Six Strategies to be Insurable in Providing Psychedelic Treatments

By Gigi Acevedo-Parker, Ryan Kostiuk, and Liam Brown

Psychedelics are a class of psychoactive substances that produce changes in perception, mood and cognitive processes. Recently, there’s been a rising interest in their potential to address conditions like depression, PTSD, anxiety and eating disorders, as psychedelics like psilocybin affect all the senses, altering a person’s thinking, sense of time, and emotions.

While psychedelics can cause a user to see or hear things that do not exist or are distorted, some studies are focusing on reducing the length of the psychedelic experience or eliminating it altogether, while still preserving the therapeutic benefits for patients.

Currently, around 50 companies in this space are publicly traded, offering services that include drug development, therapeutic retreats, and specialized training programs.

In light of this potential, an increasing number of firms are setting up operations in areas with more lenient regulations, such as Mexico and parts of Europe, to bypass U.S. Food and Drug Administration restrictions. Currently, ketamine is the only psychedelic federally approved for medical use within the U.S.

Venturing into the world of psychedelics is not without its legal and financial obstacles. Operating internationally does not eliminate all the risks for businesses based in and marketing to the U.S., presenting a complex landscape for companies to navigate.

Six tips to ensure insurability with psychedelics

Entering the psychedelics industry offers immense opportunities, but also significant risks. To make a practice with psychedelics insurable, it is vital to adopt the following key strategies:

1. Standardize all products. Consistency and reliability of psychedelic compounds is critical, akin to the cannabis industry. Synthetic lab-produced substances are preferred for their reproducibility and safety. Source products only from approved, regulated suppliers with whom you have established contracts, and test all compounds for reliability before use in treatments. Host regular meetings with the professionals involved to monitor progress.
2. Establish and enforce routine protocols. Robust protocols are essential for patient safety and preventing accidents. These should cover drug administration, the handling of adverse events, and ensuring informed consent. All parties should be made aware of the psychological and physical risks of the program through signed consent, with plans in place before, during, and after the patient’s treatment. Remember that psychedelics can affect people differently, based on factors such as the person’s size, weight and overall health; their previous experience with the compound; the amount and strength of the dose; the environment they take it in; and whether they are currently on any other medications.
3. Obtain necessary licensing. The cornerstone of any legitimate practice is proper licensure. All staff administering treatments must be clinically licensed and legally authorized according to local or jurisdiction regulations. Psychedelic therapy requires specific qualifications, and employing unlicensed practitioners can jeopardize your operation. Ensure that all individuals involved in prescribing, administering, and monitoring medications are appropriately licensed.
4. Implement comprehensive employee training. Extensive and thorough training is crucial but varies widely due to the absence of standardized federal protocols in this field. Practitioners need documented training specific to the psychedelics they use, following evidence-based protocols and local regulatory standards.
5. Ensure informed consent. Patients should be fully educated about their psychedelic treatments prior to their appointment. The effects of these drugs can last for hours and vary based on the particular substance used. Informed consent documents should be written at an accessible level, clearly outlining the psychedelic’s risks and benefits, and in the patient’s preferred language if needed. It should list the potential side effects of treatment, such as hallucinations, confusion, extreme relaxation, difficulty concentrating, dizziness, blurry vision, irregular heartbeat, rapid breathing, nausea, sweating and chills. Patient signatures should be mandatory to acknowledge they have been informed.
6. Partner with an insurance broker from the start. Before opening your practice, engage with an experienced broker to secure comprehensive coverage. Adequate insurance is essential for attracting investors as well as medical professionals. Directors and officers (D&O) coverage and a robust risk management plan are paramount. Without these, reputable doctors may be unwilling to join your operation.

Protecting your practice is the first step to success

In the medical psychedelics industry, insurance is frequently overlooked but is vital for success. Ensuring strict compliance with licensing requirements, establishing and following robust protocols, obtaining informed consent, providing comprehensive practitioner training, standardizing products and consulting with an insurance broker early are all critical steps. Meticulous preparation and adherence to these practices will safeguard your practice and pave the way for success in this dynamic and growing field.

Gigi Acevedo-Parker is National Practice Leader – Clinical Risk Management for global insurance brokerage Hub International. She is a nurse executive with more than 30 years as a healthcare clinician, nursing leader, healthcare consultant and educator with a focus on healthcare risk mitigation and patient safety. Ryan Kostiuk is a Commercial Account Executive in Hub’s Canadian healthcare specialty practice. He provides guidance to Canadian companies operating and expanding into the U.S. and has expertise in medical malpractice, life sciences, and cross border consulting. Liam Brown is the Canadian Healthcare and Life Sciences Practice Leader for Hub. He drives the vision, overall strategy, and brand for the practices.