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Making coverage of medical cannabis mandatory for insurers is one of the biggest potential spurs for growth in the sector. And companies operating in South America hope the taking of such a step by Colombia could open up a market there along the lines of that in Germany.
Colombian insurance providers have been mandated to cover the costs of medical cannabis prescriptions for patients since January. According to the Ministry of Health, more than 99% of the country’s 51m population are covered by either private or public health insurance.
Even of those interested, however, some might struggle to find certified physicians willing to prescribe – an issue that has been a significant brake on medical cannabis markets elsewhere.
Khiron Colombia, a subsidiary of Canadian-based Khiron Life Sciences, estimates the country’s potential medical cannabis market at 6m – though this may be overly optimistic at this early stage of market development.
Nonetheless, by making medical insurance reimbursement compulsory for both private and public medical insurance plans, the country will have taken arguably the biggest step it can towards creating an accessible medical cannabis market.
A decisive move for both patients and industry
ProColombia, the government Exports, Tourism and Investment Offices, told CannIntelligence there is not yet enough information available to allow it to quantify the impact the decision to bring medicinal cannabis into the national health system will have on the Colombian market.
“However, it is expected that this important advance will have a positive impact on the internal demand for cannabis products used for medicinal purposes and will benefit Colombian companies that specialise in the production of pharmaceutical grade cannabis,” ProColombia said.
Businesses involved in the sector agree.
“For therapy with medical cannabis, the reimbursement by statutory health insurance is a decisive factor,” Khiron CEO Alvaro Torres said. “On the one hand for the individual patient – who in addition to the illness also suffers from the cost pressure as a self-payer – and on the other hand for the general growth of the national market for medical cannabis.”
And Luis Merchan, CEO of Florida-based Flora Growth, agrees that access to medicinal cannabis in Colombia will be a boon for national cannabis companies, and feels it will also advance education about the benefits of the plant.
“Education will be critical in the expansion of this market,” Merchan told CannIntelligence. “We know the future of cannabis relies heavily on the transformation of this unique plant into mainstream medicines, and accessibility to the populations who need it most.”
He said Flora Growth “applauds the Colombian government’s acknowledgment of the power of this plant”.
New regulations still need fine-tuning
The Colombia Health Ministry signed a legal ruling in December, Resolution 2808, requiring national insurance providers to cover medicinal cannabis costs for patients suffering from fibromyalgia, refractory epilepsy, insomnia, lack of appetite due to health issues, and chronic pain from causes including cancer and neuropathy.
“It’s definitely a big deal for the members of the Colombian market and particularly the larger players,” Colombian consultant and medical advisor Maria Fernanda Arboleda told CannIntelligence. “There are still some areas in the execution of the regulation that need to be ironed out, though with time this is a great opportunity for companies looking to provide locally produced cannabis products to millions of potential patients in need.”
The coverage of medicinal cannabis in Colombian insurance plans is facing obstacles in its first months since implementation, Arboleda added. She said some of the approved regulations were vague and would require fine-tuning.
“Sleep disruptions can occur for a number of reasons and the regulation as it is needs to be more specific and clear as to who that applies to,” she said. “There is need for more clarity as to when to prescribe a patient medicinal cannabis, and if other treatment solutions and options have been considered or attempted.”
Currently only a very small percentage of Colombian public doctors have been certified to prescribe cannabis, creating significant barriers to its availability, she added.
“There are definitely some issues and doubts that will still need to be clarified as Colombia offers medicinal cannabis as part of its insurance plans. That will be important to do in the short term so that the numerous companies operating in the country will be able to take advantage of this opportunity.”
It is hoped that additional training for doctors will help to address this issue.
High hopes in the capital
Meantime, companies are already making moves to capitalise on the insurance rule. Earlier this year, Khiron, through its wholly owned medical cannabis clinic network Zerenia, signed a contract with Colombia’s largest public insurance company, Capital Salud EPS, to provide medical cannabis services and products to its patients.
Capital Salud EPS is owned by the city of Bogotá and insures more than 1.2m people in and around the capital, including more than 280,000 active patients with chronic conditions such as pain, epilepsy and mental health issues. Bogotá city councillor Juan Baena said the aim was to make Bogotá “the medical cannabis hub of the country”.
In April, Flora Growth announced it had received a certification from Colombia’s National Institute of Medicine and Food Monitoring (Invima) for its compound prescription formulation lab in Bogotá, and would release eight cannabis formulations to address specific ailments that could be prescribed by doctors and fully covered by insurers.
The inclusion of medicinal cannabis in health insurance coverage is similar to the German law that came into force in 2017.
Every doctor in Germany is able to prescribe cannabis-based treatments, including flowers, extracts and individual cannabinoids. It is estimated that there will be around 1m medical cannabis patients in the country by 2024.
In Germany, around 90% of citizens are covered by statutory public health insurance, with the remaining 10% covered by private insurance. Everyone living in the country is required to be insured for at least hospital and out-patient treatment.
Germans’ health insurance options
There are three options for health insurance for those living in Germany: the government public health insurance scheme (Gesetzliche Krankenversicherung, GKV); private health insurance through a German or international insurance company (PKV); or a combination of the two.
