Why pharmaceutical companies are investing billions in psychedelic drugs despite regulatory setbacks and unresolved safety questions

Pharmaceutical companies are continuing to invest billions in psychedelic medicines despite the FDA’s rejection of MDMA-assisted therapy for PTSD, which exposed problems including functional unblinding and the difficulty of separating drug effects from psychotherapy. Eli Lilly plans to acquire AtaiBeckley for up to $3.8 billion, while AbbVie acquired bretisilocin for $1.2 billion. Late-stage studies of LSD- and psilocybin-based treatments report promising results for anxiety and treatment-resistant depression, and regulators are offering clearer guidance for psychedelic trials. Developers are also pursuing shorter-acting compounds with fewer hallucinations. However, major uncertainties remain around adverse effects, treatment duration, therapeutic context, clinical infrastructure and the risk of renewed backlash. MDMA and psilocybin may be the first compounds to reach pharmaceutical approval, while ibogaine and 5-MeO-DMT are receiving growing attention but present significant safety and development challenges.