The SSRI's sometimes quit working suddenly for no apparent reason, they just do that with some people.
Paxil is associated with clinically significant weight gain, birth defects and increase in the risk of suicide in adults. Women planning to have children should not use it.
Ongoing tests are finding Paxil more harmful than first known, and it is not effective at all for kids under 18 but increases risk of harmful outcomes including self-harm and potentially suicidal behavior. There are now "use with extreme caution" and "closely monitor" adult patients with risk of suicidal thoughts" or during withdrawal. "Reduce gradually over several weeks to several months if the decision to withdraw is made."
This is probably why your doctor doesn't want to increase the dose or stop the drug while you're feeling so down, and wanted blood tests to rule out other problems.
The new warnings are across the board in Europe (EMEA) and (CHMP), and with the FDA in the USA, where further studies show impairment of memory and IQ, and DNA fragmentation in male sperm.
Serotonin Syndrome or Serotonin Toxicity (a form of poisoning) is also a concern, though it's rare so far. It is a potentially life threatening adverse drug reaction that may occur following therapeutic use, inadvertant interactions between drugs, overdose of particular drugs, recreational use of certain drugs, or interaction of herbs including; St John's Wort, Syrian rue, Panax ginseng and Nutmeg
(For a serotonin toxicity death, see New York State case of Libby Zion, has also shown up in newborns, the elderly and children).
SSRI's Fluoxetine and sertraline do not cause weight gain and can easily be substituted for Paxil without withdrawal syndrome.