Last month, California Governor signed the most comprehensive drug pricing transparency bill in the nation. SB-17 is intended to promote transparency in drug pricing, reduce overall healthcare spending, and shine light on how drugs are priced. Under the new law, drug manufacturers, PBMs, health plans, and insurers operating in California are required to report drug price increases and their effects on the premiums. For example, drug manufacturers must provide a 60-days’ notice to state agencies, plans, insurers, and PBMs of any planned drug increase in a drug’s wholesale acquisition cost (WAC) of 16% or more over a two-year period, if the drug’s WAC is over $40. The manufacturers must also justify the increase. After receiving the notice, a PBM must notify its clients (plans), if the plan has 500 or more beneficiaries.

Beginning January 1, 2019, a manufacturer must also provide certain information to the Office of Statewide Health Planning and Development (OSHPD). Such information includes a schedule of WAC increases, the justification for such increases, the volume of U.S. sales and some additional information addressing the increase. Extra reporting requirements exist for certain specialty drugs. A manufacturer that fails to comply with these reporting requirements could face a civil penalty of $1,000 per day.

The bill also applies to certain plans and insurers. For example, beginning October 1, 2018, plans and insurers that are regulated by the California Department of Managed Health Care (DMHC) and the California Department of Insurance (CDI) must report its 25 most frequently prescribed drugs, 25 most costly drugs, and 25 drugs with the highest year-to-year increases. The DMHC and the CDI will compile this information into a public report demonstrating the overall impact of drug costs on premiums.

Naturally, manufacturers fiercely opposed the bill. NPR reported that the industry hired 45 firms to defeat the new law and spent $16.8 million on lobbying against it.

While there are many supporters of the law, some argue that the bill would not serve its intended purpose. For example, Biotechnology Innovation Organization, the leading biotech industry trade group, issued a statement condemning the bill, arguing that it would not provide meaningful information to the public nor lower prescription drug costs. In addition, the group argues that the law “seriously jeopardizes the future of California’s leadership in this innovative industry” – Reuters reports.

California Association of Health Plans – on the other hand – supported the bill and has declared that its members would cooperate by providing the information on the increases. The Association believes that the bill will provide valuable information that will help the public and the industry to prepare for and address “the unrelenting price increases.”

The proposed $66-billion merger between CVS and Aetna – the most expensive healthcare deal to date – may cut down drug prices by eliminating the middlemen. The proposed deal is covered in depth by various publications. For example, Bloomberg News suggests that the merger could be the end of the pharmacy-benefit business. Reuters reports that the move will enable the insurer to better negotiate prices with pharmaceutical manufacturers and set customer out-of-pocket costs. Others suggest that the move is an attempt to counterbalance Amazon’s arrival into the pharmaceutical market. See Los Angeles Times. According to the St. Louis Post-Dispatch, Amazon is now licensed as a pharmaceutical wholesaler in at least 12 states, including Nevada, Arizona, North Dakota, Louisiana, Alabama, New Jersey, Michigan, Connecticut, Idaho, New Hampshire, Oregon and Tennessee. And its entry into a pharmaceutical market will likely disturb the present model of pharmaceutical distribution.

The Amazon’s entry, a possible merger between CVS and Aetna, and a recent partnership between CVS and Walgreens to create a performance-based network put lots of pressure on pharmaceutical players – including independent pharmacies – to consider merging to keep up with the potential healthcare cost savings and increase in profit margins. The trend has already started and it is reported that Walgreens is currently considering merger with Express Scripts. See Reuters.

On a side note, if CVS and Aetna merger goes through, Anthem’s efforts to partner with CVS for its pharmacy benefit needs will not lead to a favorable outcome. To remind, earlier this year Anthem has announced that it will not renew its contract with Express Scripts due to its drug pricing methods. And if CVS merges with Aetna – another insurer – CVS is not likely to be a good match to manage Anthem’s drug benefit.

