[tehwalrus]

The thing that freaks me out about placebos is that you can rig them - a sugar pill, for example, isn't necessarily inert in diseases that mess with sugar levels (among other things) - by pitting your drug against a "placebo" that actually makes the disease worse chemically, you can get away with murder when your drug magically turns out to be better than it.

Comparing against other drugs, especially established ones, is a reasonable fix for this, although as others have pointed out this may cause perverse incentives.

[ceejayoz]

I'd suspect that diabetes pill placebos would be something like a gelcap filled with water, not a sugar pill.