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Take notice of the fact that Congress is gunning for Avanir Pharmaceuticals (NASDAQ:AVNR) right now, asking the company to explain the pricing for Nuedexta, a recently-approved treatment for pseudobulbar affect (PBA).

PBA is defined as a neurological condition that leads to spontaneous episodes of laughing and/or crying for which there is no other approved treatment.

Sales of Nuedexta have hardly hit the ground running during the commercial launch - although it's still way to early to judge how much of a success the product could become - so some investors may be concerned that any regulatory interference with the pricing of the drug could put even more of a damper on the future potential of Avanir's flagship product.

It's not my opinion that the Congress has enough healthcare overhaul momentum to mount a serious attack on the likes of Avanir and its pricing for drugs, but it's definitely not out of the question that at some point down the road Congress will step in and attempt to regulate prices, in my opinion.

There's no doubt that drugs and treatments are expensive in the USA, but when you consider the amount of time and effort put forth by a company to bring a product to market, let alone the loops and holes that need to be jumped through to get through the FDA - not to mention the costs of regulatory filings and the barbaric terms of financing for small biotechs and pharmaceutical companies - then you can better understand why the end product is so expensive.

After dipping in price on Wednesday afternoon, high volume sent shares of AVNR higher by seven percent on Thursday, although the uncertainty now surrounding the stock at the behest of those rascally congressmen may give the significant short position an opportunity to pressure the stock lower.

It's possible that the company could sign a partnership deal over the coming months, if not be acquired outright, but AVNR will be a stock to watch.

Volatility has offered quite a few "buy the dip" and "sell the spike" opportunities of late, and that's not likely to change, in my opinion.

However, not only should investors be concerned about the potential pressure that Congress could put on the company to change its pricing, but there's a good chance that recent actions by the government are just warning shots being fired across the bow of the powerhouse pharmaceutical ship that has sailed to its own tune for decades.

It's no secret that the Obama administration wants to control - if not lower - the cost of health care in the U.S., and controlling the cost of drugs play a big part of that strategy.

If a second term is won by the sitting president, then you can bet another all-out charge on the health care sector will accompany that second term; and this time the White House won't have to worry about placating voters for the next election.

Avanir may end up unaffected by the current government attention, and Thursday's price rebound may be a positive sign, but follow the story closely; this just might be Washington tipping its hand for future battles.

Source: Investors Should Take Notice of Congressional Questions Regarding Nuedexta Pricing