Ketamine - Regulatory and Clinical Issues
If you’ve been following the rise of ketamine therapy for mental health, you already know how promising it can be for depression.
But for clinics, the excitement surrounding ketamine comes with a tangled web of regulations, legal challenges, and risks that can derail even the most well-intentioned provider.
How can clinics balance compliance, patient safety, and ethical care?
Let’s dive in.
The Legal Maze: Ketamine's Unstable Standing
Off-Label Chaos
Ketamine is FDA-approved for anesthesia, but its off-label use for mental health is… Barely legal.
The FDA’s hands are “tied” because ketamine’s patent expired long ago.
Without a patent, Big Pharma has zero incentive to fund the massive, double-blind studies required for a new FDA approval.
And without that approval, most insurance companies won’t touch it, leaving patients to foot the bill.
The irony is, the patients who could benefit the most from ketamine therapy often can’t afford it.
To make matters worse, providers who offer off-label ketamine treatments risk heightened scrutiny from the DEA and medical boards.
While the therapy itself might be effective and appropriate, offering it could result in negative attention from colleagues or even an audit.
It’s a legal tightrope.
And no one’s providing a safety net.
Esketamine’s REMS Trap
In contrast, esketamine (Spravato) has secured FDA approval for TRD and MDSI, giving it an edge over its parent chemical.
But as we know, Esketamine is heavily regulated by the REMS (Risk Evaluation and Mitigation Strategy) program.
The REMS program provides a safety net for the stakeholders.
It also feels like a bureaucratic beast.
Every prescriber, pharmacy, and patient must jump through strict regulatory hoops just to administer or receive treatment.
The well-intended requirements of this program creates bottlenecks for clinics with limited resources and space.
Small clinics and private practices often can't afford to stock up on esketamine for treatments due to their high cost and complexity around prior authorization.
They often end up opting for cash-only, off-label ketamine business instead.
The Clinical Dilemma: No One is a Ketamine “Specialist”
Ketamine therapy for mental health disorders—especially IV administration—sits at the awkward intersection of psychiatry and anesthesiology.
While psychiatrists understand mental health, they may lack the experience to manage ketamine’s physiological side effects, like its cardiovascular risks.
On the flip side, anesthesiologists are experts in administering ketamine but may not have the training to handle the psychiatric crises that can arise during treatment, like psychosis.
The outcome?
A costly and complicated collaboration between the two specialties.
For example, many psychiatrists are forced to hire or consult anesthesiologists to manage administration, which drives up costs.
Because most patients are paying out of pocket,
these financial barriers can make ketamine therapy inaccessible to all but the privileged individuals.
It’s a frustrating disconnect in a treatment that could help so many.
FDA Risk Alerts: Compounding the Confusion
To add fuel to the fire, the FDA has issued two risk alerts about compounded ketamine formulations, raising concerns about safety and proper administration.
These warnings, while important, have created confusion among both patients and providers.
The FDA isn’t banning compounded ketamine, but they’re not exactly endorsing it either.*
* During the 2024 panel discussion, the FDA representative clarified that the alerts were intended to increase awareness, rather than serve as guidance or regulatory measures.
This leaves providers in a regulatory limbo, trying to read between unclear guidelines while ensuring patient safety.
The compounded formulations are often used because they can be customized for individual patient needs.
It also introduces variability in quality and safety, something that off-the-shelf esketamine doesn’t face.
Yet again, patients are forced to choose between cost and safety, with no clear winner in sight.
Keeping Ketamine’s Effects: The Maintenance Problem
Ketamine works fast, but not for long.
While patients might feel better within hours,
those effects often wear off after a week.
Patients often need periodic treatments to maintain those benefits.
The main issue is the unknowns.
What does repeated ketamine use do over time?
We don’t fully know yet.
Long-term safety of frequent doses remains a big question mark.*
* Spravato (esketamine) has more long-term safety data, thanks to its REMS reporting requirement.
Most experts agree that weekly or biweekly dosing is generally safe for up to one year.
Ethical and Financial Tensions: The Price of Access
As ketamine clinics pop up across the country, ethical concerns about quality of care and financial disparities grow louder.
Patients who can’t pay out of pocket are often left without access to this life-saving treatment.
And even if they can afford it, they’re navigating a world where providers might be cutting corners due to a lack of guidelines.
For example, the Ohio Board of Pharmacy received a licensing request for a ketamine clinic inside a gym..
Doesn't exactly scream 'safe and sterile,' if you ask me.
Meanwhile, compounding pharmacies find themselves in an awkward position.
They have to weigh the risks of following unclear FDA/DEA guidelines while managing growing demand from providers and patients alike.
The Fight for Standardized Ketamine Therapy
Ketamine’s future as a mental health treatment remains uncertain.
