Nonprofits Are Ready to Repurpose Generic Drugs

Drug companies typically seek a formal labeling change from the U.S. Food and Drug Administration (FDA), or a parallel regulatory body outside the U.S., to market a drug for a new use. But once a drug is off-patent and generic, competition drives prices down, and the cost of investing in research and marketing outweighs the potential financial return. This means that if there’s promising data for the new use, drug companies have little reason to pursue regulatory approval via a formal labeling change.

Therefore, drug companies can’t legally promote the repurposed treatment, and it remains off-label (i.e., a use that has not received regulatory approval). Clinicians may be unaware of the treatment, leaving patients who might benefit without access.

The result is a well-recognized incentive gap: Innovative, low-cost therapies languish, remaining underutilized. For example, during the COVID-19 pandemic, the adoption of dexamethasone used off-label for severe COVID-19 patients varied widely across U.S. health systems. 

Why existing routes are ill-suited to nonprofits

Nonprofits want to step into this gap by translating off-label uses into approved treatments. Indeed, some have already taken large steps — for example, funding clinical trials. Yet they remain shut out of the formal approval machinery, which is structured around drug companies that manufacture or sell products for profit. Current approval systems only allow the company that holds the New Drug Application (NDA) or marketing authorization the right to request changes to a drug’s labeling, such as the addition of new uses. We describe some of the emerging solutions to this problem below, including underpinning design principles.

Alternative pathways

Three pathways in the U.S., either proposed or already in law, aim to fix this misalignment. A pathway being developed outside the U.S., the European Union (EU) Commission’s draft Article 48, is still under legislative review but shows another government’s approach to addressing the problem. Within each pathway, nonprofits may act as either a sponsor of the approval process or a non-sponsor contributor. A sponsor submits the regulatory application and assumes legal responsibility, including potential liability for patient harm. A non-sponsor contributor may prompt a labeling update by providing evidence to the existing sponsor or FDA for review, but would not have a formal tie to the product. The table below summarizes these pathways, including the implications for nonprofit liability.

Pathway (Status)	Summary & Nonprofit’s Role	Liability Exposure for the Nonprofit
“Labeling-Only” 505(b)(2) (proposal)	Builds off of the existing 505(b)(2) pathway so a nonprofit can sponsor a labeling change without intending to sell the drug. Other drug companies may then add the use to their labeling.	High – inherits failure-to-warn duties.
MODERN Labeling Act (enacted in 2020, but has not been implemented to date)	FDA can require drug companies to update their labeling for generics when the branded product is off the market. FDA can, but is not required to, seek input from the public.	Low – liable for misleading information.
MODERN Expansion (proposal)	As above, but extended to situations where the branded product remains on the market. FDA would be required to seek input from the public, including nonprofits and other experts, who can suggest labeling changes and submit data.	Low – liable for misleading information.
EU Article 48 (in parliamentary review)	Nonprofits can suggest labeling changes and submit data to the European Medicines Agency (EMA). The EMA can require drug companies to update their labeling.	Low – liable for misleading information.

Table 1. Summary of pathways and nonprofit liability.

However, even with a pathway put in place—whether “labeling-only” 505(b)(2), MODERN, or a MODERN expansion—two structural hurdles still stand in the way of nonprofit-led FDA labeling updates: regulatory-grade evidence and liability. 

Evidence: the first barrier

To support a labeling change, FDA generally requires at least one randomized controlled trial conducted under an Investigational New Drug application and complying with Good Clinical Practice standards, with patient-level data available. For trials already completed, the underlying, patient-level data typically rest with (i) the original NDA or authorization holders, who have little commercial incentive to share them; or (ii) academic investigators, whose studies may not meet regulatory documentation standards. When new trials need to be conducted, nonprofits can finance regulatory-grade trials, but these can be expensive. Unless regulators are willing to rely on peer-reviewed evidence when safety concerns are minimal—or public funders such as the National Institutes of Health (NIH) create dedicated grants for repurposing trials—this evidentiary gap will remain a barrier to nonprofit-led labeling updates. 

Liability: the second barrier

Assuming the role of formal “sponsor” exposes a nonprofit to various product-liability risks: failure-to-warn claims and post-marketing pharmacovigilance obligations. Drug companies mitigate these exposures through compliance infrastructure and insurance. However, nonprofits, which are often small and funded by philanthropy, rarely possess comparable resources. The pathways that rely on regulatory agencies—not the nonprofit—to initiate a labeling change (e.g., MODERN and EU Article 48) largely sidestep this burden by limiting the nonprofit’s responsibility to the accuracy of the data they submit. 

Design principles for viable nonprofit pathways

Based on discussions between the authors and external advisors, several options could make one or more pathways workable for nonprofits, while still delivering the rigor regulators demand:

1. Establish “labeling-only” 505(b)(2) guidance and liability safe harbor. FDA could formalize a route—either through guidance or legislation—that lets nonprofits cross-reference existing CMC files (i.e., the drug’s Chemistry, Manufacturing, and Controls quality dossier) and focus solely on submitting clinical evidence. Statutory language could shield nonprofits from sponsor-level tort claims when they do not manufacture or control the product, maintain no financial ties to the product, and act solely to advance public health.
2. Implement and expand MODERN. FDA could establish clear procedures, allocate appropriate resources, and create a public docket so nonprofits know how to contribute data. Expanding MODERN could allow for generic drug labeling to be updated where the brand is still marketed, ensuring no treatment is left behind. 
3. Fund evidence generation. An NIH line-item for regulatory-grade repurposing trials would pay for itself many times over in health system savings.

The bigger picture — and why it matters

Regulators already recognize the value of patient groups in accelerating therapies for rare diseases; the same logic holds for nonprofits repurposing generic drugs. With a clear, low-liability route to update drug labeling, trusted nonprofits could bring dozens of “sleeping” treatments to patients at a fraction of the cost of new drug development. In health systems now measured in trillions of dollars, unlocking such value makes sound fiscal sense. 

The science of repurposing is largely in hand, but the real constraint is regulatory design. By carving out a dedicated pathway for mission-driven organizations, policymakers could transform promising evidence into approved therapies. Nonprofits operate with limited resources and currently must navigate legal rules designed for multinational drug companies, despite having no financial stake or profit motive. That alignment with patient interests is precisely what the system should reward.

Acknowledgements: Research for this post was supported by a grant to Reboot Rx from Arnold Ventures and by the Novo Nordisk Foundation (NNF) through the scientifically independent Collaborative Research Program in Bioscience Innovation Law (Inter-CeBIL Program, Grant No. NNF23SA0087056).