MedReleaf Australia chief executive Russell Harding tells Cannabiz of his latest plans for the company, discusses the thorny issue of imported product and expresses hope that subsidies may not be far away.
When MedReleaf Australia formally announced itself to the local market in early 2018, it, like many, was eyeing rapid growth.
The company, a joint venture with Canadian giant MedReleaf Corp, had already acquired a four-hectare plot of land near Brisbane, with publicly-stated aims to construct an 8,000sqm facility during the year.
Stage two of the blueprint would expand that to 23,000sqm, with plans to cultivate and manufacture 20 tonnes of medicinal cannabis each year. It was an ambitious vision.
“Yes, well that was the plan at that time,” MedReleaf Australia chief executive Russell Harding recalled. “But as we all know, there’s been a global reset of the industry. Most of the facilities of that size are almost dinosaurs.”
MedReleaf was certainly not alone in talking big in the 24 months after medicinal cannabis was legalised in Australia. But where once there was boldness and hype, realism and pragmatism have now set in.
Some large-scale facilities are being sold at a fraction of the cost they were once worth, Harding said. Nevertheless, while a return to mass-production strategies is unlikely – certainly not in the immediate future – local manufacturing remains the goal.
“If anything there’s a global over-supply right now. At this point in time, to build an 8,000sqm cultivation facility, we just don’t see that as appropriate,” Harding told Cannabiz.
“We’re looking at a smaller, more focused facility based on the needs of the market. We’re keeping a close eye on when we push the button, but the land is there when we’re ready to go.
“The areas of manufacturing we’re looking at are high-level, boutique novel products.
“The industry here is developing well, the growth is strong and we have good support from the Government, patients, doctors and pharmacists. So it’s getting close for us to make these sorts of strategic decisions.”
The Canadian link
For the time being, MedReleaf Australia is among the many local outfits bringing product into Australia.
Since mid-2018, the firm’s strategic partner has been Aurora, which acquired MedReleaf’s original JV partner, MedReleaf Corp, in May of that year for US$2.5 billion. Aurora holds a 10% stake in the local operation.
It’s no secret that Aurora turned inwards as it dealt with considerable challenges in its home market, and by extension within its own business. There was little surprise last month when the company sold its remaining 12% interest in Cann Group, having been a cornerstone investor since 2016.
Harding said its own relationship with Aurora remains robust.
“We are very fortunate to have the support of Aurora on a range of levels and have a good supply line,” he said. “You never know in this world what’s around the corner, but certainly at this point we’re comfortable with the relationship.
“I think it’s very much the case that some companies are skewing towards recreational cannabis, but Aurora still retains its strong focus on medical. It started as a medicinal cannabis company and it still is.”
Levelling up the playing field
For some importers of medicinal cannabis – and there are many of them – the game could be about to change.
Consultation is due to begin in December over proposals to require product shipped to Australia to be GMP compliant. For the handful of local manufacturers already faced with such quality requirements, it is long-overdue.
Harding is in no doubt that it’s the right way forward. However, he called on the TGA to give companies time to transition to GMP facilities if and when the regulations are tightened.
“All of our products come out of a GMP facility, so we’re not under any pressure, but for others who are not in that fortunate position they should be allowed some time to transition,” Harding said. “It goes without saying that products taken by Australians, whether manufactured locally or imported, should be out of a GMP-accredited facility. Everyone in Australia and around the world knows that, and we are fully supportive.
“But the fact also remains that the vast majority of major players in Australia are importers, and what those importers are doing – MedReleaf included – is creating a market for the future. That market can only happen right now because of the wealth of experience and knowhow that has been generated, particularly in Canada and Europe.
“We see ourselves playing an important role in this period of building the market, and that includes training doctors and pharmacists. There is limited knowledge about cannabis in the pharmacy world here in Australia. And while some companies in Australia might say importing could stop tomorrow and we’d be okay, the fact is we wouldn’t be.
“If you remove importers from the landscape a lot of this education and market activity would stop overnight.
“The bottom line is that GMP is the important thing, but there needs to be a transition period. I am sure common sense will prevail.”
Yet even if overseas manufacturers are given time to upgrade facilities, Harding said some are unlikely to make it.
Asked if more stringent requirements would knock products out of the local market, the MedReleaf boss said: “It will, there’s no doubt about it. The cost to undertake testing for every batch is enormous… and some companies won’t be able to manage that. Those which have already gone down that road and reached the required standards will stay in the market, but I’m sure there will be others who just won’t be able to.”