According to a CNBC report, Apple is negotiating a business deal with a medical clinic startup CrossOverhealth. If Apple acquires the startup, you may soon go to a local Apple store for a quick health check-up. CNBC also reports that Apple is currently discussing an acquisition of One Medical, a concierge medical group. One Medical is an innovative health startup conducting a vast majority of appointments through an app. Apple has already made claims that its products may aid in tracking and improving health conditions. For example, Apple Watch that can monitor and track health through sophisticated body sensors.

Apple has already entered healthcare arena with its HealthKit and ResearchKit, softwares designed to share health findings with providers and patients. USA Today reports that Apple is currently working on a non-invasive way to monitor blood sugar without piercing the skin. So Apple is definitely seizing a business opportunity in the most lucrative market and is making a strong attempt to fix some of the healthcare flaws with technologies.

Many skeptics, however, point to a huge difference between making software and hardware and managing a network of healthcare providers and navigating complex healthcare requirements and regulations (such as FDA regulations of digital health). On a separate note, hacking of medical devices has recently increased and Apple will have to consider this factor when it starts mass producing medical devices. See the blog on hacking medical devices.

Last week, Express Scripts – a pharmacy benefit manager (PBM) – announced that it has reached an agreement to acquire eviCore – a medical benefit manager (MBM) – for $3.6 billion. eviCore manages medical benefits for 100 million people in areas of radiology, cardiology, musculoskeletal disorders, post-acute care and medical oncology.   Express Scripts is the largest PBM in the nation and its acquisition of eviCore means a rapid advance into the world of MBM, a large and growing market. While our pharmacy spending is $400 billion, healthcare spend represents nearly $3.4 trillion, so the acquisition is an attractive entry point into an extremely lucrative market.

In its announcement, Express Scrips stressed that the acquisition will improve its ability to address $1 trillion annual spending on unnecessary healthcare. To remind, this year, Express Scripts lost its biggest client, Anthem, for allegedly inflating the drug pricing. Anthem has filed a law suit against Express Scripts for $15 billion that it overspent on prescription drug prices for its members while Express Scripts was managing prescription drug benefits for its beneficiaries.

The deal with eviCore is conditioned on all regulatory approvals and is expected to close by the end of 2017.

ESI press release

Unlike most countries, the U.S. does not regulate drug pricing but allows the market to set them according to demand. On numerous occasions, the U.S. Congress sided with the pharmaceutical industry and failed to pass laws that would change how drugs are priced. In addition, the Trump administration has delayed the implementation of a rule under the Affordable Care Act to prevent price gorging. More information on the delay.

A recent catastrophe with sky-high drug prices used to treat life-threatening conditions prompted many states to enact or propose their own laws against pharmaceutical price gorging:

Maryland was the first state in the nation to go after pharmaceutical companies for unconscionable drug prices. Maryland’s attorney general can use the new law to sue generic drugs manufacturers that make an “unconscionable” price increase. As expected, the law met a strong opposition from the pharmaceutical industry which challenged the case in a federal court on the ground that it constitutes an “unconstitutional overreach that will create market instability.” A U.S. District Judge has refused to enjoin Maryland’s new law. More information on Maryland’s drug pricing law.

Nevada has a measure requiring drug makers to annually disclose the prices they set, profits they make and discounts they offer.

Ohio has a pending measure that would bar state entities from buying drugs at prices higher than those paid by the U.S. Department of Veterans Affairs, which typically pays 20% to 24% less than other agencies.

Massachusetts is considering a bill that would require manufacturers to explain the total cost for the top 20 most expensive drugs.

Louisiana requires each drug manufacturer or marketer to provide the state – four times each calendar year – the current wholesale acquisition cost for the approved drugs marketed in the state.

Michigan has proposed a plan to create a Prescription Drug Consumer Protection Board that drug manufacturers would be required to submit documentation to justify price increases above 10% in one year, or 30% over five years.

California has recently enacted a law that requires pharmaceutical companies to notify insurers and government plans at least 60 days before a drug price increase of more than 16 percent over a two-year period.  More on California new law.

