. In 1995, the diabetes rate for adults in Nevada was about 4.7%. Today, it is near 12.4%.
19 An additional 787,000 people, 38.5% of Nevada’s adult population, have pre-diabetes. Senate Bill
20 No. 265 (“SB 265”), introduced in the Nevada Senate in February 2017, was “intended to address
21 the rapidly increasing cost of diabetes care in Nevada.” Hearing on S.B. 265 Before the Sen. Comm.
22 on Health & Human Servs., 2017 Leg., 79th Sess. 33 (Nev. Mar. 29, 2017) (“Mar. 29 Mins.”). The
23 bill’s author “sincerely believe[d] increased transparency leads to decreased costs.” Hearing on S.B.
24 265 Before the Sen. Comm. on Health & Human Servs., 2017 Leg., 79th Sess. 5 (Nev. May 3,
25 6
See, e.g., Genia Long, Analysis Grp., The Biopharmaceutical Pipeline: Innovative Therapies in
26 Clinical Development (July 2017) (69% of diabetes drugs in development were potential first-in-
class medicines).
27 7
See Andrew Curry, Pathways to a Type 1 Vaccine, Diabetes Forecast (July 2016),
http://www.diabetesforecast.org/2016/jul-aug/vaccines.html.
28
4
1 2017). SB 539 incorporated much of SB 265. As the legislative history of SB 265 shows, the State
2 focused primarily on controlling the list prices of insulin and other patented diabetes medicines.
3 Proponents of the bill complained that “competition has not led to lower [insulin] prices” and
4 asserted that manufacturers would simply “tweak” insulin “to keep it under patent status, so the
5 patent does not expire and become eligible for generic versions.” Mar. 29 Mins. at 36; see also, e.g.,
6 id. at 33 (noting antitrust allegations against insulin manufacturers); id. at 58–60 (discussion of
7 patent protection). Referring to the patented medicines Janumet and Jardiance, one proponent
8 argued that he “should not [have to] depend on [manufacturer] coupons on the Internet to offset the
9 cost of diabetic medications.” Id. at 45. Another explained that the bill was designed to “hit directly
10 to the root of the problem” of high diabetes drug prices because “pharma will react accordingly with
11 rebate dollars and trying to unwind what has been done” to “meet the terms of what [SB 265] puts
12 out.” Id. at 37 (testimony of managed care pharmacist).

McDONALD CARANO LLP
13 SB 265 sought to control prices by, first, directing the Department to compile a list of
14 prescription drugs “essential” for treating diabetes. SB 265 § 6. Second, it compelled the
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15 manufacturer to report to the Department specific cost and pricing information for each essential
16 diabetes drug. Id. § 7(1). Third, it excluded this cost and pricing information from Nevada’s
17 definition of “trade secret,” id. § 27.5(5), and required the Department to publish a report on the
18 prices and how they affect health care spending in Nevada, id. § 7(2). Fourth, it directed
19 manufacturers to provide 90 days’ notice before increasing the national benchmark list price, known
20 as the wholesale acquisition cost or “WAC,” of any essential diabetes drug. Id. § 8.
21 On May 16, 2017, SB 539, also targeting list price increases for diabetes drugs, was
22 introduced. Originally a “complement” to SB 265, see Hearing on S.B. 265 Before the Sen. Comm.
23 on Health & Human Servs., 2017 Leg., 79th Sess. 3 (Nev. May 26, 2017) (“May 26 Mins.”), SB
24 539 also required that “Pharmacy Benefit Managers” (PBMs)—intermediaries between
25 manufacturers and payers—disclose rebates received from manufacturers the prior calendar year.
26 SB 539’s author justified it as an effort to control prices, as the “retail price [of diabetes drugs] paid
27 by patients is unpredictable and can escalate to unaffordable levels over short periods.” Id.
28
5
1 On June 2, 2017, Governor Sandoval vetoed SB 265 because it “pose[d] serious risks of
2 unintended and potentially detrimental consequences for Nevada’s consumer patients,” including
3 the risk “that access to critical care will become more expensive, more restricted, and less
4 equitable.” Veto Letter at 2. The bill, he wrote, “could cause more harm than good for Nevada’s
5 families.” Id. Governor Sandoval concluded that “constitutional and other legal concerns” rendered
6 the bill “problematic” and vulnerable to challenges based on “federal preemption, the Fifth
7 Amendment’s prohibition on uncompensated takings, and the Dormant Commerce Clause.” Id. at 3.
8 On June 5, 2017, the Nevada Senate and State Assembly both passed SB 539, which, as
9 amended, largely replicated the drug pricing and reporting provisions of SB 265 that the Governor
had deemed constitutionally problematic. See Veto Letter at 2.8 Nonetheless, on June 15, 2017,
10
11 three days after his veto, the Governor signed SB 539. Like SB 265, it directs the Department to
12 compile, by February 1 of each year, a list of prescription drugs “essential for treating diabetes.” SB
McDONALD CARANO LLP
13 539 § 3.6(1). While not defining “essential,” the Act requires the list to include “all forms of insulin
14 and biguanides” sold in the State. Id.9 In August 2017, the Nevada State Primary Care Office
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15 distributed a draft list of “essential diabetes drugs” with 46 major drugs, including Afrezza, Byetta,
16 Duetact, Farxiga, Humulin, Invokana, Janumet, Januvia, Jardiance, Lantus, Nesina, Novolog,
17 PrandiMet, and Trulicity. See Ex. D, Draft List of Essential Diabetes Drugs.
18 Upon release of the final list, the Act requires drug manufacturers, by April 1 of each year,
19 to submit to the Department a report that includes:
20  “[t]he costs of producing the drug”;
21  “marketing and advertising costs” associated with the drug;
22  profit “earned from the drug” and the amount of “total profit” attributable to it;
 the amount spent on “patient prescription assistance program[s]”;
23
24
25
8
The key exception was dropping the 90-day notice provision for increases in the WAC.
26 9
Insulin and biguanides each lower blood glucose through different physiological mechanisms. See
27 Biguanides (Metformin) for Prediabetes and Type 2 Diabetes, WebMD,
http://www.webmd.com/diabetes/biguanides-for-type-2-diabetes.
28
6
 the cost of “coupons provided directly to consumers and for programs to assist
1
consumers in paying copayments, and the cost to the manufacturer attributable to
2 the redemption of those coupons and the use of those programs”;
 the “wholesale acquisition cost of the drug,” defined as “the manufacturer’s list
3
price for a prescription drug to wholesalers or direct purchasers in the United
4 States, not including any discounts, rebates or reductions in price, as reported in
wholesale price guides or other publications of drug pricing date”;
5
 “[a] history of any increases in the wholesale acquisition cost of the drug” for the
6 prior five years, “including the amount of each such increase expressed as a
percentage of the total wholesale acquisition cost of the drug, the month and year
7 in which each increase became effective and any explanation for the increase”;
8  “[t]he aggregate amount of all rebates” in Nevada; and
 other “information prescribed by regulation . . . for the purpose of analyzing the
9
cost of prescription drugs . . . on the list.”
10 SB 539 § 3.8.
11 Any manufacturer that increases the WAC of an “essential” diabetes drug by more than the
12 “Consumer Price Index, Medical Care Component” (“CPI”) during the preceding year, or by double
McDONALD CARANO LLP
13 the percentage increase in the CPI for Medical Care over the previous two years, also must disclose:
14  “[a] list of each factor that has contributed to the increase”;
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15  “[t]he percentage of the total increase that is attributable to each factor”;

16  “[a]n explanation of the role of each factor”; and
17  “[a]ny other information prescribed by regulation.”
18 Id. §§ 3.6(2), 4.
19 By tying these disclosures to the CPI for Medical Care, the Act penalizes manufacturers
20 whose diabetes drug prices exceed the index. But the CPI for Medical Care is not based only on
21 drug prices. It also reflects prices for professional and hospital services. Effective diabetes drugs
22 reduce doctor and hospital visits and thereby lower the CPI for Medical Care. Thus, on this
23 measure, the more effective the product, the tighter the constraint on its price.
24 Once manufacturers have submitted the disclosures required by Sections 3.8 and 4, the
25 Department, by June 1 of each year, must analyze them and “report on the price of the prescription
26 drugs that appear on the most current lists . . . , the reasons for any increases in those prices and the
27 effect of those prices on overall spending on prescription drugs in this State.” Id. § 4.3. The
28 Department must post the report on its website, id. § 6(a)(5), organized to provide each
7
1 manufacturer “its own separate entry,” id. § 6(b). SB 539 allows the Department to publish the
2 information, share it widely, or use it for such purposes as negotiating rebates with manufacturers.
3 What is more, SB 539 expressly eliminates trade-secret protection for all the information
4 manufacturers must disclose. Id. § 4.3. Specifically, the Act narrows the definition of “trade secret”
5 in NRS 600A.030 to exclude “any information that a manufacturer is required to report pursuant to
6 section 3.8 or 4 of [the Act], . . . to the extent that such information is required to be disclosed by
7 [that] section[].” Id. § 9(5)(b). Failure to disclose the required information subjects the manufacturer
8 to an administrative penalty of up to $5,000 per day. Id. § 8(2).
9 The provisions of SB 539 relevant to this lawsuit are effective immediately “for the purpose
10 of adopting regulations and performing any other [necessary] administrative tasks . . . and on
11 October 1, 2017, for all other purposes.” Id. § 28(3). The Department intends to publish the first list
12 of “essential” diabetes drugs on October 15, 2017.

McDONALD CARANO LLP
13 C. SB 539’s Harm to Plaintiffs’ Members and Innovation of Diabetes Treatments
14 SB 539 would seriously harm Plaintiffs’ members, including the largest U.S. manufacturers
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15 of diabetes medicines. Several members produce drugs on the Department’s draft list of “essential”
16 diabetes drugs. Compare Ex. D, with Ex. E, Decl. of Vanessa Broadhurst, at ¶ 4; Ex. F, Decl. of
17 James Borneman, at ¶ 6; Ex. G, Decl. of Derek L. Asay, ¶ 4; Ex. H, Decl. of Patrick T. Davish, at
18 ¶ 4; Ex. I, Decl. of Steve Albers, at ¶ 4; Ex. J, Decl. of Christine Marsh, at ¶ 4. None resides in
19 Nevada. See, e.g., Ex. F ¶ 3; Ex. I ¶ 3; Ex. J ¶ 3.
20 Eliminating trade secret protection allows competitors of affected manufacturers to freely
21 use the confidential data the Act requires be disclosed showing a manufacturer’s cost structure,
22 resource allocation, and pricing practices. Such access by competitors could handicap that
23 manufacturer in the marketplace. Ex. E ¶ 13; Ex. F ¶¶ 15, 20; Ex. G ¶ 13; Ex. H ¶ 13; Ex. I ¶ 13; Ex.
24 J ¶ 13. Worse, the factors manufacturers consider and the methodologies they deploy in setting
25 prices are similar from product to product. Thus, this prejudice could spread to competition
26 involving non-diabetes products. Similarly, information on a manufacturer’s costs and pricing
27 formulas can prejudice the company’s ability to negotiate with third-party payers, including Nevada
28
8
1 itself, regarding purchases and rebates for all the manufacturer’s products. Ex. E ¶ 12; Ex. F ¶¶ 14,
2 17; Ex. G ¶ 12; Ex. H ¶ 12; Ex. I ¶ 12; Ex. J ¶ 12.
3 The economic harm from SB 539 will be nationwide. Because the WAC is a national
4 benchmark, SB 539’s effective cap on a drug’s WAC will apply nationwide. Similarly, the
5 economic value of trade secrets withers in every state—including those where affected
6 manufacturers reside—once Nevada makes the information public. The competitive harm from SB
7 539 will undermine the incentives that patents provide for Plaintiffs’ members to invest in
8 developing innovative diabetes medicines. Ex. E ¶¶ 16–18; Ex. F ¶¶ 19–22; Ex. G ¶¶ 16–18; Ex. H
9 ¶¶ 16–18; Ex. I ¶¶ 14–15; Ex. J ¶¶ 16–18. Absent judicial intervention, SB 539 could force
10 innovators to revise their current and future priorities for diabetes research and development.
11 ARGUMENT
12 “A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on

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13 the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the
14 balance of equities tips in his favor, and that an injunction is in the public interest.” Winter v. Nat.
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15 Res. Def. Council, Inc., 555 U.S. 7, 20 (2008); see also DiTech Financial LLC v. Am. West Vill. II
16 Owners Ass’n, No. 2:17-CV-2164, 2017 WL 3610559, at *1 (D. Nev. Aug. 22, 2017) (applying
17 same standard for temporary restraining order). Under this Circuit’s “serious questions” test, a
18 temporary restraining order and preliminary injunction are also “appropriate when a plaintiff
19 demonstrates that serious questions going to the merits were raised and the balance of hardships tips
20 sharply in the plaintiff’s favor.” All. for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1134–35 (9th
21 Cir. 2011); accord Johnson v. Nguyen, No. 3:12-CV-00538, 2015 WL 105826, at *9 (D. Nev. Jan.
22 7, 2015).10 The court must balance “competing claims of injury” and “consider the effect on each
23
24
10
Although the Federal Circuit would hear any appeal in this case as a result of Plaintiffs’ patent
25 preemption argument, see, e.g., Flex-Foot, Inc. v. CRP, Inc., 238 F.3d 1362, 1365 (Fed. Cir. 2001),
26 Ninth Circuit law governs whether this Court should grant a temporary restraining order and
preliminary injunction. See Broadcom Corp. v. Qualcomm Inc., No. SACV 05-468, 2005 WL
27 5925584, at *2 (C.D. Cal. Oct. 19, 2005); Mikohn Gaming Corp. v. Acres Gaming, Inc., 165 F.3d
891, 894 (Fed. Cir. 1998).
28
9
1 party” of granting or withholding the requested relief. Amoco Prod. Co. v. Vill. of Gambell, 480
2 U.S. 531, 542 (1987).
3 Plaintiffs’ constitutional challenges to SB 539 will likely succeed on the merits. In stripping
4 trade-secret protection from manufacturers of patented diabetes medicines, the Act conflicts with
5 federal patent and trade-secret law, destroys valuable intellectual property without compensation,
6 and imposes Nevada’s economic policy on every other state. The loss of trade secrets is irreversible
7 and will not only harm the affected manufacturers, but also weaken national competition and
8 undermine incentives to develop diabetes medicines. This harm outweighs any possible
9 inconvenience to Defendants from postponing the Act’s implementation and enforcement.

