Big Pharma: Friend or Foe of Psychedelic Drugs?

• Big Pharma has played an infamous role in obstructing/delaying the legalization of cannabis
• The psychedelic drug industry has dramatically different dynamics from the legal cannabis industry
• Because of this, it is much less obvious as to whether Big Pharma will be a facilitator or an obstructionist with psychedelic drug development

The psychedelic drug industry and the legal cannabis industry are an obvious comparison.

Both categories of substances were heavily criminalized. In both cases (and especially with cannabis), the medical/legal justification for such Prohibition is extremely dubious.

Now the liberalization of psychedelic drug laws and the potential commercialization of these substances is on the horizon. Following in the footsteps of cannabis legalization.

With respect to cannabis legalization, we have seen one regulatory or bureaucratic roadblock after another impeding the commercialization of legal cannabis – especially in the United States.

Behind much of this Obstructionism toward cannabis is Big Pharma. Multinational pharmaceutical companies are not only publicly critical of cannabis legalization. They fund most of the anti-cannabis lobbying activities in the United States.

This raises an obvious question. Will Big Pharma adopt a similar obstructionist stance toward the legalization and commercialization of psychedelic drugs for medicinal use?

To answer this question first requires examining two other factors.
 
Cannabis and psychedelic drugs: apples and oranges

Both cannabis and psychedelic drugs have been heavily criminalized through drug Prohibition statutes in recent decades.

Both cannabis and psychedelic drugs appear to have enormous potential as medicinal therapies in a multitude of areas.

However, the similarities between these two classes of substances pretty much ends there.

Psychedelic drugs are complex substances with potent chemical properties. But they are generally discrete drugs, meaning that only a single active agent is at work.

In contrast, cannabis is an incredibly complex plant. There are roughly 100 known cannabinoids in cannabis, the principal active substances in the plant.

In addition, the cannabis plant contains dozens of terpenes and flavonoids. Many researchers in medicinal cannabis strongly believe that these terpenes and flavonoids also have medicinal effect.

More importantly, many of these researchers subscribe to the theory that the combination of all these cannabinoids, terpenes and flavonoids produces maximum medicinal benefits from cannabis. This is known as “the Entourage Effect”.

Cannabis can’t be patented

Multinational drug companies derive most of their revenues and profits from drug patents. They get their patented drugs licensed and then soak up the lucrative, multi-year revenue streams from such patents.

Drug companies could (can) synthesize individual cannabinoids and then obtain patents for such synthetics.

The problem?

They can’t patent the Entourage Effect.

This means that Big Pharma could invest several years (and hundreds of millions of dollars) bringing a synthetic cannabinoid drug to market to treat a particular medical issue. But that synthetic drug may not produce even an equal medicinal benefit to raw cannabis.

The synthetic cannabinoid drug may also cost consumers 5 –10 times as much as equivalent medication from raw cannabis. A very poor risk/reward scenario for Big Pharma.

Psychedelic drugs can be patented

A crucial difference between psychedelic drugs and cannabis is that psychedelic drug sare much more amenable to a drug patent system.

As noted, these are all discrete substances rather than mere ingredients of an incredibly complex plant. Indeed, unlike cannabis the class of psychedelic drugs is a mixture of natural substances and synthesized chemical molecules.

Compared to cannabis, patenting psychedelic drugs for medicinal applications is a much more straightforward business proposition. Once a drug patent is locked up the drug developer can be reasonably confident in the revenue stream that will follow.

Of equal importance, preliminary clinical trials on psychedelic drugs show the potential for enormous improvements in the standard of care with respect to many mental health disorders.

The potential drug revenue dollars are enormous.

A previous Psychedelic Stock Watch article highlighted the enormous economic costs of mental health disorders –and the opportunity this represents for psychedelic drugs.
 
Mental health disorders are already estimated to cost the global economy $1 trillion per year. This is primarily because the current treatment options for many of these disorders produce dismal results.

This means the future outlook here is nothing short of an economic catastrophe.

