Secrets of Transparency
Biotech, pharmaceutical and medical device developers, as well as the lawyers who represent them, gathered recently at a Kentucky Derby party in Plymouth Meeting.
Amid the games, faux betting, and interesting displays of new genetic technologies and services, I talked with researchers and chief executive officers about some fascinating projects underway.
It didn’t seem like a natural pairing for a national open-records expert to be attending a life sciences’ gathering, and it prompted curious questions about my work as a transparency lawyer, namely “What is Transparency Law?” After explaining that I obtain public records for journalists, hedge funds and big pharma using open records laws, the next question was usually one of astonishment.
“Are you are telling me that when we submit documents to the FDA or the National Institutes of Health, my competitors, or universities, or the media can see that information?” a bio-tech chief executive officer asked me, his pitch rising each time it dawned on him that another group of people could potentially obtain some of his companies’ records.
In short, the answer is yes.
On the federal side, the Freedom of Information Act, governs the release of government records among the nation’s 97 federal agencies. All 50 states also have laws that govern the release of public records, which collectively are referred to as “sunshine laws.”
Any time a private corporation does business with or is regulated by a state or federal government, the records they submit to the government are considered public records. That doesn’t mean that every record will be released to the public. But it does mean that the records submitted to the government are on the table to be considered public, unless one of nine exemptions in the federal law (and scores of exemptions in state laws) permit an agency to withhold those records.
What types of records are we talking about? Applications for gaming or medical marijuana licenses. A public relations company’s contract to perform communications. Insurance companies’ submissions for state reimbursements for health-care providers. Vendor contracts. A defense contractor’s bid to install fighter jet communication technology. Big pharma’s submission for drug approval.
Again, it doesn’t mean that every record submitted by a company will be deemed public and released. But it does mean that each and every record submitted is legally presumed to be public, including records that relate to that contract (think emails here). At the state level, Pennsylvania is one of the few states in the nation that deem a private company’s records to be public when it relates to performance of a governmental function.
When companies submit records, they had better understand the law’s components, and how to ensure that legitimately confidential material remains confidential. One of the most crucial protections for the corporate world are exemptions related to confidential proprietary or trade secret information.
At the Life Sciences of Pennsylvania meeting, one young entrepreneur for a medical device company that works in Japan and the United States confidently said to me: “We’re a private company and our confidential information wouldn’t be released by the government.”
If I would have been sitting down, I would have fallen off my chair. I can think of at least two dozen cases where corporations were not even given notice that someone was even seeking their records, including scientists who had no knowledge that big pharma swept in with FOIA requests to obtain their lifework before they had a chance to weigh in.
Many times, corporations and big pharma don’t know when—or if—competitors (or would-be competitors) have filed a request for records related to their submissions to government. Given that unknown window, it’s more than just a matter of due-diligence for corporations to train their staff on how to prepare record submissions, it’s good business. Companies should understand which records are public under the law, and how to best protect their records and conversely, how to use these laws for competitive edge (which I will address in later column.)
There’s a couple of reasons that even legitimately confidential proprietary information is vulnerable to release when submitted to the government: corporate misunderstanding of the most rudimentary elements of the law and government workers’ misapplication of the exemptions.
On one hand, corporations often adamantly and mistakenly believe that every document, even those that are the most basic public record, submitted to the federal government is confidential and should never see the light of day. On the other hand, overworked government agencies, inundated with voluminous requests, aren’t always vigilant in asserting a third-party company’s position, even when records are genuinely confidential proprietary.
Here are examples of both. I recently represented a company bidding for a multi-million government contract. I helped them prepare the documents to comport with the state’s Right to Know Law and counseled them on what records would be public and which would be held confidential. Prior to the submission, the company spokesman wanted to redact the company’s logo, name and address. (All are public under the state’s Right to Know Law.) The spokesman argued that the public did not need to know who the company was—even though it stood to receive millions of taxpayer dollars. Such a move only serves to make vulnerable even otherwise legitimately protected documents.
Having served as Pennsylvania’s first executive director of the Office of Open Records and Illinois’ first public access counselor, I can tell you firsthand that when a government office sees such a rookie mistake, they think that all claims of confidentiality by the company are suspect. (And this doesn’t even begin to cover the public relations nightmare that can follow when the media sees a company that stands to garner millions of dollars in taxpayer money trying to hide their identity.)
On the flip side, governments aren’t always great at protecting legitimately nonpublic record. The government, which tends to keep a tight fist on their internal records, sometimes just doesn’t view your company’s secret sauce as secret as you do. A few years ago, a group of researchers at Yale filed a several large FOIA requests with a government agency to obtain records that a pharmaceutical submitted seeking approval of a new drug. Despite government obligation to provide notice to the pharmaceutical, the government didn’t notify the company of the pending FOIA request until three days before the records were headed to New Haven.
While some of the material set to be released was, in fact, public, much of it was legitimately confidential proprietary information. The pharmaceutical didn’t follow a best-practices protocol for submission that would have helped the government help the pharmaceutical protect its records. The pharmaceutical should have understood the apparatus of submission, included notification triggering requirements, and segregated public from nonpublic information. Instead, under deadline pressure, they were forced to scramble to protect the records prior to release, which included costly litigation options.
The perception remains that transparency law is reserved for journalists or curious citizens. The reality is that C-suites need to recognize sunshine laws as an important offensive and defensive business tool. Any document submitted to the government is potentially up for grabs. Understanding the law’s two-edge sword is critical for the corporate world.
Terry Mutchler is managing partner of Mutchler Lyons, the nation’s first transparency law firm devoted to helping media and corporations obtain public records. She served as Pennsylvania’s first executive director of Office of Open Records and Illinois’ first public access counselor enforcing FOIA. She can be reached at firstname.lastname@example.org