The High Price of Psychedelic Drugs Treatments

Navigating the cost of promising psychedelic drug treatments is a complicated trip. A new report issued by Water Tower Research (WTR), “Thoughts on Pathways to More Robust Payor Coverage for PAT,” looked at the costs patients could be expected to pay for treatments that most insurers don’t cover at this time. For the few payers that do help pay for some of the expenses, the remaining amount owed by patients is still pricey.

WTR analyst Robert Sassoon noted that it based its report on the best sources available and cautioned that the prices might not be accurate. Sassoon also pointed out that current psychedelic-assisted treatment or PAT coverage is patchy and limited.

Without public and private insurance coverage, costs will likely make PAT out of reach for many people who could benefit from it.

Ketamine

Ketamine is the predominant PAT in the market, even though its use is mostly off-label. The demand for ketamine treatments is growing as quickly as the clinics are being built. The report stated that the amount of ketamine treatment clinics has grown from 60 to 300 during the years of 2015-2018 to approximately 500 to 700.

Esketamine is a nasal spray under the brand name Spravato that became the first psychedelic treatment substance approved by the FDA for the treatment of a mental disorder and is often covered by payors. Intravenous and oral use of ketamine is considered an off-label use and often isn’t covered. WTR wrote that the CEO of Field Trip Health said at a recent investor conference that patients are seeing between 10% and 60% of the costs. These treatments can range between $750 and $1,000 a session. Patients usually need four to six sessions leading the costs to hit roughly $6,000 per patient.

“However, we have heard from other sources in the industry that the total cost for a full course of ketamine-assisted treatment could be higher at $10k per patient per treatment cycle based on Field Trip numbers,” wrote WTR. Even if a patient gets reimbursed at the 60% level, that still leaves a $4,000 out of pocket cost. That puts the treatment out of range for many people.

MDMA

It doesn’t get any cheaper with the next drug expected to get approved by the FDA – MDMA. The Multidisciplinary Association for Psychedelic Studies (MAPS) has sponsored the research on MDMA, which is on its way to getting approved by the FDA. MAPS has estimated that the cost per dose could be as high as $300-$500. Throw in some therapy and MDMA-assisted treatments could reach $10,000 to $15,000. MAPS believes its treatments will be fully reimbursable citing the health benefits and cost savings of a treated patient versus the issues an untreated patient faces. MAPS also argues this favors these shorter-term treatments versus the current costs of long-term mental illness drugs.

The difference though in costs for ketamine treatments is matched up against the length of treatment time for other psychedelic drugs. A  ketamine session typically lasts two hours according to WTR’s report, whereas MDMA and psilocybin treatments can last four to six hours. The size of the treatment room is also larger with sometimes two therapists in attendance and the need for a bathroom. A two-hour treatment often doesn’t need such accommodations.

Psilocybin

Psilocybin treatments could be as much as three years away from approval with Compass Pathways (NASDAQ: CMPS) leading the category. These treatments are estimated to cost between $2,500 to $6,000. However, WTR states that this estimate could be unreliable or too low. The study has just entered Phase three trials and treatment protocols aren’t determined as of yet. It could be a one-dose session or more with an undetermined number of needed therapists.

In Closing

WTR’s report believes health payors will eventually get on board. Coming out of the pandemic, many employers voice commitments toward more mental wellness spending. The report also mentions an insurance disruptor called Enthea, which is a third-party benefits administrator (TPA) that has become the first facilitator for full-on insurance coverage of psychedelic-based therapies. It wrote, “Enthea’s medical coverage policies are currently limited to ketamine, although healthcare will likely expand to embrace MDMA and psilocybin when they are legalized. Enthea has been established to provide a turnkey operation that enables self-funded employers to include these psychedelic-assisted treatments as part of their healthcare coverage to employees and dependents. Starting as a not-for-profit, Enthea launched a pilot program last year in a partnership with privately owned soap maker Dr. Bronner’s to facilitate coverage of KAT for the latter’s 400 to 500 employees. Following the successful pilot, Enthea restructured itself into a for-profit public benefit corporation and then proceeded to raise $2 million in a seed round in 4Q22.”

WTR thinks that there will be new competitors to Enthea after seeing its success. This competition will lead to more payors wanting to cover psychedelic treatments and boosting the whole category.