Panic in the Woods is a strange phenomenon found in Grand Theft Auto V. It is based on the claim that, on rare occasions in the San Andreas woodlands, a high pitched buzzing noise will be playing loudly, similar to the medical disease tinnitus, and the player character's health will gradually decrease, until he returns to civilization.
According to the blog The Paranormal Guide, Panic in the woods has been associated with the Pagan God Pan, protector of wild places, whose unseen presence inspires causeless terror. Victims experience an overwhelming feeling of paranoia, such as a sinister force nearby, and sense imminent danger. This usually leads the person to flee the area, desperately seeking out civilization. One curiously common characteristic of panic is, that people often describe that the woodlands will go completely silent, deafening the witness before the loud pitch sound sets in a few moments later. Deafening silence and paranoia in the woods are related to the real life cryptid Goatman and another group of paranormal monsters, known as Skinwalkers. At least one article on the phenomenon has been written for Fortean Times Magazine by Patrick Harpur, titled Landscapes of Panic. The behavior is a common post on many paranormal forums and message boards.
As in real life, panic begins with a sudden, complete silence that soon turns into an annoying buzzing sound. After a few minutes have passed, the player character's health will begin to slowly decrease, and the player character may say some unusual dialogue. Upon reaching a town, or even coming across a road or an NPC, everything returns to normal. Panic may, in fact, be an audio glitch in defective consoles. However, this does not explain the draining health. Occasionally, panic coincides with the appearance of other cryptids. The cryptid known as Goatman is rumored to appear in the game, and if Panic applies to Goatman sightings in real life, they likely apply in game as well. Panic always happens at night, and no daytime sightings have ever been reported.
There are a few theories about the phenomenon, and possibly a solution.
The noise probably comes from a glitched audio file that is either corrupted, or was an unused ambiance around that is not supposed to play, as this would explain the silence that is usually reported to happen before the phenomenon.
The slowly decreasing health is a tricky one. It is most likely a glitch, which could be caused by either an unused file for a beta mechanic, or a corrupted health file.