The Revealing Economics of Psychedelics

In the 1950s, R. Gordon Wasson traveled to Huautla de Jimenez in Oaxaca, Mexico, to study fungi and experiment firsthand with "magic mushrooms." His experience, captured in a 1957 article in Life magazine, found further validation that same year when a Swiss chemist, Albert Hofmann, extracted the psilocybin from some dried Psilocybe Mexicana mushrooms. Soon psilocybin was available in pill form for use in psychiatric research, which continued until the designation of LSD and mescaline in 1970 as Schedule I drugs.

Today, interest in psilocybin as a potential treatment for many mental health issues is in its heyday, and a whole economy has emerged around it. The size of the global psychedelic drugs market was valued at $2.9 billion in 2023 and is estimated to reach $8.7 billion by 2033. This new "economics of psychedelics" involves some key factors and considerations....

The Hype About Psilocybin and Psychedelics

Not every potential psychiatric medication undergoing clinical trials generates this amount of hype, as evidenced by the disproportionately heavy money pouring into psilocybin research and the companies and institutions that conduct or support it:

? Leading universities across the U.S. and worldwide have formed whole centers dedicated to studying the therapeutic promise of psychedelics. Johns Hopkins launched its Center for Psychedelic and Consciousness Research after a $17 million donation from a group of private donors.

? Between 2019 and 2024, there have been 104 studies of psilocybin alone, supported by millions in grant money.

? The year 2023 saw record investment in the psychedelic sector: more than $2.5 billion. Meanwhile, billionaires like PayPal co-founder Peter Thiel have been pouring millions into these drugs.

The Economic Burden of Mental Health Disorders

As exorbitant as they might seem, these costs to investors are still a fraction of the total cost of mental health issues in the U.S.--a whopping $282 million annually, according to an April 2024 article in U.S. News. The debilitating burden of disorders like depression, PTSD, and alcohol and drug use for employers, the healthcare system, and the larger economy is often appealed to, persuasively, as good reason to invest in psychedelic treatment for these and other conditions.

The Hidden Costs of Psychedelic Therapy

So far, no psychedelic drug has been approved by the Food and Drug Administration to treat any psychiatric disorder, on account of the risks. These and reported instances get little mention in all the hype about the drugs' reported benefits. That hasn't stopped providers from offering "psychedelic therapy." It typically consists of a few sessions with a clinician who has been trained to supervise and facilitate the therapeutic experience with magic mushrooms or another psychedelic drug.

This treatment is very expensive. Just a few sessions of MDMA therapy can easily cost $11,000 and up per patient, according to sources. Could these costs make it hard for individual patients to one day access psychedelic therapy, if the drugs are FDA-approved? Quite possibly, given the rush by entrepreneurs to profit off these drugs.

Illicit psychedelics sold on the street are relatively inexpensive, by comparison, and have increased in popularity among young adults in recent years, the National Institute on Drug Abuse has said. Is there a connection between this trend and the recent hype around these drugs in the psychiatric world? It may be too soon to say, but the question, which is one of supply and demand, is worth considering.

In the meantime, there remain the less talked about instances of a psychedelic drug potentially causing harm. In the fall of 2023, an experienced pilot tried to bring down an Alaska Airlines plane less than 48 hours after reportedly taking magic mushrooms for depression. Such occurrences point to the potential dangers of psychedelic treatment and its costliness. These, too, need to factor into a discussion of the economics of psychedelics.

COMTEX_455860911/2891/2024-08-01T02:00:36

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