Cutting Healthcare Costs with the Placebo Effect

People feel better even if their pills are fake.

One of the reasons Mr. Obama's health care program is in such trouble is that people are terrified of its cost.  No less a Democratic luminary than Senator Joe Lieberman, Al Gore's vice-presidential running-mate, has declared that although there are changes that should be made, we simply can't afford to do anything major about health care until the economy recovers.  People who've been packing "town meetings" to vent about health care seem to agree.

We at Scragged have listed a number of common-sense ways to cut health care costs.  It's not hard to cut costs without sacrificing medical effectiveness, but all such cuts will make the people who benefit from the current spending pattern scream to high heaven. For instance, we've suggested changing the legal system which would have blown the trial lawyers into orbit.

In the same spirit, we offer yet another sure-fire way to cut medical costs without sacrificing quality, particularly among certain groups. This time, instead of orbiting the lawyers, we'll send the drug companies into orbit.

The Placebo Effect

It's a well-known fact that humans are extremely susceptible to the power of suggestion, especially when suggestions come from authority figures.  In a psychology experiment, students were willing to press a button which they were told would send a lethal electric shock to someone in the other room.

As the experiment progressed, the student was supposed to ask the subject questions and give worse and worse shocks if the subject answered wrong.  When the experiment progressed to the lethal level, the psychologist in a white coat would urge the student to go ahead, "He deserves it, he got it wrong."  To the experimenter's amazement, most students were willing to push the button even though they had been told that the person in the next room whose screams they'd heard would die.

The conclusion of the researchers: most people would be willing to commit murder if told to do so often enough by a sufficiently authoritative figure.

Those of us who are familiar with this series of experiments have no doubt whatsoever that Mr. Obama's "death panels" would happily pull the plug on grandma to save money.  At some level, most Americans feel the same way, and are saying so as loudly as they are able.

Medical Suggestions

We see the same effect in medicine.  If people believe sincerely that a medicine or surgical procedure will help them, it often does even if there's no reason for it to.  This is called the "placebo effect."

Nobody knows how or why taking sugar pills or being injected with salt water makes people get well if they believe strongly enough that the procedure will help, but it works.

In "Placebos Are Getting More Effective. Drugmakers Are Desperate to Know Why," Wired Magazine described the fate of a new drug known as MK-869 which failed clinical trials because it was no more effective than a placebo:

True, many test subjects treated with the medication felt their hopelessness and anxiety lift.  But so did nearly the same number who took a placebo, a look-alike pill made of milk sugar or another inert substance given to groups of volunteers in clinical trials to gauge how much more effective the real drug is by comparison.  The fact that taking a faux drug can powerfully improve some people's health--the so-called placebo effect--has long been considered an embarrassment to the serious practice of pharmacology.

Our Food and Drug Administration won't release a drug for general use unless it works better than a placebo.  Wired reports that the placebo effect seems to getting stronger over time.

The failure rate in more extensive Phase III trials increased by 11 percent, mainly due to surprisingly poor showings against placebo. Despite historic levels of industry investment in R&D, the US Food and Drug Administration approved only 19 first-of-their-kind remedies in 2007 - the fewest since 1983 - and just 24 in 2008. Half of all drugs that fail in late-stage trials drop out of the pipeline due to their inability to beat sugar pills.

Lies, Lies, it's all Lies!

The placebo effect is traced to a lie told by an army nurse during WWII.  She had to treat so many wounded soldiers that she ran out of morphine.  She told a soldier that she had a really potent painkiller for him and shot him up with salt water.  To her amazement, the bogus medication relieved his pain and prevented shock.  Thus was the placebo effect born.

An anesthetist named Henry Beecher saw what she'd done and studied the effect when he got back to Harvard.  He eventually showed that a great many drugs were no more effective than placebos.

He demonstrated that trial volunteers who got real medication were also subject to placebo effects; the act of taking a pill was itself somehow therapeutic, boosting the curative power of the medicine. Only by subtracting the improvement in a placebo control group could the actual value of the drug be calculated.

