United States

14.7.1 The Transatlantic Journey of Psychedelic Medicine

Psychedelic research in the U.S. has followed a trajectory that parallels European experiences. Early scientific exploration in the mid‑twentieth century yielded promising results for substances like psilocybin, LSD, and MDMA. However, the 1970 Controlled Substances Act's Schedule I classification—indicating "no accepted medical use" and "high potential for abuse"—created barriers that resonated with European drug control measures, effectively suspending most research for decades.

Historical Context and Research Renaissance

The 1950s and 1960s represented a golden age of psychedelic research in the United States, with government‑funded studies exploring potential applications in psychiatry. This era ended abruptly when cultural backlash and political pressure led to strict prohibition. For nearly 30 years, legitimate scientific inquiry into these compounds virtually disappeared.

The early 2000s marked the beginning of what researchers now call the "psychedelic renaissance"—a cautious revival of scientific interest led initially by academic institutions and non‑profit organisations. This resurgence gained momentum as preliminary studies showed remarkable potential for treating conditions that conventional approaches had failed to address effectively.

Regulatory Innovations and Challenges

Research has accelerated dramatically in recent years, with U.S. clinical trials providing critical data that European regulators and healthcare systems now reference. The FDA's Breakthrough Therapy designations—a special status granted to expedite the development of promising treatments for severe conditions—for MDMA (2017) and psilocybin (2019) have influenced European regulatory thinking.

At the same time, setbacks—such as the 2024 rejection of MDMA therapy for PTSD by an FDA advisory panel—offer important lessons for European approval pathways. These challenges highlight the complex interplay between scientific evidence, regulatory frameworks, and cultural attitudes that shape how novel treatments enter healthcare systems.

Market Pathways and Access Models

The U.S. presents a complex healthcare financing landscape that differs significantly from European models. Understanding how psychedelic therapies navigate the U.S. system—from pharmaceutical approval to insurance coverage—provides valuable comparison points for European stakeholders planning implementation strategies.

State‑level innovations, particularly in Oregon and Colorado, demonstrate how regional approaches can create controlled access to psychedelic treatments even while federal prohibitions remain in place. These regulatory experiments offer potential models for European countries seeking flexible implementation frameworks.

Significance for European Development

By examining the U.S. experience in clinical development, regulatory frameworks, healthcare integration, and funding models, European stakeholders can better anticipate challenges and opportunities in their own jurisdictions. The American journey provides cautionary tales and successful strategies that may inform European approaches.

This analysis provides context for understanding how different approaches to psychedelic medicine may translate across Atlantic healthcare systems. While fundamental differences exist between U.S. and European healthcare structures, the scientific, regulatory, and implementation lessons from the American experience offer valuable guidance for European psychedelic medicine development.

14.7.2 Research on Psychedelic Therapies in the U.S.

The research landscape for psychedelics in the United States has evolved dramatically over the past two decades, with key clinical trials now directly influencing regulatory decisions and reimbursement pathways. Rather than emerging from traditional pharmaceutical companies, non‑profits and specialised biotech firms have spearheaded much of this research.

MDMA Research and Regulatory Challenges

The Multidisciplinary Association for Psychedelic Studies (MAPS), founded in 1986, has led groundbreaking research on MDMA for post‑traumatic stress disorder (PTSD). Their Phase III clinical trials showed remarkable efficacy, with 67‑71% of participants experiencing clinically meaningful symptom reductions compared to control groups. Despite these promising results, MAPS encountered regulatory hurdles.

In 2024, MAPS' for‑profit subsidiary Lykos Therapeutics submitted its New Drug Application (NDA) to the FDA. However, an FDA advisory committee voted against recommending approval in 2024, citing concerns about blinding methodology and isolated instances of misconduct during trials. This rejection highlights the stringent standards applied to psychedelic treatments and offers important lessons for European regulatory submissions.

Psilocybin Research for Depression

Compass Pathways, a UK‑based company with significant U.S. operations, has conducted the largest clinical research programme on psilocybin therapy for treatment‑resistant depression (TRD). In 2018, the FDA designated its proprietary formulation, COMP360, as a Breakthrough Therapy. A Phase IIb study showed that a single dose of psilocybin, when combined with psychological support, significantly reduced depression symptoms for many participants.

