As many as 238,000 pharmaceutical jobs may be lost in a decade in the US if President Obama’s proposed American Jobs Act is introduced, a new report warns.

The Act proposes that manufacturers of prescription drugs would pay rebates to the federal government for medicines used in both the Medicare and Medicaid health schemes and Medicare’s prescription drug benefit, known as Part D.

The report says that mandatory Part D rebates would see jobs cut, increase the cost of medication for the elderly and slow R&D with pharma absorbing the new charges.

This would result, it adds, in reduced payroll employment, reduced profits and possibly higher prices for other buyers.

President Obama introduced the bill in September, but faced stiff opposition from Republicans in the Senate who rejected the measure in the chamber vote.

The Office of Management and Budget (OMB) estimates that if the Act were introduced, the rebates would result in $135 billion paid to the federal government over the next ten years.

The report, published by the American Action Forum, a free-market policy think tank, says that “at a minimum, these additional rebates would constitute a direct, dollar-for-dollar reduction in revenue to the pharmaceutical industry”.

It also forecasts that hundreds of thousands of job losses would come from direct employment within the pharmaceutical industry and indirectly from suppliers.

After the rejection by the Senate, President Obama is now touring the US with the aim to increase support for the Act, which according to some economists, could actually create up two million jobs and see the economic growth by two percentage points.

Plans have been published in the US to make $320bn of healthcare savings over the next decade, including $135bn worth of discounts from pharmaceutical companies.

Living Within Our Means and Investing in the Future: The President's Plan for Economic Growth and Deficit Reduction outlines measures to reduce the cost of drugs under the US’ Medicare benefit system.

The proposals call for payment policies for low-income beneficiaries to be aligned with those for Medicaid, the state/federal health programme for around 50 million people on low incomes.

Currently, pharmaceutical companies are required to pay specific rebates for those within the Medicaid scheme. However, sponsors for the Medicare negotiate with pharma to obtain specific rebates.

The report notes that “substantial differences” have been found between the rebates and the net prices paid for brand-name medication under the two programmes – Medicare beneficiaries receive significantly lower discounts and pay higher prices than those using Medicaid.

Under the President’s proposal it “would allow Medicare to benefit from the same rebates that Medicaid receives for brand-name and generic drugs provided to beneficiaries who receive the Medicare Low-Income Subsidy beginning 2013,” the report says.

The plans also propose to ban the ‘pay for delay’ deals between brand-name and generic manufacturers which prevent the release of cheaper alternatives on to the market and to reduce the exclusivity of biologic drugs from 12 years down to seven. It’s also hoped the measures will improve the Independent Payment Advisory Board’s (IPAB) aim to reduce long-term drivers of Medicare cost growth.

The proposals have been sent by the White House for consideration to the Joint Select Committee on Deficit Reduction and are part of measures aiming to reduce the US’ national deficit by $1.5 trillion over the next decade.