One of the hottest topics in health care benefits today is the use of medical marijuana products and how payers will define the parameters of how when such products are covered moving forward, as the law continues to evolve on the state and federal level. With marijuana classified as a Schedule I drug at the federal level (alongside unlikely neighbors such as heroin and peyote) and now completely legal in numerous states even for recreational use, the prospect of instituting any type of coverage for cannabis products is risky to begin with.

However, we've still seen some payers communicate an interest in doing so, recognizing that from a cost containment perspective, medical marijuana may be a much better choice than the high cost specialty drugs it might be replacing in certain situations. Now, some changes at the federal level have cleared the way for covering certain types of marijuana-derivatives, without the risks associated with reimbursement for a product the use of which is criminal under federal law.

Notably, the Agriculture Improvement Act of 2018 (known as the “Farm Bill”) created a new classification of cannabis products, “hemp”, which includes cannabis and cannabis derivatives which contain essentially no THC (delta-9-tetrahydrocannabinol, the compound which gives marijuana its psychoactive effects).

The bill removed hemp, this new category of marijuana products, from the Controlled Substances Act, which means essentially that marijuana which contains no THC (specifically, less than 0.3 percent THC by dry weight) is not a controlled substance under federal law. This would include cannabidiol or “CBD”, which is rapidly gaining popularity and is being sold an aid for everything from pain, insomnia and anxiety, to more far-fetched conditions such as cancers.

In response to this the FDA Commissioner has issued a statement outlining the FDA's policy on such products and indicating an intent to carefully monitor CBD and other cannabis products and the claims they make in connection with their marketing. It's important to remember that although a product such as CBD may be marketed and sold legally, the FDA still has a significant interest in making sure that it is done so in accordance with its set guidelines, for example ensuring that unfounded and unsupported claims are not made in regard to CBD's health effects or medicinal value.

Still, we have already seen FDA approval of CBD for certain uses, namely as a very effective treatment of certain forms of epilepsy. Epidiolex, a CBD product manufacturer by a UK-based company which also funded the study, was determined to very effective at treating certain types of epilepsy, significantly reducing seizures with manageably side effects, particularly at the right dosage. Epidiolex has since received FDA approval for treatment of certain types of epilepsy.

So, in light of developments in the last few years, the issue of coverage is no longer as simple as defining “marijuana and marijuana derivatives” and either excluding or covering them—a payer that wants to afford its participants access to and coverage of emerging cannabis-based treatments which may be more effective and cost effective than other alternatives will need to properly differentiate between different types of marijuana products, particularly those containing and those not containing THC.

This will mean revisiting plan definitions as well as exclusions and other limitations. It's also important to remember that FDA approval does not apply to a drug in a vacuum – a drug is or is not FDA approved for treatment of a certain condition under certain medical guidelines, so Epidiolex would properly be considered FDA approved for treatment of one of the approved forms of epilepsy, but not for something like cancer. And finally, in the self-funded world, any time a plan document undergoes changes, the applicable stop loss policy should also be reviewed and amended. Corresponding definitions and exclusions in that policy will also need to be examined and likely revised to avoid putting the plan in a precarious situation.

Andrew Silverio, Esq., serves as the Compliance & Oversight Counsel for the Phia Group, primarily focusing is on the most complex and emerging legal and regulatory issues, both internally and for our clients as a member of Phia Group Consulting. Andrew is also the Phia Group's HIPAA privacy officer.

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Medical cannabis: Should your health plan cover it?

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