Drug importation threatens backbone of New Jersey’s economy

Millions of Americans’ lives are riding on the success of a few New Jersey companies.

Garden State pharmaceutical firms account for nearly 30 percent of all diabetes and heart disease treatments in development.  These two diseases alone kill hundreds of thousands of Americans each year. And they’re driving U.S. healthcare costs through the roof.

Those treatments may never reach patients if some in Washington push forward with a plan to allow patients to import foreign prescription drugs. Though intended to help patients, importing these medicines would endanger patients’ health, put thousands of New Jersey jobs at risk and undermine research into new treatments.

The biopharmaceutical industry is a mainstay of the New Jersey economy. It’s the top industry in the state – directly supporting over 65,000 jobs from Sussex to Cape May. Many of those jobs employ highly-skilled workers.

Nearly 40 percent of the jobs in New Jersey’s biopharmaceutical sector are in production; life, physical, and social sciences; or architecture and engineering.   By working with over 9,500 vendors and suppliers, the biopharmaceutical industry supports another quarter million jobs in the Garden State – bringing the total to nearly 313,000.  As a mayor of a town where the jobs of many residents fall into one of these categories, I see the impact on families and our community every day.

Each person employed by the industry backs the state economy. A biopharmaceutical sector employee contributes nearly $723,000 in economic output – more than four times the average New Jersey worker’s output.  Industry workers paid nearly $800 million in state taxes in 2014. The biopharmaceutical sector also is a linchpin of the state’s economic output. Life sciences companies purchased over $6.5 billion worth of goods and services from local businesses in 2013.  The industry supported over $108 billion in economic output in 2014 – nearly one-fifth of the entire state’s GDP.

Legalizing the importation of foreign drugs – as President Trump and members of both parties have advocated – would choke off this economic success and endanger patients.

Right now, the Food and Drug Administration ensures a safe drug supply by requiring medicines to be manufactured domestically, or at carefully monitored foreign facilities.  Many medicines sold through foreign pharmacies – which aren’t subject to FDA supervision – are shoddily made or even fake.  If Americans took them, they could suffer fatal reactions or perish when the pills fail to work as intended.

Importation would also threaten pharmaceutical research and manufacturing jobs in New Jersey and across the country. Medicines are often cheaper abroad because many countries impose price ceilings.

American manufacturers have to sell medicines at market prices in America to recoup their enormous research and development costs. On average, it takes more than a decade and $2.6 billion to bring a drug to market.

If patients were permitted to buy foreign drugs, they would essentially import price controls along with the pill bottles. That would undercut American firms, who produce nearly 60 percent of the new drugs in the world.  These companies might have to cut back on research and development or lay off some employees.

High healthcare costs are a real problem. Fortunately, there are better solutions that won’t harm economic growth or patients’ safety.

For instance, Congress could aim to lower drug prices by increasing competition between pharmaceutical companies. Reauthorizing the Prescription Drug User Fee Act would do just that. The law, which expires in September, requires drug companies to pay fees to the FDA when they submit a drug for approval. Those fees help the FDA maintain a skilled workforce that can efficiently approve new drugs.  Speedy approvals give patients and insurers more choices, which means they have leverage to demand big price discounts.

Congress and the president can also promote job growth and curb healthcare spending by negotiating trade deals that protect American intellectual property. IP protections allow American companies to step up their research spending, secure in the knowledge that foreign countries won't break their patents and let foreign competitors create unfair knockoffs.

This increased investment will lead to more new medicines, which often reduce total healthcare spending by keeping people healthier. The added choices also drive down drug prices.

Drug importation may seem like an easy way to cut U.S. healthcare costs. But it would actually jeopardize patients’ health, undercut economic growth and prevent the creation of lifesaving, cost-cutting medicines.

Joseph Pannullo is mayor of East Hanover.