A byline by Michael Sassano
Germany has some of the most progressive cannabis rules in the global markets. The cannabis industry is celebrating decriminalization, which provides increased access to cannabis that may help patients. This change has brought growing challenges, and volumes are up to 2 to 4 times and on track to do more than 1 billion euros in sales sometime in mid to late 2025.
German cannabis companies have always forged through the complex regulatory maze to do their best for patients, but compliance remains a costly undertaking.
German Compounding Rules May Hinder Market Development
Compound rules have complicated all parts of the supply chain in Germany. It is not the businesses‘ fault; the regulatory framework surrounding compounding prevents advancement to service this booming market and the success story of regulation changes.
What is Medical Cannabis Compounding?
Compounding is a process by which a pharmacist mixes a drug in their facility to offer a non-registered medical product to a patient. Generally, compounding exists for limited ailments that do not have a mass-manufactured medicine, are difficult to store, or are hard-to-find medicines; a pharmacist can compound a medicine for the affected population.
Nearly all countries have defined rules explaining the prices pharmacists can charge to make the needed medicine. Making custom medicines is expensive for pharmacists and requires lots of staff, inventory management, regulatory management, and much more. Regulations dictate the difficulty of the steps and how to charge. Some rules are step-by-step; in some cases, like Germany, compound pharmacists are required by law to mark up their efforts by 90% of the cost of goods.
Compounding Medicines is An Outdated Way to Prescribe Cannabis
There are plenty of reasons why compounding medicines is extremely important, but for cannabis in Europe and globally, the industry has outgrown this practice. Countries like Germany will feel more growing pains if they don’t take into account 7 years of German cannabis market evolution.
In fact, most countries have rules stipulating that once a finished dosage form becomes easy to obtain and prescribe, compound pharmacists should not be making those products. The reason is that compound pharmacist drugs are expensive and quality isn’t better than finished dosage form medicines. Australian regulators have recently made it clear, as of October 1, 2024, that due to the prevalence of finished dosage cannabis products, compound pharmacists must stop making these products.
Compounding Medicine Packaging is Often Onerous and Wasteful
As of now, compounding for flower and extracts is the only way to receive and dispense cannabis in Germany. A practical example of a hurdle regarding cannabis packaging is that when flower comes to a compounding pharmacist, that pharmacist must take a 100-gram, 250g, 500g or 1-kilogram bag of flower, and break that into 10g packages. Sometimes, they take a 10g package and repackage it into another 10g package.
This process requires much capital to perfect. After these steps, the pharmacist can legally sell it to a patient. The same goes for extracts; they can either receive 100-milliliter, 250ml, 500ml or 1 liter of extract, then they dispense that into 30ml bottles. In some cases, they take a 30ml bottle and change the product to another 30ml bottle. Again, much capital is required to conform to these extra steps.
The Shelf Life of Compounded Products is Costly for All Parties
Shelf life for a consumable medicine is information for patients to read on the bottle, and it is also an inventory management guide that helps deliver efficiency in a world that wants their medicine just in time.
Cannabis compounding is different than finished dosage form final products, which is what mass-market medicines are. Compounded products get a 3-month shelf life. However, finished dosage flowers may carry a 6-month or longer shelf life, while extracts may have a 1-year minimum and usually a 2-year shelf life. Not only is the patient disadvantaged by the shelf-life of compounded products, but it also costs much more to manage short-term inventories, further hurting the industry that wants to bring timely healing to the patients when they walk into the pharmacy.
Compounded Products Can’t Deliver Large-Scale Production Quality
Quality is difficult to assess because all the products are properly given to patients. However, there is a technological edge to the rules that govern finished dosage from medicines versus compounding. In short, compounding requires more laboratory formulations, whereas finished dosage utilizes large-scale equipment and procedures with precise microbial controls. Finished dosage form manufacturers follow complex global standards that guide all worldwide medicine standards, which is very costly. However, the scale at which they operate creates good economic value for patients, pharmacists, and manufacturers.
German Pharmaceutical Technology Must Catch Up to Cannabis
Current pharmacy and distributor inventory management systems do not work well in the compounding world and are geared toward standard finished dosage form medicines. The short shelf life doesn’t help in this process either, as long-term planning must consider the short-term 3-month limitation.
While the technology to create a more seamless solution to better access pharmacies and help them access cannabis inside a compound universe is being worked on, it takes time and capital. Still, the problem remains that inventory management systems that are efficient and already exist cannot work well with compounded products.
Solutions for the German Cannabis Compounding Conundrum
The solution is fairly easy yet complex simultaneously: Regulatory changes to account for finished dosage forms will help pharmacists and patients alike.
Most pharmacists would agree to a simpler prescription pathway via finished dosage forms, and the lost markup will be equally offset by dramatically less capital needed, which can go to inventory-building and volumes of efficiencies. It isn’t that compound pharmacies are wildly profitable; the cost is high to make and manage those products and inventories. Additionally, many people and types of specialty equipment are needed to package cannabis products.
Increase German Access to Quality Medical Cannabis Products
As cannabis has advanced in Germany, the future market needs to be more efficient now that volumes and ease of service have become so important to take care of. There is no need anymore for compounding regulations in the modern era of medicine.
So many more dosage forms reach so many different demographics, such as finished dosage forms like vaporizers, soft gel caps, oral gums, concentrates, transdermal, and more. An array of finished dosage forms would mean better-priced choices with higher quality for patients, pharmacists would rejoice at a more straightforward process that doesn’t restrict capital needed to support the increasing infrastructure, and the industry would benefit from improved efficiency.
About the author
Michael Sassano, Founder, CEO, and Chairman of the Board for SOMAÍ Pharmaceuticals, a European pharmaceutical and biotech company centered on manufacturing in Lisbon, Portugal, and globally distributing EU GMP-certified cannabinoid-containing pharmaceuticals.
Disclaimer: Bylines by external contributors must not reflect the opinion of the editorial team. If you want to contribute as an external expert please reach out to redaktion@krautinvest.de.