Amgen, Inc. v. Health care Services

Health and Safety Code section 127677, enacted as part of

Senate Bill No. 17 (Stats. 2017, ch. 603, § 4), requires

pharmaceutical manufacturers to provide 60-days’ notice to

public and private registered purchasers, including state entities

and health insurers, before increasing the wholesale acquisition

cost of a drug (we will refer to the notice as a “price increase

notice”). That statutory section further mandates that registered

purchasers who are pharmacy benefit managers give notice to

certain of their customers irrespective of whether those

customers are registered purchasers. Senate Bill No. 17 does not

impose any confidentiality obligations on the recipients of the

price increase notices or restrict their use of the information

provided in the notices.

3

Plaintiff and respondent Amgen Inc. (Amgen) submitted a

price increase notice by e-mail to defendant and appellant

California Correctional Health Care Services (CCHCS) and the

other approximately 170 registered purchasers. When Reuters

News made a request under the California Public Records Act

(CPRA) (Gov. Code, § 6250 et seq.) seeking the price increase

notices CCHCS had received, Amgen filed a petition for a writ of

mandamus blocking disclosure, commonly called a “reverseCPRA” action. Amgen invoked the trade secret privilege under

Evidence Code section 1060, incorporated into the CPRA through

Government Code section 6254, subdivision (k).

Amgen also moved for a preliminary injunction, which the

trial court granted. CCHCS appeals from that order.

While this appeal was pending, the trial court sustained

CCHCS’s demurrer to the mandamus cause of action with leave

to amend. Amgen chose to dismiss its action instead.

On appeal, CCHCS argues the trial court abused its

discretion when it found, among other things, that Amgen had

made a sufficient showing that its price increase notice met the

definition of a trade secret despite its disclosure to more than

170 registered purchasers and an unknown number of customers

of pharmacy benefit managers. CCHCS further contends the

trial court erred in finding that the balance of hardships favored

Amgen. Amgen argues the appeal is moot following its dismissal

of the underlying mandamus action, and that the trial court

correctly ruled that limited disclosure of the price increase notice

to noncompetitors did not deprive the information included in the

price increase notice of its trade secret status.

We exercise our discretion to decide this otherwise moot

appeal. The issues this appeal raises are capable of repetition

4

because there will be future price increase notices. In addition,

the issues are likely to evade review because a pharmaceutical

manufacturer has little reason to continue to prosecute a

mandamus action after obtaining a preliminary injunction for the

60-day period before a price increase becomes public.

On the merits, we agree with CCHCS. Amgen has failed to

demonstrate that once it disclosed its price increase information

pursuant to Senate Bill No. 17, that information retained

whatever status it may previously have had as a trade secret.

First, Amgen has failed to show that its disclosure was limited.

Senate Bill No. 17 and Health and Safety Code section 127677

place no limitation on the registered purchasers’ further

dissemination of Amgen’s price increases during the 60-day

period, including to Amgen’s competitors. Amgen provides no

evidence that the registered purchasers have, or would, maintain

the confidentiality of the price increase notice.

Second, Amgen has failed to explain why, even if the price

increase information were not disseminated to competitors, the

registered purchasers, who sit opposite Amgen at the bargaining

table, are not themselves capable of taking economic advantage of

that information, thus inflicting the very harm Amgen claims a

preliminary injunction would prevent. Indeed, as detailed below,

the purpose of Health and Safety Code section 127677 was to

allow the registered purchasers actively to prepare for upcoming

price increases by, inter alia, finding cheaper alternatives to the

drugs subject to the notices.

Given Amgen’s failure to show its price increase

information was still a trade secret after disclosure to the

registered purchasers, we further conclude that the trial court

5

abused its discretion in finding that the balance of harms favored

Amgen.

Accordingly, we reverse the trial court’s order granting the

preliminary injunction.

FACTUAL AND PROCEDURAL BACKGROUND

A. Health and Safety Code section 127677

The Legislature passed Senate Bill No. 17 in 2017 to

increase transparency into pharmaceutical pricing. The bill’s

author stated, “Expensive drugs and steady price increases are

becoming commonplace with little transparency for astounding

prices,” and explained that Senate Bill No. 17 would “shin[e] a

light on drugs that are having the greatest impact on our health

care dollar.” (Sen. Rules Com., Off. of Sen. Floor Analyses,

Unfinished Business of Sen. Bill No. 17 (2017–2018 Reg. Sess.) as

amended Sept. 5, 2017, p. 8.)

Among other things, Senate Bill No. 17 requires

pharmaceutical manufacturers to provide advance notice of price

increases to statutorily defined purchasers, including state

purchasers and health insurers. (Health & Saf. Code, §§ 127675,

127677; Stats. 2017, ch. 603, § 4.) Supporters of the bill

contended that providing them advance notice of price increases

would allow them to “make changes to formularies; find

alternatives to costly drugs; hold third-party purchasers

accountable for prices and rebates; negotiate larger rebates and

discounts; . . . prevent unnecessarily high payment for drugs,

such as those with short-term price hikes where an alternative

formulation can achieve the same result; and budget for price

increases.” (Assem. Com. on Appropriations, Analysis of Sen. Bill

No. 17 (2017–2018 Reg. Sess.) as amended July 20, 2017, p. 4

6

[statement of San Francisco Culinary, Bartenders, and Service

Employees Welfare Fund]; see also Sen. Health Com., Analysis of

Sen. Bill No. 17 (2017–2018 Reg. Sess.) Mar. 14, 2017, p. 8 [bill

cosponsor Health Access California stated that the advance

notice provisions of bill would give purchasers “time to adjust

formularies, to negotiate price concessions, and to seek other

alternatives, including obtaining alternative formulations of

drugs for which there are therapeutic equivalents”].)

Health and Safety Code section 127677 sets forth the

advance notice provision of Senate Bill No. 17. It requires a

prescription drug manufacturer to provide a minimum of 60 days’

notice to specified recipients of an “increase in the wholesale

acquisition cost of a prescription drug,” subject to certain

limitations not at issue in this appeal.1 (Health & Saf. Code,

§ 127677, subds. (a), (b).) The notice “shall include” the date and

amount of the increase, the current wholesale acquisition cost of

the drug, “a statement regarding whether a change or

improvement in the drug necessitates the price increase,” and, if

applicable, a description of that change or improvement. (Id.,

subd. (c).)

The manufacturer must provide the notice to “each

purchaser described in [Health and Safety Code] Section 127675”

who “registers with the [Office of Statewide Health Planning and

Development] for the purpose of this notification.” (Health & Saf.

1 Notice is required only if the current wholesale

acquisition cost of the drug is more than $40 for a course of

therapy, and if the proposed increase “is more than 16 percent,

including the proposed increase and the cumulative increases

that occurred within the previous two calendar years prior to the

current year.” (Health & Saf. Code, § 127677, subd. (a).)

