Pharmaceutical innovation often follows a familiar model: companies invest heavily in drug development, patents protect the resulting products, and commercial returns help fund the next generation of medicines.
But a recent paper in The Cambridge Law Journal argues that one part of drug development does not fit into that picture. Once medicines lose patent protection and generic versions enter the market, companies often have less reason to keep investing in new uses. Yet clinical research does not simply stop.
Hospitals, universities and public research groups continue to run late-stage trials on existing medicines, testing whether old drugs can be used in new ways. For Johnathon Liddicoat, James Parish and Mateo Aboy, the authors of The Republic of Translational Medicine, this is not a collection of isolated exceptions. It is evidence of a parallel innovation system that has been operating around academic research, clinical practice and patient need.
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The drug repurposing innovation puzzle
Hospitals and universities have long been involved in clinical research, but the authors argue that their role in generic-drug repurposing is larger and more systematic than conventional pharmaceutical innovation theory would predict. In their words, existing theory does not adequately explain the volume of late-stage trials conducted by hospitals and universities on already authorized medicines, particularly once generic versions are available.
One study cited in the paper followed 15 drugs that first faced generic competition in the U.S. in 2014. In the five years before generic entry, originator companies sponsored 223 phase 2 and 3 clinical trials involving those medicines. In the five years after generic entry, hospitals and universities conducted 237 phase 2 and 3 trials on the same drugs. This is the anomaly the paper is trying to explain.
The first number fits the standard logic of pharmaceutical R&D: before exclusivity expires, originator companies still have a commercial reason to test new indications. The second number is harder to explain. Once generics enter the market, lower-cost competition reduces margins, and any new use discovered by a company may be difficult to protect in practice. The paper points in particular to “cross-label use”: situations where a generic medicine is dispensed for a patented indication even though the generic label excludes that use. Earlier work by Liddicoat describes this as a problem created by the gap between patent law, prescribing practice and pharmacy substitution.
This does not mean companies never develop new uses for old drugs or that patents become irrelevant. But it does weaken the assumption that commercial exclusivity is the only engine capable of sustaining serious therapeutic development. If hundreds of phase 2 and 3 trials continue after the patent has faded, something else must be driving them.
That is the puzzle at the center of The Republic of Translational Medicine: why so much of drug repurposing continues when the usual commercial incentives are no longer strong enough to explain it.
A different model of innovation
To explain this apparent contradiction, the paper proposes what the authors call the Republic of Translational Medicine. The name deliberately echoes the philosopher Michael Polanyi’s idea of the “Republic of Science”, in which scientific progress emerges not from central planning but from thousands of researchers independently pursuing questions that they consider worthwhile. The authors argue that something similar happens in translational medicine, where hospitals, universities, and publicly funded researchers collectively continue developing new uses for existing medicines even after commercial incentives have weakened.
They present this as a complementary system operating alongside the usual model. Companies remain essential for discovering and developing entirely new medicines. But once a medicine has reached the market and eventually lost exclusivity, the conditions for innovation change. Three barriers that normally make drug development prohibitively difficult become substantially lower: expertise, risk and capital.
About the argument around expertise, repurposing an existing medicine is fundamentally different from developing a new molecular entity. Researchers are working with compounds whose pharmacology, manufacturing processes and safety profiles are already well characterized. Clinicians have often accumulated years of practical experience using these medicines and may begin to notice unexpected therapeutic effects during routine care. Those observations can then generate hypotheses that are explored through observational studies before progressing to formal clinical trials. Instead of starting from a blank page, repurposing begins with a medicine that has already cleared many of the scientific and regulatory hurdles associated with first-in-human development.
Risk is also handled differently. For pharmaceutical companies, the success or failure of a late-stage clinical trial can determine whether years of investment are recovered. Academic institutions face a different set of incentives. Researchers may still publish important findings even if a study produces negative results. Clinicians gain evidence that informs patient care. Governments and public funders acquire knowledge that can inspire future research or healthcare policies. Because the financial consequences of failure are spread across public institutions rather than concentrated within a single commercial organization, the authors argue that translational research can continue even when the probability of commercial return is relatively low.
