Public Insurance for Medical Cannabis Patients Proving to Be a Healthy Prescription
By Esteban Rossi I., Ph.D., Analyst, New Frontier Data
As the legal cannabis industry matures, various jurisdictions sought to expand public insurance networks to include coverage for medicinal cannabis products. The inclusion of these products depends on three factors: a sound regulatory framework; government support; and robust distribution channels where doctors can prescribe, and monitor the clinical outcomes for cannabis patients. Since cannabis flower and generic formulations are cheaper to produce and distribute, the inclusion of medical cannabis in public insurance systems offers important economic benefits for all parties involved.
The regulatory pathway
In recent years, numerous countries have established guidelines to guarantee patient access to medical cannabis. Guidelines describe standards for the manufacture and distribution of cannabis flower, generic formulations, and finished products. Subsequently, regulators must implement proper mechanisms to monitor cannabis production and prescriptions, evaluate clinical outcomes, and develop detailed understanding about the cost structure of the value chain (e.g., from seed to patient).
At first, ensuring medical-grade standards for cannabis flower, derivatives, and magistral preparations (e.g., tinctures) appears complex, but that is not necessarily so. As shown by multiple firms in Latin America, it is completely feasible to mass-produce derivatives and magistral preparations (i.e., personalized formulations) at a low cost. The Colombian legal framework for medicinal use, outlined in Decree 613 (2017) and Decree 811 (2021), was developed on that premise. Subsequently and despite some delays, it proved to be most adequate.
After completing the legal and regulatory process coupled with the medical learning curve, health-care authorities can proceed to include medical cannabis in the public insurance system. Pioneer countries like Germany, the Czech Republic, Italy, Germany, and Colombia respectively made important efforts to expedite the process to expand coverage for cannabis patients. Results indicated that expanded public coverage benefited patients, especially those with limited therapeutic options, and offered investors a refined assessment of market size and growth rate. In the Czech Republic, insurance coverage began in 2020, boosting flower sales more than 3x from 16 kg in 2019 to 66 kg in 2020. The number of prescriptions also reflects the trend, increasing more than 2.4x from 4,125 kg in 2019 to 14,167 kg in 2020.
In Italy, public insurance covers medical products distributed in hospital pharmacies, these products are mostly imported from the Netherlands. Figures signal strong growth, increasing from 25 kg of flower in 2014 to 215 kg in 2020. Germany, in turn, remains the largest and perhaps most promising market with insurance coverage comprising roughly 90% of the population. In 2020, German doctors issued approximately 340,165 prescriptions and reimbursements from the statutory health insurance, worth €165,259,927 (i.e., $195.1 million USD). Undoubtedly, the past three years have seen the German case became a testament to the opportunities, challenges and hype surrounding medicinal markets.
Double dividends
Recent experience suggests that expanding public insurance coverage serves both patients and governments. Chronic patients benefit from the lower costs, safety, and the minimal side effects of cannabis products. Affordability and ease of access are crucial to grow the patient base. A large proportion of patients simply cannot afford to pay out-of-pocket for medicinal products. In Colombia, for example, Khiron’s CEO Alvaro Torres notes that a susbstantial fraction of the patients of the company’s Zerenia clinic have access to magisterial preparations thanks to the government’s recent inclusion of cannabis in the public health insurance program. Moreover, public coverage helps companies grow their customer base, as observed in the Czech Republic, Germany, and Colombia. Similarly, recent efforts in Peru indicate that at least some magistral preparations will likely soon be included in the public insurance program. Similar assessments are under development in Ecuador, Chile, Paraguay, and Argentina, as numerous locally manufactured products reach the market (see table).
Governments in the region increasingly recognize the potential economic impact of the legal cannabis industry. In the same vein, health-care regulators noted that by including medicinal products in the public insurance system, they could reduce expenditures in prescription drugs. Evidence from the United States illustrates the magnitude of potential savings, along with substantial public health benefits (e.g., reduced side effects and mortality). Consequently, it is time for cannabis companies, patient associations, and health-care providers to work more closely with health-care regulators to streamline their efforts and take advantage of the emerging opportunities in young medical markets.
