Legal Weed Likely To Cost Drug Companies Billions

Legalizing cannabis will cost traditional drug companies billions of dollars, reducing drug sales and stock market value, according to a new study by researchers at the California State Institute of Technology and the University of New Mexico. is predicted.

Researchers examined how the stock market returns of publicly traded pharmaceutical companies responded to legislation legalizing medical and recreational cannabis over a 25-year period from 1996 to 2019. They found that stock market returns were 1.5% to 2% lower 10 days after cannabis. The impact of legalization events and their cuts has run into billions of dollars. Both generic drug makers and name brand drug makers saw revenue declines in response to the legalization of both medical and recreational use. The authors estimate that investors expect a single legalization event to reduce pharmaceutical companies’ annual sales by an average of $3 billion.

“Using novel datasets and estimation approaches to health policy, we find evidence that investors predict that access to legal cannabis will significantly reduce sales of conventional medicines. Legal cannabis is putting competitive pressure on both generic and branded drug markets on both classes of drug companies,” the study’s authors wrote. Unlike generic branded drug patent expiry or generic entry, typically only one drug, the off-patent drug and its substitutes, is affected. Unlike, it can be purchased without a prescription and grown at home.”

Cannabis as an alternative to medicine

In the report, researchers note that previous research has shown that access to legal cannabis reduces consumption of certain medications, including highly addictive opioids. Additionally, other studies have shown that legalizing marijuana reduces consumption of other drugs among certain patient populations, such as Medicaid recipients.

Marijuana legalization could also affect drug companies due to the vast number of medical conditions available for treatment. Unlike conventional drugs that are developed and approved to treat specific ailments, patients use cannabis to treat a variety of physical symptoms, such as pain and muscle spasms, as well as anxiety, depression, PTSD, and more. treat mental health conditions.

The high cost of medicines has also been cited by the authors as a factor in the economic impact of cannabis legalization measures on traditional pharmaceutical companies. As legalization measures take hold, cannabis could help ease the barriers that high drug costs pose to access to health care, easing the financial burden on state and federal governments.

Researchers have determined through research that cannabis is becoming an important new contender in the pharmaceutical market, estimating that full federal legalization would reduce sales of traditional pharmaceuticals by about 11%. Study co-author Sarah Stis of the University of New Mexico Department of Economics adds that despite standardization, health insurance coverage and clear dosing instructions, consumers continue to switch from pharmaceuticals to cannabis. increase.

“Currently, cannabis patients and their providers have little information to guide them toward the most effective treatment for their condition. Stis said“The future of cannabis medicine is to understand the prevalence and effects of plant constituents beyond THC and CBD, and identify ways to classify cannabis by measurable properties known to have specific effects.” Mimicking conventional medicines through standardization is likely not the optimal end point for cannabis, as the variability inherent in the cannabis plant likely drives its ability to treat so many conditions. there is potential.”

In addition to the overall finding that cannabis legalization reduces the stock market value of publicly traded pharmaceutical companies, the authors found that recreational marijuana legalization has more than twice the impact of medical cannabis legalization. discovered. Manufacturers of branded medicines have been hit harder than generic drug makers.

In conclusion, the authors conclude that traditional pharmaceutical companies may benefit more by investing in the regulated cannabis market than by lobbying against efforts to expand marijuana legalization. said to be high. They also recommend that cannabis regulatory policies should support research into the risks and benefits of both medical and recreational cannabis.

the study, “US Cannabis Law Projected to Cost Generic and Branded Drug Companies Billions of Dollars‘ was published in the journal on Wednesday pro swan.

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