CANNABINOID DRUG DEVELOPMENT

CHAPTER 5.
DEVELOPMENT OF CANNABINOID DRUGS		 2
FEDERAL DRUG DEVELOPMENT POLICY 2
THE DEVELOPMENT AND MARKETING OF MARINOL® 12
MARKET OUTLOOK FOR CANNABINOIDS 17
MARIJUANA: REGULATION AND MARKET OUTLOOK 23
CONCLUSIONS 28
REFERENCES 29

5.1

DEVELOPMENT OF CANNABINOID DRUGS

Medicines today are expected to be of known composition and quality. Even in cases where marijuana can provide relief of symptoms, the crude plant mixture does not meet this modern expectation. The future of medical marijuana lies in classical pharmacological drug development, and indeed there has been a resurgence of scientific, as well as public, interest in the therapeutic applications of cannabinoids. After an initial burst of scientific activity in the 1970s, today's renewed interest has been fueled by major scientific discoveries discussed in previous chapters: the identification and cloning of endogenous cannabinoid receptors, the discovery of endogenous substances that bind to these receptors, and the emergence of synthetic cannabinoids that also bind to cannabinoid receptors. These scientific accomplishments have propelled interest in developing new drugs that can treat more effectively or more safely the constellation of symptoms for which cannabinoids might have therapeutic benefit (see chapter 4). Through the process of what is referred to as "rational drug design", scientists manipulate the chemical structures of known cannabinoids to design better therapeutic agents. Several new cannabinoids are being developed for human use, but none has reached the stage of human testing in the United States.

The purpose of this chapter is to describe the process of and analyze the prospects for development of cannabinoid drugs. It first discusses the regulatory hurdles that every new drug encounters en route to market. It then proceeds to describes the regulatory and market experiences of dronabinol (tetrahydrocannabinol, or THC, in sesame oil), the only approved cannabinoid in the United States. These sections serve as a road map to determine whether the therapeutic potential of cannabinoids is likely to be exploited commercially to meet patient needs. Finally, the chapter describes what would be needed to bring marijuana to market as a medicinal plant.
The term cannabinoids is used in this chapter to refer to a group of substances that are structurally related to THC-by virtue of a tricyclic chemical structure-or that bind to cannabinoid receptors, such as the natural ligand anandamide. From a chemist's point of view, this definition encompasses a variety of distinct chemical classes. But because the purpose of this chapter is to explore prospects for drug development, both chemical structure and pharmacological activity are important, therefore, the broader definition of cannabinoids is used.

5.2

FEDERAL DRUG DEVELOPMENT POLICY

Like controlled substances, cannabinoids developed for medical use encounter a gauntlet of public-health regulatory controls administered by two federal agencies: the Food and Drug Administration (FDA) of the Department of Health and Human Services (DHHS) and the Drug Enforcement Administration (DEA) of the Department of Justice. FDA regulates human testing and the introduction of new drugs into the marketplace, whereas DEA determines the schedule of and establishes production quotas for drugs with potential for abuse to prevent their diversion to illicit channels. DEA also authorizes registered physicians to prescribe controlled substances. Some drugs, such as marijuana, are labeled Schedule I drugs in the Controlled Substance Act (CSA), and this adds considerable complexity and expense to their clinical evaluation. It is important to point out that Schedule I status does not necessarily apply to all cannabinoids.

Food and Drug Administration

Under the Federal Food, Drug, and Cosmetic Act, the FDA approves new drugs for entry into the marketplace after their safety and efficacy are established through controlled clinical trials conducted by the drugs' sponsors. 23 FDA's approval of a drug is the culmination of a long, research-intensive process of drug development, which often takes well over a decade. 19, 44 Drug development is performed largely by pharmaceutical companies, hut some targeted drug development programs are sponsored by the National Institutes of Health (NIH) to stimulate further development and marketing by the private sector. The NIH's drug development programs-including those for AIDS, cancer, addiction, and epilepsy- have been instrumental in ushering new drugs to market in collaboration with pharmaceutical companies. 33 In fact, as noted later, most of the preclinical and clinical research on dronabinol was supported by NIH.
Drug development begins with discovery, that is the synthesis and purification of a new compound with expected biological activity and therapeutic value. The next major step is the testing of the compound in animals to learn more about its safety and efficacy and to predict its utility for humans. Those early activities are collectively referred to as the preclinical phase. When evidence from the preclinical phase suggests a promising role in humans, the manufacturer submits an Investigational New Drug application (IND) to the FDA. The IND submission contains a plan for human clinical trials and includes the results of preclinical testing and other information.20 Absent FDA objection, the IND becomes effective after 30 days, allowing the manufacturer to conduct clinical testing (testing in humans),

5.3

which generally involves three phases (see figure 5.1). The three stages of clinical testing are usually the most time-consuming phases of drug development, lasting five years on average. The actual time depends on the complexity of the drug, availability of patients, duration of use, difficulty of measuring clinical end points, therapeutic class, and indication (the disease or condition for which the drug has purported benefits). 31

5.4

Figure 5.1 Stages of Clinical Testing

5.5

Drug development is a long and financially risky process. For every drug that ultimately reaches clinical testing through an IND, thousands of drugs are synthesized and tested in the laboratory. And only about one in five drugs initially tested in humans successfully secures FDA approval for marketing through a new drug application. 19
The manufacturer submits an NDA to FDA to gain approval for marketing clinical testing is complete. An NDA is a massive document, the largest portion of which contains the clinical data from Phase I-III testing. The other technical sections of an NDA include chemistry, manufacturing, and controls; nonclinical pharmacology and toxicology; and human pharmacokinetics and bioavailability. 23 In the case of a new cannabinoid, an abuse liability assessment would also probably be part of an NDA submission. In 1996, the median time for FDA review of an NDA, from submission to approval, was 15.1 months, a review period considerably shorter than that in 1990, when the figure was 24.3 months. 22 The shortening of approval time is an outgrowth of the Prescription Drug User Fee Act of 1992, which authorized FDA to hire additional review staff with so-called user fees paid by industry, and imposed clear deadlines for FDA action on an NDA. With respect to the cost of a single drug's development, a number of recent studies have provided a range of estimates of about $200-300 million, depending on the method and year of calculation. 33, 44
With FDA approval of an NDA, the manufacturer is permitted to market the drug for the approved indication. At that point, although any physician is at liberty to prescribe the approved drug for another indication (an "off-label use"), the manufacturer cannot promote it for that indication unless the new indication is granted separate marketing approval by the FDA. a To obtain such approval, the manufacturer is required to compile another application to the FDA for what is known variously as an "efficacy supplement," a "supplemental application", or a "supplemental new drug application". Those terms connote that the application is supplemental to the NDA. In general, collecting new data for FDA approval of an efficacy supplement is not as intensive a process as that for an NDA; it generally requires the firm to conduct two additional Phase III studies, although under some circumstances only one additional study of the drug's efficacy is needed.24 The preclinical studies, for example, ordinarily need not be replicated. The average cost to the manufacturer for obtaining approval for the new indication is typically about $10-40 million.33 The review time for FDA approval of the new indication can be considerable; a recent study of supplemental indications approved by FDA inl989-1994 found the approval time to exceed that for the original NDA,18 a reflection, in part, of the lower priority FDA accords to the review of efficacy supplements as opposed to new drugs.

a FDA policies for off-label use are being transformed as a result of the Food and Drug Administration Modernization Act of 1997, which, FDA recently promulgated new rules to give manufacturers greater flexibility to disseminate information about off-label uses (FDA, 1998b). As of this writing, however, court decisions have left the status of the new rules somewhat unclear.

