For more than half a century, ketamine occupied a narrow role in American medicine.Synthesized in 1962 and approved by the FDA in 1970, it has been widely used as an anesthetic in surgical, emergency, and battlefield settings because of its safety profile and dissociative properties.

That changed as research into ketamine’s rapid antidepressant effects began to translate into clinical practice. Off-label ketamine treatment offerings expanded accordingly, including dedicated outpatient clinics and telemedicine-based programs.

Beginning in the late 1990s, researchers observed that subanesthetic doses of ketamine could produce rapid antidepressant effects, often within hours, in treatment-resistant patients. This was a striking departure from traditional antidepressants, which typically take weeks to take effect and frequently fail in treatment-resistant cases. By the mid-2000s, clinicians began offering off-label ketamine infusions for depression, anxiety, PTSD, and related conditions.

Over time, patient demand increased. From 2015 to 2024, the number of ketamine therapy clinics nationwide reportedly grew from fewer than 100 to more than 1,500. By 2023, industry estimates placed the U.S. ketamine clinic market at roughly $3.4 billion, reflecting rapid growth in clinic count and service offerings. Pandemic-era telemedicine waivers, investor interest, and consumer-facing marketing accelerated adoption, positioning ketamine therapy as a rare growth segment in an otherwise constrained healthcare market.

Much of this growth preceded the development of clear, uniform regulatory standards governing ketamine’s psychiatric use.In the absence of clear regulatory standards, oversight is increasingly being defined through audits, investigations, and enforcement actions by federal regulators and state medical boards rather than prospective guidance.

An uneven regulatory framework

Ketamine remains FDA-approved only as an anesthetic. All psychiatric uses—whether delivered in clinics or via telemedicine—are off-label. This distinguishes ketamine from esketamine (Spravato®), a prescription nasal spray which the FDA approved in 2019 for treatment-resistant depression and later for depressive symptoms associated with suicidal ideation. Spravato is subject to a Risk Evaluation and Mitigation Strategy (REMS) requiring in-clinic administration and post-dose monitoring.

Ketamine itself is not subject to a comparable federal framework. The FDA has issued warnings about compounded ketamine products, particularly oral and at-home formulations, citing concerns about inconsistent dosing and safety. The DEA regulates ketamine as a Schedule III controlled substance, imposing registration, storage, security, and record-keeping requirements. State medical boards oversee professional conduct, while state attorneys general, consumer protection agencies, and private litigants increasingly scrutinize advertising and business practices.

No comprehensive regulatory scheme has emerged governing ketamine’s psychiatric use across delivery models. In practice, that has left enforcement agencies to define boundaries through investigations and prosecutions rather than prospective guidance.

Two business models, distinct enforcement risks

Enforcement patterns reflect two primary ketamine delivery models.

Telemedicine and at-home administration

Telemedicine providers typically prescribe compounded oral ketamine for self-administration outside a clinical setting, most commonly in lozenge form.This model expanded rapidly during COVID-19, when federal regulators temporarily waived the in-person examination requirement for controlled substances issued via telemedicine.

From an enforcement perspective, this model presents heightened risk. Once ketamine is dispensed, providers lose control over storage, administration, and diversion. High-volume remote prescribing is evaluated against the baseline requirements governing controlled substances, including patient screening, PDMP checks, follow-up care, and individualized clinical documentation.

The legal exposure here does not arise from off-label use itself, but from the manner in which controlled substances are prescribed and monitored.

In-Clinic infusion programs

In-clinic ketamine programs generally administer ketamine intravenously under on-site supervision.Because the drug does not leave the facility, diversion concerns are reduced.However, these clinics face different regulatory pressures.

State medical boards and healthcare fraud investigators focus on whether treatment decisions reflect individualized medical judgment.Red flags include standardized infusion protocols applied uniformly across patients, insufficient screening for substance use disorders or psychiatric contraindications, minimal physician involvement, and high-frequency dosing without documented clinical justification.

