Over the past year we have heard stories of Big Pharma being out to get the growing medical cannabis industry. We wanted to know if there was any truth behind these fears, oft dismissed as conspiracy theories.
We spoke to a pharmaceutical market analyst* to see if the cannabis industry should fear Big Pharma. Here’s what they told us.
*Due to the sensitive nature of their work, their name has been withheld.
Despite its slow entrance to the clinical setting, medical cannabis research has recently seen renewed interest due to a plethora of data now available boasting its efficacious and safe effects in treating various diseases. Presently, it is no secret that Big Pharma is lobbying against the increasingly confident cannabis wave since the conditions that cannabis may be used to treat are highly prevalent, and thus currently very lucrative for Big Pharma.
Big Pharma’s future of ‘blockbuster profits’ are under threat by the pricing cut downs promised by the two US presidential candidates. The US drug market is the largest in the world in terms of profitability, which is greatly aided by the high cost of prescription drugs – on average between 3 to 5 times higher than in the EU. Big Pharma have spent years reaping the rewards from their high price pharmaceuticals until a public firestorm initiated from Martin Shkreli’s 5,000% price hike on toxoplasmosis treatment Daraprim put Big Pharma’s prices right in the spotlight. This is significant, as public awareness of high drug prices fuels enthusiasm for a cheaper, effective option such as cannabis.
The promised beat down on drug prices has now coincided with a surge in public and madical interest in the use of medical cannabis; a potential double hit on Big Pharma’s profitability. Indeed, legalising medical cannabis would significantly impact Big Pharma’s sales growth and US patients, in states where cannabis is legalised, are already turning towards its use against prescription medications.
A new survey conducted by the Centre for Addictions Research of British Colombia found that 87% of surveyed therapeutic cannabis users gave up prescription medications, alcohol, or other drugs in favour of cannabis. Moreover, a study from the University of Georgia examined the costs of Medicare’s prescription drug benefit program in 2013 over 17 states, and found a savings of $165.2 million in prescription costs due to cannabis use. Savings in this manner are likely to rise significantly as cannabis legalisation sweeps over additional countries, targeting an increasing number of disease areas. Hence, it is not overly surprising that Big Pharma is fearful at the present time as these revenues are being bled directly from their profits.
In an age where prescription medications are at an all-time high and patients are becoming the key stakeholders in determining the outcomes of expensive medications, we are now looking more towards the cost-effectiveness of alternatives. Evaluating the cost-effectiveness of drugs is now the established strategy around EU country-specific regulators, such as NICE and G-BA. These healthcare austerity measures are becoming increasingly stringent on the cost-benefit analysis of new agents in comparison to existing technologies. Unfortunately for Big Pharma, this regime has helped keep drug prices much lower in the EU in order for them to be deemed ‘cost-effective’.
Cannabis may prevail here due to its low associated cost, disease versatility, demonstrated efficacy, and improved safety against competitor prescription medications. In this manner, cannabis may acquire a positive cost-effectiveness evaluation in the EU which would create a window of opportunity for its uptake against Big Pharma’s pricier prescription meds in the future. Indeed tides are turning as Canadian cannabis research giant, Tilray, have recently imported the first ever legal shipment of medical cannabis into the EU from North America, which marks an important milestone in the global progression of legalised cannabis.