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$18.5 Billion Less For Big Pharma If All 50 States Legalize Medical Marijuana: Study

Nationwide medical marijuana legalization could take a multi-billion dollar bite out of the pharmaceutical industry, according to the latest research from analytics firm New Frontier Data.

In a study titled ‘From Prescription to Recommendation: How Cannabis Could Disrupt the Pharmaceutical Industry’, researchers write that if medical cannabis were legalized in all 50 states, pharmaceutical expenditures on the top nine conditions commonly treated by medical cannabis could fall an estimated $18.5 billion between 2016 and 2019.

“The United States constitutes 35 percent of the global pharmaceutical market, the largest market in the world, and a major driver of the U.S. economy. It is one of many industries that will be impacted by the growth of the legal cannabis market and we are already starting to see that trend in legal medical states where use of key prescription drugs is down by 11 percent,” said Giadha Aguirre De Carcer, CEO and founder of New Frontier Data.

“If cannabis were to be adopted nationally, we would begin to see a trend of patients turning to medical cannabis as a substitute or complement to pharmaceuticals.”

Researchers looked at nine of the conditions classified by the National Academies of Science as being most effectively treated by medical cannabis – chronic pain, post-traumatic stress disorder, sleep disorders, anxiety, nerve pain, chemotherapy induced nausea and vomiting (CINV), Tourette syndrome, glaucoma, and seizures/epilepsy.


Based on a 2016 Health Affairs study that found an 11 percent reduction in drug prescriptions in states with legalized medical marijuana, New Frontier Data analysts estimated what the total drop would be if medical marijuana were fully legalized around the country. They applied that decrease to the total amount of money spent in the U.S. on treatments for the aforementioned conditions, and estimated that cannabis and related products can replace $4.4 billion to $4.9 billion per year of current spending on existing treatments.

“Looking at these numbers, it would appear that medical cannabis would be a drop in the bucket when it comes to impacting the total pharmaceutical industry,” said Aguirre De Carcer.

“However, when you start to break down the numbers by specific sectors of the industry, like chronic pain or symptoms associated with chemotherapy, which are very lucrative markets for pharmaceutical companies, you will certainly see cannabis have a major impact.”


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