Failure Due to High Placebo Response A Primer on Placebos in Clinical Trials and How to De-Risk Them

Key Takeaways

It is of critical importance for investors to understand the placebo response in the diseases in which their portfolio companies are developing drugs. Failure to do so could lead to falsely assigning treatment effect as ‘real’, giving investors a wrong image of the potential and risk profile of the drug in development. Placebo rates will get highlighted in randomized trials further down the road, potentially leading to a failure of the drug and catastrophic loss for the investor.

Responses in the placebo arm of a clinical trial do not equate to placebo effects. Placebo responses by definition include any change observed after the placebo administration, which in many cases is driven by spontaneous improvements in disease or patient-reported symptoms (e.g. natural course of the disease leads to improvement (common cold), fluctuation of symptoms, parallel changes in diet/lifestyle, etc.) rather than a ‘true’ placebo effect.

For the majority of diseases, ‘true’ placebo effects are minimal and not statistically/clinically relevant. Placebo effects can be relevant but these are generally confined to diseases that lack objective assessments (biomarkers/ survival) and assess subjective symptoms such as pain and nausea.

The placebo effect has been shown to be highly influenced by a variety of factors that influence expectations such as doctor-patient interactions, the modality of the placebo, information provided, etc.

Trial design is an important factor in both, placebo responses and the placebo effect. While impossible to eliminate completely, an appropriate trial design by choosing the right eligibility criteria, endpoints, etc. can help to manage it.