Following decades of stagnant research, psychedelic-assisted therapy has been heralded as a potentially transformative approach amid a global mental health crisis.
According to World Health Organization (WHO) data published in August 2025, over one billion people live with mental health conditions worldwide. Despite substantial investment, psychedelic research has seen several setbacks. Most notably, the rejection of the MDMA (3,4-methylenedioxymethamphetamine)-based therapy by Lykos Therapeutics, now known as Resilient Pharmaceuticals, by the FDA in 2024 exposed the inherent challenges psychedelic research faces, including the risk of functional unblinding and the difficulty in determining efficacy independent of psychotherapeutic support.
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Nonetheless, several biopharma companies have prevailed. Definium Therapeutics and Helus Pharma both boast Phase III-stage programs with psychedelic-based therapeutics being studied in generalized anxiety disorder (GAD) and major depressive disorder (MDD), respectively. Additionally, Compass Pathways reported a late-stage win in February, with its second Phase III trial for psilocybin-based COMP360 meeting its primary endpoint in treatment-resistant depression (TRD). The company plans to file for approval in Q4 2026.
In a boost for the space, US President Donald Trump recently signed an executive order backing the investigation of psychedelics in mental health. The order seeks to accelerate regulatory timelines and bolster research efforts with a $50 million injection of funds.
While a welcome gesture, industry experts say it remains to be seen whether this order will translate into tangible benefits for the sector. Aside from regulatory and legal hurdles, high up-front costs, lengthy monitoring sessions, and training requirements pose challenges to the effective use of psychedelic therapies in the clinic.
Potential impact of the executive order
The demonstration of support from the White House in the form of an executive order may boost funding in this space, according to a US-based regulatory compliance advisor at a law firm. Indeed, investors signaled increased confidence in the sector, with Compass’s market cap surging by almost 30% when the market opened after the April 18 executive order.
However, the order doesn’t guarantee approval, as assets will still need to meet the FDA standard of safety and efficacy, which has proved challenging in the psychedelic space, the advisor adds.
“They are not trying to just give this carte blanche,” notes Dr. Rayyan Zafar, research associate in the Department of Brain Sciences, Imperial College London, UK. Instead, they’re putting in place the infrastructure to run the necessary clinical studies, adds Zafar, who is also an advisor to Hamilton, Bermuda-headquartered insurance company Relm Insurance.
The order stipulates that the FDA Commissioner, at the time Dr. Marty Makary, award expedited regulatory review to psychedelics with breakthrough therapy designation via the Commissioner’s National Priority Voucher (CNPV). However, there has been significant upheaval at the FDA in recent weeks, with Makary resigning following reports that Trump was considering firing him. “Exactly what happens at [the] FDA is going to be an open question,” notes the regulatory compliance advisor.
While the order is “encouraging,” it is “hard to say what impact it will actually have,” according to Brian Pilecki, PhD, clinical psychologist at Portland Psychotherapy, Oregon. There is still a degree of stigma and fear around the safety of this drug class despite the willingness to study it, he explains.
Similarly, Dr. Ryan Henner, psychiatrist at Beth Israel Deaconess Medical Center, Boston, Massachusetts, says that due to the “antidogmatic” nature of the treatment, he has a “hard time imagining it being embraced by the administration, despite their efforts to advance it.” He adds that from a political standpoint, there appears to be an inherent tension between a Make America Healthy Again (MAHA)-driven desire to advance psychedelics and some other contingents of the Republican Party or other political powers that are more dogmatic. Henner notes that this tension may limit regulatory approval or affect post-approval use.
Regulation introduces complexity
From a regulatory perspective, the FDA could set out specific requirements for post-approval monitoring if they consider a drug to be high risk. Johnson & Johnson’s Spravato (esketamine), a drug with consciousness-altering effects that was first approved by the FDA in 2019 for TRD, carries a strict Risk Evaluation and Mitigation Strategy (REMS) program. This mandates the certification of treatment facilities as well as patient monitoring and discharge protocols.
The FDA might also require REMS protocol for psychedelic products if they feel it is needed to ensure safety, explains the regulatory compliance advisor.
In the US, psychedelics are generally classified as Schedule 1 controlled substances under the federal Controlled Substances Act, meaning they have no accepted medical use. Following approval, a psychedelic drug would require “rescheduling” by the Drug Enforcement Administration (DEA), which could further delay market access.
Beyond the classification, security and anti-diversion measures would need to be put in place for a controlled substance, notes the regulatory compliance advisor. Prescribers, wholesalers, and distributors will have to contend with these DEA compliance requirements, they explain. Furthermore, controlled substances are also regulated on a state level, which may create additional complexity.
Implementation challenges likely to persist
Equitable access is a key challenge, and there is a “risk of developing a two-tiered system, wherein those that can afford treatment through private markets receive it, and those that can’t afford it don’t,” says Zafar.
Keeping overhead costs down will be key to ensuring insurer coverage, says Henner. In a Phase IIb trial (NCT05407064), Definium’s LSD (lysergic acid diethylamide)-based drug DT120 required continuous monitoring by two session monitors for at least 12 hours. Staffing facilities for the duration of the required monitoring period is likely to be “one of the biggest challenges to making this affordable from an insurance perspective,” notes Henner.
Given the high cost, it is likely that insurance companies will require patients to fail previous treatments before coverage is provided, which can further limit access, says Dr. Angelo Sambunaris, psychiatrist at Dr. Sambunaris & Associates, Alpharetta, Georgia.
In 2020, Oregon passed the first state-level legislation to legally permit the supervised, non-medical use of psilocybin. Subsequently, the first psilocybin service centers opened their doors in 2023, offering a window into potential access frameworks.
Pilecki, who has been doing psilocybin facilitation for over two years, says that cost is still the biggest barrier to access, since the process is “very expensive” for clients and no insurance coverage is available. The cost of a single psilocybin session can be as high as $3,000, as per a 2025 Guardian article.
Prolonged monitoring sessions also challenge compatibility with existing healthcare frameworks, says Pilecki. “That’s definitely one of the drawbacks of this model of psychedelic-assisted therapy,” he notes. Furthermore, a lack of trained clinicians and appropriate facilities is likely to be a bottleneck in the early days post approval, according to Pilecki.
Appropriate training and accreditation will also be important considerations, since there are currently no official streams for that, notes Zafar. Furthermore, there is currently no governing body for psychedelic-assisted therapy in the US nor a centralized list of training requirements, says Pilecki. Sambunaris notes that collaboration among relevant stakeholders, including regulatory authorities, the DEA, academics, and clinicians, will be needed to establish a set of consensus guidelines.
There is also a risk of premature commercialization, where clinics rush to market without fulfilling the necessary steps like building training programs and infrastructure, to reduce risks to patients, notes Zafar. This has been observed with telehealth-based racemic ketamine treatment in the US, he highlights. Post-Covid-19, when a market for at-home ketamine treatment emerged via legal loopholes, there were examples of diversion and misuse, he explains.
