Shares of health care companies took another blow Wednesday, as the developmental climate of health care, including requirements for lower drug prices and "Medicare for All" plans, continued to weigh heavily on the Wall Street senses.
Four of the Dow Jones Industrial Average s
10 biggest losers on Wednesday were health enterprises, including UnitedHealth Group Inc.
Merck & Co.
and Walgreens Boots Alliance Inc.
SPDR Health Care Select Sector listed fund
XLV,  -3.32%
fell 2.6% against a 3 month low, having fallen 2.1% on Tuesday. It was the only SPDR ETF that track S&P 500's 11 sectors that lost ground year by day. By comparison, the S&P 500 index is
has climbed 16% this year.
Wednesday's selloff was led by medical care company DaVita Inc.
insurance company Anthem Inc.
and the drug company Alexion Pharmaceuticals Inc.
Health companies have met with investors' reactions to possible changes in the health policy landscape. Unlike political pressure over heavy drug prices, and recently, a new US Sen proposal. Bernie Sanders, who proposes a single payer system, is becoming increasingly dirty around an industry that once considered a safe haven.
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"Volatility addresses the health care clinics around the election cycles as emotions move around in response to various candidates' plans to change health care, especially since health commissions has been a key topic for voters since 2007, "wrote Brian Tanquilut of Jefferies in a note to clients on Wednesday.
Health insurance companies such as Anthem and peers UnitedHealth, Humana Inc. and Cigna Corp.
has fallen substantially this year.
UnitedHealth shares have cut 7% over the past two days despite the company's reporting revenues on Tuesday that beat expectations, as investors seemed nervous about the possibility that Medicare for everyone became a reality. It follows that last week 10.3% drubbing, which was the worst weekly achievement in 10 years.
At the same time, Anthem shares fell 9.0% this week after losing 13.8% last week, the largest weekly decline since February 2009.
Health care facilities and managed care companies could face "temporary downside risk" said JP Morgan analysts in a Wednesday note to clients. Healthcare company HCA Healthcare Inc.
shares have fallen 11% this year, even though Tanquilut of Jefferies called the sale "overdone."
"We will still have hospitals to be viable even though Medicare for All is adopted," he said. "As currently suggested, [Medicare for All] will most likely reduce the need for managed care companies … on the other hand, the need goes For [health-care] vendors do not discard, so the government will need hospitals, medical practice and other [health-care] providers to remain viable to protect access to care. "
Pricing pressures and fears of Medicare for All can also play a part in the falling stock prices of drug companies such as Merck and Pfizer. Drugs manufacturers will have to pair their prices significantly under a single payer system," said Raymond James health politician analyst Chris Meekins in a recent note to clients. The simple payer – in this case the government – would have significant bargaining power and could "repay patents" if the companies refused to pay the government's desired rate, he wrote.
Earlier this month, Walgreens shares fell 12% after the company reported second quarter earnings that lost expectations, while the target was reduced for the full year, at which time CEO Stefano Pessina called the period "the hardest quarter we've had since the formation of the Walgreens Boots Alliance", referring to falling generic drug prices and lower reimbursements from payers.  Rivals CVS Health Corp.
and Rite Aid Corp.
RAD, + 2.33%
has also seen its shares fall, with Rite Aid declining 35% and CVS falling 20% this year. Shares of Walgreens have fallen 20% this year to date.
"The retail / supply chain complex is very difficult to own … in the short term given the uncertainty regarding [Affordable Care Act] drug pricing, discounts," says Jefferies Health Care trading desk strategist Jared Holz MarketWatch in an email. "On the retail side, trends are weak on average, and Amazon will continue to be a long-lasting force for the industry to deal with."