Instead, both bills break the nation into 10 or more regions where private insurance companies would offer coverage for prescriptions. Rather than negotiating with the government, the pharmaceutical industry would deal with an array of insurers, each with thousands of clients, rather than millions. The extra costs would be paid by taxpayers and consumers.

A new drug benefit would pump about $400 billion in tax dollars into the health care system over 10 years. Analysts say insurance coverage would lead to increased use of prescription drugs by seniors, particularly those with lower incomes for whom cost is now a barrier.

For years, the drug industry fought an effort, mostly by Democrats, to create drug coverage for Medicare beneficiaries. Drug companies said it would resemble a huge buying cartel that could demand and receive rock-bottom prices. Government buyers such as the Veterans Administration and state-federal Medicaid programs get discounts of up to 40% from average wholesale prices.

In 1999, the industry fought to kill a Democratic plan that would have given the government a central role in providing drug coverage for seniors. It sponsored TV ads featuring a character named Flo, who admonished fellow retirees not to allow "big government into your medicine cabinet."