The province ordered the assessment of Dr. David Craig's work after the provincial citizens' representative called for Craig's removal.
Barry Fleming reported in 2011 that Craig should be replaced after several inmates said he refused them drugs prescribed by other doctors.
But the review by Philip Klassen, a forensic psychiatrist and assistant professor at University of Toronto, says Craig meets acceptable standards.
Craig's prescribing practices are "very typical" of those seen in corrections, Klassen wrote. "A number of commonly used psychotropic medications have potential for abuse in correctional settings with possible health and security consequences for inmates and the institution."
Klassen said such drugs include methylphenidate or Ritalin used for hyperactivity and attention-deficit disorders; bupropion, also known as Zyban, sometimes used to help smokers quit; and a range of benzodiazepines often prescribed for anxiety, insomnia and alcohol withdrawal.
Whether drugs are prescribed or not may depend on several factors "including the psychiatrist involved, whether the medications were started in the community, the patient's presentation and history and perhaps the culture of the institution," Klassen wrote.
He also said Craig indicated that "biopolar disorder, while a common diagnosis, is often unwarranted in inmates."
Klassen reports that Craig keeps good records, collaborates with other care providers and practices in a way that's typical of psychiatric services in corrections.
Still, "I feel that Dr. Craig is quite correct in suggesting that he should not work within a professional vacuum in terms (of) provision of psychiatric services in a correctional setting," Klassen said of his interview with Craig before writing the report.
Klassen said mental health services for inmates could be improved, but that's true outside the province as well.
The review makes five recommendations but finds no reason to remove Craig from his work at Her Majesty's Penitentiary in St. John's along with jails in Clarenville and Labrador.
Klassen also interviewed Fleming, who has repeatedly called for a more mainstream psychiatrist after inmates complained they were taken off prescribed medications.
The issue made headlines again last June when convicted robber Camille Strickland-Murphy asked a judge to sentence her to two years plus a day despite the fact that her lawyer had asked for a lesser sentence. Federal sentences longer than two years are served outside the province.
At issue was the woman's concern that she would be kept off her prescribed mental health drugs in the provincial system.
Klassen interviewed Fleming and reviewed the records of 14 inmates who agreed to release their information but did not interview any offenders.
"He offered that it's not fair to inmates that they cannot choose their psychiatric practitioner," Klassen wrote.
Justice Minister Darin King said he accepts Klassen's professional analysis over the report of Fleming, who is not a psychiatrist.
"You have to acknowledge that it's a peer review which is one professional with tremendous credentials and experiences, reviewing another professional," he told reporters. "That's really the highest degree of critique you can have.
"So, yes, Dr. Craig will stay. But we're going to move to implement the five recommendations."
Those changes include improving communications with inmates and creating a rotation of psychiatrists in provincial jails.
Liberal justice critic Andrew Parsons said the review raises several concerns.
"The level of mental health care services for patients in the correctional system is obviously lower than that outside," he told reporters.
Parsons also cited the "professional vacuum that Dr. Craig has operated in for almost 15 years now."
Cindy Murphy, executive director of the John Howard Society of Newfoundland and Labrador, provides counselling and support to offenders. She said the agency has had few complaints from inmates about drugs being cut unnecessarily.
"We've had a couple that we've referred on to the medical association because we did not feel we had the expertise to be dealing with it, but it wasn't a flood of complaints."
That said, Murphy is calling for improved services for mentally ill offenders. Use of segregation is another big concern, she said in an interview.
"We feel that maybe there's an overuse of segregation when people are not well. So we'd like to see less use of that in the future."