The Psychedelic Revolution
woman behind colorful overlay
Watch, read and listen to L.E.K.’s Adrienne Rivlin’s latest thinking on psychedelics.
Volume XXVI, Issue 21 |

Modern exploration of the therapeutic potential of psychedelics to treat mental health disorders began in the 1950s, and although research was significantly restricted by the US Controlled Substances Act enacted in 1970, psychedelic research has been enjoying a resurgence since the early 2000s. The US Food and Drug Administration (FDA) awarded breakthrough designation to MAPS’ (now Lykos Therapeutics) 3,4-methylenedioxymethamphetamine (MDMA) therapy for treatment of post-traumatic stress disorder (PTSD) in 2017 and Compass’ psilocybin therapy in 2018 for the treatment of major depressive disorder and treatment-resistant depression (TRD). The FDA approved its first psychedelic therapy, Spravato, indicated for TRD, in 2019.

According to a recent analysis conducted by L.E.K. Consulting, investment into psychedelic therapies has increased in recent years, peaking at c.US$1.6 billion in 2021 (see Figure 1)1, and the global psychedelics market is estimated to grow by c.14% per annum to reach c.US$13 billion by 20302. There are currently more than 40 psychedelic assets in clinical development. Psychedelic trials are mainly targeting depression, anxiety and addiction indications where there is significant unmet clinical need, and the majority are being developed as psychedelic-assisted psychotherapy; exceptions to the requirement for accompanying therapy include some dimethyltryptamine (DMT), 5-methoxy DMT (5-MeO-DMT) and ketamine assets. Their efficacy appears promising, particularly in patients who have not responded to other therapies, with strong readouts from recent late-stage clinical trials such as the Lykos MDMA phase 3 in PTSD and the Compass psilocybin phase 2 in TRD. 

As pipeline psychedelic therapies progress though the key milestones in clinical development, the companies developing them are turning their attention towards understanding the requirements for successful commercialisation. Along with the regulatory and supply chain challenges posed by manufacturing-controlled substances, the psychotherapy element included in most psychedelic treatment regimens also creates significant commercialisation risks that will need to be managed.

Overview of psychotherapy

Psychotherapy, or ‘talk therapy’, can take many forms but overall seeks to treat mental, emotional and behavioural disorders through verbal and psychological techniques. It can be offered independently or alongside pharmacotherapy and is the standard of care for many psychiatric disorders. 

Mainstream psychotherapy techniques are based on the various ‘schools’ of psychotherapy that practitioners and therapists adhere to, driven by different hypotheses of the human psyche and their implications for the underlying cause of mental disorders. Mainstream psychotherapies are based on three key elements3, and five common factors4 (see Figure 2); common factors are not specific to any particular school of therapy and together account for most of therapy effectiveness. However, each form of psychotherapy uses different methods and techniques to support the patient, and has varying treatment goals and outcomes, which may or may not precisely follow the three key elements outlined in Figure 2. Despite growing demand for psychotherapy, there is no single credential governing body responsible for regulating policies or guidelines on best practices.

Psychotherapy is offered by mental health professionals including psychiatrists, psychologists, clinical social workers, counsellors and psychiatric nurses. In the US, psychotherapists must be licensed in order to practise and therefore require a master’s degree in psychology, counselling or a related field. Modern psychotherapy is often delivered as a package of sessions (e.g., 8 sessions of cognitive behavioural therapy (CBT)) and follow on therapy may be provided depending on the outcome. Psychotherapy is delivered in a range of care settings, with most patients beginning their care journey in an outpatient setting, such as a private clinic, community mental health centre, university or school, and digital platforms are also increasing in popularity. Although a minority, some patients require inpatient care in a general or psychiatric hospital setting. 

How does psychotherapy feature in psychedelic treatment regimens?

Several late-stage clinical studies have demonstrated the efficacy of psychedelic-assisted psychotherapy in treating psychological disorders including PTSD, alcohol use disorder (AUD) and TRD (see Figure 3)5. Most psychedelic treatment regimens currently include some form of psychotherapy, with the exception of ketamine and DMT treatments for depression and addiction, which have a fast onset and a short duration of action.

