New FDA Guidance on Psychedelics Could Open Minds, Funding Sources

New FDA guidance on psychedelics changes little for researchers but could open minds and funding sources.

This story was reprinted with permission from Crain’s New York and written by Amanda D’Ambrosio.

Last month, federal regulators released research guidance for classic psychedelics, marking the first time the government has offered suggestions for studying medicines like LSD, MDMA and psilocybin to treat mental illness. The draft guidance signals a shift in the medical community’s perception of psychedelic medicine—a field that has previously been deemed fringe.

Local researchers and biotech companies say it doesn’t impact them much.

“In that guidance document, there’s nothing surprising,” said Rob Barrow, chief executive of MindMed, a Midtown-based biotech company investigating psychedelic drugs, especially for companies that have been in conversation with the FDA about their research.

While researchers say the guidance will not drastically change how they study the substances, it does have an impact on two major hurdles facing the burgeoning industry: public perception and funding.

“I think one of the biggest potential upsides is that it communicates (the FDA’s understanding of this research) to the broader world—whether that’s providers, patients, investors, researchers,” Barrow said.

The organization’s engagement with previously taboo substances signals a shift that the FDA is engaged in legitimate conversations about clinical trials for these medicines, also opening more doors for potential funding.

The FDA’s proposed guidance comes as general interest in psychedelics has increased, and industry experts estimate the drugs will grow into a multibillion-dollar industry. While interest in the field has grown, most of the funding for research has come from donors and biotech companies.

Dr. Michael Bogenschutz, director of NYU’s Center for Psychedelic Medicine, said that most funding came from philanthropy organizations until around five years ago, when private funders and biotech companies began entering the space. The Center for Psychedelic Medicine, which launched in 2021, received $5 million in funding from MindMed to train researchers.

Public funding, which supports critical research that can bring treatments from clinical settings to the real world, has been sparse. But despite limited funding from the government, the field has published research showing the promising potential of these therapies.

In recent years a few randomized clinical trials, the gold standard in medical research, have shown that psilocybin-assisted psychotherapy might improve major depressive disorder or alcohol use disorder.

“The very early small studies that were done on limited funding were extremely promising,” Bogenschutz said of psilocybin, noting that evidence is still lacking on whether the drug is safe and effective.

But in order to conduct the studies that further investigate the safety and efficacy of psilocybin and other psychedelic drugs, researchers need funding from a key source—the government.

“This is something that needs the kind of investment that all potential therapeutics get—government funding,” said Dr. Rachel Yehuda, director of Mount Sinai’s Center for Psychedelic Psychotherapy and Trauma Research. Currently, trials of MDMA and psilocybin led by Mount Sinai researchers are funded by philanthropy.

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