A Lancet Commission report estimates that between now and 2030, mental health disorders will cost the global economy $16 trillion. Today, psychedelic drugs offer the best potential to reduce that economic impact through more effective treatment options for mental health issues.

How many billions could Big Pharma reap from licensing and commercializing the drugs to address this mental health epidemic?

Clearly, Big Pharma has a large (potential) economic incentive to support the legalization and commercialization of psychedelic drugs. However, there is one other crucial variable here.
Pharmaceutical companies make money selling drugs to sick people.

The more people who are sick and the longer that they are sick, the more money that Big Pharma makes. This is the basic reality of the global drug industry.

Obviously, curing people (i.e. making sick people healthy) reduces revenues and profits for Big Pharma.

Consequently, multinational drug companies prefer not to develop drugs that cure illnesses. Rather, their strategy is to target drug development that merely treats the symptoms of illnesses.

Sick people stay sick. Big Pharma’s revenue streams go on and on and on.

The Big Pharma healthcare scam is particularly brazen with respect to the treatment of depression.
 
Current antidepressant drugs don’t work. Consistently, in clinical testing they produce little more efficacy than sugar pills (i.e. placebos).

In other words, anti-depressants provide near-zero medicinal benefit beyond the Placebo Effect. But they do produce unpleasant and even dangerous side effects.

Patients are frequently prescribed these dangerous and ineffective drugs for years. Worse still, they are addictive.

People who (finally) realize that their antidepressants are providing no medicinal benefit discover they can’t quit.

How does this make Big Pharma any different from street drug-pushers? And 1 out of every 8 Americans above the age of 12 is currently being prescribed these dangerous, ineffective, addictive drugs.
 
Keeping sick people sick: that’s “the Big Pharma way”.

This was another red flag for cannabis legalization in the eyes of multinational drug companies. Cannabis is a relatively benign substance that has been shown to make people healthier in numerous ways.

Big Pharma can’t make money on healthy people.

Returning to psychedelic drugs, these substances have shown exciting potential to not just treat serious mental health disorders but to actually cure them.

Ironically, it is this strong efficacy that could turn Big Pharma against the development and commercialization of psychedelic drugs.

“Cure” is a four-letter word in the eyes of multinational drug companies.

The Patent Cliff

Ultimately, Big Pharma may be forced to embrace psychedelics.

Over the past decade in particular, multinational pharmaceutical companies have been hit hard by drug patent expiries on some of their most lucrative drugs.

Once a drug loses patent protection, generics and other competitors can take as much as 80 percent of market share. According to Statista, in the two worst years for patent expiries (2012 and 2015), drug patents with combined annual revenues of $52 billion lost protection each year.

That was $104 billion in annual revenues for Big Pharma, with most of those revenue streams now gone.

Compounding this crisis (for the pharmaceutical industry), drug development costs have skyrocketed and pharmaceutical companies are simply running out of viable ideas for new drug candidates.

Psychedelic drugs represent a multitude of new drug development possibilities. The potential to fill the holes in Big Pharma’s drug pipelines.
 
Big Pharma’s Faustian Bargain?

For the pharmaceutical industry, psychedelic drugs are a commercial proposition that requires stacking up the pros and cons and then assessing the balance.

Pros

• Many patentable drugs
• Large potential revenue streams
• Strong efficacy (in early clinical testing)

Cons

• Psychedelic drugs represent potential cures or transformative therapies with a number of medical conditions that affect large populations
• This could make pharmaceutical drugs (and the industry as a whole) more efficient and cost-effective

Lots of dollars on the table. Many drug patent possibilities (in multi-billion dollar treatment markets).

But in providing actual cures or dramatic improvements on existing standards of care, psychedelic drugs would make populations generally healthier. This could easily reduce overall spending on pharmaceuticals.

Bottom-line pressures on multinational pharmaceutical companies may tip the scales here.

Without a viable alternative to replenish its pipeline of drug patents, Big Pharma may be forced to embrace psychedelic drugs.