RATIONALE: Estrogen can stimulate the growth of breast cancer cells. Hormone therapy using tamoxifen or LY353381 may fight breast cancer by blocking the use of estrogen.

PURPOSE: This randomized phase I trial is studying how well tamoxifen works on the biomarkers of the tumor tissue, compared with LY353381, in treating women with newly diagnosed breast cancer.

OBJECTIVES:

• Determine whether LY353381 hydrochloride or tamoxifen administered in the interval between biopsy and re-excision alters the expression of tissue biomarkers relative to placebo controls in postmenopausal women with newly diagnosed breast cancer.

OUTLINE: This is a randomized, double-blind, placebo-controlled, multicenter study.

• Phase I: Patients are randomized to receive either oral LY353381 hydrochloride or oral placebo daily.

Upon completion of phase I, all treatment centers begin phase II of the study.

• Phase II: Patients are randomized to receive either oral tamoxifen or oral placebo daily.

Treatment in both phases continues for 2-6 weeks (until scheduled lumpectomy or mastectomy) in the absence of disease progression or unacceptable toxicity.

Patients are followed at 1 and 2 weeks after surgery.

PROJECTED ACCRUAL: A minimum of 120 patients (60 per treatment phase) will be accrued for this study within 18 months.

• Drug: arzoxifene hydrochloride
• Drug: tamoxifen citrate

DISEASE CHARACTERISTICS:

• Histologically confirmed noninvasive or small invasive breast cancer

  • Low or intermediate grade (ductal carcinoma in situ, T1, or T2) OR
  • Estrogen and/or progesterone receptor positive
  • Largest mass no greater than 5 cm
  • Clustered microcalcifications as only abnormality allowed with no upper size limit
  • If no distinction between mass and microcalcifications, size as 1 lesion
• Lumpectomy or mastectomy must be planned for 2-6 weeks from start of study
• No evidence of metastases from any malignancy

• Hormone receptor status:

  • Estrogen and progesterone receptor positive (unless low or intermediate grade tumor)

PATIENT CHARACTERISTICS:

Age:

• 18 and over

Sex:

• Female

Menopausal status:

• Postmenopausal by one of the following:

  • Prior oophorectomy
  • Over age 50 with prior hysterectomy, ovaries remaining
  • Uterus and ovaries intact and no menstrual period for more than 3 months

Performance status:

• Not specified

Life expectancy:

• Not specified

Hematopoietic:

• Platelet count greater than 100,000/mm^3
• Hemoglobin greater than 10 g/dL
• Absolute granulocyte count greater than 1,000/mm^3

Hepatic:

• Albumin greater than 3 g/dL
• Bilirubin less than 1.5 mg/dL
• AST less than 100 U/L
• Alkaline phosphatase less than 200 U/L

Renal:

• Creatinine less than 1.5 mg/dL

Cardiovascular:

• No history of deep vein thrombosis

Pulmonary:

• No prior pulmonary embolus

Other:

• Not pregnant or nursing

PRIOR CONCURRENT THERAPY:

Biologic therapy:

• Not specified

Chemotherapy:

• At least 1 year since prior chemotherapy

Endocrine therapy:

• At least 1 year since prior aromatase inhibitors, antiestrogens, or LH agonists/antagonists
• No concurrent hormone replacement therapy or oral contraceptives (from time of randomization)

Radiotherapy:

• Not specified

Surgery:

• See Disease Characteristics

Other:

• No concurrent treatment for other malignancy