5.6

The manufacturer also must apply to the FDA to receive marketing approval for a new of a previously approved drug. A new formulation is a new dosage form, which may include a new route of administration. One example of such a new formulation would be an inhaled version of dronabinol, which is currently approved only in oral capsule form. The manufacturer is required to establish bioequivalence, safety, and efficacy of the new formulation. The amount of evidence required for approval is highly variable, depending on the similarities between the new formulation and the approved formulation. Each new formulation is evaluated on a case-by-case basis by the FDA. In the case of dronabinol, for example, an inhaled version is likely to require not only new studies of efficacy, but also new studies of abuse liability (see below). There appear to be no published, peer-reviewed studies of the average cost and time to approval of a new formulation.
Two other FDA programs may be relevant to the potential availability of new cannabinoids. One program is authorized under the Orphan Drug Act of 1983, which provides incentives to manufacturers to develop drugs to treat orphan (i.e., rare) diseases. Orphan diseases, defined in a subsequent amendment to the Act, are those affecting 200,000 or fewer people in the U.S.b The Act's most important incentive is a period of exclusive marketing protection for seven years, during which time FDA is prohibited from approving the same drug for the same indication.5, 6 Some of the medical conditions for which cannabinoids are being considered - Huntington's disease, multiple sclerosis, and spinal cord injury (see chapter 4) - may meet the definition of an orphan disease, thus enabling manufacturers to take advantage of the Act's financial incentives to bring the product to market. If the disease affects more than 200,000, then the manufacturer sometimes subdivides the patient population into smaller units in order to qualify. For example, while a drug for the treatment of Parkinson's disease is not likely to receive an orphan designation because its prevalence exceeds 200,000 patients, orphan designations have been accorded to drugs for a subset of Parkinson's patients, e.g., those suffering from early-morning motor dysfunction in the late stages of the disease.25
The other program is the "Treatment IND" program which was established by regulation in l987 (and codified into law in l997) to allow patients with serious and life-threatening diseases to obtain experimental medications, such as marijuana, before their general marketing. c Treatment INDs may be issued during Phase III studies to patients who are not enrolled in clinical trials, provided there is no comparable alternative drug available, among other requirements. 22, 32, 33 Thus, the treatment IND program may provide a mechanism for some patients to obtain a promising new cannabinoid before its widespread commercial availability, if it were to reach the late stages of clinical testing for a serious or life-threatening disease.

b An orphan designation also can be granted by FDA for drugs intended for conditions affecting larger populations as long as the manufacturer's estimated expenses are unlikely to be recovered by sales in the U.S. (Public Law 9X-55 1).

c Marijuana cigarettes were available under a special FDA-sponsored Compassionate Investigational New Drug Program for desperately ill patients until March 1992, when the program was terminated for new participant. 48

5.7

Drug Enforcement Administration

The Drug Enforcement Administration (DEA) is responsible for scheduling controlled substances, i.e., drugs and other agents that possess a potential for abuse. Abuse is generally defined as nonmedical use that leads to health and safety hazards, diversion from legitimate channels, self-administration, and other untoward results.15, 21 The legislation that gives DEA the authority to regulate drugs of abuse is called the Controlled Substances Act (CSA), which was first passed in 1970 and amended several times thereafter. The overall purpose of the CSA is to restrict or control the availability of drugs to prevent their abuse.
Under the CSA, DEA places each drug with abuse potential into one of five categories. The five categories, referred to as schedules I-V, carry different degrees of restriction. Schedule I is the most restrictive, covering drugs with "no accepted medical use in the U.S. and a high abuse potential." The definitions of each category and examples of scheduled drugs are listed in appendix B. Each schedule is associated with a distinct set of controls affecting manufacturers, investigators, pharmacists, practitioners, patients and recreational users (among others). These controls, which vary by schedule, include registration with DEA, labeling and packaging, production quotas, security, recordkeeping, and dispensing.15 For instance, patients with a legitimate medical need for drugs in Schedule II, the most restrictive schedule for drugs use, can neither refill their prescriptions nor have them telephoned to the pharmacy (except in an emergency).
The scheduling of substances under the CSA is handled on a case-by-case basis. It may be initiated by the DEA, by the Department of Health and Human Services (DHHS), or by petition from an interested party, including the drug's manufacturer or a public interest group. 15 The final decision for scheduling rests with DEA, but for this purpose the Secretary of DHHS is mandated to provide a recommendation. The Secretary's recommendation d to DEA is based, in part, on results from abuse liability testing that FDA, an agency of DHHS, requires of the manufacturer seeking a new drug approval. Abuse liability testing is not a single test; it is a compilation of several in vitro human and animal studies, some of the best known being drug self-administration and drug discrimination studies. 21, 34 The Secretary's recommendation for scheduling is formally guided by eight legal criteria, including the drug's actual or relative potential for abuse; scientific evidence of its pharmacological effect; risk to public health; and its psychic or physiological dependence liability (21 U.S.C. § 811 (b), (c)). Once DEA receives a scheduling recommendation, its scheduling decision, including the requirement for obtaining

d FDA and the National Institute of Drug Abuse, two agencies of DHHS, work jointly to develop the medical and scientific analysis that is forwarded to the Secretary, who, in turn, makes a recommendation to the Administrator of DEA (DEA, 1998).

5.8

public comment, usually takes weeks to months.33 In practice, DEA usually adheres to the recommendation of the Secretary. e Beyond the DEA, there are a variety of State scheduling laws that also affect the manufacture and distribution of controlled substances.33, 50

