The Economic Case for Ketamine: How Expanded Access Could Save Lives and Money

Healthcare costs in the United States continue to rise at an alarming rate, with mental health treatment representing a significant and growing portion of these expenses. Among mental health conditions, treatment-resistant depression stands out as particularly costly, both in terms of direct medical expenses and the broader economic impact on individuals, families, and society as a whole. Patients with treatment-resistant depression often cycle through multiple medications, require frequent hospitalizations, and experience reduced productivity that affects their ability to work and contribute to the economy. However, a groundbreaking economic analysis published in 2025 has revealed that expanding access to ketamine therapy for treatment-resistant depression could result in massive cost savings while dramatically improving patient outcomes [1]. The study found that broader availability of ketamine treatment could save society over $828 million annually, representing one of the most compelling economic arguments for psychedelic medicine to date. These findings have significant implications for healthcare policy, insurance coverage decisions, and the future of mental health treatment.

This article examines the economic burden of treatment-resistant depression, explores how ketamine therapy offers a cost-effective alternative to traditional treatments, and analyzes what these findings mean for patients, healthcare providers, and policymakers. We'll break down the numbers, examine real-world implications, and discuss how expanded access to ketamine could transform both individual lives and the broader healthcare system.

The Burden of Treatment-Resistant Depression

Treatment-resistant depression affects millions of Americans and represents one of the most challenging and expensive conditions in mental healthcare. Defined as depression that does not respond adequately to at least two different antidepressant treatments of adequate dose and duration, treatment-resistant depression affects approximately 30-40% of people with major depressive disorder [2]. This translates to millions of individuals who continue to suffer despite trying multiple conventional treatments. 

The human cost of treatment-resistant depression cannot be overstated. Patients often endure years of persistent symptoms including profound sadness, hopelessness, fatigue, and loss of interest in activities they once enjoyed. The condition affects every aspect of life, from personal relationships and family dynamics to career prospects and financial stability. Many patients describe feeling trapped in a cycle of trying new medications, experiencing side effects, and facing disappointment when treatments fail to provide meaningful relief.

The economic burden of treatment-resistant depression extends far beyond the direct costs of medical care. While healthcare expenses for these patients are substantial, including frequent doctor visits, multiple medication trials, hospitalizations, and specialized treatments, the indirect costs are even more significant. These indirect costs include lost productivity due to missed work days, reduced work performance, early retirement, and disability claims. Family members often become caregivers, taking time off work or reducing their own productivity to provide support. Current treatment options for treatment-resistant depression are limited and often expensive. Electroconvulsive therapy (ECT), while effective for some patients, requires multiple sessions under general anesthesia and can cause memory problems and other side effects. Transcranial magnetic stimulation (TMS) involves daily treatments over several weeks and may not be covered by insurance. Newer medications specifically approved for treatment-resistant depression, such as esketamine nasal spray, can cost thousands of dollars per month and require ongoing administration in medical settings.

The healthcare system struggles to manage the complex needs of patients with treatment-resistant depression. These patients often require more frequent appointments, longer treatment relationships, and coordination between multiple providers. Emergency department visits and psychiatric hospitalizations are common when symptoms become severe or suicidal thoughts emerge. The revolving door of failed treatments creates frustration for both patients and providers while driving up costs throughout the system. Insurance companies face significant expenses related to treatment-resistant depression, not only from direct medical costs but also from disability claims and reduced productivity among covered employees. The condition often leads to long-term disability, early retirement, and increased healthcare utilization across multiple medical specialties. The economic ripple effects extend to employers, who face increased absenteeism, reduced productivity, and higher healthcare premiums due to the costs associated with treating these complex cases.

Ketamine: A Game-Changing Treatment

Ketamine represents a revolutionary breakthrough in the treatment of depression, offering hope for patients who have exhausted conventional treatment options. Originally developed as an anesthetic, ketamine's antidepressant properties were discovered somewhat by accident when researchers noticed that patients receiving ketamine for surgical procedures often experienced improvements in mood that lasted well beyond the anesthetic effects. This observation led to decades of research that has established ketamine as one of the most significant advances in depression treatment in recent history. What makes ketamine unique among antidepressant treatments is its rapid onset of action and novel mechanism of action. While traditional antidepressants work by affecting neurotransmitter levels and can take weeks or months to show benefits, ketamine works through the brain's glutamate system and can produce improvements in depression symptoms within hours or days [3]. This rapid response is particularly important for patients with severe depression or suicidal thoughts, where waiting weeks for treatment effects could be life-threatening.

