Doctors Are Getting Kickbacks For Cannabis Prescriptions Now??
Clinics and physicians are receiving monetary kickbacks for selling products stocked by licensed medical cannabis producers.
Medical cannabis producers are increasingly paying clinics to prescribe their products to patients, calling into question the ethics and business practices of the fledgling industry. There’s nothing illegal about these payments, and many clinics claim they could not make ends meet without them. Some even claim that the funds are used to finance patient-benefitting programs. Still questionable to be receiving monetary kickbacks in healthcare.
The practice of ‘monetary incentives’ harkens to the opioid sales pitches of the past two decades that had physicians getting vacations and merchandise for meeting prescription quota. This new practice is balancing high on a moral tightrope that could threaten the legitimacy of the industry and taint the public image of medical cannabis.
So, How Many Clinics Are Accepting Payments to Prescribe a Certain Brand of Cannabis?
According to Canada’s National Post, the practice of providing these sorts of kickbacks has increased dramatically in recent months. The nature of the deals works like this: A medical cannabis producer approaches an independent cannabis clinic, offering to provide the clinic with 15 to 20 percent of the cost of each dose of medicine the company sells to its patients. So if a patient is looking to benefit from full-spectrum CBD oil, the clinic could push them toward the oil offered by this company and net an extra 20 percent profit on the sale.
Does that sound shady? It probably does. But there are two sides to the story.
Kickbacks in Cannabis: Shady or Necessary?
If you look at it from a medical perspective, a patient’s best interests should never be subservient to a profit. If one strain or product would serve the patient best, both doctors and clinics have a moral responsibility to provide the best care possible. This is why there are laws in the United States about how drug makers can market their products to medical doctors — and why they must report every dollar spent on the practice. In fact, the makers of opioids have been sued recently for their aggressive and less-than-ethical models of pushing doctors toward prescribing more opioids with misleading information.
But medical cannabis isn’t only prescription based. Thanks to new laws in Canada that legalized recreational cannabis use — and a lack of physician education on cannabis medicine — many patients are buying medical cannabis the way Americans buy over-the-counter medicine. They use cannabis based on advice from friends or clinic operators, instead of medical professionals. And clinic operators are in the business to make money. If they’re less educated about different strains of cannabis or its effects on the human body, they may not see the subtle differences in products.
And, again, this practice isn’t illegal. In the same way that grocery stores sell the space on the premium shelves to giant corporations for big money, cannabis producers can claim that they are simply leveraging their marketing budgets to best get their products in front of customers.
So, is there a difference between General Mills paying Kroger millions to keep its cereals at eye-level and a cannabis company offering an incentive to do the same with its products? Some say it’s a gray area, while others argue that it undermines the entire operation just as it’s vying for public support.
And make no mistake — it’s a lot of money.
How Much Money Are Clinics Getting From Kickbacks?
Sunniva Inc., which own seven physician-based medical clinics throughout Canada, disclosed that the biggest jump in its Q3 earnings came from these sorts of deals — what it deemed “Licensed Producer (LP) revenue.” Its public filing states: “Gross margin increased by $0.4 million and $2.8 million during the three and nine months ended September 30, 2018 primarily due to the increase of LP revenue. LP revenue provides the highest margin of all the Company’s revenue streams.”
On the one hand, it would be financial suicide to kill off a revenue stream that large. On the other hand, it’s sometimes necessary to take the high road in order to gain or preserve the public trust. Thinking in the short-term can lead to disastrous long-term consequences, and it’s too early to tell if Canadian cannabis clinics have built their empires on sand or stone.
Nor are these kinds of deals limited to clinics. Physicians are also on the receiving end of these sweetheart deals with medical cannabis producers — even though they cannot legally prescribe one specific brand of cannabis to their patients.
The College of Physicians and Surgeons of Ontario has issued statements against the practice of doctors charging fees to licensed providers for writing prescriptions, demarcating a bright line in the sand. Yet the practice will continue until lawmakers can come up with a solution that forbids unethical practices while still allowing drug makers to market their products toward physicians, who may be in dire need of education on these medicines.
Let’s hope it’s resolved before the industry is taineted by unscrupulous practices and patients lose access to the benefits of medicinal cannabis.