The characteristic of the pharmaceutical industry that is usually cited as making patents essential is that it costs an average of $150 million to get a new drug through FDA approval. Without the temporary exclusion that patents provide, there would be no way to recoup this cost.
I am firmly of the opinion that patents are used for this because no legal alternative has been provided. But it is easy to imagine a more targeted property right for this case that would serve the same purpose as patents, except more efficiently. And my standard example of an inefficiency of the current situation is that there is good evidence that hookworm is an effective treatment for Crohn's disease, but since hookworm is not patentable, there is no prospect that this treatment will ever get evaluated.
I am firmly of the opinion that patents are used for this because no legal alternative has been provided. But it is easy to imagine a more targeted property right for this case that would serve the same purpose as patents, except more efficiently. And my standard example of an inefficiency of the current situation is that there is good evidence that hookworm is an effective treatment for Crohn's disease, but since hookworm is not patentable, there is no prospect that this treatment will ever get evaluated.