Under the CSA, marijuana and THCf are in Schedule I, the most restrictive schedule. The scheduling of any other cannabinoid under this Act first hinges upon whether it is found in the plant. All cannabinoids in the plant arc automatically in Schedule I. That is because they fall under the Act's definition of marijuana (21 U.S.C. § 802 (16)). In addition, under DEA's regulations, synthetic equivalents of the substances contained in the plant and "synthetic substances, derivatives, and their isomers" whose "chemical structure and pharmacological activity" are "similar" to THC also are automatically in Schedule I (21 CFR § 1308.11(d)(27). Based on the examples listed in the regulations, the word "similar" probably limits the applicability of the regulation to isomers of THC, but DEA's interpretation of its own regulations would carry significant weight in any specific situation.
Prompted by a 1995 petition from the National Organization for the Reform of Marijuana Laws (NORML), to remove marijuana and THC from Schedule I, DEA gathered information which was then submitted to DHHS for a medical and scientific recommendation and scheduling recommendation, as required by the CSA. For the reasons noted above, any changes in scheduling of marijuana and THC would also affect other plant cannabinoids. However, for the present, any cannabinoid found in the plant is automatically controlled in Schedule I.
Investigators are affected by Schedule I requirements, even if their research is being conducted in vitro or on animals. For example, researchers studying cannabinoids found in the plant are required under the CSA to submit their research protocol to DEA, which issues a registration contingent upon FDA's evaluation and approval of the protocol (21 CFR § 1301.18). DEA also inspects the researcher's security arrangements. However, the regulatory implications are quite different for cannabinoids not found in the plant. Such cannabinoids appear to be unscheduled unless (1) FDA or DEA decide they are sufficiently similar to THC to be placed automatically into Schedule I under the regulatory definition outlined above, or (2) FDA and/or the manufacturer deem them to have potential for abuse, thereby triggering the de novo scheduling process noted above. Thus far, the cannabinoids most commonly used in pre-clinical research (table 5.1) appear to be sufficiently distinct from THC that they are not currently considered controlled substances by definition (F. Sapienza, DEA, personal communication, 1998). Since no new cannabinoids other than THC have yet been clinically tested in the United States, scheduling experience is limited. It is possible that, as research progresses, the

e Under the CSA, "The recommendations of the Secretary to the Attorney General shall be binding on the Attorney General as to such scientific and medical matters, and if the Secretary recommends that a drug or other substance not be controlled, the Attorney General shall not control the drug or other
substance." (21 U.S.C.§ 811 (b))

f Technically, the CSA and the regulations use the term "tetrahydrocannabinols."

5.9

unscheduled status of some cannabinoids may change. Results from early clinical research may lead the manufacturer to proceed with, or the FDA to require, abuse liability testing. Depending on the results of such studies, DHHS may or may not recommend de novo scheduling to DEA, which makes the final decision on a case-by-case basis.

Will newly discovered cannabinoids be subject to scheduling? This is a complex question. The answer depends entirely on each new cannabinoid-whether it is found in the plant, its chemical and pharmacological relationship to THC, and its potential for abuse. Those novel cannabinoids with strong similarity to THC are likely to be scheduled at some point before marketing; whereas, those with weak similarity may not be. The manufacturer's submission to FDA, which contains its own studies and its request for a particular schedule, can also shape the outcome. Cannabinoids found in the plant are automatically in Schedule I until the manufacturer requests, and provides justification for, rescheduling. The CSA does permit DEA to reschedule a substance (move it to a different schedule) and to deschedule a substance (remove it from control under the CSA), according to the scheduling criteria (see appendix E) and process outlined above.
The possibility of scheduling is a major determinant of whether a manufacturer proceeds with drug development. 33 In general, pharmaceutical firms perceive scheduling to be a deterrent because it limits their ability to achieve market share for the following reasons: restricted access; physician disinclination to prescribe scheduled substances; stigma; the additional expense for abuse liability studies; and costly delays in reaching the market due to Federal and State scheduling processes. Empirical evidence to support these widely held perceptions is difficult to find; however, at least one large survey of physicians found them to have moderate concerns about prescribing opioids because of actual or perceived pressure from regulatory agencies-such as the DEA. 57 On the basis of a legal analysis and widespread complaints from researchers and pharmaceutical executives, the IOM (1995) recommended changes to the CSA to eliminate the Act's barriers to undertaking clinical research and development of controlled substances, a position supported in a subsequent report on marijuana.40

5.10

Table 5.1 Cannabinoids and Related Compounds Commonly
Used in Research

Agonists

THC
WIN 55212-2
CP 55940
HU-210
Anandamide (natural ligand)
2-arachidonylglycerol (natural ligand)

Antagonists

SR 141716A
SR 144528

Sources: Felder and Glass, 1998, Mechoulam et al., 1998.

5.11

THE DEVELOPMENT AND MARKETING OF MARINOL®

The following material is based on the published literature (where cited), workshops sponsored by the IOM, and an interview with Dr. Robert Dudley, senior vice president of Unimed Pharmaceuticals, Inc., the manufacturer of Marinol® and the holder of the NDA. Unimed jointly markets Marinol® with Roxane Laboratories, Inc.

Marinol® (dronabinol) is the only cannabinoid with approval for marketing in the U.S.' The following description covers its development, regulatory history, pharmacokinetics, adverse events, abuse liability and market growth. The experience with dronabinol may serve as a bellwether for the regulatory and commercial fate of new cannabinoids being considered for development.

Development and Regulatory History

Dronabinol is an oral capsule containing THC in sesame oil. It was approved by FDA in 1985 for the treatment of nausea and vomiting associated with cancer chemotherapy. In 1992, FDA approved the marketing of dronabinol for a second indication, the treatment of anorexia associated with weight loss in patients with AIDS, 45 The pre-clinical and clinical research on THC that culminated in FDA's 1985 approval was primarily supported by the National Cancer Institute (NCI), whose research support stems back to the 1970s. The NCI's contribution appears pivotal, considering that Unimed, the pharmaceutical company that holds the NDA, estimates its contribution to have been only about 25 percent of the total research effort. FDA's review and approval time for dronabinol took approximately two years after submission of the NDA, according to Unimed. In order to obtain approval for dronabinol's second indication (i.e., through an efficacy supplement, see above), FDA required two more relatively small Phase III studies. The studies lasted three years and cost $5 million to complete.

a The only cannabinoid licensed outside of the U.S. is nabilone (Cesamet ®), which is an analog of THC available in the U.K. for the management of nausea and vomiting associated with cancer chemotherapy (Pertwee, 1 997a).

5.12

Physical Properties, Pharmacokinetics, and Adverse Events

Dronabinol is synthesized in the laboratory rather than extracted from the plant. Its manufacture is complex and expensive because of the numerous steps in the manufacturing process needed for purification. Since dronabinol is highly lipophilic, its poor solubility in aqueous solutions together with its high first-pass metabolism in the liver are responsible for its poor bioavailability; only 10-20 percent of the original oral dose reaches the systemic circulation. 45, 60 The onset of action is slow, with peak plasma concentrations attained 2-4 hours after dosing. 45, 56 By contrast, inhaled marijuana is rapidly absorbed. In a study comparing THC administered via oral, inhaled and intravenous routes, plasma levels peaked almost instantaneously for both inhaled and intravenous forms, whereas oral THC was the slowest to reach the circulation, most participants' peak plasma levels occurring at 60 or 90 minutes, although the average time to reach peak levels was about 2 hours. Variation in individual responses is highest for oral THC and bioavailability is lowest. 42
Dronabinol's most common adverse events are associated with the central nervous system (CNS): anxiety, confusion, depersonalization, dizziness, euphoria, dysphoria, somnolence, and thinking abnormality. 8, 9, 45, 59 In two recent clinical trials, CNS adverse events affected about one-third of patients, but only a small percentage discontinued the drug due to adverse events. 9 Lowering the dose of dronabinol can minimize side effects, especially dysphoria (i.e., disquiet or malaise). 47

