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KPMG's Guidance for Big Pharma on Psychedelics & Pennsylvania's Policy Pivot
Today, we’re looking at two related, very related, themes.
Does Big Pharma have any interest in psychedelics?
Are psychedelics-as-medicines an opportunity to reimagine how drug development is funded, studied and approved?
Related to the second point, I am developing a strong—but potentially naive— intuition about an approach to state policy reform, which I begin to outline in the last section of this post. I would be keen to hear comments and feedback!
Let’s have a gander.
Waiting for Pfizer1: KPMG’s Psychedelic Report
A recent report from KPMG, the massive accounting and professional services company—specifically their Advisory Services—is worth mentioning for two reasons:
KPMG is a household business name, and it’s issuing a report on psychedelics is indicative of the mainstream coming around to recognize that, yes, this is, in fact, a thing.
Second, the report2 is presented as advice to Big Pharma on how to approach psychedelics.
Janssen’s foray with Spravato has made an impression, and besides a few partnerships, the big pharma players haven’t embraced psychedelics yet.
This short but instructive briefing from a large professional services group offers insight into the big pharma thought process, a perspective worth understanding for stakeholders building in the psychedelic space.
“Because of recent research and regulatory developments, the risk/reward ratio is changing for pharma companiesconsidering entry in the psychedelic marketplace. Here are five development milestones that, when reached, couldchange how big pharma thinks about psychedelics:”
Here is my paraphrased version of the guidance the authors made to Big Pharma:
See what happens with MAPS. The phase II readout was a significant inflection point. A successful Phase III would be another—and the recent interim analysis indicates things are on track for a successful study completion3. FDA approval would be impressive but would only be the first hurdle.
Let the early entrants figure out reimbursement. The drug+therapy combination makes things complicated enough from a care delivery perspective. But if MAPS can demonstrate that payors have an appetite for this approach, it’s game on.
Keep tabs on other neurological but non-psychiatric disorders like dementia, pain, and movement disorders. Indications that don’t require therapy would make delivery more streamlined4.
IP is messy. The opportunities to patent natural products are limited, and first-generation molecules have been in the public domain for a while. However, psychedelic-inspired candidates that get Composition of Matter patents could be coming down the road.
The status as federally scheduled substances will present safety and storage challenges that prescribers, distributors, and clinics will need to adopt. These restrictions may be onerous and prevent adoption, see Spravato.
I’ve noticed two trends among states’ psychedelic policy approaches. I am calling them East Coast5 vs. West Coast.
“Connecticut approach is a practical counterbalance to the pioneering legalization paths underway on the West Coast, with Oregon's Measure 109, California's Bill 519, and Colorado's Natural Medicine Health Act.
We might even say two distinct approaches to state-level psychedelic policy reform are emerging along the stereotypical East Coast—West Coast dichotomy that has characterized the differences between cultural, business, and power centers of the respective coasts.
Tradition, legacy institutions, and prestige codify the East Coast ethos, while West Coast boasts innovation, experimentation, and novelty.
This schism is representative of the two (general) approaches to state-level policy reforms, with the Western states aiming at progressive legalization efforts. In contrast, the more reserved East Coast approaches seek to work within the previously established frameworks erected by the federal institutions.”
East Coast reforms are structured to use state funds to develop research programs that collect data and subsidize access to research-based-treatment6 for groups with high rates of mental illness, such as veterans and frontline healthcare workers.
In March, Pennsylvania lawmakers put forward such a bill they expected to pass until the 11th hour.
The bill fit the description of the East Coast model because it coupled a research program with subsidizing access, but it went a step further by proposing to use naturally derived psilocybin grown in the state:
“Achieving the optimal public health benefit of psilocybin requires the Commonwealth to invest in and facilitate research using naturally grown psilocybin mushrooms, which would be infeasible if conducted through private funding.”
This approach has been scrapped, and a new bill will be put forward in the next session that follows in the footsteps of Connecticut.
The Connecticut Approach was developed by Reason for Hope, and the cornerstone of this strategy is leveraging FDA-sanctioned Expanded Access Programs to create state-funded real-world research programs.
Fed up with the Fed
As I think about these two approaches to state psychedelic policy, I wonder if the East Coast approach is actually more subversive to the status quo than legalization proposals out West.
On the surface, this seems false, but I am coming to view the movement of state-funded psychedelic research and access as a referendum on the FDA/Pharmaceutical industry monopoly on introducing new treatment approaches.
The current approach to researching, developing, and deploying new treatment options—especially for mental health—is broken. We spend more and more for worse and worse outcomes.
We don’t just need innovation in treatments but in how we develop and approve treatments.
Psychedelics present a window of opportunity for several reasons that make them unique from other drugs in the approval pipeline:
they are either naturally occurring or off-patent synthetics
have a long history of human use
are non-toxic and non-addictive
are already widely used
have demonstrated robust, rapid-acting, and possibly longstanding results (a model that flies in the face of pharma incentives) in early trials.
As Matt Zorn from On Drugs notes,
Federalism, at its best, works a bit like natural selection. Different states take up different solutions to different problems. They innovate. Good solutions survive; bad ones don’t. Law evolves. When we abandon this idea in favor of central planning, however, we stop innovating and evolving. It is like monopoly power or putting all of the eggs in one basket. The law becomes static, not dynamic. And that’s not good.”
Cannabis legalization was a novel first step. Psychedelic Legalization, like in Oregon, is another. But these both apply pressure to current federal laws.
East Coast psychedelic policy is pressure on the status quo of how medicines are developed, funded, and deployed.
Weekend Reading, Listening & Viewing
In the latest Psychedelics Today podcast Rick Doblin speaks at length about the scrutiny MAPS has faced in the aftermath of the Cover Story podcast.
Thanks for reading, have a great weekend!
This is a reference to Samuel Beckett’s Waiting for Godot, a play with only two characters who “discuss a variety of issues at length, none of any apparent significance, and it is finally revealed that they are awaiting a man named Godot. They are not certain if they have ever met Godot, nor if he will even arrive.”
Godot never arrives.
“Report” may be too generous, perhaps “explanatory pamphlet”?
An interim analysis is a process by which an auditor surveys data of an ongoing trial to inform the sponsor (MAPS) if they will need to recruit additional study subjects. Per a recent press release, MAPS “announced that a blinded administrative interim analysis has confirmed no changes to the planned sample size are necessary to provide sufficient statistical power to detect efficacy of MDMA-assisted therapy for posttraumatic stress disorder (PTSD) in the second of two Phase 3 trials (MAPP2)…The first Phase 3 trial of MDMA-assisted therapy for PTSD indicated that it may be a safe and effective treatment for PTSD resulting from any cause, with 88% of participants demonstrating a clinically significant reduction in PTSD symptoms two months after the last experimental session with no serious safety signals emerging. If the MAPP2 study results, available after October 2022, are statistically significant for a reduction in PTSD symptoms and meet the FDA standards for safety, MAPS and MAPS PBC are planning to submit a New Drug Application to the FDA in the first half of 2023.”
Texas, as far as I can tell, is the pioneer of the ‘East Coast approach’ of combining research with subsidized access for groups with high rates of mental illness. Texans, I am sure, are upset with my framing.
Or is it treatment-based-research?