The election results cast a black cloud over drugmakers, whose stocks sank across the board on worries that the Democrats - led by Sen. Nancy Pelosi of California, the incoming House Speaker - want Medicare coverage to include provisions for the government to negotiate directly with the drugmakers, which could drive down prices.

Barbara Ryan, analyst for Deutsche Bank North America, called the Democrats' victory a "negative surprise" for Big Pharma. But the Democrats could still face a presidential veto of any bill that would squeeze drugmakers, she noted.

Medicare Plan D, enacted at the start of the year, has helped big drugmakers thus far, with the increased drug coverage adding 1 percent to 2 percent to industry-wide sales for the year, analysts say.

Merck (MRK) sank more than 3 percent in trading Wednesday, Schering-Plough (SGP) tumbled 2.5 percent, Pfizer (PFE) lost nearly 1.5 percent and Bristol-Myers Squibb (BMY) and GlaxoSmithKline (GSK) fell as well. Merck's decline was exacerbated by the U.S. and Canadian governments holding the company liable for $5.6 billion in taxes.