Down-scheduling CBD from Schedule 4 to Schedule 3

The need to shift gear and take the drug approval route1
Date:  2020-09-16
Author:   Dr. Sean Hall
Down-scheduling CBD from Schedule 4 to Schedule 3

The TGA’s interim decision to down schedule CBD to a schedule 3 drug means that medicinal cannabis-based products will be available over the counter, without a prescription, from July 2021. It is a structural shift in the way medicinal cannabis is accessed in this country, and while currently limited to the oral delivery of 60mg per day of CBD-only products, it could be a sign of things to come.

While the industry at large has met the down-scheduling decision with enthusiasm, many Australian companies are not yet on the drug approval pathway and will need to play catch-up to remain competitive under this new regime, where gaining regulatory approval will eventually become the norm.

Until now there have been two schools of thought on cannabis. One is that it will follow various US states and/or Canada and become more a retail item, widely available and with little to no medical/pharmacy oversight. The other view is that science and medical investigation need to lead the way, with the goal of developing a registered medicinal cannabis product that has measurable medical claims.

In the Australian market, we’ve been sitting in the middle. Cannabis has been available under the Special Access Scheme (SAS), and although only available under prescription, these products have not had to undergo the rigours of testing and validation required for drug approval. The downgrade of CBD to schedule 3 signals that the goalposts may soon shift and that seeking drug approval could be a blanket requirement.

To date, most ASX-listed pot stocks have not elected to choose a drug approval pathway via the TGA or other regulatory bodies. Instead, most companies have built their sales – and investment proposition – on importing or growing product, to sell under the Special Access Scheme.

The down-scheduling of CBD puts that strategy at risk.

This is because the purpose of the SAS is to allow access to unapproved medicines for approved patients when all other options have failed. This means that once a cannabis product is approved for an indication, one can’t request a SAS approval for a similar product for a similar claim. For example, if a 60mg daily CBD product is approved for usage to help treat anxiety, it becomes very difficult for any other medicinal cannabis product – regardless of the dose or ingredient – to be prescribed or approved for the treatment of anxiety under SAS.

This effectively creates a race for the first TGA-approved products and lengthens the time and cost to market for any medicinal cannabis company that is pursuing SAS as the pathway to commercial success. It effectively changes the game for pot stock companies and their investors.

Ultimately, the need to obtain approvals is going to lift the bar for patients, prescribers and investors.

Whether a drug is approved for schedule 3 or schedule 4, it is still required to achieve regulatory approval, and the level of work and validation required is similar. While cannabis is a known ingredient, there’s an argument that efficacy should be demonstrable. But one area that will set competitors apart is how products stack up on the chemical, manufacturing and controls (CMC). This is a disciplined pharmaceutical practice and a critical step in proving the viability, authenticity and safety of the product. In other words, it is providing validation that the product is actually what one claims the product to be, with little to no inter-batch variability.

When working with crop-based products such as cannabis, CMC can be an even more complex process, because of the variability of the crop and the secondary harmful compounds typically used in farming cannabis, such as pesticides and fungicides, vermin control and accelerants. CMC requires requisite skills and investment, and it is an area that is often undervalued by companies and over-looked or not understood by generalist investors.

At Medlab, we have always believed that medicinal cannabis should be subject to the same rigours of testing, clinical and scientific validation that any other approved drug is subject to. For example, we are now on the path to gaining US regulatory approval for our THC/CBD product, NanaBIS. We will also be looking to move quickly into a clinical trial for our CBD formulation, NanoCBD, a 16mg daily formulation for the treatment of cancer-induced nausea.

Ultimately, the need to obtain approvals is going to lift the bar for patients, prescribers and investors. It expands the market opportunity, but more importantly gives doctors and patients confidence in the medical claim and in the safety and consistency of the product being prescribed or bought over the counter. And while it might mean a period of shifting gears, it’s ultimately going to lift the transparency, quality and reputation of medicinal cannabis products coming out of Australia, even if giving those already on the drug approval pathway a head start.


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Dr. Sean Hall, Chief Executive Officer of Medlab
Chief Executive Officer
Dr. Sean Hall

Sean founded Medlab in August 2012; he has over 20 years' experience in nutraceutical sales and development, as well as early drug discovery in Australia, Asia and the US. Sean has led and inspired his teams to author multiple patents, write peer-reviewed articles and deliver lectures at scientific conferences. His passion is leading his researchers into novel areas and strong commercialisation opportunities.

Prior Sean was a founder of FIT-BioCeuticals. Under his management and guidance, BioCeuticals became the most innovative, research-driven, practitioner brand in Australia. For his sale of FIT-BioCeuticals to Blackmores in 2012, Sean was nominated as a finalist in the inaugural Australian Exit CEO of the Year Award. Sean is a Medical Doctor with an MBA in clinical pharmaceutical management and focuses on the research to pioneer innovation and commercialisation. Sean is an active member of Medicines Australia, the European Medical Association, the American Federation for Medical Researcher, The World Medical Association, A4M and Special Operations Medical Association.


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