Compass Pathways’ ongoing Phase III trials will be crucial for potential FDA approval and subsequent reimbursement decisions. Their business model anticipates eventual coverage through insurance systems, making their regulatory strategy particularly relevant for European healthcare integration.

The Usona Institute, a non‑profit research organisation, is conducting parallel studies on psilocybin for major depressive disorder (MDD). Their approach—focused on making treatments widely available rather than maximising profit—offers an alternative model for bringing psychedelic medicine to market.

Ketamine's Pathway: From Discovery to Prescription

Ketamine represents the most developed case study for psychedelic medicine's journey through research, regulation, and reimbursement systems. Though approved as an anaesthetic in 1970, ketamine's antidepressant properties weren't discovered until around 2000, when researchers at Yale University published findings showing its rapid effects on depression symptoms.

This discovery led to the proliferation of off‑label ketamine use for depression—prescribed by doctors but not officially approved for this indication by the FDA. These clinics operate in a regulatory grey area, typically requiring out‑of‑pocket payment as insurance rarely covers off‑label treatments.

Johnson & Johnson saw an opportunity to develop a patentable derivative, focusing on the S‑enantiomer of ketamine (esketamine). After conducting Phase I through III clinical trials between 2014 and 2018, their nasal spray formulation, Spravato, received FDA approval in 2019 for TRD. Major insurers now cover this drug, reaching $750M in sales in 2024.

Spravato's approval created two parallel markets: the FDA‑approved, potentially insurance‑covered esketamine treatment and the cheaper but uninsured generic ketamine treatments. This dual pathway highlights how regulatory approval directly influences reimbursement possibilities.

Research Implications for Future Coverage

These research initiatives reveal different approaches to bringing psychedelic treatments to market, each with distinct implications for regulatory approval and insurance coverage:

The pharmaceutical pathway (exemplified by Spravato and partly by Compass) follows traditional FDA approval channels, leading to potential insurance coverage but typically at higher costs.

The therapeutic pathway (seen with ketamine clinics) operates partially outside regulatory frameworks, offering more immediate access but shifting the financial burden entirely to patients.

The hybrid approach (pursued by MAPS and Usona) seeks pharmaceutical approval while emphasising the therapeutic protocol surrounding the drug, potentially creating new reimbursement categories that cover both the substance and the associated therapy.

As research progresses through regulatory hurdles, healthcare systems must determine how these treatments fit within existing reimbursement structures. The challenge extends beyond simply proving efficacy—it requires creating appropriate billing codes, establishing provider qualifications, and determining fair valuation for novel treatment paradigms that don't fit neatly into existing healthcare categories.

14.7.3 Pathways to Market and Insurance Coverage

The journey from clinical research to widespread patient access to psychedelic therapies in the United States follows complex pathways that differ significantly from conventional treatments. Understanding these pathways provides crucial context for European stakeholders planning their own implementation strategies.

Pharmaceutical vs. Therapeutic Pathways

In the U.S. healthcare system, novel treatments typically reach patients through one of two distinct routes: the pharmaceutical or therapeutic pathways. Each has different regulatory requirements, evidence standards, and reimbursement mechanisms.

The FDA highly regulates the pharmaceutical pathway. Treatments following this route require rigorous clinical trials demonstrating safety and efficacy, followed by formal approval before doctors can prescribe them through insurance. This process typically takes 10–15 years and requires substantial investment, but it creates a clear path to insurance coverage.

The therapeutic pathway, by contrast, does not require FDA approval. Instead, new therapeutic approaches gain legitimacy through endorsement by professional associations, clinical practice guidelines, and real‑world evidence. Practitioners with appropriate licensing can implement new therapies based on their clinical judgment, though insurance coverage may lag behind clinical adoption.

Ketamine illustrates how a single compound can follow both pathways simultaneously. As an FDA‑approved anaesthetic since 1970, ketamine's antidepressant effects were discovered around 2000. This led to two parallel approaches:

1. Off‑label ketamine clinics emerged following the therapeutic pathway, administering the generic drug for depression without formal FDA approval for this indication. These clinics operate legally but typically cannot bill insurance, requiring out‑of‑pocket payment from patients.
2. Spravato (esketamine) followed the pharmaceutical pathway when Johnson & Johnson isolated ketamine's S‑enantiomer, conducted formal clinical trials, and secured FDA approval in 2019, specifically for TRD. This approval created a pathway for insurance coverage.

