On a 49-40 vote, the Senate required the administration to certify the safety and effectiveness of imported drugs before they can be imported, a requirement that officials have said they cannot meet.
"Well, once again the big drug companies have proved that they are the most powerful and best financed lobby in Washington," said Sen. David Vitter, a Louisiana Republican.
The vote neutralized a second amendment, later passed on a voice vote, that would legalize the importation of prescription drugs manufactured in Canada, Australia, Europe, Japan and New Zealand.
Sen. Bernie Sanders, I-Vt., called the certification amendment, introduced by Sen. Thad Cochran, R-Miss., a "poison pill" for the drug-imports legislation. Sen. Byron Dorgan, D-N.D., acknowledged it nullified his bid to allow the purchase of drugs abroad.
"This is a setback for us. But the drug industry is one of the strongest industries in this town," Dorgan said.
Sen. Mike Enzi, a Wyoming Republican, said the requirement for a safety certification was essential to protect the public.
"Under both Democratic and Republican administrations, secretaries of Health and Human Services have declined to certify that foreign drugs - like those allowed under the Dorgan Foreign Drug Act - are safe for American consumers. They realized, as I do, that close enough isn't good enough," Enzi said.
The maneuvering occurred on broader legislation to renew the FDA's ability to collect fees from the drug industry to defray the cost of reviewing new drugs. Lawmakers have seized on the bill to overhaul the agency, including its handling of drug-safety issues highlighted in the wake of the withdrawal of the painkiller Vioxx.
Advocates of drug importation have argued for years that an existing ban is more a protection for the drug industry than a safety issue.
Overseas, drugs can cost two-thirds less than they do in the United States, where prices for brand-name drugs are among the highest in the world. In many industrialized countries, prices are lower because they are either controlled or partially controlled by government regulation.
Dorgan said allowing imports would drive down the price of U.S. brand-name drugs.
He said 90 doses of the cholesterol drug Lipitor costs $321 in the U.S. - about twice the cost in Canada. The idea of allowing prescription drug imports enjoys broad popular support. However, lower prices overseas would not automatically translate into large savings for domestic consumers, according to a 2004 study by the Congressional Budget Office. The study found that allowing drug imports from a broad set of countries would cut U.S. drug spending by $40 billion over 10 years, about a 1 percent savings. It said foreign governments could limit drug exports to protect their own domestic supplies, and that U.S. drug companies could respond to an importation bill by increasing prices abroad. The pharmaceutical industry vehemently opposes allowing drug imports, arguing that they could leave the nation vulnerable to dangerous counterfeits. Similar drug-import legislation is pending in the House. AP-CS-05-07-07 1832EDT