Henry Waxman (D-CA) has won appointment in the House to be the Chairman of the Energy and Commerce Committee, defeating his colleague, John Dingell (D-MI), who had been the Chairman over the past two years and has served as Ranking Member since 1995.

Mr. Waxman's taking over the leadership position on the Energy and Commerce Committee has, potentially, big implications for the healthcare industry. The Hatch-Waxman bill put into law in 1984 essentially created the generic drug industry as we know it today, and over the past twenty-plus years Mr. Waxman has argued aggressively for cheaper drug pricing and nationalized healthcare. Both would be a significant negative headwind for many companies in our universe.

Biotechnology companies now seem squarely in Mr. Waxman's crosshairs, with his aggressive push for "follow-on biologics" (FOB). His argument for zero years of patent exclusivity for new biologic applications seems absurd, and it has little chance of passing, but it does seem likely that we are heading toward a generic biologic industry much like the generic small-molecule industry Mr. Waxman helped create back in 1984.

We'll leave the merits of Nationalized Healthcare to Washington, but it is clear that mandating cheaper drug prices for Medicare Part-D and allowing follow-on biologics in as little as zero years after approval is a negative for pharmaceutical stocks. Additionally, expanding government run insurance programs with big subsidies, all while limiting the ability for private insurance from small business and citizens also is a significant industry headwind. The money needs to come from somewhere, be it higher taxes, lower prices, or a combination of both.