Cannabis Care

A new market in medical marijuana

  • Why it matters

    Why it matters

    A new law requires health insurers to pay for medical marijuana and will allow government-controlled hemp cultivation in Germany for the first time.

  • Facts

    Facts

    • The law will come into effect later in March, and cover costs for all cannabis-based prescription drugs.
    • Currently, all German medical marijuana is imported from other E.U. countries.
    • Private cultivation and recreational use of cannabis will remain illegal.
  • Audio

    Audio

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Cannabis-Produktion
A cannabis farm in Israel, producing medical marijuana. Source: DPA

Germany is taking another step to make cannabis available to patients, mandating that health insurers cover the cost of the pain medication in certain cases for the seriously ill.

The new law, which will come into effect this week, will make medical marijuana easier to obtain for patients who suffer from severe pain and for whom other therapies have proved ineffective. About 1,000 patients in Germany currently have the necessary permit issued by the Federal Institute for Drugs and Medical Devices to buy cannabis for medical purposes. Most of them buy dried cannabis flowers to smoke or inhale the active ingredients.

The law will also open up a new market for companies offering pharmaceutical cannabis, raising the hopes of both German and foreign firms.

“The new legislation is a milestone for us,” said Michael Popp, chief executive and owner of Bionorica, a company based in Neumarkt in the southern German state of Bavaria.

Bionorica, best-known in Germany for its sinusitis medication Sinupret, produces the cannabis-based narcotic Dronabinol. About 5,000 seriously ill patients currently have prescriptions for Dronabinol, according to Mr. Popp. The company grows its hemp in Austria, extracts the active ingredients in liquid form, and pharmacies then sell them in the form of capsules or, less often, as oral solutions.

Under the new law, insurance firms will not only have to pay for the Dronabinol solution, but also for cannabis flowers and their extracts. Until now, patients with special permits have had to pay out of pocket for their treatment, which can quickly total more than €1,000 ($1,060) per month. Patients will also only need a prescription from their doctor, no longer requiring the special government permit.

“The fact that German health insurers are covering the cost for medical marijuana is groundbreaking.”

Saul Kaye, co-founder, iCan Israel Cannabis

To meet the expected peak in demand, it will be possible to grow hemp for medical purposes in Germany in future. So far, all Germany’s medical hemp has been imported from the Netherlands. The government’s drug department will establish a cannabis agency that will first oversee imports and then tender out the contract for production in Germany. The agency will take possession of the cannabis after the harvest, and it will only be available through licensed pharmacies.

The new possibilities are enticing for producers of cannabis flowers worldwide. Ever since cannabis was legalized in Canada, a new industry developed. Canadian Tilray is already setting up a German subsidiary, and competitor Tweed Marijuana is sounding out options.

Dutch firm Bedrocan, which so far has supplied the medical marijuana to the 1,000 special permit holders in Germany, is considering the export of more products and even the cultivation of cannabis in Germany in future, a spokesperson said.

Israeli companies are also interested in the new German market. The export ban for cannabis is expected to be lifted soon, which would allow for expansion to Europe. “The fact that German health insurers are covering the cost for medical marijuana is groundbreaking,” said Saul Kaye, co-founder of Israeli producer iCan Israel Cannabis. “We estimate the market for medical cannabis in Germany to grow to about 80,000 patients within two years,” he added.

Bionorica’s Mr. Popp is a bit more conservative in his outlook. “I expect 40,000 patients for all cannabis-based products,” he said, adding that the law still restricts marijuana use to special cases that need to be approved by a doctor.

So while there won’t be billions to be made in the medical marijuana market in Germany, millions are definitely realistic. Mr. Popp said Dronabinol sales in Germany and Austria total in the double-digit millions, and that profits are solid.

The federal drug agency expects a demand of 365 kilogram of cannabis flowers to serve the current 1,000 permit holders, which means pharmacy sales of €7 million ($7.4 million). If tens of thousands of patients bought cannabis-based products, sales could quickly cross the €100-million mark.

Mr. Popp said he is not considering entering the business with cannabis flowers though. “It’s not part of our philosophy as a company that patients have to smoke or inhale our products,” he said. Bionorica specializes in herbal medicine. He said his firm will continue to offer Dronabinol, and will add a cannabis essence that can be taken as an oral solution, which is easier to dispense and more effective, according to the pharmacist.

One question worries both Mr. Popp and potential newcomers into the German market is that of quality standards. It is not yet clear which standards the federal drug agency will set for the processing of cannabis flowers. Mr. Popp said if it’s not the high pharmaceutical production standard GMP, he expects many producers to flood the German market with low-cost cannabis products. “That would be a real disadvantage for producers like Bionorica, who have invested a lot in the GMP standard,” he said.

Marla Luther, head of Canadian firm Tilray’s Germany operations, agreed with this view. As one of only a few foreign companies, Tilray obtained a GMP certification for Europe, as did Bedrocan from the Netherlands.

 

Maike Telgheder is an editor at Handelsblatt, covering the health industry, pharmaceutical companies and chemistry. To contact the author: telgheder@handelsblatt.com

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