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November 22, 2022

Legal Challenges in Developing Psychedelic Therapeutics

By Kimberly Chew and Jacqueline von Salm

COVID-19 has led to a sharp global increase in depressive and anxiety disorders. The overall number of cases of mental disorders rose dramatically since the onset of the pandemic, with an additional 53.2 million cases of anxiety and 76.2 million cases of major depressive disorders. This increase is a significant challenge for health systems around the world. It is estimated that approximately 30 percent of patients with depression do not respond to antidepressant therapy. Therefore, there is a need for additional effective treatments to address these issues.

Psychedelic drugs—a class of psychoactive drugs that alter perception and mood—are currently the subject of multiple clinical trials and are making scientific news as potential life-changing therapies for disorders such as post-traumatic stress disorder (PTSD), depression, neurodegenerative diseases, and behavioral conditions such as tobacco addiction and anorexia. They are also being investigated for their use as powerful anti-inflammatories for whole organ transplant and glaucoma. For instance, methylenedioxymethamphetamine (MDMA)-mediated therapy for PTSD has been designated by the U.S. Food and Drug Administration (FDA) as a “breakthrough” therapeutic. Stage III clinical trial results for MDMA-mediated therapy were published in May 2021, showing that 67 percent of the trial participants no longer suffered from PTSD in the year after the treatment. This finding has ignited excitement in the field with the anticipation that MDMA may be the first psychedelic to achieve FDA approval, possibly as soon as 2023.

Despite these notable advances in research, the development of therapies incorporating psychedelics can be a complicated endeavor. Almost all psychedelic drugs, including mescaline, psilocybin (“magic mushrooms”), lysergic acid diethylamide (LSD), MDMA, and N,N-dimethyltryptamine (DMT), are considered Schedule I drugs under the U.S. Controlled Substances Act (CSA). Schedule I drugs are considered highly addictive with no therapeutic value and are illegal in the United States. This scheduling status means that psychedelics are difficult to access, even for research purposes. Furthermore, the Drug Enforcement Agency (DEA) administers the CSA, while the FDA oversees and enforces the approval of drugs based on safety and efficacy. These agencies have very different perspectives and portfolios, and their regulatory overlap can create additional confusion for innovators seeking to develop new therapies.

Researching Psychedelics

Research involving Schedule I substances is regulated by several agencies at various state and federal levels, including the DEA. The DEA controls the drug supply chain and sets annual quotas for Schedule I drugs, which can affect research and development efforts. The DEA quota for production of DMT was increased from 250 grams to 3,000 grams for 2022, a reflection of the agency’s recognition of the increased use of this substance for research. Under the CSA, the researcher must obtain DEA licensure and approval of the research proposal before working a Schedule I drug. Through these appropriate approved licenses, both at the federal and state level, substances that are otherwise illegal can be researched for the possibility of medical utility. This article walks through an example of one psychedelic undergoing such research: DMT.

DMT as a Case Study

DMT is a naturally occurring substance found in plants and in the nervous system of mammals, including the human brain. It is known to be an agonist of the serotonin 2A receptor, which is believed to be responsible for its hallucinogenic properties. Researchers believe it induces neuroplasticity and shifts neuronal functioning. The neurological and animal research on DMT suggests that it could provide benefits for depression and anxiety. This substance is noted for having a rapid onset and offset of action, meaning the duration of the drug’s action is short-lived. By contrast, other psychedelics, such as psilocybin, have a fairly long duration of up to eight hours. The more manageable one- to two-hour duration of treatment makes DMT an especially attractive drug for development as a therapeutic, and research groups have taken notice. For instance, Algernon Pharmaceuticals is seeking to run clinical trials for DMT’s beneficial uses in the treatment of stroke,Small Pharma announced the results of Phase I trials for DMT-assisted therapy for major depressive disorder (MDD), Cybin Inc. acquired a Phase I trial for safety and pharmacology, and Yale University is conducting a Phase I clinical trial for depression utilizing DMT.

