April 1 ushered in a new era with respect to the medical use of marijuana in Canada. There are emerging implications for plan sponsors that should be considered proactively. Health Canada has repealed the Marijuana Medical Access Program (MMAP) in favour of the Marijuana for Medical Purposes Regulations (MMPR) whereby patients using medical marijuana will have to access their supply from one of 12 licensed growers (as of April 1, 2014) in Canada and can go through their own doctor for approval as opposed to having to apply to Health Canada.

The situation has been complicated by a March 21 injunction that was imposed by a federal court judge in British Columbia that will allow patients currently approved to grow their own supply at home to continue to do so. Recent estimates have suggested that up to 24,000 Canadians have licences to grow their own medical marijuana supply. There has been a significant backlash to the new regulations from existing patients who grow their own supply who fear that they will no longer be able to afford the new commercial prices that are expected to range between $4 and $12 per gram. It’s been estimated that patients growing for themselves can spend between $1 and $3 per gram to produce.

The use of medical marijuana in Canada has exploded since 2001 when Canadians were first able to legally acquire marijuana for HIV/AIDS and a handful of other conditions. As of 2014, the number of Canadians using medical marijuana has grown to approximately 40,000. according to Health Canada, and, according to the government, that number is expected to increase as much as tenfold in the next decade alone. While this may not have been on the radar screen of plan sponsors in the past, given that it was a niche market controlled by Health Canada, when we are looking at a market size of hundreds of thousands of Canadians in the future on an open market, that will change.

On Apr. 3, Tweed Marijuana Inc. went public on the TSX Venture Exchange. It’s one of the initial group of 12 licensees. The company has gained notoriety for taking the old Hershey’s chocolate factory in Smiths Falls, Ont., and turning it into Willy Wonka’s dream garden. Even facing the uncertainty of what the federal injunction has imposed, its market capitalization by Tuesday of the following week hit nearly $150 million. There are clearly some very bright minds in financial markets who also believe the sky is the limit for the growth of the medical marijuana business in Canada.

The major uses for medical marijuana today include the following:

  • an appetite stimulant in patients with HIV and cancer;
  • chemotherapy-induced nausea and vomiting;
  • treating muscle spasticity in diseases such as multiple sclerosis;
  • seizure prevention in epilepsy; and
  • treating chronic pain

That being said, Health Canada has not placed any restrictions on physicians for what they can and cannot prescribe medical marijuana for. It’s expected that the use of medical marijuana will expand rapidly to treating a whole host of other conditions, including diabetes and dementia.

The interesting thing about the evolving medical marijuana market is that cannabis contains hundreds of different compounds, but the two active ingredients understood to have the greatest pharmacological effect are tetrahydrocannabinol (THC) and cannabidiol (CBD), and the combination of strengths of THC and CBD in new strains is limitless. There’s an opportunity for licensed growers to develop specific strains for specific disease states. There’s also emerging work being done in the field that would suggest that different diseases respond to different levels of THC and CBD, so there is an opportunity down the road for licensed growers to start developing an endless array of branded products.

The new rules for using medical marijuana involve the following:

  • obtaining a prescription from any licensed physician—so access to prescriptions will not be a challenge for a plan member, it’s not as though they will need to wait to see a specialist;
  • that prescription is forwarded to one of the licensed growers of their choice;
  • producers of medical marijuana will consult with patients with respect to appropriate products and strains;
  • delivery by courier is required—there will be not retail access to medical marijuana, and patients will be limited to 150 grams per month of dried buds.

Based on a 150 gram per month maximum, some patients could be looking at out-of-pocket costs of $1,800 per month or more than $20,000 per year. This is where plan sponsors may start to find more pressure from members to look at how they will cover medical marijuana under existing drug benefits plans.

Here are some of the issues that are on the table for plan administrators, claims processors, plan sponsors and their advisors to consider:

  • Will medical marijuana be covered at all under third-party plans if prescribed by a licensed physician? If so, for what disease states/uses, or will there be any controls over what it’s allowed to be used to treat?
  • Since medical marijuana will not have a drug identification number because the product cannot be regulated and controlled by Health Canada, how will it be handled by private plans? Will plan administrators issue product identification numbers (PINs)?
  • Will PINs be issued for all licensed growers or just those who have been validated by various third-party payers?
  • Will PINs be issued for all strains produced by a licensed grower or just specific strains?
  • Will healthcare spending accounts cover medical marijuana from any licensed grower?
  • Will plans cap what they will pay? Will there be a step-therapy process or prior authorization protocol implemented?
  • There are 12 licensed producers today, but Health Canada has received up to 600 applications from other groups looking for a licence. How will plans deal with an expansion of suppliers from a dozen to possibly hundreds down the road?

Some food for thought as one of the most interesting market expansions in the healthcare space in recent years unfolds around us.

Mike Sullivan (msullivan@cubichealth.ca) is president of Cubic Health, an analytics and drug plan management company based in Toronto. Follow Mike on Twitter at @cubichealth.

These are the views of the author and not necessarily those of Benefits Canada.

Copyright © 2018 Transcontinental Media G.P. Originally published on benefitscanada.com

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See all comments Recent Comments

Jason:

If only it were 100% legal to grow and posses, then all these questions and problems would not exist. Hurray for government interference! long live bureaucracy and red tape!

Wednesday, April 23 at 7:57 pm | Reply

Dana Larsen:

You call it a “prescription” in this article, but it’s not actually a prescription. If it was a true prescription, doctors couldn’t charge an extra fee to provide it, but they do. And if it was a true prescription, then the cannabis medicine would be GST-free, but it’s not.

Thursday, April 24 at 2:31 pm | Reply

Matt:

I am a new patient and am unable to get access to medicine under the new rules at all. You have one letter you can give out and then you are locked to a supplier. Tweed is my supplier and is unable to register me as a client because they don’t have enough product. They say they will register me once their production comes online. As to do that they literally have to build new production space and then still grow a crop in it.. I expect that process to take years, not months. I don’t expect to get legal access to medication for a very VERY long time to come. Certainly not before my prescription expires and I have to go through the massive expense and effort it requires to get another one in Alberta.

Wednesday, April 30 at 3:17 am | Reply

Jon:

You can have your doctor switch your supplier if there is no product try oganigram or bedrocan

Monday, December 19 at 1:14 pm

Shawn:

I have been injured since 2003, between 2003-2011 my Doctor prescribed a myriad of drugs and every time I complained about the side effects would get a newer and better drug with more side effects; it took a an episode in the hospital where I needed 4 pints of blood, to finally earn my medical marijuana license. I had gotten so violently ill as a side effect that I ended up tearing my insides and started to bleed out, only then did I finally get my license to grow. After 1 year they take away the only thing that was allowing me to return to the workforce. I am now registered with one of the companies, that took almost 2 months and now in order to live some semblance of life I must now pay $1824 per 30 day period. My injuries have left me on the disabled list and I am currently on social assistance because I am unable to work unless I have my medication………..want to know the kicker, I have access to any amount of narcotic, muscle relaxer or anti-inflammatory but if I take them I cant leave the house due to illness and fear of returning to the emergency department. Any suggestions on how to proceed, I don’t want to give up yet………..!

Tuesday, July 15 at 9:08 am | Reply

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