10 I. PLAINTIFFS ARE LIKELY TO SUCCEED ON THE MERITS
11 A. SB 539 Is Preempted By Federal Patent and Trade-Secret Law
12 The Supremacy Clause makes “the Laws of the United States . . . the supreme Law of the
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13 Land.” U.S. Const. art. VI, § 1, cl. 2. “Thus, where Congress legislates within the scope of its
14 constitutionally granted powers, that legislation may displace state law.” Pharm. Research & Mfrs.
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15 of Am. v. District of Columbia (PhRMA), 406 F. Supp. 2d 56, 64 (D.D.C. 2005), aff’d sub nom.
16 Biotech. Indus. Org. v. District of Columbia (BIO), 496 F.3d 1362 (Fed. Cir. 2007). Even where
17 federal legislation does not explicitly preempt state law, “federal courts [must] inquire whether a[n]
18 implied preemption exists.” Id. And implied preemption exists, in the form of “conflict
19 preemption,” where compliance with both state and federal regulation is either a “physical
20 impossibility,” id. at 65, or “stands as an obstacle to the accomplishment and execution of the full
21 purposes and objectives of Congress,” Hines v. Davidowitz, 312 U.S. 52, 67 (1941).
22 To determine whether a state statute poses such an obstacle, courts scrutinize both the
23 legislature’s purpose and the “law’s actual effect.” Gade v. Nat’l Solid Wastes Mgmt. Ass’n, 505
24 U.S. 88, 105 (1992); accord BIO, 496 F.3d at 1372 (“Our conflict inquiry is a searching one that
25 ranges beyond the literal text of the statute.”). In purpose and effect, SB 539 obstructs federal patent
26 and trade-secret laws from achieving their goals. It is therefore preempted.
27
28
10
1 1. SB 539 Conflicts with Federal Patent Law
2 The Constitution delineates Congress’s paramount role in setting national patent policy,
3 vesting Congress with the power to “secur[e] for limited Times to Authors and Inventors the
4 exclusive Right to their respective Writings and Discoveries.” U.S. Const. art. I, § 8, cl. 8. The
5 stated objective of this clause is to “promote the Progress of Science and useful Arts.” Id.
6 Federal patent laws “promote . . . progress by offering a right of exclusion for a limited
7 period as an incentive to inventors to risk the often enormous costs in terms of time, research, and
8 development.” Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 480 (1974). Thus, a patent holder
9 may “‘exclude all from the use of the protected process or product’ and charge prices of its
10 choosing, including supracompetitive prices.” King Drug Co. of Florence, Inc. v. SmithKline
11 Beecham Corp., 791 F.3d 388, 400–01 (3d Cir. 2015) (quoting FTC v. Actavis, Inc., 133 S. Ct.
12 2223, 2231 (2013)); see also Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225, 229 (1964) (“The
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13 grant of a patent is the grant of a statutory monopoly . . . .”). Patent laws “suppl[y] a carrot in the
14 form of economic rewards resulting from the right to exclude,” and “the only limitation on the size
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15 of the carrot [of exclusivity] should be the dictates of the marketplace.” King Instruments Corp. v.
16 Perego, 65 F.3d 941, 950, 960 (Fed. Cir. 1995).
17 The federal patent system thus “embodies a carefully crafted bargain for encouraging the
18 creation and disclosure of new, useful, and nonobvious advances in technology and design in return
19 for the exclusive right to practice the invention for a period of years.” Bonito Boats, Inc. v. Thunder
20 Craft Boats, Inc., 489 U.S. 141, 150–51 (1989). “Congress, as the promulgator of patent policy, is
21 charged with balancing these disparate goals. The present patent system reflects the result of
22 Congress’s deliberations. Congress has decided that patentees’ present amount of exclusionary
23 power, the present length of patent terms, and the present conditions for patentability represent the
24 best balance between exclusion and free use.” BIO, 496 F.3d at 1373.
25 Patent protection is critical to promote pharmaceutical research and development because
26 discovering a successful new drug is exceedingly difficult, costly, and rare. By one estimate, “95%
27 of the experimental medicines that are studied in humans fail to be both effective and safe. . . .
28 [B]ecause so many drugs fail, large pharmaceutical companies . . . spend $5 billion per new
11
1 medicine.”11 Research and development costs of just the drugs that are ultimately approved are, on
2 average, $2.6 billion, “a 145% increase” over the past decade.12
3 To deal with the unique economic challenges of pharmaceutical research and development,
4 Congress in the Hatch-Waxman Act, extended the patent term for pharmaceuticals to “create a
5 significant, new incentive which would result in increased expenditures for research and
6 development, and ultimately in more innovative drugs.” H.R. Rep. No. 98-857(I), at 18 (1984), as
7 reprinted in 1984 U.S.C.C.A.N. 2647, 2650 (Committee on Energy and Commerce); see also BIO,
8 496 F.3d at 1373. Balanced against the need for these incentives to innovate was the goal of
9 increasing consumer access to affordable medication. Andrx Pharms., Inc. v. Biovail Corp. Int’l,
10 256 F.3d 799, 809 (D.C. Cir. 2001). To that end, the Hatch-Waxman Act permits generic versions
11 of an innovator’s drug after the patent exclusivity expires. Signing the bill, President Reagan
12 reiterated that it “will promote medical breakthroughs and drug innovation by granting drug
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13 companies up to 5 more years of patent protection for new drugs. And this extension will help
14 compensate for the years of patent life lost due to the time-consuming, but essential, testing required
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15 by the Food and Drug Administration.” Presidential Statement on Signing S. 1538 Into Law, 20
16 Weekly Comp. Pres. Doc. 1359 (Sept. 24, 1984).
17 Relying on the incentives in the Hatch-Waxman Act, innovators boosted research and
18 development spending from $3.6 billion in 1984 to more than $30 billion in 2001.13 In 2016 alone,
19 PhRMA members invested roughly $65.5 billion in discovering and developing new medicines.14
20 For example, Novo Nordisk developed NovoLog, a rapid-acting insulin product and one of the most
21 widely used diabetes drugs in the United States. Since launching NovoLog, Novo Nordisk has
22
11
23 Matthew Herper, The Cost of Creating A New Drug Now $5 Billion, Pushing Big Pharma To
Change, Forbes.com (Aug. 11, 2013).
24 12
Rick Mullin, Tufts Study Finds Big Rise In Cost Of Drug Development, Chem. & Eng’g News
(Nov. 20, 2014).
25 13
See Recent Developments Which May Impact Consumer Access to, and Demand for,
26 Pharmaceuticals: Hearing Before the Subcomm. on Health of the House Comm. on Energy and
Commerce, 107th Cong. (June 13, 2001) (statement of Rep. Barbara Cubin).
27 14
Pharmaceutical Research and Manufacturers of America, PhRMA Annual Member Survey
(Washington, DC: PhRMA, 2017, forthcoming).
28
12
1 continued to invest in improving delivery of the treatment, with patented devices such as a special
2 injection syringe, an injection button, and a dose-setting limiter. By enhancing the convenience and
3 efficacy of treatment, such innovations reduce nonadherence and help patients control blood sugar.
4 The balance struck in the Hatch-Waxman Act has spurred many other innovations in treating
5 diabetes. See Compl. ¶¶ 23–28 (innovative diabetes products developed by Plaintiffs’ members).
6 In BIO, the Federal Circuit found that federal patent law preempted legislation at odds with
7 this careful balance. Plaintiffs there challenged a District of Columbia statute prohibiting
8 pharmaceutical manufacturers from selling or supplying a “patented prescription drug that results in
9 the prescription drug being sold in the District for an excessive price.” BIO, 496 F.3d at 1365. The
10 court held that the statute was a “clear attempt to restrain . . . excessive [drug] prices, in effect
11 diminishing the reward to patentees in order to provide greater benefit to District drug consumers.”
12 Id. at 1374. Because Congress—and Congress alone—is the “promulgator of patent policy,” federal
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13 patent law preempted the District’s attempt to “re-balance the statutory framework of rewards and
14 incentives insofar as it relates to inventive new drugs.” Id. at 1373–74.

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15 Like the D.C. law invalidated in BIO, SB 539 “attempt[s] to restrain . . . excessive [essential
16 diabetes drug] prices, in effect diminishing the reward to patentees in order to provide greater
17 benefit to [Nevada] drug consumers.” Id. at 1374. The Act punishes manufacturers if “essential”
18 diabetes drug prices increase more than the “percentage increase in the [CPI for Medical Services]
19 during” the prior year or “[t]wice the percentage increase [in that index]” over the prior two years.
20 SB 539 §§ 3.6(2), 4. The punishment is compelled disclosure of additional confidential pricing
21 information and loss of trade-secret protection for that information. See supra, p. 5. The only way a
22 manufacturer can preserve trade-secret protection is by limiting its list price to the de facto cap. SB
23 539 thus restrains patent holders from exercising their right under federal patent law to set prices.
24 This is precisely why the Federal Circuit in BIO struck down the D.C. law, because it
25 “shift[ed] the benefits of a patented invention from inventors to consumers.” 496 F.3d at 1374. The
26 D.C. law did so by prohibiting manufacturers from selling patented prescription drugs at “excessive
27 prices.” Nevada seeks to do so by penalizing manufacturers who, on its measure, excessively raise
28 the price of essential diabetes drugs. Both methods of curtailing federal patent rights are
13
1 unconstitutional. The preemption analysis is the same whether a local law bans excessive prices and
2 then imposes penalties for violating the ban, as the D.C. law did, or imposes penalties for ostensibly
3 excessive prices without expressly banning them first. See Perez v. Campbell, 402 U.S. 637, 652
4 (1971) (states may not “nullify . . . unwanted federal legislation by simply . . . articulating some
5 state interest or policy—other than frustration of the federal objective—that would be tangentially
6 furthered by the proposed state law”); cf. Sorrell v. IMS Health Inc., 564 U.S. 552, 565–66 (2011)
7 (“[T]he Government’s content-based burdens [on speech] must satisfy the same rigorous scrutiny as
8 its content-based bans.”). The dispositive question is whether the law “stands as an obstacle to the
9 accomplishment and execution of the full purposes and objectives of Congress.” BIO, 496 F.3d at
10 1372 (quoting Hines, 312 U.S. at 67). In this respect, the laws in BIO and SB 539 are
11 indistinguishable: both “stand[] as an obstacle to the federal patent law’s balance of objectives as
12 established by Congress” by “penalizing high prices . . . and thus limiting the full exercise of the
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13 exclusionary power that derives from a patent.” BIO, 496 F.3d at 1374.
14 In many ways, SB 539 is even less compatible with Congress’s comprehensive federal
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15 patent scheme than was the law in BIO. That law only curbed future price increases, barring sales of
16 patented drugs at “excessive” prices. SB 539 does that and punishes manufacturers for past price
17 increases. It singles out a class of private companies—makers of essential diabetes drugs—because
18 Nevada deems their past prices excessive. See, e.g., Mar. 29 Mins at 33, 36–37, 58–60; May 26
19 Mins. at 3. The Act requires these companies alone to disclose confidential, competitively critical,
20 proprietary information detailing costs, pricing factors, advertising plans, and marketing strategies
21 for their patented diabetes medicines. See SB 539 § 3.8. The Act also wipes out trade-secret
22 protection for this information. Id. § 9. Like many retrospective penalties, SB 539 also has a
23 prospective effect. It deters the enormous investment needed to develop new diabetes medicines,
24 because when manufacturers seek to recoup their investments by setting prices as federal patent law
25 contemplates, the State will punish them for doing so. Thus, both retroactively and prospectively,
26 SB 539 burdens pharmaceutical innovators’ exercise of the right the federal patent laws confer.
27
28
14
1 2. SB 539 Conflicts with Federal Trade-Secret Law
2 Federal and state trade-secret laws also play an important role in sustaining the American
3 economy. Legal protection for trade secrets “encourage[s] invention in areas where patent law does
4 not reach, and . . . prompt[s] the independent innovator to proceed with the discovery and
5 exploitation of his invention.” Kewanee Oil, 416 U.S. at 485. In the end, “[c]ompetition is fostered
6 and the public is not deprived of the use of valuable, if not quite patentable, invention.” Id.
7 Every U.S. state protects trade secrets. Forty-eight states, including Nevada, have adopted
8 some form of the Uniform Trade Secrets Act (“UTSA”). See H.R. Rep. No. 114-529, at 4 (2016)
9 (Committee on the Judiciary); Frantz v. Johnson, 999 P.2d 351, 357–58 (Nev. 2000). The
10 remaining two states—New York and Massachusetts—protect trade secrets under the longstanding
11 common-law tort of misappropriation. See Ashland Mgmt. Inc. v. Janien, 624 N.E.2d 1007, 1012
12 (N.Y. 1993); Peabody v. Norfolk, 98 Mass. 452, 457 (1868).

