Rep. Henry Waxman (D-CA) helped depress most drug and hospital stocks Thursday with his warning that the Obama administration doesn’t feel bound by its deal with pharmaceutical companies and that Congress isn’t bound by that deal.

The markets obviously didn’t believe the White House denial that anyone working there said President Obama isn’t bound by the deal he made with drug makers, which made a vague promise to help the government save some $80 billion on drug purchases over the next 10 years.

I recently did an interview with the FT discussing the healthcare sector as a good defensive sector play. I answered of course that healthcare, along with utilities and consumer staples, are the classic defensive sectors. The stocks in those sectors tend to be lower beta and many are mature companies with good cash flow that pay dividends. We own many companies within the sector.

We watch the sector closely, as the head winds to growth are many, here are a few:

CareView Communications, Inc. (CRVW.PK) develops, markets and operates high-speed data network systems that are deployed throughout healthcare facilities using the existing cable television infrastructure of the facility. The systems provide bedside, point-of-care video monitoring and recording as well as providing patients with entertainment, communications and education systems. The Company’s systems are suitable for use by a wide variety of healthcare institutions including hospitals, nursing homes, adult living centers and select outpatient care facilities.

What’s really important here though is not whether or not he meets that deadline. Hitting that deadline is actually quite irrelevant as the proposed options to fix the system won’t address the real problems in health care. Even worse yet it seems to me that the administration doesn’t care that the real problems won’t be addressed. Let’s take a look at the healthcare problem, analyze the facts, discuss the proposed solution, and identify what changes REALLY need to be made.

Below is a summary of updates to the BioMedReports.com FDA Calendar, which includes a database of 250 entries as of 7/9/09. I originally created the calendar to track companies with pending new drug, biological agent, or medical device new product decisions at the FDA. With the launch of BioMedReports.com, the FDA Calendar has expanded to include the following categories: pending new submissions to the FDA (e.g. NDA, BLA, 510k, PMA, sNDA, sBLA filings), pending complete response letter (CRL) re-submissions to the FDA, and pending late-stage clinical trial results.

The future of health care reform seems to be so uncertain that speculators in the stocks of health insurers, health care providers, medical device makers and exchange traded funds that track health stock indexes aren’t sure which way to turn.

On Wednesday, as expected, health insurers’ stocks lost part of the gains they made Tuesday when it looked like insurers wouldn’t face competition from President Obama’s government-run public option health plan, or government HMO. Late Tuesday, Obama reasserted his support for a public option, which is why insurers’ stocks fell Wednesday.

Duoyuan Global Water (DGW) - Began trading on 6/24 after pricing at $16 per share. The stock ran up to the mid-$20’s in the first week of trading and has held steady since. The company is a maker of water treatment equipment in China that includes wastewater treatment and water purification. One of my favorite long-term investment themes involves water and water-related stocks. The ties DGW has to China make the stock even more attractive because the country has major water issues and will have to address them in the years to come. The most recent Chinese stimulus package is actually going after upgrading infrastructure and will be a boost for DGW.

Wal-Mart (WMT) made headlines last week by endorsing proposals in Washington that mandate employer-provided health insurance. Fox News anchor Elizabeth MacDonald does a good job analyzing the retail giant’s motives in her blog post and identifies competitive advantages that Wal-Mart would enjoy if this coverage were legally required. In essence, because Wal-Mart already covers many employees and has the pricing power of an enormous company, new universal mandates are more crippling to its competitors. MacDonald also argues that, by stepping forward now, Wal-Mart ensures a seat at the political table in shaping the legislation, ensuring that the law will be relatively beneficial to the company.

Wal-Mart’s actions are a good example of the way that large companies, with their deep pockets and legions of lobbyists, can influence new regulations and legislation to their advantage at the expense of smaller competitors. The more regulation created, the more the potential for this type of mischief. This is not to pass judgment on the merits of the issue, but only to observe how large corporations can influence legislation in their favor better than smaller companies, and the more regulation, the greater the potential advantage.

