Is Big Pharma Out to Stop—Or Take Over—Marijuana Legalization?
Pharmaceutical companies might not have to actively oppose cannabis legalization to cause problems for the marijuana movement.
A nurse carries a tray of medical marijuana. Rehovot, Israel, 2011. Photo: ChameleonsEye/Shutterstock
Geoffrey Guy stood out when he began attending conferences of the National Organization for the Reform of Marijuana Laws in Washington, DC, in the mid to late 1990s. The stout British gentleman, dressed in a Brooks Brothers suit, was hard to miss among the other attendees dressed in tie-dye shirts and psychedelic parkas, recalled Allen St. Pierre, then NORML's deputy national director.
But while he might not have fit in, Guy, a doctor in his early 40s who'd already made millions by founding a UK-based pharmaceutical company, was eager to learn all he could at the events about medical marijuana.
"He was like a dry sponge who desperately wanted to be thrown in a bucket of water," said St. Pierre, who recently resigned from his 11-year stint as NORML's executive director to pursue private-sector opportunities.
What Guy absorbed at those conferences and other fact-finding excursions became the basis for GW Pharmaceuticals, a UK drug company he founded with fellow doctor Brian Whittle in 1998 that has now become a major player in the legal marijuana industry by developing Sativex, a groundbreaking marijuana-derived drug sold in more than a dozen countries worldwide, and Epidiolex, a cannabis-based seizure medication that's on a fast track to become the first cannabis-based drug approved in the United States.
While much has been written on GW's groundbreaking origins, part of the story is missing, according to St. Pierre: The close ties the nascent drug company forged with some of the biggest and most colorful names in the US marijuana movement.
Early GW investors included the late Peter Lewis, the billionaire former chairman of Progressive Insurance who donated millions to the Marijuana Policy Project and other cannabis reform efforts, and Don Wirtshafter, a longtime marijuana activist who was removed from NORML's board of directors in 2000 after allegations surfaced of shady dealings between NORML and High Times magazine.
At the same time, said St. Pierre, GW employed the services of reform-minded scholars, writers and lawyers, including celebrated marijuana seed collector David Watson, pioneering cannabis scientist Ethan Russo and marijuana research and policy guru Paul Armentano, who had left his position at NORML in 1999 and later that year did short-term freelance contract work for GW, drafting content for various sections of their website. (Armentano, now NORML's deputy director, confirmed these details but declined to comment further on the matter.)
"The GWs of the world, it plays into their hand. It wouldn't cost them that much to produce product in the United States."
GW also boasted an unusual champion: Irvin Rosenfeld, a stockbroker who is one of only two surviving patients to receive medical marijuana from the federal government thanks to the little-known Compassionate Investigational New Drug program. "I started supporting them and buying their stock," said Rosenfeld of GW. "I wasn't calling my regular clients on this. I was going to NORML conferences and other conferences and saying, 'This company, I think it has potential.'"
Thanks largely to Rosenfeld's efforts, by 2001 St. Pierre said 12 of NORML's 19 board members had invested in GW, including several who'd sunk more money into the British company than they'd ever donated to the marijuana organization. The situation triggered some of the first discussions the board ever had on whether members should be allowed to invest in cannabis-related companies.
"There is no way you have GW Pharmaceuticals without a bizarre and interesting cast of characters from the marijuana movement," said St. Pierre, who never invested in GW. "When [GW] started, they promoted this really grand notion that you could make money and prove marijuana was a safe and viable drug. You would be doing well and doing good, in terms of the legalization of marijuana."
But more than a decade later, as GW has become a stock market darling and medical marijuana has become a nationwide industry, did the hopes of these marijuana advocates turned pharmaceutical investors come to pass? Are pharmaceutical interests, sensing financial potential, pushing for cannabis reforms? Or is Big Pharma, wary of new competition, working to stop marijuana legalization in its tracks?
There's reason for pharmaceutical interest to be supportive of marijuana reforms. After all, excitement has been growing about the prospect of cannabis-based drugs.
According to the cannabis advisory firm Viridian Capital Advisors, biotech companies, led by GW, were responsible for more than half of the roughly $400 million investors sunk into the marijuana industry in 2015. And while the DEA's refusal two weeks ago to reschedule marijuana as a less dangerous drug frustrated many cannabis activists, the fact that the agency announced it would increase the number of operations allowed to grow research-grade cannabis signaled it was open to marijuana pharmaceuticals.
