RX For Nosebleed Prices

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And they are expensive to cultivate. Last year the pharmaceutical industry spent more than $26 billion to develop new potions, according to the Pharmaceutical Research and Manufacturers of America, a Washington lobby group. While drugmakers have traditionally been among the most profitable U.S. companies, they plow 20% of their sales into research and development, in contrast to less than 4% for the average U.S. manufacturer. "If you've got a life-threatening disease, your best hope is the American pharmaceutical industry," says Alan Holmer, president of the lobby.

William Nixon, head of the Generic Pharmaceutical Association, responds that pressure from knock-offs actually encourages innovation by the name-brand firms. "To remain competitive in the marketplace, they have to go out and do cutting-edge R. and D.," he says. A 1999 Yale study concluded that consumers benefit financially from the increased availability of generic drugs "without any appreciable innovative 'losses' resulting from reduced research and development."

While regulators and some lawmakers take aim at dirty patent tricks, the young Bush White House has mostly looked the other way. Bush campaigned on a promise to help senior citizens pay for prescription drugs through Medicare reform, but he hasn't been eager to press that contentious issue. He will most probably deliver a set of reform guidelines to Congress by summer and then strive to remain above the fray.

But that could prove difficult as the drive to halt patent cheating and encourage generics gains momentum in Washington. As that happens, the issue will become how to control prescription costs without dampening the flow of funds for pharmaceutical research. And if that heroic task should cause anyone heartburn, why, then, a dose of Prilosec--or its generic equivalent, if one ever becomes available--could certainly do the trick.