The Pharmaceutical Industry Has its Eyes on Cannabis: Is that Good or Bad?

by | Aug 5, 2019

Written by Sarah Ratliff

Already, three cannabinoid-based prescription medications have hit the market under ‘Big Pharma’ labels—Epidiolex (cannabidiol), prescribed for intractable epilepsy, and Marinol (dronabinol) and Cesamet (nabilone), which are used to counteract nausea and vomiting by cancer patients undergoing chemotherapy. As of mid-2018, pharmaceutical and biotech companies had registered 119 ongoing clinical trials of cannabis-based products on the government’s clinical trials website.

Ready or not, big pharma is coming, and the cannabis industry will never be the same. Whether it will be better or worse—or something in between—remains to be seen.

Big Pharma and Medicinal Cannabis: The Downside

Pharmaceutical industry interest will be welcomed by many established medicinal cannabis companies. They will be eager to form partnerships with these profitable multinational enterprises, like the one announced last year between the Canadian cannabis company Tilray and the Swiss pharmaceutical giant Novartis.

However, smaller companies and entrepreneurs have reason to view the arrival of big pharma with foreboding. 

If pharmaceutical companies do indeed assert control over the burgeoning medicinal cannabis market, money will inevitably play a more influential role in every aspect of the industry. Who has it and who doesn’t will matter most.

Big pharma advertising dollars will distort market forces, tilting the playing table toward the new players and away from the start-ups and bootstrap entrepreneurs who’ve built the industry as it currently exists. On the lobbying front, the pharmaceutical giants may ask for a wide range of tax breaks, patent protections, and other special privileges that could put their smaller competitors at a disadvantage.

If pharmaceutical companies take over, many of the profits from medicinal cannabis cultivation, manufacture and sale will be siphoned out of local communities and placed in off-shore bank accounts. Rather than enrich local economies, cannabis may contribute to their dissolution.  

Pharmaceutical and biotech companies spend tremendous amounts of money on product research, and they do so because the payoff is often immense. However, their research generally involves relatively trivial genetic manipulation of existing formulas or products, which allows them to gain new patents and steal market share without contributing anything genuinely innovative. Medical facilities and individual physicians will be strongly encouraged to push the “new and improved” cannabis products manufactured by large pharmaceutical companies, who will have slick brochures, company-sponsored studies, and persuasive sales pitches ready to help them close the deal.

Perhaps the biggest concern if big pharma and the biotech industries take over is medication pricing. In the United States, in particular, the pharmaceutical companies have gained a reputation for relentless price gouging—and these practices are already in full display in the cannabis sector. A year’s worth of prescriptions for Epidiolex will cost a patient with epilepsy more than $30,000 to fill, while those who need Marinol or Casamet can expect to pay $244 and $2,055 respectively for a single prescription.

Should big pharma’s products become dominant in medicinal cannabis, price barriers for the uninsured and underinsured in the U.S. could be prohibitive. If legal cannabis is unaffordable, they may choose to stay with less efficacious and more dangerous drugs, or possibly self-medicate with cannabis products obtained through the black market (where quality control is sorely lacking).

Big Pharma and Medicinal Cannabis: The Upside

It is convenient and comforting to cast pharmaceutical companies in the role of the villain. They’ve done much to earn such a designation. However, the potential involvement of big pharma in the cannabis industry does have its upside and could benefit the development of the industry in some important ways.

The most apparent benefit of Big Pharma’s involvement would be its impact on the legalization movement. In politics, big money talks, and if pharmaceutical lobbyists start pushing legalization, formerly recalcitrant legislators are likely to change their views. The 17 states that have yet to legalize medicinal cannabis could quickly swing to the other side, once their most influential donors make their voices heard.

On the genetics and manufacturing side, the availability of R&D funds would explode. This could mean a proliferation of customized cannabis products with precise chemical formulas targeted for specific medical conditions, such as Pascal Biosciences’ ST-403. Biotechnology is flexible enough to be a force for good if the focus is on meeting actual medical needs and not merely maximizing profits.

The credibility factor also shouldn’t be dismissed.

Many who favor natural approaches to healing view the pharmaceutical companies with skepticism and suspicion. However, for a wide swath of the public, and for many who work in the medical profession, pharmaceutical medications represent the gold standard in evidence-based healing.

Cannabis, on the other hand, still carries a huge stigma in the minds of many. This is especially true among many older patients, whose ideas about cannabis were formed during a far less enlightened era.

We might expect things to be different from medical professionals. However, surprisingly, they are not. In two studies published by Cannalytic Insights in October 2018, only 38 percent of physicians surveyed were currently prescribing and recommending cannabis products in states where medicinal cannabis is legal. When asked to explain their anti-cannabis bias, 69 percent of the non-prescribers mentioned the dearth of clinical studies verifying the effectiveness of medicinal cannabis products.

This objection would likely vanish if the pharmaceutical industry became involved, as their products must be backed by extensive clinical research, and the cannabis stigma, in general, would dissipate rather quickly once medicinal cannabis prescriptions became more common.

The normalization of medicinal cannabis is an ongoing process, among consumers and at the institutional level. Big pharma and biotech involvement could help reinforce this trend.

The Fox is Outside the Hen House

Big Pharma and biotech involvement in medicinal cannabis could lead to a greater diversity of quality products available at reasonable prices, with smaller companies successfully preserving a niche in the marketplace.

That’s the best-case scenario.

The worst-case scenario would see the pharmaceutical giants squeezing smaller operators and other competitors out, or buying off enough of them to create an oligopoly. This could lead to prolific price gouging and an eventual decline in the safety of available products.

Something between these two extremes is the most likely outcome. However, no industry has deeper pockets than big pharma, and that could make them difficult to manage once they get their foot in the door. Affordable, quality cannabis for all could be at risk if the pharmaceutical companies and the biotech industry seize control of medicinal cannabis.