The once-celebrated mental health startup Cerebral Inc. is now under intense national scrutiny, a sharp contrast to its meteoric rise during the early days of the pandemic. Founded in 2019 and launched in 2020, Cerebral quickly emerged as a major player in the digital mental health space, promising fast access to care through virtual visits and medication delivery. But recent developments have placed the company at the center of what many now refer to as the Cerebral mental health controversy.
From Congressional investigations and DOJ probes to terminated insurance partnerships and layoffs, Cerebral’s rapid growth has come at a cost—raising questions about oversight, accountability, and the risks of scaling healthcare too quickly.
House Committee Launches Investigation Into Telehealth Prescribing
The Cerebral mental health controversy escalated when the U.S. House Committee on Oversight and Reform launched an investigation into how the Drug Enforcement Administration (DEA) has enforced the Ryan Haight Act, which governs how controlled substances are prescribed via telehealth.
During the COVID-19 public health emergency, the DEA temporarily waived the Act’s requirement for an in-person exam before controlled substances could be prescribed remotely. This move allowed companies like Cerebral to scale rapidly by offering prescription medications—such as Adderall and Xanax—via online consultations.
But lawmakers are now pushing back, expressing concern that companies exploited the relaxed regulations. In a letter to the DEA, Subcommittee Chair Rep. Gerald Connolly (D-Va.) cited Cerebral by name, warning that the rise of virtual care may have enabled a new class of “pill mills” that could exploit vulnerable patients seeking legitimate mental health treatment.
“Left under-regulated, we risk allowing new, more sophisticated classes of ‘pill mills’ to freely exploit Americans seeking legitimate mental and physical health services,” the letter states.
The committee also highlighted a whistleblower retaliation suit against Cerebral and referenced pharmacy chains that have refused to fill prescriptions from the company’s providers. The concerns reflect a growing belief in Congress that Cerebral may have put growth and investor satisfaction ahead of patient safety—at the heart of the Cerebral mental health controversy.
Cerebral Responds by Scaling Back Controlled Substances
In the wake of mounting criticism, Cerebral announced that it would stop prescribing most controlled substances by fall 2022. The company cited the expected expiration of the pandemic-era DEA waiver as a key reason for the policy shift.
Cerebral will continue prescribing controlled substances only for opioid use disorder (OUD), which is governed by a separate regulatory framework. The decision marks a significant departure from the company’s original model, which had leaned heavily on virtual access to medications for conditions like ADHD, anxiety, and depression.
This policy change is one of several actions the company has taken to try to restore credibility amid the Cerebral mental health controversy. CEO Dr. David Mou, who took over following leadership changes, acknowledged that mistakes were made and emphasized the company’s new focus on safety, compliance, and clinical integrity.
Aetna Drops Cerebral from Network
In another blow, Aetna, the insurance arm of CVS Health (NYSE: CVS), announced that it would remove Cerebral from its provider networks effective August 21, 2022. The decision came shortly after CVS and Walmart pharmacies declared they would no longer fill controlled substance prescriptions from Cerebral providers.
A CVS Health spokesperson confirmed the move in an email, linking the decision directly to Cerebral’s prescribing practices.
“This is related to the decision we made regarding controlled substance prescriptions issued by Cerebral,” the spokesperson said.
Previously, Aetna had offered in-network coverage for Cerebral services in 45 states, giving the startup a wide national footprint. Losing that relationship is not only a reputational hit—it also raises major questions about Cerebral’s ability to serve patients and remain financially viable.
The insurance fallout underscores the impact of the Cerebral mental health controversy, as payers reevaluate relationships with digital health providers that may be viewed as risky or non-compliant.
DOJ Investigation Adds Legal Pressure
As Cerebral navigates policy shifts and insurance losses, the U.S. Department of Justice (DOJ) has opened an investigation into the company’s practices. Reports suggest the DOJ is examining whether Cerebral engaged in improper prescribing or marketing of controlled substances.
While no charges have been filed, the investigation adds serious legal weight to the Cerebral mental health controversy. The startup’s leadership and investors now face the possibility of regulatory penalties or even criminal liability, depending on what the probe reveals.
Cerebral has not commented publicly on the DOJ investigation, but internal restructuring and layoffs suggest the company is preparing for a prolonged period of scrutiny and change.
Layoffs Reflect Strategic Retrenchment
To manage growing pressure, Cerebral has begun laying off employees across departments. Although the company hasn’t provided detailed figures, sources close to the situation say the cuts reflect a broader retrenchment as the company narrows its focus and attempts to minimize legal exposure.
These layoffs are both a symptom and a consequence of the Cerebral mental health controversy, which has disrupted operations, weakened investor confidence, and made it harder for the company to maintain business-as-usual.
For many insiders and observers, the layoffs also highlight how fast a healthcare startup can go from unicorn status to survival mode—especially when foundational issues around safety and compliance are involved.
From Unicorn to Uncertainty
At its height, Cerebral raised $462 million in venture capital and achieved a valuation of $4.8 billion after a $300 million Series C round led by SoftBank Vision Fund 2 in December 2021. Its promise was to democratize mental health care with convenient, digital access to therapy and prescriptions.
But what began as a bold innovation in telehealth has become a cautionary tale. The Cerebral mental health controversy is not just about one company—it reveals systemic issues in how digital health is regulated, scaled, and financed in the U.S.
Critics now argue that Cerebral’s growth was too fast, its clinical protocols too thin, and its internal controls too weak. Some have compared it to early-stage opioid distributors, while others see it as the inevitable outcome of a startup culture focused more on disruption than patient care.
The Broader Implications of the Cerebral Mental Health Controversy
The Cerebral mental health controversy is already influencing policy. Lawmakers are pushing the DEA to enforce tighter restrictions on telehealth prescribing. Insurers are reevaluating their partnerships with digital-first providers. And investors are taking a harder look at the clinical risks baked into digital health business models.
The controversy also serves as a wake-up call for other startups in the behavioral health space. As the industry moves beyond the pandemic, there will be less regulatory flexibility and more demand for accountability. Companies must balance accessibility with safety—or risk following Cerebral’s path from breakout success to federal investigation.
What Happens Next?
For Cerebral, the road ahead will likely involve continued operational downsizing, reputational repair, and legal navigation. CEO David Mou has promised a new chapter for the company, but that chapter is already being shaped by investigations, lost partnerships, and public skepticism.
The company has not yet responded to the House committee’s request for comment or offered updates on how it plans to regain the trust of patients, regulators, and partners.
One thing is clear: the Cerebral mental health controversy is far from over—and its outcome could shape the future of virtual mental health care for years to come.