Below is a summary of updates to the BioMedReports.com FDA Calendar, which includes a database of 246 entries as of 7/8/09. I originally created this calendar to track companies with pending new drug, biological agent, or medical device new product decisions at the FDA. With the launch of BioMedReports.com, the FDA Calendar has expanded to include the following categories: pending new submissions to the FDA (e.g. NDA, BLA, 510k, PMA, sNDA, sBLA filings), pending complete response letter (CRL) re-submissions to the FDA, and pending late-stage clinical trial results.

Health insurers’ stock prices are likely to fall Wednesday. Most of them rose smartly Tuesday on news that President Obama would accept a health bill without a public option health plan.

But not only did the left get to Obama and force him to reassert his demands for a public option health plan, or Government HMO, Senate Majority leader Harry Reid (D-NV) told Sen. Max Baucus (D-MT) that the health bill must include the Government HMO.

Below is a summary of updates to the BioMedReports.com FDA Calendar, which includes a database of 243 entries as of 7/7/09. The calendar was originally created by Mike Havrilla to track companies with pending new drug, biological agent, or medical device new product decisions at the FDA. With the launch of BioMedReports.com, the FDA Calendar has expanded to include the following categories: pending new submissions to the FDA (e.g. NDA, BLA, 510k, PMA, sNDA, sBLA filings), pending complete response letter (CRL) re-submissions to the FDA, and pending late-stage clinical trial results.

My stock suggestion today is in the spirit of adventure. It’s a medical technology company that doesn’t really have revenues, much less earnings, and it doesn’t have a product approved for sale. What it has is a great idea for a hand-held device that will enable dermatologists to scan skin lesions to determine whether they are melanomas.

The company is Electro-Optical Sciences (MELA), and the device-called the MelaFind-uses light at various wave-lengths to scan the suspicious lesion. It then uses its database of melanoma images to calculate a diagnosis.

The Obama administration Monday backed down from its demand that Congress enact a public option health plan and said that any approach that would increase competition among health insurers would be acceptable to the president.

Good move. If Congress takes the bait, health insurers will face uncertainty instead of extinction.

Novo Nordisk (NOVO) wrote down $280 million for its investment in inhaled insulin in January of 2008, but this is dwarfed by Pfizer’s (PFE) write off in November of 2007 of $2.8 billion for its investment in Exubera, its entry into the inhaled insulin market. By March of 2008, Lilly (LLY) also gave up the ghost, and wrote down its efforts in the area.

Sanofi-Aventis (SNY) finally received some good news when the U.S. FDA approved the company’s heart drug, Multaq, on July 2, 2009. Multaq provides patients suffering from atrial fibrillation (AF) or atrial flutter (AFL) with a new treatment option.

The approval process for Multaq was not exactly smooth sailing with the company receiving a non-approvable letter from the FDA for its initial new drug application (NDA) filing in 2006. Sanofi resubmitted its NDA in 2008 and received a favorable response from an FDA advisory panel in March 2009.

Below is a summary of updates to the BioMedReports.com FDA Calendar, which includes a database of 240 entries as of 7/6/09. The calendar was originally created by Mike Havrilla to track companies with pending new drug, biological agent, or medical device new product decisions at the FDA. With the launch of BioMedReports.com, the FDA Calendar has expanded to include the following categories: pending new submissions to the FDA (e.g. NDA, BLA, 510k, PMA, sNDA, sBLA filings), pending complete response letter (CRL) re-submissions to the FDA, and pending late-stage clinical trial results.

1. No additional clinical studies have been requested;
2. The additional data requested do not involve new data analyses; and
3. The Company plans to formally respond to the FDA’s requests by 7/8/09.

America’s health care system is broken, but President Obama inspires little confidence with his fix.

Health care absorbs 18 percent of GDP—about 50 percent more than in other wealthy countries. Prices are too high and are a terrible burden on jobs creation.