KEI has an online clearing house for people who are into prizes instead of patents. For example, it talks about Sen. Edwards' interest in prizes for medical treatments, as an addition to the patent system. Also, it mentions a lot of prizes throughout history, such as the X prize, the Longitude Prize, and my favorite the Methuselah Mouse Prize. How cute can you get, having a prize whose goal is to help mice live longer?
If you are interested in major improvements to how new drugs are created and distributed to the population, then it will not work to snip little pieces around the edges. It is important to think about how the system in general works, which right now is based on patents. The most plausible alternative I know of is to offer prizes.