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The New Magic that Can Heal You and Has the Drug Companies Running Scared

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 placebo.

In addition, some products that have been on the market for decades, like Prozac, are faltering in more recent follow-up tests. These are the compounds that made Big Pharma more profitable than Big Oil in the late '90s -- but if these same drugs were vetted now, the FDA might not approve them.

It's not that the old meds are getting weaker, drug developers say. It's as if the placebo effect is somehow getting stronger. And the fact that an increasing number of medications are unable to beat sugar pills has thrown the industry into crisis.