Investors Seem to Think Hillary Clinton Really Will Take On Big Pharma

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Photo: Ethan Miller/Getty Images

The health-care industry has donated millions of dollars to Hillary Clinton’s 2016 campaign. For some of the Democratic nominee’s left-wing skeptics, this fact suggests that Clinton’s advocacy for the public option and combating price-gouging in the pharmaceutical sector is a strictly “public position.”

But health-care-industry investors seem to disagree. As Clinton’s lead in the presidential race widened last week, the S&P 500’s drug, insurance, and hospital stocks posted a 3.3 percent collective decline.

“You have a perfect storm — you obviously have the headline risk associated with the election,” Craig Sterling, head of U.S. equity research at Pioneer Investment Management, told Bloomberg. “There’s a much brighter light on the whole system. Whether this is temporal or not, it’s hard to know. If Hillary Clinton gets elected, it seems to be like there will be continued interest in it.”

“Pharma and biotech probably have more at stake in this election than any industry,” Dan Clifton, head of policy research at Strategas Research Partners, told the outlet.

Clinton has decried “price-gouging” in the pharmaceutical sector since the early days of her campaign, and has called for allowing Medicare to negotiate drug prices.

Last month, amid controversy over skyrocketing EpiPen prices, the Democratic nominee proposed a federal consumer-oversight board that could fine drug companies for “unjustified” price increases, and then use the accrued revenue to fund lower cost alternatives. Mylan, the maker of EpiPen, saw its stock plummet in the wake of Clinton’s announcement.

The CEO of Pfizer called Clinton’s plan “very negative for innovation.”

It would also be very negative for drug-industry profits — a point Morgan Stanley emphasized in a new note to investors.

“With Trump’s chances fading, and Clinton’s lead growing, the ‘Democratic Sweep’ now carries greater, albeit still small, odds, raising the prospects for increased infrastructure spending and for heavier regulation of the financial and pharma sectors,” the bank advised clients Monday morning.

At present, a single disparaging tweet from Bernie Sanders can cost a drug company $387 million in an afternoon.

Such tweets would, presumably, be even more potent, were Sanders chairman of the budget committee in a Democratic Senate, while Nancy Pelosi was speaker of the House.

Still, Morgan Stanley expresses some faith in the resilience of Republican (and/or moderate Democratic) obstruction.

“If we’re wrong, and there is a Democratic sweep, there are still challenges to executing a progressive policy agenda,” the analysts wrote. “Republicans will likely maintain filibuster power in the Senate, and several key Senate Democrats are up for reelection in Republican and swing states in 2018, which may temper their enthusiasm for more progressive policies.”

Nonetheless, there’s a broad consensus among investors that Clinton’s election will heighten the risk of new, profit-shrinking regulations on health-care companies and banks.

Which is to say: When evaluating the sincerity of Clinton’s support for reforming the industries she accepts donations from, there’s more than one way to follow the money.

Health-Care Stocks Dip As Democrats Gain in Polls