7

Code, § 127677, subds. (a), (d).) The entities listed in Health and

Safety Code section 127675 are considered “purchasers” for

purposes of Health and Safety Code section 127677 because they

either purchase drugs directly or because they provide

reimbursement for prescription drug purchases by others. (See

Health & Saf. Code, § 127675, subd. (a) [applying chapter to

manufacturers of prescription drugs that are “purchased or

reimbursed” by the listed entities].)

Purchasers described in Health and Safety Code

section 127675 include state purchasers like CCHCS, as well as

“licensed health care service plan[s],” “health insurer[s] holding

a valid outstanding certificate of authority from the Insurance

Commissioner,” and “pharmacy benefit manager[s]” as

defined under Business and Professions Code section 4430,

subdivision (j).2 (Health & Saf. Code, § 127675, subd. (a).)

Pharmacy benefit managers in turn “shall notify [their] large

contracting public and private purchasers of the increase”; a

“ ‘large purchaser’ ” is defined as “a purchaser that provides

coverage to more than 500 covered lives.” (Id., § 127677,

subd. (e).)

Neither Health and Safety Code section 127677 nor any

other provision enacted under Senate Bill No. 17 requires the

purchasers to keep the price increase notices confidential or

otherwise restricts the purchasers’ use of the information in the

notices.

2 A pharmacy benefit manager “manages the prescription

drug coverage” provided by entities such as health insurers and

health care service plans. (Bus. & Prof. Code, § 4430, subds. (a),

(j).)

8

CCHCS provided the trial court with a list of

approximately 170 individuals registered to receive the price

increase notices. The registered recipients represented over 70

public and private entities, such as the California Department of

Public Health, the County of Los Angeles, CalPERS, Blue Shield,

Kaiser Permanente, and CVS Health.3

B. Amgen’s disclosure

On November 15, 2018, Amgen provided notice pursuant to

Health and Safety Code section 127677 to all registered

purchasers, including CCHCS. The notice consisted of an e-mail

and an attachment. The e-mail, marked “Confidential” both in

the subject line and at the beginning of the message text (some

capitalization omitted), stated, “Amgen is providing the enclosed

60 day notification of potential list price actions for select drugs

as required by California SB 17 to all registered purchasers. In

addition to the potential list price increases included in the

attached notification, Amgen also intends to decrease list prices

for select products in 2019.”

The attachment consisted of a chart of 13 drugs, listing for

each the earliest date of a price increase, the current wholesale

acquisition cost, and a range of possible increases in both dollar

amounts and percentages, with zero as the bottom of each range.4

3 It appears from the list provided by CCHCS that

multiple employees of a single entity have registered for receipt

of the price increase notices.

4 Amgen did not provide “a statement regarding whether a

change or improvement in the drug necessitates the price

increase.” (Health & Saf. Code, § 127677, subd. (c)(2).) That

omission is not at issue in this appeal.

9

On December 3, 2018, CCHCS informed Amgen by letter

that it had received a CPRA request from Reuters News seeking

all price increase notices received by CCHCS from November 1 to

November 16, 2018. CCHCS stated, “Due to the confidentiality

disclaimer set forth in [Amgen’s] notification documents, CCHCS

is providing this notice of its intent to disclose such records, in

their entirety, in response to the PRA request.” CCHCS stated it

would disclose the notice unless it received a court order to the

contrary by December 17, 2018. CCHCS stated that it “does not

identify a legal basis for nondisclosure of the price increase

notifications, as the records and its contents were provided

pursuant to a statutory obligation . . . .”

On December 11, 2018, Amgen filed a complaint and

petition for writ of mandate “seek[ing] declaratory and injunctive

relief ” to prevent CCHCS from disclosing its price increase

notice. Amgen claimed its potential price increases constituted

trade secrets privileged under Evidence Code section 1060, which

exempted them from CPRA disclosure under Government Code

section 6254, subdivision (k). Amgen did not challenge the

validity of Senate Bill No. 17 or Health and Safety Code

section 127677.

Amgen’s writ petition was directed solely at protecting the

confidentiality of the proposed price increases disclosed in the

price increase notice; Amgen acknowledged in later filings that

“[i]f Amgen in fact implements an increase in the [wholesale

acquisition cost] for any particular product, that increase can be

disclosed.”

The trial court granted Amgen’s unopposed ex parte

application for a temporary restraining order. Amgen then

moved for a preliminary injunction, which CCHCS opposed.

10

In support of its motion, Amgen submitted a declaration

from an employee, Rachelle Wan (Wan). Wan declared that

“Amgen invests substantial resources in developing its pricing

strategy” and “spend[s] considerable time, effort, and money

determining and properly calibrating Amgen’s prices for its

products, as well as making decisions about which products may

see price changes and what possible changes may be

implemented.” According to Wan, “Amgen diligently protects the

confidentiality” of its drug pricing strategy, including through

employee training and limiting which employees have “access to

information regarding drug prices and potential price changes.”

Wan attested that Amgen released the information to the

registered purchasers “solely for the purpose of complying with”

Health and Safety Code section 127677, and “would not otherwise

disclose this information publicly.”

Wan contended that public disclosure of Amgen’s potential

price changes would put it at a “significant competitive

disadvantage by providing Amgen’s competitors valuable nonpublic information and insights about Amgen’s pricing strategy,

internal decision-making, internal forecasts, and a roadmap for

Amgen’s potential actions with respect to certain of its products.”

Wan opined that a competitor armed with information about

Amgen’s potential future price increases could “(i) undercut

Amgen’s prices, (ii) ‘dump’ competing drugs onto the market in

advance to decrease Amgen’s sales, (iii) start a publicity

campaign against Amgen’s products, or (iv) negotiate sales

contracts with potential clients and strengthen their existing

client base,” all to Amgen’s detriment.

The trial court issued a written ruling in Amgen’s favor on

February 1, 2019. The trial court found that Amgen had

11

demonstrated a reasonable probability of prevailing on the merits

of its writ petition. Citing Wan’s declaration, the trial court

found that Amgen had sufficiently demonstrated that the

information in its price increase notice contained trade secrets.

Specifically, the trial court found that Amgen had made

reasonable efforts to maintain the secrecy of its potential price

changes, and the pricing information had “independent economic

value” in that Amgen “expended time, effort, and money” in

setting the prices and its “pricing strategy provides [Amgen] with

a competitive advantage over competitors.”

The trial court rejected CCHCS’s argument that disclosure

of the pricing information to the registered purchasers vitiated

any trade secret protection, because “the law compelled [Amgen]

to make the disclosure,” and “there is no evidence the pricing

information in the Notice is ‘generally known to the public’ or

[Amgen’s] competitors.” The trial court also rejected CCHCS’s

argument that the CPRA trade secret exemption under

Government Code section 6254, subdivision (k) was permissive,

not mandatory, finding that “without the ability to bring a

reverse-CPRA action, [Amgen’s] trade secret protection would be

left to the discretion of [CCHCS].”