Until there are clear, national guidelines or FDA-approvals, providers and patients alike will have to wade through murky waters.
Collaboration between Psychiatry and Anesthesiology is essential but costly.
Nationwide insurance coverage remains unlikely unless Big Pharma steps up (doubtful without significant financial incentives).
What’s needed is a joint effort from policymakers, healthcare providers, and regulators to create clear, consistent guidelines and make ketamine therapy affordable and accessible.
Without these changes, ketamine will remain an elusive option for many, despite its proven potential.
The FDA’s 2024 Panel Meeting and the Need for a National Registry
In June 2024, the FDA invited a panel to discuss ketamine therapy.
One of the key consensus was the need for a national registry to track the use of ketamine across the country.
Such a registry could collect crucial data on safety, effectiveness, and procedural outcomes.
It will allow us to finally get a clear picture of how ketamine is being used and its long-term effects.
It’s mind-boggling that we don’t have this already.
If the FDA, DEA, and the state boards are so concerned about off-label ketamine use,
why haven’t they implemented a mandatory reporting system?
A national registry would give us the data we need to make better decisions and help guide future FDA policies.
Right now, clinics are operating in silos, with no standardized way to collect and share information.
A centralized system could solve this issue and help push ketamine toward FDA approval down the line.
Navigating the Challenges of IV Ketamine Therapy: Practical Solutions for Clinics
In order for any clinic to offer ketamine therapy mental health conditions, they must navigate a complex regulatory environment to ensure patient safety and legal compliance.
Beyond the typical concerns, there are nuanced DEA rules and risks of drug diversion that clinics must consider.
Below is a suggestions to how clinics can navigate these challenges while keeping patient safety and compliance at the forefront.
1. Constructive Transfer and DEA Flexibility: Are Clinics Overlooking Risks?
DEA’s rule against constructive transfer requires patient-specific compounded ketamine to be delivered directly to the patient, not to the clinic.
This prevents clinics from storing the drug for administration.
When ketamine is delivered directly to patients, the medication can be tampered before bringing it to the clinic.
Compounded drugs, in particular, can be altered more easily than FDA-approved products.
Hypothetical Example
A compounding pharmacy was cited by the DEA for sending ketamine directly to the clinic instead of the patient.
To comply, they dispense ketamine directly to patients for home storage before their in-clinic treatment.
A family member tampers with the drug before bringing it in.
Tampered Ketamine is then infused, causing a significant adverse event.
Patient seeks litigation against the clinic and the pharmacy.
Following DEA rules didn’t solve any problem.
It ended up creating one.
Practical Tip
DEA MAY use enforcement discretion to allow pharmacies to deliver a SINGLE DOSE directly to a clinic for administration under the right circumstances**, +.
(Click here for details)
** NOT legal advice. The DEA can still take action against the pharmacy and the clinic.
+ The New Mexico DEA office has notified the state’s board of pharmacy that pharmacies making transfers to prescribing physicians are in violation of the CSA, jeopardizing pharmacy licensing with the BOP.
Alliance for Pharmacy Compounding (APC) strongly recommends consulting a pharmacy attorney before dispensing a controlled substance prescription, in any amount, to anyone other than the ultimate user of the medication.
Clinics and pharmacies should carefully assess the risks of delivering ketamine directly to patients vs. clinics.
Either case, clear protocols and DOCUMENTATION are essential.
Avoid home administration when possible, and only prescribe small doses as needed.
Be aware that at-home ketamine therapy via telehealth is under close scrutiny and may face tighter regulations or a ban soon.
Don’t be afraid to ask the DEA for guidance.
Email offers a solid paper trail.
2. Choosing Between 503A and 503B Pharmacies: What’s Best for Your Clinic?
When sourcing ketamine, clinics often have to decide between using a 503A compounding pharmacy or a 503B outsourcing facility.
Each option comes with its pros and cons.
503A Compounding Pharmacies
Pros
Patient-Specific
Customization of medication to meet specific patient needs (e.g., tailored dosages).
Local Access
Direct relationships with local pharmacists for consult, counseling, and adjustments.
Lower Regulatory Burden
Less stringent FDA oversight, mainly state-regulated.
Cost-Efficient for Small Orders
Lower costs for clinics with fewer patients.
Compliance
PDMP reporting required at the time of dispensing
Cons
No Office Stock
Cannot supply bulk ketamine for clinic inventory.
Potential Variability
Less strict quality control compared to 503B.
Must Dispense to Patient
Often required to dispense directly to the patient, complicating clinic operations.
Lack of safety-related reporting requirement
Compounding pharmacies are not required to report side effects.
503B Outsourcing Facilities
Pros
Bulk Stock
Can provide ketamine in bulk for office use without patient prescriptions.
