It does not go down. The more drugs we know, the harder it is to prove that the new drug you propose is better than current therapy. A proposed molecule that does not have significant advantage compared to the current gold standard will never sell. To put it in another way: all the low-hanging fruits are already taken.
Add to the fact that science progresses; we now know more about the human body and generally everything compared to 20 years ago, so more stringent rules and testing are required.
Classic example: before thalidomide, nobody cares about how drugs work in pregnant women. Now all drugs have pregnancy category (how safe it is to be used by pregnant women) approved by FDA, and figuring out this pregnancy category comes with a cost.
Yes it is. It is not about the cost of comparing 2 products, it is about market saturation. When 2010 came, drug A would be off-patent and evidence for using A would be piling up. As a doctor that cares about his patient, one would very reasonably choose drug A over the still-on-patent drug D which is only slightly more effective but since it's new the evidence is weaker (as in -- will this work for the relevant genetic makeup, disease state profile, microbial resistance pattern for antibiotics, is this better efficacy real and not just some shady number crunching by big pharma etc.), nobody exactly knows the long-term side effects, and it's much more expensive. Do you think that the pharma would spend millions to face this bleak market?
(EDIT: this assumes that drug A works "satisfactorily". Drug D still have a chance if it has markedly differentiating features, say if drug A is injected while drug D is taken orally.)
(as a side note, cancer drugs are hot because of precisely opposite of these -- most are fairly new, those that are old are not exactly pleasant to take, there is no "silver bullet" found yet so there are lots of room for improvement.)
Another take on the market saturation is that when the current therapy is simply already good enough, ie. the "silver bullet" has been discovered. That's the reason why there has been no new drugs developed for headache in recent few years (or pain management drugs in general). It's a totally different story when, say, aspirin was first introduced: there is a lot more room to improve on / differentiate from its side effect profile, pharmacological properties, etc.
I'm honestly gobsmacked that our model of health and physiology is so primitive that it doesn't use the most widely available treatment as a first line approach, which, as you point out, is the placebo effect. Why are so many resources being wasted on developing new chemicals when the brain can seemingly perform the same functions with nothing? I get that for a lot of things you need a physical intervention, but should this not be the last resort as it tends to have the most side effects?
Every time I read a post like yours, I think "Do you really want to treat HIV with a placebo?" But I know that's an uncharitable reading of your position. Which diseases do you propose be treated with placebo primarily?
All I said was try a placebo and see if it works as part of the standard routine. Obviously with a potentially fatal illness you want to use everything in your disposal to stop it. Why would you not use your last resort for something that serious? But then that includes using both physical and psychological treatments. If someone has HIV then the boost that positive thinking delivers to the immune system (http://legacy.lclark.edu/dept/chron/positives03.html) combined with anti-virals could save a life. If it's something like, say, depression or migraines or the flu, then a placebo may well cure it and there's no need to prescribe drugs which have nasty side effects or are addictive. If you can get something for free, why would you not do it?
The placebo effect only really changes self-reported symptoms. It makes people feel much better and that shouldn't be discounted, but it doesn't change things you can make objective measurements of - like whether the patient is alive or dead.
That isn't actually true. Ask any doctor about patients who just lost the will to live. Also read about the research about morphine and placebos, how a morphine blocking drug actually blocked the placebo effect - without the person knowing they got the blocker drug!
That's not correct. Placebos work even when the person knows it's a placebo. All that is required is belief that it will work, even if you have knowledge that it doesn't.
i.e. if they see they got better on the placebo they won't care when they find out - they have clear evidence that it does work.
Add to the fact that science progresses; we now know more about the human body and generally everything compared to 20 years ago, so more stringent rules and testing are required.
Classic example: before thalidomide, nobody cares about how drugs work in pregnant women. Now all drugs have pregnancy category (how safe it is to be used by pregnant women) approved by FDA, and figuring out this pregnancy category comes with a cost.