On September 27, 2017, a subsidiary of AmerisourceBergen – AmerisourceBergen Specialty Group (ABSG) – admitted to illegally distributing misbranded drugs.  ABSG agreed to pay $260 million to resolve criminal liability for distribution of oncology supportive drugs from a facility that was not registered with the FDA. During the hearing, federal agents from various federal branches expressed the need for more enforcement and supervision of suppliers of injectable drugs, which must be pure, sterile, and produced in an FDA-compliant facility within the supply chain that the FDA oversees.

The court records state that two of ABSG’s subsidiaries Medical Initiatives Inc. (MII) and Oncology Supply Company (both are based in Alabama) prepared millions of syringes that had been pre-filled with oncology supportive care drugs – Aloxi, Anzemet, Kytril, Neupogen, Procrit. These syringes were shipped to oncology centers, medical practices, and physicians for administration.  To prepare the syringes, the companies removed FDA-approved drug products from their original vials and repackaged them into plastic syringes allowing them to sell the left-overs. According to government documents, the repackaging was performed in unclean and unsterile conditions, as a result some syringes contained particles or foreign matters.

To avoid the FDA’s oversight, ABSG did not register MII as a re-packager or manufacturer with the FDA as required by the Federal Food, Drug and Cosmetic Act. Instead, ABSG represented MII as a state-regulated pharmacy.

In addition to substantial monetary penalties, ABSG has entered into a settlement with the federal government, which requires its board members to annually review the ongoing compliance program and to maintain a hotline that will receive and process complaints about any improper practices.

Press Release, Department of Justice

Plea Agreement

The FDA has extended the deadline for manufacturers, repackagers, and other distributors to place a drug product identifier at the individual package level for each product introduced into interstate commerce.

Beginning November 27, 2017, manufacturers are required to “affix or imprint a product identifier to each package and homogenous case of product intended to be introduced in a transaction into commerce.” Likewise, wholesalers and dispensaries (pharmacies) should not accept pharmaceutical products missing product identifiers (i.e. a bar code).

Following the industry’s concern that manufacturers and trading partners are not ready to comply with this rule, the FDA decided to postpone the implementation of the rule until November 28, 2018. The FDA has stated – in the proposed guidance available below – that it will not take action against repackagers, wholesalers, and dispensers who engage in the transactions involving a product that does not have a product identifier.

FDA’s guidance: “Product Identifier Requirements Under the Drug Supply Chain Security Act – Compliance Policy.”

Healthcare providers in California are faced with a dilemma: should their practices start doing anything differently since the legalization of marijuana? Many wonder whether they should change their employment policies, admittance procedures, or start recommending and experimenting with marijuana. Cannabis, however, continues to be in “legal-but-not-entirely-legal-status.”[1] Federal law continues to classify marijuana as a Schedule I drug with a high potential for abuse and no currently accepted medical use. Therefore, no prescription may be written for marijuana under the federal law – physicians may only recommend marijuana, with no recommendation as to the dosage, refills, or length of use.

         Federal perspective: “Good people do not smoke marijuana.”[2]

           Many physicians are eager to start recommending marijuana to some of their patients – especially to seriously ill patients who want to avoid heavy medications – but concerned of possible legal consequences, especially with the DEA. The concern is not baseless, the DEA may threaten a physician’s DEA registration in recommending context as aiding and abetting in obtaining an illegal drug under the federal law. The 9th Circuit has tackled the issue in Conant v. Walters and held that the DEA may not revoke physicians’ registrations merely for recommending medical marijuana as provided under the state law.[3] The case also upheld the injunction prohibiting the DEA from conducting an investigation of a physician based solely on the physician’s recommendation of medical marijuana.[4]  Therefore, a physician may lose the DEA’s registration for prescribing marijuana but the DEA may not revoke the registration if a physician merely recommends it to his patients in California.[5]

           Nevertheless, recently the DEA has canceled registrations of two Colorado doctors specializing in recommending medical marijuana to their patients.[6] In these cases, however, the issue stemmed from the Medical Board’s actions against the doctors, who lost their licenses due to a high number of marijuana recommendations authorizing high plant counts. Doctors were each accused of recommending hundreds of patients to grow or possess more than the standard six plants per patient as allowed under the state law. The DEA has published a notice in the Federal Register explaining that the revocation was a consequence of the state license suspension.[7]

