Minnesota “Transparency” Legislation Threatens Manufacturers’ Competitiveness

Protection of trade secrets and other forms of intellectual property are a fundamental necessity for manufacturers to succeed in today’s intensely competitive global marketplace. No industry should be forced to turn over to the government highly sensitive, proprietary information that tears down longstanding intellectual property protections and weakens their ability to innovate and grow their businesses.

Yet, there are proposals currently in the Minnesota state legislature that would require manufacturers in the pharmaceutical industry to disclose historically protected confidential information about their businesses, such as research and development costs, pricing strategies and production and marketing expenses. This information lies at the very heart of the operational strategy of any business in any industry and is a critical component for success, and the unintended consequences of transparency legislation would put Minnesota manufacturers at a serious disadvantage, undercutting their ability to innovate and compete.

Trade secrets, which include pricing information, are protected by both federal and Minnesota law. Forcing companies to make this information public would fundamentally alter the marketplace and allow competitors to piggy-back on another’s innovation, effectively nullifying the stringent intellectual property protections the United States has enshrined to encourage innovation. This would have dramatic consequences for the biopharmaceutical industry and have a chilling effect on medical innovation by creating disincentives for companies to invest in new medicines.

Manufacturing is critical to Minnesota’s economy. Manufacturers produce more than 14 percent of the state’s total output and employ 314,000 people. Manufacturing jobs are also higher-paying, with an average compensation of more than $70,000 compared to other nonfarm businesses that average $48,898.

But in our industry, you can’t compete if you can’t innovate. The transparency proposals in the Minnesota legislature would set a dangerous precedent for all manufacturers, who are constantly thinking of new ways to innovate, grow their businesses and serve their customers. Forcing any industry to hand over proprietary information that hinders their ability to innovate goes against the entrepreneurial spirit that makes manufacturing in America great. For the biopharmaceutical industry, increased transparency legislation would kill competition and stifle innovation, impeding the ability of companies to bring new, lifesaving medicines to market all while failing in its intent to contain health care costs.

Policymakers in Minnesota and at the federal level should work to create policies that help innovators attract and retain investment. The NAM opposes any efforts that would invalidate longstanding intellectual property and trade secrets protections and force manufacturers of medicines to heed new government-driven demands that are contrary to basic free market principles.

Robyn Boerstling

Robyn Boerstling is the Vice President of Infrastructure, Innovation and Human Resources Policy at the National Association of Manufacturers.

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