Abuse Potential and Scheduling

Upon its commercial introduction in 1985, dronabinol was placed in Schedule II. This schedule, the second most restrictive category, is reserved for medically-approved substances with "high potential for abuse" (21 U.S.C. § 812 (b) (2)). Unimed did not encounter any delays in marketing as a result of the scheduling process because the scheduling decision was made by DEA prior to FDA's approval for marketing. Nor did Unimed encounter any marketing delays as a result of State scheduling laws. Unimed was not specifically asked by the FDA to perform abuse liability studies for the first approval, presumably because such studies had been conducted earlier.
Unimed later petitioned DEA to reschedule Marinol ® from Schedule II to Schedule III, the next less restrictive category reserved for medically-approved substances with some potential for abuse (21 U.S.C. § 812 (b) (3)). To buttress its request for rescheduling, Unimed supported an analysis of Marinol's® abuse liability by researchers at the Haight Ashbury Free Clinic of San Francisco, which treats a significant number of cannabis-dependent patients as well as people with HIV/AIDS. This study found no evidence of abuse or diversion of Marinol® after a literature analysis and surveys and interviews of addiction medicine specialists, oncologists, researchers in cancer and HIV treatment, and law enforcement. The authors attribute

5.14

Marinol®'s low abuse potential to its slow onset of action and dysphoric effects, among other factors.12 On November 5, 1998, the DEA announced a proposal to reschedule Marinol ® to Schedule III." As of this writing, no formal action on that proposal has been taken.
The rescheduling of a drug from Schedule II to Schedule III is considered to be a very important step because it lifts some of the restrictions to availability. For example, Unimed anticipates a sales increase of approximately 15-20 percent as a result of rescheduling. In its judgment, and that of many other pharmaceutical companies,33 scheduling limits market penetration, with progressively greater limitations at the more restrictive schedules. The reasons are (1) physicians and other providers are reticent to prescribe Schedule II drugs; (2) patients are deterred from seeking prescriptions because of Schedule II prohibition of refills, unlike the case for any other commercially available scheduled substances; (3) the existence of additional restrictions imposed by several States, such as quantity restrictions (e.g., 30-day supply limits) and triplicate prescriptions; 50 and (4) the exclusion of some Schedule II drugs from hospital formularies because of onerous security and paperwork requirements under Federal and State controlled substances laws.

Market Growth and Transformation

The annual sales of Marinol® currently are estimated at $20 million, according to Unimed. The composition of Marinol®'s patient population is 80 percent for HIV, 10 percent for cancer chemotherapy, and about 5-10 percent for other purposes. The latter group is thought to consist of Alzheimer's patients drawn to the drug by a recently published clinical study indicating dronabinol's promise for the treatment of their anorexia and disturbed behavior. 58 As noted earlier, Unimed cannot promote Marinol® for this unlabelled indication, but physicians are free to prescribe it for such an indication. Unimed is conducting additional research in pursuit of FDA approval of a new indication for Marinol® in the treatment of Alzheimer's disease (see below).
The 1992 approval of Marinol® for the treatment of anorexia in AIDS patients marked a major transformation in the composition of the patient population. Prior to that, Marinol®'s use was restricted to oncology patients. The oncology market for Marinol® gradually receded as a result of the introduction of newer medications, including serotonin antagonists such as ondansetron, which are more effective (see chapter 4, section on Nausea and Vomiting) and are not scheduled. Much of the recent growth of the market for Marinol® at approximately 10 percent annually, is attributed to its increasing use in HIV patients being treated with combination anti-retroviral therapy. Marinol® appears to have a dual effect, not only in stimulating appetite, but also in combating the nausea and vomiting associated with combination therapy. Unimed is presently supporting a Phase II study to examine this combined effect, and with promising results, plans to seek FDA approval for this new indication.
Unimed possesses two forms of market protection for Marinol® In December 1992, Marinol® was granted by FDA seven years of exclusive marketing

5.14

under the Orphan Drug Act. The market exclusivity relates to Marinol®'s use in anorexia associated with AIDS. With a designated orphan indication, the active ingredient, THC, cannot be marketed by another manufacturer for this same indication until December 1999 (see earlier section). Other pharmaceutical manufacturers are not constrained from manufacturing and marketing THC for its other indication (i.e., antiemesis for cancer chemotherapy); however, none appear to be interested in what is, by pharmaceutical company standards' a small market. In addition to market exclusivity, Unimed secured in June 1998 a "use patent" for dronabinol for the treatment of disturbed patients with dementia. This confers patent protection to Unimed for this use for 20 years from the date of filing the application,b assuming that this indication eventually gains approval from FDA.

The following are considered to be the rate-limiting factors in the growth of the current market for Marinol® according to Unimed: the lack of physician awareness of the drug's efficacy; its adverse effects (see earlier section); and its restricted availability as a result of placement in Schedule II. Unimed perceives only a small percentage of its market to be lost to "competition" from marijuana itself, but there are, admittedly, no reliable statistics on the number of people that have chosen to treat their symptoms with illegally obtained marijuana, despite their ability to obtain Marinol®

New Routes Of Administration

It is well recognized that Marinol®'s oral route of administration hampers its effectiveness due to slow absorption and to patients' desire for more control over dosing. A drug delivered orally first is absorbed from the stomach and small intestine and then is passed through the liver, where it undergoes some metabolism before being introduced into the circulation. To overcome the deficiencies of oral administration, Unimed activated an IND in 1998 as a step toward developing new formulations for Marinol® Four new formulations are under study in Phase I clinical studies being conducted in conjunction with Roxane Laboratories. These formulations seek to deliver Marinol® more rapidly and directly to the circulation: deep lung aerosol, nasal spray, nasal gel, and sublingual preparation. The first two fall under inhalation as a route of administration. Inhalation is considered to be the most promising method owing to the rapidity of onset of its effects and potential for better titration of the dose by the patient, but it might also carry an increased potential for abuse. The abuse of a drug is correlated with its rapidity of onset (G. Koob, IOM workshop). The sublingual route of administration also affords rapid absorption into the circulation, in this case from the oral mucosa. Other researchers are pursuing the delivery of THC through rectal suppositories, but this slower route

b A use patent also known as a process patent-is one type of patent that accords protection for a method of using a composition or compound. A use patent is not considered as strong as a product patent, which prohibits others from manufacturing' using, or selling the product for all uses, rather than for a specific use defined in a use patent.

5.15

may not be acceptable to many patients. A transdermal route of administration, which is best suited to a hydrophilic drug, is precluded because of the lipophilicity of THC. Thus, the choice of routes of administration heavily depends on the physicochemical characteristics of the drug as well as safety, abuse liability, and tolerability.

Unimed anticipates that it will be required by FDA to conduct studies of the bioavailability, efficacy, and possibly the abuse liability of any new formulation it seeks to market. Any formulation that expedites Marinol® 's onset of action, as noted above, is thought to carry greater possibility for abuse The cost of developing each new formulation is estimated by Unimed at $7-10 million.
Unimed and Roxane are developing, or considering development of, five new indications for Marinol® (1) treatment of disturbed behavior in Alzheimer's disease; (2) treatment of nausea and vomiting in HIV patients receiving combination therapy, (3) the treatment of spasticity in multiple sclerosis; (4) the treatment of intractable pain, and (5) stimulating appetite in patients with cancer and renal disease.