           The U.S. Department of Justice also has highlighted in its two memorandums that the priority is not on individuals in strict compliance with the state laws but on individuals presenting a threat to public safety, such as those supplying cannabis to minors, drugged driving, etc.[8]  The federal government does not intend to waste its limited resources on individuals whose actions are in clear and unambiguous compliance with marijuana state laws providing for the medical use of marijuana. The policy is likely to continue with the new U.S. Attorney General, Jeff Sessions. Despite Sessions’ statements that his department will prioritize the enforcement of the Controlled Substances Act – the effect is not likely to be felt by healthcare providers but the accent will fall on interstate cannabis transporters.[9]

           In addition, since 2015 Congress has been enacting a medical cannabis rider (Sec. 538) prohibiting the use of federal funds in prosecuting individuals in compliance with the state marijuana laws. The current rider has been extended to September 30, 2017.[10]  The case brought under Sec. 538 in a California District Court held that as long as Sec. 538 is in place, the DOJ can only enforce federal controlled substances laws against individuals and business if they are not in compliance with California law.[11]

           However, the effect on healthcare providers of marijuana being classified as a Schedule 1 is still profound – from inability to properly research medical effects of marijuana to fearing the potential problems with the payors, accreditation agencies, and the CMS.

           California perspective: “not going to stand aside.”[12]

           As to physicians recommending marijuana, California law prohibits disciplining them for recommending cannabis for treatment of a serious medical condition.[13] The Medical Board, however does take disciplinary action against recommending physicians if they fail to comply with accepted medical standards when recommending marijuana. The Medical Board in a precedential decision stated that “the mere receipt of a complaint that the physician is recommending marijuana for medical purposes will not generate an investigation absent additional information indicating that the physician is not adhering to accepted medical standards.”[14] These accepted standards are the same as any reasonable and prudent physician would follow when recommending or approving any other medication, and include the following:

1.    Reviewing medical history and conducting an appropriate prior examination of the patient;

2.    Developing of a treatment plan with objectives;

3.    Obtain informed consent to the treatment and discus the side effects;

4.    Periodically review the treatment’s efficacy.

5.    Comply with proper record keeping and maintain medical records supporting the decision to recommend the use of marijuana for medical purposes.[15]

           In other words, if physicians use the same care in recommending marijuana to patients as they would in recommending any other dangerous drug, they would not be subject to discipline with the Medical Boards (according to the California Board’s position taken in the above cited precedential decision). The problem, however, is that most cannabis recommendations take place under the following circumstances:

           (1) no prior relationship exists between the patient and physician;

           (2) the recommender is not a specialist in treating the underlying condition; and

           (3) no follow-up appointments are scheduled.

           This makes physicians prone to licensing issue, violation of ethical duties; and negligence-style type of cases. To avoid these potential legal implications, a recommending physician must strictly follow the Board’s guidance and comply with all regulations applicable in prescribing context.

           Hospitals’ Direction: in or out?

           As hospitals are seeing more patients legally using and possessing the drug, they develop new policies and practices to address some of the legal issues raised by possession or use on their premises. The policies that should address lawful possession of marijuana should include:

  • Self-administration of medications by patients
  • Handling personal property
  • Alternative supplements
  • Patient care order
  • Hospital security practices
  • Inpatient patient medication

Currently hospitals follow three paths when dealing with marijuana on their premises.

(1) Medical use of marijuana is allowed in the facilities (minority approach):

           When patients registered with the state’s marijuana program arrive with marijuana in its original container as dispensed by an approved dispensary, the admitting physician has a discretion to allow the patient to continue using the drug while at the facility. Of course, only capsules or oral liquid should be allowed and self-administer should not be permitted.

                 This is an approach taken by some facilities in the states with high standards for ensuring quality control of marijuana, and where manufacturers are required to demonstrate consistency of product content, purity, stability, and accuracy of labeling (for example, Minnesota). California is not one of the states with strong standards and regulations of the industry (which is likely to change with the adoption of the regulations of the marijuana industry in 2018).

