Psychedelics and mental health

By Emily Shettel, GBA

Once associated with counterculture, psychedelics are now being studied as potential treatments for chronic mental health conditions like treatment-resistant depression (TRD) and PTSD. With over 600 clinical trials underway globally—including studies funded by the U.S. Department of Defense and Veterans Affairs—interest in these therapies is growing.

New frontiers: Ketamine, Spravato®, and Psilocybin

Ketamine is drawing increased attention in the mental health field due to its rapid onset and unique effects on the brain. Studies show it can stimulate neurogenesis and neuroplasticity—processes that support the growth and reorganization of brain cells—within 72 hours of treatment. These effects may help explain its potential for people who haven’t benefited from other treatments. The U.S. ketamine clinic market, valued at $3.41 billion in 2023, is projected to grow at over 10% annually through 2030, reflecting rising demand and expanding access to these therapies.

Spravato® (esketamine), a nasal spray derived from ketamine, was approved by the FDA in 2019 for use in adults with depression. While ketamine itself is only FDA-approved for anesthesia, it has been legally prescribed off-label in all states for various mental health conditions. As of January 2025, Spravato® is also approved for use as a standalone treatment—without the need for concurrent oral antidepressants, which was a requirement of the 2019 approval.

Psilocybin, another psychedelic compound, is not yet FDA-approved but is currently in Phase 3 clinical trials for TRD. While federal approval is still pending, psilocybin therapy is legally accessible in supervised settings in Oregon and Colorado.

Cost and Coverage: a drowing divide

Treatment costs can be significant: ketamine infusions typically range from $400–$800 per session, while Spravato® may cost $18,500–$45,000 in the first year alone.

Despite growing interest, coverage remains limited. According to the International Foundation of Employee Benefit Plans (IFEBP) 2024 Mental Health and Substance Use Disorder Benefits Survey, only 9.2% of all employers—and just 5.6% of multiemployer plans—currently cover psychedelic-assisted therapy in a clinical setting.

Considerations for plan sponsors

As this treatment landscape evolves, plan sponsors should consider:

• Should psychedelic-assisted therapies be covered, and under what conditions?
• How can plans ensure treatments are administered safely and effectively? What safeguards should be in place?
• How can plans manage costs and ensure compliance with federal and state laws?
• Are there existing access challenges to address for currently covered FDA-approved behavioral health services, such as outpatient therapy and medication management?

At Rael & Letson, we help benefit plans navigate emerging treatments with a focus on fiduciary responsibility, care quality, and cost containment. Whether you’re evaluating your coverage options or redefining your behavioral health strategy, we’re here to support your decision-making.

Let’s connect to explore how your plan can stay informed and prepared. Contact us.

Source:

Benefits Magazine, May/June 2025, “Psychedelics: Emerging Mental Health.”