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Formal approval may not arrive within the 12-month window Secretary Robert F. Kennedy Jr. predicted in June 2025, but several of the enabling regulatory steps are falling into place. Compass Pathways, whose synthetic psilocybin COMP360 hit its primary endpoint in two Phase 3 trials for treatment-resistant depression, is now filing its new drug application on a rolling basis after the FDA granted that request in April. The agency also awarded COMP360 a Commissioner’s National Priority Voucher, a new pathway that can compress a standard 10-to-12-month review to as little as one or two months. The politics have turned in the company’s favor: President Trump signed an executive order in April directing agencies to speed psychedelic review and approval for serious mental illness. A first FDA decision could land by late 2026 or early 2027.
Jonathan Bound
In the following Q&A, Jonathan Bound, product development lead at Relm Insurance, which has underwritten companies across the psychedelics sector for years, works through that question from the underwriter’s side. He explains how a REMS can cut both ways, reducing drug risk while creating documented obligations. He questions the premise that the longer, more intense session is inherently harder to insure. And he maps where he expects insurable business to form across the value chain, from CROs and manufacturers to certified treatment sites and training organizations.
Spravato already runs under a REMS with multi-hour monitoring. From an underwriting standpoint, what does a psilocybin REMS add to a provider’s liability exposure that Spravato’s didn’t, given a longer, potentially full-day supervised session and a more intense psychoactive experience?
Bound: While Risk Evaluation and Mitigation Strategies (REMS) are intended to reduce drug-related risks, they can also increase liability sensitivity for providers by creating specific, documented obligations that must be followed. From an underwriting standpoint, the provider is operating within a federally prescribed risk-control framework. Failure to comply with that framework could support allegations of negligence, professional misconduct, inadequate supervision, improper discharge, or failure to follow required safety protocols. The insurer would not be liable for the REMS failure itself, but may have a duty to defend or indemnify covered claims arising from the provider’s noncompliance with the REMS, subject to policy terms and exclusions of course.
Compared with Spravato, a psilocybin REMS could add incremental exposure if it requires a longer, full-day supervised session and addresses a more intense psychoactive experience. Longer monitoring increases the period during which the patient is in an altered, vulnerable state and under the provider’s control. That creates additional exposure around staffing adequacy, patient supervision, boundary violations, employee misconduct, patient elopement, emergency response, psychological destabilization, and premature release. If the REMS imposes specific screening, preparation, monitoring, therapeutic support, documentation, or discharge criteria, the provider’s liability exposure would expand to whether each of those obligations was properly satisfied.
Relm has underwritten the regulated psilocybin programs in Oregon and Colorado. What has the real claims and demand experience been there? How does that inform how you assess the commercial and liability outlook for an FDA-approved product?
Bound: An FDA-approved medication may involve standardized dosing, clinical labeling, approved indications, provider requirements, REMS obligations, and a more traditional healthcare delivery setting. Those features could reduce uncertainty compared with state-regulated adult-use or service-center models, but they may also create new compliance-based liability if providers fail to follow required protocols.
From an underwriting standpoint, more credible operating and claims data generally allows for more precise risk selection, pricing, and coverage terms over time. Where data remains limited, insurers typically need to account for uncertainty through underwriting discipline, risk controls, pricing adequacy, and careful attention to sublimits and exclusions.
A multi-hour supervised session with a trained monitor is a heavy operational and cost model. From an insurability standpoint, does that workflow create concentration risk (sites, staffing, facility incidents) that makes it harder to underwrite or scale than Spravato’s roughly two-hour interventional-psychiatry workflow?
Bound: While longer supervised sessions can increase the risks associated with a treatment, they don’t make them inherently harder to underwrite than shorter supervised sessions. From an insurability standpoint, it can make the underwriting process more dependent on site-level controls, yet the more standardized and auditable those controls are, the easier the risk becomes to underwrite and scale.
Relative to Spravato, a psilocybin treatment model may involve a longer period during which a patient is in an altered and vulnerable state; which can increase exposure to risks associated with professional liability, premises liability, negligent supervision, employee misconduct, emergency response failures, and improper discharge. However, those exposures don’t make the model inherently more difficult to insure, they simply require more robust underwriting guidelines.
Longer supervised sessions may also drive higher operational costs because they require more staff time, more facility capacity, and more robust controls around patient safety and documentation. Similarly, they can drive higher insurance costs due to the increased risk exposures mentioned.
Over the next two to three years, where does Relm see insurable business forming, and what’s the biggest risk that the COMPASS approval does not translate into a viable insurable market?
Bound: Over the next few years, I expect insurable business to form around specific, regulated parts of the value chain that have defined operating standards. That includes clinical research organizations, drug developers, manufacturers, specialty distributors, certified treatment sites, healthcare providers, training organizations, and ancillary service providers supporting compliant delivery. Relm’s focus has consistently been on emerging industries where traditional insurance products often do not necessarily fit neatly, and psychedelics are a good example of that. The opportunity is the regulated infrastructure needed to responsibly research, manufacture, distribute, administer, and monitor a given treatment.
From our perspective, the key question is not only whether COMPASS achieves approval, but whether the post-approval ecosystem becomes standardized, auditable, and financially sustainable. The more the market develops around clear protocols, credible clinical governance, and consistent compliance controls; the more underwriters can support it. The greater risk is a market where demand exists, but the operating model remains too expensive, too inconsistent, or too thinly funded to produce a durable insurable market.
Relm’s focus has consistently been on emerging industries where traditional insurance products often do not necessarily fit neatly, and psychedelics are a good example of that. Beyond simply the compound, the opportunity is the regulated infrastructure needed to responsibly research, manufacture, distribute, administer, and monitor a given treatment.
Filed Under: Neurological Disease
