Location upset former schoolfellow? It’ll have no effect on me (7)
I believe the answer is:
Here is my best explanation:
'it'll have no effect on me' is the definition.
I can't judge whether this definition defines the answer.
'location upset former schoolfellow?' is the subsidiary indication.
'location' becomes 'place' (place is a kind of location**).
'upset' shows that the letters should be reversed in order.
'former schoolfellow?' becomes 'ob' (abbreviation for old boy).
'ob' backwards is 'bo'.
(Other definitions for placebo that I've seen before include "Medicine given solely for psychological effect", "An effect", "Medicine working by psychology only", "evening 19d", "Ineffective substance given to humour patient", "drug for clinical trial", "control measure?", "Control drug", "Inactive medicine" and "Medical treatment whose effect is psychological".)