The trial court acknowledged that one of the goals of

Senate Bill No. 17 was to “ ‘improve data transparency’ ”

regarding drug pricing, but found this goal “is not thwarted

through recognizing a manufacturer’s trade secret information

for up to 60 days before the price increase is effectuated.”

Finally, the trial court found that “the balance of relative

harms [in granting the injunction] tips in [Amgen’s] favor.”

Despite Amgen’s disclosure of the pricing information to the

registered purchasers, “there is no evidence those purchasers

12

have not voluntarily complied with [Amgen’s] request to maintain

the confidentiality of the information,” and “the audience to

whom [Amgen] actually disclosed the pricing information was not

[Amgen’s] competitors. Therefore, public dissemination of the

pricing information could be harmful to [Amgen] notwithstanding

[Amgen’s] compliance with SB 17.”

The trial court signed an order granting the preliminary

injunction on March 11, 2019, stating that “Amgen’s Notice or

information contained in Amgen’s Notice shall not be disclosed by

CCHCS to any third parties pursuant to a Public Records Act

request or otherwise.”

5 (Footnote omitted.) The order further

stated that “[n]othing in this Order shall prevent CCHCS from

disclosing a price increase to the Wholesale Acquisition Cost

(WAC) implemented by Amgen for the medications in the Notice.”

CCHCS timely appealed from the grant of the preliminary

injunction. Amgen applied ex parte to stay the trial court

proceedings pending resolution of the appeal, which CCHCS

opposed. The trial court denied the ex parte application.

The trial court subsequently sustained CCHCS’s demurrer

to the mandamus cause of action with leave to amend.6 Amgen

5 CCHCS objected in the trial court to the “or otherwise”

language in the preliminary injunction order, which arguably

bars any public disclosure, and not just disclosure pursuant to a

CPRA request. CCHCS does not renew this challenge on appeal;

we therefore do not address the validity or effect on this appeal of

the “or otherwise” language.

6 The trial court also stayed Amgen’s cause of action for

declaratory relief and sustained the demurrer without leave

to amend to the cause of action for injunctive relief. The

trial court’s rulings on the demurrer are not at issue in this

appeal.

13

did not amend, instead voluntarily dismissing its action, thereby

abandoning its attempt to prevent CCHCS from providing the

price increase notification to Reuters News. Amgen represents

on appeal that the dismissal did not “jeopardize[e] its trade

secrets because it had already implemented the proposed price

changes for the drugs listed in the SB 17 notice.”

DISCUSSION

I. This Appeal Is Not Barred by the Mootness Doctrine

As an initial matter, Amgen argues that its voluntary

dismissal of the underlying action dissolved the preliminary

injunction CCHCS seeks to challenge, and thus the appeal should

be dismissed as moot. As CCHCS notes, however, we “retain[ ]

discretion to decide a moot issue if the case presents an issue of

‘ “substantial and continuing public interest” ’ and is capable of

repetition yet evades review.” (Citizens Oversight, Inc. v. Vu

(2019) 35 Cal.App.5th 612, 615; Conservatorship of Wendland

(2001) 26 Cal.4th 519, 524, fn. 1.)

This is such a case. The issues involved are capable of

repetition. We reasonably can expect that Amgen will provide

price increase notices in the future, and will again attempt to

enjoin disclosure of those notices under the CPRA. Indeed, at the

hearing on CCHCS’s demurrer, Amgen’s counsel admitted,

“[W]e’re going to have the same issue the next time a disclosure

is made and if a C.P.R.A. request is made for that information.”

Counsel continued, “So it becomes a repeated issue.”

The issues raised by this case are not limited to the parties

before us. Amici curiae GlaxoSmithKline LLC and ViiV

Healthcare US state that they “have each been notified by state

agencies on three separate occasions that third parties were

14

seeking disclosure of the advance price increase submissions,”

and both have taken legal action to prevent the public agencies

from disclosing the submissions.

Amgen suggests the dispute at issue in this case is unlikely

to recur because the contents of Amgen’s future price increase

notices may change—for example, Amgen may no longer include

a range of possible price increases, instead listing only a specific

increase—which in turn may affect the trade secret analysis.

Because our resolution of this appeal does not turn on the

contents of Amgen’s notice, we reject this argument.

The issues in this case also are likely to evade review. As

Amgen has made clear, its goal in this litigation was to prevent

disclosure of its proposed price increases for the 60-day period

before Amgen implemented the new prices. Once Amgen

implemented the price increases, it could (and did) dismiss its

reverse-CPRA action without jeopardizing its purported trade

secrets. Nothing prevents Amgen from taking a similar approach

to future price increase notices, in which case the trial and

appellate courts would never reach the merits of the case.7

We further conclude that the interrelation of trade secret

protections and Health and Safety Code section 127677 is an

issue of substantial and continuing public interest, given the

7 Amgen represents that it dismissed the underlying case

not to avoid a ruling on the merits, but out of concern that

changes in the content of its future notices might render any

declaratory relief based on its current notice of limited use. We

do not question Amgen’s motives. We merely note that a

pharmaceutical manufacturer has little incentive to continue

prosecuting an action to protect its price increase notice once it

has implemented the price increases publicly.

15

multiple legal actions taken by drug manufacturers to prevent

disclosure of their price increase notices, the filing of three briefs

by amici curiae in this case, and the fact that the disclosure in

the case was sought by a prominent news organization.

Amgen argues that CCHCS “cannot invoke the

discretionary exception to mootness because it voluntarily chose

not to preserve the status quo pending this appeal” when

it opposed Amgen’s request to stay the trial court proceedings.

Amgen cites Fair v. United States E.P.A. (9th Cir. 1986) 795 F.2d

851 (Fair), which declined to consider a moot appeal when it was

“unlikely that this controversy will arise again between these

parties,” and “[t]he sole reason this case ‘evaded review’ is the

appellants’ failure to take requisite action,” such as posting a

bond along with their request for a preliminary injunction or

seeking a stay of the trial court’s judgment pending appeal.

(Id. at p. 855.)

Fair is inapposite. As set forth above, the controversy at

issue in this case is likely to arise again between these parties,

and the appeal was rendered moot not through CCHCS’s

inaction, but by Amgen’s decision to dismiss the underlying case,

something CCHCS could not have prevented even had it agreed

to stay the proceedings in the trial court.

Amgen’s other cited cases do not support the proposition

that application of the mootness exception depends on the

appellant taking action to preserve the status quo. Instead, the

courts in those cases declined to apply the exception because they

were not persuaded the issues in the cases were likely to recur.

(See Building a Better Redondo, Inc. v. City of Redondo Beach

(2012) 203 Cal.App.4th 852, 867 [no exception to mootness

applied because “the appeal of the judgment in this case presents

16

fact-specific issues that are unlikely to recur”]; Santa Monica

Baykeeper v. City of Malibu (2011) 193 Cal.App.4th 1538, 1551

[declining to apply an “exception for recurring controversies” to

an otherwise moot appeal because the recurrence of issues

concerning a particular construction project in future undefined

projects was speculative].) Amgen also cites Wilson & Wilson v.