The patient outcomes documented from these various trials will be beneficial for any companies working with this drug substance. For example, the results of the Phase I performed by Small Pharma showed that DMT was very well tolerated with no serious adverse events in healthy volunteers, enabling the drug product, along with psychotherapy, to be tested in a Phase IIa for patients with MDD. Currently, Algernon Pharmaceuticals and Yale University are among the few companies with approval to begin trials for sub-hallucinogenic dosing of DMT unaccompanied by psychotherapy. Alternative delivery methods and dosing of psychedelics in a precise way may prove critical as excessive doses of certain drugs could lead to “bad trips” (a frightening and unpleasant experience triggered by psychoactive drugs), gastrointestinal upset, seizures, cardiotoxicity, or other undesirable effects.

All of the current clinical trials for DMT are performed intravenously; however, non-invasive, sub-hallucinogenic alternatives are also being developed, such as a DMT patch developed by Psilera, Inc. This product illustrates some of the scientific and practical strategies employed to address the challenges of bringing a promising psychedelic-based therapeutic to market. Psilera is researching the efficacy, safety, and practicality of the slow-release single-layer patch, which is specifically designed to reduce abuse potential, as the drug is in the adhesive itself. Since the amount of drug being delivered is sub-hallucinogenic, it is intended to not be disruptive to the patient’s everyday life. It is anticipated that patients with neuropsychiatric disorders are already under treatment with a therapist, and this product could be prescribed in such a setting, in line with the current models of therapeutic use of psychedelics for disorders such as PTSD and depression.

It is estimated that approximately 10 percent of young adults and adolescents in the U.S. suffer from social anxiety disorder. Because of the isolation brought on by the pandemic, studies suggest that the disorder will become more prevalent in the coming months as people re-emerge into group activities, leading to greater rates of depression.

Clinical Trials of a DMT product: FDA and DEA

The clinical trial process for Schedule I substances involves both DEA and FDA regulatory processes, which include registrations, licenses, and inspections. The FDA, as part of the Department of Health and Human Services (HHS), oversees and regulates the approval process of drugs marketed and sold in the United States, including clinical trials related to psychedelics. The FDA has established internal protocols to work with the DEA in a clinical trial that involves a Schedule I substance. The clinical researcher must also obtain approval from the DEA to work with the substance by submitting an application to the DEA web portal. There are many other requirements that need to be met before clinical trials can begin, including: registration; the submission of animal pharmacology and toxicology studies; manufacturing information regarding the composition, manufacturer, stability, and controls used for manufacturing the drug; and detailed clinical protocols and investigator information as to the qualifications of clinical investigators to assess whether they are qualified to fulfill their clinical trial duties. The process is a multi-year, multi-million-dollar process with frequent interaction with regulatory agencies. The estimated likelihood that a drug entering clinical trials will be approved by the FDA is 11.83%. It is important to keep in mind that a substance undergoing a clinical trial does not mean that the FDA has approved the substance, and such trials do not change the DEA’s schedule of the drug.

Psilera anticipates that its product will be the first psychedelic to be delivered in a transdermal patch form and thus will be first to undergo evaluation by the FDA. It has submitted their initial questions to the FDA in order to start Phase I clinical trials, which will examine both safety and tolerability. One potential hurdle to address with low doses of DMT is how to distinguish treatment from placebo. This is an ongoing issue in the psychedelic field, because participants may skew the results by falsely convincing themselves they have been administered a drug and claiming to have noticeable benefits.

Psilera is working with various organizations and the FDA on designing the clinical trial to address this potential issue as well as finding ways to possibly make outpatient therapies for improved accessibility beyond the current in-clinic model of most psychedelic treatments. The hope is to ultimately design products that provide greater access to diverse patient populations with coverage by insurance companies.

Patentability of a DMT Product

A patent is a property right granted by the United States Patent and Trademark Office, and an invention must meet several requirements to receive a patent such as novelty, in that the invention cannot be described in a printed publication, be in public use, be on sale, or be available to the public before the effective filing date of the claimed invention. Further, the subject of the patent must be non-obvious to someone in the same industry. Inventions related to Schedule I substances must meet these same requirements for patentability. The patent system is independent from the DEA and FDA regulatory systems, so nothing about a substance’s classification prohibits it from being patented so long as it meets patentability requirements.

Many companies are staking their claim in the psychedelic-therapeutic realm through patent applications. Patents in psychedelics are a controversial topic; many are plant-based medicines that are well-known to indigenous cultures and arguably not novel, which is required for patentability. One such controversy resolved on June 22, 2022, with a petition for post-grant review being denied by the Patent Trial and Appeal Board regarding one of Compass Pathways’ synthetic psilocybin patents. In the case of DMT, while a known substance, a specific formulation of this drug utilizing a new mode of drug delivery, such as a DMT patch under development, is very likely to be considered novel and patentable.