                 Hospitals that decided to take this route, have physicians, nurses, pharmacists, representatives from external agencies (e.g., drug diversion, members of various professional boards), and of course, their legal counsel crafting such policies. Many also involve their local medical cannabis manufacturers asking them to bring packaging, the product, and the label so the medical team can become more familiar with what the patients and their families will be bringing in.[16]

(2) Prohibit any use of marijuana in the facilities (the majority’s position):

           Almost all California hospitals currently prohibit use or possession of marijuana while at the hospital or any other inpatient facility. Clinical concern is the primary reason for taking this approach: drug interactions, lack of research on cannabis, etc. But what the facilities to do with marijuana if a patient is admitted with the drug? Pharmacies could not store, destruct, or manage it. Many facilities ask the patient to give the drug to a family member or lock it in the cars. In addition, many utilize their Security Department, which can store patient’s marijuana with other personal belongings of the patient and return them on the discharge.

(3) Shifting rules.

                       Some facilities allow the use of marijuana for certain patients, such as oncology and pediatrics patients.[17] The workgroups implementing this practices concluded that there is a substantial research showing marijuana’s ability to help relieve some of the symptoms of serious conditions, which cannot be improved with other drugs or FDA approved THC (marijuana active ingredient) compounds.[18]

           A Note on Employment

           A majority of healthcare employees are at-will meaning that the employer may terminate them at any time for any reason.[19] Therefore, parties may agree on any terms they want, including a drug-free policy. Because of the highly regulated nature of the profession, a vast majority of healthcare businesses require their employees to be drug-free, which is often enforced through mandatory drug testing. While some states have enacted the protection for marijuana users in the employment environment, California law does not protect marijuana users from workplace termination. The California Supreme Court has ruled that employers have a right to drug test and terminate employees based on positive testing.[20] The Ninth Circuit also held that the ADA does not offer job protection for medical marijuana users because it is an illegal substance under federal law.[21]

           Prop. 64 (the Adult Use of Marijuana Act) itself provides that employers may test employees for marijuana use prior to hiring or at any time during the employment and terminate the employment in case of the positive outcome.

           Therefore, because marijuana continues being an illegal substance under the federal law, the employers may continue terminating employees based on the usage and do not have to accommodate such employees in the workplace.[22]

           Conclusion

           Because marijuana continues to be an illegal substance under the federal law – and the federal policy is not likely to change in the near future – healthcare providers must strictly follow the state law when recommending marijuana to their patients. Due to some increased interest from the Medical Board to the recommending physicians, the safest route is still to prescribe the FDA-approved THC compounds. The changes might be coming in how hospitals are handling the marijuana of their patients, which now constitutes the legal property of the patient and should not be destroyed or turned to the law enforcement. Possibly we might even see medical marijuana administration in California hospitals[23] – which is not likely to happen very soon.

[1] Erwin Chemerinsky, Jolene Forman, Allen Hopper & Sam Kamin, Cooperative Federalism and Marijuana Regulation, 62 UCLA L. Rev. 74, 113 (2015).

[2] Statement made by the U.S. AG Jeff Sessions during a senate hearing, video is available at: https://www.washingtonpost.com/news/wonk/wp/2016/11/18/trumps-pick-for-attorney-general-good-people-dont-smoke-marijuana/?utm_term=.b808fa20dc2c (last visited May 4, 2017)

[3] Conant v. Walters, 309 F.3d 629 (9th Cir. 2002).

[4] Id.

[5] See Chemerinsky at 85 (supra note 1), citing Planned Parenthood of S.E. Pa. v. Casey, 505 U.S. 833, 884 (1992) (recognizing a physician’s First Amendment right not to speak); Rust v. Sullivan, 500 U.S. 173, 200 (1991) (noting that regulations on physician speech may “impinge upon the doctor patient relationship”).

