There are rules for sleep deprivation under the "Appalling Fecundity" sign in Elder Evils.
Strong: Living creatures that require sleep lose the ability to do so, as their bodies fidget and their thoughts race. Physical exhaustion sets in, and eventually minds break. A living creature can go without sleep for a number of days equal to its Constitution modifier (minimum one). Thereafter it is fatigued, remaining in this state for a number of days equal to its Constitution modifier (again, minimum one); if it would become fatigued during that time, it is exhausted instead. Each day after that period, the creature takes 1 point of Wisdom damage. If the total Wisdom damage exceeds its Hit Dice, the creature is affected as if by an insanity spell. Once its Wisdom score drops to 0, the creature becomes unconscious but cannot recover lost Wisdom naturally. Only a sleep or deep slumber spell or equivalent effect can grant rest for a time, after which the effects of the sign begin anew.
Sadly, nothing in that prevents you from healing the 1 point of wisdom damage naturally each day. It only prevents you from recovering wisdom naturally after the wisdom score has dropped to 0. So, as long as someone has a base wisdom higher than 1 (and doesn't take Wis damage from some other effect), they can't ever reach 0, and won't ever become
insane (because 1 point of wisdom damage never exceeds the HD of even a first level commoner.)
Their intent was good, and a simple house rule removing the natural healing once you take the first point of Wisdom damage would fix it, but as written this affect isn't some terrible apocalypse for mankind; it just drops everyone's Wisdom by 1 and fatigues them, effectively indefinitely.