Cost of MARINOL® vs. Marijuana

During the IOM public workshops held during the course of this study, many people commented that an important advantage of using marijuana for medical purposes is that it is much less expensive than Marinol®. But this comparison is deceptive. While the direct costs of marijuana are relatively low, the indirect costs can be prohibitive. Individuals who violate federal or state marijuana laws risk a variety of costs associated with engaging in criminal activity, ranging from increased vulnerability to theft and personal injury legal fees to long prison terms. In addition, when purchasing illicit drugs there is no guarantee that the product purchased is what the seller claims it is, or that it is not contaminated.
The price of Marinol® for its most commonly used indication, anorexia in AIDS, is estimated at $200 dollars per month. The less commonly used indication -- nausea and vomiting with cancer chemotherapy -- is not as costly because use is not chronic. Yet regardless of indication, patients' out-of-pocket expenses tend to be much less, often minimal, because of reimbursement through public or private health insurance. For indigent patients who are uninsured, Roxane sponsors a patient assistance program to defray the cost.
The street value of marijuana is, according to DEA's most recent figures, about $5-10 per bag of loose plant 16, c At the California buyers' clubs, the price ranges from 2-16 dollars per gram, depending on the grade of marijuana. The cost to a patient using marijuana will vary according to the number of cigarettes smoked on a daily basis, their THC content, and the duration of use. Insurance does not cover the cost of marijuana. In addition, it is possible for a person to cultivate marijuana privately with little financial investment.
Thus, MARINOL® appears to be cheaper than marijuana for patients with health insurance or with financial assistance from Roxane. Yet' if the full cost of

c The DEA did not provide an estimate for the weight of marijuana per bag.

5.16

Marinol® is borne out-of-pocket by the patient, the cost comparison is not so unambiguous. In this case, the daily cost in relation to marijuana varies according to the number of cigarettes smoked: If the patient smokes two or more marijuana cigarettes a day, Marinol® may be cheaper than marijuana; if the patient smokes only one marijuana cigarette a day, dronabinol may be more expensive than marijuana, according to an analysis submitted to the DEA by Unimed. These cost comparisons will vary according to fluctuations in the retail price and street value of dronabinol and marijuana, respectively, and will vary if marijuana were to become commercially available.

In summary, this section has described Marinol®'s scientific, regulatory, and marketing milestones. Marinol® has been on the US market since 1985. Its commercial development was heavily reliant upon research supported by the NIH. Marinol®'s market has grown over time to reach $20 million in sales. Further market growth is anticipated, yet is still constrained by lack of awareness, adverse effects, oral route of administration (conferring low bioavailability and slow onset), and by restrictions imposed by drug scheduling. As mentioned above, the absence of evidence for abuse or diversion of dronabinol to illicit channels recently has resulted in a proposal to reschedule it to a less restrictive schedule. The manufacturer is proceeding with research on new forms of delivery to overcome the problems associated with oral administration. The manufacturer also is proceeding with research on a spectrum of new indications for Marinol®

MARKET OUTLOOK FOR CANNABINOIDS

The potential therapeutic value of cannabinoids is extremely broad. It extends well beyond antiemesis for chemotherapy and appetite stimulation for AIDS, the two indications for which the FDA has approved dronabinol Marinol® Chapter 4 of this report assessed the possible wider therapeutic potential of marijuana and THC in neurological disorders, glaucoma, and analgesia, all conditions for which clinical research has been underway in order to fulfill unmet patient needs. New therapeutic areas are being explored in pre-clinical research. For any of these therapeutic indications, will novel cannabinoids reach the market to satisfy the medical needs of the patients?

5.17

Economic Factors in Drug Development

The outcomes of pre-clinical and clinical research determine whether a drug is sufficiently safe and effective to warrant FDA approval for marketing. But the decisions to launch pre-clinical research and to proceed to clinical trials, when early results are promising, are largely dictated by economic factors. A pharmaceutical company must decide whether to invest in what is universally regarded as a lengthy and risky research path. For any given drug, the question is: will there be an adequate return on investment? The "investment" in this case is the high cost of developing a drug (noted earlier). The expectation of high financial returns on investment is what drives drug development. 44, 53
Market analyses are undertaken to forecast whether a drug can be expected to reap a significant return on investment. The market analysis for a cannabinoid is likely to be shaped by the following factors. On the cost side, the average cost of developing a cannabinoid is likely to be higher than that for other drugs if its clinical indication falls under the therapeutic categories of neuropharmaceutical or nonsteroidal antiinflammatory drug, the two therapeutic categories associated with the highest research and development costs. 19 One reason for higher costs is the need to satisfy DEA's regulatory requirements related to drug scheduling.
On the "market return" side are a multiplicity of factors. A market analysis examines the expected returns from the possible markets for which a cannabinoid could be clinically pursued. The financial size of each market is calculated mostly on the basis of the current and projected patient prevalence (i.e., for a given clinical indication), sales data (if available), and competition from other products. The duration of use is also factored in-a drug needed for long-term use in a condition with an early age of onset is desirable from a marketing perspective. Other factors that can augment or diminish market return include patentability and other forms of market protection, reimbursement climate, restrictions in access due to drug scheduling, social attitudes, adverse effect profile, and drug interactions. 33, 53 New cannabinoids generally can receive product patents, giving the patent holder 20 years of protection against others seeking to manufacture or sell the same product. According to U.S. patent law, the product must be novel and "nonobvious" in relation to prior patents. 28

5.18

Cannabinoids under Development

From publicly available sources, the IOM was able to identify several cannabinoids being developed for human use (table 5.2). All of these compounds, with the exception of dronabinol and marijuana, are in the pre-clinical phase of testing in the U.S. This list may not be comprehensive, since other compounds may well be under development, but that information is proprietary.d This table does not list the full complement of cannabinoids, both agonists and antagonists, being used in research as tools to understand the pharmacology of cannabinoids (for more comprehensive lists of cannabinoids, see Felder and Glass, 199826; Mechoulam et al, 199836; Howlett et al, 199530; Pertwee 199746 ). Nor does it list cannabinoids once considered for development, but later discontinued. An 18-year survey of analgesics in development from 1980-1998 found that over half of the nine cannabinoids under development for analgesia were either discontinued or undeveloped,49 e but most of these were halted before 1988 when the first endogenous cannabinoid receptor was discovered (chapter 3).
There are three points to be made from this table. The first is that virtually all of the listed cannabinoids are being developed by small pharmaceutical companies or by individuals. In general, this implies that their development is considered especially risky from a commercial standpoint, since small companies frequently are willing to assume greater development risks than are larger, more established firms (Schmidt, W., personal communication' 1998) Without the benefit of sales revenues, small companies are able to fund their research through financing from venture capital, stock offerings, and relationships with established pharmaceutical companies.43

d Information about the existence of an lND is confidential, and can only be confirmed by the manufacturer, not by the FDA.

e Discontinuations: levonantradol, nabitan, nantradol, pravadoline. Undeveloped: CP-47497, CP-55244.

