After decades of stagnation, the field of mental health drug development is finally seeing some movement. A wave of innovation, bolstered by new science, shifting public attitudes, and landmark regulatory moments, is transforming how we understand and treat mental health conditions.
“It’s like we’ve been playing the same song on repeat,” says Emma Wille, a Minneapolis-based senior analyst at Citeline, a Norstella company, who specializes in drugs that treat depression and post traumatic stress syndrome. “The monoaminergic theory of depression—the serotonin, dopamine norepinephrine model—has been the basis for antidepressants for decades. But it just doesn’t work for a lot of people.”
In fact, more than half of patients don’t respond to their first prescribed antidepressant, according to the 2015 STAR*D trial, the most comprehensive study ever conducted to evaluate depression treatments. That trial revealed how limited current options can be: selective serotonin reuptake inhibitors (SSRIs), serotonin and norepinephrine reuptake inhibitors (SNRIs), and monoamine oxidase inhibitors (MAOIs) all operate with similar mechanisms, leaving millions of mental health patients without relief.
So why now? Why are drug developers re-engaging with this historically difficult space?
It’s because of both scientific and cultural shifts, according to Wille.
“We started realizing that there’s more going on biologically—other targets, other mechanisms,” she says. “And in 2019, when Spravato [esketamine] was approved, it was a huge moment. It opened the door for psychedelic development.”
Spravato, derived from ketamine and approved for treatment-resistant depression, acts on the N-methyl-D-aspartate (NMDA) receptors and initiates downstream effects like synaptic plasticity. Unlike SSRIs, which can take weeks to show effects, ketamine works within hours.
The timing of these breakthroughs also coincided with a rising cultural openness about mental health, largely due to the COVID-19 pandemic.
“That’s when people started talking more openly about being depressed or anxious,” Wille says. “It became more normalized.”
That normalization not only reduced stigma, but also increased demand, as more patients sought alternatives to traditional therapies. Combined with social media’s amplification of personal stories and a broader acceptance of psychedelics in public discourse, it created fertile ground for investment and drug developers were paying attention.
“We’re not just riffing on SSRIs anymore,” Wille says. “There are drugs targeting sleep-related receptors, opioid receptors, and others. Novelty is money—but it’s also helpful for patients who didn’t respond to older drugs.”
Psychedelics like psilocybin and 3,4-Methylenedioxymethamphetamine (MDMA) are at the forefront of this innovation, though the path to approval is complex. Compass Pathways’ COMP360, a synthetic form of psilocybin, is one of the most advanced compounds in clinical trials and could be approved by the late 2020s, according to Wille. But the clinical development of psychedelics raises new regulatory and logistical challenges because, although these are medical treatments with physical health risks, treatment is often carried out in conjunction with traditional talk therapy.
“One big issue is how to regulate the therapy component,” Wille says. “The U.S. Food and Drug Administration (FDA) doesn’t regulate psychotherapy. So how do you approve a treatment that requires both the drug and the therapist?”
This is a sticking point for MDMA-assisted therapy for PTSD, which faced FDA rejection in early 2024.
“Even though it wasn’t approved, it was a landmark moment,” Wille says. “Now companies know what the FDA is looking for—things like trial design, how to define psychological support versus active therapy.”
Another challenge is the phenomenon of ‘functional unblinding’ in psychedelic trials: A patient will most likely know if they took a psychedelic because of their altered mental state, also known as a trip.
“People know when they’re on lysergic acid diethylamide (LSD). So the placebo effect looks lower and the drug effect looks higher,” Wille says. This skews the data and can create unrealistic expectations about efficacy.
But new, innovative trial designs are emerging to address this. MindMed, for example, used a three-arm design in its LSD anxiety trial—comparing a full dose, a sub-therapeutic dose and placebo—to measure drug effect more accurately.
Looking ahead, Wille says that psychedelics will play a major role in the next decade of mental healthcare, but she tempers the hype.
“They’re not magic bullets. They’re not necessarily more efficacious than SSRIs. They’re just different—and they might help people who haven’t been helped before,” she says.
And that is what excites drug developers: an opportunity to expand the patient population and finally move beyond the limitations of traditional psychiatry.
“This is a field that has been stuck,” Wille says. “Now we’re seeing real momentum.”
As public awareness grows, regulatory frameworks evolve and science continues to uncover new mechanisms, the 2020s could be remembered as the decade mental health drug development finally broke free from the past—and started offering hope to millions who had long gone untreated.
Managing Editor | Citeline
Senior Analyst | Citeline
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