 inversecondemnation.com 
Who likes paying a lot for prescription medications? Anyone?
Oregon sure didn't like it, and it was going to do something about it. In 2018, it adopted a statute the "Prescription Drug Price Transparency Act," which requires manufacturers to report to the State information about costs, revenues, and prices of certain prescription drugs. The Act also requires the State to disclose, in the public interest, much or all of that information to the public, provided that information is not a trade secret. Oregon has not actually disclosed any trade secrets.
An industry association (PhARMA) sued, asserting inter alia, a facial takings claim. The District Court granted PhRMA summary judgment, concluding that the publication of trade secrets under the public-interest exception is a taking requiring compensation.
In Pharmaceutical Research and Manufacturers of America v. Stolfi, No. 24-1570 (Aug. 26, 2025), the U.S. Court of Appeals for the Ninth Circuit reversed.
The court first held that PhARMA had associational standing because its members were injured in fact by the Act, even though Oregon has not actually invoked the public interest exception and publicly disclosed trade secrets. There's a credible threat of enforcement and the public interest exception (and disclosure) could be triggered by an agency determination that disclosure is nonetheless required. "We conclude that the risk of future injury is sufficiently nonspeculative to establish injury in fact." Slip op. at 58.
Next, the court concluded the takings claim was ripe. The Article III component of ripeness was satisfied by the court's prior determination that PhARMA had standing. Regarding final decision (prudential) ripeness, the court held that because the challenge here is facial ("a declaration stating that every disclosure under the public-interest exception...constitutes an unconstitutional taking"), the ripeness question is "properly addressed as part of the merits," and thus the court was willing to address the issue.
Next, the court rejected PhARMA's claim that the takings claim should be evaluated under Lucas's economic wipeout theory. Trade secrets are intangible personal property and not land, and the record here is not clear that disclosure of trade secrets would render the trade secret totally useless.
And most importantly, in Ruckelshaus v. Monsanto Co., 467 U.S. 986 (1984), the only case in which the Supreme Court addressed takings of trade secrets, the Court applied the Penn Central standard. Applying Penn Central, the Ninth Circuit concluded that PhARMA's members could not satisfy the "interference with distinct [or reasonable] investment-backed expectations" because this is a highly-regulated environment in which owners of trade secrets have to know that they are entering a field in which trade secrets are not, you know, truly secrets. This has always seemed like a bootstrap rationale to us, where allegedly overregulation of activity is justified on the basis of the overegulation itself. But the court concluded otherwise:
As a starting point, then, manufacturers ought to be aware of the heightened possibility that regulations may be enacted requiring disclosure of the exact type of information that may be commonly claimed as a trade secret under HB 4005.
Slip op. at 66.
Next, the Ninth Circuit sidestepped Palazzolo's conclusion that an owner does not forfeit a takings claim simply because of the existence of a regulatory scheme. Some form of trade secret restrictions have been in place in Oregon since 1987, so it is your fault, PhARMA members, that you got into this highly regulated field:
Oregon law has precluded trade secret misappropriation claims based on the public disclosure of trade secrets where “the public interest requires disclosure” since the State first adopted the Uniform Trade Secrets Act in 1987. See 1987 Or. Laws Ch. 537 § 8(3) (Oregon Uniform Trade Secrets Act, now codified at Or. Rev. Stat. § 646.473(3)); 1973 Or. Laws Ch. 794 § 11 (Oregon’s Public Records Law, now codified at Or. Rev. Stat. § 192.345(2)). The State’s general practice of disclosing trade secrets in furtherance of the public interest further diminishes manufacturers’ reasonable expectations of strict confidentiality in all cases.
Slip op. at 67.
Finally, Oregon (unlike the federal government in Monsanto) had provided no assurances of confidentiality. If you want to play in our market, says Oregon, you have to play by our rules. And if you don't like it, go sell your lifesaving drugs somewhere else:
However, just as in Monsanto, the benefit provided to manufacturers is the ability to sell a highly regulated product in a government-regulated market. In Monsanto, the Supreme Court explained that in “those situations where [Monsanto] deems the [trade secret] data to be protected from disclosure more valuable than the right to sell in the United States,” it can “decide to forgo registration in the United States and sell a pesticide only in foreign markets.” 467 U.S. at 1007 n.11. Here, manufacturers have a similar choice. If they decide the value of protecting their trade secrets from potential disclosure to be more valuable than the right to sell in Oregon, they can decide to forego pharmaceutical sales in the state and limit their product sales to other states and foreign markets.
Slip op. at 70-71.
There's a reason why the "investment-backed expectations" factor is the most criticized by critics of Penn Central. Yeah, it was made up whole cloth by a law review article and sua sponte inserted into the opinion without the benefit of briefing and arguments (as Professor Gideon Kanner explained), but more critically, it is mostly a device which is deployed to allow a court to conclude no taking even where the other two Penn Central factors cut in favor of the owner. After all, what industry or use of property isn't regulated these days? Can't think of any. The investment-backed expectations seems more like a get-out-of-jail free card than a basis for principled analysis.
For good measure, the Ninth Circuit also held that the other two Penn Central factors favor Oregon. There's no showing that disclosure would wipe out the use or value of every secret disclosed (so shame on you, PhARMA for bringing this as a facial challenge, chided the court), and the character of the government action is more like a readjusting of the ups-and-downs of economic life than an exercise of eminent domain. Slip op. at 75.
We've written previously on how courts screw up the character factor in particular, and rather than repeat it here, we'll just refer you to history.
Pharmaceutical Research & Manufacturers of America v. Stolfi, No. 24-1570 (9th Cir. Aug. 26, 2025)
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