That's a rather one sided view of the problem. Just because patents presently allow the pharmaceutical industry to fund R&D costs (estimates of which might be inflated[1]) does not mean they are the only way. If the cost of patents outweigh this one benefit, we should get rid of them.
First, not all research is done by the pharmaceutical industry. In the US, they account for about 36% of research spending[2], behind the government (38%, federal plus state plus local). Note that total funding by the industry (not limited to pharma but including biotech and medical devices) represented 58% in 2007 but the role of patents in those industries is a different debate. The remaining 4% are from foundations and charities.
Next, considering that pharmaceutical companies spend far more on marketing than research and development (typically 25% vs 15% of revenues respectively)[3] and considering that a large part of their revenues comes from public healthcare anyway, one can wonder how hard it would be to replace their R&D spendings with public funds, and get the money back thanks to cheaper drugs,since generics are typically 20% of the brand price.
(BTW I wonder what part of these 15% of revenues spent on R&D is for important research and what part is spent on looking for the next Botox)
Also patents could be replaced with public funding in ways that minimize the impact on the industry, for example by granting prizes for the discovery of important drugs.
Sure, there might be many ways to fix the problem, but just getting rid of pharmaceutical patents and doing nothing else is unlikely to help.
Also, be careful about misusing the statistic of "drug companies spending more on marketing". A huge part of "marketing" is giving away free samples, which are often used by doctors to help reduce the cost of drugs for low income patients.
Ah indeed I read more in your comment than you actually wrote.
Regarding free samples, it's a good point that I overlooked. According to reference [3] above, free samples account for 28% of marketing expenditures. The remaining 72% still represent 18% of revenues spent on pure marketing. So even if all free samples were used by doctors to help the poorer patients, there is arguably more money spent on marketing than R&D.
I don't think InclinedPlane was arguing that there aren't other ways to do drug research. Patents are just one solution to the free rider problem, and pretty much every free rider problem lends itself to the same small set of solutions: propertization, regulation, or subsidization. We address the free rider problem in drug development by giving temporary property rights in drug formulas, but we could just as easily regulate the industry and guarantee a rate of return or publicly fund development.
First, not all research is done by the pharmaceutical industry. In the US, they account for about 36% of research spending[2], behind the government (38%, federal plus state plus local). Note that total funding by the industry (not limited to pharma but including biotech and medical devices) represented 58% in 2007 but the role of patents in those industries is a different debate. The remaining 4% are from foundations and charities.
Next, considering that pharmaceutical companies spend far more on marketing than research and development (typically 25% vs 15% of revenues respectively)[3] and considering that a large part of their revenues comes from public healthcare anyway, one can wonder how hard it would be to replace their R&D spendings with public funds, and get the money back thanks to cheaper drugs,since generics are typically 20% of the brand price.
(BTW I wonder what part of these 15% of revenues spent on R&D is for important research and what part is spent on looking for the next Botox)
Also patents could be replaced with public funding in ways that minimize the impact on the industry, for example by granting prizes for the discovery of important drugs.
[1] http://news.ycombinator.com/item?id=4591766
[2] http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3118092/
[3] http://www.plosmedicine.org/article/info:doi/10.1371/journal...