Psychedelic medicine has regained momentum in 2025. Investors are coming back, regulatory attitudes are softening, trial results are improving and major pharmaceutical firms that kept their distance are starting to pay attention.
Author
- Sandy Brian Hager
Senior Lecturer in International Political Economy, City St George's, University of London
This is quite a turnaround for a sector whose share prices collapsed and whose funding dried up when weak trial results combined with rising interest rates in 2022. But enthusiasm should be tempered.
Psychedelic drugs are hard to turn into profitable medicines. Some of the strategies companies are using to overcome these obstacles could ultimately remove the elements that many people believe make them effective in mental health treatment.
My research points to three features of psychedelics that make commercial development unusually complicated.
The first challenge is intellectual property. Developing a new medicine is expensive, and investors only commit money if they think a company can recover those costs later. Patents make that possible: they grant a temporary monopoly, allowing firms to raise prices once a drug is approved.
But psychedelic compounds don't fit comfortably with this model . Psilocybin and mescaline are natural, so companies cannot claim them as inventions.
Synthetic drugs such as LSD were created decades ago, and their original patents have expired. Many of these substances also have well-documented histories of use in Indigenous healing traditions , which makes it harder to argue that therapies based on them are genuinely new.
Firms can still patent delivery methods, formulations or small chemical tweaks. But these protections are narrow and fairly easy to challenge , so they don't provide the kind of security investors look for.
The second challenge is practical. A psychedelic session isn't like taking an antidepressant at home. A psychedelic trip can last six to 15 hours, so patients are prepared in advance of the session, supervised throughout and supported afterwards to help them process the experience. This requires trained staff, clinical space and time.
Health systems and insurers have not yet agreed on how to pay for this type of care, and companies have no clear model for delivering psychedelic therapy at scale . The economics of a treatment that occupies a clinic room and several professionals for most of a working day bear little resemblance to standard antidepressants.
The third challenge concerns clinical testing. Most medicines are evaluated in trials where neither participants nor researchers know who has received the real drug and who has received a placebo. With psychedelics, this becomes obvious as soon as the effects begin. Participants know when they are tripping, and researchers know too.
Some trials experiment with low doses or active placebos that cause mild sensations. But it is unclear whether regulators will treat these designs as equivalent to the gold-standard trials used for conventional medicines. This uncertainty makes it harder for investors to see a clear path to regulatory approval.
Two directions
In response to these challenges, the field is developing in two directions. One route is to develop short-duration compounds like 5-MeO-DMT , which produce a very intense altered state that lasts minutes rather than hours.
A session of that length is easier to supervise, demands fewer clinical resources and does not tie up a treatment room for most of the day. Companies pursuing this strategy have encouraging early results and have attracted renewed investment .
But safety remains an issue: delivering such a powerful psychedelic can be overwhelming, especially when therapeutic support is limited. As one researcher warned , "you don't want to advance the world's most powerful psychedelic experience on the timescale of a dental cleaning".
The other route goes further. Instead of compressing the trip, some companies are trying to remove it altogether with so-called neuroplastogens . These molecules are designed to trigger the brain changes associated with classic psychedelics without the trip.
Because these compounds are new, they offer the intellectual property protection investors look for. They also avoid the unpredictable experiences that make psychedelic sessions difficult to deliver in clinics and are more compatible with the insurance and regulatory systems of conventional medicines.
However, the science behind them is still young , and it is not yet clear whether drugs without the trip can provide the same benefits that drew attention to these compounds in the first place.
Both approaches seek to make psychedelics easier to administer, insure and patent, but they also push the experience itself to the margins.
Many patients credit the psychedelic trip with their progress in therapy. Biotech companies see it as an obstacle to profitability. If that patient view is right, commercialised psychedelic medicine may never become the mental health revolution that companies and their investors expect.
Sandy Brian Hager does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
