I am so sorry violet, what a terrible merry go round you are on.
I was having terrible anxiety over going to sleep the past year. Many of us abuse drugs and alcohol due to anxiety and sleep related issues. So we may not have the medical answer to your situation, but we surely DO understand the feelings of frustration and hopelessness.
I know it is likely to be a chicken/egg situation, but do you know which came first? the anxiety or the insomnia?
Your body isn't loving the Xanax, there are many many ways to address insomnia, so it may take some time, but there is definitely hope.
how thorough and intensive was your sleep dr's investigations into your sleep habits, etc?