For years patients and prescribing physicians have relied on man-made medication produced by pharmaceutical companies to treat many symptoms including pain and mental disorders. However, with the increase of scientific research and the decriminalization of marijuana, many people are making the switch to a more natural source of relief, forcing a huge threat to Big Pharma’s share of the market. How much money has big pharma lost since medical marijuana has become legal and how much money will they lose if it becomes legal in all 50 states? What positive effects does legalizing marijuana have on the economies of the states that have legalized it? What tax measures are being put into place to improve each state’s economy?
Ever since California became the first state to legalize medical marijuana in 1996, pharmaceutical companies have continued to lose a tremendous amount of money as more and more states follow California’s lead. A study conducted by the University of Georgia in 2016 showed that pharmaceutical companies have lost an average of $166 million every year in states where medical marijuana is available to the public. People that suffer from symptoms of nerve pain, Tourette syndrome, epilepsy, chronic pain, and many other medical conditions have started using medical marijuana and CBD products instead of prescription drugs because they can achieve the same relief of their symptoms without some of the horrible side effects that some medications have on their consumers. According to a separate study done at the University of Georgia in 2013 by Ashley and W. David Bradford, doctors in the 17 states that had already legalized medical marijuana by then prescribed an average of 265 fewer doses of antidepressants, 486 fewer doses of seizure medication, 541 fewer anti-nausea doses and 562 fewer doses of anti-anxiety medication each year since states began legalizing medicinal marijuana in 1996.
Medicare programs were also able to spend less on medication for their enrollees in states where medical marijuana is available, with Medicare Part D programs cutting spending by $165.2 million each year from 2010 through 2013. Now, with marijuana not only being offered medically but also recreationally in some states, the stigma of marijuana is a harmful drug is being erased and more and more companies are supporting the research of marijuana’s medicinal effects and creating new medications from its main chemical components. This could be a miracle for people seeking relief from the symptoms of their illnesses, but big pharma could lose up to $5 billion of their $425 billion markets even if marijuana was only prescribed to a small number of patients in the medical community as an alternative to pain and other medications.
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Even though pharmaceutical companies are losing out on a huge amount of money by marijuana becoming legal, there are many positive effects on the economies of the states that have legalized it. It is stated that in 2015 Colorado made more than $135 million from the taxes of medical and recreational marijuana. In a study organized by Colorado State University-Pueblo’s Institute of Cannabis Research, they stated that legal marijuana has lead to over $58 million in taxes and fees being collected by the local economy in Colorado. This has sparked the interest of other states seeking to pay off debts and improve their own economies, which could mean more money for public schools, hospitals, community programs, and improving public roads.
Legalization would also reduce how much is spent on court proceedings and imprisoning minor marijuana offenders. According to Harvard economist Jeffrey Miron, up to $13.7 million in taxes spent on enforcing marijuana laws could be saved simply by federally legalizing it across all 50 states. However, with the average tax on each sale being 35%, a large number of users in states with current recreational bills in place are continuing to purchase their marijuana off of street dealers in an effort to avoid paying the steep tax. Many fear that unless states reduce the price of marijuana sales tax, black-market marijuana sales will actually continue to rise even with a large number of dispensaries opening up all over recreational states. But, due to high demand and areas where black-market marijuana isn’t always readily available, some users are willing to pay the 35% tax and, according to Cannabis analytics company New Frontier, if marijuana becomes legal federally, sales could prompt $131.8 billion in tax revenue by the year 2025, which won’t solve but could at least help with the $22 trillion federal debt. Big Pharma is afraid of this threat to its market share though, and it shows in instances like the 2016 ballot in Arizona.
Insys, a therapeutics company predominantly involved in opioid production, donated $500,000 to the citizens of Arizona for Responsible Drug Policy, an organization strongly against the legalization of recreational marijuana in the state. What’s even more peculiar is that Insys then released Sydros the following year, a pharmaceutical drug made from synthesized THC that mimics the effects of marijuana. Many believe that Insys’ sizeable donation was the reason Arizona was the only state to decline a proposition to legalize recreational marijuana in 2016 and was also a way to clear the path for their new medication which would have been marketed to the same patients as traditional marijuana.
In the 1980s, Big Pharma actually tried to synthesize their own THC to create medicine from, and in 1985 they succeeded and Dronabinol was approved by the FDA for the treatment of nausea and vomiting in cancer patients that were suffering from side effects of chemotherapy. As expected though, there were many problems with dosing and consistency ineffectiveness due to everyone having different tolerances and experiencing different effects when THC is introduced to their bodies. There were no “strains” or differentiation in effects, just one pill with one effect, while in the medical marijuana industry there are multiple types of products that treat varying symptoms, and doses can be taken at a much slower rate. For these reasons, Dronabinol was never as successful as raw marijuana as an effective medicine. However, Big Pharma is currently spending a fortune researching the effects of cannabidiol (CBD), the most medicinal component of marijuana. If they can catch up to the leaders in the CBD medicine industry, they could have a shot at competing in the $1 billion dollars and rapidly growing CBD industry.
Another way Big Pharma is trying to get behind the marijuana industry and stay in the game is by backing large, state-of-the-art marijuana companies. Sandoz, a subsidiary of the Novartis pharmaceutical group, has recently partnered with Tilray, a marijuana producer based in Canada, to distribute its products globally. Under their partnership, Tilray will be able to distribute their marijuana under Sandoz’s name to approximately 35 countries that allow medical marijuana as a form of treatment. While some people think that Big Pharma getting involved in medical marijuana could lead to them monopolizing the industry, others believe that it could lead to important research and reform taking place much sooner.
With one form of treatment that comes with multiple side effects and an outrageous price tag, and the other having minimal side effects and being much more affordable, it’s no wonder why Big Pharma is at a crossroads of either joining the trend or continuing to spiral downward as marijuana becomes more extensively researched and used by more and more seeking relief from their symptoms that man-made medication doesn’t always fully treat. At this point, getting behind medical marijuana is probably the smartest option to move pharmaceutical companies forward. Until pills can be reduced in cost and be synthesized to be safer for those who consume it, people in need will continue to use alternative treatments; whether it be marijuana or any other form of natural medicine. But at the same time, if states can’t meet consumers in the middle with tax prices, the recreational marijuana industry could actually drive the black-market marijuana industry as people try to find cheaper ways to purchase their medication. These gray areas will all be answered as marijuana continues to move up the list as one of the most commonly used medications and we move into a new age of treatment.
