It was an invigorating conference at Horizons: Perspectives on Psychedelics, October 15–17, 2026, in New York, which featured important views on the health care industry, federal agency preparation for psychedelic drug regulation, reimbursement, and incorporating psychedelics into patient care protocols.
Here are some insights that the Epstein Becker Green team took away from sitting in on these discussions:
Federal Agencies Are Aligned on Expanding Access, but Key Details Remain Open
Federal officials described an unprecedented level of interagency collaboration on psychedelics, with regular meetings and communication at senior levels. The shared goal, they reported, is to expand access while keeping safety in focus. All panelists acknowledged that the severe mental health crisis in the United States and the limited set of available solutions have helped drive federal interest in psychedelics.
If psychedelic products are approved, they would likely be paired with individualized risk evaluation and mitigation strategies (REMS), but the associate director for regulatory science at the U.S. Food and Drug Administration (FDA) emphasized that the agency does not have complete safety data and it remains unclear who would be entitled to prescribe and administer psychedelics. FDA also reported the rapid growth in psychedelic investigational new drug (IND) applications (433 total, of which 40 percent are active), and the representative from FDA’s Center for Drug Evaluation and Research (CDER) noted that psychedelic clinical trials accounted for about one-third of her team’s workload.
A U.S. Department of Health and Human Services (HHS) deputy general counsel credited Executive Order 14401, “Accelerating Medical Treatments for Serious Mental Illness” (Apr. 16, 2026), which included a focus on psychedelic therapies, as the catalyst for the recent interagency collaboration efforts. He reported that agency leaders have been challenged to question their status quo assumptions on the topic of psychedelics. While an executive order can set priorities among agencies and speed up the process for approval, the statutes and regulations governing drug approval still define what ultimately is required to support approval, and a future administration could easily change the direction of development (though broad-based support for advancing these therapies was noted). The moderator asked whether we could expect bifurcated scheduling (under which a specific drug product could be listed in Schedule III while the underlying substance remains in Schedule I), but, perhaps unsurprisingly, the HHS official declined to comment.
The HHS official also raised questions about whether and how federal access and state-regulated psychedelic programs might coexist or whether a federal rollout would create tension with state programs. If FDA approval is followed by insurance coverage, he noted, federal access could become the cheaper route to psychedelic therapy, particularly once medicines go generic and off-label use expands, which could render state-regulated programs superfluous.
The Standards for Approval Matter (but So Do the Decision-Makers)
Panels discussed the standards for approval, and the importance of not diminishing the standards, particularly with respect to patient safety. However, something that was not directly addressed was the decision-makers and, more specifically, where the authority for approval lies for new drugs, including psychedelics.
Under the Federal Food, Drug, and Cosmetic Act (the “Act”), new drug approval authority rests with the HHS secretary, who then delegates it to the FDA commissioner who, through FDA Staff Manual Guides, further delegates to the directors of CDER’s Office of New Drugs; the office for the specific therapeutic area (for psychedelics, the Office of Neuroscience); and, for certain applications, a subdivision within that therapeutic office. Each director, the commissioner, or the secretary can review subordinate decisions, which are generally revisited on administrative appeal (also called “Formal Dispute Resolution” by CDER). Further, original decision-makers may change their views based on new information that a product that wasn’t approved in the past should be approved today.
The standards for approval under the Act—namely, providing “substantial evidence of effectiveness” based on “adequate and well-controlled trials,” and data supporting “safety,” for proposed conditions of use—are flexible standards, subject to individual expert judgment, and they have evolved over time. Changes in how one interprets new data, new public health realities, or simply new ways of thinking could affect outcomes of new drug reviews. As noted by one moderator, a pharmaceutical company recently resubmitted a new drug application (NDA) for a psychedelic product based primarily on Phase III studies that were deemed insufficient to support approval, though likely with some additional clinical safety data, audits and reanalysis of prior Phase III trials, and other information to address prior concerns. An NDA resubmission in response to a complete response letter both provides an opportunity for reconsideration and is necessary to set up an appeal, so it will be interesting to see what comes from the review, and at what level an approval decision might be made.
The VA Is Preparing to Scale, with Spravato® Lessons in Mind
A senior advisor at the U.S. Department of Veterans Affairs (VA) noted that the VA operates more than 53 ketamine clinics and treats thousands of patients annually. Officials reflected on the rollout of Spravato® (esketamine), which was approved in 2019 just before the COVID-19 shutdown, and on the VA’s lack of advance planning for commercial availability, which, per that official, didn’t start until the day of approval.
