Pharmaceutical Versus Dispensary Cannabinoids Competition

Epidiolex Approval Queues Up Pharmaceutical Versus Dispensary Cannabinoids Competition

Pharmaceutical cannabinoids have been around since the 1980s in synthetic or semi-synthetic form for the treatment of nausea related to cancer, and anorexia related to both cancer and AIDS. The FDA approved GW Pharmaceuticals’ Epidiolex in 2018 marking the first time that the US federal government has approved a naturally-derived cannabis-based pharmaceutical drug.

This pharmaceutical cannabis topic and others are discussed at length in the new BDS Analytics/Arcview Market Research report titled Pharmacies vs. Dispensaries: The Future of Cannabinoids as Medicine.

After being hamstrung by prohibition for decades, the number of trials and drugs in development featuring pharmaceutical cannabinoids are multiplying by the day as the industry rushes to make up for lost time. As of January 2019, there were 770 clinical trials registered with the US federal government including trialing of drugs for the treatment of diseases and disorders, and studies on adult-use cannabis. The majority of studies are in the early stages, so growth in pharmaceutical cannabinoid spending will likely remain low compared to both the overall cannabis market at $31.6 billion and the broader pharmaceutical pmarket at $1.4 trillion in 2022. Spending on pharmaceutical cannabinoids will come in around $2.2 Billion by 2022. However, the real growth will come after the time frame of our forecast when other pharmaceutical cannabinoid drugs will be fully commercialized, and Epidiolex will be approved more conditions.

In the near term, Epidiolex has been approved specifically for the treatment of childhood epilepsy conditions, Dravet Syndrome (DS) & Lennox-Gastaut Syndrome (LGS). GW obtained orphan status for the drug during the approval process. Orphan status brings special regulatory considerations for drugs that treat rare diseases. As an orphan drug targeting a very narrow set of conditions, the company estimates the average annual cost of Epidiolex to come to $32,500. It went on sale in pharmacies in the US in November of 2018.

The approval and commercial launch of the drug is significant in a multitude of ways. By moving through the FDA approval process and proving to the agency its claims of efficacy, this bolsters the assertions of medical benefits that patients and medical marijuana advocates have been pointing to for years. The FDA approval resulted in the specific formulation of cannabidiol in Epidiolex being rescheduled from DEA Controlled Substance Act schedule 1 to 5. This marks the first time a naturally-derived cannabis-based drug has been acknowledged as having medical use by the DEA. And, finally, it positions dispensaries and pharmacies as competitors signaling the first time patients have been able to access the same drug (if difference formulations) at a local dispensary in legal states, online and at retail outlets.

GW is keenly aware of this competition. The 2018 Farm Bill that clarified the legalization of industrial hemp on the federal level removed the risks makers of hemp-based CBD had been facing by distributing through broad retail and online channels. Facing competition from well-established hemp-based CBD brands such as Charlotte’s Web, GW and has made lobbying state governments a key part of its business strategy. The company is advocating the insertion of language into legislation that only allows the sale of CBD products that have been approved by the FDA.

South Dakota included such a language in Senate bill 95 which essentially made Epidiolex the only legal CBD product in the state until other pharmaceutical companies get through the FDA approval process.

CBD makers and now finding themselves cut out of South Dakota. this is a significant signal what the cannabis industry is up against now the pharmaceutical companies have taken note.

This is just the beginning of what will be fierce competition in both the market and legislative arenas as the established cannabis industry and patients advocate for broad access to CBD, and pharmaceutical companies advocate for CBD that has been through the rigorous clinical trial process.

Click here to view the Pharmacies vs. Dispensaries: The Future of Cannabinoids as Medicine Infographic.