Higher Quality
Follows FDA’s cGMP standards for consistency and sterility.
Better for Large Clinics
Can handle high-volume needs with reliable supply.
Standardized Dosing
More consistent, reducing variability in treatments.
Registry Compliance
503B facilities are required to report any side effects through MedWatch
Cons
Higher Cost
More expensive due to stricter regulatory requirements.
Still inexpensive (<$10/dose)
Less Customization
Limited ability to tailor dosing for individual patients.
Longer Lead Times
May take longer to fulfill orders compared to local 503A pharmacies.
PDMP Not Required for In-Clinic Administration
More difficult to identify to spot drug-seeking behaviors.
Key Decision Points for Clinics
Smaller Clinics
May prefer 503A for patient-specific customization and lower costs.
Larger Clinics
Likely benefit from 503B’s ability to provide bulk stock and consistent quality.
Practical Tip
Consult with your prior state board of pharmacy for sourcing guidance.
Make sure to carefully vet the pharmacy’s personnel and practices.
3. Preventing Diversion: Can You Trust Your Systems?
Ketamine status as a controlled substance poses a risk of theft or misuse by patients or staff.
Diversion can happen at multiple points—
Patients altering or misusing the drug after it’s delivered
or
through internal theft from pharmacy or clinic staff
To prevent this, clinics need to implement strict inventory controls and use Prescription Drug Monitoring Programs (PDMPs) to track patient behavior.
PDMPs allow clinics to see whether a patient is obtaining ketamine from multiple sources or trying to refill their prescriptions too frequently.
Practical Tip
DEA’s requirement for inventory is twice a year.
It may differ from state to state. Conducting monthly inventory is widely seen as best practice.
Keep in mind, PDMP reporting may not be required for IV ketamine clinics that don't work with a pharmacy.
When checking PDMP, include nearby states and patient’s previous state of residence.
4. Signed Treatment Protocols: Can You Guarantee Accountability?
One of the simplest and most effective ways to ensure accountability in ketamine therapy is by using signed treatment protocols.
Real-World Example
Some collaborative compounding pharmacies and ketamine clinics have a policy where every ketamine treatment includes a signed protocol.
Each party—patient, clinic, and pharmacy— signs and receives a copy of the agreement.
These agreements clearly outline roles, responsibilities, and expectations and reduce the chance of miscommunication.
This allows for effective communication amongst all parties and provides legal protection.
It also helped ensure that dosing adjustments are communicated effectively, reducing the risk of errors or misuse.
Practical Tip
Provide detailed education on off-label Ketamine use and obtain informed consent when giving patients signed documents.
If a patient needs long-term treatment, make sure to regularly review and update their consent form.
Partner with compounding pharmacies for additional counseling at dispensing.
Conclusion: Know Your Laws. Prioritize Safety.
IV Ketamine therapy requires careful planning, strict adherence to DEA and state regulations, as well as understanding of the risks associated with compounded formulations and drug diversion.
Clinics can provide safe, effective ketamine treatments to their patients by choosing the right pharmacy, implementing tight monitoring, and ensuring accountability through signed treatment protocols.
Clinics need to seriously consider whether they are fully equipped to manage the complexities of offering ketamine therapy.
Do they have the right systems and protocols for safe acquisition, administration, compliance with regulations, monitoring, and reporting?
Are they ensuring that their processes not only meet legal requirements but also prioritize patient safety and long-term care?
How well these questions are addressed will define the clinic's ability to operate successfully in this rapidly changing landscape.
What’s Next?
SPRAVATO - Legal Middle-Finger to Greedy Payers
Insurance rarely covers off-label ketamine treatments, and some insurers even refuse to reimburse therapy sessions held during ketamine administration.
This leaves patients either paying large out-of-pocket expenses or trying for partial reimbursement through superbills—only to have claims frequently denied.
Their justification?
Ketamine isn’t FDA-approved for mental health..
My solution?
Increasing Spravato Approvals..
Hear me out.
Spravato (esketamine) squeaked through FDA approval with relatively thin evidence, likely due to the lack of options available for treatment-resistant depression (TRD).
Janssen poured resources into securing this approval, making Spravato the only psychedelic-derived treatment that insurers are forced to acknowledge.
I’m not a fan of Big Pharma (Purdue, we see you), but Janssen played the game.
They built a system where insurers can’t just brush Spravato off.
Now insurers are paying for it—literally.
Janssen now collects substantial second-hand payments from insurance companies, while offering patients comprehensive copay and coverage assistance.
They also offer providers with high-quality resources and case management support at no cost.
Perhaps that's what drove the creation of monopoly-friendly rules and regulations.
