Texas Governor Signs Budget into Law Including $2 Million That Can Be Used to Fund PROMETA(R) Treatment Programs for Criminal Justice Program

Hythiam, Inc. (NASDAQ:HYTM) today announced that the Texas legislature and Governor have approved the new fiscal budget, including $2 million in funding that can be used for the PROMETA treatment program within Texas Department of Criminal Justice (TDCJ) initiatives. Funding will become available September 1st, 2007.

Additionally as previously disclosed by Hythiam, two other states have made available $1.5 million that can be used for providers in their state to use for the PROMETA treatment program. Thus far, a total of $3.5 million has been authorized within 3 separate states.

“The state of Texas has been focused on exploring ways to reduce its criminal justice population,” said Texas State Representative Jerry Madden, Chairman of the House Corrections Committee. “Towards that end, during this legislative session, we have provided funding for programs addressing substance dependence within the offender population. If this approach proves successful we can significantly reduce the number of people sent to the prisons of Texas. While looking for programs that could help reduce our incarceration rate, we were fortunate to learn about Hythiam and the PROMETA treatment program. Our belief is that the program has great potential and offers an opportunity for Texas to manage and reduce substance dependency, towards the ultimate goal of decreasing criminal activity driven by drug needs.”

“Hythiam is committed to bringing substance dependence treatment to those who need it the most, which is the socio-economically disadvantaged populations that have the least resources with which to access treatment. We are gratified that Texas has joined a growing number of states in joining our efforts to help their citizens who suffer from substance dependence,” said Terren Peizer, Hythiam’s Chairman and CEO. “Representative Madden and others have shown the foresight in seeking ways to reverse the taxpayer burden caused by the escalating costs of incarcerating substance dependent criminal offenders, and we thank them for their efforts. We are also excited to see the responsiveness of the Texas legislature who have made this initial commitment in parallel to an ongoing pilot program that is underway in cooperation with Collin County. It is our belief that the results from these initial programs and the data expected from double-blind placebo controlled studies later this year could provide the support needed to significantly increase Texas’ commitment from these early levels.”

Peizer continued, “Our belief is that these first programs will demonstrate PROMETA’s utility, not just for probation, corrections, and re-entry programs, but also ultimately as an integral component of the state’s healthcare system, where treatment can be used as a first-step, prior to a person becoming a criminal offender. Additionally, based upon what we have seen in the State of Washington, county funding for the PROMETA treatment program can be secured by providers in addition to state budget allocations. As a result, more providers in more counties will be able to offer the PROMETA programs to more offenders from a multiplicity of funding sources that supplement state funding. We expect that this momentum will only accelerate as double-blind controlled study data becomes available later this year, and as the success of these programs such as in Texas receive widespread attention. Ultimately, we remain committed to the goal of making the PROMETA treatment programs ubiquitous tools for government to use to help their substance dependent populations.”

Hythiam had previously announced that the PROMETA treatment program for stimulant dependence was also being evaluated for funding, adoption, and use as a treatment alternative by the probation, corrections, and re-entry programs in Collin County, Texas. The company anticipates the county will complete this pilot evaluation by late summer, 2007.

About PROMETA(R) Treatment Program

Hythiam’s PROMETA(R) treatment programs are designed for use by healthcare providers seeking to treat individuals diagnosed with dependencies to alcohol, cocaine or methamphetamine, as well as combinations of these drugs. The PROMETA treatment programs include nutritional supplements, FDA-approved oral and IV medications used off-label and separately administered in a unique dosing algorithm, as well as psychosocial or other recovery-oriented therapy chosen by the patient and his or her treatment provider. As a result, PROMETA represents an innovative approach to managing alcohol, cocaine, or methamphetamine dependence that is designed to address physiological, nutritional, and psychosocial aspects of the disease, and is thereby intended to offer patients an opportunity to achieve sustained recovery. To learn more, please visit www.prometainfo.com.

About Hythiam, Inc.

Integrating both medical and psychosocial treatment modalities, Hythiam, Inc. provides comprehensive behavioral health management services to health plans, employers, criminal justice, and government agencies. With a focus on using the latest medical and health technology towards improved outcomes and out-patient treatment, the company manages all behavioral health disorders. The company also researches, develops, licenses and commercializes innovative and proprietary physiological, nutritional, and behavioral treatment programs. Hythiam currently offers disease management for substance dependence built around its proprietary PROMETA treatment programs for alcoholism and dependence to stimulants. The PROMETA treatment programs, which integrate behavioral, nutritional, and medical components, are available through licensed treatment providers. Hythiam does not practice medicine nor manufacture, distribute, or sell any medications and has no relationship with any manufacturers or distributors of medications used in the PROMETA programs. For further information, please visit www.hythiam.com.

Forward-Looking Statements

Except for statements of historical fact, the matters discussed in this press release are forward looking and made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect numerous assumptions and involve a variety of risks and uncertainties, many of which are beyond the company’s control that may cause actual results to differ materially from stated expectations. These risk factors include, among others, limited operating history and lack of statistically significant formal research studies, the risk that treatment programs might not be effective, difficulty in developing, exploiting and protecting proprietary technologies, intense competition and substantial regulation in the healthcare industry; and additional risks factors as discussed in the reports filed by the company with the Securities and Exchange Commission, which are available on its website at http://www.sec.gov.