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Table 5.2 Cannabinoids Under Development for Human Use

Name of Drug Investigator Stage of Development Pharmacology U.S. FDA Status Possible Indication(s)
HU-211 Pharmos Corp. Clinical Phase II in Israel NMDA receptor Antagonist None Neuroprotection
(Neurotrauma, stroke, Parkinson's, Alzheimer's)
CT-3 Atlantic Pharmaceuticals Pre-clinical Nonpsychoactive None Antiinflammatory
Analgesia
THC Unimed Roxane Labs Clinical Phase 1 Cannabinoid Receptor Agonist IND [see text]
Marijuana Plant HortaPharm GW Pharmaceuticals Clinical in England* Cannabinoid mixture None Multiple Sclerosis
Donald Abrams, M.D. Clinical Phase I Cannabinoid mixture IND HIV-related appetite stimulation
Ethan Russo, M.D. . Cannabinoid mixture IND pending Migraine

*Clinical trials are to proceed in the next few years under a license from the British Home Office10

Sources: Glain, 199827; Atlantic Pharmaceuticals, 19977; Striem et al, 199755; Nainggolan, 199737; Zurier et al, 199861; D. Abrams and E. Russo, personal communications, 1998; R. Dudley, personal communication, 1998; Pharmaprojects Database, 1998.

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The second point is that, with the exception of THC and the marijuana plant itself, no constituents of the plant appear to be undergoing development by pharmaceutical companies. A number of plant compounds have been tested in experimental models and humans. For example, the antiemetic properties of 8-THC were demonstrated, along with negligible side effects, in a clinical trial of children undergoing cancer chemotherapy,1 but no sponsor was interested in developing 8-THC for commercial purposes (R. Mechoulam, personal communication, 1998). The absence of plant cannabinoids under development implies that the specter of automatic scheduling in Schedule I under the CSA is a significant deterrent, even though rescheduling would occur prior to marketing.a The point from the earlier discussion is that automatic, as opposed to de novo, scheduling appears to cast a pall over development of a cannabinoid found in the plant. Another impediment is that a cannabinoid extracted from the plant is not likely to fulfill the criteria for a product patent, although other forms of market protection are possible. Dronabinol, for example, was accorded orphan drug status and obtained a use patent.
The third point is that cannabinoids are being developed for therapeutic applications that extend beyond those discussed earlier in both this chapter and in chapter 4. One of the most prominent new applications of cannabinoids is for "neuroprotection," i.e., the rescue of neurons from cell death associated with trauma, ischemia, and neurological diseases.29, 36 Cannabinoids are thought to be neuroprotective-through receptor-dependent, 51 as well as receptor-independent pathways; both THC, which binds to CB1 receptors, and CBD, which does not, are potent antioxidants (antioxidants are effective neuroprotectants because of their ability to reduce the toxic forms of oxygen [free radicals] that are formed during cellular stress).29 The synthetic cannabinoid HU-211 (dexanabinol) is an antioxidant and an antagonist of the NMDA receptor, rather than an agonist at the cannabinoid receptor.52 Earlier research demonstrated that HU-211 protects neurons from neurotoxicity induced by excess concentrations of the excitatory neurotransmitter glutamate. Excess release of glutamate, which acts by binding to the NMDA receptor, is associated with trauma and disease.54 As an NMDA antagonist, HU-211 blocks the damaging action of glutamate and other endogenous neurotoxic agents.52, 55 After having been studied in the U.K. in Phase I clinical trials, HU-211 progressed to Phase II clinical trials in Israel for the treatment of severe closed head trama (Pharmaprojects Database, 1998).35

a As a result of FDA's approval of an NDA, the drug would be, at a minimum, rescheduled in Schedule II. Depending on abuse liability data supplied by the manufacturer and FDA's recommendation, the drug could be rescheduled to a less restrictive schedule or be descheduled entirely.

5.21

Market Prospects for Cannabinoids

It is difficult to gauge the market prospects for new cannabinoids. There certainly appears to be scientific interest, particularly in the discovery area, but whether this interest can be sustained commercially through the arduous course of drug development is an open question. Research and development experience is limited, only one cannabinoid, dronabinol, is commercially available, and most of its research and development costs were shouldered by the federal government. Further, the size of dronabinol's market (at about $20 million) is modest by pharmaceutical company standards. None of the other cannabinoids in development has reached clinical testing in the U.S. Their scientific, regulatory and commercial fates are likely to be very important in shaping future investment patterns. Experience with the drug scheduling process also is likely to be watched very carefully. If these early products are heavily regulated in the absence of strong abuse liability, future development may be deterred. For the present, what seems to be clear from the dearth of products in development and the small size of the companies sponsoring them is that cannabinoid development is seen as especially risky.
One scenario is that cannabinoids will be pursued for lucrative markets for which there is large unmet medical need. Of the therapeutic areas for which cannabinoid receptor agonists have been tested, analgesia is by far the largest. The annual U.S. prescription and over-the-counter analgesic market in 1997 was $4.4 billion.49 Given the long-standing need for less addictive, safer, easier to use, and more effective drugs for acute and chronic pain, it would not be surprising to see cannabinoids developed to treat some segments of the current analgesic market, were their safety and effectiveness clearly established in clinical trials.
In addition to cannabinoids receptor agonists, there are other classes of cannabinoid-related drugs that might prove therapeutically useful: cannabinoid antagonists and inverse agonists, compounds that bind to receptors but produce effects opposite to those of agonists. Neither would be subject to the same scheduling concerns as cannabinoid agonists, because they are not found in marijuana and would be highly unlikely to have any abuse potential. Another set of cannabinoid-related drugs, such as those that affect the synthesis, uptake, or inactivation of endogenous cannabinoids might, however, have abuse potential because they would influence the signal strength of endogenous cannabinoids.
The development of specific cannabinoid antagonists, like SR141716A for CB1 receptors and SR144528 for CB2 receptors, has provided a significant impetus in understanding cannabinoid actions. Those compounds block many of the effects of THC in animals, and their testing in humans has just begun. Cannabinoid antagonists have physiological effects on their own, in the absence of THC. They might have significant therapeutic potential in a variety of clinical situations. For example, since THC reduces short-term memory, it is possible that a CB1 antagonist like SR141716A could act as a memory enhancing agent. Similarly, for conditions under which cannabinoids decrease immune function (presumably by binding to CB2

5.22

receptors in immune cells), a CB2 antagonist might be useful as an immune stimulant.

Cannabinoid inverse agonists would exert the opposite effects of THC and might thus cause appetite loss, short-term memory enhancement, nausea, or anxiety. Those effects could possibly be separated by molecular design, in which case inverse agonists might have some therapeutic value. One report has been published suggesting that the CB1 receptor antagonist, SR141617A,11 is an inverse agonist, and there will likely be others.

