[triplefox]

I discussed this yesterday (elsewhere) with respect to games. I couch it in terms of "permission economy" (the present strong IP situation) versus "remix economy" (the weak IP situation)

My analysis is that, first of all, there is a lot of waste overhead involved in large-budget productions. In a remix economy everyone will use the minimum budget possible to produce new material, so producers will operate near perfect-competitor efficiency.

Second, and perhaps more importantly, because all material can be reused, consumers will profit; new material will constantly seek to create new value, rather than to simply create a rebranded version of old value.

This can apply to drugs as well as media. Presently, pharma corporations each jealously guard their research. Hence they are all duplicating effort. In a remix economy, the company that kept secrets would be overtaken by collaborating competitors, because their costs would be too high. They'd get throttled from the overhead needed both to do original research and keep it secret.

[paulgb]

But pharma research is expensive, so what incentive does a company have to fund research if it isn't granted a (temporary) monopoly on the results? They would end up protecting their innovation through trade secrets, which essentially gives them a monopoly until someone duplicated their efforts. This is the situation patents exist to avoid.

Even if a bunch of companies are collaborating to create a new drug, the dominant strategy for a company is to not be involved in the collaboration, since you get the IP without the cost. (Ignoring the possibility of trade secrets)