New Drugs Trail Many Old Ones In Effectiveness Against Disease

Despite the more than $50 billion that U.S. pharmaceutical companies have spent every year since the mid-2000s to discover new medications, drugmakers have barely improved on old standbys developed decades ago.

Research published on Monday showed that the effectiveness of new drugs, as measured by comparing the response of patients on those treatments to those taking a placebo, has plummeted since the 1970s.

While that is already unwelcome news to drug and biotech companies, the consequences for the pharmaceutical industry could get worse under President Barack Obama's healthcare law.

The law established an independent research institute to compare the effectiveness of different treatments for the same condition. That way, patients as well as private insurers and government programs such as Medicare can stop paying for less effective therapies. If the new analysis is correct, then "comparative effectiveness research" could conclude that older drugs, which are more likely to be generics, are better than pricey new brand names that deliver the most profits for drugmakers.