Despite the shock of Donald Trump's election to be the 45th U.S. president, shares of pharmacy benefit managers were rallying on Wednesday as fears of a crackdown on drug prices abated.
"The PBMs were getting squeezed a few weeks ago. A Trump win relieves some pressure on them," JPMorgan analyst Nadia Lovell said. "It's very unlikely that you see some pricing reforms."
Democratic nominee Hillary Clinton repeatedly promised to go after companies that drastically increased drug prices, while Trump took a more muted stance on the pricing controversy.
Clinton indicated that she would fine drug companies that unjustly raised prices and cap out-of-pocket costs paid by patients for expensive treatments. Wall Street's reaction was largely negative, with drug stocks falling last September when she tweeted about "price gouging" within the sector.
Following Trump's victory, more than 80% of health care investors believe that major drug price reforms will no longer occur, according an Evercore ISI survey.
A defeat to California's Prop 61, which would have limited the amount that states pay for prescription drugs, is also benefiting drug stocks today.