MARIJUANA: REGULATION AND MARKET OUTLOOK

Marijuana is not a legally marketed drug in the United States.b No sponsor has ever sought from the FDA marketing approval for medical use of marijuana. One sponsor has an IND for a clinical safety study on HIV anorexia (D. Abrams, personal communication, 1998). Another has an IND pending for the treatment of migraine headaches (E. Russo, personal communication, 1998). Since 1970, marijuana's manufacture and distribution have been tightly restricted under the CSA, which places marijuana in Schedule I. This schedule is reserved for drugs or other substances with: 1) "a high potential for abuse," 2) "no currently accepted medical use" and 3) "lack of accepted safety for use...under medical supervision" (21 U.S.C. § 812 (b)(1))
Marijuana has remained in Schedule I despite persistent efforts at rescheduling since the 1970s by advocacy groups, such as NORML. Through petitions to DEA, advocacy groups contend that marijuana does not fit the legal criteria for a Schedule I substance owing to its purported medical uses and lack of high abuse liability. 3, 4, 48 Another rescheduling petition, which was filed in 1995, presently is being evaluated by FDA and DEA.

Marijuana Availability for Research

To use marijuana for research purposes, researchers must register with DEA, as well as adhere to other relevant requirements of the CSA and other federal statutes, such as the Food, Drug, and Cosmetic Act. The National Institute on Drug Abuse (NIDA), one of the institutes of the National Institutes of Health, is the only organization in the U.S. licensed by DEA to manufacture and distribute marijuana for research purposes. NIDA performs this function under its Drug Supply Program.c

b Under the CSA, its only legal use is in research under strictly defined conditions.

c This is also the program through which several patients receive marijuana under a compassionate use program monitored by FDA. For history and information on this effort, see CRS, 1993.48

5.23

Through this program, NIDA arranges for marijuana to be grown and processed through contracts with two organizations, the University of Mississippi and the Research Triangle Institute. The University of Mississippi grows, harvests, and dries the marijuana, whereupon the latter processes it into cigarettes. A researcher can obtain marijuana free-of-charge from NIDA in one of two ways: through an NIH-approved research grant to investigate marijuana or through a separate protocol review.39 Research grant approvals are handled through the conventional NIH peer review process for extramural research, a highly competitive process with success rates in 1997 of 32 percent of approved NIDA grants.41 Through the separate protocol review, in which the researcher funds the research independent of an NIH grant, NIDA submits the researcher's protocol to several external reviewers who evaluate the protocol on the basis of scientific merit and of its relevance to the mission of NIDA and NIH.

Through these two avenues, marijuana has been supplied to several research groups, most of those who apply. While there has been much discussion of NIDA's alleged failure to supply marijuana for research purposes, we are unaware of recent cases in which they failed to supply marijuana to an investigator with an NIH-approved grant for research on marijuana. Donald Abrams' difficulty in obtaining research funding and marijuana from NIDA has been much discussed,2 but the case of a single individual should not be presumed to be representative of the community of marijuana researchers. Failure of investigators who apply to NIH for marijuana research grants to receive funding is hardly exceptional: in 1998, less 25 % of all first time investigator-initiated grant applications (known as ROI's) to the NIH were funded.38
To import marijuana under the CSA for research purposes, the procedures are more complex. Under DEA regulations, marijuana can be imported provided that the researcher is registered with DEA and has approval for marijuana research (21 CFR § 1301.11, .13, and .18), has a DEA-approved permit for importation (21 CFR § 1312.11, .12, and .13), and the exporter in the foreign country has appropriate authorization by the country of exportation. Importation would enable U.S. researchers to conduct research on marijuana grown by HortaPharm, a company that has developed unique strains of marijuana. However, no U.S. researcher has imported HortaPharm's marijuana because of refusal by the Dutch authorities to issue an export permit, despite the issuance of an import permit by the DEA ( D. Pate, HortaPharm, personal communication, 1998).d
HortaPharm, which is located in the Netherlands, grows marijuana as a raw material for the manufacture of pharmaceuticals. Through selective breeding and controlled production, HortaPharm has developed marijuana strains that feature single cannabinoids, e.g., THC, cannabidiol, etc. The plants contain a consistently

d It may be eventually possible to import HortaPharm's marijuana from England, where HortaPharm is growing its marijuana strains for research use in clinical trials for multiple sclerosis (Boseley, 1998). England, as the country of origin, would have to provide appropriate authorization for export of the strains to the U.S. Permission to export for research purposes is part of the basis for HortaPharm's participation in this project with GW Pharmaceuticals through a special set of licenses with the British Home Office (Dr. David Pate, HortaPharm, personal communication, 1998).

5.24

"clean" phytochemical profile and a higher level of THC (16 percent) or other desired cannabinoids than seized marijuana. Marijuana seized in the U. S. in 1996 had a THC content averaging about 5 percent.16 Consistency of THC content is desirable because it overcomes the natural variability due to latitude, weather, and soil conditions. Product consistency is a basic tenet of pharmacology because it enables standardized dosing for regulatory and treatment purposes.

The difficulties of conducting research on marijuana also were noted in the 1997 NIH report, which recommended that NIH facilitate clinical research by developing a centralized mechanism to promote design, approval, and conduct of clinical trials.

Regulatory Hurdles to Market

For marijuana to be marketed legally in the U.S., a sponsor with sufficient resources would be obliged to satisfy the regulatory requirements of both the Food, Drug, and Cosmetic Act and the CSA.
Under the Food, Drug, and Cosmetic Act, a botanical product like marijuana theoretically might be marketed in oral dosage form as a dietary supplement;e however, as a practical matter, only a new drug approval is likely to satisfy the provisions of the CSA, which require prescribing and distribution controls on drugs of abuse that also have an "accepted medical use." (The final paragraphs of this section clarify the criteria for "accepted medical use.")
Bringing marijuana to market as a new drug is uncharted terrain. The route is fraught with uncertainty for at least three pharmacological reasons: marijuana is a botanical product; it is smoked, and it is a drug with abuse potential. In general, botanical products are inherently more difficult to bring to market than are single chemical entities because they are complex mixtures of active and inactive ingredients. Concerns arise about product consistency, potency of the active ingredients, contamination, and stability of both active and inactive ingredients over time. These are among the concerns that the sponsor would have to overcome in order to meet the requirements for a new drug application, especially those relating to safety and to chemistry, manufacturing, and control (noted earlier).
There are a handful of botanical preparations on the market, but none received a formal new drug approval by today's standards of safety and efficacy (FDA, Center for Drug Evaluation and Research, personal communication, 1998). The three marketed botanical preparations are older drugs that came to market years before safety and efficacy studies were required by legislative amendments in 1938 and 1962, respectively, and before modern chemistry and manufacturing controls came into being. One of these botanical preparations is the prescription product digitalis. Because it came to market prior to 1938, it is available today because it was "grandfathered" under the law, but does not necessarily meet contemporary standards for safety and effectiveness.20 Two other botanical preparations, psyllium

e Inhaled products may not lawfully be marketed as dietary supplements

5.25

and senna, came to market between 1938 and 1962. Drugs entering the market during this period for over-the-counter use were later required to be evaluated by FDA in what is known as the over-the-counter drug review process.20 Through this process, psyllium and senna were found to be generally recognized as safe and effective and thus were allowed to remain on the market as over-the-counter drugs.f While no botanical preparations have been approved as new drugs, it is important to point out that a number of individual plant constituents, either extracted or synthesized de novo, have been approved (e.g., taxol and morphine). But these drug approvals were for single constituents rather than botanical preparations per se. FDA is in the process of developing guidance to industry to explain how botanicals are reviewed as new drugs, but the final document might not be available before 1999.

