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After all that lobbying, drug companies can breathe a sigh of relief

Donald Trump speaks at a caucus night watch party at the Treasure Island Hotel & Casino on February 23, 2016, in Las Vegas, Nevada.
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Donald Trump speaks at a caucus night watch party at the Treasure Island Hotel & Casino on February 23, 2016, in Las Vegas, Nevada.

The political pressure on drug stocks has faded with Donald Trump's election win and voter rejection of a California ballot initiative on pricing.

Major pharmaceutical companies had spent at least $109 million to urge voters to say "no" to Prop 61 in California, which could have reduced prices for some drugs but potentially limited their availability. As of Wednesday morning, with 100.0 percent of precincts partially reporting, the vote was 53.7 percent against the proposal and 46.3 percent in favor, according to California's Secretary of State.

"Irrespective of your political leanings, this is unambiguously the most positive scenario a biotech investor could ask for," said Paul Yook, portfolio manager at BioShares Funds.

"I think we could be back to growth mode. ... Pullbacks will be bought," he said.

The iShares Nasdaq Biotechnology ETF (IBB) surged nearly 9 percent in its best day since Oct. 13, 2008, and topped its 50-day moving average for the first time in more than a month.

Comments from Hillary Clinton and Bernie Sanders on high drug prices have weighed on pharmaceutical stocks.

Despite a nearly 9 percent surge Wednesday, the biotech ETF was still down more than 13 percent over the last 12 months and was trading about 17 percent below its 52-week intraday high, or in correction territory.

"On Prop 61, its defeat means efforts to drug price regulate at the state level become much more difficult," Terry Haines, managing director and head of political analysis at Evercore ISI, said in an email. "In a political context 61's defeat is a black eye for Democratic progressive supporters of this kind of initiative, Senator [Bernie] Sanders in particular."

The passing of Prop 61 would have largely prevented state agencies, which cover about 5 million people, from paying more for prescription drugs than what the federal Veterans Affairs Department pays. The VA often pays the lowest prices for drugs in the nation, often at a steep discount compared to other government agencies and Medicare.

To be sure, President-elect Trump's health-care platform highlights the need to negotiate drug prices. Trump also plans to repeal the Affordable Care Act.

"ACA reform if successful would broadly benefit hospitals, providers and insurers but is probably negative for pharma and bio if successful because some sort of drug pricing action happens on Part D — adding price to the government negotiating criteria in the law along the lines of Mr. Trump's campaign position," Haines said.

— CNBC's Dan Mangan and Meg Tirrell contributed to this report.