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How Far Would You Go for Cheaper Drugs?

Thousands of Americans are crossing the border to get the best deal on their prescriptions. Our reporter tags along.

Drug Companies Offer a Caution continued...

Drug prices in America vary greatly depending on who pays the bills. Insurers and employers pay most prescription costs, but this is changing as managed care plans impose caps on prescription reimbursements. Some companies are putting expensive drugs off- limits or reducing drug benefits, requiring workers to make larger copayments. And people who rely on Medicare, which serves senior citizens, are on their own, since Medicare does not currently pay for any outpatient medications.

The growing outcry over high drug costs has forced both political parties to seek out ways to provide prescription coverage to seniors on Medicare. Republicans want to offer government subsidies to encourage private insurance companies to offer drug policies to the elderly. The Democrats would increase Medicare payments to hospitals and other health care providers, making a drug benefit part of the program.

But it is state governments, especially those that border Canada, that are taking the lead on establishing price controls. In May, a law was passed in Maine -- over industry objections -- that created a commission with the power to negotiate drug prices for uninsured Maine residents and to impose price limits in 2003 if drug companies don't lower costs.

In Vermont, a similar bill would have imposed price caps and taken other steps to make medications affordable. It was defeated after what Vermont House Speaker Michael Obuchowski called "the most intensive lobbying effort" that he'd seen in 28 years, mounted by drug companies and the Pharmaceutical Research and Manufacturers of America (PhRMA), the industry's trade organization.

Sanders, the Vermont Congressman who led drug-buying trips to Canada, says the issue of high prescription drug prices arouses more anger than any he has encountered in his career. Last year, he introduced a bill that would allow American distributors and pharmacists to re-import prescription drugs into the United States from Mexico and Canada at the lower prices offered there -- as long as the drugs meet strict safety standards and are approved by the FDA. "There is simply no reason why Americans should pay up to 10 times more than people in other countries for the exact same drug," Sanders argues. Similar legislation was introduced this year in the Senate by Vermont's Republican Senator, Jim Jeffords.

Who Should Pay for Costs of Drug Research?

The pharmaceutical industry is fighting hard against efforts to allow drug importation and to control domestic prices. The industry argues that drug prices are artificially low in other countries and that imposing controls here would limit the resources drug companies could put into the expensive research required to develop new drugs. "We totally oppose any form of price controls because it discourages innovation and investment in research and development," says Meredith Art, a spokesperson for PhRMA. "The solution to high prescription drug prices is to add an outpatient drug benefit to Medicare."

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