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In the latest struggle over pharmaceutical costs, Pfizer has filed a lawsuit against a Texas state agency for releasing Medicaid rebate data to a pair of state lawmakers, claiming the move violated federal and state laws that protect its confidential information.

By releasing the data, Pfizer argued the Texas Health and Human Services Commission compromised “valuable and commercially sensitive trade secrets” that could hurt its ability to compete with rivals, according to the lawsuit, which was filed in federal court in Austin, Texas, on Thursday. “Small differences in pricing and rebates can make the difference between success and failure,” the lawsuit stated.

The drug maker also contended that disclosure can lead to “uniform pricing” that could harm Medicaid. How so? Pfizer maintained that, if other large purchasers were to know about — and then demand — the same prices offered to the Texas Medicaid program, the company “would not be able to provide such pricing and rebates to every entity due to their unique differences in size, market and particular needs.”


Drug makers are required to pay rebates to Medicaid. But without confidentiality for specific pricing data, “Medicaid would be unable to obtain such preferential discounts and rebates, which would dramatically increase the costs of the Medicaid program to both the states and the federal government,” Pfizer argued. And the drug maker added that “the low rates that Texas Medicaid enjoys would disappear.”

The lawsuit arises as a national debate ensues over prices for prescription drugs. Rising costs — for new and old drugs alike — have inflamed the public and put the pharmaceutical industry on the defensive. Meanwhile, state lawmakers and agencies are looking for ways to lower costs in hopes that needed medicines do not become budget busters.


In Texas, lawmakers have sought to determine these costs. And Charles Schwertner, who chairs the state Senate Committee on Health and Human Services, earlier this year asked the state agency for information on rebates that drug makers provide the state Medicaid program. Initially, the state agency declined to release the data.

But last July, Texas Attorney General Ken Paxton determined the data could be released. This prompted Pfizer to file a lawsuit against the attorney general, claiming the disclosure violated state law and was never notified its data may be released. Meanwhile, the state agency also released the data to the chair of the state Senate Finance Committee who, in August, also requested the information.

“Right now, it’s somewhat nebulous and opaque with not having sure certainty regarding what actually is costing the taxpayers of Texas,” Schwertner told the Texas Standard last month after Pfizer filed its first lawsuit. “So I’m trying to find out the balance between what type of prescription drug benefit plan and the cost of it, and how to manage it more effectively and efficiently.”

Although the cat is out of the bag, Pfizer asked the court for a temporary restraining order and a preliminary injunction to prevent the Texas Health and Human Services Commission from releasing data in response to any additional requests. The drug maker also wants to be notified in the event that other requests are made.

“The more legislators and staffers gain access to such information, the more difficult it is to secure the information, identify the source of leaks, and sue the correct source,” the suit stated.

A spokeswoman for the Texas Health and Human Services Commission wrote us that the agency is “aware of the suit and will respond at the appropriate time.”

This is likely to be a closely watched case, given the tremendous interest in pharmaceutical costs and the mystery surrounding rebates. If Pfizer prevails, the intrigue is likely to continue.