The Hindu Business Line : Do drug prices enhance placebo?

My father-in-law recently fell ill and was hospitalised for nearly a month. During that period, he developed an infection and had to be treated with a strong antibiotic. The antibiotic was very expensive but he was rid of the infection in three days. This led me to an interesting question: Are some drugs effective because they are pricey?

To answer the question, we first need to understand the placebo effect. Placebo in Latin means “I shall please”. It was first used to refer to the sham mourners who were hired to cry for the dead. The medical practice later borrowed the term when doctors prescribed drugs to “please” their patients. It is one thing to claim that some drugs are placebos. It is quite another to show that pricey drugs have a greater placebo effect than the ones that are cheaper.

Behavioural psychologists have conducted several experiments to explore if prices and placebo effect are related. In one study, they administered a certain drug — a placebo — to two groups. One group was charged full price for the drug, while the other was given a hefty discount. The “patients” were later monitored to record the relief they got from the drug.

‘Discounted’ relief

The results were startling. The group that was charged full price claimed to experience more relief than the one that was charged discounted price! This seems to suggest that the relief that we get from a drug is based more on our perception about it than the actual medicinal value. It is, perhaps, for the same reason that we feel better immediately after we visit our favourite doctor.

The price-value relationship is true with consumer products as well. An experiment was conducted to explore if a certain energy drink reduced fatigue after a work-out at a gym. Just as with drugs, people who paid full price claimed to be less fatigued than the ones who paid a discounted price. It appears that what we pay is what we get. Is that one of the reasons why some drugs are pricey?

(The author is an investment strategist.)

More Stories on : Economics | Simple Economics | Pharmaceuticals

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page