Open source software grew out of the Free Software movement, which was modeled on the activities of scientists. Papers would be published in journals for everyone to read. It was free to teach a scientific theory to your students. Researchers built on each others' work.

Drug research is scientific research. The distribution of drugs is actually pretty cheap -- once you know the formula, you can usually make the drug rather inexpensively. It's the R&D that needs funding, and it's currently funded by proprietary drug companies much like Microsoft, Adobe etc. built THEIR software. But years later, IE still sucks and open source browsers have helped the world a lot. Our mobile phones all run WebKit. We are lucky that Netscape open sourced their codebase and formed Mozilla, which at the time was an precedented move. These days, Apple, Google and Facebook work with the open source community, whereas Microsoft is becoming more and more irrelevant. If they joined with the open source communities instead of hiding their code they would probably bounce back -- for example if they threw out their old rendering engine and based IE10 on WebKit.

Certainly patents and software help the old business models that rely on them (drug companies, newspapers, proprietary software companies). I think in software we have shown that over time, free information and community collaboration can produce better, more stable, more standards-compliant products. The question is, can we do this in other areas?

I would argue that we have to separate the distribution network (Apple distributing apps, etc.) and the R&D. The distribution networks have to compete on price, efficiency, ease of access, etc. But the R&D is not necessarily done by drug companies. What happened to all that money we raise in "find the cure" walkathons? Where does it go? A lot of the drug research is done in universities, where papers are published openly and freely. I expect the drug companies to fight open source research just like Microsoft fought open source. But at the end of the day, there has to be a good system in place to fund R&D as a community that SHARES knowledge with the world.

Don't get me wrong, clinical trials cost money, and dealing with the FDA costs money. But as far as innovation, there would be MORE innovation if people freely published the knowledge and built upon what others have done. You made a drug based on this gene sequence? I can make one that helps these gene sequences. That's the future, imho.

The surprising truth about what motivates us:
http://www.youtube.com/watch?v=u6XAPnuFjJc

Smart people aren't just motivated by greed. Lots and lots of professors in university are motivated simply by making a difference in their field, and in their world. They want to make a breakthrough because they love their work. Sometimes they donate everything they get back to the university. Similarly, the kids who grew up with computers formed a hacker culture that loves to show off what they did to others. I think the first steps should be to foster that sort of "open source culture" among kids learning science in high school and college, and to provide the infrastructure for better online journals. When they finish grad school, they will often publish their research for free as a matter of helping the world. The drug companies won't be able to charge a huge markup on the drugs. The drugs would be manufactured at cost by the distribution networks (which are regulated by the government, of course, so no one slips a mickey in the drugs).

A great example of an open source drug is this "cure for cancer" discovered in Canada:

http://www.youtube.com/watch?v=7LXH-TJYS5w

it may very well cure cancer in lots of different people. DCA has already been produced for over 100 years and no one can patent it. Which is great for the public at large. Imagine people taking DCA after the FDA has certified it, and it being produced cheaply. Basically, I think that we are just starting to see the ways in which a patent-less and copyright-less world can actually produce more innovation and useful solutions for people, than one where information is locked up in corporate silos and controlled by special interests.