Sentence

Please read:

a.The government has pointed out the bad effect certain drugs have on people and has decided to effect new laws to restrict the sale of these drugs. (1)

b.The government has pointed out that certain drugs have a bad effect on people and has decided to effect new laws to restrict the sale of these drugs. (2)

I don't understand (1), especially the bad effect certain drugs have on. Could you tell me the grammar rule here? (to turn (2) to (1))
(Why is there a verb have in the bad effect certain drugs have on? I saw noun phrases with noun but not verb, in (1), the bad effect certain drugs have on is a noun phrase or the bad effect certain drugs have on people is a noun phrase?)

Thanks
Quoc

have doesn't go with on.  on goes with people.  There is no "drugs have on" in that sentence.  It's on people.

Your second sentence means the same thing as the first.

They have pointed out || the bad effect | (that) certain drugs have _____ |  on people || and ...

The ______ is where the bad effect has been removed and placed earlier in the sentence.

Compare:

Mr. Malatesta noticed the animosity some people had toward him.
Scientists are studying the cravings smokers have for nicotine.
The whole class laughed because of the joke the class clown played on the teacher.

CJ