Add to the fact that science progresses; we now know more about the human body and generally everything compared to 20 years ago, so more stringent rules and testing are required.
Classic example: before thalidomide, nobody cares about how drugs work in pregnant women. Now all drugs have pregnancy category (how safe it is to be used by pregnant women) approved by FDA, and figuring out this pregnancy category comes with a cost.
No it's not. Example:
1980: Drug A is invented to treat illness X, proves to be the most effective
1990: Drug B is invented for illness X, effectiveness is tested against Drug A
2000: Drug C is invented for illness X, effectiveness is tested against Drug B
2010: Drug D is invented for illness X, effectiveness is tested against Drug C
In other words, always compare effectiveness to the current few best treatments. Nothing spirals, nothing becomes harder to prove.
http://www.wired.com/medtech/drugs/magazine/17-09/ff_placebo...
i.e. if they see they got better on the placebo they won't care when they find out - they have clear evidence that it does work.
http://www.wired.com/wiredscience/2011/10/cannabinoids-place...
(EDIT: this assumes that drug A works "satisfactorily". Drug D still have a chance if it has markedly differentiating features, say if drug A is injected while drug D is taken orally.)
(as a side note, cancer drugs are hot because of precisely opposite of these -- most are fairly new, those that are old are not exactly pleasant to take, there is no "silver bullet" found yet so there are lots of room for improvement.)
Another take on the market saturation is that when the current therapy is simply already good enough, ie. the "silver bullet" has been discovered. That's the reason why there has been no new drugs developed for headache in recent few years (or pain management drugs in general). It's a totally different story when, say, aspirin was first introduced: there is a lot more room to improve on / differentiate from its side effect profile, pharmacological properties, etc.