Medical Marijuana Set to Steal $4 Billion from Big Pharma

It’s estimated that if medical marijuana continues to gain momentum as it has been (and is legalized for medicinal use in all 50 states), the pharmaceutical industry could lose out on some $4 billion a year.

The study was performed by New Frontier Data, a company that provides analytics and data to people in the cannabis business, and comes at a pivotal point in medical history.
With a country facing a deadly opioid epidemic and more people interested in marijuana as medicine than ever before, the analysts behind the report aimed to show that medical cannabis could directly influence impact in a few key areas of pharmaceutical sales.

A report released in May by New Frontier Data suggests that if people were free to choose medical marijuana, this could have a significant impact on nine specific conditions currently treated by both medical marijuana and modern pharmaceutical drugs. These conditions include:

Chronic pain
PTSD
Anxiety
Epilepsy
Nerve damage
Chemotherapy-induced nausea/vomiting
Sleep disorders
Tourette’s syndrome
Glaucoma

The report was amassed using data collected from study that was released last year by the University of Georgia that showed a some 11 percent reduction in Medicare pharmaceutical prescriptions between 2010-2013 amongst states that had legalized marijuana as medicine. A similar study conducted this year found a noteworthy reduction in Medicaid pharmaceutical prescriptions in medical marijuana-friendly states.
This 11 percent decrease in pharmaceutical sales was applied by New Frontier analysts to the total amount of money spent nationally on the nine specific recognized conditions each year. They found that medical marijuana could wipe out $4.4 billion to $4.9 billion each year from the pharmaceutical industry if patients chose to medicate with marijuana instead of prescription medication for these certain conditions.

This also gives rise to the idea that a legitimate medical marijuana market could have a serious positive impact on the nation’s opioid epidemic.

While $4 billion is barely a dent in the $425 billion spent annually on prescription medication, it’s a definitely a start. John Kagia, executive vice president of industry analytics for New Frontier, says “the impact of medical cannabis legalization is not going to be enormously disruptive on the pharmaceutical industry,” but goes on to add that certain companies that cater to specific therapies could take a heavier hit.

He spoke particularly of Pfizer Inc., who sells medications specific for epilepsy, anxiety, depression, seizures, epilepsy, and glaucoma. Kagia estimated that this major player in the pharmaceutical industry could lose a half-billion dollars of their $52.8 billion (2016) annual sales.

While medical marijuana could have somewhat of an impact on the pharmaceutical industry, drug policy expert Robert Mikos believes estimating just how big this impact could be would take some time. He notes that even if legalization happened “overnight”, getting physicians to recommend marijuana over prescription medication would most likely take a while.
Then there’s the potential of the pharmaceutical companies who have established themselves in the medical community of taking a stand against medical marijuana. They’ve certainly got the money to do so. Mikos speculates, “I think there are pharmaceutical companies that are worried about the impact this could have on their sales. Their complaint is that you’ve got a movement afoot that is making grandiose and unsubstantial claims about health benefits, and it’s hard for them to push back against that.”

Then there are those who are those companies looking to cash in on the potential medical cannabis contains. Take Arizona-based Insys Therapeutics for instance, who not only put $500,000 toward opposition of Arizona’s recreational marijuana ballot measure in 2016, who is also developing a synthetic form of THC. And GW Pharmaceuticals, a British pharmaceutical company is known for their multiple sclerosis treatment, Sativex, the first natural cannabis byproduct to receive market approval in the world.

With all the hype surrounding the significant chunk of change the pharmaceutical company could stand to lose comes the fear that the federal government might go so far as to limit medical marijuana manufacturing to the pharmaceutical industry.
Regardless of how much money medical marijuana ends up taking from the big pharma, one thing is certain. There is a substantial portion of the population that stands to benefit from the national legalization of medical cannabis. And it seems that when the people are given a choice on the medicine they can take, that medical marijuana is literally smoking the competition.

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