Winning the Hardware Software Game Winning the Hardware-Software Game - 2nd Edition

Using Game Theory to Optimize the Pace of New Technology Adoption
  • How do you encourage speedier adoption of your product or service?
  • How do you increase the value your product or service creates for your customers?
  • How do you extract more of the value created by your product or service for yourself?

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  • Anonymous said More
    Well written. Well constructed. Tuesday, 13 August 2019
  • Ron Giuntini said More
    As always a good read.
    I have always... Thursday, 25 January 2018

Based on the incentives facing different players in the US medical cannabis market, I believe the market will not achieve mainstream adoption unless or until the US overcomes several hurdles: (i) the classification of cannabis as a Schedule I drug, (ii) cannabis’s lack of FDA approval, (iii) the lack of clear information about and trust in cannabis as a safe and medically efficacious product, and (iv) the social disapproval of cannabis use by a significant portion of society.

Players in the Medical Cannabis Game

Let’s start by examining the incentives facing the main participants in the medical cannabis market.

hurdles to adoption

Healthcare Providers

Hurdles to Prescribing:

  • Cannabis is not FDA-approved
    • Providers can legally prescribe cannabis, but most don't
    • Malpractice insurance doesn't cover cannabis because it’s not FDA-approved
    • There’s too little FDA guidance available on cannabis usage and dosing
  • Cannabis is a Schedule I drug
    • By prescribing cannabis to patients, providers risk: (i) fine, (ii) arrest, (iii) ability to prescribe, (iv) medical license
    • Hospitals require Providers to follow Federal law, which prohibits cannabis use
  • Other
    • Providers want to avoid excessive intoxication and risk of dependence
    • Providers can't control patient diversion of excess medication to others
    • Providers have no information about directing patients on the use of all the different cannabis varieties and forms of use

Healthcare Payers

Hurdles to Reimbursing:

  • Cannabis sold in dispensaries is not FDA-approved.
  • Pharmaceutical grade cannabis that is FDA-approved is expensive; alternative medications, such as opioids, are less costly.
  • Cannabis is not on Payers’ formularies because:
    • Cannabis sold in dispensaries is not FDA-approved or
    • Pharmaceutical grade cannabis is expensive, and cheaper alternatives exist.
  • Cannabis that’s dispensed without a prescription is considered over-the-counter (OTC). OTC medications are not traditionally covered by health insurance.
  • Cannabis is a Schedule I, which puts Payers at risk for covering it.

Cannabis Dispensaries

Hurdles to Dispensing:

  • Regulations keep evolving, making compliance difficult to achieve.
  • Regulatory costs are extremely high.
  • Black market competition makes it difficult for legal cannabis businesses to survive.
  • Cannabis’s Schedule I status creates barriers to funding.

Employers of Potential Cannabis Users

Hurdles to Condoning/Insuring:

  • Employers don't want impaired employees
  • Employers refuse to include cannabis on Employee's healthcare plans

Potential Users' Trusted Advisors

Hurdles to Supporting:

  • Social stigma
  • Lack of accurate information on the benefits of medical cannabis

Potential Medical Cannabis Users

Hurdles to Using:

  • Cannabis’s Schedule I status creates fear and social stigma in potential users and creates risk of being fired by Employers
  • Payers won't reimburse
  • Providers won't prescribe or accommodate
  • Employers may fire Employees for use
  • Potential users risk being reclassified as higher risk patients by Payers if they admit to using cannabis

Main Hurdles to Mainstream Adoption of Medical Cannabis

After examining the incentives faced by individual players in the market, we see that there are four main hurdles to medical cannabis adoption by mainstream users: (i) the classification of cannabis as a Schedule I drug, (ii) cannabis’s lack of FDA approval, (iii) the lack of clear information about and trust in cannabis as a safe and medically efficacious product, and (iv) the social disapproval of cannabis use by a significant portion of society.

I. Status I Classification

Cannabis has been classified as a Schedule I drug since the inception of drug classification with the Controlled Substances Act of 1970. The Schedule I classification of cannabis prevents market entry and thus provision of products and services required for mainstream adoption of medical cannabis.

  • Prevents banks from providing services to cannabis businesses
  • Prevents hospital use due to fear of government sanctions
  • Risk to MDs: fine, arrest, lose license
  • Impedes cannabis research
  • Impedes payer coverage for cannabis users
  • Impedes employer-based healthcare coverage
  • Impedes investment in cannabis businesses
  • Risk to patients: lose job or classified as high-risk patient by insurance

II. Lack of FDA Approval

Lack of FDA approval for greater numbers of cannabis medications prevents physicians from prescribing and health insurance companies from covering use of medical cannabis by patients.

  • Prevents malpractice coverage for providers
  • Impedes providers from prescribing
  • Impedes information/guidance for providers on usage and dosing
  • Impedes healthcare coverage for patients

III. Risk/Lack of Information/Trust

Lack of trustworthy and clear information on the benefits and harms of medical cannabis impede adoption by potential adopters from all constituencies.

  • To use medical cannabis effectively, need information on science, individual, product
  • Prevalence of lack of information, wrong information, low quality products (which can be toxic)
  • People don’t know who to rely on to get trustworthy information: Will net benefits exceed those of alternatives?

IV. Stigma/Social Disapproval

Social stigma continues to plague cannabis use, thereby impeding adoption by potential adopters from all constituencies.

  • Many people fear using cannabis
  • Many employers will fire or not hire for cannabis use
  • Friends/family/physicians disapprove

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