• Change in Panic Disorder Symptoms, Phase 1 (Week 0 - Week 6) [ Time Frame: Measured at baseline and after Phase 1 (6 weeks) ] [ Designated as safety issue: Yes ]
• Change in Panic Disorder Symptoms, Phase 2 (Week 6 - Week 12) [ Time Frame: Measured after Phase 1 (Week 6) and Phase 2 (Week 12) ] [ Designated as safety issue: No ]
• Change in Panic Disorder Symptoms, Phase 3 (Week 12 - Week 24) [ Time Frame: Measured after Phase 2 (Week 12) and Phase 3 (Week 24) ] [ Designated as safety issue: No ]

This study will determine the effectiveness of different treatments for panic disorder symptoms in individuals who still have symptoms after initial treatment with medication.

Panic disorder is a serious condition that may cause significant psychological and physical distress. Many patients with panic disorder remain symptomatic despite initial intervention. Unfortunately, little data is available to guide health care providers in "next-step" treatment approaches. This study will evaluate the effectiveness of treatments for individuals with panic disorder that is resistant to initial treatment with SSRIs.

This study will last 24 weeks and will comprise three phases. In Phase 1, participants will receive the SSRI sertraline for 6 weeks. Phase 1 will be used to determine participants' resistance to treatment. During Phase 1, participants will begin a medication schedule and symptom diary and will have weekly study visits to assess regimen adherence and any side effects they may be experiencing. In Phase 2, participants will be randomly assigned to 6 weeks of one of two treatments: sertraline at an elevated dose from that given in Phase 1 or a sertraline and placebo regimen. During Phase 2, participants will have 3 study visits. Self-report scales and diary entries will be used to assess panic disorder symptoms and medication side effects. In Phase 3, participants will be randomly assigned to receive either CBT or sertraline and clonazepam for 12 weeks. All participants will have weekly study visits during Phase 3. Questionnaires and self-report scales will be used to assess participants at the end of Phase 3.

Study hypothesis: Combined selective serotonin reuptake inhibitors (SSRIs) and benzodiazepine treatment, increasing the dose of SSRI, and the addition of cognitive behavioral therapy (CBT) each may have benefits for patients with panic disorder who remain symptomatic after initial treatment with SSRIs.

• Drug: Clonazepam
• Drug: Sertraline
• Behavioral: Cognitive behavioral therapy

• Experimental: Participants in phase II will receive sertraline, or an equivalent medication, up to 100 mg plus a placebo pill. Participants in phase III will receive the same medication with cognitive behavioral therapy.
• Experimental: Participants in phase II will receive sertraline, or equivalent medication, up to 200 mg. Participants in phase III they will receive the same medication with flexible clonazepam augmentation.

Inclusion Criteria:

• Diagnosis of panic disorder

Exclusion Criteria:

• History of bipolar disorder, schizophrenia, psychosis, or delusional disorders
• Post-traumatic stress disorder diagnosis within 6 months prior to study entry
• Current use of psychotropic medications
• Current use of cognitive behavioral therapy