They do.
Once it goes off patent, 80% of the sales of brand name can vanish [1]. Getting a generic approved is a fraction of the time and cost as getting the original through the pipeline. It's like P vs NP, since the FDA approval means publishing pretty much a how-to guide (synthesis route) and much of the safety data. You just have to demonstrate "our stuff is the same as the proven stuff".
I've long been a proponent of "15 years from FDA approval" - this gives a reliable, predictable cushion, without having to predict clinical failure rates. More time can be spent on safety studies (NCSS) and less costly Phase I and II trials, ideally leading to safer and more effective drugs. There is still pressure to move quick, because as soon as the clinical trials start, other companies have access to the leads you are looking at, and can simulate the structure and look for similar leads.
I'm just saying that, for example, I don't think we would've discovered a hep-c drug without the incentive of exclusive rights to sell the drug. I think the individual researchers are probably motivated by their desire to help people, but corporations don't run on altruism.
Where does the money come from for large capital expenditures like a research facility or production line?
I don't believe patents, as they are, are doing very much toward their original goal. Right now, and perhaps this is my frustrated cynicism here, they just look like one more method for those with money to bully those without.
Drugs fall into a problematic territory here. I don't know enough about big pharma to have an informed conversation but I feel like there are other options available to us. Pharma R&D is what is always, always, always trotted out as a defense for our absurd patent system. The whole world has to get shafted with a bad system because one industry can't figure out another way?