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COWEN
COLLABORATIVE INSIGHTS

February 25, 2019

Health Care: Payor Perspective (Rhyee)

Based on our conversations with managed care companies, whether CBD oils will be covered as a medical benefit by government sponsored health programs is determined by the Center for Medicare and Medicaid Services (CMS) and state governments. Currently, CBD products aren’t a covered benefit or an extra benefit that has been approved by CMS or states, and it isn’t known at this time whether CMS or states governments are considering reimbursement for CBD products. That said, based on our discussions with a number of payors, if a state government were to provide reimbursement for CBD products under Medicaid, it would have to add CBD oils as a covered benefit under the state plan, which may or may not require CMS approval. We note that CMS and states do provide reimbursement for non-traditional treatments, if they determine that there’s some benefit, such as issues around social determinants, As such, we see the potential for CBD oils to become a covered benefit under CMS, even without FDA approval.

On the commercial side of the market, payors we spoke with noted that CBD oils aren’t eligible for coverage under commercial health plans because they’re not regulated by the FDA. There are a couple of exceptions, such as GWPH’s Epidiolex, which is a prescription pharmaceutical formulation of highly purified, plant-derived cannabidiol for the treatment of seizures associated with Lennox-Gastaut syndrome (LGS), or Dravet syndrome in patients two years of age or older. Epidiolex is covered by commercial insurance as it is an FDA approved drug. Payors noted three factors complicating commercial coverage of CBD oils, including (1) legal issues, as CBD oils derived from THC (cannabis) aren’t legal if they contain equal to or more than 0.3% THC; (2) lack of regulation by the FDA; and (3) their availability as OTC medications.

Health Care: Provider Perspective (Rhyee)

The certified use of medical marijuana appears to be gaining acceptance by the provider community, as evidenced by the recent distribution of a memo by the chief physician executive of Intermountain Healthcare, Utah’s largest health provider, to its network of providers that the health system is lifting its prior directive that advised physicians not to write letters recommending cannabis treatments. However, it’s difficult to assess providers’ stance on recommending the use of CBD oils. With greater clinical evidence supporting the efficacy in treating various conditions, we may very well see doctors recommend CBD oils as well, which some claim to be effective in treating loss of appetite in cancer patients, chronic pain, epilepsy, Huntington’s disease, sleep disorders, multiple sclerosis symptoms, schizophrenia, and glaucoma.

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