Psychedelics Must Be Based in ‘Traditional Psychiatric’ Care

For all the hype, psychedelics such as MDMA or psilocybin won’t succeed as a treatment or service line without substantial clinical support within behavioral health organizations.

As recent ketamine-provider stumbles demonstrate, simply establishing access to and attempting to scale singular forms of treatment tend to lead to failure. Further, such treatment-specific ventures fail to address the holistic nature of health and the fragmented reality of the American health care system. 

New therapeutics could be beneficial for treating various aspects of mental illness. Just regarding depression, an estimated 2.8 million Americans have treatment-resistant depression (TRD), or depression that fails to improve with two or more interventions. The same research estimates that TRD lays a $44 billion burden on the country in terms of health care costs, productivity losses and unemployment.


Still, the need or opportunity for innovation to do good is different from demand. And innovation without some foundation in well-known and successful operations walks a tightrope without a net.

“I’m not sure how anyone could build a sustainable business around a particular drug, such as ketamine,” Dr. Steve Manlove — founder of Advanced Brain and Body Clinic in Minneapolis, and Manlove Brain and Body Health in Rapid City, South Dakota — told Behavioral Health Business. “We’re not in the ketamine business, though we do a lot of ketamine treatments. Ketamine is not in our clinic’s name. … It’s simply one of the most effective medications for treatment-resistant depression, anxiety, PTSD and more.”

Manlove launched his firm after frequent failures with antidepressants in treating patients with depression. His approach was to add together all the options available to treat TRD. That included fusing transcranial magnetic stimulation (TMS), psychopharmacology, brain health and psychotherapy into a holistic care regimen with a 75% success rate among TRD patients. 


And clinicians may soon have psychedelics to add to that arsenal of treatments for depression and comparably difficult-to-treat mental illnesses. Reporting by The Intercept shows an expectation within the Biden administration that psilocybin and MDMA will be approved for treating depression and post-traumatic stress disorder by mid-2024. 

Research on the effectiveness of psilocybin specifically is very promising. One study by researchers at Johns Hopkins Medicine found that the impact of a course of treatment with psilocybin and other mental health support lasted “well beyond the duration of effects reported with ketamine.”

“Psilocybin not only produces significant and immediate effects, it also has a long duration, which suggests that it may be a uniquely useful new treatment for depression,” Roland Griffiths, the founding director of the Johns Hopkins Center for Psychedelic and Consciousness Research, said in a related news release.

The excitement for new and better treatments partly fueled the enthusiasm around scaling up ketamine therapy centers. Many scaled ketamine companies also meant for their businesses to be platforms for the anticipated federal approvals of psychedelic medicine. However, Ketamine Wellness Centers and Field Trip Health & Wellness, two of the largest ketamine therapy providers in North America, are effectively defunct after failing to generate enough interest and, therefore, revenue to keep up with capital demands.

“The excitement and enthusiasm and support around continued research and psychedelics [are] clearly there,” Michael Kuntz, chief operating officer of psychedelics training and education platform Fluence, told BHB. “But to me, the excitement and the enthusiasm [are] much further ahead of the reality in terms of what it takes to stand up and operate and successfully sustain a business within psychedelics.”

Psychedelics based in psychiatry

Several psychiatric practices have included ketamine therapy at the local level, even setting up clinics marketed in major metros where awareness of the drug’s use as a mental health treatment is more common. However, sometimes the care is delivered by psychiatrists, other times by anesthesiologists, trained in using compounds such as ketamine.

But this type of doctorate-level oversight on patient care is often lacking. 

“Most of the time, it’s not on the foundation of a traditional psychiatric practice,” Dr. Abid Nazeer, co-founder and chief medical officer of Advanced Psych Solutions, told BHB.

Nazeer founded his practice in 2016 and was the second center offering ketamine therapy, the first to be provided by a psychiatrist, in Illinois, he said. His practice has three locations — in Chicago, Naperville and Oak Brook.

Patients that look to ketamine — and may look to psychedelics — for relief after failures with other treatments are often complicated and require full psychiatric support. That’s often lacking among scaled ketamine therapy providers. 

This fragments care, Nazeer said, making it harder to ensure care quality. On the business side, sustainability can only pick up at scale if several health plans start to cover the treatment.

Many insurance plans won’t cover services provided by clinicians operating outside of their scope of practice. IV ketamine therapy, the primary intervention offered in clinics, is not often covered by insurance because ketamine as a mental health intervention is an off-label use of the compound.

“It’s proven there’s a demand for effective treatments considering the traditional treatments have always suffered from poor efficacy rates,” Nazeer said. “The field needs new treatments that are effective. And I think that part of it is getting widely accepted — that there are new ways to approaching this.”