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13 Against this backdrop, Congress passed the Defend Trade Secrets Act (“DTSA”) of 2016,
14 creating a federal private right of action for misappropriation of trade secrets “related to a product
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15 or service used in, or intended for use in, interstate or foreign commerce.” Pub. L. No. 114-153, 130
16 Stat. 376 (2016) (codified at 18 U.S.C. § 1836(b)). Congress enacted the DTSA because “trade
17 secrets are increasingly becoming the foundation of businesses across the country, with one
18 estimate placing the value of trade secrets in the United States at $5 trillion. . . . With so much at
19 stake, it is absolutely vital . . . [to] include strong protections against the theft of trade secrets.” 162
20 Cong. Rec. H2028-01, H2033 (Apr. 27, 2016) (comments of Rep. Nadler). “By improving trade
21 secret protection,” Congress sought “to incentivize future innovation while protecting and
22 encouraging the creation of American jobs.” S. Rep. No. 114-220, at 3 (2016).
23 Even though all states protected trade secrets, Congress worried that state trade-secret “laws
24 vary in a number of ways and contain built-in limitations that make them not wholly effective in a
25 national and global economy.” H.R. Rep. No. 114-529, at 4. The DTSA therefore provides U.S.
26 businesses a uniform remedy for misappropriation because “trade secret cases often require swift
27 action by courts across state lines to preserve evidence.” Id. “[U]nlike patents, once this information
28 is disclosed it instantly loses its value and the property right itself ceases to exist.” 162 Cong. Rec.
15
1 H2034 (comments of Rep. Jackson Lee). Thus, the DTSA allows businesses “to move quickly to
2 Federal court . . . to stop trade secrets from winding up being disseminated and losing their value.”
3 H.R. Rep. No. 114-529, at 6; see also id. at 13; accord S. Rep. No. 114-220, at 3.
4 SB 539 frustrates Congress’s purpose to provide an effective nationwide remedy for
5 misappropriation of trade secrets. The Act compels manufacturers to disclose confidential
6 information that derives independent value from not being generally known to third-party payers
7 and competitors. Ex. E ¶¶ 6, 9; Ex. F ¶¶ 8, 11; Ex. G ¶¶ 6, 9; Ex. H ¶¶ 6, 9; Ex. I ¶¶ 6, 9; Ex. J ¶¶ 6,
8 9. This information is a trade secret under the DTSA as well as Nevada law—unless and until SB
9 539 takes effect.15 See, e.g., Aerodynamics Inc. v. Caesars Entm’t Operating Co., No. 2:15-CV-
10 01344, 2015 WL 5679843, at *8 (D. Nev. Sept. 24, 2015) (“confidential pricing information, . . .
11 marketing strategies, . . . exact pricing for [certain] bid[s], payment terms, and credits and discounts
12 provided” held trade secrets under state law); Finkel v. Cashman Prof’l, Inc., 270 P.3d 1259, 1263
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13 (Nev. 2012) (“confidential pricing structures and marketing plans” were trade secrets); see also
14 Compl. ¶ 86 (collecting additional cases). Further, as noted, the Act eliminates trade-secret
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15 protection for information that a manufacturer is required to report, SB 539 § 9, allows the
16 Department to freely use or disseminate the disclosed information, and directs the Department to
17 post a report matching the information to each manufacturer. Id. § 6(a)(5), (b).
18 Once published under the authority of SB 539, a manufacturer’s information loses its trade-
19 secret status not just in Nevada, but nationwide. Fundamental to the definition of a trade secret is
20 that it remains confidential. Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1002 (1984) (“Because of
21 the intangible nature of a trade secret, the extent of the property right therein is defined by the extent
22 to which the owner of the secret protects his interest from disclosure to others.”). Thus, information
23 broadcast over the Internet has become “public knowledge” and no longer remains a trade secret.
24
25 15
Because Congress modeled the DTSA definition of “trade secret” on the UTSA definition,
26 “courts may look to the state UTSA when interpreting the DTSA.” Kuryakyn Holdings, LLC v.
Ciro, LLC, No. 15-CV-703-JDP, 2017 WL 1026025, at *5 (W.D. Wis. Mar. 15, 2017); see also
27 H.R. Rep. 114-529, at 14 (“[T]he Committee does not intend for the definition of a trade secret to
be meaningfully different from . . . [those] States that have adopted the UTSA.”).
28
16
1 Id.; Philip Morris, Inc. v. Reilly, 312 F.3d 24, 41 (1st Cir. 2002) (en banc) (it is “paradigmatic” that
2 compelled disclosure to a party not required to keep the secret extinguishes the property right).
3 The difference between SB 539 and the DTSA (plus other states’ laws) is not merely a
4 matter of nuance. SB 539 guts the trade-secret protection afforded by the federal government and
5 every state for confidential information associated with essential diabetes drugs. This mass
6 nullification frustrates Congress’s goal in the DTSA to enhance trade-secret protections and thereby
7 to “incentivize future innovation while protecting and encouraging the creation of American jobs.”
8 S. Rep. No. 114-220, at 3. SB 539 thus “stands as an obstacle to the accomplishment and execution
9 of the full purposes and objectives of Congress.” Hines, 312 U.S. at 67.
10 B. SB 539’s Uncompensated Abolition of Trade-Secret Protection for Valuable

Information Violates the Fifth Amendment Takings Clause
11
The Fifth and Fourteenth Amendments forbid the taking of “private property . . . for public
12
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use, without just compensation.” U.S. Const., amend. V, XIV. “Private property” includes
13
intangible property, such as trade secrets. Ruckelshaus, 467 U.S. at 1002–04. A state’s “failure to
14
provide adequate protection to assure [a trade secret’s] confidentiality, when disclosure is
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15
compelled . . . , can amount to an unconstitutional taking of property by destroying [the trade
16
secret], or by exposing it to the risk of destruction by public disclosure or by disclosure to
17
competitors.” St. Michael’s Convalescent Hosp. v. California, 643 F.2d 1369, 1374 (9th Cir. 1981)
18
(alteration omitted) (quoting Wearly v. FTC, 462 F. Supp. 589, 598 (D.N.J. 1978)).
19
In Ruckelshaus, the Supreme Court held that the Environmental Protection Agency (EPA)
20
impermissibly took property without compensation by disclosing pesticide manufacturers’ trade
21
secrets collected under EPA’s regulatory authority. 467 U.S. at 1016. A prior version of the statute
22
had required EPA to keep confidential all information that manufacturers designated as trade
23
secrets. Id. at 990–97. However, the revised statute authorized EPA to disclose this information to
24
competitors for regulatory purposes so long as they agreed to pay for it and, if necessary, submit to
25
arbitration over the price. Id. The Court held that this revision violated the Takings Clause because
26
the manufacturer had disclosed the information with the expectation it would remain secret but then
27
28
17
1 found that the information was available to any competitor willing to arbitrate over the price. Id. at
2 1011; see also Reilly, 312 F.3d at 41–42; St. Michael’s, 643 F.2d at 1374.
3 The Supreme Court explained that “[t]he right to exclude others is generally one of the most
4 essential sticks in the bundle of [property] rights,” and for trade secrets “the right to exclude others
5 is central to the very definition of the property interest.” Ruckelshaus, 467 U.S. at 1011. Under the
6 revised statute, EPA (like Nevada) was “extinguish[ing]” trade secrets through public disclosure. Id.
7 at 1002. Eliminating confidentiality, the essence of the property right, defeated manufacturers’
8 investment-backed expectations. Id. at 1011–12. The expectations were reasonable because the
9 information had trade-secret protection when generated. Id. at 1013; Reilly, 312 F.3d at 41.
10 Disclosure destroyed its value as a trade secret. Ruckelshaus, 467 U.S. at 1012. Although the Court
11 typically considered “several factors . . . when determining whether a governmental action has gone
12 beyond ‘regulation’ and effects a ‘taking’”—such as “the character of the governmental action, its
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13 economic impact, and its interference with reasonable investment-backed expectations,” id. at
14 1005—the Court found the depredation of the manufacturers’ investment-backed expectations

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15 dispositive because “the force of this factor [was] so overwhelming,” id. In other words, this taking
16 was “categorical.” Id. at 1012; see also Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1015 (1992)
17 (destruction of core property interest is a categorical taking).
18 Like the statute at issue in Ruckelshaus, SB 539 extinguishes pharmaceutical manufacturers’
19 property interest in the confidentiality of their trade secrets and thus works a categorical taking.
20 Manufacturers investing in diabetes treatments had reasonable “investment-backed expectations”
21 that their confidential information would remain secret. See Reilly, 312 F.3d at 40. For many years
22 Nevada—like every other state—treated this information as a trade secret, with no diabetes
23 exception. See, e.g., Nev. Rev. Stat § 600A.030 (1987); Finkel, 270 P.3d at 1263; Frantz, 999 P.2d
24 at 359. SB 539, however, strips trade-secret protection and mandates public disclosure of
25 confidential information, eradicating trade-secret protection in other states. See Ruckelshaus, 467
26 U.S. at 1011–12; see also 162 Cong. Rec. H2034 (“[U]nlike patents, once this information is
27 disclosed it instantly loses its value and the property right itself ceases to exist.” (comments of Rep.
28 Jackson Lee)). This is precisely the result that the Supreme Court held unconstitutional.
18
1 The other two factors in the takings analysis, while cumulative, see Ruckelshaus, 467 U.S. at
2 1005; Penn Cent. Transp. Co. v. City of New York, 438 U.S. 104, 124 (1978), reconfirm that the Act
3 is an impermissible taking. First, the “character” of this legislative action weighs heavily against the
4 Act. For punishment and coercion, it discloses trade secrets, causing them to “lose all value.” Reilly,
5 312 F.3d at 41 (citing this aspect of state disclosure statute’s “character” to show a regulatory
6 taking). “Therefore, if the [pharmaceutical manufacturers] comply with the requirements of [SB
7 539], their property right will be extinguished.” Id. at 42. “[T]his is precisely what the Takings
8 Clause is designed to prevent.” Id. at 43.
9 Second, eliminating trade-secret protection here will have a devastating “economic impact.”
10 Manufacturers of essential diabetes drugs, if forced to disclose such information, will be at a severe
11 disadvantage vis-à-vis competitors not subject to the Act. See supra, p. 8. Affected manufacturers,
12 but not manufacturers of non-diabetes drugs, also will be disadvantaged in dealing with third-party
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13 payers, who have the manufacturer’s playbook in negotiations. See supra, p. 8.
14 These adverse effects extend beyond Nevada to the entire Nation. Ex. E ¶¶ 10–14; Ex. F
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15 ¶¶ 12–17; Ex. G ¶¶ 10–14; Ex. H ¶¶ 10–14; Ex. I ¶¶ 10–13; Ex. J ¶¶ 10–14. As noted, for trade
16 secrets, disclosure anywhere is disclosure everywhere. See supra, pp. 8–9. A trade secret published
17 in Nevada is useable in New York, Ohio, or any other state. This nationwide geographic scope
18 amplifies the competitive harm to, and hence the penalty on, Plaintiffs’ members for exercising the
19 right federal patent law confers to set prices for their diabetes products. Manufacturers relied on the
20 protection that the federal government, Nevada, and every other state afforded trade secrets. These
21 companies did not expect Nevada to overturn that protection everywhere. Nor did they expect the
22 consequent economic impact: the nationwide erosion of anticipated returns on their investments in
23 researching, developing, and marketing their diabetes drugs. Ex. E ¶¶ 15–18; Ex. F ¶¶ 18–21; Ex. G
24 ¶¶ 15–18; Ex. H ¶¶ 15–18; Ex. I ¶¶ 14–15; Ex. J ¶¶ 15–18.
25 C. SB 539 Violates the Commerce Clause by Overriding Every Other State’s Laws
26 The Constitution authorizes Congress “[t]o regulate Commerce . . . among the several
27 States.” U.S. Const. art. I, § 8, cl. 3. The Commerce Clause “reflect[s] a central concern of the
28 Framers . . . : the conviction that in order to succeed, the new Union would have to avoid the
19
1 tendencies toward economic Balkanization that had plagued relations among the Colonies and later
2 among the States under the Articles of Confederation.” Hughes v. Oklahoma, 441 U.S. 322, 325
3 (1979). Thus, the Supreme Court has “long interpreted the Commerce Clause as an implicit restraint
4 on state authority, even in the absence of a conflicting federal statute.” United Haulers Ass’n v.
5 Oneida-Herkimer Solid Waste Mgmt. Auth., 550 U.S. 330, 338 (2007). This is the “so-called
6 ‘dormant’ aspect of the Commerce Clause.” Id.
7 A state law oversteps these constitutional limits when it imposes a burden on interstate
8 commerce “clearly excessive in relation to the putative local benefits.” Pike v. Bruce Church, Inc.,
9 397 U.S. 137, 142 (1970). The dormant Commerce Clause “prohibits states . . . from regulating
10 interstate commerce and enacting legislation that would ‘offend sister States and exceed the
11 inherent limits of the State’s power.’” PhRMA, 406 F. Supp. 2d at 67 (quoting Healy v. Beer Inst.,
12 491 U.S. 324, 336 n.13 (1989)). SB 539 violates this principle by imposing sanctions for out-of-
McDONALD CARANO LLP
13 state conduct and nullifying rights that all other states grant.
14 First, SB 539 restrains PhRMA and BIO members’ commerce in other states by penalizing
(702) 873-4100 • FAX (702) 873-9966
15 them in Nevada. The Act’s price cap is keyed to the WAC, a national benchmark. By affecting a
16 drug’s WAC, SB 539 affects drug prices nationally, including for drugs bought and sold outside
17 Nevada. A New York manufacturer of essential diabetes drugs selling to a California purchaser
18 must lower its price to prevent Nevada from negating the company’s trade secrets. The dormant
19 Commerce Clause bars Nevada from imposing such burdens on wholly extraterritorial commerce.
20 Again, BIO is instructive. Besides holding the D.C. law preempted by federal patent law, the
21 district court found that the law’s “impermissible extraterritorial reach” violated the dormant
22 Commerce Clause. PhRMA, 406 F. Supp. 2d at 70. The court stressed that Plaintiffs’ members
23 “manufacture patented prescription drugs wholly outside the District of Columbia,” are neither
24 headquartered nor operate warehouses there, and make “the overwhelming majority of [their] sales”
25 outside D.C. to out-of-state wholesalers. Id. at 68. “[T]he critical inquiry” was “whether the
26 practical effect of the [law was] to control conduct beyond the boundaries of the State.” Id. at 70
27 (quoting Healy, 491 U.S. at 336). It was indeed, as Plaintiffs’ members could not “conduct
28 commerce on their own terms elsewhere, without either scrutiny or control by the District.” Id.
20
1 The same is true of SB 539. By penalizing manufacturers for increasing the WAC of
2 diabetes drugs above the CPI for Medical Care, SB 539 prevents them from “conduct[ing]
3 commerce on their own terms elsewhere, without either scrutiny or control by [Nevada].” Id. Such a
4 statute “offend[s] sister States and exceed[s] the inherent limits of [Nevada’s] power.” Id. at 67.
5 Second, SB 539 burdens interstate commerce by eviscerating commercial rights other states
6 grant, stripping a broad compass of trade-secret protection for all manufacturers of essential
7 diabetes drugs, whatever the prices they charge. See SB 539 §§ 3.8, 9. None of these companies is
8 headquartered in Nevada. SB 539 will prevent manufacturers from protecting their trade secrets in
9 every state. This imposition will interfere in particular with states that host these manufacturers’
10 headquarters or key operations. Those jurisdictions have a legitimate interest—which Nevada
11 overrides—in promoting the success of these manufacturers by protecting their trade secrets. See
12 Healy, 491 U.S. at 336–37 (“[T]he Commerce Clause protects against inconsistent legislation
McDONALD CARANO LLP
13 arising from the projection of one state regulatory regime into the jurisdiction of another State.”).
14 For example, Eli Lilly—one of three major insulin manufacturers—is headquartered in