Aside from patent protection, entities seeking to enter the field of psychedelic-related therapeutics need also to consider the accessibility of their products. While DMT itself is a Schedule I drug, theoretically, a case could be presented to the FDA and DEA that a unique formulation that is medically useful and utilizes DMT in a new modality (such as a low-dose patch) ought to be rescheduled; however, even if the product were to be rescheduled, the pure substance (DMT) would remain Schedule I. This could have implications for others wanting to develop generics of such a product, as has been seen in the case of Marinol, a synthetic version of tetrahydrocannabinol (THC), the principal psychoactive substance of cannabis. The FDA approved Marinol and the DEA assigned it to Schedule III. In John Doe v. DEA (2017), the plaintiff sought to import a generic version of Marinol (synthetic dronabinol) into the United States for bioequivalency testing but was stymied when the DEA denied its importation because the plaintiff did not seek a Schedule I registration as only Marinol was given Schedule III status, not synthetic dronabinol.

A final consideration is how the scheduling of the product affects intellectual property. So long as the psychedelic-related compound remains a Schedule I substance, patents involving such compounds may not be easily enforced in federal court because it could require the patent owner to admit or disclose information confirming its sale of, use of, distribution of, or offer to sell a Schedule I controlled substance; therefore, it remains important for companies and universities working with these substances to maintain DEA compliance for any and all research endeavors.

Potential Rescheduling of a DMT Product Following Approval

One of the final steps in seeking FDA approval of any drug is the submission of a New Drug Application (NDA). The NDA submission must include data such as preclinical, clinical, pharmacokinetic, and bioavailability data. In the context of psychedelic medicines, such as DMT, it must address abuse potential as Schedule I substances are defined as drugs with a high potential of abuse. If the FDA approves of such a substance following clinical trials, it will be seen as now having an accepted medical use, which will mandate either de-scheduling or rescheduling of the drug under the CSA. Generally, the NDA applicant will propose a scheduling, the FDA will assess and recommend an initial schedule for the drug to the DEA, and the DEA would schedule the drug through its regulatory process. The drug will be scheduled “not later than 90 days” after DEA’s receipt of FDA’s approval of the drug.

There are other ways a substance could be rescheduled. Proceedings to add, delete, or change the schedule of a drug may be initiated by the DEA, by the HHS, through Congressional amendment, or by petition from any interested party, including sponsors and individual citizens. The DEA has rejected two petitions to reschedule marijuana. In February 2022, a medical doctor filed a formal petition to reschedule psilocybin. The DEA denied this petition on September 23, 2022, and a challenge was filed to appeal this denial in late October 2022.


The field of psychedelic therapeutics is promising but presents legal challenges. Their broader acceptance by mainstream society as a legitimate treatment for difficult health conditions will solidify and clarify the legal and regulatory framework for these drugs. In turn, companies seeking to enter this area will have greater clarity as to the risks of developing these therapies and taking them through clinical trials and eventual commercialization.

The authors thank Natasha V. Sumner, Esq., Karen Luong, Esq., and Chris Witowski, Ph.D. for their contributions to this article.

    Kimberly Chew, Esq.

    Husch Blackwell, Oakland, CA

    Kimberly Chew is co-founder and co-lead of Husch Blackwell’s Psychedelic and Emerging Therapies practice group. She is a former research scientist with a broad range of litigation and regulatory experience, representing and advising business owners of closely held entities, individual manufacturing facilities, educational institutions, and Fortune 500 companies in product liability, environmental tort, and controlled substance-related matters. She may be reached at [email protected].

    Jacqueline von Salm, Ph.D.

    Psilera, Inc., Tampa, FL

    Jackie von Salm, Ph.D., is a natural products chemist and the co-founder and chief science officer of Psilera Inc. She previously served as director of laboratory and director of research and development at AltMed and as a formulation scientist at CoreRx. She has written and lectured widely on natural products and, more recently, the medical potential of Cannabis sativa and other psychoactive substances like psychedelics. She may be reached at [email protected].

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