Despite psychedelics’ promise, they aren’t necessarily a first-line option. Nazeer’s practice also offers TMS, esketamine (a low-dose nasal spray version of ketamine) and psychotherapy. 

San Francisco-based Mindful Health Solutions — which lists 24 locations in California, Georgia and Texas — offers ketamine as part of a suite of step-wise service offerings that are meant to start patients at less intense treatments and work them up through to IV ketamine, CEO John Minahan told BHB.

Encompassing, psychiatric-based services allow patients access to a range of services should one fail or if a patient has a bad experience with another.

“If all I have is a ketamine clinic, I want a diagnosis for the patient to use ketamine, right?” Minahan said. “But for us, the right answer is what is right for the patient.”

Infrastructure for psychedelics is pending

It will take time for the market to accept psychedelics and for payers to cover the services. Further, there are specific facility and staff needs for psychedelic hopefuls to establish before they can offer it once it clears regulatory approvals.

Sessions can last six to eight hours and require two therapists on-site to guide and oversee the experience.

“It can’t be in the middle of all the hustle and bustle of a fully operational clinic — that just doesn’t fit when you’re in an altered state of consciousness,” Nazeer said.

On the payer front, the very beginnings of the business infrastructure to track and bill psychedelic treatments are just now beginning to come out.

At the beginning of May, the American Medical Association (AMA) announced the creation of a Current Procedural Terminology (CPT) III code for psychedelic therapies. The details of the code will be released later in the summer and may be effective as of Jan. 1, 2024, according to a joint announcement by a biopharma company developing a TRD-psilocybin treatment called COMPASS Pathways plc (Nasdaq: CMPS) and MAPS Public Benefit Corporation, an organization dedicated to accelerating the commercialization of psychedelic therapies.

The two organizations collaborated in lobbying for the creation of the code.

Still, even with investments in business development and business infrastructure, there are a handful of unresolved questions and market trends that may severely limit the application of psychedelics in behavioral health.

The U.S. faces a well-articulated maldistribution of mental health clinicians generally and an outright shortage of psychiatrists. Previous research has found that by 2024 the U.S. could be facing a shortage of 14,280 and 31,091 psychiatrists to meet prevailing needs, depending on the assessment of need. Hundreds of counties in the U.S. lack a single psychiatrist in the first place.

And even if there were enough psychiatrists to meet needs, not all would be willing or even ready to administer psychedelics as a form of therapy, creating another training pipeline issue for the behavioral health industry.

Training organizations such as Fluence seek to address the bottleneck between clinicians and the use of psychedelics.

“It’s easier to scale medicine than it is to train therapists to deliver the treatment,” Fluence CEO and co-founder Ingmar Gorman told BHB. “By solving this challenge through Fluence, we’re helping put psychedelics into practice.”

He added that psychedelic-specific training and credentialing could be required before a provider could use psychedelics in their practice. Insurers may require providers to get specific training, while other bodies could demand a demonstration of competency to provide psychedelics.

In addition to training community-based providers, Fluence partners with pharma companies to help train clinicians participating in clinical trials.

“It cannot be overstated how different psychedelics are from our current pharmacological toolkit,” Gorman said. “If the behavioral health industry is trained and recognizes how these compounds are different from existing medicines, we’ll be able to optimize outcomes while dramatically reducing the frequency of adverse reactions.”

Fears of abuse or harm from psilocybin have been the predicate for the federal government to keep the compound off the commercial markets. Psilocybin is a Schedule I compound, according to the Drug Enforcement Administration. The DEA and the Food and Drug Administration assess the medical use, potential for abuse and safety liability of compounds. This means that, barring a major change, psilocybin is forbidden from being used in treatment.

London-based COMPASS Pathways acknowledges this hurdle but says that FDA approval of its lead depression intervention, COMP360, would necessarily mean that the highest schedule it could receive is Schedule II. It was granted the Breakthrough Designation by the Food and Drug Administration in 2018.

“If or when COMP360 receives FDA approval, we anticipate that the DEA will make a scheduling determination and place it in a schedule other than Schedule I in order for it to be prescribed to patients in the United States,” COMPASS Pathways said in its latest annual financial filing. “This scheduling determination will be dependent on FDA approval and the FDA’s recommendation as to the appropriate schedule.”

Some organizations seek to span across providers and the biopharma research segments, such as Numinus Wellness Inc., a Vancouver, British Columbia-based Numinus. The company operates a clinical network and a research division.

The company focuses on integrating several aspects of care in its business, Payton Nyquvest, the founder and CEO of Numinus, told BHB.

“We believe we offer the totality of what needs to be offered to support people through psychedelic therapy, including traditional mental health support, community support, training, all of those kinds of necessary pieces that have to be built with and coincide with psychedelic therapy,” Nyquvest said.

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