(702) 873-4100 • FAX (702) 873-9966
15 Indianapolis, Indiana, with no offices or operations in Nevada. Indiana law protects Eli Lilly’s trade
16 secrets—including pricing and cost information for its essential diabetes drugs. See, e.g., Hydraulic
17 Exch. & Repair, Inc. v. KM Specialty Pumps, Inc., 690 N.E.2d 782, 786 (Ind. Ct. App. 1998).
18 Indiana has an interest in protecting that confidential information to preserve the company’s
19 financial strength, which affects local jobs and economic growth. In compelling the disclosure of
20 information that is a trade secret under Indiana law, SB 539 overturns Indiana’s protection. SB 539
21 bestows upon Nevada legislators supreme judgment as to the proper balance between the protection
22 of trade secrets and the promotion of “transparency” in pricing. The dormant Commerce Clause
23 does not tolerate such efforts by one state to foist its regulatory preferences on every other state.
24 These substantial effects on interstate commerce clearly exceed any putative local benefit
25 SB 539 may have in Nevada. While the purpose of the Act is to control prices for diabetes drugs,
26 neither the Act nor its legislative history explains how gutting manufacturers’ trade-secret
27 protection will lower prices—apart, that is, from impermissibly burdening manufacturers’ lawful
28 exercise of federal patent rights. See, e.g., Mar. 29 Mins. at 33, 36–37, 58–60; May 26 Mins. at 3.
21
1 Nevada’s attempt to “extend [its] police power beyond its jurisdictional bounds” offends the
2 dormant Commerce Clause. C & A Carbone v. Town of Clarkstown, 511 U.S. 383, 393 (1994).
3 II. PLAINTIFFS’ MEMBERS WILL SUFFER IRREPARABLE HARM ABSENT A

TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTIVE
4
RELIEF
5 “Irreparable harm is traditionally defined as harm for which there is no adequate legal
6 remedy, such as an award of damages.” Ariz. Dream Act Coal. v. Brewer, 757 F.3d 1053, 1068 (9th
7 Cir. 2014). It is “presumed where a party misappropriates a trade secret.” Excellence Cmty. Mgmt.,
8 LLC v. Gilmore, 351 P.3d 720, 724 (Nev. 2015) (presumption where use of stolen trade secret was
9 ongoing or imminent); see also Finkel, 270 P.3d at 1264; Saini v. Int’l Game Tech., 434 F. Supp. 2d
10 913, 919 (D. Nev. 2006) (“[D]isclosure of confidential information or trade secrets would create
11 irreparable injury . . . .”). “[I]t is axiomatic that unprotected disclosure of a trade secret destroys the
12 secret.” 4 Robert M. Milgrim & Eric E. Bensen, Milgrim on Trade Secrets § 15.02[1][c].
McDONALD CARANO LLP
13 The challenged provisions of SB 539 become effective on October 1, 2017, and officially
14 strip affected manufacturers of trade-secret protection for their confidential data as soon as the
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15 Department publishes its list of “essential” diabetes drugs, which Defendants represent will happen
16 on October 15, 2017—just weeks from now. See SB 539 § 28(3). Furthermore, the Act compels
17 disclosure no later than April 1, 2018. The Department then has free rein to disseminate the
18 information. Faced with this forced disclosure, Plaintiffs’ members must immediately reassess the
19 risks and returns of their investments in diabetes therapies. See Ex. E ¶¶ 16–18; Ex. F ¶¶ 19–22; Ex.
20 G ¶¶ 16–18; Ex. H ¶¶ 16–18; Ex. I ¶¶ 14–15; Ex. J ¶¶ 16–18. “[Such] harms, which are not readily
21 addressed through payment of economic damages, are sufficient to meet the irreparable injury
22 requirement for a preliminary injunction.” Saini, 434 F. Supp. 2d at 919; accord Aerodynamics,
23 2015 WL 5679843, at *12. Only a temporary restraining order and preliminary injunction can
24 prevent irreparable harm by protecting trade secrets pending resolution of this litigation.
25
III. THE BALANCE OF EQUITIES AND THE PUBLIC INTEREST SUPPORT A
26 TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION
27 The balance of hardships decisively favors a temporary restraining order and preliminary
28 injunction. Where, as here, a “plaintiff shows a substantial likelihood that the challenged law is
22
1 unconstitutional, no substantial harm to others can be said to inhere in its enjoinment.” Déjà vu of
2 Nashville, Inc. v. Metro. Gov’t of Nashville & Davidson Cty., 274 F.3d 377, 400 (6th Cir. 2001);
3 accord Nelson v. NASA, 530 F.3d 865, 881–82 (9th Cir. 2008) (constitutional violation tips balance
4 of hardships “sharply toward” party seeking injunction), rev’d on other grounds, 562 U.S. 134
5 (2011). Because Plaintiffs have shown a likelihood of success on their constitutional claims, the
6 balance of hardships favors them, and the Court need not assess any potential effect on Defendants.
7 In any event, the only arguable “hardship” to Defendants is a possible delay in
8 implementation of the Act. Even if publication of the list of “essential” diabetes drugs were
9 postponed temporarily, any inconvenience resulting from the delay would pale compared to the
10 substantial and irreparable harm that the Act would inflict on Plaintiffs’ members.
11 Finally, the public interest strongly favors a temporary restraining order pending disposition
12 of Plaintiffs’ motion for a preliminary injunction, and a preliminary injunction pending resolution of
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13 this case. “[I]t is always in the public interest to prevent the violation of a party’s constitutional
14 rights.” Sw. Voter Registration Educ. Project v. Shelley, 344 F.3d 882, 910 (9th Cir.), rev’d on other
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15 grounds, 344 F.3d 914 (9th Cir. 2003); see also Preminger v. Principi, 422 F.3d 815, 826 (9th Cir.
16 2005) (similar). And “there is a strong public interest in protecting trade secrets, as evidenced by the
17 existence of the DTSA and UTSA.” Prot. Techs., Inc. v. Ribler, 2017 WL 923912, at *3 (D. Nev.
18 Mar. 8, 2017). Allowing SB 539 to take effect could undermine public health by upending
19 Congress’s carefully crafted a system of incentives encouraging the development of new medicines.
20 It is therefore in the public interest to preserve the status quo while the Court considers SB 539’s
21 constitutional defects.
22 CONCLUSION
23 SB 539 interferes with federal patent and trade-secret laws, deprives manufacturers of
24 property rights in their trade secrets, and improperly overrides the regulatory choices of every other
25 state. These violations threaten irreparable harm to Plaintiffs’ members, and ultimately, diabetes
26 patients. Plaintiffs therefore respectfully ask the Court to temporarily restrain and preliminarily
27
28
23
1 enjoin Defendants from implementing or enforcing Sections 3.6–4, 4.3, 6, 7, 8, and 9 of SB 539,
2 and all related sections or subsections.
3 Dated: September 13, 2017.
4 MCDONALD CARANO LLP

5
6
By: /s/ Pat Lundvall
7 Pat Lundvall
Telephone: (702) 873-4100
9 Facsimile: (702) 873-9966
10 Robert N. Weiner
11 R. Stanton Jones
12
McDONALD CARANO LLP
Telephone: (202) 942-5000
14 Facsimile: (202) 942-5999
(702) 873-4100 • FAX (702) 873-9966
15 Attorneys for Plaintiffs Pharmaceutical Research and

Manufacturers of America and Biotechnology
16
Innovation Organization
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1 CERTIFICATE OF SERVICE
2 I HEREBY CERTIFY that I am an employee of McDonald Carano LLP, and that on this
3 13th day of September, 2017, I caused a true and correct copy of the foregoing PLAINTIFFS’
4 MOTION FOR TEMPORARY RESTRAINING ORDER AND PRELIMINARY
5 INJUNCTION, AND SUPPORTING MEMORANDUM OF POINTS AND AUTHORITIES to
6 be served via HAND DELIVERY upon the following:
7 Linda C. Anderson
Chief Deputy Attorney General
8
555 E. Washington, #3900
Phone: (702) 486-3077
10
Counsel for Defendants
11
12 /s/ Marianne Carter

McDONALD CARANO LLP
An employee of McDonald Carano LLP

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1 INDEX OF EXHIBITS
3 Description Exhibit No.

4 Nevada State Senate Bill No. 539 A
5 June 2, 2017 Letter from Gov. Sandoval to Sen. Majority Leader Ford B
6 Chart of FDA-Approved Diabetes Medicines C
7 List of Essential Diabetes Drugs D
8 Declaration of Vanessa Broadhurst E
9 Declaration of James Borneman
F
10
Declaration of Derek L. Asay G
11
Declaration of Patrick T. Davish H
12
McDONALD CARANO LLP
Declaration of Steve Albers I

13 Declaration of Christine Marsh
J
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(702) 873-4100 • FAX (702) 873-9966
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1 Pat Lundvall (NSBN 3761)

McDONALD CARANO LLP
Las Vegas, NV 89102
3
Telephone: (702) 873-4100
4 [email protected]
5 Robert N. Weiner
Admitted Pro Hac Vice
7
R. Stanton Jones
8 Admitted Pro Hac Vice
10 Telephone: (202) 942-5000
[email protected]
11
[email protected]

15
17 PHARMACEUTICAL RESEARCH AND Case No.: 2:17-cv-02315-JCM-CWH
MANUFACTURERS OF AMERICA and
18 BIOTECHNOLOGY INNOVATION
ORGANIZATION, JOINT STATUS REPORT
19
Plaintiffs,
20
vs.
21
BRIAN SANDOVAL, in his official capacity as
22 Governor of the State of Nevada; RICHARD
WHITLEY, in his official capacity as Director of
23 the Nevada Department for Health and Human
Services; and the NEVADA LEGISLATURE,
24
Defendants.
25
26

