OVERVIEW:
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Today, outgoing FDA Commissioner Scott Gottlieb who, hours after passage of the 2018 Farm Bill reminded everyone Congress put the FDA in charge of regulating cannabis and cannabis-derived products, announced enforcement actions against several cannabis-related businesses.
These enforcement actions are directed at three companies, Relievus in New Jersey, Nutra Pure LLC in Washington State and PotNetwork Holdings. On Twitter today, Commissioner Gottlieb also announced that Walgreens and CVS would be hearing from him as well, in light of their recent announcements about selling CBD products in a few states.
Ever mindful that Cannabis related products are enjoying considerable political popularity, Commissioner Gottlieb also announced a public meeting on May 31 to “obtain scientific data and information about the safety, manufacturing, product quality, marketing, labeling, and sale of products containing cannabis or cannabis-derived compounds.”
As a reminder for those of you who are not health care analysts, the FDA requires a cannabis product (hemp derived or otherwise) that’s marketed using claims of therapeutic benefit to be FDA-cleared before it can be introduced into interstate commerce. Put another way, it is illegal to claim CBD oil reverses the progression of Alzheimer’s disease (or any other ailment, for that matter) as part of a marketing campaign.
Complicating things further, because CBD and THC are active ingredients in an FDA-approved drug (in this case, GWPH’s Epidiolex) it is unlawful to introduce food containing CBD or THC into interstate commerce or to market CBD or THC products as a dietary supplement. The only pathway for CBD and THC to be added to foods or marketed as a dietary supplement is if the FDA first issues regulation through the rulemaking process.
The public meeting in May is intended to address what the agency believes are unanswered questions about the use of cannabis. For example, the FDA identified liver injury as a possible consequence of using Epidiolex. Such side effects can be managed through monitoring and medical supervision, something which would be unlikely were CBD used as a dietary supplement. The FDA also has questions about the effects of cumulative exposure to CBD from use in many consumer products as well as concerns about the functionality of CBD in those products. Finally, the FDA wants to consider some threshold level below which CBD could be added to foods without compromising the drug approval process or undermining commercial incentives for clinical study.
For the public meeting, the FDA is asking everyone to leave their anecdotes at home and offer data and information on:
- What levels of cannabis and cannabis-derived compounds cause safety concerns
- How the mode of delivery – ingestion, absorption, inhalation – affects the safety of CBD and THC compounds
- How incentives for drug development with CBD and THC are affected by the widespread availability of products that contain these ingredients
- How cannabis and cannabis-related compounds interact with other substances
As we have noted previously, the FDA has formed a working group chaired by Principal Deputy Commissioner, Amy Abernathy, and Principal Associate Commissioner for Policy, Lowell Schiller to explore regulatory options under existing authority for the regulation of CBD and THC. The group will also explore whether there are legislative options that should be explored that can lead to more efficient regulatory pathways than those available under current law.
The announcement certainly represents progress toward a regulatory regime with which comes a certain amount of predictability for the cannabis sector. Regulatory predictability, of course, makes for a better business environment for all segments of the industry.
However, the speed at which policy development occurs may not always be to the liking of the industry. For that reason, Gottlieb’s announcement attempts to manage expectations, “This is a complicated topic and we expect that it could take some time to resolve fully. Nevertheless, we're deeply focused on this issue and committed to continuing to engage relevant stakeholders as we consider potential paths forward. The working group plans to begin sharing information and/or findings with the public as early as Summer 2019.”
The other important point Gottlieb makes several times in the announcement is that the FDA takes a science-based approach to public health. There is little dispute among policy makers that the science around the use of CBD and THC is still pretty thin owing to its long-standing prohibition. It remains an open question how the FDA will reconcile its regulatory authority with a dearth of support scientific evidence.
Finally, for the time being we are skeptical that legislative actions developed by the working group have much of a future on Capitol Hill in 2020. The priority among leadership is the SAFE Act which is making progress on the House side. Passage by the Senate remains very much up in the air, particularly as long as Sen. Grassley chairs the Judiciary Committee but we are watching it closely.
Shayne Laidlaw from the Hedgeye Cannabis team and I will be at the May 31 meeting and will share all that we learn and observe. In the meantime, if you have any questions or comments on implications for any tickers the Cannabis team has reviewed, please contact them directly or . If you want to discuss the regulatory environment at the FDA or anywhere else, just send me a note or give me a call.
Emily Evans
Managing Director – Health Policy
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