Patent Expiration and the Paradox of Clinical Research

It is natural for pharmaceutical companies to reduce R&D investment in drugs with declining commercial value due to generic (generic) releases. However, according to The Cambridge Law Journal, there is a paradox: clinical Phase 2 and Phase 3 studies, centered on universities and hospitals, continue to be active even after patent expiration. In fact, an analysis of 15 drugs facing generic competition in 2014 revealed that while pharmaceutical companies sponsored 223 clinical trials before patent expiration, universities and hospitals conducted 237 clinical research studies in the five years following expiration. This demonstrates that the expiration of patent exclusivity does not signify the end of innovation, and that a public sector-led parallel innovation system is functioning robustly.

The Economics of Repurposing: Reducing Costs and Risks

The reason academic research institutions are actively involved in drug repurposing is that it significantly reduces clinical development costs and risks. Since these drugs are already on the market, their existing safety data and pharmacokinetic information have been validated, allowing them to bypass Phase 1 clinical trials. While commercial clinical research costs hundreds of millions of dollars, academic-led, multi-center clinical studies can be conducted for less than 2 million euros (approximately $2.3 million). Non-profit organizations with limited capital are addressing unmet medical needs in various areas, including rare diseases, through this low-cost innovation pathway.

The Combination of Open Science and User Innovation

Public researchers respond to non-financial incentives such as academic reputation and the needs of the field, rather than commercial profits. This is a valuable phenomenon that combines open science and user innovation led by clinicians. For example, Roche's (Roche, RHHBY) anticancer drug Avastin (bevacizumab) targets vascular endothelial growth factor-A (VEGF-A), prompting ophthalmologists to use it off-label to treat macular degeneration, thereby changing guidelines. The RECOVERY clinical trial, led by the UK academic community, which demonstrated the effectiveness of dexamethasone in reducing mortality from COVID-19, is also similar.

Challenges in Public Policy and Institutional Support

Regulatory agencies in various countries are also beginning to systematize innovation that operates outside the pharmaceutical industry. The European Union (EU) is coordinating amendments to drug laws to allow non-profit organizations to obtain official approval for new indications without the involvement of the original pharmaceutical company. The U.S. Food and Drug Administration (FDA) is also promoting institutional improvements through Project Renewal, which updates the labels of older drugs with the latest data. However, as the UK National Health Service (NHS) temporarily suspended its drug repurposing program in 2025, the key challenge will be to establish sustainable governance that ensures both the efficiency of public funding and innovation.