The law was changed to require that all new drugs be tested against patients receiving placebos.  This has the desirable effect of limiting quackery, but had an undesirable side effect:

The fact that even dummy capsules can kick-start the body's recovery engine became a problem for drug developers to overcome, rather than a phenomenon that could guide doctors toward a better understanding of the healing process and how to drive it most effectively.

The Wired article lists a number of high profile drugs which would not be approved today because they didn't beat placebos by a big enough margin.  Drugs that were approved years ago don't beat placebos any more:

It's not that the old meds are getting weaker, drug developers say. It's as if the placebo effect is somehow getting stronger.

Nobody is certain why the placebo effect is becoming so much more potent.  Some psychologists have suggested that it's because drug companies advertise their drugs so much.  Most drug ads associate taking the drug with pleasant activities which may condition people to expect good results from taking any pill, whether it's a real pill or not.  If the observed strengthening of the placebo effect is in fact due to drug company advertising, they've shot themselves in the foot by making it harder and harder for new drugs to pass the placebo test.

Why Not Use Placebos?

If placebos work so much better than some approved medicines and they're working better and better with time, why don't doctors use them?  Because it's illegal for a doctor to prescribe a placebo, even if he knows it will help his patient.

One of my college doctors had a practice on Beacon Hill; he came to the college so he could treat some real injuries instead of spending all his time with hypochondriacs.

"I have a couple of patients who're perfectly healthy, but they visit me at least twice a week," he told me.  "What can I do?  It's illegal for me to prescribe sugar pills; I'd lose my license.  I have to find a really bad-tasting medicine, tell them it'll help, and prescribe it.  They think it works and they feel better.  Quinine pills would work as well, quinine tastes like a powerful medicine."

We all know how strongly people want to believe in flimflam cures - didn't we just elect a President on bogus promises of "Hope and change?"  If the placebo effect works so effectively in politics, it'll work in medicine, but we gotta go about it the right way.

  1. Make a quiet change to our laws so that doctors can prescribe harmlessly useless pills when appropriate.
  2. Do a little research to determine what line of patter works best with what type of people.  Should a placebo taste bad?  Should the doctor tell the patient it's really expensive?  Should the doctor swear the patient to secrecy as in, "I'm not supposed to give you this under Medicare guidelines, but I'm sure it'll help you.  Don't tell anybody or I'll get in trouble."

Once we know how to wrap placebos in the most effective mumbo-jumbo available to make them work as well as possible, we're on our way to cutting medical costs.  In point of fact, we're already doing this:

Nearly half of the doctors polled in a 2007 survey in Chicago admitted to prescribing medications they knew were ineffective for a patient's condition - or prescribing effective drugs in doses too low to produce actual benefit - in order to provoke a placebo response. [emphasis added]

Just think!  Maybe some good can come from doing things Chicago style.  It's already happening, so why not make giving placebos legal?  People who come to the doctor when they aren't sick can be given placebos which makes them happy and saves money all 'round.

When Mr. Obama says we can cut medical costs, the right response is, "Yes, sir, we can, but you're going about it the wrong way.  Rationing goes against human nature.  Let's harness the placebo effect!"

Can we do that?  Yes, we can!  And unlike a nice strong dose of Obamacare, a couple of sugar pills laced with quinine won't do any harm and might do some good.

Will Offensicht is a staff writer for and an internationally published author by a different name.  Read other articles by Will Offensicht or other articles on Economics.
Reader Comments
All of your points are good, however the potential for abuse is also very large. It is probably safer to keep the prescription of placebos illegal and just let doctors prescribe low dosage medication under their personal discretion. The best thing to do in my opinion is to come clean with the patient. Explain to them the placebo effect and that they really don't need medication. By understanding that they don't need medication, the result will be the same as the placebo. Of course the motivation to sell drugs is very strong for many interested parties so I'm sure that this does not happen all that often.
August 27, 2009 6:20 PM
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