“Our clients are working with a broad spectrum of psychotherapeutic support models across disease areas and compounds. These span from minimalist 'dosing monitors', who refrain from administering any psychotherapeutic intervention before, during, or after dosing, to elaborate psychotherapy protocols rooted in Cognitive Behavioural Therapy (CBT) paradigms. The jury is out on which of these approaches will be most efficacious at this stage. However, irrespective of the model selected, our programmes are focused on ensuring consistency within the trial (and ultimately real world) setting through: recruitment of best-in-class therapists, comprehensive training and implementation of robust monitoring and feedback mechanisms”

— Tom McDonald, CEO, Clerkenwell Health* 

Psychedelic-assisted psychotherapy regimens sometimes use a specific therapeutic approach (such as ACT, CBT, IPT, etc.), but are typically made up of three distinct phases, and the timing and form of the psychotherapy sessions within each phase vary according to the indication and the psychedelic being used:

  • Preparation phase — This can vary in total duration from approximately two to 10 hours. The objective is to set clear intentions for the treatment, introduce the psychedelic treatment model and train participants in skills that may be useful in the psychedelic experience (e.g., mindfulness, breathing exercises).
  • Drug sessions — These can last between approximately 45 minutes (ketamine sessions) and eight hours (psilocybin sessions) and are usually supervised by one or two qualified healthcare professionals. Sessions may be directive, where therapists direct patients’ attention towards issues that are relevant to treatment and support them through the process (e.g., ketamine-enhanced psychotherapy for AUD or PTSD), or non-directive, where therapists only aim to keep the participants’ attention directed inwards and provide support during challenging moments (e.g., psilocybin-assisted psychotherapy for TRD, MDMA-assisted psychotherapy for PTSD).
  • Integration/debriefing phase — The duration of this phase is typically two to three hours, with non-directive psychotherapy sessions occurring in the days and weeks immediately after the drug session. The objective is to process and generalise the insights gained during the psychedelic experience into the patient’s everyday life. In some treatment regimens, a greater number of directive psychotherapy sessions (e.g., CBT, motivational enhancement therapy) may occur over a period of up to six months.

Challenges of psychotherapy

A key challenge for successful commercialisation of psychedelics treatments will be to ensure that there is sufficient physical and human infrastructure to deliver the associated psychotherapy sessions. Capacity for psychotherapy is already failing to meet demand in key markets, with c.60% of therapists claiming not to have openings for new patients in the US in 2022, and growth in demand has outstripped growth of supply over recent years.

Approximately 12,000 therapists are estimated to be needed to reach peak capacity in the US for the psychedelic therapies currently in clinical development. This is expected to be feasible in the long term (c.6% of the existing c.200,000 active therapist licences), but it is likely to be challenging to meet initial levels of demand when these therapies are first launched. Therapists will require retraining to administer psychedelic-assisted therapy, which can often involve self-funding a nine-month course costing c.US$10,000 for novice therapists, or a shorter (a few days long) and lower-cost training for more experienced therapists. Furthermore, specialised clinics may need to be established to administer drug sessions as Risk Evaluation and Mitigation Strategy programmes limiting psychedelic use to certain centres may be imposed to alleviate safety concerns and improve regulator trust.

The high variability and complexity of patients, their circumstances and psychotherapy settings (i.e., the type and timing of psychotherapy sessions, quality of the therapist, etc.) in psychedelic clinical trials have created challenges for replicability and generalisability of results. This has contributed to continuing uncertainty about how psychedelic-assisted psychotherapy will be managed by insurers, medical systems and regulatory bodies.

Proposed psychedelic therapy treatment models are also time and resource intensive and therefore expected to have relatively high cost compared with current standard of care (e.g., US$11,500 for one Lykos PTSD treatment regimen versus the much lower cost of standard of care therapy such as selective serotonin reuptake inhibitors). Historically, access to psychedelics therapy has relied on a combination of patient out-of-pocket funding and via manufacturer-sponsored clinical trials. This is starting to change since the American Medical Association issued first Current Procedural Terminology (CPT) III code for psychedelic therapies, thus providing healthcare professionals some means to seek reimbursement. However, given the uncertainty about the number of treatment sessions required per patient, this relatively high cost of treatment still has the potential to create market access issues that will also need to be resolved.

