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As more U.S. states relax cannabis restrictions, reliance on prescription medication may be declining. Studio Marmellata/Stocksy
  • As states across the U.S. continue to ease cannabis restrictions and legalize medicinal and recreational use, reliance on prescription medication may be declining.
  • In fact, new research estimates that legalizing cannabis at the federal level could cost the pharmaceutical industry billions.
  • While cannabis can offer an alternative to prescriptions like opioids, experts say that people should talk with their doctor before swapping their medication.

Legalizing cannabis at the federal level and expanding access in U.S. states where it is still illegal could reduce sales of prescription and over-the-counter drugs by billions of dollars, researchers say.

The estimate is based on changes in stock market value that occurred after various states had legalized cannabis for medical or adult recreational use.

According to researchers, the shift in the stock market is a reflection of investor predictions.

The belief is that once cannabis is legal, many consumers will use it to treat health conditions such as chronic pain and insomnia, instead of reaching for pharmaceutical drugs.

In the study, published August 31 in the journal PLoS ONE, researchers examined stock market returns data from 1996 through 2019 for over 500 pharmaceutical companies.

They looked specifically at changes in drugmaker returns that occurred before and after cannabis legalization — either through a governor signing a bill into law or through a ballot initiative.

They then compared the actual data to an estimate of the returns in the absence of legalization, based on a financial model.

As a result, researchers found that drugmaker returns were 1.5% to 2% lower 10 days after cannabis legalization, compared to what they might have been without legalization.

This corresponds to each company losing about $133 million to $177 million in stock market returns value.

Based on these figures, researchers estimate that each time cannabis was legalized for medical use, annual pharmaceutical drug sales in the United States dropped an average of $2.4 billion.

The impact of cannabis legalization on total sales was larger for adult recreational legalization compared to medical legalization, they found. It also had a bigger effect on the total sales of brand name drugmakers compared to generic drug makers, mainly because of the larger market share of companies making brand name drugs.

Using these results, researchers estimate that if the remaining U.S. states without legal access to cannabis were to pass medical-use cannabis laws, pharmaceutical sales would drop by $38.4 billion, or about 10.8% of total sales.

This includes both prescription drugs and over-the-counter medications.

At the time of the analysis, 16 states did not have legal access to cannabis.

Currently, 37 states and the District of Columbia allow the medical use of cannabis products, and 19 states, including the District of Columbia, allow adult non-medical use.

The study also has several limitations, which the researchers pointed out in their paper.

Their analysis includes only publicly-traded companies, so the results could be an underestimate of the impact of cannabis legalization on pharmaceutical drug sales.

In addition, other events that occurred around the time of legalization could have affected stock market returns.

According to the study, expanding the legalization of cannabis in the U.S. could potentially cost the pharmaceutical industry billions of dollars in revenue.

The pharmaceutical industry may already be aware of the risk it faces from legal access to cannabis.

For instance, The Washington Post reports that some drug makers have funneled money to anti-cannabis groups, lobbied federal agencies directly, and provided funding to academics opposed to legalization.

Other companies are trying to cash in on the public’s interest in the benefits of cannabis.

Last year, drug maker Pfizer, Inc., purchased a cannabinoid biotech company for $6.7 billion, according to Forbes.

However, even the 10.8% drop in total drug sales estimated by the authors of the new study may not be insurmountable for the pharmaceutical industry.

A 2019 paper by West Health Policy Center, a nonpartisan, nonprofit organization based in Washington, D.C., estimates that large drug makers could face an 11% drop in profits and still see a more effective return on their invested capital compared to other industries.

Even a 21% profit reduction would leave these companies more competitive than 75% of other industries, according to the paper.

Other research suggests that many people may be choosing to manage their health conditions with cannabis rather than with prescription or over-the-counter medications.

For instance, a study published this year in Health Economics shows that legalizing recreational cannabis reduced demand for certain prescription drugs through state Medicaid programs between 2011 and 2019.

Researchers focused on prescription medications used to treat pain, depression, anxiety, sleep, psychosis, and seizures — specifically drugs where cannabis could be an effective substitute.

“What we found is that for the majority of these categories, there are reductions of about 9% to 13% in the utilization of those prescription drugs in the Medicaid population in states that legalized recreational cannabis,” study author Shyam Raman, a doctoral student in the Jeb E. Brooks School of Public Policy at Cornell University in Ithaca, New York, told Healthline.

In addition, a 2017 study in Health Affairs saw a similar decrease in the use of certain prescription drugs by Medicaid enrollees in states that had legalized medical cannabis.

These studies focused on overall drug spending after cannabis legalization. Other research has looked at how individual patients respond to having legal access to cannabis.

In a study published last year in the journal Pain Medicine, researchers found that prescription opioid use by Canadian medical cannabis patients decreased over a 6-month period — dropping from 28% of participants at the start of the study to 11%.

The majority of patients in the study had chronic pain, but some people had anxiety, arthritis, insomnia, headache, or other conditions.

In addition to the drop in prescription opioid use, researchers saw a decrease in the percentage of patients using non-opioid pain medications, antidepressants, anti-seizure medications, and benzodiazepine.

“This study adds to the ever-increasing body of research which suggests that when patients incorporate medical cannabis into their course of care, they tend to reduce their use of prescription drugs, and also alcohol, tobacco and other substances,” study author and cannabis researcher Philippe Lucas, PhD, president of Calgary-based SABI Mind, told Healthline.

Studies such as this come at a time when both the United States and Canada are dealing with an opioid crisis.

In 2016, more than 42,000 Americans died of an opioid overdose, with 40% of those involving a prescription opioid, according to the Department of Health and Human Services.

“Evidence suggests that cannabis might offer patients, particularly those dealing with chronic pain, a safer alternative to using opioids,” Lucas said. “This can save lives and also improve public health and safety overall.”

The decrease in prescription drug use by medical cannabis users seen in the study by Lucas and his colleagues also occurred alongside an increase in their quality of life, with the biggest changes occurring in their physical health and psychological health.

Research has shown that cannabis products can offer relief for chronic pain, insomnia, and other conditions as an alternative to prescription drugs, sometimes with fewer side effects.

Be that as it may, experts like Raman said one concern with the legalization of cannabis is that people may discontinue their regular medical care in favor of cannabis.

Lucas agreed and said that people need to communicate with their physician that they’re using cannabis, either to manage a medical condition or simply recreationally. This is especially important before stopping any prescription medication.

An open line of communication about cannabis use also needs to go both ways, Lucas added. But for that to happen, physicians will need more training.

“We need to see a higher level of education for primary care physicians on the positive and negative impacts of cannabis use, particularly medical cannabis use,” said Lucas.

Legalizing cannabis at the federal level could cost the pharmaceutical industry billions of dollars, according to new research.

But at the same time, legal access to cannabis could offer an alternative or complement to prescription medication and possibly mitigate the ongoing opioid crisis.

As states continue to expand and implement cannabis legalization policies, people who rely on prescription medication for health conditions should speak with their doctor before replacing or supplementing their medication with cannabis.

“We need to make sure those individuals can communicate with their physicians, and build cannabis into a treatment plan,” Raman said. “Or at least include the fact that they may be self-medicating [with cannabis] in their medical history.”