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It is Admiral Adama's suggestion to use the drug, described as a hallucinogen that creates a high level of anxiety in the subject, generating a feeling that their survival is at stake.
The drug is injected into one of the subject's carotid arteries, which supply blood directly to the brain, and appears to take effect relatively quickly. Initially the subject is rendered unconscious, but soon awakes in a pliable state. Baltar sees himself in the midst of a dark ocean, with Adama's voice being his only lifeline.
Adama shows some skill in using this method, likely having been trained in its use. Doctor Cottle, on the other hand, appears to disapprove; he terminates the session when Baltar begins to go into distress, calling it a "freak show" (TRS: "Taking a Break From All Your Worries").