28 Biotechnology Innovation Organization (“BIO”) (together, “Plaintiffs”), and Defendants Brian
1 Sandoval, in his official capacity as Governor of the State of Nevada (the “State”), Richard Whitley,
2 in his official capacity as Director of the Nevada Department of Health and Human Services (the
3 “Department”), and the Nevada Legislature (the “Legislature”) (together, “Defendants”), by and
4 through their respective undersigned counsel, hereby submit this joint status report to apprise the
5 Court of their collective views regarding the implications of the now-effective regulation adopted
6 by the Department, LCB File No. R042-18 (Joint Status Report Ex. 1), and the State’s subsequent
7 actions on this litigation.
8 First, as the Court is aware, the Department previously issued a proposed regulation (ECF
9 No. 86-1) designed to mitigate the constitutional concerns that Plaintiffs raised with respect to
10 Nevada Senate Bill No. 539 (“SB 539”). Plaintiffs argued that the challenged provisions of SB 539,
11 including the provision that excludes from the definition of “trade secret” “any information that a
12 manufacturer is required to report pursuant to section 3.8 or 4 of [SB 539],” see SB 539 § 9, are
13 preempted by the federal patent laws and the federal Defend Trade Secrets Act (“DTSA”), and also
14 violate the Fifth Amendment Takings Clause and the dormant Commerce Clause. The Department
15 argued that Plaintiffs’ claims were not ripe for review because “the Department is not exempt from
16 exposure for liability under [the] DTSA if the Department were to disclose a federally defined trade
17 secret without consent from the manufacturer who asserted that secrecy. Plaintiffs have a separate,
18 stand-alone remedy under [the] DTSA that affords protection for their trade secrets if they need to
19 challenge any action of the Department.” Opp’n to Pls.’ Mot. Summ. J. 4, ECF No. 74. Further, the
20 Department also argued that “[t]o the extent that the state law fails to set forth a process for protecting
21 trade secrets that could be subject to dissemination under SB 539, the void will be filled by
22 regulations of the Department.” Id. at 4–5.
23 On May 31, 2018, the Department accelerated its anticipated timeline and adopted the
24 proposed regulation, which became effective that same date (Joint Status Report Ex. 1 at 1).
25 Defendants believe that, as predicted, the now-effective regulation has filled any void and obviated
26 Plaintiffs’ alleged facial constitutional claims. Under the now-effective regulation, pharmaceutical
27 manufacturers may request that information they submit to the Department pursuant to Sections 3.8
28 and 4 of SB 539 be kept confidential as trade secrets under the DTSA. See Regulation § 3 (Joint
Page 2 of 5
1 Status Report Ex. 1 at 6-10). To request such confidentiality, the manufacturer must (1) “describe,
2 with particularity, the information sought to be protected from public disclosure,” id. § 3(2)(a); and
3 (2) “include an explanation of the reasons why public disclosure of the information would constitute
4 misappropriation of a trade secret for which a court may award relief pursuant to the federal [DTSA],
5 as amended,” id. § 3(2)(b).
6 Under the DTSA, a court may award relief where a trade secret is “misappropriated,” which
7 the DTSA defines to include “disclosure or use of a trade secret of another without express or implied
8 consent by a person who . . . at the time of disclosure or use, knew or had reason to know that the
9 knowledge of the trade secret was . . . acquired under circumstances giving rise to a duty to maintain
10 the secrecy of the trade secret or limit the use of the trade secret.” 18 U.S.C. § 1839(5)(B)(ii)(II).
11 The parties agree and acknowledge that, under SB 539, the Department may acquire manufacturer
12 trade secrets, such as a manufacturer’s costs of production and other internal costs, “under
13 circumstances giving rise to a duty to maintain the secrecy of the trade secret or limit the use of the
14 trade secret.” Id. Thus, the parties agree and acknowledge that, so long as such trade secrets continue
15 to satisfy the definition of “trade secret” in 18 U.S.C. § 1839, if the Department were to disclose
16 such trade secrets to any third party or use such trade secrets, such disclosure or use would constitute
17 “misappropriation” for which a court may award relief pursuant to the DTSA. These protections are
18 intended to afford an opportunity to manufacturers that submit trade secrets to the Department to
19 seek to safeguard their interests in the confidentiality of those trade secrets. In Defendants’ view,
20 the now-effective regulation, as described, resolves the alleged facial constitutional issues with
21 respect to the challenged provisions of SB 539.
22 Second, on June 7, 2018, the Department represented on its website that it would not proceed
23 with enforcement actions for manufacturer reports submitted on or before January 15, 2019. The
24 Department has further assured Plaintiffs through email correspondence that it will not bring any
25 enforcement action against any manufacturer based on the submission of an incomplete report or no
26 report during this time period, so long as the manufacturer submits a compliant report on or before
27 January 15, 2019. On the basis of these representations, on June 8, 2018, Plaintiffs withdrew their
28 renewed motion for a preliminary injunction without prejudice.
Page 3 of 5
1 Third, by filing this joint status report or agreeing to voluntary dismissal of this action
2 without prejudice under Federal Rule of Civil Procedure 41(a)(2), the parties do not waive any of
3 their rights but fully reserve all of their rights to assert any claims, issues, arguments, objections or
4 defenses, in law or fact, that they raised or that they could properly have raised during the course of
5 this action, including, without limitation, any claims, issues, arguments, objections or defenses, in
6 law or fact, relating to the constitutionality of the challenged provisions of SB 539.
7 On the basis of the foregoing acknowledgements, assurances, changed circumstances, and
8 reservation of rights, Plaintiffs have agreed to separately file an unopposed motion for voluntary
9 dismissal of this action without prejudice under Federal Rule of Civil Procedure 41(a)(2).
10 Dated: June 28, 2018.
11 /s/ Pat Lundvall

Pat Lundvall (NSBN 3761)
13 Las Vegas, Nevada 89102
Telephone: (702) 873-4100
15 Robert N. Weiner
16 R. Stanton Jones
18 Telephone: (202) 942-5000
19 Attorneys for Plaintiffs Pharmaceutical Research
and Manufacturers of America and
21
/s/ Linda C. Anderson
22 Linda C. Anderson
Nevada Attorney General’s Office
24 555 E. Washington Ave.
Suite 3900
Telephone: (702) 486-3077
27
Attorney for Defendants Brian Sandoval and
28 Richard Whitley
Page 4 of 5
2 /s/ Kevin C. Powers

Kevin C. Powers
3
Chief Litigation Counsel
Nevada Legislative Counsel Bureau, Legal Division
5 401 S. Carson Street
Carson City, Nevada 89701
6 Telephone: (775) 684-6830
[email protected]
7
8 Attorney for Defendant Nevada Legislature
9
CERTIFICATE OF SERVICE
10
I certify that I am an employee of McDonald Carano, and that on the 28th day of June, 2018,
11
a true and correct copy of the foregoing JOINT STATUS REPORT was electronically filed with the
12
Clerk of the Court by using CM/ECF service which will provide copies to all counsel of record
13
registered to receive CM/ECF notification.
14
15
/s/ Beau Nelson
16 An employee of McDonald Carano LLP
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Page 5 of 5

EXHIBIT 1

McDONALD CARANO LLP
Las Vegas, NV 89102
3
Telephone: (702) 873-4100
4 [email protected]
5 Robert N. Weiner
7
R. Stanton Jones
10 Telephone: (202) 942-5000
[email protected]
11
[email protected]

15
ORGANIZATION, PLAINTIFFS’ UNOPPOSED MOTION
19
FOR VOLUNTARY DISMISSAL
Plaintiffs, WITHOUT PREJUDICE
20
vs.
21
24
Defendants.
25
26
27 Pursuant to Federal Rule of Civil Procedure 41(a)(2), Plaintiffs Pharmaceutical Research and
28 Manufacturers of America and Biotechnology Innovation Organization (together, “Plaintiffs”), by

1 and through their undersigned counsel, hereby move unopposed for voluntary dismissal of this action
2 and state as follows:
3 On September 1, 2017, Plaintiffs filed their complaint against Defendants Governor Brian
4 Sandoval and Nevada Department of Health and Human Services Director Richard Whitley, in their
5 official capacities, seeking injunctive relief and a declaration that Nevada Senate Bill 539 is
6 unconstitutional on the grounds that it conflicts with federal patent law and the 2016 Defend Trade
7 Secrets Act, constitutes an unlawful government taking of trade secrets under the Fifth and
8 Fourteenth Amendments, and violates the Commerce Clause of Article I. ECF No. 1.
9 On October 3, 2017, the Court permitted the Nevada Legislature to intervene as a defendant
10 (collectively with Governor Sandoval and Director Whitley, “Defendants”). ECF No. 43.
11 On October 4, 2017, Governor Sandoval and Director Whitley answered the complaint, ECF
12 No. 44, and, on October 5, 2017, the Legislature answered, ECF No. 45.
13 Pending before the Court are the parties’ cross-motions for summary judgment. See, e.g.,
14 ECF Nos. 46, 66.
15 Plaintiffs have met and conferred with Defendants regarding the filing of this motion.
16 Plaintiffs have agreed to move for voluntary dismissal without prejudice in light of the
17 acknowledgements, assurances, changed circumstances, and reservation of rights described in the
18 parties’ June 28, 2018 joint status report. ECF No. 95. Defendants do not oppose.
19 ///
20 ///
21 ///
22 ///
23 ///
24 ///
25 ///
26 ///
27 ///
28 ///
Page 2 of 3
1 Plaintiffs therefore respectfully request that the Court dismiss the complaint without
2 prejudice pursuant to Federal Rule of Civil Procedure 41(a)(2), with each party to bear its own costs.
3 Dated: June 28, 2018.
4 /s/ Pat Lundvall

Pat Lundvall (NSBN 3761)
6 Las Vegas, Nevada 89102
Telephone: (702) 873-4100
7 [email protected]
8 Robert N. Weiner
9 R. Stanton Jones
11 Telephone: (202) 942-5000
12 Attorneys for Plaintiffs Pharmaceutical Research
and Manufacturers of America and
14
CERTIFICATE OF SERVICE
15
I certify that I am an employee of McDonald Carano, and that on the 28th day of June, 2018,
16
a true and correct copy of the foregoing PLAINTIFFS’ UNOPPOSED MOTION FOR
17
VOLUNTARY DISMISSAL WITHOUT PREJUDICE was electronically filed with the Clerk of
18
the Court by using CM/ECF service which will provide copies to all counsel of record registered to
19
receive CM/ECF notification.
20
21
/s/ Beau Nelson
22
An employee of McDonald Carano LLP
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Page 3 of 3
Proposed Order

McDONALD CARANO LLP
Las Vegas, NV 89102
3
Telephone: (702) 873-4100
4 [email protected]
5 Robert N. Weiner
7
R. Stanton Jones
10 Telephone: (202) 942-5000
[email protected]
11
[email protected]

15
ORGANIZATION, [PROPOSED] ORDER GRANTING
19
PLAINTIFFS’ UNOPPOSED MOTION
Plaintiffs, FOR VOLUNTARY DISMISSAL
20
vs.
21
24
Defendants.
25
26
27
28
1 Having reviewed Plaintiffs Pharmaceutical Research and Manufacturers of America and
2 Biotechnology Innovation Organization’s Unopposed Motion for Voluntary Dismissal Without
3 Prejudice, and good cause appearing therefor:
4 IT IS HEREBY ORDERED THAT:
5 Pursuant to Federal Rule of Civil Procedure 41(a)(2), the instant action, Pharmaceutical
6 Research and Manufacturers of America, et al. v. Sandoval, et al., Case No. 2:17-cv-02315-JCM-
7 CWH, is hereby dismissed without prejudice, each party to bear its own costs.
8 It is SO ORDERED June
this 28, 2018. day of , 2018.
10
United States District Judge
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Page 2 of 2
BRIAN SANDOVAL RICHARD WHITLEY, MS
Governor Director
DEPARTMENT OF HEALTH AND HUMAN SERVICES

DIRECTOR’S OFFICE
4126 Technology Way, Suite 100
Carson City, Nevada 89706
Telephone (775) 684-4000  Fax (775) 684-4010
http://dhhs.nv.gov
October 31, 2017
SB539 required the Department of Health and Human Services (DHHS) to develop a list of essential
diabetes drugs. To that end, DHHS sought public comment from prescribers in Nevada, analyzed data to
determine drugs most often prescribed, and consulted with FDA resources to determine appropriate use
as established by the label. Below describes the process for creation of the list:
o An initial list of frequently prescribed drugs used for the treatment of diabetes was created
by pharmacists employed by the department.
o The list was then sent to prescribers in the state as a survey to solicit public comment and
determine if any drugs needed to be removed/added. DHHS received over 300 responses.
o That list was compared to the Medicaid pharmacy data reported to the Centers for
Medicare and Medicaid Services (CMS) and information from the Public Employees Benefit
Program on prescribed drugs. This prescriber data accounted for approximately 700,000
Nevadans insured under these public plans and was used to whittle down the list to just
those drugs prescribed in Nevada.
o The remaining drugs were checked against the FDA database to ensure that only drugs
approved by the FDA for the treatment of diabetes were included on the list. No drugs
were included if their treatment of diabetes was considered an “off-label” use.
This process was designed to include the feedback from prescriber stakeholders along with addressing
the concerns expressed by industry members regarding appropriate label use. This list does not include
any drugs used to treat co-morbidities often present in an individual with diabetes. The list also does not
contain every single drug that may be an effective treatment for diabetes or approved for the treatment
of diabetes. This list attempts to distill down the numerous treatments to those which are approved for
treatment, identified by prescribers as essential, and most frequently prescribed in Nevada (as
determined by the publicly available data sources).
As this is the first year DHHS has created this list, we welcome feedback on the process that can be used
for the development of the list for 2018. Feedback and questions can be directed to the
email: [email protected].
Nevada Department of Health and Human Services

Helping People -- It's Who We Are And What We Do
Revision Date February 13, 2018
Proprietary Name Non_Proprietary_Name Class Labeler
Tanzeum albiglutide Glucagon-Like Peptide- GlaxoSmithKline, LLC

1 (GLP-1) Agonists
Byetta exenatide Glucagon-Like Peptide- Astrazeneca AB;

1 (GLP-1) Agonists Physicians Total Care, Inc.
Invokana; canagliflozin Sodium Glucose Co- Jansen Pharmaceuticals, Inc.