The mechanism by which ketamine treats depression involves blocking NMDA receptors in the brain, which leads to increased production of brain-derived neurotrophic factor (BDNF) and promotes the growth of new synaptic connections. This neuroplasticity effect essentially helps the brain rewire itself, breaking free from the negative thought patterns and neural circuits that maintain depression. The result is often a dramatic and rapid improvement in mood, energy, and overall functioning that can be sustained with appropriate maintenance treatment. Clinical studies have consistently demonstrated ketamine's effectiveness for treatment-resistant depression. Response rates in clinical trials often exceed 60-70%, which is remarkable considering that these patients have typically failed multiple previous treatments [4]. Many patients experience significant improvement after just a few ketamine sessions, and some achieve complete remission of their depression symptoms. The durability of ketamine's effects varies among patients, with some maintaining benefits for weeks or months between treatments.

The administration of ketamine for depression typically involves a series of treatments given over several weeks, followed by maintenance treatments as needed. The medication can be given intravenously in medical settings or through FDA-approved nasal spray formulations. Treatment protocols are individualized based on patient response and tolerability, with most patients requiring ongoing maintenance treatments to sustain benefits. The flexibility of ketamine dosing and administration makes it adaptable to different patient needs and clinical situations.

Safety considerations for ketamine treatment are generally manageable when administered in appropriate medical settings. Side effects during treatment can include temporary increases in blood pressure and heart rate, mild dissociation or feeling "disconnected," and nausea. These effects typically resolve within hours of treatment and are well-tolerated by most patients. Long-term safety data continues to accumulate, but current evidence suggests that ketamine treatment for depression has an acceptable risk profile when properly monitored.

The Numbers Don't Lie: Economic Analysis

The comprehensive economic analysis conducted by Lu and colleagues provides compelling evidence for the cost-effectiveness of expanding ketamine access for treatment-resistant depression [1]. Using sophisticated modeling techniques, the researchers projected the economic impact of making ketamine therapy available to all eligible patients with treatment-resistant depression over a five-year period. The results demonstrate substantial cost savings across multiple stakeholders in the healthcare system. The study's methodology involved creating a population-level Markov simulation model that tracked patients through different health states over time. The model compared two scenarios: current standard care (primarily electroconvulsive therapy for treatment-resistant depression) versus expanded access to ketamine therapy. The analysis included both direct healthcare costs and indirect costs related to lost productivity, caregiver burden, and other economic impacts. This comprehensive approach provides a more complete picture of the true economic implications of treatment decisions. The patient population analyzed in the study was substantial, reflecting the significant number of Americans affected by treatment-resistant depression. In the first year of the analysis, the model included 350,000 eligible patients, with an additional 11,296 new patients added each subsequent year. This large patient population underscores the magnitude of the treatment-resistant depression problem and the potential impact of policy changes that could affect access to effective treatments.

The projected impact of expanded ketamine access on treatment utilization was significant. The analysis found that making ketamine more widely available would increase the number of patients receiving treatment by 75,000 in the first year alone, with an additional 4,292 patients receiving treatment annually in subsequent years. This increase in treatment access represents thousands of individuals who might otherwise go untreated or receive less effective interventions, highlighting the potential public health impact of expanded access policies. The cost savings projected by the analysis are remarkable in their scope and distribution across different stakeholders. The total annual societal savings of 828.2 million breaks down into 95.3 million in savings to patients and $743.7 million in savings to healthcare payers, primarily insurance companies and government programs. These savings result from reduced healthcare utilization, fewer hospitalizations, decreased need for other expensive treatments, and improved productivity among treated patients.

However, the analysis also identified some costs associated with expanded ketamine access. The study found that expanded access would impose an additional $10.8 million annual burden on caregiver time. This cost reflects the time that family members and friends spend supporting patients during ketamine treatment, including transportation to appointments and monitoring during recovery periods. While this represents a real cost to families, it is relatively small compared to the overall savings generated by the intervention. The cost-effectiveness of ketamine compared to electroconvulsive therapy (ECT) was particularly striking in the analysis. While ECT remains an effective treatment for severe depression, it requires general anesthesia, specialized facilities, and often causes memory problems that can affect patients' quality of life and productivity. Ketamine's less invasive administration and fewer cognitive side effects contribute to its superior cost-effectiveness profile, even accounting for the need for ongoing maintenance treatments.

Real-World Impact for Patients

The economic benefits of expanded ketamine access translate into tangible improvements in the lives of patients and their families. When treatment-resistant depression is effectively managed with ketamine therapy, the ripple effects extend far beyond symptom improvement to encompass virtually every aspect of a person's life. Understanding these real-world impacts helps illustrate why the economic case for ketamine is ultimately about human welfare and quality of life. One of the most immediate impacts of effective ketamine treatment is the reduction in healthcare utilization that drives much of the cost savings identified in the economic analysis. Patients with treatment-resistant depression often become frequent users of emergency departments, particularly during crisis periods when suicidal thoughts or severe symptoms require immediate intervention. Effective ketamine treatment can dramatically reduce these emergency visits by providing rapid symptom relief and preventing the escalation of depressive episodes.