The fact that marijuana is smoked might pose an even greater regulatory challenge. The risks associated with smoking marijuana are described in Chapter 2. FDA would have to weigh these risks along with marijuana's therapeutic benefits in order to arrive at a judgment about whether a sponsor's new drug application for marijuana met the requirements for safety and efficacy under the Food, Drug, and Cosmetic Act. Marijuana delivered in a novel way that avoids smoking would overcome some, but not all, of the regulatory concerns. Vaporization devices that permit inhalation of plant cannabinoids without the carcinogenic combustion products found in smoke are under development by several groups; such devices would also require regulatory review by FDA.
The regulatory hurdles to market posed by the CSA are formidable, but not insurmountable. If marijuana received market approval as a drug by the FDA, it would most likely be rescheduled under the CSA, as was the case for dronabinol. That is because a new drug approval satisfies the "accepted medical use" requirement under the CSA for manufacture and distribution in commerce.13 But a new drug approval is not the only means to reschedule marijuana under the CSA.14 For years, advocates for rescheduling have argued that marijuana does enjoy "accepted medical use," even in the absence of a new drug approval. Although advocates have been unsuccessful in rescheduling efforts, their actions prompted DEA to specify the criteria by which it would determine whether a substance had "accepted medical use." In DEA's 1992 denial of a rescheduling petition, it listed these elements as constituting "accepted medical use": 1) the drug's chemistry must be known and reproducible; 2) there must be adequate safety studies; 3) there must be adequate and well-controlled studies proving efficacy, 4) the drug must be accepted by qualified experts; and 5) the scientific evidence must be widely available. 14
Assuming all of these criteria were satisfied, marijuana could be rescheduled, but into which schedule? The level of scheduling would be dictated primarily by a medical and scientific recommendation to DEA made by the Secretary of DHHS.g As noted earlier, this recommendation is determined by the five scheduling criteria

f Over-the-counter monographs for these products have been issued as tentative final monographs (proposed rules), but have not yet been issued in final form as final rules (FDA, Center for Drug Evaluation and Research, personal communication, 1998).

g At present, there is no practical mechanism for generating such a recommendation outside the new drug approval process, although such a mechanism could, theoretically, be developed. 33

5.26

listed in the CSA (noted above). However, scheduling in a category less restrictive than Schedule II may be prohibited by international treaty obligations. The Single Convention on Narcotic Drugs, a treaty that was ratified by the United States in 1967 imposes on the plant and its resin minimum placement in Schedule II.13

Market Outlook for Marijuana

The market outlook for the development of marijuana as a new drug, based on the foregoing analysis, is not favorable for a host of scientific, regulatory, and commercial reasons.
From a scientific point of view, research is difficult due to the rigors of obtaining an adequate supply of legal, standardized marijuana for study. Further scientific hurdles to overcome relate to satisfying the exacting requirements for FDA approval of a new drug. These hurdles are even more exacting for a botanical product due to inherent problems with purity, consistency, and other factors (noted above). Finally, the health risks associated with smoking represent another barrier to FDA approval, unless a new, smoke-free route of administration is demonstrated to be safe. Depending on the route of administration, an additional overlay of regulatory requirements may have to be satisfied.
From a commercial point of view, uncertainties abound. The often-cited cost of new drug development, about $200-300 million (cited earlier), may not fully apply but there are likely additional costs needed to satisfy FDA's requirements for a botanical product. As noted above, no botanical products have ever been approved as new drugs by FDA under today's stringent standards for safety and efficacy. Satisfying the legal requirements of the CSA also will add significantly to the cost of development. On the positive side, so much research already has been done that some development costs will be lower. The cost of bringing dronabinol to market, for example, was curtailed dramatically as a result of clinical trials supported with government funding. Nevertheless, for these reasons it is impossible to estimate the cost of developing marijuana as a new drug. Estimating return on investment is similarly difficult. A full-fledged market analysis would be required for the indication being sought. Such an analysis would take into account the market limitations resulting from drug scheduling restrictions, stigma, and patentability.
The plant does not constitute patentable subject matter under US patent law because it is unaltered from what is found in nature. So-called 'products of nature' are not generally patentable.28 New marijuana strains, on the other hand, could be patentable in the U.S. under a product patent or a plant patent because they are altered from what is found in nature. (A product patent prohibits others from manufacturing, using, or selling each strain for 20 years, whereas, a plant patent carries somewhat less protection.) Thus far, HortaPharm has not sought any type of patent for its marijuana strains in the U.S., but it has received approval for a plant registration in Europe (David Watson, HortaPharm, personal communication, 1998).

5.27

In short, the development of the marijuana plant is beset by significant scientific, regulatory, and commercial obstacles and uncertainties. The prospects for its development as a new drug are unfavorable, unless return on investment is not a driving force. It is noteworthy that no pharmaceutical firm has sought to bring it to market in the U.S. The only interest in its development appears to be in England by a small pharmaceutical firm (see Boseley, 199810 ) and in the U.S. from physicians without formal ties to pharmaceutical firms (D Abrams and E. Russo, personal communications, 1998).

CONCLUSIONS

Cannabinoids are an interesting group of compounds with potentially far reaching therapeutic applications. There is a surge of scientific interest in their development as new drugs. But the actual road to market for any new drug is expensive, long, and risky. It is studded with scientific, regulatory, and commercial obstacles. Experiences with the only approved cannabinoid, dronabinol, may not illuminate the pathway because of the government's heavy contribution to research and development, dronabinol's scheduling history, and its small market size.
There appear to be only two novel cannabinoids actively being developed for human use, but they have yet to be tested in humans in the U.S. Their experiences are likely to be more predictive of the marketing prospects for other cannabinoids. It is simply too early to forecast the prospects for cannabinoids, other than to note that their development at this point in time is considered to be especially risky, judging by the paucity of products in development and the small size of the pharmaceutical firms sponsoring them.
The market outlook in the U.S. is distinctly unfavorable for the marijuana plant and for cannabinoids found in the plant. Commercial interest in bringing them to market appears nonexistent. Cannabinoids in the plant are automatically placed in the most restrictive schedule of the Controlled Substances Act, thereby serving as a significant deterrent to development. The plant itself is not only subject to the same scheduling strictures as are individual plant cannabinoids, but development of marijuana also is encumbered by a constellation of scientific, regulatory, and commercial impediments to availability.

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