I’m unsatisfied with the argument that pharmaceutical companies need patents on their new drugs because otherwise their R and D is so expensive and long term that a removal of their patent privilege would greatly reduce the number of new drugs that hit the market. The argument then implies that keeping this amount of drugs from dropping is well worth whatever innovations and losses the monopoly restrictions bring along.

The argument is usually focused around how much fewer drug innovations we would have. I want to take it from the other side for a moment and think about just how costly is the forgone discovery and restrictions that we are enduring. Here’s how I see it. The intangible knowledge of the drug’s chemical compound is nearly impossible to enforce a property claim over (just like most IP). Even if you catch the people who crack the chemical code you can’t make them really forget that they know the recipe. IP theft is different from physical theft in this way. When someone steals your wallet and you get it back the story is over. Not so with knowledge.
What this translates into is a significantly higher cost to enforcing intellectual property rights compared to ordinary property rights. The monopoly privilege is reserving a realm of profits for the patent holder, all the while, the privilege is also inclining people to cheat against the patent by making marginal changes to the formula, sell on the black market, etc. This in turn re-inclines the patent holder to spend money, efforts, and resources on enforcing their patents preemptively.
These enforcement costs are real and should be included in the calculation that I described at the beginning of the post. They can even include unintended consequences. For example, the enforcement cost would refer to the direct financial costs of running and operating regulatory agencies like the FDA but not necessarily account for all of the type one and type two errors that that agency commits. Furthermore, the operating costs of these agencies get distributed across the citizens while their benefits are concentrated to the patent holder. Another cost not included in the opening calculation.