Analysis: what the Government’s proposed reforms mean for Australia’s medicinal cannabis industry

Cannabiz editor-at-large Rhys Cohen takes a look at the small print in the Department of Health’s consultation paper on reforms to medicinal cannabis manufacturing, labelling and packaging.

The Department of Health has commenced a consultation process addressing several significant regulatory challenges facing Australia’s medicinal cannabis industry. At a very general level, these issues are:

1. An uneven playing field where imported products and ingredients are held to a lower quality standard than those locally made.
2. Concerns regarding the extent, oversight, and quality of extemporaneously compounded cannabis preparations.

In addition to these headline issues, the consultation paper includes some interesting discussion around:

3. Packaging, labelling and specifying ingredients.
4. Additional guidance for analytical testing.

The consultation paper itself does a good job of explaining the regulatory minutia and I encourage you to read it for yourself. So instead of just re-stating the document in its entirety, I’m going to give a brief overview and then focus on the parts I think are the most relevant and interesting.

Quality standards for imports

The problem goes something like this: unapproved medicines (which include almost all cannabis medicines), that are manufactured overseas, are exempt from the requirement that they be manufactured according to Good Manufacturing Practice (GMP) quality standards.

So unapproved medicinal cannabis ingredients and products that are imported don’t need to meet GMP. But locally made ones do. That puts local companies at a disadvantage.

Both imported and locally made products, as well as their active ingredients, have to conform with Therapeutic Goods Order 93 (TGO93) which sets out minimum quality standards and requires products to be consistent and free of contaminants.

The Department of Health wants to ensure a level playing field for everyone by imposing similar quality standards on both imports and local products. They have proposed two possible solutions (other than ‘doing nothing’). 

Proposed solutions

The first is to insert new GMP requirements specific to medicinal cannabis in the Therapeutic Goods Regulations, and the second is to do essentially the same thing but by making changes to TGO93. 

The only meaningful difference between these options seems to be that amending the regulations would still allow for some non-GMP ingredients to reach Australian patients through compounding pharmacies, while amending TGO93 would be more comprehensive. 

Either way, the consequences for patients and industry would be similar. 

First, a whole bunch of products that are currently on the market would be removed. That won’t happen overnight as it will take time to finalise the changes, and even after that, product sponsors will get a grace period to transition over to the new requirements (probably similar to what’s going on in New Zealand right now).

Second, companies would need to demonstrate GMP compliance for overseas manufacturing sites before products could be imported (locally manufactured products are all GMP by default). Thankfully, Australia is a PIC/S member and has mutual recognition agreements in place with most large-scale exporters including Canada, Switzerland and the US.

Either way, Australia would cease to be the international dumping ground for non-GMP products and start to look more like Germany in terms of import requirements. Alongside the much-needed upcoming reforms to Australian cultivation and manufacturing licences, this will take some of the pressure off local companies and hopefully give them the breathing room they sorely need.

Compounding

There is nothing inherently wrong with extemporaneous compounding and it plays an important role in community healthcare. But the Department of Health has acknowledged that there are concerns with the extent to which cannabis medicines are being compounded in Australia.

Compounding pharmacies don’t need to have a GMP-licensed facility or a medicinal cannabis manufacturing licence, and doctors who write prescriptions for compounded products don’t need to get a SAS-B approval or become an Authorised Prescriber, so the government has literally no way of knowing how many or what kinds of patients are being prescribed compounded products. 

Normally that wouldn’t be too much of a concern, as compounding is supposed to be done on-demand for a specific patient with a particular requirement. Quoting from the consultation document, these products are only permitted if they are compounded “on an ad hoc basis, for a particular person at a particular time, for therapeutic application to that person… consequently, the practice of ‘extemporaneously compounded’ medicines in advance or anticipation of a patient with a relevant prescription would not be covered”.

So it seems the Department may be concerned that some compounding pharmacies are behaving more like unlicensed drug manufacturers. This echoes reports from other industry commentators who have claimed some cannabis clinics and doctors have even started to ‘brand’ compounded products, implying a level of forward planning that would seem to be in conflict with compounding regulations.

Second, there are some regulatory gremlins that make it difficult for the Department to be confident that compounding pharmacies are adhering to TGO93.

TGO93 applies to the ingredients that compounding pharmacists use as well as the preparations they dispense to patients. As compounded preparations are – by definition – not made in batches and are only custom made for a specific patient, they are “not subject to ordinary testing and sampling associated with batch manufacture” as is required by TGO93.

And the third weird twist in this story is that local cultivators and manufacturers are, as a condition of their licences, only allowed to supply their ingredients to compounding pharmacies that hold a GMP licence (there are some GMP-licensed compounders, but not many). 