A long and slow ride
The training of medical professionals clearly remains one of the key objectives, and major challenges, for the medicinal cannabis industry.
It was described by Harding as a “long and slow ride”, but one he remained convinced would reap dividends.
He also suggested the TGA may soften its efficacy requirements for medicinal cannabis to allow certain products to become listed on the ARTG. Achieving that would, in all probability, lead to far greater acceptance among GPs.
Little wonder that Harding described himself as an “optimist at heart”.
“There are a whole range of areas you can collect data from, randomly controlled trials, N-of-1 trials, observational and anecdotal studies, individual patient reports,” he said. “And the TGA recognises the complexity of cannabinoids and how challenging it is to standardise placebo-based trials.
“So we sense as a company that there will be a softening and an understanding that cannabis has a very minimal adverse effect profile, unlike big pharma where molecules can have some serious side effects. Our view is that the TGA will, perhaps, make it easier for us to get products on to the ARTG.
“Provided products meet minimum quality requirements, are manufactured to GMP standards and are proved to be safe, there might not be a need to demonstrate efficacy, as such, using the standard protocol. That’s certainly what we’re hoping.”
The down scheduling debate
The need to demonstrate efficacy is the sizeable spanner in the works of the CBD down scheduling conundrum, an issue which unexpectedly continues after a final ruling was delayed this week.
In MedReleaf’s role as a founding member of the Medicinal Cannabis Industry Australia (MCIA), Harding has been working alongside fellow members to lobby the TGA. The MCIA, and the wider industry, believe the proposed maximum dose of 60mg per day will, given the requirement for efficacy data, prevent any products from reaching the market. Even if they do, such a low dose may be therapeutically worthless.
Harding said a 300mg dose offered a more realistic chance of demonstrating efficacy.
“I think it’s unlikely the TGA will move from where it is now, but that’s the number we should be focusing on,” he said.
While MedReleaf intends to play in the CBD over-the-counter market, Harding ruled out investing in trials in an attempt to gather efficacy data.
“We won’t put resources into that process based on 60mg because we pretty much know what the outcome will be,” he said. “It would be an irresponsible use of funds.”
Subsidising medicinal cannabis
Naturally, the holy grail for the industry, and more pertinently, for patients, is for products to not only appear on the ARTG, but to be subsidised under the Pharmaceutical Benefits Scheme.
No one is kidding themselves that will happen any time soon. But Harding remained hopeful, expectant even, that as prescription numbers rise, some form of subsidy will follow.
He likened the TGA’s Special Access Scheme to the “largest observational study in the history of mankind”.
“The TGA can see what’s going on. They can see what’s being prescribed and re-prescribed. I am hopeful that over time we will see some subsidies come in.”
He highlighted rebates starting to be offered by private health funds as important progress, while community care organisations are funding prescriptions for people in home care.
“The tide is turning,” Harding said. “You can’t expect companies to do it as it’s an expensive medicine to grow and manufacture. But I don’t think we’re far away from seeing subsidies and seeing patients in the wider community getting access to medicinal cannabis.
“I doubt it will be through the PBS, but whatever the subsidy scheme is I would think that within two years, if I can be optimistic, some sort of funding will come through. The number of patients is going to keep rising and the TGA sees all that data.”
Harding claimed there could be financial benefits for governments if they do start subsidising cannabis. Explaining further, he said data captured through MedReleaf’s clinics shows a decline in polypharmacy when medicinal cannabis is prescribed. That keeps patients out of hospital, and prevents a drain on health resources.
“That’s the sort of information the TGA is looking for,” he said. “We need to demonstrate the impact it has on the Federal budget, that it keeps people out of hospital and the like. We’ve all got to work together to gather that information and demonstrate to the TGA that medicinal cannabis is worthy of subsidising.”
At the coalface
So where does Harding’s optimism come from? The answer is a simple, but profound, one.
“It probably comes from being at the coalface… and seeing what medicinal cannabis actually does,” he said. “I talk to doctors regularly who work in our clinics, and I see people in a wheelchair one month and the next month they’re walking in. I actually see it.
“But I also know Professor Skerritt [who heads the TGA]. I’ve got a lot of confidence in the man. In his early days, his thesis was on cannabinoid therapy, so I think he sees things differently. He’s a big reason why we’ve had such progress in the industry in such a short period of time.
“I think at a ground level and at the high level, the confluence of those two provides me with that optimism.”