You can opt for a full private health insurance plan if your annual gross salary is above €64,350, if you are self-employed, unemployed, or over 55 and not employed. For all others, membership of the GKV is mandatory.
Medicinal cannabis costs are covered by both statutory and private insurance but is not guaranteed. Germany’s largest health insurance provider, AOK-Bundesverbund, estimates that around 64% of applications were approved between 2017 and 2022.
According to market experts consulted by CannIntelligence, roughly two-thirds of applications for medicinal cannabis through statutory health plans are approved. In some cases, patients must prove that they have attempted other treatment options for certain ailments before requesting medicinal cannabis.
A government spokesperson explained that reimbursement for medical cannabis was intended only for cases where no standard and approved medicine was effective and there was a reasonable chance that cannabis medication would be. They added that errors in applications might lead to some being rejected, and that the government had no figures on the approval rate for follow-up applications.
Patients without health insurance cover can purchase medical cannabis in Germany at the legally prescribed maximum quantity, on a case by case basis. It is considerably more expensive without insurance.
Epicentre of the EU cannabis market
According to German legal firm Gleiss Lutz, in 2021 alone, accredited physicians working in the statutory health insurance system prescribed €185m worth of cannabis-based medicines, up a little over 12% on the previous year. In 2018, sales stood at €74m.
The GKV said there were 393,187 cannabis prescriptions in 2022, with raw cannabis flower accounting for 111,567 of those. In 2021, the number of prescriptions for medical cannabis rose to 372,000, compared to 340,000 in 2020. Unprocessed cannabis flowers accounted for almost €70m and cannabinoid-containing medicines a further €46m.
Gleiss Lutz said no reliable figures were available for self-payers and private patients and for this reason sales may actually be higher than the statistics indicate.
Since the passage of the 2017 law, there has been a vast increase in cannabis imports into the German market due to a lack of domestic production. And this has created opportunities for both German and foreign companies such as Khiron, Demecan, Cannovum, Aurora Cannabis, Flora Growth and many others.
In 2022, Germany imported an estimated 27.6 tonnes of cannabis for medical or scientific purposes, an increase of 19% on the previous year, according to industry figures. By way of comparison, in 2017 Germany imported 1.78 tonnes of medicinal cannabis.
“Germany does appear to be at the epicentre of the European Union’s cannabis market,” Merchan said. “Health insurance coverage of cannabis is a critical aspect of fair access to this medicine and allows for patients to get the products they need.”
He said Germany offering medicinal cannabis within the regulated government healthcare system created a level of trust and safety for consumers, as against products obtained in the illicit market.
Untapped market potential
In December, Flora Growth announced it had completed the acquisition of Franchise Global Health, a multi-national operator in the medical cannabis and pharmaceutical industry with principal operations in Germany, in an effort to “cement a foothold in Germany and the European Union”.
Khiron, which sent its first shipment of medical cannabis to Germany in 2021, agreed that coverage by insurance providers can bolster and nurture growth in a national market.
“Many experts have indicated that insurance reimbursements represent the ultimate barrier for the actual implementation of cannabis-based treatments,” Torres told CannIntelligence. “This protects legitimate operators and expanding legal markets, such as Germany and Colombia, while increasing treatment options and preventing patients from falling back into the black market.”
He added that Germany had the largest and most mature market for medical cannabis in Europe.
Khiron estimates the potential size of the German cannabis market at 1% of the total population – more than 800,000 patients. The company says that the third quarter of 2022 saw a €9m increase in sales of dried cannabis flowers billed via statutory health insurance in Germany against the same period a year earlier, suggesting around 6,000 more prescriptions. Germany currently has an estimated 80,000 to 120,000 patients receiving medical cannabis treatment.
“The untapped potential is therefore still very high,” Torres said.
Yet Germany encountered similar obstacles to Colombia after the ruling that placed medicinal cannabis on public insurance policies.
Colombian exporters poised to meet German demand
Cannabis is classified in Germany as a medicinal product and pharmacies are only allowed to distribute it to customers with a doctor’s prescription – and industry experts say many German doctors are still reluctant to prescribe it.
Nonetheless, with Germany still unable to fulfil existing demand through domestic production, there is significant scope for export to the market – and producers in Colombia are well poised to take advantage.
According to calculations from ProColombia, based on official data from the National Directorate of Taxes and Customs, exports of Colombian cannabis and related products netted $1.5m in the first two months of 2023, up from $619,000 in January and February 2022. Last year overall, cannabis exports from Colombia were up almost 90% on the previous year.
In 2022, two companies accounted for more than 75% of the country’s total exports of cannabis and related products, among a total of 15 companies engaged in such exports.
“The cannabis industry has the potential to be converted into a new source of income for the country,” ProColombia reported. “In fact, if the positive trend of cannabis exports is maintained in the next months, it is estimated that exports in 2023 could exceed $12m.”
The agency added that an estimated 11,000 extra jobs could be created in the Colombian cannabis industry by 2026.
“It’s important to highlight that Colombia has been a pioneer in the region regarding the implementation of the legal framework for cannabis production and industrial use, and as a result have one of the most complete regulatory frameworks in the region, spanning the entire production chain,” ProColombia told CannIntelligence.
– Adam Williams CannIntelligence contributing writer
Photo: Erick Salas Agudelo
