This “hidden” research system, which operates outside of the patent system, has huge potential to regularly provide society with affordable treatments.

Examples of this have included using a cancer drug to treat a leading cause of blindness, changing a drug from treating breast cancer to preventing it, and using an old anti-inflammatory drug to treat Covid.

The new research led by King’s College London and published in the Cambridge Law Journal explores the parallel drug innovation system taking place outside of pharmaceutical companies.

The research shows that hospitals and universities are conducting substantial numbers of late-stage clinical trials funded at less than 10% of pharmaceutical companies’ reported costs.

This is in part because universities and hospitals are able to carry out these trials with fewer resources than industry.

In drug research and development there are three main barriers to innovation: expertise, risk and capital. These barriers are high for organisations that develop new drugs. However, the barriers are lower when repurposing generic drugs.

The expertise required when repurposing drugs is lower because the drug is well studied and already manufactured, investigators select projects based on their expertise, and the trials are approved by grant and ethics bodies. Risk is lower because no organisation’s financial viability depends on the authorisation and sales of the drug.

The research also explores how clinicians and scientists have different motivations for repurposing generic drugs compared to the incentives that the patent system offers. These include helping patients recover more quickly and publishing studies to progress their careers.

The process of finding new uses for already authorised drugs is commonly known as “repurposing”. Early in a drug’s lifecycle, companies are interested in repurposing, and recent data indicates that, on average, they obtain regulatory authorisations for 32 new uses annually.

These approvals permit the drugs to be marketed for those new uses in addition to the original use. However, once generic drugs enter the market, companies lose interest in repurposing due to competition. Yet, it is also at this moment that the new system flourishes, with hospitals and universities using cheap, generic versions of the drugs in their research.