“Producer Fees” Now Routine in the Industry, Many Say

Medical Cannabis Industry’s Secret KickbacksMany clinics prescribing medical cannabis are making more from the licensed producers (LPs) in “producer fees” and other euphemistic payments than from the medical visit itself. Canada House for example – a chain of cannabis clinics – reported that of the $1.2 million in revenue it earned one quarter last year, $1.1 million came from producer fees.

These fees go by a number of different names: producer fees, referral fees, and educational grants, to name a few. But at least one bioethicist is saying it amounts to one thing.

“These are kickbacks. Let’s be blunt — that’s what they are,” said Bryn Williams-Jones, a University of Montreal bioethics professor. Every time the clinic’s patient fills a prescription with an LP, that LP gives the clinic up to 20 per cent of the cost of each dose, according to the National Post article (click the link below to see the full article). That represents a conflict of interest, Williams-Jones said. “Regardless of whether the physician thinks they’re independent, they’re no longer independent.”

However, not all agree that this is the same as payola. Barry Fishman, CEO of Vivo Cannabis, said that the fees it receives from LPs are “educational grants” that cover the costs of providing patients with informed care – something it couldn’t do otherwise.

“There’s rent and there’s staffing and payroll and insurance, and all the other things that go into running the business,” Fishman said. “There needs to be a way to have a sustainable business … and it doesn’t appear the governments are providing adequate funding.”

According to a Vivo corporate filing, patient educators are not informed about specific contracts with LPs, allowing them to make recommendations based on patient need, not producer marketing.

It’s not anything new – pharmaceutical companies have been doing the same for years. Despite crackdowns, it seems clear that there will always be ways to reach prescribers.

Within the cannabis industry, these sorts of payments have only become normalized over the last three years. In 2015, Tilray complained that clinics and doctors were beginning to demand referral fees. Today, nobody at the firm (under new management) would comment to the National Post about referral fees.

With shortages in the cannabis industry affecting medical cannabis patients, is it possible that referral fees might even keep medical cannabis more available for patients? And would that be a good thing or a bad thing for the industry?

For Williams-Jones, it’s clear cut. “You have this clear conflict of interest in place: the more you prescribe, the more you get,” he said. “In principle, this is simply unacceptable.”

This editorial content from the LPC News Editor is meant to provide analysis, insight, and perspective on current news articles. To read the source article this commentary is based upon, please click on the link below.

Leave a Reply