Viagra has been making a fortune for Pfizer for some years now. It’s going to stop doing so soon.
Pfizer’s worldwide patents on sildenafil citrate will expire in 2011–2013.
Now I think we can all agree that the invention of the drug has increased human happiness? At least, it has done amongst men. Whether their female partners of a certain age are quite so happy about it is another matter. And of course there are those cases like Rod Liddle where he was able to chase a much younger secretary (while, amusingly, stating that he was "testing" the drug for an article) much to the distaste of his then wife.
One can think of various other methods by which one might pay for the development of drugs. In an entirely free market they’re difficult things to make money from. The marginal cost of production is usually pennies. But the R&D costs (the largest of which are usually the clinical trials) are in the $800 million per drug range. So you spend your $800 million and when the drug looks like it has a market you find everyone and their grandmother selling stuff they’ve been making for pennies.
Other methods might be paying a bounty out of tax revenue for the successful development. Not entirely convinced personally, as I can see the political difficulties of charging tax just so that middle aged men can get hard ons.
The patent system means that Pfizer has had a monopoly on manufacture since 1996. That monopoly, as above, runs out in a few years’ time. Then anyone can indeed make it for those pennies and sell it in a free market.
This is very much the same argument used about copyrights. We want more innovation, we like lots of innovation. But the huge upfropnt costs and the very low costs of duplication mean that it’s difficult to make money out of innovations. Thus we get less of it than we might desire. So, we institute a limited monopoly so as to allow earnings and thus encourage innovation.
There might be other systems possible and there are those who propose such. However, a lot of the criticism seems to me ill founded, in that it can just be aimed at "big companies making profits" without understanding the basic economic problem that we’re trying to solve. That without some mechanism of rewarding innovation we’re not going to get much of it.
I will admit though that I could be biased. The current system is going to make Viagra cost pennies a dose just as I enter my 50s…….