From 2001 to 2006, the percentage of new products cut from development after Phase II clinical trials, when drugs are first tested against placebo, rose by 20 percent. The failure rate in more extensive Phase III trials increased by 11 percent, mainly due to surprisingly poor showings against placebos.
Some products that have been on the market for decades, like Prozac, are faltering in more recent follow-up tests. In many cases, these are compounds that have made billions of dollars for pharmaceutical companies. But if these same drugs were vetted now, the FDA might not approve them.
Two comprehensive analyses of antidepressant trials have uncovered a dramatic increase in placebo response since the 1980’s. One estimated that the so-called effect size (a measure of statistical significance) in placebo groups had nearly doubled over that time.
The fact that an increasing number of medications are unable to beat sugar pills has thrown the pharmaceutical industry into crisis. Drug developers say it's not that the medications are getting weaker -- instead, they say that the placebo effect is somehow getting stronger.