The entire psychedelic industry is holding its breath in anticipation of the long-awaited FDA approval of MDMA. It will certainly be a big step for the sector, but it is only one of many. Once the drug is approved for medical use, there is a lot to be done to overcome the issues that the Multidisciplinary Association for Psychedelic Studies (MAPS) will face while commercializing the drug for medical use.
The FDA approval of MDMA for the treatment of PTSD is pretty much set in stone. Of course, there is always the possibility of some speed bumps. But, the data from the MAPS study makes it nearly impossible for the FDA to ignore the incredible healing potential of the drug. As a result, it will likely be approved within the next year. Many experts are predicting it to go through in the first quarter of 2024. However, what comes next is a little less certain.
People are preparing for the inevitable approval of the drug as much as possible, but there will inevitably be some issues faced while bringing the treatment to market. Despite the issues that MDMA commercialization will face, there will also be some positive changes for the industry as a whole. One thing is for sure, the next few years will hold both challenges and major wins for the psychedelic industry.
Potential Challenges and Mitigation
Perhaps the biggest issue that MAPS will face while commercializing MDMA-assisted therapy is the lack of infrastructure available to ensure a rollout that is able to meet the predicted high level of demand. This is going to be seen in two areas— the number of qualified therapists and adequate clinic spaces. The leaders in the psychedelic industry have been aware of this issue for quite a while. While they are working to prevent the problem of inadequate supply, it will inevitably affect the rollout of the MAPS psychedelic-assisted therapy program.
MDMA-assisted therapy requires a specific design and functionality of space that simply doesn’t exist in the numbers needed. The estimated demand for treatment will require about 16,000 clinics in the US. It is going to be incredibly challenging to meet that demand.
There are currently around 2700 ketamine clinics in the US. While several ketamine companies are interested in expanding to offer other psychedelic compounds as they become available, only about 5% of their clinics will be able to accommodate the needs of MDMA-assisted therapy.
Ketamine infusions require less room because they only take about 40 minutes. MDMA clinics will require rooms with enough space for the patient to be comfortable for around 6-8 hours. It will need to include a bed for the patient to lie down on during the experience, as well as a bathroom nearby so that they aren’t wandering around the clinic while under the influence of a strong entheogenic. It will also need space for a physician and a therapist to be with the patient throughout the whole experience. That is why it will be difficult for ketamine clinics to convert into spaces that can be used for treatment with other psychedelic compounds.
Ketamine treatment, since it is a dissociative, also requires less attention to “set and setting.” Clinics designed for other psychedelic and entheogenic treatments, like MDMA or psilocybin, will likely have more attention to details that will affect the psychedelic experience.
MDMA clinics will have to be built out specifically to accommodate the needs of this unique therapy, which is a costly endeavor. There are many businesses and therapists who are excited to offer MDMA therapy once it is approved. However, it is risky to build out these spaces before it is even possible to offer the drug.
Though many of the top experts in the psychedelic sector are predicting that approval will come in the first quarter of 2024, that is not definitive. It may be sooner, or it may be later. A company would need significant cash on hand to be able to risk building out the spaces before they know when the clinics will be able to start producing revenue. Small, independent clinics simply cannot spend that kind of money until they know that there will be returns.
One solution to this problem has been presented by Healing CREI— a real estate investment fund started by Cody Shandraw (president), Daniel Carcillo (COO), and Ty Zakoveich (CEO). Shandraw is an investor in the psychedelic sector who saw a significant unmet need and is attempting to address it before it becomes a major issue for the commercialization of MDMA.
The fund is committed to helping established practitioners build out the space that they need to offer treatments with compounds such as MDMA and psilocybin. Their work will certainly help bridge the anticipated gap between supply and demand for MDMA-assisted therapy. However, there is absolutely no way to completely rectify this issue before the upcoming FDA approval.
The other big issue with supply is the number of therapists qualified to be offering this type of treatment. Once again, the needs for MDMA treatment are going to be vastly different than the needs of traditional therapy or even ketamine treatment. The therapists offering preparation and integration services will likely be able to cross over to MDMA quite easily. However, it is a different story when it comes to the skills required to sit with a patient throughout their psychedelic experience.
Providing psychedelic therapy requires a unique set of skills that take time to acquire. Companies such as Fluence and Numinus are attempting to address this issue by offering training courses. Fluence has gotten significant attention from major psychedelic investment funds who, like Cody Shandraw, are attempting to address a major foreseen roadblock to the commercialization of MDMA.
MAPS had been attempting to address this issue as well. However, they were forced to shut down their program by the FDA, which did not want them preparing to commercialize a drug that is not yet approved. Like the issue with the lack of clinic spaces, it will be impossible to overcome the lack of qualified therapists by the time the drug is approved. It will take a few years to produce the predicted 30,000 psychedelic therapists needed to meet demand.
