When I ran Department V I made a kind of Sanity mechanic for contact with supernatural (the “Atlantean colonies”). I called it Exposure, and (because it was The Sweeney investigating the World of Darkness) it was an amalgamation of the Delerium (from Werewolf), Masquerade (from Vampire) and Arete (from Mage). Basically this:

• Contact with Atlanteans elicited a physiological response in humans (not sure if it was poisoning, or an autoimmune response) which resulted in hallucination
• Atlanteans relied on this to keep up their “masquerade”.
• Humans marked by the Atlantean virus could become more susceptible to later infection and control, much like the Code 5 virus in Ultraviolet.
• But, humans could build up a tolerance to the virus/poison/hormone and use their Exposure to do magic (being Awakened to the magical possibilities of the world).

Lovecraft and specifically Call of Cthulhu gets a bad rep for heavy handed treatment of mental illness. Part of the problem is the way CoC calls this property Sanity, when it’s really a response to cosmic horror, which is about comprehension and entirely rational. The response to losing SAN points is the issue: “madness” is really the Delerium, a short-term chemical or biological response. So I think the solutions are fairly simple:

• stop using Madness, Insanity or similar labels for something that’s a short term effect of a chemical imbalance.
• stop equating horror with insanity. If you want to make some point about the way society perceives mental illness as other and can do it sensitively, OK. But that horror, like any horror, is entirely rational.