Report Highlights

Drug Repurposing in the U.S.: Market Overview

The U.S. drug repurposing market reached USD 11.2 billion in 2024, making it the largest national market for new-indication development worldwide. Activity is split between two groups. The federal government, principally the National Institutes of Health through its National Center for Advancing Translational Sciences, has dominated early target validation and public data infrastructure, while private sponsors lead late-stage development and commercialization. Pfizer's sildenafil, first developed for angina and later approved for erectile dysfunction, illustrates how commercial sponsors capture repurposing value.

Policy shapes the market's current form through exclusivity and pricing rules rather than direct subsidy. The Orphan Drug Act of 1983 and the Drug Price Competition and Patent Term Restoration Act of 1984 created the economic logic for repurposing by offering seven-year orphan exclusivity and three-year new clinical investigation exclusivity under 21 U.S.C. 355. Consequently, the market concentrates on oncology and rare disease indications where these protections deliver the highest return.

Policy-Driven Growth in U.S. Drug Repurposing

Three named instruments drive demand. First, the 21st Century Cures Act (Public Law 114-255, 2016) created Breakthrough Therapy designation and the Rare Disease Endpoint Advancement pilot, which lower evidentiary thresholds for repurposed candidates in rare conditions. Second, Section 45C of the Internal Revenue Code grants a 25 percent tax credit on qualified clinical testing expenses for orphan drugs, directly reducing the cost of Phase 3 trials for sponsors pursuing orphan indications.

Third, the National Center for Advancing Translational Sciences runs the Therapeutics for Rare and Neglected Diseases program, which funds preclinical and early clinical work for academic and small-company sponsors. The FDA Modernization Act 2.0, enacted within the Consolidated Appropriations Act, 2023, removed the statutory requirement for animal testing before human trials. Together these instruments lower the upfront cost of generating candidate data, which expands the pipeline of repurposing programs that reach the clinic.

Regulatory Barriers and Compliance Costs

Licensing and evidence requirements are administered by the FDA's Center for Drug Evaluation and Research. Investigational new drug applications must comply with 21 CFR Part 312, and sponsors must still run randomized Phase 3 trials that typically cost USD 20 million to USD 50 million. FDA review of an efficacy supplement under standard review adds roughly 10 months before a new indication can be marketed.

Pricing is the second constraint. The Inflation Reduction Act of 2022 authorizes the Centers for Medicare & Medicaid Services to negotiate prices for selected Medicare Part D drugs, and small-molecule eligibility begins seven years after approval, so a new indication does not reset the clock. The first negotiated prices took effect January 1, 2026. Repurposed controlled compounds, such as cannabinoid or psychedelic candidates, also require formal rulemaking under 21 U.S.C. 811 from the Drug Enforcement Administration before commercialization.

Policy-Created Opportunities in the U.S.

The Advanced Research Projects Agency for Health, funded at USD 1.5 billion for fiscal year 2024, supports programs targeting rare and chronic diseases. These programs create co-development and procurement opportunities for repurposed candidates. The Department of Defense Congressionally Directed Medical Research Programs also funds repurposing studies through its peer-reviewed topic areas, providing non-dilutive capital for sponsors with clinical hypotheses.

The Veterans Affairs Million Veteran Program links genomic data to electronic health records for more than one million enrolled veterans, creating a real-world evidence source for identifying off-label signals. Sponsors partnering with VA researchers can generate observational evidence that supports supplemental filings under the FDA real-world evidence program authorized by Section 3022 of the 21st Century Cures Act.

Market at a Glance

Leading Market Participants

• Eli Lilly
• Pfizer
• Johnson & Johnson
• Merck & Co.
• Amgen
• Bristol Myers Squibb
• Gilead Sciences
• Recursion Pharmaceuticals
• BenevolentAI
• Healx

Regulatory and Policy Environment

The primary legislation is the Federal Food, Drug, and Cosmetic Act, administered by the Food and Drug Administration. Repurposed indications are governed by the Drug Price Competition and Patent Term Restoration Act of 1984, which introduced the 505(b)(2) pathway allowing sponsors to rely partly on existing FDA findings. Key compliance requirements include Good Clinical Practice standards, IND compliance under 21 CFR Part 312, and sponsor reporting under the Orphan Drug Act's designation and exclusivity rules.

Upcoming changes include the PDUFA VIII reauthorization, negotiated between FDA and industry in 2026 and due before September 30, 2027. The rare pediatric disease priority review voucher program, which expired December 20, 2024, remains before Congress. Compared with regional peers, the U.S. offers seven years of orphan exclusivity, while the European Union grants ten years under Regulation (EC) No 141/2000, making the American framework shorter but faster to process.

Long-Term Policy Outlook for U.S. Drug Repurposing

The PDUFA VIII reauthorization will set FDA review staffing and user-fee commitments for fiscal years 2028 through 2032. Its terms will determine whether the agency maintains the review speed that currently supports supplemental indication filings. Expected changes to Medicare negotiation rules, including the orphan exclusion expansion enacted in the July 2025 reconciliation law, will widen the set of repurposed rare-disease drugs exempt from price selection.

The FDA Modernization Act 3.0, introduced in Congress in 2025, would codify non-animal testing alternatives into statute. FDA's April 2025 roadmap to phase out animal testing for monoclonal antibodies signals the agency's direction. These measures will lower preclinical costs for repurposing sponsors and shift the competitive advantage toward firms with in-silico and organoid testing capabilities by 2032.