Placebo is a Latin word which means "I will please." In the field of medicine, it refers to any drug, substance, preparation, procedure or practice that has no inherent therapeutic property but is nevertheless effective because the patient believes it will work. A placebo may be ingested, injected, inserted, inhaled, applied or performed (i.e., if it involves doing a certain activity). In its broadest sense, the term placebo refers even to such things as "fake or psychic" surgery and quackery.

A placebo effect occurs when a patient’s symptoms ease or subside following the administration of a placebo. For a placebo effect to occur, the patient must be made aware that the placebo has been administered to him/her. In contrast, a proprietary drug or medical procedure with proven efficacy will exert its expected effect even if administered covertly.

Incidentally, patients who do not believe in placebo may experience worsening of symptoms. This phenomenon is called "nocebo effect," which is Latin for "I will harm."

The placebo effect is considered by many experts as a remarkable aspect of human physiology. It is universally accepted that a person’s beliefs, attitudes and expectations significantly affect the person’s well-being, response to treatment and recovery from injury or illness. Research has shown that sensory experiences and thoughts influence many of the body’s organ systems, notably the endocrine system, which produces hormones and the immune system, the main defense system of the body against disease and foreign substances.

According to Kleijnen and his colleagues, healing is an interactive process between three influences: 1) the self-healing properties of the patient; 2) the non-specific effects induced by the presence of the therapist and the therapeutic setting; and, 3) the specific effects of the physical or pharmacological therapeutic interventions. In this context, placebo effect can be considered as part of the second influence, which affirms a person’s potential to react positively to a healer.

The placebo effect is so widely accepted such that many clinical trials that evaluate the safety and efficacy of a new drug include a placebo control group. The presence of the placebo group ensures that the noticeable change in the signs and symptoms of the subjects is due to the drug under study and not to placebo effect. In general, for a new drug to be approved for marketing, it must be proven to be significantly more effective than placebo.

Placebo, however, does not work for all. Likewise, placebo effect eventually wears off. Researches have consistently shown that only about a third of the population is susceptible to placebo effect. Likewise, placebo is not effective in all conditions. It is more effective in subjective disorders (e.g., depression, headache, back and other forms of pain, migraine, rheumatoid arthritis and angina) than in objective disorders. But there are some objective signs such as blood pressure, heart rate, body temperature and cholesterol level and some disorders exemplified by skin conditions such as warts and contact dermatitis that are receptive to placebo,

Do doctors knowingly use placebo? Not everyone will admit to, but most do, especially on patients who expect to get a prescription every time they visit a physician.

Now, let me answer your last question. The placebo effect only partially explains the occasional or anecdotal successes of charlatans, quacks, and fake surgeons and healers in effecting cures. These people also take advantage of other medical phenomena and practices. For example, many diseases such as the common cold and many forms of infection are self-limiting, which means, with time, they subside spontaneously even without treatment. Likewise, many chronic conditions such as osteoarthritis have periods of remission during which the signs and symptoms subside temporarily. Often, an ineffective treatment is administered just before a natural remission and is claimed to be the cause of the disappearance of the signs and symptoms. Also, many fake healers—and these are the dangerous ones—actually prescribe proprietary drugs.