Invokamet Transporter-2 (SGLT2)
Inhibitors
Cycloset; bromocriptine mesylate Ergolines Paddock Laboratories, LLC;
Parlodel; Ranbaxy Pharmaceuticals, Inc.;
Bromocriptine Sandoz, Inc.;
mesylate Physcians Total Care, Inc.;
Santarus, Inc.;
Validus Pharmaceuticals, LLC
Farxiga; DAPAGLIFLOZIN Sodium Glucose Co- AstraZeneca Pharmaceuticals, LP

Xigduo Propanediol Transporter-2 (SGLT2)
Inhibitors
DiaBeta glyburide Sulfonylureas (SUs) Actavis Elizabeth;
Aurobihndo Pharma;
Dava Pharms, Inc;
Epic Pharma LLC;
Heritage Pharms, Inc.;
Hikma;
Impax Labs, Inc;
Mylan;
Pharmadax, Inc;
Sandoz;
Sanofi-Aventis U.S., LLC;
Teva;
Zydus Pharms USA, Inc
Trulicity Dulaglutide Glucagon-Like Peptide- Eli Lilly and Company
1 (GLP-1) Agonists
Jardiance Empagliflozin Sodium Glucose Co- Boehringer Ingelheim Pharmaceuticals, Inc.;

Synjardy Transporter-2 (SGLT2) Cardinal Health
Inhibitors
Glyxambi Empagliflozin and linagliptin Sodium Glucose Co- Boehringer Ingelheim Pharmaceuticals, Inc.
Transporter-2 (SGLT2)
Inhibitors
Synjardy empagliflozin and Sodium Glucose Co- Boehringer Ingelheim Pharmaceuticals, Inc.
metformin hydrochloride Transporter-2 (SGLT2)
Inhibitors
Bydureon exenatide Glucagon-Like Peptide- AstraZeneca Pharmaceuticals, LP;
Byetta 1 (GLP-1) Agonists Physicians Total Care, Inc.
Fortamet Metformin hydrocloride Biguanide Physicians Total Care, Inc.;

Shionogi, Inc.
Amaryl Glimepiride Sulfonylureas (SUs) Accord Healthcare Inc; Prasco Laboratories;

Glimepiride Aidarex Pharmaceuticals LLC; Preferred Pharmaceuticals Inc.;
American Health Packaging; Physicians Total Care, Inc.;
Aurobindo Pharma Limited; Proficient Rx LP;
Avera McKennan Hospital; Qualitest Pharmaceuticals;
Bionpharma Inc. Rebel Distributors Corp;
Blenheim Pharmacal, Inc.; RedPharm Drug, Inc.
BluePoint Laboratories; REMEDYREPACK INC.;
Bryant Ranch Prepack; St Marys Medical Park Pharmacy;
Cardinal Health; Sanofi-Aventis U.S., LLC;
Carlsbad Technology, Inc.; Solco Healthcare U.S., LLC;
Citron Pharma LLC; STAT Rx USA LLC;
Dr. Reddy's Laboratories Limited; Takeda Pharmaceuticals America, Inc.;
DIRECT RX; Teva Pharmaceuticals USA, Inc.;
Golden State Medical Supply, Inc.; Unit Dose Services;
International Laboratories, LLC; Virtus Pharmaceuticals
Lake Erie Medical DBA Quality Care Products LLC;
Liberty Pharmaceuticals, Inc.;
MedVantx, Inc.;
Micro Labs Limited;
Mylan Institutional Inc.;
Mylan Pharmaceuticals Inc.;
NCS HealthCare of KY, Inc dba Vangard Labs;
Northwind Pharmaceuticals;
NuCare Pharmaceuticals, Inc.
PD-Rx Pharmaceuticals, Inc.;
Glipizide glipizide Sulfonylureas (SUs) Accord Healthcare Inc; MedVantx, Inc.;

Glipizide XL Actavis Elizabeth LLC; Mylan Institutional Inc.;
Glipizide ER Actavis Pharma, Inc.; Mylan Pharmaceuticals Inc.;
Glucotrol Aidarex Pharmaceuticals LLC; NCS HealthCare of KY, Inc dba Vangard
Glucotrol XL Aphena Pharma Solutions - Tennessee, LLC; Labs;
Apotex Corp.; Northwind Pharmaceuticals;
Apotheca Inc.; NuCare Pharmaceuticals, Inc.
Aurobindo Pharma Limited; PD-Rx Pharmaceuticals, Inc.;
Avera McKennan Hospital; Par Pharmaceutical, Inc.;
Bionpharma Inc. Physicians Total Care, Inc.;
Blenheim Pharmacal, Inc.; Preferred Pharmaceuticals Inc.;
Bryant Ranch Prepack; Proficient Rx LP;
Cardinal Health; Rebel Distributors Corp;
Carlsbad Technology, Inc.; RedPharm Drug, Inc.
Clinical Solutions Wholesale; REMEDYREPACK INC.;
Contract Pharmacy Services-PA; Rising Pharmaceuticals, Inc.;
Dr. Reddy's Laboratories Limited; St Marys Medical Park Pharmacy;
DIRECT RX; Sandoz Inc;
Dispensing Solutions, Inc.; State of Florida DOH Central Pharmacy;
Golden State Medical Supply, Inc.; STAT Rx USA LLC;
Greenstone LLC; Sun Pharmaceutical Industries, Inc.;
International Laboratories, LLC; TYA Pharmaceuticals;
H.J. Harkins Company, Inc.; Unit Dose Services;
Lake Erie Medical DBA Quality Care Products LLC; Virtus Pharmaceuticals
Legacy Pharmaceutical Packaging, LLC;
Major Pharmaceuticals;
Glipizide and Glipizide and Metformin Sulfonylureas (SUs) AvKARE, Inc.; Physicians Total Care, Inc.;
Metformin Hydrochloride Bryant Ranch Prepack; Rebel Distributors Corp;
Hydrochloride Cadila Healthcare Limited; REMEDYREPACK INC.;
Glipizide and Heritage Pharmaceuticals Inc.; St Marys Medical Park Pharmacy;
Metformin HCI KAISER FOUNDATION HOSPITALS; Teva Pharmaceuticals USA, Inc.;
Lake Erie Medical DBA Quality Care Products LLC; Unit Dose Services;
Mylan Pharmaceuticals Inc.; Zydus Pharmaceuticals (USA) Inc.
Glucophage Metformin Hydrochloride Biguanide Bristol-Myers Squibb Company;

PD-Rx Pharmaceuticals, Inc.
Glumetza Metformin Hydrochloride Biguanide Depomed, Inc.;
Santarus, Inc.
Glyset Miglitol Alpha-Glucosidase Pharmaceia and Upjohn Company LLC
Inhibitors
Novolin Human Insulin Short Acting or Regular Novo Nordisk;

Physicians Total Care, Inc.;
TYA Pharmaceuticals
Novolog insulin aspart Rapid-Acting Insulin Dispensing Solutions;
Novo Nordisk;
Physicians Total Care, Inc.;
TYA Pharmaceuticals
Tresiba insulin degludec insulin Novo Nordisk
Xultophy insulin degludec; liraglutide Glucagon-Like Peptide- Novo Nordisk

1 (GLP-1) Agonists
Levemir insulin detemir Long-Acting Insulin Dispensing Solutions;

Novo Nordisk;
Physicians Total Care, Inc.
Basaglar insulin glargine Long-Acting Insulin Dispensing Soloutions, Inc.;
Lantus Eli Lilly and Company;
Toujeo Physicians Total Care, Inc.;
Sanofi-Aventis U.S. LLC
Soliqua insulin glargine; Lixisenatide Insulin Sanofi-Aventis U.S. LLC
Apidra insulin glulisine Rapid-Acting Insulin Sanofi-Aventis U.S. LLC
Afrezza Insulin human Intermediate Insulin or Eli Lilly and Company;

Humalog 70/30 Baseline, Basal Mankind Corporation;
Humulin Physicians Total Care, Inc.
Humulin N
Humulin R
Humalog Insulin lispro Rapid-Acting Insulin Dispensing Solutions, Inc.;
Eli Lilly and Company;
Tradjenta linagliptin Dipeptidyl Peptidase 4 Boehringer Ingelheim Pharmaceuticals, Inc.;
Inhibitors Cardinal Health
Jentadueto linagliptin and metformin Dipeptidyl Peptidase 4 Boehringer Ingelheim Pharmaceuticals, Inc;
Jentadueto XR hydrochloride Inhibitors Bryant Ranch Prepack;
Victoza liraglutide Glucagon-Like Peptide- Novo Nordisk

1 (GLP-1) Agonists
Metformin HCL Metformin HCL Biguanide Ascend Laboratories, Inc.;

Cambridge Therapeutics Technologies, LLC;
Time Cap Laboratories, Inc.
Nesina Alogliptin Dipeptidyl Peptidase 4 Takeda Pharmaceuticals America, Inc.

Inhibitors
Pioglitazone Pioglitazone Thiazolidinediones Avera McKennan Hospital; NuCare Pharmaceuticals, Inc.;
Actos (TZDs) Cadila Healthcare Limited; Physicians Total Care, Inc.;
Cardinal Health; Ranbaxy Pharmaceuticals, Inc.;
Carilion Materials Management; Rebel Distributors Corp.;
Citron Pharma LLC; Sandoz, Inc.;
Dispensing Solultions, Inc.; Takeda Pharmaceuticals America, Inc.;
International Laboratories, LLC; Teva Pharmaceuticals USA, Inc.;
Lake Erie Medical & Surgical Supply dba Quality Wockhardt Limited;
Care Products LLC; Zydus Pharmaceuticals (USA) Inc.
Macleods Pharmaceuticals Limited;
MedVantx, Inc.;
Mylan Institutional Inc.;
Mylan Pharmaceuticals Inc.;
Prandin Repaglinide Meglitinides Cardinal Health;

Carilion Materials Management;
Gemini Laboratories, LLC;
Lake Erie Medical dba Quality Care Products LLC;
Novo Nordisk;
Physicians Total Care
Precose Acarbose Alpha-Glucosidase Aphena Pharma Solutions - Tennessee, LLC;

Inhibitors Bayer Healthcare Pharmaceuticals, Inc.;
Riomet Metformin Hydrochloride Biguanide Ranbaxy Laboratories, Inc.
Onglyza SAXAGLIPTIN Dipeptidyl Peptidase 4 AstraZeneca Pharmaceuticals LP;

Inhibitors Cardinal Health;
Kombiglyze SAXAGLIPTIN AND Metformin + AstraZeneca Pharmaceuticals LP
METFORMIN
HYDROCHLORIDE
Januvia sitagliptin Dipeptidyl Peptidase 4 Avera McKennan Hospital;
Inhibitors Cardinal Health;
Lake Erie Medical & Surgical Supply dba Quality
Care Products LLC;
Merck Sharp & Dohme Corp.;
Janumet sitagliptin and metformin Metformin + Lake Erie Medical & Surgical Supply dba Quality
hydrochloride Care Products LLC;
Merck Sharp & Dohme Corp
Starlix Nateglinide Meglitinides Novartis Pharmaceuticals Corporation
SymlinPen 60 & 120 Pramlintide Amylin Agonist AstraZeneca Pharmaceuticals LP

Welchol Colesevelam Hydrochloride Bile Acid Binding Resins Avera McKennan Hospital;
Carillion Materials Management;
Daiichi Sankyo, Inc.;
Physicians Total Care Inc.;
Rebel Distributors
Revised: December 23, 2017

Steve Sisolak Richard Whitley, MS
Governor Director
Julie Kotchevar, PhD

DPBH Administrator
2019
Essential Diabetes
Drug List
Report Date:
February 1, 2019
Prepared by:
Primary Care and Health Workforce Development Office, State of Nevada
Division of Public and Behavioral Health (DPBH)
4150 Technology Way, Suite 300, Carson City, NV 89706
Office: (775) 684-4255 Email: [email protected]
drugtransparency.nv.gov
Helping People. It’s who we are and what we do.

Introduction
During the 79th legislative session, Senate Bill (SB) 539, which supports prescription
drug transparency, was approved. SB 539 was codified in Nevada Revised Statutes
(NRS) 439B. The law requires in NRS 439B.630 that the Department of Health and Hu-
man Services (DHHS) compile a list of prescription drugs essential for treating diabetes in Ne-
vada:
NRS 439B.630 Department to annually compile lists of certain prescription
drugs essential for treating diabetes. On or before February 1 of each year, the De-
partment shall compile:
1. A list of prescription drugs that the Department determines to be essential for treat-
ing diabetes in this State and the wholesale acquisition cost of each such drug on the
list. The list must include, without limitation, all forms of insulin and biguanides mar-
keted for sale in this State.
2. A list of prescription drugs described in subsection 1 that have been subject to an
increase in the wholesale acquisition cost of a percentage equal to or greater than:
a.) The percentage increase in the Consumer Price Index, Medical Care Compo-
nent during the immediately preceding calendar year; or
b.) Twice the percentage increase in the Consumer Price Index, Medical Care
Component during the immediately preceding 2 calendar years.
(Added to NRS by 2017, 4297)
The first essential diabetes drug list was published on October 31, 2017. The 2019 Essential Di-
abetes Drug List identifies Nevada’s essential diabetes drugs as of the publication date and also
indicates if these drugs underwent a significant price increase as defined by NRS 439B.630 (2).
To produce the current list, DHHS posted a draft version of the essential diabetes drug list
online on January 14, 2019 and received public and other stakeholder comments. All requests
were carefully reviewed before finalization of this publication. Manufacturers that produce
drugs found on this list are required to submit reports by April 1, 2019 that include information
about these drugs as outlined in NRS 439B.635 and NRS 439B.640. Additionally, Pharmacy
Benefit Managers (PBMs) are required to provide information to DHHS by April 1, 2019 regard-
ing these drugs as outlined in NRS 439B.645. Data from these reports will be aggregated and
published in the DHHS report required by NRS 439B.650 by June 1, 2019.
Report Methodology
To compile the 2019 DHHS Essential Diabetes Drug list, DHHS utilized a methodology that met
the requirements of NRS 439B.630. Two versions of the list are published: (1) a summary of the
nonproprietary and brand or proprietary drug names found on the essential list [Appendix 1],
and (2) a detailed list of all the National Drug Codes (NDCs) indicated by DHHS as essential dia-
betes drugs and if each drug NDC experienced a significant price increase [Appendix 2]. The
summary list [Appendix 1] provides a concise outline of the essential drugs, while the NDC list
[Appendix 2] identifies the specific drug NDCs that will be monitored by DHHS and included in
the yearly report.
2
To generate the final list, DHHS compiled an initial list of diabetes drug NDCs that in-
cluded varying drug packing formulations based on prior and current stakeholder input
of essential diabetes drugs. These NDC codes were filtered down to include the drugs
for which Nevada Medicaid expended funds in 2017 and/or 2018. Additional NDCs that
were of interest to the public and stakeholders were added to this list.
This essential list does not include any drugs used to treat co-morbidities often present in indi-
viduals with diabetes. The list does not contain every single drug that may be an effective treat-
ment for diabetes or approved for the treatment of diabetes. This list attempts to refine the nu-
merous treatments to those approved for treatment, identified by prescribers as essential, and
most frequently prescribed in Nevada (as determined by publicly available data sources). For
this reason, some brand names are excluded while generics or alternative brands are included.
DHHS welcomes feedback regarding this report. DHHS strives to ensure that consumers receive
accurate information. Any identified errors, omissions, or feedback can be submitted to the de-
partment via email at [email protected].
DHHS invites you to view the Drug Transparency website at drugtransparency.nv.gov. If you are
interested in receiving email notifications for Nevada Drug Transparency information and up-
dates, please subscribe online at http://drugtransparency.nv.gov to the DHHS Drug Transparen-
cy LISTSERV.
3
Appendix 1:
2019 DHHS Essential Diabetes Drug
Summary List
4
Appendix 1: 2019 DHHS Essential Diabetes Drug Summary List
Page 1 of 2
Included Essential Drug Brand Names