As noted by Armentano in an Alternet article, according to the DEA's notice on the matter, "under the new approach explained in this policy statement, persons may become registered with DEA to grow marijuana not only to supply federally funded or other academic researchers, but also for strictly commercial endeavors funded by the private sector and aimed at drug product development."
This isn't the first time federal interests have lowered the barriers to marijuana drug development while keeping a hardline stance on cannabis in general. Last year, the Controlled Substances Act was amended to require that all schedule I drugs be moved to a less restrictive schedule within 90 days of winning FDA approval. In other words, if the FDA approves GW's Epidiolex, it won't be schedule I drug, unlike the plant from which it's derived. FDA approval will come with another benefit: Seven years of market exclusivity for that specific cannabis-based formulation.
"I think the DEA announcement is good news for companies that are already producing cannabis in other countries according to the strict quality standards expected by the FDA," said Marcel Bonn-Miller, a University of Pennsylvania professor and executive director of the new Institute For Research On Cannabinoids. "The GWs of the world, it plays into their hand. It wouldn't cost them that much to produce product in the United States."
But aside from a few other companies besides GW working to produce pharmaceutical-grade medical marijuana products, such Tilray in Canada and Bedrocan in the Netherlands, there aren't many indications that pharmaceutical interests are looking to take advantage of cannabis reforms to produce new drugs. Possibly that's in part because there are already synthetic pharmaceuticals on the market that mimic some of the effects of marijuana, such as Marinol, Syndros and Cesamet. And while many patients say these options can't compete with the benefits of real cannabis plants, since the country's drug development process is geared toward producing synthetic pharmaceuticals–only very rarely has the FDA approved plant-derived drugs along the lines of Epidiolex–most drug companies might not think it's worth the hassle to try to loosen marijuana restrictions to allow for more cannabis drugs synthesized from the real thing.
Finally, if pharmaceutical interests do see major financial gains from marijuana legalization, we'd already know it, said John Hudak, a senior fellow at the Brookings Institution who studies marijuana policy: "If the pharmaceutical industry is readying itself to make billions of dollars on medical cannabis or medical products derived from cannabis, how did they not get marijuana rescheduling two weeks ago?"
So maybe Big Pharma isn't actively supporting marijuana legalization. But is it opposed to it?
It might be, according to recent research coming out of the University of Georgia. There, Ashley and W. David Bradford, a father-daughter team, scrutinized prescription drugs sold under Medicare Part D from 2010 to 2013 and found that drug sales, particularly for painkillers, were markedly lower in the 17 states that then had medical marijuana laws. And a new paper just submitted by the Bradfords reports that in medical marijuana states, drug sales under Medicaid, which covers a younger population than Medicare, were even lower. The results didn't appear to be simply correlational; sales of drugs that weren't likely to be replaced by cannabis use, such as flu medications, weren't lower in states that had legalized medical marijuana.
All in all, the Bradfords estimated that state medical marijuana programs were responsible for $165.2 million in Medicare prescription savings in 2013 and $178.5 million in Medicaid prescription savings in 2014.
With figures like that, W. David Bradford has come around to the idea that pharmaceutical companies could be intimidated by marijuana reforms. "Rescheduling whole-plant marijuana does pose a threat to the pharmaceutical industry," he said.
It's why some people believe drug companies are quietly supporting anti-marijuana efforts. In 2014, investigative journalist Lee Fang published articles in The Nation and Vice detailing how pharmaceutical firms had ties to organizations and individuals opposing marijuana legalization. And recently, the Florida Medical Association voted to oppose a medical marijuana ballot measure on the state's November ballot at a conference that just happened to be sponsored by one of the largest pharmaceutical trade organizations.
"With few exceptions, most pharmaceutical companies have been silent about their intentions toward medical marijuana," said Joel Stanley, CEO of CW Hemp, which produces "Charlotte's Web," a hemp-based product made famous by the CNN documentary "Weed." "Pharmaceutical dollars, however, have not been so silent. If we look into some of the largest backers of [anti-marijuana organizations], we find the big pharmaceutical companies."
