As with any new product, it is important to assess the potential liabilities arising from the use of psychedelic drugs so that these can be minimised and the necessary precautions taken.
Professor David Nutt, Edmond J. Safra Professor of Neuropsychopharmacology and director of the Neuropsychopharmacology Unit in the Division of Brain Sciences at Imperial College London has stated to us that:
The treatment model is very different from traditional mental illness treatments in that the drugs are given just once or twice rather than daily for months or years. This massively reduces patient exposure to the medicine and is likely to reduce adverse effects.
Professor David Nutt
With this in mind, we set out our thoughts on liability below:
Clinical trials: The usual risks arising in the context of clinical trials will apply equally to psychedelics, such as the potential for adverse effects and failure to adequately treat or report those effects. Batches should be manufactured in an appropriately controlled environment and doses should be administered (and effects monitored and treated) by adequately trained and qualified medical staff.
Capacity to consent: Whilst all drug recipients should go through an informed consent process, special care should be taken with those who may suffer from more severe mental conditions, for example, suicidal tendencies, psychosis or delusions, to ensure that they have sufficient capacity to understand and agree to the administration of psychedelic treatments, whether during clinical trials or otherwise.
Appropriate treatment settings: Given their hallucinogenic properties, the administration of psychedelics in an appropriate setting is important to support a positive experience. Patients may be exposed to greater risks of harm or an exacerbation of symptoms if used in unregulated settings without the supervision of trained practitioners and appropriate preparatory therapy sessions. A failure to identify pre-existing mental health conditions and acute risks such as suicidality and psychosis may also place patients at higher risk of harm. Should a patient then be injured in such circumstances, the supplier or prescriber of the treatment may be at risk of a claim.
Warnings: It is important that users are fully informed about their use in order to minimise the risk of injury. Instructions for Use (IFU) should clearly set out warnings about (i) potential adverse reactions, side effects, risks and contraindications , (ii) appropriate usage & dosages, (iii) the environment in which drugs are to be administered and by whom and (iv) procedures for before, during and after administration of the medicine (i.e. observation of the patient for several hours after administration etc).
Post-market surveillance: As the long-term effects of psychedelics are relatively unknown, post-market surveillance will be essential to identify any unexpected adverse effects or unexpectedly high rates of certain effects.
Controlled use: In the event that psychedelics are re-scheduled, drug agencies and industry stakeholders will likely be keen to ensure that appropriate restrictions apply to their sale, distribution, provision and use, in order to restrict potential misuse. It is likely that only medical practitioners and other properly licensed persons and entities (with appropriate insurance in place) will be authorised to supply, prescribe and administer them in the short-term.
Potential for wider distribution: There is, of course, potential for psychedelics to be made more widely available should the medium to long term results prove favourable and there is appetite for this treatment as a solution to the growing mental health crisis. As with any product that is widely distributed, this increases the potential for more product and personal injury claims against manufacturers, importers, prescribers and medical professionals and other stakeholders.
Appropriate insurance cover should be acquired for all these circumstances.
The market for insuring life science products is currently robust, with many insurance companies competing for opportunity. However, as has historically been the case, identifying the right type of coverage for pharmaceutical products can present some challenges, typically characterized by the varying levels of liability limits, scope of coverage, deductibles, and premiums available from insurers. The appetite for certain kinds of product exposure will also vary between insurers, which certainly appears to be the case for psychedelic products.
The most common insurance policy addressing the potential liabilities arising from product use is product liability insurance. This is widely available from the insurance market for exposure to patient injury arising from clinical trials and commercial product sales. Not all product liability policies are alike with each having nuanced language that may work for or against the policyholder, for example, exclusions for the US Drug Enforcement Administration’s  Schedule 1 products, under which some psychedelics may fall. Despite this, some insurers have already been gravitating towards underwriting psychedelic products, though this is very much an emerging market.
Many companies in the psychedelics space are start-ups focused on attracting high quality board members, resulting in a strong need for Directors’ & Officers’(D&O) Liability insurance. Until 2020, the D&O insurance market had little interest in these companies, which resulted in low coverage capacity, high retentions and extremely high premiums. However, over the past 18 months, insurers have gained a better understanding of the associated risks and have since been attracted to the space, as demonstrated by an increase in coverage capacity, and reduced retentions and premiums by up to 50% and 45% respectively.
Larger scale and longer term trials are of course required to further investigate the safety and efficacy of psychedelic treatments. However, given their preliminary promise, many are hopeful that they may be the solution to the burgeoning mental health crisis, which is costing the global economy and health insurance industry billions every year. We will very much be staying tuned in.
We are delighted that Professor David Nutt will be joining Kennedys for a discussion on psychedelics. Please click here to register your interest.