Potential solutions

Successful commercialisation of psychedelics and their integration into psychiatric standard of care will require input from a wide range of stakeholders to build the market. Initiatives to address the key challenges for commercialisation could include:

  • Investment in therapist quality beyond just qualifications or experience to ensure that psychedelics are appropriately administered by high quality therapists. This would help standardise the role of psychotherapy approaches, such as CBT, in psychedelic treatment regimens, and help ease the confidence of regulators / insurers in this therapeutic approach - both of which are important for commercialisation. Once therapist quality is established and the role of psychotherapy in psychedelic-assisted psychotherapy standardised, development of clear guidelines and incentives for psychotherapists to follow best practices, and implementation of training programmes based on these standardised guidelines, would also be necessary.
  • Adopting digital approaches to increase capacity in the market, reduce the cost of treatment and increase standardisation of the psychotherapy element of the treatment regimen. Digital psychotherapy could be offered as an adjunct to in-person therapy, such as through a companion digital tool or additional digital psychotherapy sessions, or as a standalone, comprehensive digital patient engagement solution. Prescription digital therapeutics are already being used to deliver standardised versions of traditional behavioural therapies (e.g., Somryst CBT treatment for insomnia) and can be enhanced with artificial intelligence to deliver more personalised treatments. A number of psychedelics players, including Compass, atai and MindMed, are currently exploring a range of digital offerings.
  • Using group therapy and task shifting to reduce the total number of therapists required and increase capacity in the market. Whilst this may not be appropriate for dosing sessions, group therapy sessions in the preparation and debriefing/integration phases of treatment could reduce the total number of therapists required to commercialise psychedelic therapies. Moreover, task shifting in the form of using less qualified but carefully selected staff (e.g., community health workers) to deliver psychotherapies could be used to address the shortage of professional therapists, especially in the low- and middle-income countries, where there is a limited number of specialists that need to be freed up for dealing with more complex cases.
  • Personalising the number of psychotherapy sessions offered as part of the psychedelic treatment regimen. There is significant variation in the number and duration of the sessions required for each psychedelic therapy, however they are usually offered as a standardised package, which includes a fixed number of sessions. Personalised treatment regimens with varying number / duration of sessions on a case-by-case basis depending on patient needs could reduce the therapy infrastructure required to commercialise these regimens.
  • Finding further evidence to determine whether psychedelics are effective treatments by themselves or whether they act as catalysts for the treatment provided by psychotherapy. Data from Compass Pathways’ phase 2 trial shows patients have a dose-dependent response to psilocybin, which indicates that psilocybin has a pharmacological effect, a finding that is critical for it to be recognised as a new treatment option in the future. If further evidence could be generated to elucidate the treatment mechanism and understand whether psilocybin is efficacious by itself as a treatment for TRD, it would potentially enable psilocybin to be administered under the supervision of a person who is not a licensed psychotherapist, solving the potential capacity challenge. Furthermore, under existing regulatory models, regulatory bodies such as the FDA review the efficacy and safety of drugs, not psychotherapies; evidence to illustrate the mechanism of action of psychedelics would therefore most likely facilitate the regulatory approval process.


How L.E.K. Consulting can help

As mental health assumes an increasingly prominent role in the healthcare system, we help organisations address a range of key issues, creating value for our provider clients and across the investment landscape. We assist clients with their commercial and growth strategy, supporting them in growing sectors such as psychedelic drugs. Our approach helps organisations consistently make better decisions, deliver improved business performance and create greater shareholder returns.

To find out more and for a further discussion, please contact Adrienne Rivlin, Partner.

L.E.K. Consulting is a registered trademark of L.E.K. Consulting. All other products and brands mentioned in this document are properties of their respective owners. © 2024 L.E.K. Consulting

1L.E.K. Consulting Executive Insights, Exploring the Psychedelics Landscape: Looking Ahead to Funding in 2024 ...
2MarketWatch; Data Bridge Market Research; Market Industry Reports; Research and Markets
3NIDA; Journal of addiction medicine
4Wampold, 2015; L.E.K. research and analysis 
*Clerkenwell health are a contract research and psychedelic-assisted therapist training organisation

Questions about our latest thinking?

Related Insights