Recently, MAPS and Numinus announced a partnership that will attempt to start solving this problem. Numinus has been developing a network to help support the rollout of MDMA-assisted therapy and other psychedelics in the future. Its CEO, Payton Nyquvest, said on The Dales Report recently that Numinus was created based on this question: “What is an organization like MAPS gonna need to really be successful?”
Numinus is working to do just that. At the MAPS conference in Denver this week, Numinus will be working on networking with practitioners so that the company can help ensure that they are starting to flood the market with qualified psychedelic therapists. Nyquvest also told Shadd Dales that this is the primary issue facing the industry right now. According to him, the number of available clinic spaces is irrelevant if there aren’t enough therapists to fill them. He has a point, and MAPS seems to agree with this as well.
This new partnership is a big indication of where MAPS is focusing its efforts as it transitions from a research organization to commercialization. Another indication — of the approximately 10,000 people attending the non-profit conference, many of them are practitioners, and the conference is geared toward them. MAPS is making a major effort to jumpstart an increase in therapists interested and qualified to provide this novel treatment.
Companies and investors alike are working to solve the inevitable bottleneck in the psychedelic industry caused by a lack of qualified psychedelic therapists and clinics. Oregon is already experiencing this issue, and it will telling to see how quickly the state is able to overcome it. These are going to be two of the biggest issues that the industry faces over the next few years, and they are bound to be some other problems as a result of it.
Ethical and societal implications
There are two additional issues that are likely to affect access to MDMA treatment as a result of the limited supply of treatment. These issues will be apparent in the first couple of years of commercialization. The first is affordability. A full round (three sessions) of MDMA-assisted therapy is going to cost roughly 10-15k. The exact price will not be known until approval happens, but this is a rough estimate given by the CEO of Numinus. The cost includes the drug, therapist supervision, administrative assistance, and additional therapy sessions to help integrate the experience.
Once the drug is approved, insurance will cover the cost of treatment, but only when people use it for PTSD. Current research suggests that it will also be beneficial in treating other conditions, including anxiety, depression, addiction, and even marital issues. However, in order for patients to receive the drug for these issues, it will have to be prescribed off-label, and that will not be covered by insurance.
This is a problem that has been seen before with ketamine. Currently, ketamine is classified as an anesthetic. Clinical studies have shown that it has strong antidepressant effects and is also useful for addiction, anxiety, and PTSD. However, since it is not FDA-approved to treat those indications, insurance will not cover the cost, which is quite high. Patients are forced to pay out of pocket, and many of those who could benefit from treatment are not able to afford it.
This will likely happen with MDMA as well once it is approved. Some doctors may claim that patients are suffering from PTSD, even if they are not so that insurance will reimburse the steep price of treatment. However, not all doctors will feel comfortable doing this. As a result, many people who could benefit from a long-lasting depression, anxiety, or addiction treatment will not be able to obtain it, even if the supply is available.
Another factor that will prevent patients from receiving treatment is geographical restrictions. With a lack of supply on a national level, investors and clinicians are going to focus on the areas with the highest volume of patients.
Healing CREI is utilizing search data from Healingmaps.com to identify areas with the highest need and will be focusing its efforts on building out clinics in areas near VA hospitals. The fund is also looking at areas with a high number of domestic abuse victims, police officers, and firefighters. Perhaps now California will now reconsider decimating its police force!
Patients in rural areas and those without the demographic markers that companies are looking for will not likely have convenient access to MDMA therapy for 5-10 years after it is approved for medical use. Unfortunately, the people in these areas are also less likely to have the financial means to travel a long distance to access a treatment center, especially considering that treatment includes three dosing sessions, which take over 4 hours each, and additional therapy sessions.
It is, without a doubt, an exciting development in the world of psychedelic medicine to have MDMA become a legal medical treatment. However, it would be foolish to think that legalization means complete and total access to the drug. The inevitable shortage of therapists and clinic spaces with the means to support this type of treatment will prevent quick commercialization of the drug. MDMA is not likely to see its revenue spike as quickly as a drug like Spravato has. It will be several years after the initial approval of the drug before all the kinks are worked out.
There is no shortage of investors and businesses making a big effort to tackle these issues before they ever see the day of light. However, it will not be enough. The resources, and people willing to take the risk that is needed to overcome the supply issue, simply do not exist. MDMA commercialization will inevitably face the issues highlighted above. That being said, there will be many benefits as a result of the FDA approval of this novel drug.
