New WA laws could see medicinal cannabis prices drop

Western Australia laws medicinal cannabis prices drop FreshLeaf Analytics
Legislative changes announced by the WA government are predicted to lead to an increase in medicinal cannabis prescriptions and potential price reductions.

The cost an average patient is spending on medicinal cannabis is going down and this week’s announced regulatory changes in Western Australia could see prices dropping even further.

According to recent statistics reported by medicinal cannabis data company FreshLeaf Analytics, a greater availability of cheaper products in the emerging market has resulted in overall lower monthly costs for patients.

In addition, the Western Australian Government this week announced changes to its prescription approvals process aimed at making it easier for patients to access medicinal cannabis.

Speaking with Small Caps, FreshLeaf principal consultant Rhys Cohen said the changes should result in increased patient numbers in the state, along with further price reductions – good news all round it seems for patients in the west.

Strong product competition

According to FreshLeaf’s third quarter report, there are now 76 products available for doctor prescription in the Australian market – more than 40% more than the 54 confirmed during the 2019 first quarter.

In addition, the average spend by a patient has declined by 13% over the last six months, with about one-third of patients now spending between $5-10 per day on medicinal cannabis.

According to the University of Sydney’s Cannabis as Medicine Survey, research participants were willing to pay a mean $11 per day for medicinal cannabis.

Average patient daily spend medicinal cannabis Australia 2018 2019
Patient average daily spend on medicinal cannabis in Australia.

As FreshLeaf concludes, with 55% of patients spending $11 or less, this suggests most patients would find treatment costs “acceptable”.

“In Australia, medicines that are subsidised by the federal government (via the Pharmaceutical Benefit Scheme) are cost-capped in 2019 at approximately $40.10 per prescription ($6.50 per month for concession card holders). By comparison, any price points above these amounts will likely make unsubsidised medicine such as cannabis seem ‘expensive’ to patients,” FreshLeaf stated in its report.

The agency said considering the price profile of products sold to pharmacies has remained fairly stable over the period, this patient price drop is believed to have been caused by doctors switching patients from higher cost products to lower cost options.

WA’s recent changes

WA’s McGowan Labor Government on Tuesday announced new legislative changes that authorise general practitioners to prescribe medicinal cannabis without specialist approval.

A media statement by WA health minister Roger Cook said the change followed the health department’s review of three years of prescribing data and brings the state closer in line with other Australian jurisdictions including New South Wales, Queensland and Victoria.

However, doctors will still be required to seek specialist approval when prescribing for children under the age of 16 and for patients with drug dependencies or a history of drug use.

“Previously, if you were a general practitioner in WA and wanted to prescribe cannabis to a chronic pain patient, for example, the state government would expect you to get a pain specialist to endorse the request or collaborate with you on the treatment of a patient,” Mr Cohen said.

He said the previous system had posed a “huge barrier” since “there’s very few doctors who are interested in and motivated to prescribe cannabis to begin with, and even fewer specialists, and of course, seeing a specialist means even more money out-of-pocket for the patient”.

“We have seen similar changes in other states translate into significant increases in prescribing rates and expect the same to occur in WA,” Mr Cohen said.

He said there will probably be a “bump in patient figures over the next couple of months” and compared the changes to when Queensland revised its state legislation.

Medicinal cannabis SASB approvals Queensland Western Australia chart
Special Access Scheme Category B approvals for medicinal cannabis have increased rapidly in Queensland following relaxed prescription rules and clinics entering the market.

“They had a similar process in place where you had to get approved by state government and there were restrictions on GPs prescribing. It was all a bit of a shemozzle.”

“They removed that requirement and in subsequent months, we saw quite a significant increase in patient access. Queensland now prescribes nearly twice as much [medicinal cannabis] as Victoria,” Mr Cohen said.

He said while there is already a lot of competition in the market currently, these changes can certainly lead to lowered product prices.

“An increase in patient access lowers the cost per unit, as most of these products are imported, so companies have to pay for export, shipping, importing, warehousing, distribution, and there’s a certain minimum spend they have to invest,” Mr Cohen explained.

“So, if they’re moving twice or three times as many units as they previously did, the cost per unit for [the companies] goes down and they can pass that onto consumers in the form of price competition – and consumers get cheaper products.”

Increased dosages

Another interesting observation FreshLeaf highlighted in its report is that while patients on average are spending less, the average daily dose has increased.

According to the agency’s data, the average dosage has risen 15% in six months from 47mg per day 54mg per day.

Dr Sanjay Nijhawan, the medical director of Cannabis Access Clinics (the clinic network that supplied patient product and dosage data for FreshLeaf’s report), said this was consistent with the ‘titrate-up’ prescription model used by most doctors.

“Patients will typically start on a low dose and slowly increase over time until they see maximum effect.  This approach does result in average dosages rising over time, as occurs in conventional medicine,” he said.

The full potential of Australia’s medicinal cannabis market

Data also shows patient approval numbers are up more than 1,000% in 2019 so far, with FreshLeaf forecasting a total of 28,301 new patient approvals by the end of this year.

But while these numbers are growing at a rapid pace, the agency believes the market is still far from reaching its full potential.

“We estimate there’s an addressable market for medicinal cannabis of around 500,000 patients. That means patients who would probably benefit or be approved by TGA under the current guidelines,” the chief executive officer of both Cannabis Access Clinics and FreshLeaf’s parent company Southern Cannabis Holdings, Tim Drury said.

“Active patients today in the market are around 5,000-7,000 at the moment, so we’ve really only addressed 1-2% of the market and there’s another 98-99% waiting to move onto cannabis products. There’s a lot of potential out there,” he added.

FreshLeaf’s report concluded that to realise the market’s full potential, patient cost is still a key issue needing to be addressed, along with the widespread adoption of cannabidiol (CBD) products and grey areas relations to driving regulations.