If the United States legalized medical marijuana for conditions such as chronic pain, anxiety and seizures, cannabis could siphon more than $4 billion annually from the nation’s pharmaceutical industry, a new study hypothesizes.
The report expected to be released Wednesday by New Frontier Data, a provider of data and analytics to cannabis businesses, is intended to show how cannabis could disrupt pharmaceutical sales in nine key treatment areas.
“Any opportunity for alternatives that could result in reduced pharmaceutical drug use might present a compelling point of discussion from a public policy standpoint,” said John Kagia, executive vice president of industry analytics for the Washington, D.C.-based New Frontier.
With the backdrop of opioid use concerns and the simmering debates on health care reform and marijuana legalization, Kagia and fellow analysts sought to explore the idea of pharmaceutical substitution — people eschewing prescription drugs and using medical marijuana to treat certain ailments.
The foundation of New Frontier’s report is a 2016 study out of the University of Georgia that tracked Medicare Part D spending in states that legalized medical marijuana.
From 2010 to 2013, Medicare prescriptions declined for drugs in which medical marijuana could be an alternative, amounting to annual savings of $165.2 million in 2013, the researchers found. A follow-up report from the same researchers showed that if medical marijuana were legal nationally, taxpayers could save $1.1 billion on Medicaid prescriptions annually, the Washington Post reported.
Kagia extrapolated that research by applying the average prescription decline of 11 percent to annual pharmaceutical spending for the most common medical marijuana qualifying conditions (see chart below). To determine which ailments to analyze, New Frontier reviewed current state medical marijuana laws and the National Academies of Science’s report showing the potential efficacy of medical cannabis in certain conditions. They arrived at the following nine conditions to examine in their study: chronic pain, post-traumatic stress disorder, sleep disorders, anxiety, epilepsy, nerve pain, chemotherapy-induced nausea and vomiting, Tourette syndrome and glaucoma.
New Frontier then reviewed market research reports for each condition and mapped out pharmaceutical spending through 2019 — calculating total costs that climbed from $40 billion in 2016 to more than $44 billion in 2019. If cannabis replacement accounted for 11 percent of that total, the annual substitution cost would be $18.5 billion: $4.41 billion in 2016, $4.55 billion in 2017, $4.7 billion in 2018 and $4.86 billion in 2019, according to New Frontier.
Those figures are substantial on their own, but are just a sliver of the U.S. pharmaceutical market, which reported prescription drug spending of $425 billion in 2015, according to IMS Institute for Healthcare Informatics.
“The impact of medical cannabis legalization is not going to be enormously disruptive to the pharmaceutical industry,” Kagia said.
But to certain companies, catering to certain therapies, the effect could be more pronounced, he said.
New Frontier noted specifically Pfizer Inc., which has medications for conditions such as anxiety, epilepsy, glaucoma, depression, anxiety and seizures. The New York-based Pfizer, which had $52.8 billion in sales in 2016, could take a half-billion-dollar hit annually, New Frontier estimated.
Pfizer officials could not be reached for comment Tuesday afternoon.
It’s reasonable to assume that medical marijuana will have an effect on pharmaceutical sales, but estimating that with any precision is a tough task, said Robert Mikos, drug policy expert and law professor at the Vanderbilt University Law School.
“Even if you had legalization overnight, it typically takes a while to get physicians who are comfortable recommending the drug,” he said.
Questions abound as to what national medical marijuana legalization could look like, to what extent Food & Drug Administration regulations are policed, and how established pharmaceutical companies may try to oppose the cannabis market.
“I think there are pharmaceutical companies that are worried about the impact that this could have on their sales,” Mikos said. “Some, rightly or wrongly, complain they’re held to a much higher standard for their products. Their complaint is that you’ve got a movement afoot that is making grandiose and unsubstantiated claims about health benefits, and it’s hard for them to push back against that.”
There have been some instances of pharmaceutical firms opposing state-based legalization movements. Chandler, Ariz.-based Insys Therapeutics, which is developing a synthetic THC drug, ponied up $500,000 in opposition of Arizona’s recreational marijuana measure in 2016.
Others, such as GW Pharmaceuticals, are hoping to capitalize on the potential of medical marijuana.
New Frontier’s math may not ultimately prove exactly true — the impact could be larger or smaller than projected — but the data do point to a trend worth watching, Mikos said.
“If the data are accurate, it does suggest that there’s a significant portion of the population that might benefit from the legalization of medical marijuana,” he said.
Original article via TheCannabist