City Council of Redwood City (2011) 191 Cal.App.4th 1559, but

that case did not address any exceptions to the mootness

doctrine.

We proceed to the merits of CCHCS’s appeal.

II. The Trial Court Abused Its Discretion by Granting

the Preliminary Injunction

CCHCS raises several contentions on appeal. Two are

dispositive. We agree that the trial court abused its discretion

when it concluded that (1) Amgen had sufficiently shown its price

increase notice is a trade secret despite its disclosure to the

registered purchasers, and (2) Amgen sufficiently demonstrated

it would be harmed if CCHCS disclosed Amgen’s price increase

notice to Reuters News and other members of the public during

the 60-day notice period under Health and Safety Code

section 127677. We assume without deciding that the price

increase information was a trade secret before Amgen disclosed it

to the purchasers.

A. Standard of review

“[A] preliminary injunction is an order that is sought by a

plaintiff prior to a full adjudication of the merits of its claim.”

(White v. Davis (2003) 30 Cal.4th 528, 554, italics omitted.) “To

obtain a preliminary injunction, a plaintiff ordinarily is required

to present evidence of the irreparable injury or interim harm that

17

it will suffer if an injunction is not issued pending an

adjudication of the merits.” (Ibid.)

Trial courts “ ‘evaluate two interrelated factors when

deciding whether or not to issue a preliminary injunction. The

first is the likelihood that the plaintiff will prevail on the merits

at trial. The second is the interim harm that the plaintiff is

likely to sustain if the injunction were denied as compared to the

harm that the defendant is likely to suffer if the preliminary

injunction were issued.’ ” (ITV Gurney Holding Inc. v. Gurney

(2017) 18 Cal.App.5th 22, 28–29 (ITV Gurney).)

“We review a trial court’s application of these factors

for abuse of discretion.” (ITV Gurney, supra, 18 Cal.App.5th

at p. 29.) “However, if the ‘likelihood of prevailing on the merits’

factor depends upon the construction of a statute or another

question of law, rather than evidence to be introduced at trial,

our review of that issue is independent or de novo.” (Marken v.

Santa Monica-Malibu School Dist. (2012) 202 Cal.App.4th 1250,

1261 (Marken).)

B. The California Public Records Act

Under the CPRA, “every person has a right to inspect any

public record” except records that are “exempt from disclosure by

express provisions of law.” (Gov. Code, § 6253, subds. (a), (b).)

“ ‘In other words, all public records are subject to disclosure

unless the Legislature has expressly provided to the contrary.’ ”

(American Civil Liberties Union Foundation v. Superior Court

(2017) 3 Cal.5th 1032, 1038–1039.) “ ‘Public records’ includes any

writing containing information relating to the conduct of the

public’s business prepared, owned, used, or retained by any state

or local agency . . . .” (Gov. Code, § 6252, subd. (e).) The parties

18

do not dispute that the price increase notice that Amgen sent to

CCHCS is a public record.8

Although the CPRA provides a mechanism to challenge an

agency’s refusal to disclose a requested public record (see Gov.

Code, § 6258), it provides no mechanism for a third party to

prevent a public agency from disclosing public records. (Marken,

supra, 202 Cal.App.4th at p. 1267.) “Therefore, third parties

must bring an independent action for declaratory relief or

traditional mandamus if they believe they will be adversely

affected by disclosure.” (Pasadena Police Officers Assn. v. City of

Pasadena (2018) 22 Cal.App.5th 147, 160, fn. 16.) This type of

mandamus action is commonly called a “reverse-CPRA action.”

(National Conference of Black Mayors v. Chico Community

Publishing, Inc. (2018) 25 Cal.App.5th 570, 575, fn. 2.)

Here, Amgen bases its reverse-CPRA action on

Government Code section 6254, which lists over two dozen

categories of documents exempt from disclosure under the CPRA.

Amgen claims its price increase notice is exempt from disclosure

under subdivision (k) of that section, which exempts “[r]ecords,

the disclosure of which is exempted or prohibited pursuant to

federal or state law, including, but not limited to, provisions of

the Evidence Code relating to privilege.” Amgen contends that

subdivision (k) incorporates the trade secret privilege under

8 Amici curiae GlaxoSmithKline LLC and ViiV Healthcare

US argue that Amgen’s notice is not a public record. Because the

parties have not raised this argument, we decline to address it.

(Bullock v. Philip Morris USA, Inc. (2011) 198 Cal.App.4th 543,

572 [“An amicus curiae ordinarily must limit its argument to the

issues raised by the parties on appeal, and a reviewing court need

not address additional arguments raised by an amicus curiae”].)

19

Evidence Code section 1060, which provides that “the owner of a

trade secret has a privilege to refuse to disclose the secret, and to

prevent another from disclosing it, if the allowance of the

privilege will not tend to conceal fraud or otherwise work

injustice.”

The exemptions in Government Code section 6254

“are permissive, not mandatory: They allow nondisclosure but

do not prohibit disclosure.” (Marken, supra, 202 Cal.App.4th

at p. 1262; see Gov. Code, § 6254, 2d to last para. [“This section

does not prevent any agency from opening its records concerning

the administration of the agency to public inspection, unless

disclosure is otherwise prohibited by law”].) In other words, a

government agency has the discretion to invoke an exemption

under Government Code section 6254, but is not required to do

so. Because mandamus cannot be used “ ‘to control an exercise of

discretion’ ”(Marken, at p. 1266), a party bringing a reverseCPRA action must show disclosure is “ ‘otherwise prohibited by

law,’ ” that is, that the government agency lacks discretion to

disclose. (Id. at p. 1270, quoting Gov. Code, § 6254, 2d to last

par.) Parties have brought reverse-CPRA actions, for example,

based on the state constitutional right to privacy (Marken, at

p. 1271) and the requirement under Penal Code section 832.7,

subdivision (a) that peace officer personnel records remain

confidential. (Pasadena Police Officers Assn. v. Superior Court

(2015) 240 Cal.App.4th 268, 285 (Pasadena Police).)

It is not clear to us that the trade secret evidentiary

privilege is a broad prohibition on disclosure akin to the

constitutional right to privacy or the statutory protection for

peace officer personnel records. Evidentiary privileges as a

general matter apply in a “ ‘[p]roceeding,’ ” defined in the

20

Evidence Code as “any action, hearing, investigation, inquest, or

inquiry (whether conducted by a court, administrative agency,

hearing officer, arbitrator, legislative body, or any other person

authorized by law) in which, pursuant to law, testimony can be

compelled to be given.” (Evid. Code, § 901; see also id., § 910

[Evidence Code privileges “apply in all proceedings”].) We are not

aware of any authority holding that the trade secret evidentiary

privilege bars the government from disclosing information

outside of the context of a “proceeding,” nor has Amgen directed

us to any such authority.