Hospitalization costs represent another major area of savings when ketamine treatment is successful. Psychiatric hospitalizations for severe depression can cost tens of thousands of dollars per admission and often require multiple stays over time for patients with treatment-resistant conditions. By providing effective outpatient treatment that prevents the need for hospitalization, ketamine therapy can generate substantial cost savings while allowing patients to maintain their normal routines and responsibilities. The impact on work productivity and employment represents one of the most significant economic benefits of effective depression treatment. Many patients with treatment-resistant depression are unable to work consistently or perform at their full capacity, leading to reduced income, job loss, and long-term disability claims. Successful ketamine treatment often enables patients to return to work or improve their work performance, generating economic benefits that extend far beyond healthcare cost savings. 

Family dynamics and relationships often improve dramatically when treatment-resistant depression is effectively managed. Depression affects not only the individual patient but also spouses, children, and other family members who may take on caregiving responsibilities or experience their own mental health challenges related to their loved one's condition. When ketamine treatment is successful, families often report improved relationships, reduced stress, and the ability to engage in normal family activities that had been disrupted by depression.

The educational and career opportunities that become available when depression is effectively treated represent long-term economic benefits that may not be fully captured in short-term cost analyses. Young adults with treatment-resistant depression may be unable to complete their education or pursue career goals, leading to lifetime earnings losses that far exceed the cost of treatment. Effective ketamine therapy can help these individuals get back on track academically and professionally, generating substantial long-term economic returns.

Quality of life improvements associated with successful ketamine treatment extend to areas that are difficult to quantify economically but represent real value to patients and society. The ability to enjoy relationships, pursue hobbies, participate in community activities, and experience pleasure in daily life represents a form of wealth that cannot be measured in dollars but is nonetheless valuable. These improvements in life satisfaction and functioning contribute to the overall case for expanding access to effective treatments like ketamine.

Overcoming Access Barriers

Despite the compelling economic case for ketamine therapy and its proven effectiveness for treatment-resistant depression, significant barriers continue to limit access for many patients who could benefit from this treatment. Understanding and addressing these barriers is crucial for realizing the projected cost savings and patient benefits identified in the economic analysis. Insurance coverage represents one of the most significant barriers to ketamine access for many patients. While some insurance plans have begun covering ketamine treatment for depression, coverage is often limited or requires extensive prior authorization processes that can delay treatment for weeks or months. The FDA-approved esketamine nasal spray (Spravato) has better insurance coverage than off-label ketamine infusions, but even this approved treatment faces coverage restrictions and high out-of-pocket costs for many patients.

The prior authorization process used by many insurance companies can be particularly problematic for patients with severe treatment-resistant depression. These processes often require patients to have failed multiple other treatments and may involve lengthy appeals and documentation requirements. For patients experiencing suicidal thoughts or severe functional impairment, delays in accessing effective treatment can have serious consequences. Streamlining these processes could improve access while reducing administrative costs for both providers and insurers.

Geographic access represents another significant barrier, particularly for patients in rural or underserved areas. Ketamine treatment requires specialized medical facilities and trained providers, which may not be available in all communities. The need for multiple treatment sessions over several weeks can make ketamine therapy impractical for patients who must travel long distances for each appointment. Telemedicine and mobile treatment options are being explored as potential solutions to geographic access barriers.

Provider training and availability also limit access to ketamine therapy in many areas. Administering ketamine for depression requires specialized knowledge and training that many healthcare providers do not currently possess. The relatively small number of providers offering ketamine treatment creates bottlenecks that can result in long waiting lists for patients seeking treatment. Expanding training programs and certification processes could help increase the number of qualified providers.

Cost remains a significant barrier even for patients with insurance coverage. Ketamine treatment often involves substantial out-of-pocket costs, including copayments, deductibles, and costs for treatments that are not covered by insurance. The total cost of a complete ketamine treatment course can range from several thousand to tens of thousands of dollars, making it financially inaccessible for many patients. Payment plans and sliding scale fee structures offered by some providers help address this barrier but are not universally available.

Stigma and misconceptions about ketamine treatment can also limit access by discouraging patients from seeking this option or causing providers to be reluctant to offer it. Some patients and families may be concerned about ketamine's history as a recreational drug or worried about the psychoactive effects associated with treatment. Education and awareness campaigns could help address these concerns and improve acceptance of ketamine as a legitimate medical treatment.