Regardless of the hypothetical reasons, most payers have been forced to consider Spravato as a real therapy option for TRD.
The payers still don’t make it easy, all requiring prior authorization for every patient.
Despite making coverage difficult, Spravato’s use has skyrocketed since its approval in 2019.
Janssen is set to hit $1 billion in Spravato sales by 2024.
Medicare alone reimburses around $1,000 (often more) for a two-hour Spravato session.
Patients often need at least eight doses during the induction phase, amounting to an $8,000 claim.
Had insurers covered IV ketamine—reasonably around $500 per session—they could’ve saved $4,000 per patient.
Ironically, IV ketamine tends to be more effective than Spravato.
Consider the broader impact–
2.8 million U.S. adults suffer from TRD (2021).
Spravato for 50% (1.4 Million) of Patients: Insurers pay $11.2 Billion
IV Ketamine for 1.4 Million Patients: Insurers pay $5.6 Billion
Potential Insurer Savings: $5.6 billion
I dream of a day when greedy corporations meddling in healthcare decisions face the consequences of their actions (Click here to learn more about the recent FTC lawsuit).
The truth is, we’re in a position to make that happen.
If you believe in breaking down barriers and providing real mental health solutions, stick around.
In my next post, I’ll dive into the practical steps for setting up a Spravato clinic that may be safe, effective, legal, and sustainable.
It’s time to bring real change to the system, together, one step at a time.
References
U.S. Food and Drug Administration. (2023). FDA warns patients and health care providers about potential risks associated with compounded ketamine. https://www.fda.gov/drugs/human-drug-compounding/fda-warns-patients-and-health-care-providers-about-potential-risks-associated-compounded-ketamine
Sanacora, G., et al. (2024). Understanding Current Use of Ketamine for Emerging Areas of Therapeutic Interest. Yale University. Presentation at FDA Panel Meeting.
U.S. Food and Drug Administration. (2019). FDA approves new nasal spray medication for treatment-resistant depression; expanded use of SPRAVATO esketamine nasal spray for MDD with acute suicidal ideation or behavior. https://www.fda.gov/news-events/press-announcements/fda-approves-new-nasal-spray-medication-treatment-resistant-depression-available-only-certified.
Ehret, M. J., et al. (2024). Patient Safety and Managing Adverse Effects of Ketamine. University of Maryland Baltimore School of Pharmacy. Presentation at FDA Panel Meeting.
Palamar, J. J. (2024). Identifying Safety Concerns and Potential Risks Associated with the Use of Ketamine Products. NYU Langone Health. Presentation at FDA Panel Meeting.
Popova, V., Daly, E. J., Trivedi, M., Cooper, K., Lane, R., Lim, P., Mazzucco, C., Hough, D., Thase, M. E., Shelton, R. C., Molero, P., Vieta, E., Bajbouj, M., Manji, H., Drevets, W. C., & Singh, J. B. (2019). Efficacy and Safety of Flexibly Dosed Esketamine Nasal Spray Combined With a Newly Initiated Oral Antidepressant in Treatment-Resistant Depression: A Randomized Double-Blind Active-Controlled Study. The American journal of psychiatry, 176(6), 428–438. https://doi.org/10.1176/appi.ajp.2019.19020172
Mailhot, S. A. (2024). Policy and Regulatory Challenges for the Medical Use of Ketamine. Husch Blackwell LLP. Presentation at FDA Panel Meeting.
Cohen, S. P., Bhatia, A., Buvanendran, A., Schwenk, E. S., Wasan, A. D., Hurley, R. W., Viscusi, E. R., Narouze, S., Davis, F. N., Ritchie, E. C., Lubenow, T. R., & Hooten, W. M. (2018). Consensus Guidelines on the Use of Intravenous Ketamine Infusions for Chronic Pain From the American Society of Regional Anesthesia and Pain Medicine, the American Academy of Pain Medicine, and the American Society of Anesthesiologists. Regional anesthesia and pain medicine, 43(5), 521–546. https://doi.org/10.1097/AAP.0000000000000808
Hermes, E. (2024). Ketamine and esketamine delivery for treatment-resistant depression in the Veterans Health Administration. Veterans Health Administration, Office of Mental Health. Presentation at FDA Panel Meeting.
Alliance for Pharmacy Compounding. (2024). Best Practices for Preparing and Dispensing Compounded Ketamine by Pharmacies. https://a4pc.org/files/APC-Ketamine-Best-Practices-April-2024.pdf.
Krystal, J. H., Abdallah, C. G., Sanacora, G., Charney, D. S., & Duman, R. S. (2019). Ketamine: A Paradigm Shift for Depression Research and Treatment. Neuron, 101(5), 774–778. https://doi.org/10.1016/j.neuron.2019.02.005
