And yet even pharmaceutical companies are now facing problems caused by too many patents (though I'm sure none of them want to abolish patents completely the way many in software do). Michael Heller from Columbia Law School writes about new therapies that companies can't bring to market because they involve dozens or hundreds of different genes or compounds, each patented separately; he argues that this will become more common because of trends in medical science. He also cites some interesting examples like http://www.goldenrice.org/ which actually did get produced, but only because they formed a non-profit foundation and basically shamed companies into licensing their patents as charity for the developing world.

Many, many more details in Heller's book and in this Econtalk interview:

http://www.gridlockeconomy.com/

http://www.econtalk.org/archives/2009/11/heller_on_gridl.htm...

That is conventional wisdom. However, if we pulled the patents from pharmas, the demand for drugs would not go away. I suspect things would open up and researchers would share and open-source their work. The total research may actually increase, but just get distributed very differently, much like software changed from Enterprise to open source processes. Of course this won't happen any time soon as making such a change would destroy the market caps of pharma corps.

i don't know if this is true, but i heard somewhere that drug companies don't really innovate anything.

it's the NIH and universities (via government funding) that actually discover the drugs, then they sell the exclusive rights to manufacture it to big pharma (who then spends a lot to get it approved and market it and such...)

(this is the book, i haven't read it) http://www.amazon.com/Truth-About-Drug-Companies-Deceive/dp/...

so in this case (if true) patents fail again.