OBJECTIVES: First-in-class drugs are those with novel mechanisms of action that offer a new therapeutic approach to treating a disease. In contrast, next-in-class drugs are those with a similar mechanism of action to existing drugs. The objective of this study was to compare the additional health gains associated with first-in-class and next-in-class drugs relative to the existing standard of care at the time of their approval. METHODS:  We identified new molecular entities (NMEs) approved by the FDA from 1999-2012 (n=392). We estimated health gains in terms of incremental quality-adjusted life-years (QALYs) gained for drugs approved for the first time from 1999 through 2012, relative to treatments available at the time of their approval. We identified incremental QALY gain estimates from published cost-utility analyses, and comparative effectiveness studies that estimated relative effectiveness using QALYs. We excluded studies that compared drugs to placebo or to no treatment when an alternative active treatment was available, and to be conservative we excluded estimates from studies supported by the pharmaceutical industry. We classified drugs as either first-in-class or next-in-class using the FDA’s categorization of NMEs. We compared estimated incremental QALY gains for drugs classified as first-in-class vs. next-in-class drugs using Mann Whitney U tests. RESULTS:  We identified incremental QALY gain estimates for 118 drugs, representing approximately 30% of drugs approved from 1999 through 2012. We classified 47 drugs (40%) as first-in-class and 71 drugs (60%) as next-in-class. First-in-class drugs and next-in-class drugs were associated with mean QALY gains of 0.49 (standard deviation 1.17) and 0.09 (SD 0.92), respectively, and median QALY gains of 0.17 (interquartile range 0.40) and 0.013 (IQR 0.19), respectively (p=0.018). CONCLUSIONS: We found that for drugs in our sample, first-in-class drugs were associated with larger incremental health gains relative to standard of care at the time of their approval than next-in-class drugs.