Although the Legislature expanded the reach of the

evidentiary privileges by incorporating them into the CPRA as

exemptions, those exemptions, like all exemptions under

Government Code section 6254, are not mandatory. Thus, while

incorporation of the evidentiary privileges into the CPRA grants

the government additional discretionary bases to refuse

disclosure, it does not necessarily follow that the Legislature

intended to allow third parties to assert those privileges outside

the context of a “proceeding” to prohibit the government from

disclosing information subject to those privileges.

In light of the above, it is not a foregone conclusion that the

trade secret privilege under Evidence Code section 1060 is a

proper basis for a reverse-CPRA mandamus action. Given our

holding in Part C of our Discussion, post, that Amgen has failed

to show its price increase notice was a trade secret after it had

been disclosed pursuant to Senate Bill No. 17, however, we need

not decide the question.

21

C. Amgen has failed to show a probability of

success on the merits

CCHCS contends the trial court abused its discretion by

concluding that Amgen had sufficiently shown that its price

increase notice was a trade secret despite its disclosure to the

registered purchasers. We agree.

“ ‘[W]hether information constitutes a trade secret is a

question of fact.’ ” (Global Protein Products, Inc. v. Le (2019)

42 Cal.App.5th 352, 367.) The party claiming the trade secret

privilege under Evidence Code section 1060 bears the burden of

proving its entitlement to that privilege. (Bridgestone/Firestone,

Inc. v. Superior Court (1992) 7 Cal.App.4th 1384, 1393.)

Similarly, a party resisting disclosure under the CPRA bears the

burden of proving an exemption applies. (Pasadena Police, supra,

240 Cal.App.4th at p. 290.) In this case, the record does not

support the trial court’s finding that Amgen had met its burden.

In applying Evidence Code section 1060 and Government

Code section 6254, subdivision (k), the trial court used the trade

secret definition from Civil Code section 3426.1, subdivision (d),

which is part of the Uniform Trade Secrets Act (UTSA) (Civ.

Code, § 3426 et seq.). This was appropriate; the Evidence Code

and case law apply the UTSA definition to the trade secret

privilege under Evidence Code section 1060. (Evid. Code, § 1061,

subd. (a)(1); Stadish v. Superior Court (1999) 71 Cal.App.4th

1130, 1141 & fn. 10.)

Civil Code section 3426.1, subdivision (d) defines a trade

secret as “information . . . that: [¶] (1) Derives independent

economic value, actual or potential, from not being generally

known to the public or to other persons who can obtain economic

value from its disclosure or use; and [¶] (2) Is the subject of

22

efforts that are reasonable under the circumstances to maintain

its secrecy.” “In short, the test for a trade secret is whether the

matter sought to be protected is information (1) that is valuable

because it is unknown to others and (2) that the owner has

attempted to keep secret.” (DVD Copy Control Assn., Inc. v.

Bunner (2004) 116 Cal.App.4th 241, 251 (DVD Copy).)

Our focus here is on the first prong,9 which recognizes the

self-evident principle that a trade secret must, in fact, be secret.

(See 1 Milgrim on Trade Secrets (2009) § 1.03 [“Indispensable to

an effective allegation of a trade secret is proof that the matter is,

more or less, secret. In the absence of secrecy the property

disappears”].) This is because the “intrinsic value” of a trade

secret “is based upon, or at least preserved by, being safeguarded

from disclosure.” (Pillsbury, Madison & Sutro v. Schectman

(1997) 55 Cal.App.4th 1279, 1287; see also DVD Copy Control

Assn., Inc. v. Bunner (2003) 31 Cal.4th 864, 881 [“ ‘Trade secrets

9 Had Amgen voluntarily disclosed its purported trade

secrets to the registered purchasers, Amgen likely would fail to

satisfy the second prong of the trade secret definition because it

would not have made reasonable efforts to maintain secrecy.

(See, e.g., Whyte v. Schlage Lock Co. (2002) 101 Cal.App.4th 1443,

1454–1455 [manufacturer did not make reasonable efforts to

maintain secrecy of information disclosed to customer without a

secrecy agreement in place].) The trial court ruled, however, that

Amgen’s disclosure in this case was “compelled” by the

requirements of Health and Safety Code section 127677, the

implication being that Amgen did everything it reasonably could

to maintain secrecy short of violating the law. Because we

conclude that Amgen has failed to make a sufficient showing to

satisfy the first prong, we do not decide whether Amgen’s

disclosure was “compelled” or what impact, if any, such a finding

might have on the second prong of the trade secret definition.

23

are a peculiar kind of property. Their only value consists in their

being kept private’ ”].)

Thus, “[p]ublic disclosure, that is the absence of secrecy, is

fatal to the existence of a trade secret. ‘If an individual discloses

his trade secret to others who are under no obligation to protect

the confidentiality of the information, or otherwise publicly

discloses the secret, his property right is extinguished.’ ” (In re

Providian Credit Card Cases (2002) 96 Cal.App.4th 292, 304

(Providian Credit Card), quoting Ruckelshaus v. Monsanto Co.

(1984) 467 U.S. 986, 1002.) In Providian Credit Card, for

example, the court held that telemarketing scripts are not trade

secrets once they are read to customers. (Providian Credit Card,

at p. 305.)

Amgen does not dispute that it disclosed its price increase

notice to over 170 registered purchasers. The disclosure did not

stop there, because those registered purchasers who were

pharmacy benefit managers were required by statute also to

inform their “large contracting public and private purchasers,”

whether or not those contracting purchasers themselves were

registered.

10 (Health & Saf. Code, § 127677, subd. (e).)

Amgen provided no evidence that the recipients of the price

increase information, whether registered purchasers or

purchasers contracting with pharmacy benefit managers, were

10 Senate Bill No. 17 itself contains no limitation on the

number of purchasers entitled to receive the price increase notice,

so long as they either meet the statutory definition and register,

or are “large” purchasers that are contracting with a pharmacy

benefit manager that is registered. As noted earlier, “large”

purchasers are those that “provide[ ] coverage to more than 500

covered lives.” (Health & Saf. Code, § 127677, subd. (e).)

24

under any contractual obligation to maintain its confidentiality,

nor does Senate Bill No. 17 impose any confidentiality

obligations.11 In contrast, other provisions of Senate Bill No. 17

expressly impose confidentially requirements for certain

information disclosed to the government. For example, Health

and Safety Code section 1367.243 (Stats. 2017, ch. 603, § 1),

which requires health care service plans annually to report

information regarding pharmaceuticals dispensed under the

plans (id., subd. (a)(2)), states that “the department shall keep

confidential all of the information provided to the department

pursuant to this section, and the information shall be protected

from public disclosure.” (Id., subd. (f).) No such language

pertaining to the price increase notices appears in Senate Bill

No. 17.