Billing practices also draw scrutiny, particularly where insurers or government payors are involved.Clinics that emphasize throughput or recurring treatment cycles without individualized reassessment may be vulnerable to allegations of medically unnecessary care.

Criminal enforcement

Federal prosecutors do not charge physicians for practicing innovative medicine or writing off-label prescriptions. They pursue cases where they conclude that a provider has wholly departed from professional practice and legitimate medical judgment.

Under longstanding Supreme Court precedent, a physician may be prosecuted under the Controlled Substances Act if prescribing occurs outside the usual course of professional practice and without a legitimate medical purpose. In 2022, the Supreme Court clarified that prosecutors must prove knowing or intentional misconduct, placing increased emphasis on evidence of intent.

In ketamine cases, that evidence often includes internal communications, standardized protocols, marketing language, patient intake metrics, and investor materials. Regulators frequently compare internal business communications with patient records, and discrepancies between the two can become a focal point of an investigation.

What investigators and state medical boards examine

When clinics are audited or investigated, regulators focus on operational indicators rather than treatment outcomes. Common areas of scrutiny include:

• Whether patient records document prior failure of conventional therapies or a clear clinical rationale for ketamine intervention
• Screening practices for ketamine misuse, substance use disorder, or doctor-shopping behavior
• The extent to which dosing and treatment plans are individualized rather than standardized
• Rejection rates for prospective patients, including evidence of meaningful gatekeeping
• The nature and consistency of physician supervision, including psychiatrist involvement
• Clinical documentation reflecting patient-specific judgment rather than uniform, repetitive entries
• Operational control by non-physician owners or investors that may warrant closer scrutiny of clinical independence
• The accuracy and transparency of advertising and marketing materials, including disclosure of off-label status and treatment limitations

State medical boards often pose the most immediate risk. Unlike criminal prosecutors, boards do not need to establish intent or prove harm. Discipline may be imposed for inadequate documentation, improper delegation, misleading advertising, failure to obtain informed consent, or deviation from accepted standards of care.

DEA oversight often begins with routine audits focused on registration, inventory control, and record-keeping, but technical deficiencies can result in significant financial penalties and escalate into broader enforcement inquiries.The DEA may also use its licensing authority to crack down on lax practices.For example, in May 2023, the DEA announced the suspension of the controlled substance registration of a prominent tele-ketamine prescriber in South Carolina, citing large-scale prescribing without adequate examinations or prescription monitoring.

Recent Criminal Prosecutions Illustrate the Risk

Federal prosecutors have begun charging ketamine-related conduct under traditional controlled-substance theories.In 2024, federal prosecutors in St. Louis charged two physicians, Dr. Asim Ali and Dr. Mohd Malik, with conspiracy to unlawfully distribute controlled substances and healthcare fraud in connection with a ketamine clinic.

According to the indictment, ketamine was administered using one physician’s DEA registration while that physician was not physically present, and Medicare was billed for evaluation and management services that were allegedly minimal or nonexistent. The case underscores the enforcement risks associated with absentee medical directorship and inadequate supervision.

The Telemedicine Deadline: December 31, 2025

Telemedicine-based ketamine providers face the scheduled expiration of COVID-era controlled substance prescribing flexibilities on December 31, 2025.Although the DEA has proposed a rule that would extend certain telemedicine prescribing allowances into 2026—and that rule is currently under review and expected to be addressed and finalized—the long-term framework governing remote prescribing of controlled substances remains unsettled.For businesses built entirely around remote prescribing, this uncertainty presents a fundamental operational issue.Providers lacking compliant pathways for in-person evaluations may find their core model untenable.

Preparing for the Next Phase

The ketamine therapy industry is entering a more regulated phase. Operators and investors who adapt early will be best positioned to navigate it. Key priorities include strengthening clinical documentation, ensuring meaningful physician oversight, aligning marketing with regulatory expectations, and preparing for changes in telemedicine requirements.

In the coming years, the defining distinction between sustainable ketamine practices and enforcement targets will not be technology, branding, or scale, but whether independent medical judgment governs how care is delivered.