Alfredo Pascual, Investment Analyst | Seed Innovations
Many European countries have legalised medical cannabis in some form or at least implemented medical cannabis programs or pilots in recent years, but Germany has drawn the most attention as it has quickly become the largest market in Europe after its 2017 law change that expanded access to medical cannabis.
The November 2018 medical cannabis reform in the UK1 could be loosely compared to the March 2017 German law change2. But markets in these two countries evolved quite differently during their first years after the new regulations were adopted.
The 2017 German medical cannabis reform led to a statutory health insurance (SHI) covered market that in 2018 already totalled €74 million3, subsequently growing 66% in 2019 to €123 million4, and a further 34% in 2020 to €165 million.5 Almost 90% of the population in Germany is covered by SHI. Some of the pillars of the system include that it is financed based on the solidarity principle and that those who are covered by it “receive medical treatment without having to outlay the costs themselves”.6
This also applies to cannabis prescriptions, even to cannabis products without marketing authorization – loosely equivalent to UK’s unlicensed cannabis-based products for medicinal use (CBPMs) – provided certain circumstances are fulfilled, including that the treatment needs to be for a severe condition and normally not as first line of treatment.7 However, for any cannabis product without marketing authorization an individual application for coverage needs to be done in Germany, many of which end up being rejected.8
With €130 million reimbursed using 262,996 prescriptions in the first nine months of 20219 reimbursement of medical cannabis will likely continue growing in 2021, albeit at a slower pace. And this is only a partial picture of the German medical cannabis market. Total sales are actually significantly higher because statutory health insurance reimbursement does not include so-called private prescription sales, for which there is no reliable, publicly available data but which are widely believed to be an increasingly significant part of the market, particularly in the flower category10.
The German private market includes not only the c.10% of the population with private health insurance. It also includes a significant patient population with SHI but that was either rejected by their SHI for cannabis coverage or that could not find a doctor willing to write the coverage application, but could find a doctor willing to write a cannabis prescription for the patient to buy out of pocket.
Statutory health insurance reimbursement does not include so-called private prescription sales, for which there is no reliable, publicly available data but which are widely believed to be an increasingly significant part of the German market
Although the UK market for unlicensed cannabis-based products for medicinal use (CBPMs) has been growing, total sales in the UK as of 2021 have paled in comparison to Germany,11 even when accounting for the later November 2018 reform in the UK versus March 2017 in Germany. Rather than a specific, single factor explaining Germany’s faster market growth, the reasons can likely be found in the broader context of the German regulations and the history of medical cannabis in Germany.
Pillars of the German medical cannabis market
The German medical cannabis market has several pillars that when combined explain its comparative success – at least on a European level – providing broader access to medical cannabis:
When looking at the seven pillars from a UK perspective, it becomes evident that the UK shares a comparable situation when it comes to the regulations not restricting the therapeutic indications for which unlicensed CBPMs may be prescribed. In the UK, patients also have access to a range of cannabis products – including flower. However, the stark differences in all the other pillars may explain Germany’s broader access to medical cannabis.
Rather than a specific, single factor explaining Germany’s faster market growth, the reasons can likely be found in the broader context of the German regulations and the history of medical cannabis in Germany.
Although German statutory health insurers reject about a third of the applications for cannabis reimbursement,12 the German law reform from 2017 mandated that provided certain conditions are fulfilled, seriously ill medical cannabis patients should have their cannabis prescriptions covered by the public health system.
During the first nine months of 2021, 262,966 medical cannabis prescriptions were covered by the German public health system, and 77% of which were for products that in the UK would be considered unlicensed CBPMs.13 This marks a stark difference with the almost purely private UK market for unlicensed CBPMs.
Finding doctors willing to prescribe medical cannabis products that do not have clinical trials to support their efficacy is complicated in any country. But in the UK – where prescribing is something limited to specialists – the situation is more restrictive than in Germany, where cannabis prescriptions can be written by general practitioners, effectively expanding the pool of doctors that can consider cannabis as a therapy option.
Before the regulatory changes in recent years in both countries, Germany had a more meaningful history of limited cannabis prescriptions, with a relatively small group of German doctors – though highly educated in cannabinoid science – who had been able to prescribe medical cannabis long before the 2017 reform.
Dronabinol has been used for magistral preparations since 1998.14 Sativex – the first cannabis-derived drug to obtain marketing authorization – became available in 201115 and about a thousand patients were accessing cannabis on an exceptional basis (including imported flower) before the 2017 reform, paying for it out of pocket through a complicated process of case-by-case approvals.16
Finding doctors willing to prescribe medical cannabis products that do not have clinical trials to support their efficacy is complicated in any country. But it is probably somewhat easier than in the UK because in Germany cannabis prescriptions can be written by general practitioners
The March 2017 change of rules expanded the toolbox of these physicians and drastically expanded that market so that it is estimated to be about 100 times larger in terms of number of patients as of end of 2021.
The role of pharmacies is also somewhat different in Germany than in the UK, with Germany possibly providing broader access. Both in the UK and in Germany, a small number of pharmacies are believed to be responsible for most cannabis prescriptions. However, the situation is more decentralized in Germany, where the magistral preparation characteristic of unlicensed CBPMs mean pharmacies play a central role. This role goes beyond the compounding and dispensing of a cannabis prescription, with pharmacists also involved in developing quality standards17.
Another difference between the 2017 German and 2018 UK reforms was the emphasis Germany’s lawmakers placed on in-country cultivation to supply the domestic market. The first German harvests became available to patients in July 202118, longer than originally expected and in volumes that only represent a fraction of the total market. However, the €4.30 price per gram at which the domestic cannabis flower is sold to pharmacies19 likely contributed to downward pressure on the prices of imported product as well, thus reducing prices overall and making cannabis therapy more affordable to those patients paying out of pocket.
Like in the UK, a range of unlicensed – or also called unapproved – medical cannabis products are available to patients in Germany. This virtue of both Germany and the UK is not always shared by other European countries with a medical cannabis program, with for instance Austria not offering to patients the possibility of cannabis flower as one of the options. Finally, while some countries, such as Portugal20, restrict the therapeutic indications for which cannabis is considered appropriate, there is no such restriction in Germany as well as in the UK.
What the UK can do beyond more research
The need for more research is often touted as the key to broaden access to medical cannabis. It has been so for decades, with German pharma news in 1998 already emphasizing the need for more research when dronabinol first became available to patients.21
Without minimizing the importance of research – which would be beneficial to expand access anywhere in the world – stakeholders in the UK interested in broadening access to medical cannabis should also look at the structural differences between the German and UK medical cannabis programs.
The need for more research is often touted as the key to broaden access to medical cannabis. It has been so for decades, with German news in 1998 already emphasizing the need for more research when dronabinol first became available to patients.
More research is needed both in the UK and in Germany, but it is not the volume or quality of scientific research or clinical trial results that explains why Germany has a much larger population of medical cannabis patients than the UK five years after the law changed. While more research continues to be done, stakeholders in the UK interested in broadening access to medical cannabis could focus on the differences in most of the pillars described above and see what would be applicable in the UK context. The most important of these pillars being public health insurance coverage; that any doctor – not just specialists – be allowed to prescribe unlicensed CBPMs; and a policy emphasis on authorised in-country cultivation to limit the dependency on imported products, possibly making cannabis-based end-products more affordable.