Israel's High Court Overturns Health Ministry's Medical Cannabis Price Reform

Reform was supposed to lay groundwork for competition and let cost be determined by the free market, but jacked up prices for patients

A medical marijuana greenhouse, January 15, 2019.
Nimrod Aronov

Israel’s High Court of Justice Thursday ordered medical cannabis companies to sell their products at the significantly lower prices at which they were offered prior to the reform in the industry.

The move comes after the Medical Cannabis Association, which represents patients who have suffered from the price hikes caused by the reform, petitioned against the rising prices.

With the new directive, medical cannabis will be sold for 370 shekels (about $106) a month as of December 15, 2019 until March 31, 2020. The court had already issued an interim order on the matter, and has now announced that the ruling will come into effect within 10 days. In addition, High Court Justices Hanan Melcer, Neal Hendel and Noam Solberg asked the Health Ministry to explain why it had not set a price ceiling for cannabis products.

The cannabis reform, led by Deputy Health Minister Yaakov Litzman, is supposed to revamp the medical marijuana industry in Israel. The reform requires the industry to determine the cost of products in accordance with their active ingredient ratio; with the old system, prices were set by an agreement between the state and growers.

The current system puts the power to determine prices in the hands of companies, investors and those involved in the field – the cost is determined by the free market. The assumption was that there would be enough players in the market releasing quality products, creating competition that would lead to lower prices and alternatives for the majority of patients. In practice, Israel's medical cannabis industry is in chaos, applying both the old and new methods at once.

The cost, with the new reform in place, is one of the central issues faced by patients, and particularly those who need relatively large quantities – 100 grams or more – of the flower bud. In March, the Medical Cannabis Association petitioned the High Court on the subject, and since then it has held two discussions and gave the interim order to extend the old pricing method.

In Thursday's ruling, the High Court gave companies that had not yet returned to the old pricing system – "who believed the interim order did not apply to them," the justices wrote – 10 days to adopt it. They also ordered the Health Ministry to explain why "no maximum price was set for medical cannabis products, both for companies whose license [to produce cannabis] was supposed to expire and for those whose license were granted as part of the new reform.”

The petitioners released a joint statement, saying that “the High Court of Justice has expressed its complete lack of confidence in Litzman’s reform and in the conduct of the Health Ministry by implementing it" in its ruling.

The Health Ministry said that they had accepted the court’s decision and would act to implement it. “Justice Melcer emphasizes the importance of the price issue, something the ministry is working for and supporting. The decision promotes the issue and obligates the price committee to make a decision,” the ministry's statement said.