Insurance reimbursement for psychedelic therapy is integral to treatment accessibility.
Psychedelics have been used for millennia, but they have only recently hit the medical mainstream. Given the ongoing toll of mental illness, marked by decades-long increases in suicide deaths, overdose deaths, and alcohol-related mortality in the U.S., clinical trials of psychedelics and other dissociative drugs like ketamine (which I will collectively refer to as psychedelics) are more than encouraging.
The benefits of psychedelics can be seen in hours rather than weeks, and studies have found that psychedelic administration reduces symptoms in patients with difficult-to-treat conditions, including post-traumatic stress disorder (PTSD) and treatment-resistant depression. Additional research on the costs and cost-effectiveness of psychedelics is needed and underway.
Psychedelics present an interesting paradigm when it comes to their delivery, since they are often accompanied by spiritual or psychotherapeutic support, which is sometimes referred to as psychedelic-assisted therapy.
Varun Saraswathula and I developed a useful framework for thinking about psychedelic and psychedelic-assisted therapy regulation: analyzing the two dimensions of medicalization versus guidance. Medicalization refers to the degree to which psychedelics are administered by health care providers, such as physicians or nurse practitioners with prescribing authority, while guidance refers to the degree to which spiritual or psychotherapeutic support accompanies psychedelic administration.
Existing regulatory frameworks, including those in Australia and Canada, require more medicalized and guided delivery models. States such as Oregon and Colorado have left the door open for medicalized, unmedicalized, guided, and unguided options.
The psychedelic delivery paradigm complicates insurance coverage—or the lack thereof. With the exception of Spravato, a derivative of ketamine that was approved by the U.S. Food and Drug Administration (FDA) in 2019, psychedelics and psychedelic-assisted therapy are not typically covered by insurance. Without insurance coverage, these treatments will be inaccessible to many who need them the most. Provider buy-in also matters: Spravato is covered by insurers such as Medicare, yet studies have found that it is rarely prescribed. Fewer than 1,300 Medicare beneficiaries were prescribed Spravato between its FDA approval in March of 2019 to 2020.
What does a roadmap to reimbursement look like? On the medicalization side, FDA approval is the first step. FDA could imminently approve MDMA to treat PTSD, and psilocybin will likely follow. Proponents of psychedelics are hopeful that the U.S. Drug Enforcement Administration (DEA) will respond by rescheduling MDMA and psilocybin, but there is no guarantee.
In the case of Epidiolex, which contains a naturally occurring cannabinoid that treats two rare forms of epilepsy, the DEA rescheduled the FDA-approved formulation but did not reschedule cannabis. As of 2024, cannabis remains a Schedule I drug, alongside drugs with the highest potential for abuse, and patients rely on budtenders rather than trained pharmacists.
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