In the past several years companies have discovered that a high placebo response rate can be almost as problematic in their clinical trials as a lack of efficacy. The cure for both includes enrolling the right patient population and hoping the compound in question has enough efficacy to overcome placebo effects.

The latest victim of the placebo effect is Genelabs Technologies Inc., which on Friday reported both good news and bad news for the first of its Phase III trials of GL701 (DHEA) in systemic lupus erythematosus. The trial tested DHEA's ability to reduce the amount of prednisone, a steroid hormone that produces toxic side effects at too high a dose, taken by lupus patients to suppress the disease.