How to Solve The Tragedy of the Commons Caused by Reliance on the Patent System to Develop New Drugs
The Problem: Lack of Private Incentives to Repurpose Off-Patent Drugs
Millions of lives could be saved if drug companies weren’t limited by a patent model that dates back to the 15th century . The problem is that when the patent on a drug runs out, drug prices plummet, creating a patent “cliff” that leaves pharma companies with almost no incentive to repurpose them for new uses. In particular, clinical trial data showing which off-patent drugs are safe and effective treatments for new diseases is “highly non-excludable”, “unmonopolisable” or “public good” information which is almost impossible to stop people from using, even with a patent . Off-patent or “generic” drugs that have successfully completed Phase 1, 2 and 3 clinical trials for safety and efficacy are, in principle, available to be re-patented as reformulations or new uses to treat new diseases. But companies also lack incentive to do this if the off-patent drug has similar efficacy and active ingredient to the patented drug, and can be prescribed off-label, which means it’s difficult to recover the cost of the clinical trials proving efficacy of the patented drug . A patented reformulation may also be less safe or effective than the off-patent drug, resulting in potential harm to patients . For this reason, the off-patent repurposing dilemma has been referred to by the NIH’s National Center for Advancing Translational Sciences (NCATS) as the “tragedy of the commons” . That’s why governments, health insurers and charities need to find a new way to incentivise off-patent drug development.
The Solution: Pay for Success Contracts
There is a solution to this tragedy, which should be intuitive. If you want to incentivise somebody, you give them a prize. Crowd Funded Cures propose establishing financially innovative “pay for success” contracts (e.g. Social Impact Bonds) as an additional incentive to the patent system, in which a drug company is given a premium or outcome payment for funding the Phase 2 and 3 clinical trials that successfully repurpose an off-patent treatment . This “pay for success” model can lead to billions of dollars in healthcare cost savings because it can be 100 times less costly and 10 times faster to repurpose off-patent drugs than patent-centric drug development, by relying on existing Phase 1 safety data . Similar proposals to use Social Impact Bonds to repurpose generic drugs have been made in the last six years but have not received backing to date .
In the meantime, please sign the petition to ask governments, health insurers and charities to back off-patent drug repurposing pay for success contracts as a new, open-source approach to incentivise the development of faster, safer, cheaper and more effective treatments — and cures — for patients, without reliance on patents.
Sign the Petition
The Tragedy Caused by Reliance on the Patent System to Develop New Drugs Millions of lives could be saved if drug…
 A 2021 study of 197 drugs approved by the FDA since 1997 showed that the chance of a drug being repurposed for a new use approaches zero as soon as it goes off-patent or “generic” (See https://pubmed.ncbi.nlm.nih.gov/33397471/).
 The following 2013 paper by Profs Amy Kapczynski and Talha Syed discusses the limits of patents with respect to certain types of “highly non-excludable” therapies including repurposing off-patent drugs and lifestyle interventions and suggests using prize incentives as well as increased public funding to address this problem (see https://www.law.yale.edu/sites/default/files/documents/pdf/Faculty/Kapczynski_Nonexcludability.pdf at 1944). The author’s 2014 thesis also discussed this problem of “unmonopolisable therapies” and proposed a flexible prize mechanism to “de-risk” clinical trials for such therapies due to public funding being centralised and inefficient (see Chapter 8 https://ir.canterbury.ac.nz/handle/10092/9826).
 For this reason repurposed generic drugs and other therapies where it is difficult to enforce a monopoly price to recover the cost of clinical trials are referred to as “financial orphans” that lack private incentives for development under the patent system (see https://www.healthaffairs.org/do/10.1377/hblog20140306.037370/).
 https://dndi.org/wp-content/uploads/2019/10/DNDi_ModelPaper_2019.pdf. See Figure 1 on page 17: Cost to repurpose existing drugs without and with new formulation.
 See proposal by Bruce Bloom, former CEO of Cures within Reach (https://ssir.org/articles/entry/repurposing_social_impact_bonds_for_medicine) and Findacure’s RDDR SIB project for the NHS to back a generic drug repurposing Social Impact Bond to treat rare diseases (https://www.findacure.org.uk/the-rare-disease-drug-repurposing-social-impact-bond/).