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PhRMA and BIO Initiate Litigation to Challenge Unconstitutional Provisions of Nevada’s SB 539

September 1, 2017

Washington, DC (September 1, 2017) – The Pharmaceutical Research and Manufacturers of America (PhRMA) and the Biotechnology Innovation Organization (BIO) today initiated litigation in the United States District Court for the District of Nevada challenging provisions of SB 539, a Nevada law that would violate patent rights and negate trade secret protection for designated diabetes medicines in a way that would harm patients and chill future biomedical innovation.

In their Complaint, PhRMA and BIO seek a declaration from the Court that the challenged provisions of SB 539 are preempted by federal law and violate several provisions of the United States Constitution. PhRMA and BIO also seek an injunction prohibiting the implementation or enforcement of these challenged provisions. The Complaint is consistent with Nevada Governor Brian Sandoval’s veto letter on a prior version of the legislation, which raised the same legal concerns about the bill that are set forth in the Complaint. A copy of the Complaint is available here.

The Complaint alleges that provisions of SB 539 violate the Constitution in at least four ways:

i. by interfering with federal patent law;
ii. by interfering with federal trade secret law;
iii. by violating the Takings Clause of the Fifth Amendment of the United States Constitution which prohibits government from taking property without just compensation; and
iv. by violating the dormant Commerce Clause of the United States Constitution, which prohibits Nevada from impeding commerce in other states.

“In 2016 more than 170 medicines for diabetes and related conditions were in development. The vast majority of these drugs are potentially ‘first-in-class medicines’ that offer a new approach to fighting a disease that afflicts millions across the United States,” said Tom DiLenge, BIO’s President for Advocacy, Law, and Public Policy. “But this critical research is incredibly expensive and risky, and we know from experience that very few development programs will make it all the way to approval. Nevada’s law is, in actuality, an attempt to set de facto price controls on the few successful products that do make it to market, and in doing so, it will chill the massive private investment needed to spur our amazing biomedical innovation ecosystem that is providing hope to patients in Nevada and throughout the world.”

“If provisions of SB 539 go unchallenged, then Nevada’s law will conflict with and in many cases override federal law and the laws of 49 other states – laws that foster pharmaceutical innovation and protect intellectual property and trade secrets. For this reason and others, provisions of SB 539 are unconstitutional and should not be implemented,” said James C Stansel, PhRMA Executive Vice President and General Counsel.

During the legislature’s consideration of SB 539 and other similar Nevada bills, PhRMA and BIO expressed concerns about the legal shortcomings of these bills in written testimony, public statements, as well as in countless conversations with members of the Nevada legislature and Sandoval Administration. Throughout this process, the biopharmaceutical industry worked in good faith with public officials on potential solutions that did not undermine incentives to invest in biomedical innovation. Unfortunately, Nevada policymakers chose a different path, necessitating this lawsuit.

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About PhRMA
The Pharmaceutical Research and Manufacturers of America (PhRMA) represents the country’s leading innovative biopharmaceutical research companies, which are devoted to discovering and developing medicines that enable patients to live longer, healthier, and more productive lives. Since 2000, PhRMA member companies have invested more than $600 billion in the search for new treatments and cures, including an estimated $65.5 billion in 2016 alone.

About BIO
BIO is the world's largest trade association representing biotechnology companies, academic institutions, state biotechnology centers and related organizations across the United States and in more than 30 other nations. BIO members are involved in the research and development of innovative healthcare, agricultural, industrial and environmental biotechnology products. BIO also produces the BIO International Convention, the world’s largest gathering of the biotechnology industry, along with industry-leading investor and partnering meetings held around the world. BIOtechNOW is BIO's blog chronicling “innovations transforming our world” and the BIO Newsletter is the organization’s bi-weekly email newsletter.


Daniel Seaton

Priscilla VanderVeer

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