On the finance side, drug repurposing trials are not inexpensive, but they often require considerably fewer resources than developing a medicine from scratch. The paper reviews several cost analyses suggesting that academic clinical trials can be conducted for a fraction of the cost typically associated with commercial development. One study cited by the authors estimated a median cost of around €2 million ($2.3 million) for multicenter academic randomized controlled trials, while another found that U.K. academic clinical trial units could run a hypothetical multicenter study for well under £1 million ($1.3 million) before accounting for drug costs. Although the precise comparison depends on how commercial development costs are calculated, answering repurposing questions requires only a fraction of the capital needed to bring an entirely new medicine to market.
These elements explain why it’s not as challenging to go the repurposing route rather than bringing an entirely new drug to market, but it does not explain what motivates the investment. According to the paper, the research is driven by a different set of incentives.
Different incentives create different innovation
According to the paper, generic-drug repurposing is sustained by incentives that sit outside the usual patent-and-profit model: scientific reputation, clinical problem-solving and patient need.
For academic scientists, the incentive is closest to what the authors call “open science.” A successful repurposing trial can lead to publications, grants, collaborations and professional recognition, even if it does not create a proprietary product. A generic medicine that turns out to work in a new indication may not create a blockbuster opportunity, but it can still create a career-defining clinical result, a new research program or a change in treatment guidelines.
Clinicians are not just researchers trying to publish; they are also users of the innovation they help create. The paper describes this as a mix of open science and “user innovation.” Doctors may investigate old drugs because they encounter unmet needs in their own practice and want better options for the patients in front of them.
This is why many repurposing stories begin in clinical settings. Bevacizumab, for example, was originally developed as an oncology drug, but ophthalmologists began using small intravitreal doses off-label for neovascular age-related macular degeneration. Its use has varied widely between countries, from almost absent in some systems to dominant in others, reflecting how clinical practice, cost pressures and evidence generation can shape adoption even without a conventional commercial launch for that indication.
Dexamethasone during COVID-19 is another example of the same logic. The drug was old, cheap and widely available, but it took the U.K.’s academically led RECOVERY trial to show that it reduced mortality in hospitalized patients requiring respiratory support.
Patients are another point authors describe differently in drug repurposing settings. In commercial drug development, patients are often discussed mainly as trial participants or future consumers. In the Republic of Translational Medicine, they can also act as users of innovation, helping with research questions, supporting recruitment, pushing for evidence generation, and disseminating results. Their incentive is the most logical one: access to better treatment. This is why the authors borrow from the economics of “user innovation,” where people develop or support innovations because they directly benefit from solving the problem.
Scientists, clinicians and patients each have reasons to support the development of new uses for old medicines. But it still needs funding, trial infrastructure, regulatory pathways and evidence strong enough to change practice.
Should governments leave the drug repurposing system alone or help it grow?
If hospitals and universities are already generating new therapeutic uses for existing medicines, should governments simply allow this work to continue organically, or should they actively help translate it into approved treatments?
The paper argues that many health systems have already begun moving, sometimes unintentionally, towards the latter. In Europe, the ongoing reform of pharmaceutical legislation introduces, for the first time, a pathway that could allow regulators to authorize new therapeutic uses developed by not-for-profit organizations, including hospitals and academic institutions, without relying on the original marketing authorization holder. Although the legislation is still being finalized and implementation will take time, the discussion recognizes that therapeutic innovations do not always originate within the pharmaceutical industry.
However, there are also more mixed approaches to drug repurposing. NHS England suspended its medicines repurposing program in 2025 after concluding that fewer opportunities were emerging than anticipated. The decision drew criticism from researchers, who argued that it risked abandoning an area where public investment could generate substantial patient benefit despite limited commercial incentives. Meanwhile, the U.S. Food and Drug Administration has launched initiatives such as Project Renewal to review older medicines that predate modern efficacy standards.
The authors suggest that policymakers have overlooked a complementary system that has been operating alongside commercial drug development for decades. If hospitals, universities and public researchers are already responsible for uncovering new uses for existing medicines, the challenge is deciding how much society should invest in recognizing, supporting and translating it into routine clinical care.
