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ADVERTISEMENT For this second order to be effective, however, a penalty must be imposed in case the manufacturer fails to reach agreement with the foreign government or refuses to sell to Medicare at the price negotiated by that government. Such penalties are described in two bills sponsored by Democrats: either exclude the drug from Medicare coverage or authorize the manufacture of a generic version, despite any patent protection. These bills envision direct negotiation between Medicare and the manufacturer but would work equally well if negotiation were indirect, as we propose.  For decades, pharmaceutical companies have pursued twin strategies to deter imports. To scare Americans from importing, they have enlisted the government’s help in blurring the distinction between counterfeit drug sellers and licensed foreign pharmacies; and, to avoid the massive imports that wider price differentials would trigger, manufacturers have resisted pressure from foreign governments to negot

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