Some people believe it's not just longstanding pharmaceutical interests that oppose legal marijuana; they say manufacturers of cannabis-based drugs like GW are also trying to restrict whole plant marijuana reforms. That includes Jody Mitchell, who helped pass a law legalizing low-THC medical cannabis oil in Alabama this year. According to Mitchell, at a hearing for the bill, Shannon Murphy, executive director of the Alabama chapter of Smart Approaches to Marijuana, a national anti-legalization group, told lawmakers she worked for GW. While Murphy apparently later amended her statement to note that she wasn't paid by the drug company, to Mitchell, the message was clear: "GW wants to corner the market."*
Mitchell believes a GW monopoly won't work for everyone – and that includes her 12-year-old son Robert, who suffers from a rare and debilitating form of epilepsy. Last year, Robert was part of an Epidiolex trial in Alabama, but his mother said she pulled him from the study when researchers required her to increase his dosage to up to 50 milligrams of cannabidiol (CBD), the active ingredient in the drug, per kilogram of body weight.
"I told them they were crazy if they thought I was going to give my child that much CBD," said Mitchell. "It's insane." Now, on a cannabis oil that provides him with .25 milligrams of CBD per pound of body weight, Robert has logged less than 35 seizures this month, down from the thousands he suffered last August.
But are pharmaceutical interests really backing marijuana prohibition? Anti-cannabis advocates insist they're not.
"Big Pharma isn't interested in fighting legalization," said Kevin Sabet, president and CEO of Smart Approaches to Marijuana. And even if companies like painkiller manufacturers offered him money, Sabet insists he wouldn't accept it: "If anything, big opioid manufacturers offer us a warning against Big Marijuana and the notion of addiction for profit."
Sabet isn't the only one who says pharmaceutical companies aren't opposing the marijuana movement. "Pharmaceutical companies in particular are by and large not an overt part of this policy debate," said NORML's Armentano. "It's possible that maybe they are playing a role behind the scenes, but if they are, I am not aware of it."
If pharmaceutical firms wanted to oppose marijuana reforms, they certainly have the resources to do so. According to campaign finance reports, companies like GlaxoSmithKline, Johnson & Johnson and Pfizer have already donated more than $86 million to oppose a California ballot measure this fall that would set a cap on how much state agencies can spend on prescription drugs. In comparison, no drug companies have donated to those fighting California's marijuana legalization ballot measure, leaving anti-marijuana interests with a war chest of just under $200,000.
"Cannabis is not one-size-fits-all."
But pharmaceutical companies might not have to actively oppose cannabis legalization to cause problems for the marijuana movement. Some activists are concerned that lawmakers will use the approval of drugs like GW's to justify terminating existing medical marijuana programs—and that, they say, could be disastrous.
"If they allow pharmaceutical companies to create pharmaceutical-level marijuana drugs but still allow other cannabis products and home brews, that's fine," said Brian Wilson, a Denver-based administrator of a medical marijuana parent advocacy group on Facebook with 7,400 members. "The big issue is what happens if these drugs get approved and everything else gets shut down. You have tons and tons of different strains and combinations of cannabinoids that have worked for people. Cannabis is not one-size-fits-all."
These days, GW keeps its distance from the marijuana movement from which it sprung. While Guy, the company's co-founder, once said his ambition was "bottling the essence of cannabis," in a prepared statement attributed to Steve Schultz, vice president of investor relations, GW now insists, "Epidiolex is not medical marijuana. It is pharmaceutical CBD, a non-psychoactive component of the cannabis plant, manufactured to pharmaceutical good manufacturing practice standards." GW wouldn't respond to questions about its former ties to cannabis activists, saying in a statement, "GW's inception was grounded in science, not politics."
Meanwhile, most of the NORML board members and other marijuana advocates who purchased GW stock sold their shares years ago, said St. Pierre, long before GW's recent market surges would have netted them significant profits. That is, except for Rosenfeld.
"It's been more successful than I ever expected it to be," he said of his GW stock. While Rosenfeld believes GW took advantage of some folks in the marijuana movement, he still supports the company. "We need GW, but we also need the FDA and [the National Institute on Drug Abuse] and the DEA to recognize the benefits of this medicine in all of its forms."
Looking back on his colleagues' connections to GW, St. Pierre concludes the episode suggests pharmaceutical interests aren't playing a major role in the marijuana legalization.
"All these years later, I think the argument that you should invest in pharmaceutical stock to prove that marijuana is a safe and effective medicine turned out to be pretty foolhardy," he said. "Looking at the history and scope of marijuana law, there is really almost no relationship between the pharmacolization of marijuana and its actual reforms."
*Editor's note: In a written statement, Shannon Murphy claimed she never said she worked for GW and never later amended her statement. According to Murphy, "I have only ever spoken to one of their employees in context of gaining information on clinical trials and expanded access programs for patients. We spoke via a phone call and had a couple of emails related to that."