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Drugs: Why Do Americans Pay More?

THE CANADA WEDGE. Still, there may be enough momentum this time to pass a measure without the HHS requirement, thus forcing regulators and the industry to swallow imported pills. Supporters in Congress argue that a carefully crafted bill could solve the safety problems. After all, imports are already routine in Europe, where middlemen buy drugs in countries with lower prices, such as Spain, and repackage them for resale in nations with higher prices.

Moreover, the current Senate bill allows only imports from FDA-approved facilities, and only from Canada. "That removes most of the legitimate safety issues," argues Senator Collins. Indeed, while the House bill covers 25 countries, its backers see Canada as their opening wedge. "I think a compromise could be something like drug importation with Canada," says Emerson. "We'll see if it works, and then expand it to the European Union."

Big Pharma, of course, is gearing up to fight the importation bills at every turn. Its lobbyists insist that Americans would be at risk. They argue that the real solution to high costs is helping people pay for drugs via better insurance -- including a Medicare drug benefit. "Far too many people can't afford drugs because they don't have prescription-drug coverage," says Jeff Trewhitt, spokesman for Pharmaceutical Research & Manufacturers of America (PhRMA).

What's more, suggests David R. Brennan, president and chief executive of AstraZeneca U.S. (AZN ), a Medicare drug benefit would reduce average prices in the U.S. The main reason why prices are lower in Canada and Europe is that governments use their huge bargaining power to win big discounts. Even in the U.S., drug prices vary widely because organizations with clout, such as the government, big health-maintenance organizations, a

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