The problem is that there is no way to experiment with other ways of funding health care research, as the cost of doing so is set at highly entrenched monopoly prices. There is no reason for those with capital to consider alternatives when there is already so much money to be made in the existing system.

I too believe that medical innovation would be wrecked by the elimination of patents, but I think that is less to due some inevitable aspect of human nature, and more due to existing incentive structures that have been created by means of policy.