Prospects for a prescription drug benefit for Medicare recipients gained momentum yesterday, as President Clinton hailed the pharmaceutical industry's willingness to negotiate on the contentious issue, and congressional Republicans signaled new interest in helping finance such a plan.

While many differences remain, the day's events are the most encouraging in months for the millions of older Americans who hope the government will partly offset the cost of prescription drugs. Such medicines are far more important in health care than they were when Medicare was created, but their prices have been soaring in recent years, outstripping the ability of many elderly people to pay.

After months of strongly opposing Clinton's approach to expanding Medicare benefits to cover prescription drugs, the pharmaceutical industry this week said it would enter into talks on a plan for partial coverage. More important, perhaps, congressional Republicans now appear much more anxious to embrace the issue in a crucial election year, in which control of the House and Senate is at stake, and they are readying a plan of their own.

Rep. Thomas M. Davis III (R-Va.), chairman of the National Republican Congressional Committee, said the GOP would "be naive not to" come up with a drug proposal. But he added, "We're not doing it because Democrats are making it an issue; we're doing it for the American people."

Democratic leaders, who have made prescription drug coverage a key plank of their legislative agenda for this year, said the recent flurry of activity highlights the issue's political potency.

"The devil's in the details, but I think we have a fighting chance to get this done this year," House Minority Leader Richard A. Gephardt (D-Mo.) said in an interview yesterday. "I think the pharmaceutical companies are sensitive to this issue and the Republicans are hearing it from their constituents. I think this thing has tremendous political attractiveness."

The cost and availability of prescription drugs have become one of the hottest issues in health care. The government says about a third of the 39 million Medicare recipients have no coverage for drugs, while most of the rest are covered by expensive private supplemental policies, known as Medigap plans, or by managed-care plans.

In June, Clinton proposed optional drug coverage for Medicare recipients at a cost of $118 billion over 10 years. Starting in 2002, his plan would pay half the cost of patients' drugs, up to a limit, in exchange for a monthly fee. When the program is fully phased in by 2008, patients would pay $44 a month, and the government would chip in as much as $2,500 a year.

While neither Clinton nor the Republicans are proposing that the government set the prices of drugs for the elderly, the pharmaceutical industry reiterated yesterday its long-standing fear that such controls could result if the federal government becomes a huge buyer of medicines through Medicare. They also insist that any new drug plan should make more extensive use of the private sector than the White House now envisions.

Still, industry spokesmen said they are pleased to see a thawing of their relationship with the administration, as first reported yesterday by the New York Times.

"You have clearly a strong desire on the part of the pharmaceutical industry to make sure we get expanded coverage for seniors through the private sector," said Alan F. Holder, president of the Pharmaceutical Research and Manufacturers of America. Acknowledging that the White House proposal would steer the benefits through government agencies, Holder said: "The administration approach does not have that degree of flexibility, and I'm sure we'll keep working on that."

Congressional Republicans, meanwhile, are preparing a new prescription drug plan of their own, which they will highlight in the next two weeks. The initiative could include a combination of tax deductions and block grants to the states. Republicans said the plan would be targeted at elderly people living near or below the poverty line--a key difference from the White House plan, which would offer benefits to any older American who wants to participate.

Democrats are likely to resist the GOP's more narrow proposal because it targets only some seniors and bypasses the Medicare system, but Gephardt said he would make concessions to win broader drug coverage. "My attitude is we're willing to compromise, we're willing to find common ground," he said.

In an interview this week, Senate Majority Leader Trent Lott (R-Miss.) said he expects Republicans to give "a lot of consideration" to finding ways to offset the cost of providing prescription medicines to lower-income older Americans. He suggested that any GOP proposal would probably be smaller and less costly than those previously discussed by the administration and congressional Democrats.

"I don't know exactly how we get to the prescription drug thing because the administration wants to give everyone free drugs," Lott said. "It's not affordable, and it weakens the Medicare system."

Staff writer Helen Dewar contributed to this report.