A placebo arm is the group in a trial that gets a dummy treatment, to compare against the real medicine's effect. It is wrong to use one when you already have a proven, effective treatment available — denying that to someone for a trial is like serving empty plates when there's a full pot of sambar right here :-) I see this in our Hyderabad labs; we work on new insulin, and we would never give a placebo to a diabetes patient when good control medicines exist. My own son's engineering fees come from this honest work, so I know the weight of giving real care.
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