Given the price increase notice’s disclosure to an unknown

number of recipients, none of whom was bound to keep it in

confidence, it would not appear that Amgen’s price increase

notice could be called “secret.”

The trial court found to the contrary, relying on the

proposition that disclosed information nonetheless may retain

trade secret status so long as it is not “generally known to the

public or to other persons who can obtain economic value from its

disclosure or use.” (Civ. Code, § 3426.1, subd. (d)(1); see Masonite

Corp. v. County of Mendocino Air Quality Management Dist.

(1996) 42 Cal.App.4th 436, 451, fn. 11 (Masonite) [“limited

11 At the hearing on Amgen’s preliminary injunction

motion, Amgen’s counsel suggested Amgen has “confidentiality

expectations and obligations” with its purchasers, but Amgen

has not identified any evidence in the record supporting this

contention.

25

disclosure to noncompetitors does not result in loss of the trade

secret privilege where . . . the holder of the privilege made

reasonable efforts to maintain secrecy”].)

The trial court found “no evidence the pricing information

in the Notice is ‘generally known to the public’ or [Amgen’s]

competitors.” The trial court further noted “there is no evidence

those purchasers have not voluntarily complied with [Amgen’s]

request to maintain the confidentiality of the information,”

presumably referring to Amgen’s placing the term “Confidential”

in both the subject line and text of the e-mail transmitting the

price increase notification.

In so concluding, the trial court misapplied the burden of

proof and abused its discretion. As the authorities cited above

indicate, disclosure to others, who have no obligation to maintain

confidentiality, will destroy a trade secret. As the party asserting

the trade secret privilege, it was Amgen’s burden to establish

that its price increase notice remained confidential despite

disclosure to the registered purchasers and “large” customers of

pharmacy benefit managers. At a minimum, this would have

required some evidence that the purchasers did not, and would

not, disclose the information to the general public or to those

“who can obtain economic value from its disclosure or use.” (Civ.

Code, § 3426.1, subd. (d)(1).) Amgen presented no evidence on

this issue. The trial court instead relied on a purported lack of

evidence of further disclosure, thus improperly shifting the

burden of proof to CCHCS.

Amgen argues that at the preliminary injunction stage, it

need only show “ ‘a reasonable probability’ that it would prevail

on the merits.” This is so, but in the absence of any evidence

whatsoever that Amgen’s price increase notice maintained its

26

confidentiality after disclosure to the registered purchasers and

others, the trial court had no basis to find Amgen had a

probability of prevailing on that critical issue, much less a

reasonable one.

The trial court’s finding that Amgen’s disclosure was

“compelled” does not affect our conclusion. The question here is

not why Amgen disclosed its price increase notice, but whether

that disclosure rendered the notice no longer confidential.

Even assuming arguendo that the registered purchasers

did not disseminate the price increase notice further, we would

conclude that Amgen has failed to show that the notice

maintained its purported trade secret status. Amgen has not

explained why the registered purchasers, who directly or

indirectly sit on the opposite side of the negotiating table from

Amgen, are not themselves “persons who can obtain economic

value” from advance knowledge of Amgen’s prospective pricing

information. (Civ. Code, § 3426.1, subd. (d)(1).) To paraphrase

Amgen’s declarant Wan, a large purchaser negotiating deals for

Amgen’s and its competitors’ products presumably would greatly

value insight into Amgen’s “pricing strategy, internal decisionmaking, internal forecasts,” and “roadmap[s] for Amgen’s

potential actions.” Thus, whatever benefit Amgen may have

derived from keeping secret its future price increases would have

been lost once those increases were disclosed to the purchasers,

even if the purchasers used the information solely for their own

purposes without disclosing it further.

Among other things, purchasers aware of upcoming price

increases can seek less expensive alternatives from Amgen’s

competitors, to the purchasers’ economic benefit and Amgen’s

detriment. Indeed, the legislative history of Senate Bill No. 17

27

indicates that this was precisely what the Legislature intended

to happen. (See Sen. Health Com., Analysis of Sen. Bill No. 17

(2017–2018 Reg. Sess.) Mar. 14, 2017, p. 8 [advance notice

provision “gives purchasers . . . time . . . to seek other

alternatives, including obtaining alternative formulations of

drugs for which there are therapeutic equivalents”]; Assem. Com.

on Appropriations, Analysis of Sen. Bill No. 17 (2017–2018 Reg.

Sess.) as amended July 20, 2017, p. 4 [“the advance price

notification will help [the purchaser] . . . find alternatives to

costly drugs . . . and prevent unnecessarily high payment for

drugs, such as those with short-term price hikes where an

alternative formulation can achieve the same result”].)

In short, Amgen has failed to explain how its purported

trade secret maintained its confidentiality and concomitant value

to Amgen when it was disclosed to over 170 purchasers who had

the incentive to use the information to their benefit and Amgen’s

detriment, and were not subject to any restrictions on using or

further disseminating the information.

Amgen’s cited cases, some of which the trial court relied

upon as well, are unavailing. We discuss each in turn.

Masonite, supra, 42 Cal.App.4th 436 held that air

emissions information submitted to government regulators

did not lose trade secret protection when those regulators, who

were statutorily bound to maintain the confidentiality of the

information, inadvertently disclosed the information to two

environmental organizations.12 (Id. at pp. 450–451.) Thus,

12 Masonite claimed trade secret status under statutes

specific to air emissions information submitted to regulators,

none of which is applicable to this case. (See Gov. Code, § 6254.7;

28

despite the disclosure, the trade secret holder could prevent

another environmental organization from obtaining the

information through a public records request. (Id. at pp. 451,

456.)

The Masonite court reasoned, “We do not equate limited,

unsanctioned acquisition of confidential information by a third

party, such as occurred here, with more general, authorized

dissemination to the public or competitors which results in loss of

trade secret privileges. The public agencies which received

the . . . information were not entitled to distribute it further, so

Masonite maintained the protection afforded by law to prevent

disclosure of designated trade secrets to the general public

and competitors.” (Masonite, supra, 42 Cal.App.4th at p. 451,

fn. omitted.) Although not applicable in that case, the Masonite

court found the trade secret definition in Civil Code

section 3426.1, subdivision (d), the definition at issue in the

instant case, supports the proposition that “limited disclosure to

noncompetitors does not result in loss of the trade secret privilege

where . . . the holder of the privilege made reasonable efforts to

maintain secrecy.” (Masonite, at p. 451, fn. 11.) It is for this

proposition that Amgen cites Masonite.

The government’s inadvertent disclosure in Masonite is not

analogous to Amgen’s disclosure under Senate Bill No. 17.

Masonite stands for the proposition that the government’s

erroneous disclosure of information that it is statutorily bound to

keep confidential does not convert the information into a public

Health & Saf. Code, § 44346; Masonite, supra, 42 Cal.App.4th at

pp. 450–451.)

