USA Article For Cannabis Law Report: Availability of Medical Insurance Coverage for Medical Cannabis Patients

Authored By: Gene Markin & Rebecca Greenberg

Gene Markin is a Shareholder in Stark & Stark’s Commercial Litigation and Intellectual Property Litigation Groups where he concentrates his practice on complex litigation matters involving copyright protection and infringement, trademark and trade dress infringement and enforcement, trade secret litigation, false advertising, domain name disputes, unfair competition, class actions, fraud and consumer fraud, shareholder and partner disputes, and breach of contract.

Rebecca is a partner of The Greenberg Law Firm LLP, practicing for more than eight years in the areas of civil and commercial litigation.  She is an active advocate in the area of drug policy reform and cannabis law.  She advises clients on minimizing liability exposure in the cannabis industry and is an expert in the areas of New York compliance and professional liability.  She is currently on the Board of Trustees for the Washington Heights Corner Project and is an active member of the New York Cannabis Bar Association. 

 

With medical marijuana legal in 30 states and Washington, DC, plus the United States territories Guam and Puerto Rico and with almost two-thirds of the country having access to medical marijuana and just over 2.2 million patients nationwide, the clinical research on the health benefits and healing properties of the cannabis plant is contributing to the growing empirical studies and evidence supporting the use of marijuana as an effective medicine.

Frustratingly, however, for many medical cannabis patients suffering from debilitating conditions and diseases such as multiple sclerosis, terminal cancer, muscular dystrophy, Lou Gehrig’s disease, seizure disorders, anxiety, migraines, and chronic pain, the cost of medicine in the form of cannabis is unfortunately not covered by healthcare insurance. Although a physician’s recommendation of cannabis for a patient’s qualifying ailments is no different than a script for opioids, anticonvulsants, or antidepressants, the patient’s health insurance provider will cover the cost of the latter but not the former.

Why? First, cannabis remains a Schedule I drug under the Controlled Substances Act, which the federal government defines as “drugs with no currently accepted medical use and a high potential for abuse.” The federal government deems Schedule I drugs to be the most dangerous category of drugs with potentially severe psychological or physical dependence. Based upon the federal government’s Schedule I designation of cannabis, the health insurance industry does not consider cannabis to be “medical care” covered by health insurance.

Second, private healthcare insurance companies as well as Medicare (federal health coverage for senior citizens) and Medicaid (federal coverage for low-income citizens) are generally only legally required to cover FDA-approved drugs. Since marijuana is not an FDA-approved drug, insurance companies are not required to cover it as part of their insurance plans. On the other hand, insurers historically covered synthetic marijuana products that have been approved by the FDA, including Marinol (which has been an approved medication for 30 years) and more recently, Syndros. Both drugs are classified as Schedule III drugs and recognized as having an “accepted medical use and low to moderate potential for abuse.” These synthetic drugs, however, are slow to work and lack the potency and effectiveness of the non-synthetic alternative.

Third, amounts paid to obtain a controlled substance such as marijuana, in violation of federal law, are not deductible expenses for medical care under section 213 of the Internal Revenue Code. Section 213(a) allows an individual to deduct certain medical expenses, including the cost of medicine and drugs, to the extent such expenses exceed three percent of adjusted gross income. Section 213(e)(1) defines “medical care” to include “the diagnosis, cure, mitigation, treatment, or prevention of disease.” Section 213(e)(2) defines “medicine and drugs” to include “only items which are legally procured and which are generally accepted as falling within the category of medicine and drugs (whether or not requiring a prescription).” Moreover, Section 213(e)(1)(ii) provides that amounts expended for illegal operations or treatments are not deductible.

Insurance carriers rely on this language in Section 213 of the Income Tax Regulations to deny coverage to medical cannabis patients. Section 213, however, deals with tax deductions and specifically provides that in order for “medical expenses paid (including expenses paid for medicine and drugs) to be deductible, they must be for medical care of the taxpayer, his spouse, or a dependent of the taxpayer and not be compensated for by insurance or otherwise.” (emphasis added). Thus, Section 213 deals with federal tax deductions for medical expenses and does not technically preclude a private insurance company from offering coverage in a green state.

There are some ways, albeit limited, for medical cannabis patients to obtain insurance coverage. Recently, for example, New York State ordered insurers to cover any medical visit involving a medical marijuana certification provided that the main reason for the doctor visit is not only to obtain the certification itself. Insurers, however, are not required to cover the cost of the medical marijuana purchased by the patient.

Worker’s Compensation boards in several states have also started to move the needle for medical cannabis patients seeking coverage. A New Jersey administrative law judge recently ordered that a workers compensation insurance carrier reimburse past and future cannabis purchases to a man injured on the job at a lumber mill whose physician recommended medical cannabis to manage his pain. The ruling, which was the first of its kind, has opened the door to similar decisions in New Mexico and Maine, with other states following suit. Though only those with workplace injuries currently stand to benefit from these decisions, it does raise the question of whether this trend will spill over into mainstream health insurance coverage.

As it stands, health insurers are resistant to covering medical cannabis as a whole, however there have been some recent developments that could pave the way for insurance coverage for the cannabis plant-derived compound, cannabinol (CBD). Recently, the FDA issued a historic approval of GW Pharmaceutical’s anti-seizure drug Epidiolex, the first FDA-approved drug made from a cannabis plant compound. Currently, the release of Epidiolex is on hold pending DEA rescheduling, but FDA approval does make insurance coverage of the drug likely. Rite Aid Pharmacy has expressed its intention to dispense the drug once it is released to the market. Most significantly, the DEA has indicated there is consideration for rescheduling CBD in light of FDA’s approval of Epidiolex. In the event this happens, it will be interesting to see whether health insurance carriers offer some sort of coverage option for CBD.

While the United States is still figuring things out, medical insurers in other countries have moved towards covering cannabis. Insurance carriers in the Netherlands will cover medical cannabis on a case by case basis, offering reimbursement for patients with specific medical conditions. In Germany, where medical cannabis was legalized nationwide last year, insurance carriers are required by law to cover medical cannabis. One German insurance company recently reported reimbursing nearly 16,000 patients since Germany legalized medical cannabis. Meanwhile, Canada recently passed full federal legalization of marijuana and following a landmark case last year, health insurance companies have begun covering medical marijuana purchases. Not bad, eh?

 

 

 

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