A major difference between scientific and complementary medicine is supposed to be in their attitude to placebos. When patients say they have been helped by treatments such as homeopathy, reflexology or flower remedies, which don't make sense scientifically, doctors often put it down to the "placebo effect". Prescription drugs, in contrast, are said to be worthwhile precisely because they have been tested against a placebo and found to work more effectively.

But this simplistic division is starting to look rather shaky in the light of recent studies that looked, for the first time, at exactly what goes on in the brain when a patient responds to a placebo. Not only did the scans find clear physical changes, but also the areas affected can be different from the ones affected by the drug. What's more, other studies reveal that the billion-dollar market for Prozac-like SSRI drugs are more firmly rooted in the placebo effect than most psychiatrists and the pharmaceutical companies would care to admit.

The first reports from a recent $6m, five-year study, which found that the herbal remedy St John's wort was less effective than a placebo, suggested that it was one in the eye for the complementary approach. While the herb had only managed to cure 24% of cases of moderate to severe depression, taking just a sugar pill had cured 32%. But a rather embarrassing fact rapidly emerged: the prescription anti-depressant Zoloft, which was also part of the trial, had been barely more effective than the herb, curing only 25%.

This fits with a dramatic new analysis of 96 anti-depressant trials between 1979 and 1996. Seattle psychiatrist Arif Khan found that in 52% of the trials, the effect of the drug could not be distinguished from the placebo. Khan suggests that the placebo response with SSRIs may be so high because patients in these trials get a lot of attention - on average, they spend 20 hours being asked detailed questions over a two-month period. This compares with the 20 minutes a month of attention a typical patient gets when being treated with the same pills by their local doctor.

"We like to think that we give people treatments and they get better," says Andrew Leuchter, professor of psychiatry at the University of California. "But we don't actually know in any individual why they get better. However, one of the factors is undoubtedly the time we spend with people and the feeling of being connected which that gives patients." As a description of the way prescribed SSRIs work, this is remarkably similar to the conventional explanation for the successes of complementary medicine.

So what exactly is going on in the brain when someone responds to a placebo in an anti-depressant trial? This was the question Leuchter set out to answer in a trial published in January. The result was a surprise. The general assumption has been that placebos somehow activate the same pathways that drugs do. This certainly seems to be what happens with placebos used for pain control.

However, when Leuchter hooked up patients to an EEG device at regular intervals during the eight-week trial comparing an SSRI with a placebo, he found something else was going on. The 32% who responded to the placebo showed quite a different pattern of brain activation to the 52% who responded to the drug. Placebo responders showed heightened activity in the executive prefrontal lobes, an increase that continued through the trial. Drug responders at first showed a decline in the frontal area and then a rise, which tapered off.

But it soon became clear that the study hadn't uncovered a general rule. Last month, researchers at Toronto University reported on a similar study, which found that the patients who responded to a placebo had similar responses to those who responded to an SSRI. Both groups showed an increase in the "thinking" frontal lobes and a decrease in the activity of the emotional limbic system.

All of this raises tricky questions about whether mainstream medicine should be so sniffy about placebos. If they are having observable physical effects on the brain, just as drugs do, what exactly is the difference? Some researchers believe that mainstream medicine should think about placebos in terms of making positive use of them, rather than treating them as a nuisance factor. They might also point the way to new treatments.

There is certainly no shortage of intriguing leads - such as the way people in different countries respond to placebos. A study last year looked at the results from double-blinded trials for stomach-ulcer medication around the world. The average placebo response rate was 35%, which was the figure for the US, but in Germany it shot up to 59%. In neighbouring Denmark, however, it dropped to 22%, while in Brazil it was just 7%. The reason for these differences is unknown.

Perhaps advertising and drug promotion has something to do with it. Timothy Walsh, a psychiatrist at Columbia University has found that the placebo effect has grown in recent years. A higher percentage of depressed patients get better on placebos than they did 20 years ago. A major reason for this is almost undoubtedly rising expectation; it is an intriguing thought that massive drug advertising campaigns don't just sell more drugs, they may actually make them more effective.

But, equally, negative publicity about drugs can reduce their effects. Arthur Barsky, a psychiatrist at Brigham and Women's hospital in Boston, has recently warned of the power of the "nocebo" - the belief that a certain treatment is going to harm you. Drug side-effects cost the American health system a staggering $76bn a year. Barsky believes that some of them may be the result of the nocebo effect. A study some years ago found that women who simply believed that they were prone to heart disease were nearly four times as likely to die as women with similar risk factors who didn't hold those views. Another study has found that patients warned about the gastrointestinal side-effects of taking aspirin were three times more likely to suffer from them.

Yet again the division between hard-nosed scientific medicine and touchy-feely complementary medicine appears increasingly fuzzy. But then placebos seem to trigger irrational responses in the patients as well as the profession. Leuchter revealed what happened once his anti-depressant trial was over and he told the placebo responders that they hadn't been getting a drug. Nearly all immediately relapsed and demanded to be put on a real drug. Only one spotted the faulty logic and declared that if he could make himself happier without the drugs, so much the better.

· Jerome Burne is editor of the monthly newsletter Medicine Today. www.medicine-today.co.uk