---
pubDate: 2021-03-28
title: Placebo Discount
tags:
  - economics
  - medicine
abstract: |
  A proposal to monitize the placebo effect by selling, at a discount, bundles
  of doses of an effective drug that includes a certain percentage of placebo
  doses.
table_of_contents: false
---

The _[placebo effect](https://www.nccih.nih.gov/health/placebo-effect)_ is a
[well-studied](https://www.medicalnewstoday.com/articles/306437#how-does-it-work)
and [used](https://www.ncbi.nlm.nih.gov/pmc/articles/PMC524103/) effect of a
_placebo_ intervention on a recipient who expects the intervention to be active.
A _placebo_ intervention is a medical intervention (most commonly a drug
administration) that is considered directly inactive yet turns out to be
indirectly active, with respect to the patient's expectations. One of the most
interesting aspects of the placebo effect is how powerful it is -- many times
the non-placebo effect of common drugs is only slightly higher than the placebo!

Examples of the effectiveness of placebo versus non-placebo:

- [nasal congestion medicine](https://pubmed.ncbi.nlm.nih.gov/26143019/)
- [antidepressants](https://bmjopen.bmj.com/content/9/6/e024886.full)
- [migrane medicine](https://pubmed.ncbi.nlm.nih.gov/24401940/)
- [nerve pain treatments](https://journals.lww.com/pain/Fulltext/2015/12000/Increasing_placebo_responses_over_time_in_U_S_.27.aspx)

Surveys of placebo effectiveness and usefulness:

- [Questionnaire survey on use of placebo](https://www.ncbi.nlm.nih.gov/pmc/articles/PMC524103/)
- [Placebo interventions in practice: a questionnaire survey on the attitudes of patients and physicians](https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3026149/)
- [Patients’ attitudes about the use of placebo treatments: telephone survey](https://www.bmj.com/content/347/bmj.f3757)

While the power of the placebo effect is well-recognized and used prolifically
by randomized, placebo-controlled clinical trials clinical trials (usually
considered the
"[gold standard](https://www.nccih.nih.gov/health/placebo-effect)" of clinical
trials) to determine the efficacy of medical interventions, placebos are not
used in consumer products such as over-the-counter drugs. Why not take advantage
of the placebo effect in consumer products by offering bundles of placebo and
non-placebo doses to buy? Well, there are a few reasons I can think of:

- users assume they are taking a placebo, so will not worry about side-effects
  or mixing drugs
- users assume they are taking a placebo and so experience an adverse
  [nocebo effect](https://pubmed.ncbi.nlm.nih.gov/30118338/)
- users feel scammed if it is not clear that some amount of the drug they are
  buying is just sugar pills
- pharmacuetical companies use manipulative marketing to advertise placebos in
  order to cut costs of producing the non-placebo drug
- the placebo effect wanes when the user actively chooses to buy a bundle that
  includes placebos rather than the regular non-placebo

And I'm sure there are other issues that I am not thinking of.

Overall, if these issues are adequately adressed, I think that the value of the
placebo effect to provide useful treatments at a low cost is likely to be much
larger than the detriments to however much of the issues are not addressed (this
calculation is included in the "adequately" qualifier).

I can imagine a deal where a drug is sold in two versions:

- **Deal 1:** the current deal, where a pack contains just doses of the
  FDA-approved drug
- **Deal 2:** the novel deal, where a pack contains 50% placebo and 50%
  non-placebo doses of the FDA-approved drug

Deal 2 takes advantage of the placebo effect since, among the doses included in
the pack, the placebo and non-placebo doses are not distinguished. For the sake
of safety, however, the same instructions and warning for taking doses of the
drug also apply to taking doses from a deal 2 pack.

Deal 2 could be offered a somewhere in the range of a 35-45% discount to reflect
how marginal production is roughly half the cost that of deal 1. This could be
called the _placebo discount_! It's a win-win since the buyer at a lower cost
takes advantage of the placebo effect (which is often comparable to the
non-placebo effect of the drug) and the seller makes rougly the same (or perhaps
slightly more) profits as if they sold a deal 2 pack.