Food and drug giant's coverage for 45,000 employees has some limitations.

At first glance, the news was "actually pretty stunning."

Joan Weir, director of health and disability policy with the Canadian Life and Health Insurance Association, was surprised to see that Canadian retail giant Loblaw Companies had started covering medical marijuana for employees through their health benefit plans back on March 28.​

After taking a closer look at the limitations of Loblaw's coverage, Weir said her astonishment diminished somewhat. The company is only covering medical marijuana used to treat the symptoms of multiple sclerosis, as well as the side-effects of chemotherapy for cancer patients, and only up to $1,500 per year.

"I don't think it's a game-changer yet," she said.

Still, Weir said Loblaw is now the first large Canadian employer to cover medical marijuana under a benefits plan.

As the federal government charges towards legalization, Loblaw's move hints at a possible future trend in employee insurance benefits.

45,000 employees covered

It's not hard to imagine why Loblaw might be willing to cover medical marijuana: the company's Shoppers Drug Mart division has applied to Health Canada for the licence needed to sell legal medical marijuana.

In a statement, Loblaw spokesperson Tammy Smitham said the company was "adapting to changes in the area of drug therapies."

"More robust clinical evidence supporting the use of medical marijuana as a treatment for some specific conditions has emerged and we felt the time was right to make this addition to our benefits plan," said Smitham.

About 45,000 Loblaw employees will be covered under their plans, Smitham said, although the company doesn't know how many employees use medical marijuana. Insurance benefits for Loblaw workers and Shoppers Drug Mart administrative employees are managed by Manulife, and Shoppers Drug Mart store staff are covered by Great West Life.

According to Health Canada, 142,541 people were registered to buy medical marijuana from government-licensed producers as of Jan. 31.

An insurance perspective

​Medical marijuana will have to clear some significant regulatory hurdles before it becomes a regular health insurance benefit, according to private health plan strategist Suzanne Lepage.

Usually, said Lepage, insurers won't cover a drug until it has passed clinical trials, been approved by Health Canada and assigned a drug identification number (DIN). Some individual medical marijuana users are urging the federal agency to assign a DIN for dried marijuana for medical purposes.

"Until that happens, it doesn't even get in the queue to be considered," said Lepage.

After that, insurance providers run a cost-benefit analysis to determine whether the drug is worth covering. Even though medical marijuana doesn't yet meet insurers' regular criteria, said Lepage, large employers like Loblaw can ask for extra-contractual provisions to administer coverage — if they're willing to take on the cost.

'A great first step'

Loblaw's decision to start covering medical marijuana is "a great first step for the industry," said Deepak Anand, executive director of the Canadian National Medical Marijuana Association. 

Even so, Anand sees Loblaw's $1,500 per year coverage limit as "quite low." An annual limit of $5,000 would be more appropriate, he said.

"If you look at the costs that patients end up paying, it's only going to cover them about six months, whereas it's supposed to last them a year or so," he said.

According to Anand, the landscape for insurance coverage of medical marijuana is already changing.

In 2017, a Nova Scotia human rights board ruled that Gordon Skinner's employee insurance plan had to cover his prescribed medical marijuana. In 2016, University of Waterloo student Jonathan Zaid convinced his student union to cover his prescription. Veterans Affairs Canada also covers the cost of medical marijuana for Canadian military veterans.

For now, Anand says the Canadian National Medical Marijuana Association has been fielding lots of calls from insurance companies who want to talk about medical marijuana.

Employer concerns

Insurance companies and their clients aren't just worried about the cost and effectiveness of medical marijuana, according to Joan Weir of the Canadian Life and Health Insurance Association. They're also trying to figure out how it will fit into the workplace.

She said covering medical marijuana brings complications related to "having medical marijuana at work, having it used at work, having impairment at work, all of those sorts of issues that employers would have to deal with if they were to add it on."

Those complications are even trickier in fields where industrial safety is a concern, she said.

More research into the effects of medical marijuana could help mitigate some of those fears, said Weir. But in the near future, she said, the uptake of medical marijuana coverage under employee benefit plans is "going to be slow."