Draconitis or dracontia is a stone produced from the brain of the dragon; but unless the head of the animal is cut off while it is alive, the stone will not assume the form of a gem, through spite on the part of the serpent, when finding itself at the point of death: hence it is that, for this purpose, the head is cut off when it is asleep. Sotacus, who tells us that he once saw a stone of this kind in the possession of a king, says that persons go in search of it in a chariot drawn by two horses; and that, the moment they see the serpent, they strew narcotic drugs in its way, and then cut off its head when asleep. According to him, this stone is white and pellucid, and admits of no polishing or engraving. (trans. John Bostock).
As weird as this seems to be, it probably relates to the “Serpent Stone” that Photius, in Biblioteca codex 190, summarizing Ptolemy Chennus’ New History, says came from serpents and gave people the power to see invisible things. (Cf. the Persian mohrah, the stone snakes use to see hidden treasure.) This, in turn, must be derived from Indian stories that spread into Greece. Consider, for example, the passage in Philostratus’ Life of Apollonius of Tyana (3.8) which describes how large serpents have stones in their heads. The Indians, Philostratus says, catch the dragons in this manner:
They embroider golden runes on a scarlet cloak, which they lay in front of the animal's burrow after charming them the runes to cause sleep; for this is the only way to overcome the eyes of the dragon, which are otherwise inflexible, and much mysterious lore is sung by them to overcome him. These runes induce the dragon to stretch his neck out of his burrow and fall asleep over them: then the Indians fall upon him as he lies there, and dispatch him with blows of their axes, and having cut off the head they despoil it of its gems. And they say that in the heads of the mountain dragons there are stored away stones of flowery color, which flash out all kinds of hues, and possess a mystical power as resided in the ring, which they say belonged to Gyges. (trans. F. C. Conybeare)
While that’s interesting enough, it’s probably worth noting that the French medievalist Claude Lecouteux made a complete hash of it in trying to describe the dragon stones in his book A Lapidary of Sacred Stones (Inner Traditions, 2012). There, he attributed Philostratus’ text to Herodotus and quotes Pliny without identifying him.