William Blair analyst John Kreger attributes the 20% pullback in shares of Diplomat Pharmacy from the June highs to growing concerns about the company's exposure to pharmaceutical rebates, which the Trump administration is seeking to regulate as part of a broader effort to lower drug prices for consumers. The analyst views the recent selloff as overdone. The vast majority of Diplomat's newly acquired pharmacy benefit management business is with commercial clients, rather than from Medicaid or Medicare Part D, Kreger tells investors in a research note. As such, any new regulations out of the Trump administration would presumably not affect PBM dealings with commercial clients, at least not directly, the analyst adds. Further, the analyst notes that rebates are just one of three broad ways in which PBMs are compensated by their clients. The other two are administrative per-claim fees and spread pricing on dispensed prescriptions. If rebates become less popular, the economics of the business could quickly shift to other payment mechanisms such as higher per-claim fees, Kreger contends. He does not view regulation of drug rebates as a long-term threat to the economics of the PBM business model for Diplomat or its larger peers. The analyst keeps an Outperform rating on Diplomat Pharmacy.