Serious mental illness (SMI) imposes a significant burden on individuals and society. Individuals living with SMI have worse expected health, education, and career outcomes during their lifetime. Although treatments exist, pharmaceutical innovation in this area has lagged many other disease areas, despite an important need for new treatments. This report describes barriers that have hindered innovation and the development of new drugs for SMI, including science and research, regulatory, and health system barriers. To address these barriers, this report presents policies that may incentivize investment in this area.