Passage of US President Barack Obama's proposed American Jobs Act would reduce pharmaceutical-related jobs by as many as 238,000 by 2021, warns a new report.
The problem relates to a provision of the bill which would require prescription drugmakers to pay rebates to the federal government for medicines dispensed to enrollees in both the Medicare and Medicaid health programmes - the "dual eligibles" - and other low-income seniors through Medicare's prescription drug benefit, known as Part D.
Such mandatory Part D rebates would put people out of work, increase costs for seniors and privately-insured patients, and slow R&D into new drugs, according to the report, which is published by the American Action Forum, a free-market policy think tank.
The Office of Management and Budget (OMB) has estimated that the proposal to add Medicaid-style rebates to the Medicare Part D programme would result in $135 billion in additional rebates to the federal government over 10 years.
However, says the Forum report, "at a minimum, these additional rebates would constitute a direct, dollar-for-dollar reduction in revenue to the pharmaceutical industry. In a less-than-best case, the rebates would make at least some drugs money-losers - these drugs would be withdrawn from the market and the revenue reduction would be even larger than the new payments to the federal government," it adds.
In either case, the revenue reduction would be absorbed by the pharmaceutical industry in three forms - reduced payroll employment, reduced profits and possibly higher prices for other buyers, it says, adding that it could also result in reduced investment in R&D, "slowing the process of bringing new drugs to market and imposing further costs on both patients in need of new treatments and on the industry."
The losses of up to 238,000 jobs by 2021 which the Forum is forecasting would come from direct employment in the pharmaceutical industry and also indirect employment in companies which supply goods and services to the sector, it says, pointing out that its assessment does not take into account possible downstream effects on distributors, pharmacies, etc.
Moreover, it comments, the fact that the OMB assessment did not provide any estimates of the effects of the Administration's proposal on jobs is "somewhat ironic, in that the President's proposal came in the context of his 'jobs bill'."
- The President introduced his American Jobs Act a month ago, but last week the Senate rejected it, with all Republicans in the chamber voting to block the measure. Pres Obama is currently touring the country aiming to increase support for the Act which, according to some economists, would create around two million jobs and grow the economy by two percentage points.
However, given the unlikelihood that the Act will pass Congress as a complete package, "we're going to chop it up into bite-sized pieces and give [the Republicans] another chance to look out for your jobs instead of looking out for their own jobs," Pres Obama told a meeting in North Carolina on Monday.