the possibility of democrats capturing the presidency and congress is worrying enough for pharmaceutical and other health-care investors. but that isn<u+2019>t the full extent of risk that shareholders face this election season. true, presidential front-runner hillary clinton has proposed numerous ideas to curb the pricing power of drug manufacturers such as allowing medicare to negotiate prices with manufacturers. most of her proposals would require an act of congress to enact, which becomes more likely the better democrats do at the voting booths. there are risks elsewhere too, though. california voters are set to weigh in on a referendum known as proposition 61 . that proposed law would mandate that state agencies would pay no more for prescription drugs than the price paid by the department of veterans affairs.<u+00a0>the federal agency by law is owed steep discounts from a given drug<u+2019>s list price and is also empowered to further negotiate on price. polls suggest the measure has a realistic chance of passing. the primary risk for investors from the law isn<u+2019>t an immediate financial hit for companies. implementing such a broad mandate would be challenging, for starters. and should the measure pass, companies would be incentivized to simply increase list prices further as a way to compensate for any mandated discounts. that could worsen the pricing burden on patients not covered by the law. get financial insights and commentary on global investing from the wall street journal<u+2019>s heard on the street team. subscribe to the podcast. instead, the measure<u+2019>s passage would deepen uncertainty, ensuring that risks to government pricing policy remain on the landscape. such a law in the country<u+2019>s largest state would make other voters<u+2014>and politicians<u+2014>take notice. that may once again chill investor enthusiasm for the sector, in turn impacting valuations. the nasdaq biotechnology index is down 11% over the past three weeks as these fears crystallize. other sectors which also benefit from high drug prices, such as pharmacy-benefit managers and drug distributors, also face risks from a gloomier policy outlook. on the other hand, should the political storm pass without incident, industry fundamentals are likely to return to focus.<u+00a0>that would be good news. but until then, it seems the november elections will be cause for health-care investors to sweat, even without mrs. clinton or donald trump being the reason.
the biggest pharma election risk is in california  - wsj
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