They do but if my memory serves me correctly the drop rate is even worse compared to open world mobs. I could be wrong but I thought I Remember reading something from a dev stating this.
Edit: Had wrong link. I believe that you are referring to a post by Ngreth. The following page has his post. It mentions that HAs have a lower drop rate and also mentions mobs that do not drop (seems to be all sort of NPC pets). Sigh, link doesn't end up on correct page and he had a post on the page that did link. Here is the post from Ngreth on thread about "Please investigate ultra rare drops".
Thanks for the information. I was asking because I have gotten two rares since they started dropping in CoTF. I knew that they dropped in those instances, because that is where both of mine dropped, but I have put in a lot of hours and I have never witnessed a TDS/EoK/RoS rare drop. I spent almost all of that time moloing in instances so I thought I would try to find out if they didn't drop in instances or if I was just unlucky.
