Magellan Cites Need for New Alternative Mental Health Treatments, Psychedelics Research

Psychedelics continue to gradually gain support as an alternative therapeutic for various mental health conditions. A division of Magellan Health lended its voice to the issue in a new report calling for “fair and balanced” reviews for psychedelics to come to market.

The report was published by Magellan Rx Management, a pharmacy benefits division of the managed care organization Magellan Health. Magellan Health earlier this year became part of Centene Corporation in a $2.2 billion deal.

The report provided a timeline of notable milestones regarding psychedelics in America, along with a list of psychedelics and psychoactive substances in multiple stages of clinical study, including psilocybin, ketamine, cannabis, LSD and MDMA.


All of the substances listed in the report except ketamine are classified by the U.S. Drug Enforcement Agency as Schedule I drugs, defined as high-risk drugs that currently have no accepted medical use. The ketamine derivative esketamine is approved for use as a nasal spray by the U.S. Food and Drug Administration under the brand name Sparvato.

Schedule I drugs are able to be cultivated for research purposes, with a handful of municipalities in recent years having passed legislation decriminalizing psilocybin. Oregon became the first state to decriminalize psilocybin in 2020, and other states – like Connecticut, Texas, Washington and California – have either introduced or passed psychedelics legislation of their own.

The worldwide cost of treating mental health conditions is expected to reach $6 trillion by 2030. The domestic psychedelic drug market by some estimates is on track to reach $10.75 billion by 2027, with other estimates predicting the global market to rise to about $69.7 billion by 2025.


Outside the United States, countries like Canada have been at the forefront of psychedelic wellness, with all 13 of the nation’s provinces and territories having exemptions for psilocybin in behavioral health care.

“This climate highlights the need for alternative options to treat mental health conditions,” the report noted, specifying that psychedelics, marijuana and ketamine-based compounds are all gaining momentum.

Magellan Health said it is in favor of reviews for the drugs to potentially go to market. Magellan also argued that more robust studies and comparative trials are needed to measure the safety and efficacy of psychedelics.

“We have four primary tenets of practice, including education, evidence-based, safety and access,” the report said.

Magellan called on payers, providers, patients, pharmacies, policymakers and other stakeholders to be educated on psychedelics, while simultaneously addressing negative stigmas surrounding the drugs, particularly as their past recreational use led the U.S. to classify drugs like LSD as Schedule I substances in 1967.

The report also advocated for evidence demonstrating the effectiveness of psychedelics before they would go to market, with future recommendations and coverage determinations supported by clinical evidence. Additionally, the report called for safety standards and processes, good manufacturing practices and reliable delivery methods to be established for the marketing of psychedelics.

Lastly, the report recommended that dialogue be engaged with influencers regarding supply entering the market. This is to be done “in a manner that is responsible from a regulatory and legislative perspective as well as sustainable from a quality and supply chain angle,” the authors noted.

Among the notable developments in psychedelic business transactions stateside has been Canadian company Delic Holdings Corp. finalizing its purchase last November of Ketamine Wellness Centers Arizona LLC for $10 million. The deal resulted in Vancouver-based Delic becoming the largest psychedelic wellness provider in the U.S.

In early March, San Francisco-based Cerebral Inc. announced a partnership with Toronto-based psychedelic-assisted treatment provider Field Trip Health Ltd. Under the partnership, Field Trip will refer its patients to Cerebral’s online platform for comprehensive general psychiatry and teletherapy services, in exchange for Cerebral referring qualifying patients to Field Trip.

Also within the last year, Vancouver-based Origin Therapeutics launched to make equity investments in privately held companies in the psychedelics space.

“Ultimately, the U.S. is the prize, but for now, we’re focused on companies that are operating in Canada and conducting clinical research in certain European jurisdictions — the U.K. and the Netherlands,” Origin CEO Alexander Somjen told Behavioral Health Business last August. “We’re still a ways off from the U.S. being viable.”

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