Essential Non-Propietary Drug Name
(Note: some brand names are excluded from this list)
Acarbose
Albiglutide Tanzeum
Alogliptin Nesina
Alogliptin and Metformin HCL Kazano
Alogliptin and Pioglitazone Oseni
Bromocriptine Mesylate Cycloset
Canagliflozin Invokana
Canagliflozin and Metformin HCL Invokamet; Invokamet XR
Colesevelam HCL Welchol
Dapagliflozin Farxiga
Dapagliflozin and Metformin HCL Xigduo XR
Dulaglutide Trulicity
Empagliflozin Jardiance
Empagliflozin and Linagliptin Glyxambi
Empagliflozin and Metformin HCL Synjardy; Synjardy XR
Ertugliflozin Steglatro
Ertugliflozin and Metformin HCL Segluromet
Ertugliflozin and Sitagliptin Steglujan
Exenatide Bydureon; Bydureon BCise; Byetta
Glimepiride Amaryl
Glipizide Glucotrol; Glucotrol XL; Glipizide XL; Glipizide ER
Glipizide and Metformin HCL
Glucagon GlucaGen
Glyburide Glynase
Glyburide and Metformin HCL
Insulin Aspart Fiasp; Novolog; Novolog 70/30
Insulin Degludec Tresiba
Insulin Degludec and Liraglutide Xultophy 100/3.6
Insulin Detemir Levemir
Insulin Glargine Basaglar; Lantus; Toujeo
Insulin Glargine and Lixisenatide Soliqua 100/33
Insulin Glulisine Apidra
Afrezza; Humulin N; Humulin R; Humulin R500; Humulin
Insulin Human
70/30; Novolin R; Novolin N; Novolin 70/30
Admelog; Humalog; Humalog 50-50; Humalog 75-25;
Insulin Lispro
Humalog Jr
Linagliptin Tradjenta
Linagliptin and Metformin HCL Jentadueto; Jentadueto XR
Liraglutide Victoza
Lixisenatide Adlyxin
Fortamet ER; Glumetza ER; Glucophage; Glucophage XR;
Metformin HCL
Riomet; Metformin ER
Miglitol Glyset
5
Appendix 1: 2019 DHHS Essential Diabetes Drug Summary List
Page 2 of 2
Included Essential Drug Brand Names

Essential Non-Propietary Drug Name
(Note: some brand names are excluded from this list)
Nateglinide Starlix
Pioglitazone Actos
Pioglitazone and Glimepiride
Pioglitazone and Metformin HCL Actoplus Met; Actoplus Met XR
Pramlintide Acetate SymlinPen
Repaglinide Prandin
Rosiglitazone Avandia
Saxagliptin Onglyza
Saxagliptin and Metformin HCL Kombiglyze XR
Semaglutide Ozempic
Sitagliptin Januvia
Sitagliptin and Metformin HCL Janumet; Janumet XR
6
Appendix 2:
2019 Essential Diabetes Drug
NDC List
7
Appendix 2: 2019 DHHS Essential Diabetes Drug NDC List
Page 1 of 16
Essential Diabetes Significant

NDC Labeler
Drug Name Price Increase
16252-0523-01 Acarbose Actavis Pharma, Inc.

47781-0340-01 Acarbose Alvogen, Inc.
00115-1152-02 Acarbose Global Pharmaceuticals
23155-0149-01 Acarbose Heritage Pharmaceuticals Inc.
00378-2821-77 Acarbose Mylan
64380-0758-06 Acarbose Strides Shasun Limited
69543-0120-10 Acarbose Virtus Pharmaceuticals LLC
00054-0140-25 Acarbose West-Ward Pharmaceuticals Corp
64764-0158-60 Actoplus Met Takeda Pharmaceuticals U.S.A., Inc.
64764-0310-30 Actoplus Met XR Takeda Pharmaceuticals U.S.A., Inc.
64764-0510-30 Actoplus Met XR Takeda Pharmaceuticals U.S.A., Inc.
64764-0151-04 Actos Takeda Pharmaceuticals U.S.A., Inc.
00024-5745-02 Adlyxin Sanofi-Aventis U.S. LLC Yes
00024-5747-02 Adlyxin Sanofi-Aventis U.S. LLC Yes
00024-5924-10 Admelog Sanofi-Aventis U.S. LLC
47918-0874-90 Afrezza Mannkind Corporation Yes
47918-0884-63 Afrezza MannKind Corporation Yes
45802-0169-72 Alogliptin-Metformin Perrigo New York Inc
45802-0211-72 Alogliptin-Metformin Perrigo New York Inc
00039-0221-10 Amaryl Sanofi-Aventis U.S. LLC
00088-2500-33 Apidra Sanofi-Aventis U.S. LLC Yes
00088-2502-05 Apidra Sanofi-Aventis U.S. LLC Yes
00173-0861-18 Avandia GlaxoSmithKline LLC
00002-7715-01 Basaglar Eli Lilly and Company
00002-7715-59 Basaglar Eli Lilly and Company
8
Page 2 of 16

NDC Labeler
60687-0286-21 Bromocriptine American Health Packaging

00378-2042-01 Bromocriptine Mylan
00574-0106-01 Bromocriptine Paddock Laboratories, LLC
00574-0106-03 Bromocriptine Paddock Laboratories, LLC
00781-5325-01 Bromocriptine Sandoz Inc
00781-5325-31 Bromocriptine Sandoz Inc
63304-0962-30 Bromocriptine Sun Pharmaceutical Industries, Inc.
68382-0110-06 Bromocriptine Zydus Pharmaceuticals (USA) Inc.
00310-6520-04 Bydureon AstraZeneca Pharmaceuticals LP
00310-6530-04 Bydureon AstraZeneca Pharmaceuticals LP
00310-6540-04 Bydureon BCise AstraZeneca Pharmaceuticals LP
00310-6512-01 Byetta AstraZeneca Pharmaceuticals LP
00310-6524-01 Byetta AstraZeneca Pharmaceuticals LP
51660-0996-28 Colesevelam Ohm Laboratories, Inc.
68012-0258-20 Cycloset Santarus, Inc. Yes
00003-1428-11 Farxiga AstraZeneca Pharmaceuticals LP
00310-6205-30 Farxiga AstraZeneca Pharmaceuticals LP Yes
00310-6210-30 Farxiga AstraZeneca Pharmaceuticals LP Yes
00169-3201-11 Fiasp Novo Nordisk Yes
00169-3204-15 Fiasp Novo Nordisk Yes
59630-0574-60 Fortamet ER Shionogi Inc.
59630-0575-60 Fortamet ER Shionogi Inc.
16729-0001-01 Glimepiride Accord Healthcare Inc Yes
69452-0128-20 Glimepiride Bionpharma Inc.
68001-0177-00 Glimepiride BluePoint Laboratories
61442-0115-01 Glimepiride Carlsbad Technology, Inc.
9
Page 3 of 16

NDC Labeler

55111-0320-01 Glimepiride Dr. Reddy's Laboratories Limited
54458-0966-10 Glimepiride International Laboratories, LLC
68645-0572-90 Glimepiride Legacy Pharmaceutical Packaging, LLC
68645-0573-90 Glimepiride Legacy Pharmaceutical Packaging, LLC
51079-0426-20 Glimepiride Mylan
00093-7254-01 Glimepiride Teva Pharmaceuticals USA, Inc.
69543-0123-10 Glimepiride Virtus Pharmaceuticals
16729-0139-00 Glipizide Accord Healthcare Inc.
00591-0460-01 Glipizide Actavis Pharma, Inc.
60505-0141-00 Glipizide Apotex Corp.
10
Page 4 of 16

NDC Labeler
68645-0150-54 Glipizide Legacy Pharmaceutical Packaging, LLC

68645-0151-59 Glipizide Legacy Pharmaceutical Packaging, LLC
51079-0810-20 Glipizide Mylan
00781-1452-01 Glipizide Sandoz Inc
57664-0398-13 Glipizide Sun Pharmaceutical Industries, Inc.
00591-0844-01 Glipizide ER Actavis Pharma, Inc.
68084-0111-01 Glipizide ER American Health Packaging Yes
00378-0340-93 Glipizide ER Mylan
10370-0745-01 Glipizide ER Par Pharmaceutical, Inc.
10370-0190-01 Glipizide ER Par Pharmaceuticals, Inc.
64980-0279-03 Glipizide ER Rising Pharmaceuticals, Inc.
59762-0540-01 Glipizide XL Greenstone LLC
11
Page 5 of 16

NDC Labeler
23155-0116-01 Glipizide-Metformin Heritage Pharmaceuticals Inc.

23155-0117-01 Glipizide-Metformin Heritage Pharmaceuticals Inc.
00378-3132-01 Glipizide-Metformin Mylan
00378-3133-01 Glipizide-Metformin Mylan
00093-7455-01 Glipizide-Metformin Teva Pharmaceuticals USA, Inc.
68382-0185-01 Glipizide-Metformin Zydus Pharmaceuticals (USA) Inc.
68382-0186-01 Glipizide-Metformin Zydus Pharmaceuticals (USA) Inc.
00169-7065-15 Glucagen Novo Nordisk Yes
00002-8031-01 Glucagon Eli Lilly and Company Yes
00087-6060-05 Glucophage Bristol-Myers Squibb Company
00087-6071-11 Glucophage Bristol-Myers Squibb Company
00087-6064-13 Glucophage XR Bristol-Myers Squibb Company
00049-4110-66 Glucotrol Roerig Yes
00049-4120-66 Glucotrol Roerig Yes
00049-0170-01 Glucotrol XL Roerig Yes
68012-0002-13 Glumetza ER Santarus, Inc.
68012-0003-16 Glumetza ER Santarus, Inc.
65862-0028-01 Glyburide Aurobindo Pharma Limited
57237-0022-05 Glyburide Citron Pharma LLC
23155-0056-01 Glyburide Heritage Pharmaceuticals Inc.
63739-0119-10 Glyburide McKesson Corporation
51079-0872-20 Glyburide Mylan
51079-0873-20 Glyburide Mylan
00093-9364-01 Glyburide TEVA Pharmaceuticals USA Inc
00093-8342-01 Glyburide Teva Pharmaceuticals USA, Inc.
12
Page 6 of 16

NDC Labeler

52817-0120-10 Glyburide TruPharma, LLC
68382-0657-01 Glyburide Zydus Pharmaceuticals (USA) Inc.
68382-0658-10 Glyburide Zydus Pharmaceuticals (USA) Inc.
00378-1125-10 Glyburide Micro Mylan
00093-8034-01 Glyburide Micro Teva Pharmaceuticals USA, Inc.
00143-9918-01 Glyburide Micro West-Ward Pharmaceuticals Corp
00228-2752-11 Glyburide-Metformin Actavis Pharma, Inc.
00228-2753-11 Glyburide-Metformin Actavis Pharma, Inc.
65862-0081-01 Glyburide-Metformin Aurobindo Pharma Limited
57237-0024-01 Glyburide-Metformin Rising Health, LLC
00093-5712-05 Glyburide-Metformin Teva Pharmaceuticals USA, Inc.
68382-0654-05 Glyburide-Metformin Zydus Pharmaceuticals (USA) Inc.
68382-0655-05 Glyburide-Metformin Zydus Pharmaceuticals (USA) Inc.
65862-0080-01 Glyburid-Metformin Aurobindo Pharma Limited
57237-0023-01 Glyburid-Metformin Rising Health, LLC
00009-0341-01 Glynase Pharmacia and Upjohn Company LLC Yes
00009-5012-01 Glyset Pharmacia and Upjohn Company LLC Yes
54868-4203-00 Glyset Physicians Total Care, Inc.
00597-0164-30 Glyxambi Boehringer Ingelheim Pharmaceuticals, Inc.
13
Page 7 of 16

NDC Labeler

00002-7510-01 Humalog Eli Lilly and Company
00002-7512-01 Humalog 50-50 Eli Lilly and Company
00002-7714-59 Humalog Jr Eli Lilly and Company
00002-8715-01 Humulin 70/30 Eli Lilly and Company
00002-8315-01 Humulin N Eli Lilly and Company
00002-8215-01 Humulin R Eli Lilly and Company
00002-8215-17 Humulin R Eli Lilly and Company
00002-8501-01 Humulin R500 Eli Lilly and Company
00002-8824-27 Humulin R500 Eli Lilly and Company
50458-0540-60 Invokamet Janssen Pharmaceuticals, Inc. Yes
50458-0940-01 Invokamet XR Janssen Pharmaceuticals, Inc. Yes
50458-0140-30 Invokana Janssen Pharmaceuticals, Inc. Yes
00006-0575-61 Janumet Merck Sharp & Dohme Corp. Yes
14
Page 8 of 16