A similar dual‑track approach can be seen with gender‑affirming care, where the World Professional Association for Transgender Health (WPATH) established standards of care beginning in 1979, gradually building clinical consensus. The inclusion of gender identity disorder (later renamed gender dysphoria) in the DSM‑III in 1980 provided diagnostic legitimacy. Despite using medications that weren't specifically FDA‑approved for this purpose, insurance coverage eventually followed—accelerated by the Affordable Care Act's non‑discrimination provisions in 2016.

Coverage Decision Framework

When evaluating whether to cover new treatments, insurers and self‑insured employers apply a multifaceted decision framework that balances several key considerations. ¹

Public programs like Medicare and Medicaid face additional constraints, as coverage decisions must comply with federal and state regulations while addressing the needs of vulnerable populations.

• Safety considerations examine both short‑term risks and long‑term effects. For psychedelics, concerns often include cardiovascular effects (with ibogaine and MDMA), psychological distress during sessions, and the potential for misuse. Spravato’s Risk Evaluation and Mitigation Strategy (REMS) programme—requiring in‑clinic administration and monitoring—exemplifies how safety protocols become tied to coverage decisions. Medicare’s coverage of Spravato demonstrates how even public programmes can accommodate novel treatments when appropriate safety measures are implemented.
• Efficacy assessment compares new treatments against existing options. Psychedelics have shown promising efficacy data, with MDMA demonstrating 67–71% response rates for PTSD and psilocybin showing similar promise for depression. However, insurers require evidence that these effects are durable and cost‑effective compared to standard treatments. Medicaid programmes face particularly tight budget constraints and often apply more stringent efficacy requirements before covering new therapies.
• Cost analysis evaluates both direct treatment costs and potential downstream savings. Psychedelic treatments present a complex cost proposition—high upfront costs (typically £2,000–5,000 per treatment course) but potentially significant long‑term savings if they reduce ongoing medication use, hospitalisations, or disability.
• Strategic value considerations are particularly relevant for employers, who may view access to innovative mental health treatments as a recruitment and retention advantage in competitive labour markets.
• Professional associations play a crucial role in establishing legitimacy that leads to coverage. For example, the American Psychiatric Association has formed a task force on psychedelics, and their eventual practice guidelines will significantly influence insurance coverage decisions. Similarly, the American Medical Association’s development of specific Current Procedural Terminology (CPT) codes for psychedelic therapy would create standardised billing mechanisms.
• Insurers codify their coverage decisions in Clinical Policy Bulletins that synthesise available evidence. These bulletins establish specific criteria patients must meet to qualify for coverage, such as failing multiple conventional treatments before accessing Spravato.

Current Reimbursement Models

• Spravato coverage represents the most established reimbursement model. As an FDA‑approved medication, Spravato is included on many insurance formularies—typically as a tier 4 or 5 specialty drug requiring significant patient cost‑sharing. Medicare covers Spravato under Part B (medical benefit) because it must be administered in a healthcare setting, necessitating specific CMS payment policies for both the drug and its administration.
• Off‑label ketamine clinics operate primarily on a self‑pay model, with costs ranging from $300 to $800 per infusion. Some clinics offer package pricing or membership models, but widespread coverage remains elusive without FDA approval or professional association endorsement.
• Emerging bundled care approaches are being pioneered by companies like Enthea and Meeko. These models bundle preparatory therapy, medication sessions, and integration therapy into a single reimbursement rate—mirroring value‑based care frameworks.
• Subscription‑based models allow patients to pay a monthly fee for access to a psychedelic‑focused practice, spreading costs over time and providing ongoing therapeutic support.

All these reimbursement approaches must navigate significant practical challenges. Psychedelic treatments don’t fit neatly into existing healthcare categories—they combine pharmaceutical intervention, psychotherapy, and supervised medical procedures. Most systems lack appropriate billing codes, forcing providers to cobble together existing codes or rely on out‑of‑pocket payment.

For future FDA‑approved psychedelic medications (e.g., MDMA, psilocybin), establishing specific CPT codes will be critical to account for extended session times, specialised provider training, and unique facility requirements. The dual‑track experience of ketamine and gender‑affirming care suggests that psychedelic therapies may initially follow self‑pay pathways before securing broader insurance coverage through regulatory approval, professional endorsement, and demonstrated cost‑effectiveness.