In anticipation of potential approvals, the VA reports that it has identified clinical deployment sites for psychedelics, has an approved plan with resource requirements, and is targeting 10 sites to be ready by early next year (when MDMA or psilocybin could receive an approval decision). Officials expect initial scarcity, with demand exceeding supply, and view group therapy as essential to scaling. The agency’s goal, according to the VA representative, is to get veterans the treatments they need as quickly and safely as possible, noting that approximately 17 veterans die by suicide each day. This creates tension between deliberate safety review and urgency.
The VA official also emphasized that the veteran population differs from typical trial participants. Clinical trials tend to include young, female, and healthy participants, while a typical veteran may be an older man with multiple comorbidities and prescribed medications. Differences in experience between older and younger generations regarding recreational psychedelic use are another potentially material factor in demographics. The VA official stated the agency’s intention is to increase clinical trials of drugs that support veterans and to build a research portfolio accordingly.
Capital Is Flowing In
Investors and pharmaceutical companies are moving at an unprecedented scale into the psychedelics ecosystem. A senior advisor at a life sciences investment firm described the field as investable because of its increasing predictability. Panelists noted that most current funding is flowing through mergers and acquisitions, the investor base is changing, and large pharmaceutical companies are now actively involved, drawn by a significant unmet mental health need and the prospect of addressing a broad range of indications.
However, investors still face uncertainty. Layers of regulatory, operational, and payer considerations increase risk. Additionally, physicians may initially be highly controlled in prescribing, which could disappoint investors focused on near-term returns. One panelist noted that, despite the fanfare accompanying Executive Order 14401, the order did not affect their current projections.
Because current developers have not publicly sought changes in how FDA interprets evidence of effectiveness and safety, the standard for approval has effectively remained the same, which simplifies an insurer’s task. New considerations that psychedelic drugs uniquely present in comparison to other prescription drugs include long periods of monitoring, leasing or purchasing real estate for clinical sites, and heavy workforce needs, which could drastically shift the calculus.
Reimbursement Is the Next Frontier
The standard reimbursement channel, through commercial and government insurance, remains challenging because of prior authorization and commercialization hurdles. A panel covering reimbursement pointed to an alternative model through self-funded employer plans, including, for example, directly contracting with smaller health plan sponsors under the Employee Retirement Income Security Act, relying on centers of excellence where vendors bundle services and sell them to employers, and cooperating with third-party administrators. One panelist estimated these channels could affect 1.5 million people and accelerate access by five to seven years. However, state-level training and credentialing standards remain open questions.
On the government side, panelists emphasized the potential value of new therapies, noting that millions of enrollees annually experience major depressive events, and that mental health disorders are usually accompanied by physical health issues. The net result of mental and physical comorbidities is more frequent visits to emergency departments and longer stays at hospitals, which create substantial burdens on the government’s fiscal resources.
Panelists acknowledged the need to establish viable reimbursement models, but the industry needs to pressure-test what works. Experts are working on modifying the standard Evaluation and Management (E&M) code’s 15-minute increment mechanism to an hour-based increment model for these therapies, sorting out what should be included in a single “episode of care,” and considering whether and to what extent specialty pharmacies will play a role in the industry.
Manufacturers also need to account for key barriers to adoption by prescribing providers, including understanding the evidence supporting the therapeutic use case, ensuring that patients are supported, and keeping prior authorization and utilization management processes from becoming overly burdensome.
Ibogaine Demonstrates the Regulatory Challenges Ahead
Ibogaine, one of the most promising psychedelic drugs at the moment, presents distinct obstacles. Panelists pointed to documented cardiotoxic risk, the need for rigorous Phase I data, the lack of a U.S. Good Manufacturing Practice-compliant manufacturer, and a Drug Enforcement Administration production quota that panelists characterized as serious hurdles for research. The implication was that despite reference to ibogaine in Executive Order 14401, other psychedelics might see a shorter time to approval.
Conclusion
Taken together, the discussions reflect a field moving from the fringe to a legitimate pathway to access. Open questions about insurance coverage, REMS requirements, state standards, and the durability of federal policy are now practical issues to address. They are also ripe to tackle now if industry wants to avoid a gap between FDA approval and meaningful adoption of these therapies by the medical and patient communities. Stakeholders should plan for both opportunity and regulatory flexibility and engage early.
We look forward to remaining involved as the psychedelics field expands and develops in the coming months and years. If you have questions about how these developments may affect your organization, please reach out to any of us.
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The Health Law Advisor blog is currently edited by Emily Chi Fogler.
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