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Fact or fiction? Importing drugs will cost jobs

Claim: Imposing price controls on pharmaceuticals, or importing pharmaceuticals, could cost U.S. jobs.

The Senate is debating an amendment to the insurance reform bill that would allow Americans to import lower-priced, Food and Drug Administration-approved drugs from other countries. Americans "are charged the highest prices in the world for drugs that the same industry sells for a fraction of the price in most other countries," said the amendment's sponsor, Sen. Byron Dorgan, D– N.D. But Sen. Robert Menendez, D-N.J., in whose state companies such as Novartis and Merck employ more than 60,000 workers, with an annual payroll of more than $6 billion, argues that drug imports would jeopardize New Jersey jobs. "At a time of joblessness in this country, I don't want to offshore those jobs," Menendez said. The Dorgan amendment is "attacking the one last major research and manufacturing entity in the United States." Is this an irreconcilable conflict between drug industry jobs and American consumers?

Fact or fiction?
Fact. A 2006 study by University of Connecticut finance professors Joseph Golec and John Vernon compared European Union countries which control drug prices and the United States where the government doesn't impose price controls. Importing drugs "is an indirect method of price control," Golec and Vernon said. U.S. drug firms are more profitable and spend more on research and development than EU firms, they found. In the years they studied, 1986 to 2004, EU consumers "enjoyed much lower pharmaceutical price inflation, however, at a cost of 46 fewer new medicines introduced by EU firms and 1,680 fewer EU research jobs," they said. If price regulation were adopted in the U.S. it could mean "974 fewer new medicines and 1,578,081 lost job years in the future." Price controls "trade off the health and employment opportunities of future generations for cost savings for current pharmaceutical consumers."

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