By Aaron Pressman
BusinessWeek.com

As Barack Obama closed in on the Presidency last year, investors got increasingly skittish…Obama’s health-care reform plan is likely to include letting Medicare negotiate lower drug prices, overturning a ban on government-driven discounts that was in the original 2003 “Part D” program.

But Medicare pricing is only part of the story for drugmakers…Investors may be overlooking substantial benefits to pharmaceutical companies because Obama is also likely to get the Food & Drug Administration moving again…The FDA has been widely criticized for weak oversight and inefficiency, and its congressional overseers have had a testy relationship with the agency…

Heath-care reform is also likely to improve prospects for generic drugmakers. With patents on drugs representing $25 billion in annual sales set to expire by 2012, the generic industry is already sitting pretty. The new Congress is planning to revisit the question of allowing generic versions of biologic drugs (those developed from living cells rather than chemical components, which is currently illegal)…

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