What Trump’s psychedelics order means for healthcare

After a rough couple of years, things may be looking up for the psychedelic medicine industry.

President Donald Trump issued an executive order (EO) on April 18 to accelerate research and development of psychedelic therapies for serious mental illnesses, such as treatment-resistant depression and post-traumatic stress disorder (PTSD). As part of this effort, the administration gave priority review vouchers to three companies studying psychedelics: London-based Compass Pathways, Wisconsin-based Usona Institute, and New York-based Transcend Therapeutics. The vouchers speed up the FDA’s review process from 10 months to six.

Robert F. Kennedy Jr., secretary of the Department of Health and Human Services (HHS), is also a proponent of psychedelic treatments and is helping to put them on the fast track.

What comes next? Compass is studying psilocybin (aka “magic mushrooms”) for treatment-resistant depression, while Usona is testing it for major depressive disorder. Transcend, on the other hand, is studying methylone, a stimulant similar to MDMA, for PTSD. Compass’s stock shot up nearly 40% on April 20 following the executive order, Forbes reported.

Even companies that didn’t receive a voucher seemed to benefit from the announcement. New York-based AtaiBeckley, one of the largest public companies developing psychedelic medicines, saw its shares rise 25%, Barron’s reported, while Irish pharma company GH Research saw shares rise 13%.

Kabir Nath, Compass’s CEO, said in a statement the company is “honored and grateful” to have been selected for the voucher, adding that it validates the “urgent unmet need facing millions of people living with treatment resistant depression and the innovative science of [Compass’s psilocybin treatment].”

Transcend Therapeutics’s co-founder and CEO Blake Mandell said in a statement that the voucher “further underscores the urgent and significant unmet need in PTSD and the potential for [methylone] to become a rapid-acting and durable treatment option.”

A spokesperson for Usona Institute said in a statement shared with Healthcare Brew that the company is “deeply grateful to the FDA and the Commissioner’s office for this recognition,” and noted that major depressive disorder affects roughly 21 million people in the US annually.

In addition to the vouchers, the FDA is allowing Miami-based biopharma DemeRx to conduct the first human trials of a psychedelic called noribogaine for alcohol use disorder treatment.

The EO also gives $50 million to state governments developing psychedelic medicine programs and calls on the FDA and Drug Enforcement Agency (DEA) to allow access to psychedelics under the 2018 Right to Try Act. The act allows patients with life-threatening diseases who have exhausted all approved treatments to try certain investigational therapies.

What it all means. The EO “essentially grants more allowances, more wiggle room between the HHS and the DEA to expand research and access without a fear of retribution,” Tom Milam, chief medical officer at mental health care company Iris Telehealth, told Healthcare Brew.

“There has been real fear of the DEA potentially cracking down on people who want to do more research and more administration of these medications to patients that are suffering,” he added.

The DEA has historically impeded psychedelic research via regulatory barriers, such as by classifying the substances as Schedule I drugs, which places strict regulations on how they can be researched.

However, the EO is far from a “free for all,” Milam cautioned. Psychedelics are still not federally approved outside of strict research settings, though Oregon, Colorado, and New Mexico have all legalized limited psilocybin use under clinician supervision.

Despite this, thanks to the executive order, more research trials could possibly help find answers to questions about which conditions psychedelics could treat, dosing regimens, potential side effects, and which age groups should be allowed to take these medicines, Milam said.

So far psilocybin, LSD, ketamine, and ayahuasca have been studied the most in the US as potential psychedelic-based treatments for mental health conditions, Milam said. Most of the research conducted has been for treatment-resistant depression and PTSD, he added. A 2024 study from Emory University found that more than 5 million people in the US could be eligible for psilocybin therapy for major depressive disorder and treatment-resistant depression.

“Some of these medications can be really life changing and can fill in the gaps for a lot of patients that may be treatment resistant,” Milam said.

The American Psychiatric Association, a professional organization representing more than 40,000 members in the field, released a statement following the EO saying that while it “welcomes federal investment” to study psychedelics, more research is “essential” before psychedelics can hit the mainstream.

“There is currently inadequate scientific evidence for endorsing the use of psychedelics to treat any psychiatric disorder except within the context of approved investigational studies,” the statement read.

While the EO didn’t provide a timeline for when a psychedelic drug could be ready for FDA approval, Milam said he thinks some may get FDA approval to work with larger populations outside of strictly research environments within “the next 12 to 24 months.”

Most recently before this, the FDA in August 2024 rejected an application from San Jose, California-based Lykos Pharmaceuticals for its MDMA-based PTSD treatment. Since then, Lykos has laid off a majority of its staff and rebranded itself as Resilient Pharmaceuticals.

Taking action. Psychedelics aren’t the only substance the Trump administration has addressed recently, either.

Five days after issuing the psychedelics EO, the Department of Justice and the DEA downgraded medical cannabis from Schedule I to Schedule III, the classification for drugs that have a “moderate to low potential for physical and psychological dependence,” according to the DEA. The agencies plan to hold a hearing in June to decide whether to downgrade recreational cannabis as well.

Stocks for companies in the cannabis industry showed a mixed response to the rescheduling news, Market Watch reported.