The Path Forward

The compelling economic case for expanded ketamine access, combined with the substantial clinical benefits for patients with treatment-resistant depression, creates a strong foundation for policy changes and system improvements that could transform mental healthcare. Realizing the projected $828 million in annual savings will require coordinated efforts across multiple stakeholders, including policymakers, insurance companies, healthcare providers, and patient advocacy organizations. Policy initiatives at both federal and state levels could play a crucial role in expanding ketamine access. Legislative efforts to require insurance coverage for ketamine treatment, similar to existing mental health parity laws, could eliminate one of the most significant barriers to access. Regulatory changes that streamline the approval process for ketamine treatment facilities and reduce administrative burdens could help increase provider availability and reduce costs.

Insurance companies have a clear economic incentive to expand coverage for ketamine treatment, given the substantial cost savings identified in the economic analysis. However, translating these long-term savings into coverage decisions requires insurance companies to take a broader view of their financial interests rather than focusing solely on short-term costs. Value-based payment models that reward insurers for improving patient outcomes rather than simply minimizing immediate costs could help align incentives with expanded ketamine access.

Healthcare systems and providers can take immediate steps to improve ketamine access within existing frameworks. This includes developing ketamine treatment programs, training additional providers, and implementing patient assistance programs to help address cost barriers. Partnerships between healthcare systems and community organizations could help identify and support patients who might benefit from ketamine treatment but face access barriers.

Research and development efforts should continue to focus on optimizing ketamine treatment protocols and developing new delivery methods that could further improve cost-effectiveness and accessibility. This includes research on optimal dosing regimens, maintenance treatment schedules, and combination approaches that might enhance ketamine's effectiveness. Development of new formulations or delivery methods that could reduce the need for medical supervision during treatment could also help expand access.

Patient advocacy and education efforts play a crucial role in building support for expanded ketamine access. Patients and families who have benefited from ketamine treatment can serve as powerful advocates for policy changes and increased awareness. Professional organizations and advocacy groups can work to educate policymakers, insurance companies, and the general public about the benefits and cost-effectiveness of ketamine treatment.

The integration of ketamine treatment into existing mental health care systems requires careful planning and coordination. This includes developing referral pathways, training primary care providers to identify appropriate candidates for ketamine treatment, and ensuring that ketamine therapy is integrated with other mental health services rather than operating in isolation. Collaborative care models that combine ketamine treatment with psychotherapy and other supportive services may optimize outcomes while controlling costs.

Conclusion

The economic analysis of expanded ketamine access for treatment-resistant depression provides compelling evidence that effective mental health treatment is not only a moral imperative but also a sound economic investment. The projected annual savings of $828 million represent just the beginning of the economic benefits that could result from making this breakthrough treatment more widely available to the millions of Americans who could benefit from it. The human cost of treatment-resistant depression extends far beyond what can be measured in economic terms, but the economic case for ketamine provides a framework for understanding the broader value of investing in effective mental health treatment. When patients with treatment-resistant depression receive effective treatment, the benefits ripple throughout society in the form of increased productivity, reduced healthcare utilization, stronger families, and healthier communities.

For patients currently struggling with treatment-resistant depression, the economic case for ketamine offers hope that access to this life-changing treatment may become more widely available in the coming years. While barriers to access remain significant, the growing body of evidence supporting ketamine's effectiveness and cost-effectiveness is building momentum for policy changes and system improvements that could transform mental healthcare. The path forward requires continued research, advocacy, and collaboration among all stakeholders in the healthcare system. By working together to address access barriers and implement policies that support expanded ketamine availability, we can realize the substantial economic and human benefits that this breakthrough treatment offers. The economic case for ketamine is ultimately a case for investing in human potential and creating a healthcare system that truly serves the needs of patients and society.

References

[1] Lu, T., D'Angelo, S., Tayebali, Z., Dempsey, M., Giombi, K., & Khavjou, O. (2025). Impact analysis of expanded access to ketamine for treatment-resistant depression. Journal of Comparative Effectiveness Research, 14(6), e240233. https://doi.org/10.57264/cer-2024-0233

[2] Li, L. J., Mo, Y., Shi, Z. M., Huang, X. B., Ning, Y. P., Wu, H. W., Yang, X. H., & Zheng, W. (2024). Psilocybin for major depressive disorder: a systematic review of randomized controlled studies. Frontiers in Psychiatry, 15, 1416420. https://doi.org/10.3389/fpsyt.2024.1416420

[3] Schipper, S., Nigam, K., Schmid, Y., Piechotta, V., Ljuslin, M., Beaussant, Y., Schwarzer, G., & Boehlke, C. (2024). Psychedelic-assisted therapy for treating anxiety, depression, and existential distress in people with life-threatening diseases. Cochrane Database of Systematic Reviews, 2024(9), CD015383. https://doi.org/10.1002/14651858.CD015383.pub2

[4] 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://pubmed.ncbi.nlm.nih.gov/30844397/

Disclaimer: Psychedelic Assisted Psychotherapy has not been approved by any regulatory agencies in the United States, and the safety and efficacy are still not formally established at the time of this writing.