Interesting read on the economics of snake oil

[Okealyshire]

Skepticblog is one of my favorites. Today Steven Novella posted a summary of a new paper by Werner Troesken that discusses why snake oil "remedies" remain popular even today.

Some selected passages:

The core concept of this paper is that the patent medicine industry demonstrated what Troesken calls “inelastic demand with respect to product failures” – in other words, people still wanted to buy patent medicines, even after their previous experience with such products resulted in failure.
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In other words – the allure of a promised cure is so great, people are willing to risk the investment in the treatment even after repeated failures. We therefore cannot rely upon market forces to weed out ineffective treatments from the marketplace.
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What Troesken does not discuss much is the false positive of the placebo effect. This is because he is restricting his analysis to claims for cures of real diseases. In his basic model he ignores spontaneous remissions, but he acknowledges this is another source of false positives – sometimes people get better on their own. But the more serious the disease, the more rare this should be.
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He also points out, and I would amplify, that increasing medical knowledge did not dampen the demand for implausible treatments. This is because the general public, while they may have increased scientific knowledge as scientific knowledge in general increased, would not rise to the point that they would reject patent medicines on the basis of scientific plausibility. They remained empiricists.
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The classic era of patent medicines may have ended in 1939, but it has had a resurgence in the US since 1994, when DSHEA was passed. DSHEA essentially removed supplements and herbs out from under the yoke of FDA regulation, partly (at least on the right) based upon the claim that market forces were sufficient to regulate such products.
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What this paper convincingly argues is that we cannot expect market forces to result in better and more effective health products, or even to keep entirely worthless or even harmful health products from the marketplace.

[newt]

Independent peer review of efectiveness is a great way to approve drugs.

4/5 drugs approved in the US have no real benefit over existing drugs, they's just more expensive.

In the UK drugs are reviewed and approved for use independently, the drug comapnies hate this. But then we pay 1/2 what US people pay per head for health care and live longer.

Atripla is, truth be told, one of the 4/5, it adds marginal convenience for some people but no additional efficacy.

- matt

[Hellraiser]

The strength of atripla is the ease of adherence though, not any increased efficacy over any other regimen.