Comparative effectiveness research (CER) represents the next stage in an evolution of research and knowledge development in regard to medical interventions. In this article we describe the challenges currently facing the innovative pharmaceuticals industry and briefly summarize the history of drug development, as context for the current movement to comparative effectiveness. CER should be considered alongside the wider field of health technology assessment (HTA), and we review the status of both CER and HTA internationally and their role in health policy. Limitations as to what can be achieved with HTA and limitations to the availability of evidence of comparative effectiveness at the time of market authorization provide ongoing challenges to all stakeholders. However, embracing CER is regarded as an essential step for the innovative pharmaceutical industry, as companies strive to more clearly demonstrate the effectiveness of their pipeline products with evidence that is compelling to payers and HTA agencies. Examples are given of how these evolving requirements from regulatory and HTA agencies are impacting on drug development efforts and how one company is responding. Finally, there are signs of increasing understanding and alignment across the various partners in drug development, registration and evaluation, and further suggestions are provided for consideration as the field matures and expands.