The ketamine economy: New mental health clinics are a 'Wild West' with few rules

For-profit ketamine clinics have proliferated over the past few years, offering infusions for a wide array of mental health issues, including obsessive-compulsive disorder, depression and anxiety. Although the off-label use of ketamine hydrochloride, a Schedule III drug approved by the Food and Drug Administration as an anesthetic in 1970, was considered radical just a decade ago, now between 500 and 750 ketamine clinics have cropped up across the United States.

Market analysis firm Grand View Research pegged industry revenues at $3.1 billion in 2022, and it projects them to more than double to $6.9 billion by 2030. Most insurance doesn’t cover ketamine for mental health, so patients must pay out-of-pocket.

Off-label use

While it’s legal for doctors to prescribe ketamine, the FDA hasn’t approved it for mental health treatment, which means that individual practitioners develop their own treatment protocols. The result is wide variability among providers, with some favoring gradual, low-dosage treatments while others advocate larger amounts that can induce hallucinations, as the drug is a psychedelic at the right doses.

“Ketamine is the Wild West,” says Dustin Robinson, the managing principal of Iter Investments, a venture capital firm specializing in hallucinogenic drug treatments.

Ketamine practitioners stress that the drug’s emergence as a mental health treatment is driven by a desperate need. Depression is the leading cause of disability in the U.S. for individuals ages 15 to 44, according to the National Institute of Mental Health, and around 25% of adults experience a diagnosable mental disorder in any given year.

Meanwhile, many insurance plans cover mental health services at lower rates than physical health care, despite laws requiring parity. Thus, many patients with mental health disorders receive little or no care early on and are desperate by the time they visit a ketamine clinic, says Dr. Steven Siegel, chair of psychiatry and the behavioral sciences at the University of Southern California’s Keck School of Medicine.

Matthew Perry and Elon Musk

But the revelation that “Friends” star Matthew Perry died in part from a large dose of ketamine, as well as billionaire Elon Musk’s open use of the drug, has piqued fresh scrutiny of ketamine and its regulatory environment, or lack thereof.

Commercial ketamine clinics often offer same-day appointments in which patients can pay out-of-pocket for a drug that renders immediate results. The ketamine is administered intravenously, and patients are often given blankets, headphones and an eye mask to heighten the dissociative feeling of not being in one’s body. A typical dose of ketamine to treat depression, which is 10 times lower than the dosage used in anesthesia, costs clinics about $1, but clinics charge $600 to $1,000 per treatment.

Ketamine is still shadowed by its reputation as the party drug known as “Special K”; Siegel’s first grant from the National Institutes of Health was to study ketamine as a drug of abuse. It has the potential to send users down a “K-hole,” otherwise known as a bad trip, and can induce psychosis. Research in animals and recreational users has shown that chronic use of the drug impairs both short- and long-term cognition.

Perry’s drowning death in October raised alarms when the initial toxicology screening attributed his death to the acute effects of ketamine. A December report revealed Perry received infusion therapy a week before his death but that the fatal blow was a high dose of the substance taken with an opioid and a sedative on the day of his death — indicating that medical ketamine was not to blame.

A variety of protocols

Sam Mandel co-founded Ketamine Clinics Los Angeles in 2014 with his father, Steven Mandel, an anesthesiologist with a background in clinical psychology, and Sam Mandel says the clinic has established its own protocol. That includes monitoring a patient’s vital signs during treatment and keeping psychiatrists and other mental health practitioners on standby to ensure safety. Initial treatment starts with a low dose and increases if that is not effective.

While many clinics follow the Mandels’ graduated approach, the dosing protocol at MY Self Wellness, a ketamine clinic in Bonita Springs, Fla., is geared toward triggering a psychedelic episode.

Christina Thomas, president of MY Self Wellness, says she developed her clinic’s procedures against a list of “what not to do” based on the bad experiences that people have reported at other clinics.

The field isn’t entirely unregulated: State medical and nursing boards oversee physicians and nurses, while the FDA and Drug Enforcement Administration regulate ketamine. But most anesthesiologists don’t have a background in mental health, while psychiatrists don’t know much about anesthesia, Sam Mandel notes. He said a collaborative, multidisciplinary approach is needed to develop standards across the field, particularly because ketamine can affect vital signs such as blood pressure and respiration.

The protocols governing Spravato, an FDA-approved medication based on a close chemical cousin of ketamine called esketamine, are illustrative. Because it has the potential for serious side effects, it falls under the FDA’s Risk Evaluation and Mitigation Strategies (REMS) program, which puts extra requirements in place, says Iter Investments’ Robinson. Spravato’s REMS requires two hours of monitoring after each dose and prohibits patients from driving on treatment days.

Generic ketamine, by contrast, has no REMS requirements. And because it is generic, cheap and already on the market, drugmakers have little financial incentive to undertake the costly clinical trials that would be required for FDA approval for specific psychiatric conditions.

That leaves it to the patient to assess ketamine providers. Clinics dedicated to intravenous infusions, rather than offering the treatment as an add-on, may be more familiar with the nuances of administering the drug. Ideally, practitioners should have mental health and anesthesia expertise or have multiple specialties under one roof, and clinics should be equipped with hospital-grade monitoring equipment, Mandel says.

The University of Southern California’s Siegel, who has researched ketamine since 2003, said the drug is especially useful as an emergency intervention, abating suicidal thoughts for long enough to give traditional treatments, like talk therapy and SSRI antidepressants, time to take effect.

“The solutions that we have and have had up until now have failed us,” Mandel says.

The drug is now popular enough as a mental health treatment that the name of Mandel’s clinic is a daily sight for thousands of Angelenos, as it appears on 26 Adopt A Highway signs along the 405 and 10 freeways.

And the psychedelic renaissance in mental health is accelerating. A drug containing MDMA, known as ecstasy or molly, is expected to receive FDA approval in 2024. A drug with psilocybin, the active ingredient in “magic mushrooms,” could launch as early as 2027, the same year a stroke medicine with the active ingredient DMT, a hallucinogen, is expected to debut.

Iter Investments’ Robinson says many ketamine clinics have opened in anticipation of the expanded psychedelic market. Since these new drugs will likely be covered by insurance, Robinson advises clinics to offer FDA-approved treatments such as Spravato so they’ll have the proper insurance infrastructure and staff in place.

For now, Sarah Gutilla will pay out-of-pocket for ketamine treatments. One year after her first round of infusions, she and her husband are saving for her second. In the meantime, she spends her days on her ranch in Llano, where she rescues dogs and horses and relies on telehealth therapy and psychiatric medications.

While the infusions aren’t “a magic fix,” they are a tool to help her move in the right direction.

“There used to be no light at the end of the tunnel,” she says. “Ketamine literally saved my life.”

This article was produced by KFF Health News, a national newsroom that produces in-depth journalism about health issues. KFF Health News is the publisher of California Healthline, an editorially independent service of the California Health Care Foundation.