29

record, at least when the inadvertent disclosure is “limited” and

made to “noncompetitors.”

Here, Amgen, not the government, disclosed the price

increase notice to the registered purchasers. Amgen did so in

compliance with a statutory regime that, far from protecting

Amgen’s price information, required that it be disclosed to a long

list of potentially adverse recipients with no limitations on those

recipients’ use or further dissemination of the information.

Amgen cannot claim to have been unaware of the possible

consequences of its disclosure, including the loss of trade secret

protections; trade groups opposed Senate Bill No. 17 precisely

because it “requires the disclosure of commercially sensitive

pricing information” “without confidentiality protections.”

(Assem. Com. on Appropriations, Analysis of Sen. Bill No. 17

(2017–2018 Reg. Sess.) as amended July 20, 2017, p. 4

[summarizing joint letter of Pharmaceutical Research and

Manufacturers of America, Biotechnology Innovation

Organization, California Life Sciences Association, and Biocom].)

Also, as we have explained, Amgen has failed to make any

showing that the registered purchasers were not akin to

competitors who could derive economic value from Amgen’s

pricing information, or that the purchasers would not further

disseminate Amgen’s price increase notice. Indeed, the pharmacy

benefit managers were required to disseminate it further to their

“large” contracting purchasers. Thus, to the extent information

may remain a trade secret despite “limited disclosure to

noncompetitors,” such as the small number of environmental

organizations in Masonite, Amgen has not shown that principle

applies here.

30

Amgen also quotes DVD Copy, supra, 116 Cal.App.4th 241,

which stated, “Publication on the Internet does not necessarily

destroy the secret if the publication is sufficiently obscure or

transient or otherwise limited so that it does not become

generally known to the relevant people, i.e., potential competitors

or other persons to whom the information would have some

economic value.” (Id. at p. 251.) DVD Copy does not in fact apply

this principle, concluding instead that the evidence indicated the

Internet disclosure in that case likely reached millions of people.

(Id. at p. 252.) Thus, DVD Copy gives no guidance as to what it

means for a publication to be “sufficiently obscure or transient or

otherwise limited” that it does not destroy trade secret

protections. Also, as we have explained, Amgen has failed to

show that the registered purchasers were not “other persons to

whom the information would have some economic value.” (Id. at

p. 251.) DVD Copy therefore does not undercut our conclusion

that Amgen has failed to show that its price increase notice

remained a trade secret after disclosure to the registered

purchasers.

Amgen cites American Defense Systems, Inc. v. Southern

California Gold Products, Inc. (C.D. Cal. May 14, 2009,

No. CV 07-7134) 2009 WL 10671854, at page *3 for the

proposition that “limited disclosure for [a] specified purpose

‘cannot be considered tantamount to placing plaintiff ’s trade

secrets in the public domain.’ ” In that case, however, the trade

secret holder had a contract with the federal government “which

explicitly prevent[ed] general or public disclosure of trade

secrets.” (Ibid.) Thus, the trade secret holder providing its

products to the government under the terms of that contract did

31

not vitiate its trade secret protections. (Ibid.) Amgen has

demonstrated no such obligation of confidentiality here.

Amgen cites Morlife, Inc. v. Perry (1997) 56 Cal.App.4th

1514, 1522 (Morlife) for the proposition that information that is

“ ‘not readily ascertainable, but only discoverable with great

effort’ ” can be a trade secret. Morlife did not concern the legal

effect of the disclosure of trade secrets; instead, it addressed

whether the information in a roofing company’s customer list was

“ ‘readily ascertainable’ through public sources” such that it

could not constitute a trade secret in the first place. (Id. at

pp. 1521–1522.) Assuming arguendo that principle applies here,

it is of no help to Amgen. Even if Amgen’s price increase notice

were not readily ascertainable by the general public (although

Amgen provided no evidence of this), it was certainly

ascertainable by the purchasers who received the notice without

any limitation on using that information to their economic

advantage.

Amgen contends in its supplemental briefing and

emphasized at oral argument that recipients of the price increase

notice did in fact have “a duty to maintain the secrecy and limit

use of Amgen’s trade secrets” under the trade secret

misappropriation statutes. (See Civ. Code, § 3426.1,

subd. (b)(2)(A)(ii) [misappropriation includes “[d]isclosure or use

of a trade secret” when the trade secret was “[a]cquired under

circumstances giving rise to a duty to maintain its secrecy or

limit its use”].) Amgen argues that CCHCS “recognized this

duty” when it sent Amgen the letter informing Amgen of Reuters

News’s CPRA request. Amgen further argues that Senate Bill

No. 17 “contemplates that CCHCS will use price increase

notifications for only a specific, limited purpose,” namely to

32

“ ‘understand and plan for specific price increases.’ ” (Quoting

Assem. Com. on Appropriations, Analysis of Sen. Bill No. 17

(2017–2018 Reg. Sess.) as amended July 20, 2017, p. 3.)

As we have discussed, nothing in Senate Bill No. 17

requires purchasers to maintain the confidentiality of price

increase notices. The fact that CCHCS, in light of Amgen’s

unilaterally marking its price increase notice confidential,

notified Amgen before responding to the CPRA request, does not

establish that CCHCS was obligated to do so. It is telling that in

that same letter, CCHCS stated that it had “not identif[ied] a

legal basis for nondisclosure,” and intended to disclose the price

increase notice absent a court order. CCHCS’s letter cannot be

read to concede any confidentiality obligation. Even if it could,

we would not be bound by any such concession given the absence

of any supporting language in Senate Bill No. 17.

Furthermore, there is no language in Senate Bill No. 17

limiting the purposes for which recipients may use the price

increase notice. Indeed, reading limitations into the statutory

scheme would be inimical to its purpose, given that one of the

intended goals of Senate Bill No. 17 was to allow the purchasers

to find less expensive alternatives for the drugs listed in the price

increase notices. This would include use of the information in the

price increase notice in negotiations to accomplish that goal,

including negotiations between purchasers and Amgen’s

competitors.

Amgen cites federal cases in support of its

misappropriation argument. All these cases are inapposite,

because they involve confidentiality obligations arising from

agreements or express statutory mandates. (See Jerome Stevens

Pharmaceut. v. Food & Drug. Admin. (D.C. Cir. 2005) 402 F.3d

33

1249, 1252 [federal law prohibited disclosure of trade secrets at

issue]; Kramer v. Secretary, United States Dept. of Army (2d. Cir.

1980) 653 F.2d 726, 730 [plaintiff alleged “government employees

agreed to honor her demand that the information, once disclosed

[in an effort to obtain a government contract], be treated in

confidence”]; Inteliclear, LLC v. ETC Global Holdings (C.D. Cal.