NDC Labeler
00006-0078-61 Janumet XR Merck Sharp & Dohme Corp. Yes

00006-0112-28 Januvia Merck Sharp & Dohme Corp. Yes
00006-0277-01 Januvia Merck Sharp & Dohme Corp.
00597-0152-30 Jardiance Boehringer Ingelheim Pharmaceuticals, Inc. Yes
00597-0146-18 Jentadueto Boehringer Ingelheim Pharmaceuticals, Inc. Yes
00597-0270-73 Jentadueto XR Boehringer Ingelheim Pharmaceuticals, Inc. Yes
64764-0335-60 Kazano Takeda Pharmaceuticals U.S.A., Inc.
64764-0337-60 Kazano Takeda Pharmaceuticals U.S.A., Inc.
00310-6125-60 Kombiglyze XR AstraZeneca Pharmaceuticals LP
00088-2219-05 Lantus sanofi-aventis U.S. LLC Yes
15
Page 9 of 16

NDC Labeler

00169-3687-12 Levemir Novo Nordisk Yes
00169-6438-10 Levemir Novo Nordisk Yes
00591-2412-19 Metformin Actavis Pharma, Inc.
60687-0143-01 Metformin American Health Packaging Yes
65162-0220-10 Metformin Amneal Pharmaceuticals LLC
53746-0178-01 Metformin Amneal Pharmaceuticals of New York LLC
60505-0190-00 Metformin Apotex Corp.
67877-0159-01 Metformin Ascend Laboratories, LLC
16
Page 10 of 16

NDC Labeler

65862-0008-01 Metformin Aurobindo Pharma Limited
00185-4416-01 Metformin Eon Labs, Inc.
42806-0213-05 Metformin Epic Pharma, LLC
68462-0159-01 Metformin Glenmark Pharmaceuticals Inc., USA
23155-0102-01 Metformin Heritage Pharmaceuticals Inc.
50742-0154-01 Metformin Ingenus Pharmaceuticals, LLC
68645-0300-59 Metformin Legacy Pharmaceutical Packaging, LLC
17
Page 11 of 16

NDC Labeler

68180-0336-07 Metformin Lupin Pharmaceuticals, Inc.
33342-0240-11 Metformin Macleods Pharmaceuticals Limited
00904-6326-61 Metformin Major Pharmaceuticals
38779-2126-05 Metformin Medisca, Inc.
58657-0640-10 Metformin Method Pharmaceuticals, LLC
00378-6002-91 Metformin Mylan
68682-0017-10 Metformin Oceanside Pharmaceuticals
68682-0018-90 Metformin Oceanside Pharmaceuticals
51927-3105-00 Metformin Professional Co.
00781-5503-01 Metformin SANDOZ INC.
43547-0248-50 Metformin Solco healthcare U.S., LLC
57664-0397-51 Metformin Sun Pharmaceutical Industries, Inc.
51224-0007-50 Metformin TAGI Pharma, Inc.
18
Page 12 of 16

NDC Labeler

00093-1048-01 Metformin Teva Pharmaceuticals USA, Inc.
49483-0620-10 Metformin TIME CAP LABORATORIES, INC
49483-0623-01 Metformin TIME CAP LABORATORIES, INC Yes
49483-0623-50 Metformin TIME CAP LABORATORIES, INC Yes
68382-0028-10 Metformin Zydus Pharmaceuticals (USA) Inc.
00591-2720-60 Metformin ER Actavis Pharma, Inc.
68180-0337-07 Metformin ER Lupin Pharmaceuticals, Inc.
00378-6001-91 Metformin ER Mylan
29033-0032-06 Metformin ER Nostrum Laboratories, Inc.
57664-0684-88 Miglitol Sun Pharmaceutical Industries Ltd.
00591-3354-01 Nateglinide Actavis Pharma, Inc.
00591-3355-01 Nateglinide Actavis Pharma, Inc.
68084-0458-21 Nateglinide American Health Packaging
68084-0459-21 Nateglinide American Health Packaging
55111-0328-90 Nateglinide Dr. Reddy's Laboratories Limited
55111-0329-90 Nateglinide Dr. Reddy's Laboratories Limited
49884-0984-01 Nateglinide Par Pharmaceutical, Inc.
19
Page 13 of 16

NDC Labeler
49884-0985-01 Nateglinide Par Pharmaceutical, Inc.

68382-0721-16 Nateglinide Zydus Pharmaceuticals (USA) Inc.
68382-0722-16 Nateglinide Zydus Pharmaceuticals (USA) Inc.
64764-0125-30 Nesina Takeda Pharmaceuticals U.S.A., Inc.
00169-1837-02 Novolin 70-30 Novo Nordisk
00169-1837-11 Novolin 70-30 Novo Nordisk
00169-1834-02 Novolin N Novo Nordisk
00169-1834-11 Novolin N Novo Nordisk
00169-1833-02 Novolin R Novo Nordisk
00169-1833-11 Novolin R Novo Nordisk
00169-3303-12 Novolog Novo Nordisk Yes
32849-0500-81 Novolog Novo Nordisk
00169-3685-12 Novolog 70/30 Novo Nordisk Yes
00169-3696-19 Novolog 70/30 Novo Nordisk Yes
00310-6100-30 Onglyza AstraZeneca Pharmaceuticals LP
64764-0121-03 Oseni Takeda Pharmaceuticals U.S.A., Inc.
00169-4132-12 Ozempic Novo Nordisk Yes
00169-4136-02 Ozempic Novo Nordisk Yes
16729-0020-10 Pioglitazone Accord Healthcare, Inc.
00591-3205-05 Pioglitazone Actavis Pharma, Inc.
20
Page 14 of 16

NDC Labeler

68084-0878-01 Pioglitazone American Health Packaging
54458-0864-10 Pioglitazone International Laboratories, LLC Yes
33342-0054-07 Pioglitazone Macleods Pharmaceuticals Limited
51079-0513-20 Pioglitazone Mylan
63304-0313-30 Pioglitazone Ranbaxy Pharmaceuticals Inc.
00781-5420-31 Pioglitazone Sandoz Inc
00093-2046-98 Pioglitazone Teva Pharmaceuticals USA Inc
00093-2047-98 Pioglitazone Teva Pharmaceuticals USA Inc
00093-7271-56 Pioglitazone Teva Pharmaceuticals USA, Inc.
13668-0119-05 Pioglitazone TORRENT PHARMACEUTICALS LIMITED
66993-0821-30 Pioglitazone-Glimepiride Prasco Laboratories
66993-0822-30 Pioglitazone-Glimepiride Prasco Laboratories
21
Page 15 of 16

NDC Labeler
00781-5634-31 Pioglitazone-Glimepiride Sandoz Inc

00781-5635-31 Pioglitazone-Glimepiride Sandoz Inc
65862-0525-60 Pioglitazone-Metformin Aurobindo Pharma Limited
33342-0177-09 Pioglitazone-Metformin Macleods Pharmaceuticals Limited
00378-1550-91 Pioglitazone-Metformin Mylan
00378-1575-91 Pioglitazone-Metformin Mylan
57237-0218-60 Pioglitazone-Metformin Rising Health, LLC
00781-5626-60 Pioglitazone-Metformin Sandoz Inc
00781-5627-60 Pioglitazone-Metformin Sandoz Inc
00093-7677-06 Pioglitazone-Metformin Teva Pharmaceuticals USA, Inc.
00093-7678-06 Pioglitazone-Metformin Teva Pharmaceuticals USA, Inc.
13668-0280-60 Pioglitazone-Metformin TORRENT PHARMACEUTICALS LIMITED
13668-0281-60 Pioglitazone-Metformin TORRENT PHARMACEUTICALS LIMITED
60846-0882-01 Prandin Gemini Laboratories, LLC Yes
60846-0884-01 Prandin Gemini Laboratories, LLC Yes
10631-0206-01 Riomet Sun Pharmaceutical Industries, Inc. Yes
00006-5369-03 Segluromet Merck Sharp & Dohme Corp.
00024-5761-05 Soliqua 100/33 Sanofi-Aventis U.S. LLC Yes
00078-0351-05 Starlix Novartis Pharmaceuticals Corporation Yes
00078-0352-05 Starlix Novartis Pharmaceuticals Corporation Yes
00006-5364-03 Steglatro Merck Sharp & Dohme Corp.
00006-5364-06 Steglatro Merck Sharp & Dohme Corp.
00006-5367-03 Steglujan Merck Sharp & Dohme Corp.
00310-6615-02 Symlinpen AstraZeneca Pharmaceuticals LP
00310-6627-02 Symlinpen AstraZeneca Pharmaceuticals LP
00597-0159-18 Synjardy Boehringer Ingelheim Pharmaceuticals, Inc. Yes
22
Page 16 of 16

NDC Labeler

00597-0280-73 Synjardy XR Boehringer Ingelheim Pharmaceuticals, Inc. Yes
00173-0866-01 Tanzeum GlaxoSmithKline LLC
00024-5869-03 Toujeo Sanofi-Aventis U.S. LLC Yes
00024-5871-02 Toujeo Sanofi-Aventis U.S. LLC Yes
00597-0140-30 Tradjenta Boehringer Ingelheim Pharmaceuticals, Inc. Yes
00169-2550-13 Tresiba Novo Nordisk Yes
00169-2660-15 Tresiba Novo Nordisk Yes
00002-1433-01 Trulicity Eli Lilly and Company
00002-1433-80 Trulicity Eli Lilly and Company Yes
00002-1434-01 Trulicity Eli Lilly and Company
00002-1434-80 Trulicity Eli Lilly and Company Yes
00169-4060-12 Victoza Novo Nordisk Yes
00169-4060-13 Victoza Novo Nordisk Yes
65597-0701-18 Welchol Daiichi Sankyo Inc. Yes
65597-0902-30 Welchol Daiichi Sankyo Inc. Yes
00310-6250-30 Xigduo XR AstraZeneca Pharmaceuticals LP Yes
00169-2911-15 Xultophy 100/3.6 Novo Nordisk Yes
23

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Electronically Filed

Case Number: A-19-799939-W

18 __/s/ Josephine Baltazar

16 • Total administrative expenditures relating to the drug;

17 • Profit manufacturer earned from the drug;

18 • Percentage of manufacturer’s total profit attributed to drug during marketing

21 • Cost associated with consumer coupons for consumer Copayment Assistance

24 • Aggregate amount of all rebates manufacturer provided to Pharmacy Benefit

6 • An explanation of the role each factor played in the increase.

25 RICHARD WHITLEY, in his official capacity

1 Plaintiffs Pharmaceutical Research and Manufacturers of America (“PhRMA”) and

2 Biotechnology Innovation Organization (“BIO”) (together, “Plaintiffs”), on behalf of themselves

7 1. Plaintiffs bring this action to block an unprecedented and unconstitutional Nevada

19 website and may disseminate the rest as it pleases.

20 3. By extinguishing trade-secret protection for manufacturers’ confidential, proprietary

4 the federal patent laws are intended to ensure.

10 undermining innovation and competition in the American pharmaceutical industry.

17 compensation,” in violation of the Takings Clause.

24 Such disclosures cannot be undone—information cannot be undisclosed. SB 539 overrides the

3 8. SB 539’s constitutional infirmities led Governor Brian Sandoval to veto a

10 9. Governor Sandoval further recognized that, beyond these constitutional defects, SB

22 enforcing those provisions.

2 based pharmaceutical and biotechnology companies in America, devoted to discovering and

5 biotechnology companies, academic institutions, state biotechnology centers and related

8 environmental biotechnology products.2

17 JURISDICTION AND VENUE

19 Constitution. The Court thus has jurisdiction under 28 U.S.C. § 1331.

25 U.S.C. §§ 2201 and 2202.

2 Plaintiffs’ Members Devote Billions of Dollars Each Year to Developing Innovative

1 Swidorski, Diabetes History, Defeat Diabetes Found. (Jan. 22, 2014),

2 https://www.defeatdiabetes.org/diabetes-history. Their quality of life was also poor. Blood vessel

4 infections leading to amputation.

7 Diabetes, 367 New Eng. J. Med. 1332, 1332 (2012),

8 http://www.nejm.org/doi/full/10.1056/NEJMra1110560, owing significantly to the enormous

9 investments by Plaintiffs’ members in research and development of innovative diabetes treatments.

11 life expectancy and quality of life.

15 http://www.medicalnewstoday.com/articles/317484.php. The following year, Eli Lilly began mass

18 Id.; Novo Nordisk, The Founders, www.novonordisk.com/about-novo-nordisk/novo-nordisk-

21 improving insulin treatment and otherwise controlling diabetes. For example:

22  In 1936, a scientist discovered that adding protamine prolonged the effects of

elevated blood sugar by increasing incretin levels, thereby inhibiting glucagon

19 Drug name Type of drug Manufacturer Approval year

1 Ryzodeg Combination insulin Novo Nordisk 2015

1 Symlin Antihyperglycemic drug Amylin Pharmaceuticals 2005

17 Current Cardiology Reports (March 2017).

18 27. Another emphasis in diabetes research and development is prevention: researchers at

24 Pathways to a Type 1 Vaccine, Diabetes Forecast (July 2016),

25 http://www.diabetesforecast.org/2016/jul-aug/vaccines.html. Congress recognized the importance

2 adherence, in each state.3

7 inhibitor. Novo Nordisk is developing semaglutide, a GLP-1 receptor agonist, in a once-weekly,

12 Diabetes Drugs in Development, Medscape (Mar. 10, 2017),

18 Producing Cells (Oct. 9, 2014), https://hsci.harvard.edu/news/stem-cells-billions-human-insulin-

21 30. The cost of developing these innovative diabetes medicines is staggering. On

22 average, a manufacturer spends between 10 and 15 years—and $2.6 billion—developing a new

14 Inhaled Insulin, Now Available in the U.S., Sanofi (Feb. 3, 2015),

15 en.sanofi.com/images/38264_20150203_Afrezza_en.pdf. However, Afrezza appealed only to a

18 https://www.statnews.com/pharmalot/2016/01/05/insulin-sanofi-diabetes/. It is unlikely that

25 Opportunities: Government-Industry Partnerships in Biotechnology and Information Technologies

1 Overview of Nevada Senate Bill 539