[6] Gentry Reeves Dunlop, M.D.; Decision and Order, 82 Fed. Reg. 8432-8433 (Jan. 25, 2017) and Janet Carol Dean, M.D. Decision and Order, 82 Fed. Reg. 9224-9226 (02/03/2017).

[7] Janet Carol Dean, M.D. Decision and Order, 82 Fed. Reg. 9224-9226 (02/03/2017).

[8] U.S. Dep’t of Justice, Office of the Deputy Attorney General, Memorandum for Selected United States Attorneys: Investigations and Prosecutions in States Authorizing the Medical Use of Marijuana 1–2 (2009), a.k.a. Ogden Memo, available at https://www.justice.gov/archives/opa/blog/memorandum-selected-united-state-attorneys-investigations-and-prosecutions-states (last accessed May 1, 2017) and 2013 Cole Memorandum announcing that the DOJ will not prioritize the enforcement of federal marijuana laws in states with their own robust marijuana regulations and specified eight federal enforcement priorities in enforcement: https://www.justice.gov/iso/opa/resources/3052013829132756857467.pdf (last accessed on April 29, 2017).

[9] Interview with Sessions is available at: http://www.hughhewitt.com/attorney-general-jeff-sessions/#more-33186 (last visited May 1, 2017).

[10] Summary of FY2017 Omnibus Appropriations Act is available: http://democrats.appropriations.house.gov/ (accessed May 4, 2017)

[11] U.S. of Am. v. Marin All. for Med. Marijuana, 139 F. Supp. 3d 1039, 1040 (N.D. Cal. 2015), appeal dismissed (Apr. 12, 2016)

[12] Cal. Lieutenant Governor Gavin Newsom: “California voters supported legalization by a historic and overwhelming margin, and their elected leaders are not going to stand aside and allow the senator from Alabama to turn back California’s clock.” Los Angeles Times, Weed’s legal in California, but activists fear a battle ahead, available at http://www.latimes.com/politics/la-pol-ca-marijuana-legalization-jeff-sessions-snap-20161201-story.html (last visited May 1, 2017).

[13] Health & Safety Code §11362.5(c).

[14] Precedential Decision No. MBC-2007-02-Q (against Tod H. Mikuriya, M.D.), California Medical Board.

[15] Id. at 36.

[16] Lalit Bajaj, Cindy Sehr, Marijuana Application in Pediatric Health Care, (Sep. 16, 2015), presentation is available at the AHLA Health Law Archive.

[17] Id.

[18] Id.

[19] With some limited exceptions, none are applicable in the medical marijuana context.

[20] Ross v. RagingWire Telecomm., Inc., 174 P.3d 200, 203 (Cal. 2008).

[21] James v. City of Costa Mesa, 700 F.3d 394, 396 (9th Cir. 2012).

[22] Coats v. Dish Network, LLC, 350 P.3d 849, 851 (Colo. 2015.)

[23] Richard Halstead, Marin Health Board Member proposes open use of medical marijuana at Marin General, Marin Independent Journal, Aug. 8, 2016, http://www.marinij.com/article/NO/20160808/NEWS/160809854 (last visited May 5, 2017)

A New York man filed a $2.5 million negligence suit against a hospital after it “carelessly faxed his medical records to his office mailroom,” revealing that he was living with HIV. The New York Daily News’ report. 

The man specifically asked the provider to mail the documents to a post office box, instead, the hospital faxed them to his work place where the files were circulated before reaching him. The hospital paid a $387,000 fine to HHS, but refuses to settle this private action.

I never recommend traditional faxing when transmitting any protected health information (PHI). Use eFax options instead, many of which are certified HIPAA-compliant. When signing up with a HIPAA compliant e-faxing service ask for a Business Associate Agreement, which can often be downloaded from their websites. HIPAA-secure eFaxing works like emails and you pick up a fax by connecting to a secure web site. Similarly, you send e-faxes from your email to a special HIPAA-compliant email address.

If you still prefer traditional faxing, follow HIPAA guidelines and go the extra mile to ensure secure receipt and delivery. HHS, for example, recommends preprogramming frequently used numbers to avoid misdirecting the information.