Apr. 5, 2019, No. 2:18-cv-10342) 2019 WL 3000648, at p. *3

[under license agreement, “Defendant had a duty to maintain in

confidence Plaintiff ’s intellectual property”]; BladeRoom Group

Ltd. v. Emerson Elec. Co. (N.D. Cal. 2018) 331 F.Supp.3d 977,

984 [defendant’s written agreement to use plaintiff ’s information

“ ‘only for the purpose of internal evaluation of whether to enter

into a business relationship’ ” gave “ ‘rise to a duty to maintain

secrecy’ ”].)

Amgen argues that a holding that it lost trade secret

protection by complying with Health and Safety Code

section 127677 “raises significant due process and other

constitutional questions that this Court should avoid,” such as

whether disclosure constitutes an unconstitutional taking of

property. (See People v. Garcia (2017) 2 Cal.5th 792, 804

(Garcia) [under the doctrine of constitutional avoidance, “a

statute should not be construed to violate the Constitution ‘ “ ‘if

any other possible construction remains available’ ” ’ ”].)

We note again that Amgen has not challenged the

constitutional validity of Senate Bill No. 17, either on appeal or

below, but instead relies solely on Evidence Code 1060 and

Government Code section 6254, subdivision (k) as a basis to bar

disclosure under the CPRA. Even assuming arguendo that our

interpretation of Senate Bill No. 17 implicates constitutional

questions, Amgen has failed to persuade us of another

34

“ ‘ “ ‘possible construction’ ” ’ ” (Garcia, supra, 2 Cal.5th at p. 804)

of the relevant statutes. Amgen urges us to read into Senate Bill

No. 17 confidentiality obligations and limitations on recipients’

use of the price increase notice that the language and intent of

the bill do not support. Absent those obligations and limitations,

we must conclude, based on the plain language of Civil Code

section 3426.1, subdivision (d) and case law interpreting it, that

Amgen has failed to show a likelihood of prevailing on its claim

that its price increase notice satisfied the statutory definition of a

trade secret once it was disclosed to the registered purchasers

and others. We will not, for the sake of avoiding potential

constitutional questions, import confidentiality obligations and

limitations into a statute that is not susceptible to such an

interpretation.

Amgen also argues that interpreting Senate Bill No. 17 as

we have would “create perverse incentives encouraging

non-compliance.” To the extent Amgen claims that the advance

notice requirement is bad policy, that is for the Legislature to

decide. We note again that the Legislature enacted Senate Bill

No. 17 over the pharmaceutical manufacturers’ express objection

that the bill “requires the disclosure of commercially sensitive

pricing information” “without confidentiality protections.”

(Assem. Com. on Appropriations, Analysis of Sen. Bill No. 17

(2017–2018 Reg. Sess.) as amended July 20, 2017, p. 4.) One

could view Amgen’s preliminary injunction motion as an attempt

to obtain from the courts an outcome that the Legislature

apparently rejected.

The parties debate at length whether the Legislature

intended the price increase notices to be publicly available

beyond those statutorily entitled to receive it. Whatever the

35

Legislature’s intent, the effect of disclosure to the registered

purchasers and customers of pharmacy benefit managers was the

loss of secrecy essential to meeting the first prong of the UTSA

trade secret definition. If the Legislature did not intend that

effect, the Legislature may of course address the issue. Again, to

the extent Amgen urges that we impose limitations on

disseminating the price increase information once received by the

registered purchasers and “large” pharmacy benefit manager

customers, that is the Legislature’s prerogative and not a matter

for judicial fiat.

D. The trial court abused its discretion by

concluding that the balance of harms favored

Amgen

The trial court’s balancing of harms relied on the same

reasoning as did its analysis of the trade secret claim: Because

Amgen had disclosed its pricing information only to the limited

number of registered purchasers, and not to the general public or

its competitors, further dissemination of the information would

be harmful to Amgen during the 60-day period defined in

Senate Bill No. 17, tipping the balance of harms in its favor.

As set forth above, Amgen has failed to show that

disclosure to the registered purchasers and pharmacy benefit

manager customers had not already placed Amgen’s price

increase notice in the hands of those who would use it to their

advantage and Amgen’s detriment, thus causing the very harm

Amgen sought to prevent with its preliminary injunction. The

trial court’s finding that “the audience to whom [Amgen] actually

disclosed the pricing information was not [Amgen’s] competitors”

did not factor in this patent consequence of Amgen’s disclosure or

that this consequence was what the Legislature intended in

36

enacting Health and Safety Code section 127677 in the first

place.

Amgen’s claim of harm is undercut further by the fact that

it ultimately discloses its purported trade secret publicly when it

implements its price increases 60 days after notifying the

registered purchasers. To the extent a competitor can divine

“pricing strategy, internal decision-making, internal forecasts,”

and “roadmap[s] for Amgen’s potential actions” from price

listings, as Wan asserted, the competitor can do so once the

prices are public. Similarly, at that time the competitor can

engage in the conduct predicted by Wan, including undercutting

Amgen’s prices, dumping competing drugs on the market,

starting a publicity campaign against Amgen, or negotiating

deals with Amgen’s customers. Amgen has failed to explain the

benefit of delaying these purported consequences for 60 days,

particularly when during that period, the registered purchasers

can use the price increase notice without limitation to Amgen’s

detriment.

We also observe that Amgen’s rival drug manufacturers are

subject to the same advance notice requirements. Thus,

whatever competitive disadvantage Amgen might suffer by

disclosing its prices early is shared by its rivals. Amgen argues

that some of its competitors may not comply with the notice

requirements, but this is pure speculation.

Amgen contends that some of the information in its price

increase notice may not become public after 60 days and

therefore should be entitled to protection. Wan stated in her

declaration, “Pursuant to SB 17, Amgen may implement the price

increases at any point after notice or Amgen may decide not to

implement the price increases at all. Furthermore, Amgen may

37

increase prices by any amount within the specified range

contained in Amgen’s notices.”

Assuming arguendo Wan correctly characterized the

requirements of Senate Bill No. 17, she provided no evidence

suggesting that Amgen actually has, or would, avail itself of

these options. Her assertions appear to us to be mere argument.

They also appear to be internally inconsistent. Given Amgen’s

concern for the harm public dissemination of its pricing may

cause, it seems unlikely Amgen would announce any prices it was

not going to implement within 60 days. Indeed, were Amgen to

disclose a proposed price increase and later retreat from

implementing that increase, that conduct could call into question

Amgen’s claim that it had made “efforts that are reasonable

under the circumstances to maintain . . . secrecy.” (Civ. Code,

§ 3426.1, subd. (d)(2).)

Amgen argues that “public disclosure of trade secret

information constitutes irreparable harm as a matter of law.”

This argument presupposes that Amgen’s price increase notice

remained a trade secret after its disclosure to the registered

purchasers and customers of pharmacy benefit managers. As we

have already explained, we disagree with that assertion.

The order granting the preliminary injunction is reversed.

California Correctional Health Care Services is awarded its costs

on appeal.