Investors need to get out their calendars and a pen because the health care industry is about to be rocked by two huge decisions this week. One of them is about as sweeping and high-profile as they come, while the other features the market's best-performing stock, a small biotech with a new drug that treats this nation's biggest health problem.

Wednesday, June 27
Arena Pharmaceuticals (Nasdaq: ARNA) has essentially gone vertical since receiving a surprisingly strong 18-4 FDA advisory panel recommendation that its obesity drug lorcaserin be approved. Shares have quadrupled over the past two months but have taken a breather these last two trading sessions as investors book profits. However, this story could radically change in 24 hours, as a massive binary event, the company's June 27 PDUFA date looms large.

If approved, Arena will have the first true weightloss drug on the market since Meridia was pulled because of safety concerns in 2010. It leapfrogged competitor VIVUS (Nasdaq: VVUS) when the FDA asked for a risk evaluation and mitigation strategy for its drug Qnexa. However, I see both VIVUS and Orexigen (Nasdaq: OREX) jumping if lorcaserin is given the green light, with an indication the FDA has softened its stance on the space.

Approval will obviously be good for Arena, but I am not sure how much shares will pop. If it did jump, Arena would be in line with VIVUS in terms of market cap, and both companies' values are tied directly to their obesity drugs. Investors still see Qnexa as more likely to be approved, largely because its birth defect issues can be mitigated by not giving the drug to women who can become pregnant.

If the FDA goes against its advisory committee, which it is known to do, shares of Arena will plummet substantially. Lorcaserin is Arena's only late-stage drug, and a rejection will be devastating. It may have to run additional trials prior to instead of post-approval, like Orexigen had to do with its rejected obesity drug Contrave. Because of this risk, I urge investors not to gamble on this risky binary event.

Thursday, June 28
This is the big one. The Supreme Court has teased us for two weeks on the impending decision regarding the constitutionality of the Affordable Care Act. The health care reform legislation, colloquially known as "Obamacare," will receive one of three fates:

  1. Entire law is upheld.
  2. Individual mandate is struck down.
  3. Entire law is struck down.

If the entire law is upheld, that is essentially the status quo, although certain key provisions have yet to be implemented. If the entire law is struck down, then we go back to our system pre-2010, and given bitter congressional partisanship, future reform is unlikely in the near term. Before oral arguments, conventional wisdom among court observers was that the entire law would be upheld; however, hostility toward the individual mandate and discussions on its severability have many thinking it is the most vulnerable piece of the legislation.

If the individual mandate is struck down, but the rest of the ACA is kept, expect the insurance industry lobby to go crazy trying to water down the remainder of the bill. The insurers need healthy individuals joining the pool to offset the risks that come from accepting customers with pre-existing conditions. Insurers like UnitedHealth have talked about extending some popular parts of the law, like allowing children to stay on their parents' insurance until age 26, but of course those early 20-somethings are exactly the type of customer the industry was hoping to capture with the mandate.

There will be a variety of winners and losers if the entire law is struck down. The biggest winner would be medical device companies like Intuitive Surgical (Nasdaq: ISRG) that will avoid paying a 2.3% tax on revenue, not income, to help fund the legislation. Meanwhile, if expansion of Medicaid to cover 18 million that can't afford insurance doesn't happen, than specialty providers like Molina Healthcare will miss out on a huge opportunity. Pharmacy benefits companies like Express Scripts (Nasdaq: ESRX) would also see an uptick in customers and generic drug usage, where the company sees strong margins.

Whatever the court decides on Thursday, expect the debate to continue through the 2012 elections. Even if the ACA is upheld as constitutional in its entirety, Republicans have made repealing the health care legislation one of their top priorities. Fortunately, The Motley Fool's free report, "These Stocks Could Skyrocket After the 2012 Presidential Election," highlights four unique ways to profit from the election -- if you buy the right stocks before the next president's term begins. Get your free copy, available for a limited time only, by clicking here.