This is a common misconception.

In fact, there are very few studies in which patients receive an "inert" placebo.

Consider a new drug that claims to treat heart disease. It would be obviously immoral to say, "we are going to take drugs away from the control group and give them sugar pills instead".

So a "Placebo" is usually the current standard-of-care, which might be a very powerful drug.

This works because we are not at all interested in the absolute effectiveness of a drug; we are only interested in whether or not it is better then the current alternatives.

You're describing an active-control trial, not a placebo-controlled trial. In a trial of drug A (current standard of care) vs. drug B (new agent), there will usually be 2 placebos involved. Participants will be randomized to receive drug A + placebo B or, conversely, placebo A + drug B. Typically the manufacturer of each drug is in the best position to produce an identical appearing placebo for each pill.

What moioci said. I don't believe

> "Placebo" is usually the current standard-of-care

is correct, either as popularly understood or as actually used during drug trials. Instead, "Placebo" is a device to make the experience of not taking a drug identical to taking a drug, which means both that it's a physical pill and that it causes the appropriate side effects.