Medical Marijuana Could Decrease Pharma Sales by $4B

Medical Marijuana Could Decrease Pharma Sales by $4B

A new study suggests that cannabis products could potentially cut sales from the pharmaceutical industry by $4 billion annually, if the United States choose to legalize medical marijuana and other marijuana derivatives.



The report, released by New Frontier Data, shows how cannabis could rattle pharmaceutical sales in nine major treatment areas: chronic pain, PTSD, sleep disorders, anxiety, epilepsy, nerve pain, CINV, tourette syndrome, and glaucoma.


Researchers have begun to explore the idea of pharmaceutical substitution. With the ever increasing opioid epidemic concerns and the debates on health care reform and marijuana legalization, people have started to abstain from prescription drugs and substituting them by using CBD and medical marijuana instead.


The Foundation of New Frontier’s report is a 2016 study out of the University of Georgia that tracked Medicare Part D spending in states that legalized medical marijuana.


Medicare prescriptions declined for drugs between 2010 and 2013. Medical marijuana could be an alternative, totalling an annual savings of $165.2 million in 2013, the researchers discovered. Another follow-up report from the same researchers showed that if medical marijuana were to be legalized nationally, taxpayers could save $1.1 billion on Medicaid prescriptions every year.


New Frontier then dove into market research reports for each condition that has potential to be treated with cannabis and mapped out pharmaceutical spending through 2019— calculating total costs that increased from $40 billion in 2016 to more than $44 billion in 2019. If cannabis accounted for 11 percent of that total, the annual substitution cost averages out at $4.7 billion a year.


It’s understandable to assume that medical marijuana and marijuana derivatives will have an on pharmaceutical sales, but estimating that with precision is a hard task. New Frontier’s math may not ultimately prove exactly true— the impact could be smaller or larger than projected— but the data does point to a trend that is worth watching.

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