Large placebo effects are typically reported in clinical drug trials and evidence suggests placebo effects have increased over time. The diminishing drug-placebo difference calls into question the effectiveness of pharmacological treatments and provides a challenge to prove the effectiveness of new medications. This chapter discusses explanations for the increasing placebo effect. It highlights the contribution of spontaneous remission to the improvement in placebo groups, but focuses particularly on the role of patient and clinician expectations. Certain characteristics of the trial design can influence the formation of patient expectations and, subsequently, true placebo responses. Side effects in clinical trials may also contribute inadvertently to placebo responses. Side effects after starting medication can inform participants about their allocation to an active treatment group. Thus, they may enhance expectations of improvement and contribute to nonspecific effects in clinical trials. It is argued that specific and nonspecific effects interact in drug groups of clinical trials. This interaction influences drug-placebo differences in clinical trials (i.e., trial sensitivity). Future research should aim to identify which patients will respond best to drugs and those who may be better treated with placebos.