The only medical cannabis treatment approved in the country is the epilepsy medication "Epidiolex." Although the Ministry of Food and Drug Safety has permitted special importation upon patient request since 2019, the issue lies in the price. Epidiolex, which is entirely imported from the United States, is quite expensive, and recent increases in exchange rates may further heighten the burden. Experts point out that the "localization" of cannabidiol (CBD), the raw material for medical cannabis, is urgent to increase patient benefits and reduce medical costs.
◇Due to regulations, CBD commercialization is still a dream despite available technology
The cannabis regulatory free zone in Andong, Gyeongsangbuk-do, was launched in 2020 as a base for the localization of medical cannabis, but commercialization remains elusive. The corporations based here are engaged in the research and development (R&D) of CBD, the raw material for medical cannabis, but under current laws, actual production and sale are not possible. Research and experiments can only take place within the licensing scope of the Ministry of Food and Drug Safety according to the subordinate regulations of the Narcotics Control Act.
Domestic corporations must establish Good Manufacturing Practice (GMP) facilities and obtain certification from the Ministry of Food and Drug Safety in order to produce pharmaceuticals and export them overseas. However, under the current circumstances, this is difficult without legislative amendments.
Recently, domestic pharmaceutical companies and startups are venturing into the CBD industry. Currently, the Andong special zone hosts companies such as Yuhan Corporation's health supplement and cosmetics subsidiary Yuhan Health & Life, Daewoong Pharmaceutical's R&D specialized subsidiary Daewoong Therapeutics, Kolmar Korea, HLB Life Science, and various CBD startups.
Yuhan Health & Life is developing CBD extraction and formulation technologies. It completed the efficacy and safety evaluation of a CBD cream formulation in 2021, and it is working on new formulation development starting in 2023. HLB Life Science is conducting research to determine which diseases CBD-based treatments are effective for, targeting the development of treatments for difficult diseases such as cancer, epilepsy, dementia, and Parkinson's disease.
NeoCannBio, a technology investment company of the Korea Institute of Science and Technology (KIST), has developed the world's first closed microwave (MW)-based CBD extraction technology. This method quickly and stably extracts high-purity CBD from cannabis by emitting high-frequency electromagnetic waves in a closed space like a microwave. Its advantages include faster extraction and less component loss compared to traditional heat-based extraction methods.
NeoCannBio aims to refine high-quality CBD to pharmaceutical raw material levels and develop a generic version with the same components and formulation as Epidiolex within two years. The key ingredient in Epidiolex, CBD, is a naturally derived substance, and development of a generic is possible since the main patents have expired or the protection scope is limited. The company plans to replace expensive imported drugs with domestically produced generics, reducing prices by over one-third.
◇The localization of medical cannabis can also help health insurance finances
If CBD is localized, it could provide substantial help to health insurance finances. Korea's health insurance finances are already signaling a crisis. The burden is increasing every year due to rising treatment costs for chronic diseases associated with an aging population. Last year, health insurance finances recorded a surplus of 4.1 trillion won, but according to the Ministry of Health and Welfare, it is expected to turn to deficit in 2026, reaching a deficit of 1.6 trillion won by 2028.
In 2021, the National Health Insurance Service recognized the reimbursement of Epidiolex, which costs 1.2 million won per bottle, for patients suffering from rare, intractable epilepsy disorders, namely "Dravet syndrome" and "Lennox-Gastaut syndrome." While this decision aims to increase patient access to treatment, it also adds to the burden on health insurance finances. Domestically produced medical cannabis treatments are being regarded as practical alternatives capable of replacing high-cost medications like Epidiolex.
In fact, researchers at Eastern Michigan University (EMU) found that after medical cannabis was legalized, pharmaceutical expenditure in the U.S. health insurance market decreased by an average of 22% after seven years. Medical cannabis reduced healthcare costs by partially replacing existing high-cost prescriptions such as narcotic opioids and anticonvulsants.
There is an analysis suggesting that if high-purity CBD is stably produced domestically and treatments based on it are expanded to be covered by health insurance, it could have a positive impact not only on patient burdens but also on the sustainability of health insurance finances.
Hong Seung-bong, honorary president of the Korean Epilepsy Society and director of the neurology department at Gangnam Bedro Hospital, noted, "Improving regulations on medical cannabis production to localize it as a generic or new drug can benefit more patients," adding that it could save about 10 billion won of taxpayer money every year.
References
International Journal of Drug Policy(2023), DOI: https://doi.org/10.1016/j.drugpo.2023.104143