The psychedelics regulatory landscape in Europe is evolving and perceptions are changing but the UK is not quite convinced (yet)

Scientific investigation and research into psychedelic medicine is currently on the rise and progressing at a rapid pace in North America. Europe is starting to wake up to the potential of this sector, but is the industry in the UK and EU moving too slowly?

A body of research now indicates that there are several psychedelic compounds which have substantial medical benefits with very few side effects. This includes research analysing the benefits of MDMA-assisted therapy for severe PTSD and studies into the use of psilocybin and escitalopram for depression, to name a few.

As a result the scientific community has realised the considerable public health benefits in facilitating projects which manage to safely bring new innovative psychedelic medications to market.

The public health applications are equally matched by the commercial benefits that can be unlocked by creating a solid regulatory landscape which welcomes and nurtures such projects. There are now several psychedelics companies listed on the Nasdaq and the Canadian Securities Exchange (CSE). This demonstrates the potential of these corporations to gather interest from the business community and achieve mainstream commercial success.
North American psychedelics companies are now looking to Europe as the next big growth market for the sector. The regulatory landscape in Europe, however, does not currently provide the same hospitable environment.

We can gain an understanding of the regulatory environment in Europe by looking at how psychedelic compounds are currently regulated in some of the continent’s major economies. The UK, France, Germany, Netherlands and Spain present different stages of European regulatory development.

Magical mystery tour (of existing legislation)UK – The Psychoactive Substances Act 2016 is the UK’s latest analogue compounds legislation, which was introduced by the UK government with the intention to restrict a new class of psychoactive substances and analogue compounds often referred to as ‘legal highs’.

The act makes it an offence to produce, supply, offer to supply, possess with intent to supply, possess on custodial premises, import or export psychoactive substances – defined as any substance intended for human consumption that can produce a psychoactive effect.

In parallel, the Misuse of Drugs Regulations 2001 – which supplements the Misuse of Drugs Act 1971 (MODA) – legislates psychoactive substances and sets out the licensing regime for production, possession and supply of controlled substances classified under MODA – in Classes A, B and C (with Class A being the most serious).

A licence would therefore be required to legally possess, manufacture and research a psychoactive substance. The application process for such a licence would be rigorous, lengthy, expensive and also require companies to present a well-defined business or research model with standard operating procedures and security plans clearly established.

The current classification of psychedelics as Schedule 1 controlled drugs – with its associated administrative and cost burdens – is therefore preventing research on psychedelics from taking place in the UK.

France – under French law, the National Agency for the Safety of Medicines and Health Products (ANSM) cannot grant authorisations for clinical research or R&D purposes for substances that have been specifically classified as a narcotic or psychotropic, as many psychedelic compounds are.

Even a pharmaceutical company seeking to carry out research may find it difficult to obtain such an authorisation if regulatory bodies do not accept that the substance has any medicinal qualities.

In order to prevent the placing on the market of what is considered ‘new psychoactive substances’, ‘research chemicals’ or ‘designer drugs’, which have similar effects to those of prohibited substances – such as ecstasy/MDMA, cocaine and heroin – French law uses a generic classification of prohibited substance categories rather than a specific ‘substance list’ approach.

In practice, analogue compounds are psychoactive substances and, as such, are classified as narcotic or psychotropic substances shortly after reaching the French market and highly controlled by customs or law enforcement.

Germany – the Act to Combat the Proliferation of New Psychoactive Substances came into force in 2016 to counter NPS more effectively in legal terms, combat the proliferation and availability of these substances and protect public health.

This item of legislation, which supplements the single-substance approach of the Narcotics Act with a substance group regulation, seeks to emphasise the general German regulator view that these substances are prohibited are hazardous to health.
The New Psychoactive Substances Act (NpSG) is an independent law with a new approach: banning entire groups of substances. This implies that it is no longer possible in Germany to circumvent bans by making small chemical changes and to place the corresponding substances on the market.

The NpSG does not apply to medicinal products and narcotics while recognised uses for commercial, industrial or scientific purposes are exempt from the prohibition. In this respect, the handling of such substances must be subject to the approval required in each case according to the purpose pursued.

Spain – there is no similar analogue compound legislation in Spain to the one in the US. The Royal Decree 2829/1977 – which regulates the psychotropic substances and medicinal preparations, as well as the supervision and inspection of their manufacture, distribution, prescription and sale – observes Lists I, II, III and IV of controlled substances.

A novel substance which is not specifically mentioned in the Lists could in theory be legal to possess and/or consume, with no commission of criminal offence.

Any attempt to market or sell such substances for recreational purposes may give rise to a public health alert – listed in the official website of the Spanish Agency of Medicines and Health Products (AEMPS) - and recommendations can then be made to update the Lists of controlled substances.

Netherlands – a legislative proposal was published for public consultation in March 2020 to amend the Dutch Opium Act, under which prohibited psychoactive substances are regulated and included in List I or II.

In the proposal, it was suggested that groups of substances could be added to a new list in the Opium Act (List Ia), with the aim to avoid a situation where the chemical structure of a substance is changed to avoid being classified as a regulated substance.
Currently, there is not yet a specific regulation with regard to analogue compounds and the legal status of a product depends exclusively on whether or not the specific analogue compound is included on the lists of the Dutch Opium Act.

Compass reading

This regulatory landscape is pushing European psychedelic companies in their search for investors backing the North American market.

Compass Pathways is a good example of this. Headquartered in the UK, it is a mental health company developing a form of psilocybin therapy using a formulation of synthetic psilocybin (‘COMP360’) administered in conjunction with psychological support.

Its market capitalisation was $127.5m with stock jumping 71% on the first day of trading on the Nasdaq. The organisation estimated that the cost of preparing its first batch of psilocybin in the UK would be in the region of £2m with a significant proportion of that cost attributable to the burden imposed by Schedule 1 classification.

Compass Pathways’ decision to list on the Nasdaq – mirrored by others in the psychedelics sector - is reflective of the current absence of an evidence-based regulatory environment designed to assist companies in this space.
Ultimately, there is a strong need for European governments to develop a regulatory framework where psychedelics medical innovation and technological developments are encouraged and nurtured.

In doing so, entrepreneurs can enter the market, allowing psychedelics companies to flourish alongside well-established pharmaceutical corporations. In this way, the UK would significantly increase its chances of becoming a hub for healthtech innovation in this nascent industry.

Robert Jappie is a partner at Ince, specialising in life Sciences and cannabis regulation for the UK and Europe.
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