If using traditional faxing, make sure that all personnel knows proper procedures when transmitting the PHI, such as:

  • attaching a cover sheet identifying the sender and recipient. The cover page should state that the fax may contain information that is confidential or privileged. It should also state that: “If you are not the intended recipient, or you are not the employee responsible for delivering the facsimile for the intended recipient, you are hereby notified that any dissemination, distribution or copying of this facsimile is strictly prohibited. If you have received this facsimile in error, please notify the sender immediately.”
  • confirming that the receiving fax machine is in a secure area or that the intended recipient is waiting by the fax machine to receive the transmission.
  • verifying the fax confirmation sheet and retaining it with the transmitted records.

And remember, sensitive PHI – such as HIV results – should never be sent by fax!

For further Administrative Data Standards, see Code of Federal Regulations.

           Employers in the states that have legalized medical marijuana are left wondering whether to change their employment policies, stop random drug-screening for marijuana, or accommodate medical-marijuana users. While many state laws completely legalized the use of marijuana, federal law continues to classify marijuana as a Schedule I drug with a high potential for abuse and no currently accepted medical use. As such, marijuana continues to be in the “legal-but-not-entirely-legal-status.”[1]
            Most employees are at-will meaning that the employer may terminate them at any time for any reason.[2] Therefore, parties may agree on any terms they want, including a drug-free policy. In the healthcare context, because of the highly regulated nature of the profession, a vast majority of healthcare businesses require their employees to be drug-free, which is often enforced through mandatory drug testing. While some states protect employees for medical marijuana user, California law does not protect marijuana users from workplace termination. The California Supreme Court has ruled that employers have a right to drug test and terminate employees based on positive testing.[3] The Ninth Circuit also held that the ADA does not offer job protection for medical marijuana users because it is an illegal substance under federal law.[4] Moreover California’s Adult Use of Marijuana Act (Prop. 64 ) itself provides that employers may test employees for marijuana use prior to hiring or at any time during the employment and terminate the employment in case of the positive outcome. Therefore – because marijuana continues being an illegal substance under the federal law – the employers may continue terminating employees based on the usage and do not have to accommodate such employees in the workplace.[5]
            Some states, however, take a different approach, which potentially may influence other states in their medical marijuana policies. Recent decisions by Massachusetts and Rhode Island state courts (both states have legalized medical use of marijuana) held that an employer may have an obligation to accommodate the off-duty use of medical marijuana.[6] Both courts recognized that the state laws do not provide express employment protection. Nevertheless, an employer may be obligated to provide a reasonable accommodation  since the medical marijuana acts protect medical use. The courts further held that an accommodation is not per se unreasonable simply because marijuana continues to be illegal under the federal law.
            In light of these decisions, employers – especially if located in Massachusetts and Rhode Island – should take precautions in administering their drug use policies. For example, employers should take time explaining their drug policies to employees, provide justifications for the need for drug-testing, and consequences if such testing is returned positive. In addition, if a drug test is returned positive for marijuana, employers might want to analyze whether the employee has a qualified disability and whether to provide an accommodation. If an accommodation is provided or not provided, the decision should be well-documented.
[1] Erwin Chemerinsky, Jolene Forman, Allen Hopper & Sam Kamin, Cooperative Federalism and Marijuana Regulation, 62 UCLA L. Rev. 74, 113 (2015).
[2] With some limited exceptions, none are applicable in the medical marijuana context.
[3] Ross v. RagingWire Telecomm., Inc., 174 P.3d 200, 203 (Cal. 2008).
[4] James v. City of Costa Mesa, 700 F.3d 394, 396 (9th Cir. 2012).
[5] Coats v. Dish Network, LLC, 350 P.3d 849, 851 (Colo. 2015.)
[6] Regalado v. Callaghan, 207 Cal. Rptr. 3d 712, 716 (Cal. App. 4th Dist. 2016), review denied (Dec. 21, 2016)
  Barbuto v. Advantage Sales and Mktg., LLC, 78 N.E.3d 37, 40 (Mass. 2017)