Incentivizing Drug Development for Serious Mental Illness

Date: January 25, 2022

Incentivizing Drug Development for Serious Mental Illness

By: Hannah Geils, MPH, Tara Lavelle, PhD, Abigail Riley, BA


Key Takeaways

Demand for better treatments for serious mental illness has long been substantial and in recent years, it has accelerated.  Pharmaceutical treatments have the potential to help address the burden imposed by serious mental illness, just as they have for many other clinical areas.  A study released today by Tufts-CEVR researchers provides a set of recommendations on how the US can realize this potential. 

  • The government can increase its funding for basic research and early clinical trials, in line with the burden imposed by serious mental illness on individuals and society.  Public-private partnerships can focus on innovation for specific mental diseases. 
  • The regulatory system can offer longer periods of exclusivity to increase the potential rewards to drug companies for effective treatments, and it can explore innovative regulatory approvals that recognize information from trials that are informative but short of definitive. 
  • Finally, the health system should funnel more resources toward mental health providers to alleviate shortages.  Medicaid, an important program in this clinical area, should align payments for drugs with their patient and societal value.


In 2020, approximately 6% of adults in the US reported living with a serious mental illness including, schizophrenia (1%), bipolar disorder (3%), and major depressive disorders (6%).  As the coronavirus (COVID-19) pandemic has persisted, its effects on mental health are becoming more evident. Twice as many individuals reported serious consideration of suicide in June 2020 than in 2018. Between 2018 and 2020, the number of adults reporting serious psychological distress increased four-fold, while the number of people reporting symptoms of depression and anxiety increased by 3- to 5-fold.

This blog summarizes our report, “Incentivizing Drug Development for Serious Mental Illness”, characterizing the burden of serious mental illness and measures that can accelerate development of pharmaceuticals to treat these conditions.

An infographic summarizes our findings:



Serious mental illnesses refer to mental, behavioral, or emotional disorders causing serious functional impairment that substantially limit one or more major life activities. Having a serious mental illness reduces average life expectancy by 10 years. On average, individuals living with a serious mental illness have lower educational attainment and approximately half the lifetime earnings compared to others. Serious mental illness is also associated with poverty, homelessness and interaction with the criminal justice system. The expected lifetime societal costs associated with a diagnosis of serious mental illness by the age 25 is $1.85 million.

Finding an effective and tolerable treatment regimen for serious mental illness is complicated by its heterogeneity and complex biology. In any year, approximately 40% of individuals with schizophrenia, 50% of individuals with bipolar disorder, and 35% of individuals with major depression remain untreated.

Despite the need for better treatments, the development of pharmaceuticals to treat serious mental illness has lagged advancements in other disease areas over the last 30 years. Most new medications have benefited patients through increased tolerability or alternative routes of administration (e.g., a relatively infrequent injection instead of daily pill), but they have not substantially reduced disease symptoms further.

We describe the scientific, research, regulatory, and health system barriers to innovation, and identify policies to help address some of these challenges.



Challenge: Although the government funds most basic research and conducts preclinical studies that can shed light on brain functions, NIH funding for serious mental illness is low relative to the condition’s prevalence and burden. Such funding is crucial to accelerating innovation because of the brain’s complexity and because identification of molecular targets for new drugs depends on understanding the brain’s basic mechanics. Moreover, the lack of mental health biomarkers makes clinical trials more difficult because there is no way to “objectively” diagnose individuals or assess treatment efficacy.

Policy Solutions:  NIH should increase funding for the NIMH and the NIH BRAIN (Brain Research through Advancing Innovative Neurotechnologies).  Support for public-private partnerships can also help. The Accelerating Medicines Partnership (AMP) between the NIH, FDA, and other public and private stakeholders aims to produce better treatments and diagnostic tools in focused disease areas. These partnerships can accelerate the process of identifying promising biological targets for drug development and hence improve the likelihood of successful clinical trials. The AMP Schizophrenia (AMP SCZ) program is the first AMP initiative focused on a psychiatric disorder. Other AMP programs should be established in order to increase the likelihood that clinical trials will succeed and to incentivize companies to pursue development of mental illness therapies.

Regulatory system

Challenge: Although the US incentivizes drug development by granting developers a “market exclusivity” period during which they can sell their treatments without competition, the laws do not account for the longer research times, higher risks, and greater costs associated with developing drugs to treat serious mental illness.  

Policy Solutions:  Extending market exclusivity terms for psychiatric and central nervous system drugs can help to ensure that as science advances, companies have incentives to initiate and continue investments in this area. The market exclusivity period should be sufficiently long to account for the high risk associated with drug development in this area.  

Adaptive licensing pathways can reduce the risks associated with large clinical trials by allowing for the conditional approval of drugs based on smaller studies than traditionally used by regulatory authorities. Following this conditional approval, regulators could require companies to conduct additional studies, with approval expanded or restricted in light of emerging evidence of a drug’s efficacy and safety.

Establishing a Neuroscience Center of Excellence (NCOE) at the FDA can also address lengthy regulatory approval periods for central nervous system drugs. The NCOE would consolidate neuroscience expertise within the agency and create processes to expedite the review and approval of potential therapies and diagnostics.

Health System

Challenge: Pharmaceutical companies invest in new drug candidates based in part on their expected return on investment (ROI). Limited access to treatments for serious mental illness and low reimbursement rates reduce anticipated revenues and anticipated ROI from drugs to treat these conditions, and can therefore serve as a disincentive to their development.

Policy Solutions:  Medicaid reform should align drug payments with economic value. This change can better incentivize development of therapeutics that provide high value to Medicaid beneficiaries.  The health system must complement greater reimbursement for therapies with additional resources for mental health workers.  For example, increasing salaries will help to alleviate the shortage in this profession.  Recent legislation proposals have called for more repayment of educational loans for mental health care professionals who work in underserved areas. This proposal aims to improve access to care for individuals on Medicaid, a group comprising a substantial portion of the serious mental illness patient population.

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