The new medical cannabis dispensaries in Texas have persevered despite high state licensing fees, a rigid regulatory environment and prospects for a severely restricted customer base.
But just as they’re harvesting their first crops and working to bring initial medications to market, another hurdle is on the horizon — in the form of a pharmaceutical company’s experimental drug that’s derived from the same non-psychoactive marijuana extract the Texas dispensaries are producing and is targeted at some of the same patients.
The drug, called Epidiolex and manufactured by London-based GW Pharmaceuticals, could win approval from the U.S. Food and Drug Administration as soon as this summer and by the fall could be available for sale nationwide, including in Texas. If so, it would be the first prescription drug derived from marijuana to get the green light from the FDA, and industry experts say it likely would be covered by medical insurance.
Epidiolex is comprised of purified cannabidiol — a cannabis extract that doesn’t make people high — and it is intended as a treatment for patients with certain rare forms of epilepsy.
The three medical cannabis dispensaries licensed in Texas — Compassionate Cultivation, Cansortium Texas and Surterra Texas — also are producing cannabidiol, known as CBD, as their primary extract. They are only allowed by state law to sell it to patients suffering from rare forms of epilepsy and under a doctor’s direction.
The upshot is the potential for strong competition for the Texas dispensaries just as they’re gaining their footing, even as advocates for medical marijuana say a stamp of approval from the FDA for Epidiolex this summer would be a landmark for establishing broad credibility for the therapeutic properties of CBD.
“If (the Texas dispensaries) can’t establish clear lines of delineation, or some other value proposition, then we do think it is going to be difficult for them to compete” if Epidiolex wins FDA approval and is marketed in Texas, said John Kagia, executive vice president for industry analytics at New Frontier Data, a cannabis market research firm based in Washington.
“An FDA-approved, commercially available CBD product will present acute competition in a CBD-only (cannabis) market” such as the one in Texas, Kagia said.
Compassionate Cultivation and Surterra Texas are in the Austin metro area, while Cansortium Texas is in Schulenburg. Similar to cannabis-derived products sold by dispensaries in other states that have legalized various forms of medical marijuana, their products haven’t gone through the years-long FDA approval process and aren’t covered by medical insurance.
Epidiolex is expected to be expensive — Cowen analyst Phil Nadeau estimates it will cost $2,500 a month in the U.S. — but medical experts say the likelihood of insurance coverage would blunt the hit to patients.
Scott Perry, a Fort Worth pediatric neurologist, said many Texas doctors probably would opt for an FDA-approved CBD drug over similar treatments if they have a choice. Perry participated in some of GW Pharmaceuticals’ drug trials for Epidiolex and also helped advocate for passage of the Texas medical cannabis law, called the Compassionate Use Act, in 2015.
If Epidiolex wins FDA approval, “I suspect more doctors will feel comfortable prescribing it” than steering their patients to other CBD treatments that haven’t been put through the agency’s rigorous processes, Perry said.
Still, the Texas dispensaries aren’t necessarily blanching at the potential challenge. Morris Denton, chief executive of Compassionate Cultivation, acknowledged Epidiolex could cost his dispensary some customers, but he said he considers “the glass three-quarters full” if the drug wins FDA approval because of the overall credibility CBD would gain as a result.
Epidiolex “represents a competitor,” Denton said, but he said he doesn’t “view it with trepidation.”
“I view Epidiolex and other clinical trials that are based around (cannabis extracts) as great validators for the potential of this medicine,” he said.
He and others said an FDA determination that CBD has medical value — even though such a ruling by the agency this summer would be limited solely to CBD in the form of Epidiolex — could be useful in efforts to convince Texas lawmakers during next year’s legislative session to expand access to medical cannabis in the state from what currently is highly restricted availability only for certain epilepsy sufferers.
Dozens of patients and caregivers from around Texas traveled to the Capitol during the 2017 legislative session to advocate for more access to medical marijuana, but bills that would have substantially expanded on the Compassionate Use Act — to add conditions such as autism, for instance — were unsuccessful.
Epidiolex “could potentially disrupt the existing market (in Texas), but I would think it also would probably make it practical for lawmakers in Texas to expand the definition of allowable CBD product offerings” from the new dispensaries, said Matthew Karnes, founder of GreenWave Advisors, a cannabis industry research firm based in New York. “I would think that in Texas it would likely be a catalyst” to lift some prohibitions on who can buy CBD products from the dispensaries.
In the interim, however, the state’s dispensaries already have a larger potential Texas customer base than Epidiolex does, Denton said, because they’re allowed to sell to patients with any form of so-called intractable epilepsy, defined by the state law as people for whom two mainstream seizure drugs have proved ineffective. Initially, GW Pharmaceuticals is seeking FDA approval for Epidiolex as a treatment only for two specific forms of intractable epilepsy — Lennox-Gastaut syndrome and Dravet syndrome — although the company is testing it in others.
Products from the Texas dispensaries also might remain appealing for certain epilepsy patients who want treatments that incorporate a fuller spectrum of cannabis extracts and not just CBD, observers said. Some proponents of medical marijuana consider other components of the plant to have medicinal qualities as well.
While Epidiolex is essentially pure CBD, products made by the Texas dispensaries can contain additional plant extracts — as long as they don’t exceed 0.5 percent tetrahydrocannabinol, or THC, which is the chemical in conventional marijuana that produces a high. For comparison, marijuana for recreational purposes generally contains from 9 percent to more than 30 percent THC.
A number of products that advertise CBD oil as ingredients can be bought in Texas without prescriptions, but they are produced by out-of-state companies and contain only trace levels of THC, generally considered to be 0.3 percent or less. In addition, an academic study in 2015 found that medical marijuana products made in some states often didn’t contain the amount of ingredients claimed on their labels.