WASHINGTON - The drug industry held out an olive branch to the Clinton administration on a Medicare drug benefit, but it probably won't be clear until the State of the Union address on Jan. 27 whether the White House will respond with a dove or a howitzer. Comments from the administration late last week hint that the Democrats can now sniff victory on the issue in an election year, making it more politically expedient for them to continue to bash the industry than to compromise with it.

Representatives of major pharmaceutical companies last week announced that they would drop opposition to a stand-alone Medicare prescription drug measure and the Republican leadership expressed interest in crafting bipartisan legislation. Senate Majority Leader Trent Lott (R-Miss.) told reporters that he favors the addition of a drug benefit to Medicare, and Republican staff on Capitol Hill said the party wants to enact legislation in part to prevent Democrats from continuing to use the issue in campaigns leading to the November elections.