Here we go again. Two years on from the last election and still America's elderly are paying for their prescription drugs despite universal agreement from both political parties and the drug companies that there should be some federal help.

Under Bill Clinton, Medicare - the system of federal healthcare aid for the elderly - looked as if it might be expanded to cover prescription drugs administered outside hospitals.

But disagreements over the scope, management and cost of the scheme meant that did not happen, even in the last election year of 2000. Now, under President George W. Bush and with more polls on the way in November, it is once again an election topic. The difference is that the hot debate is this time so much hot air: there is almost no chance of anything happening.

The House of Representatives, with its Republican leadership, has once again set aside money in its budget for a Medicare drug benefit. It is $350bn over 10 years and starts in 2004. It will be administered by the private sector.

The Senate, led by Democrats, wants to set aside $500bn. Influential Democratic senators, among them Edward Kennedy, want the government to run the benefit.

Mr Bush's own plan costs about $300bn. The White House will be making as much political capital as it can out of the Senate's wish to outspend him. Analysts see no chance of the differences being reconciled especially with the nation's finances in a far less healthy state than they were two years ago.

For the pharmaceutical companies, despite their rhetoric in favour of a drug benefit for the elderly, the lack of concrete action in Washington is good news.

The US is the world's largest market for prescription drugs, accounting for more than 50 per cent of sales. It is the only market of any size where the companies are largely free to set prices as they see fit.

They view this as essential for the high costs of research and development and the reason why the US has become the dominant pharmaceutical country. It is why companies, such as Pharmacia, have relocated to the US and why GlaxoSmithKline's Philadelphia offices are becoming the power centre of the global group.

The drug companies agree that the elderly should have access to prescription drug funding. Of course, any curbs on pricing would not be on the scale they experience in Europe and Japan, so the US's standing is not in threat. Moreover, any industry executive will admit privately that the longer it takes for any bill to be passed, the better.

But the companies are sensitive to criticism on price - and there has been plenty. "There is no doubt in my mind that there is a lot of pressure on these companies to set prices in a friendlier way than they have," says Joan Woodward, analyst at Goldman Sachs.

Busloads of pensioners have been crossing the Canadian border in search of cheaper drugs. Insurance companies have been petitioning regulators to make allergy drugs available over the counter, and therefore cheaper.

Consumer groups say drug companies spend millions enticing patients to their newest and most expensive drugs, eroding the doctor/patient relationship when older medicines might be just as appropriate.

Drug companies are under fire for spuriously surrounding their drugs with walls of patents that collapse under legal challenge. Critically ill patients in the Third World say they cannot gain access to the medicines they need.

At least one generic manufacturer - Watson - is changing its strategy because it is too hard predicting when it can launch generic products in the face of the legal onslaught. Watson is trying to find more of its own drugs now.

The big pharmaceutical groups have been responding with some ideas of their own.

Pfizer and Eli Lilly were among the first to announce schemes to help poor, elderly Americans. Recently, Abbott Labs, Aventis, Bristol-Myers Squibb, GlaxoSmithKline, Johnson & Johnson, AstraZeneca and Novartis announced their own combined effort.

Pfizer, the world's largest drugs group, says the average US retail price of a brand-name drug prescription is almost $70. Its "Share Card" allows the elderly 30 days of any of the company's drugs for $15.

President Bush's own plan for a discount card, however - which relies on industry to cut costs without any federal money - is stalled in the courts, challenged by the nation's pharmacies.

Meanwhile, individual US states, facing spiralling healthcare costs, are continuing their own efforts to cut costs of Medicaid, the assistance programme for the poor.

The industry has successfully fought off a move by Michigan to limit severely which drugs it will cover under Medicaid. But in Florida, some companies have pledged assistance and given meaningful concessions.

Some of those schemes, the discount cards, and the pressure from insurers all amount to some measure of price control. But there is no need for anyone to hold their breath for more. "Other than the public relations attacks, nothing onerous has happened to these companies yet," says Ms Woodward.

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