Many US states early in adopting medical cannabis legislation have since transitioned to permitting recreational use, meaning consumers no longer require a physician to obtain the substance. Recreational cannabis laws are linked to lower frictions, larger markets, and greater consumption.
In the current study, researchers wrote that if individuals substitute away from traditional prescription drugs, the transition to recreational cannabis laws should correspond with more significant declines in prescription drug expenditures. To investigate whether this is true, they conducted a study analyzing prescription drug claims from both small and large group insurers from 2010 to 2019 for working-age individuals.
Ultimately, they found reductions of $34- 42 per enrollee per year among those in the small group insurance market following the introduction of recreational cannabis legislation. Similar reductions, however, did not occur in large-group insurance markets. They also found no strong evidence of an effect of medical cannabis legalization on prescription drug claims in either market.
In their study, the researchers note that the more pronounced effects in small group insurance markets may stem from differences in employer size, with large group insurance plans covering larger employers where drug testing resources are available and historically more prevalent.
“We built off prior studies to examine whether declines in prescription drugs among publicly insured populations following cannabis legalization extend to employed individuals,” corresponding author Rhet A. Smith, PhD, Assistant Professor of Economics and Finance at the University of Texas at El Paso, said in a press release.
“We posit the reduction in prescription drug claims in small group insurance markets and not in large group markets suggests important compositional differences across the two markets that may influence cannabis and prescription drug usage across these populations,” he added.
Sources: EurekAlert, Health Economics