I would like to thank the committee for inviting me to testify on this important legislation. The issues of pharmaceutical prices, price controls, and importation from Canada are critical to California's policymakers.

As an economist, I often find myself in the unenviable position of advising people that well-intentioned and seemingly clever solutions won't, in practice, achieve the desired results. I'm afraid that's exactly the case with state-based efforts to import pharmaceuticals from Canada in an attempt to save the state money in pharmaceutical expenditures.

The proposed policies cannot provide the promised less expensive drugs for any sustained period of time. If implemented, such importation schemes will come with some serious side effects, including the loss of jobs in one of California's most dynamic industries, the confiscation of intellectual property of California-based companies by the Canadian government, and safety threats to state residents, with on legal recourse. In each case, the side effects of the policy prescription overwhelm any palliative effect.