This not only means that non-GMP ingredients are being turned into non-GMP products which may or may not conform to TGO93, and that these products are being prescribed to patients with essentially no government oversight, but also that local cannabis producers are largely locked out of this pathway due to the conditions of their licences.

Wild stuff.

Proposed solutions

The Department once again has proposed two options other than doing nothing: the first would essentially prohibit any compounding of medicinal cannabis products, which seems a bit extreme in my opinion. There are plenty of legitimate uses for cannabis compounding, such as patients who need specific and otherwise unavailable concentrations and ratios of cannabinoids, or specific excipients etc.

The second option would be to limit medicinal cannabis compounding to only those pharmacies which are GMP licensed. This seems more reasonable to me, but I’m far from an expert on this and look forward to hearing from the relevant professional bodies.

The implications for either option would be significant. Based entirely on guesswork, I wouldn’t be surprised if around 20% of all medicinal cannabis products dispensed in Australia this year were compounded. And I reckon the majority of those prescriptions would have been for 100mg/mL CBD in MCT oil, or something similarly generic.

The double-edged sword here is that compounded products, being the least regulated, are often the cheapest to bring to market. And if clinics and pharmacies have been passing those cost savings on to their patients, it is possible that essentially eliminating the availability of compounded products could put upwards pressure on prices.

Packaging, labelling and specifying ingredients

First off, the TGA is clearly sick of people accusing them of “only allowing isolates/synthetics”.

The consultation document reminds us that TGO93 requires all medicinal cannabis products to only contain botanically derived cannabinoids. And it explains that, even though a medicinal cannabis product might only specify the THC and/or CBD content on the label, this does not mean the product is absent of trace amounts of other cannabinoids and terpenes. Nor is there anything stopping a product company bringing (for example) a full-spectrum, high-CBG product to market.

For some strange reason, the consultation paper has also chosen to define “full spectrum” products (which include minors, terps and THC) and “broad spectrum” products (which include minors, terps without THC), although these definitions don’t seem to be relevant to the rest of the document. 

On to labelling – I can’t tell you how many times I’ve seen a patient post a picture of their medicinal cannabis product label online asking “so, how much CBD/THC is actually in this?”. Some products state the total active ingredient content of the entire container, or per-capsule/wafer etc, some as a percentage, some in mg/mL. That clearly needs to be standardised.

But what jumped out at me was the truly off-the-wall suggestion that product labels should not only specify the active ingredients, but also:

1. The “plant species” (by which they could mean sativa/indica, or even a strain name, it was not made clear in the document, apparently defining “full spectrum” was more important). 
2. The part of the cannabis plant from which the product was derived (flower, leaf, stem etc).
3. And craziest of all, a backwards calculation of how many grams of dry flower the product is equivalent to.

Obviously this would be both difficult and pointless. 

Identifying indica/sativa is useless for medicinal purposes. Identifying products by strain names is similarly unhelpful (although I’m told this is a requirement to ship into Germany). 

Why on earth does it matter which part of the cannabis plant the ingredients are derived from?

Anyone can call anything whatever strain name they like. And even if two facilities, run by the same company in the same country, cultivate genetically identical clones of the same plant, and refer to them by the same strain name, cannabis plants will express different levels of cannabinoids and terpenes in response to slight environmental differences.

Why on earth does it matter which part of the cannabis plant the ingredients are derived from? CBD extracted from flower is chemically identical to CBD extracted from leaves. How many leaves would have to make their way into your flower extraction before you were forced to declare it? How expensive and time consuming would it be to have to re-do an entire batch of labels? Why on earth would you bother?

A bottle of cannabis oil contains 400mg CBD (imported as 97% pure isolate), and 100mg THC full-spectrum extract (made from locally grown plants). How many grams of dried flower is that equivalent to? This is not a Zen Buddhist puzzle (“if a tree falls but no-one hears it, does it make a sound?”), it’s a question that the Department of Health actually believes is answerable. THC/CBD content in dried flower ranges from <1% to >20%. Which dried flower is the Department referring to? How long is a piece of string? Who cares?

I hope this is an elaborate joke intended to give us all some Christmas cheer. 

Additional guidance for analytical testing

Speaking of Christmas cheer, hidden away in a small paragraph was this little gem:

“In addition to the proposed amendments to TGO93 mentioned above, the TGA would propose to provide additional guidance on the use of suitable acceptance criteria and validation parameters for the testing of cannabinoid content in medicinal cannabis products.”

Cannabiz has covered the TGA analytical testing story extensively since it first reared its head back in September when several products were publicly named and shamed by the TGA for failing to comply with TGO93 potency requirements.

Since then we’ve had public spats between different government-certified labs, calls for greater standardisation, subsequent analysis arriving at different results from the initial tests, and most recently the TGA firmly laying down the law and rejecting assertions that their initial results could have been inaccurate.

I’m sure many in the industry are looking forward to “additional guidance” on this matter.