On the legal landscape, it is reasonable to expect the FDA approval of MDMA will have only positive effects. Of course, anything can happen. There may be issues that cause regulators to remain cautious about legalizing psychedelics. However, given the smooth rollout of MDMA-assisted therapy, there will likely be an increase in positive political movements surrounding psychedelics in general.
Government officials are already starting to change their opinions on psychedelics, and this will only serve to accelerate the process of legalization. As more research emerges supporting the therapeutic benefits of substances like MDMA, psilocybin, and LSD, policymakers will be compelled to reevaluate their stance on these drugs. The FDA approval of MDMA marks a significant milestone in the recognition of psychedelics as a valuable tool in mental health treatment. This breakthrough will not only benefit patients who have exhausted traditional treatments but also pave the way for further exploration and innovation in the field of psychedelic medicine.
However, it is important to remain cautious and realistic about the potential challenges ahead. While the FDA approval of MDMA is a major step forward, it does not guarantee an immediate and widespread acceptance of psychedelics.
Public Perception and Education
A significant number of people who are still questioning the medical value of psychedelics are those who will not accept these drugs until they gain FDA approval. It is a good thing that it is on its way! The approval of MDMA will go a long way in spreading the already changing social stigmas that label psychedelics as dangerous or, at the very least, lacking medical benefit.
People are already accepting the amazing ability of psychedelics to expand consciousness and promote mental health. Many are turning to psychedelics because the standard healthcare system has failed them. However, there will always be people who exclusively trust the judgment of the FDA when it comes to the safety and efficacy of drugs. Approval of MDMA will help more people access the drug by removing this final roadblock for people who could benefit from the treatment.
Market and industry impact
The FDA approval of MDMA should have positive effects on the psychedelic stock index and increase the amount of capital deployed into the industry. Cody Shandraw said on The Dales Report that he believes it will be easier for psychedelic companies to raise capital after MAPS gets MDMA approved. And he is probably right.
In the early days of the industry (2020 &2021), there was a massive amount of capital being deployed into psychedelic companies. That began to dry up at the end of 2021 for two reasons. First, some Investors realized that it was a much riskier and long-term investment than they had initially thought. Second, the whole economy started going down the toilet, and since psychedelic and biotech companies are some of the riskiest investment opportunities out there, they took a major hit.
People stopped deploying as much capital into the psychedelic industry because it was deemed incredibly risky for several reasons. Primarily, putting money into companies whose intended market is not yet legal poses a lot of uncertainty. So, the approval of a psychedelic drug for legal medical use will go a long way in instilling confidence in investors and hopefully getting more funding for psychedelic companies.
Psychedelic stocks are also likely to go up. Just like the amount of capital going into the industry, psychedelic stocks took a major hit starting at the end of 2021. Apart from a brief spike in the third quarter of 2022, the psychedelic stock index has been on a downslope since then. Since this approval will increase confidence in psychedelic companies, it will likely improve the state of the index as well.
All in all, this step towards psychedelic legalization is going to create a positive shift for the psychedelic stock index and companies seeking funding. However, one thing to keep an eye on is whether the predicted influx of capital in the space will cause some issues with which companies are being funded. Back in 2020, when there was tons of capital available, it was deployed into some companies that were not set up for success simply because investors believed that psychedelics would make them a quick fortune. Hopefully, the industry has learned its lesson and will avoid repeating history.
Confirmation that United States regulatory bodies are willing to change their perception and regulations of highly-controlled substances when presented with substantial evidence of their medical potential will likely serve to increase research and innovation into psychedelic compounds. While there is already an abundance of research currently underway, there is certainly room for more.
This development will encourage research and innovation in the psychedelic space to continue growing. Scientific research on psychedelics is still in its infancy, and the promise of legalization will encourage more research from scientists and institutions that may not have otherwise been incentivized to participate in this endeavor..
A Major Step Forward
To sum it up, there will be many significant changes in the psychedelic industry once MAPS secures FDA approval for MDMA. The prospect is exciting for the industry, especially those who have been fighting for the legalization of psychedelics for decades.
There will, without a doubt, be challenges that need to be overcome before MDMA-assisted therapy can reach its full potential, including a bottleneck created by a lack of clinic spaces and qualified therapists. However, this will be a short-term problem that is likely overcome within the first 5-10 years of commercialization.
This major win for psychedelics will positively impact other areas of the industry, such as future steps toward legalization, increased capital available for companies, and shifting stigmas. It will open up gates for new opportunities for companies seeking to make a difference in the mental healthcare space.
The positive outcomes far outweigh the negative. And the negatives aren’t even necessarily a bad thing when you look at it from the right perspective. To have a highly-regulated entheogenic medicine legalized at all is a major win. Many people have fought and worked incredibly hard to get to this point, and while there will inevitably be challenges to overcome, they will be faced with the fighting spirit of the psychedelic industry.