NCPA - National Center for Policy Analysis

STUDY SAYS DRUG IMPORTS CUT JOBS IN STATE

October 7, 2004

A recent study by Dean Smith, chairman of the University of Michigan's Department of Health Management and Policy, analyzes the potential impact legalized drug reimportation would have on jobs, especially in Michigan.

He found that the consequences would be disastrous for the wolverine state:

  • Michigan could lose from 25,000 to 100,000 jobs if the U.S. Congress approves a bill (Senate Bill 2328) that would allow Americans to import drugs from abroad.
  • Michigan would be hit especially hard with job losses because about 75,000 people in the state work in the job industry, earning some $3 billion a year in wages.
  • The job losses would lead to between $7 billion and $29 billion in lost income in Michigan, but the income losses would be offset by $12 billion to $19 billion in savings on prescription drugs for Michigan residents.

If drug companies' profits shrink because Americans buy cheaper drugs from other countries -- where governments typically set price limits or negotiate discounts -- the industry will have less money to invest in research and development, says Smith.

Source: Dean G. Smith, "Prescription Drug Importation, Investment and Employment in Michigan," University of Michigan, August 18, 2004.

 

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