Agree with some of your points but you are missing something essential here.
You don't pay for the cost of the ingredients in pharmaceutical products (otherwise the cost of most drugs would be 1/10th of what they are or even less), but for the IP behind it. You need clinical trials to demonstrate that something works for a specific condition, and this is what gets an approved stamp by the FDA and integration with the reimbursement system, along with a negotiation on pricing.
If there were no such incentives, then nobody would do any kind of clinical trial for compounds that are already widely available in OTC form, and the only thing you would have is anecdotal evidence (i.e. noise) to know what works or not.
Whether this is the right way to incentivize research and development is a valid topic to discuss, however.
To be fair its not so simple. You fund the clinical trial perhaps, but you also fund shareholder profits. This incentive model is actually pretty perverse because there are diseases that aren't seeing drugs developed because they are so rare that a treatment will never be given to enough patients to turn a profit. A better incentive model is to have the government identify diseases that lack a solid treatment option and fund clinical trials through direct taxation versus profiting off of the sick or abusing the for profit insurance process to cover these huge fees.
> A better incentive model is to have the government identify diseases that lack a solid treatment option and fund clinical trials through direct taxation
The government is the worst tool for this job, because they would need to hire external experts to assess which disease should be studied, and those experts would be already in bed with the industry for a long time. You would just be diverting tax-payer money in a different way.
How do you think government research money is currently directed? Sure you get people from industry but you also get people from academia and government as well filling these positions. That's basically anyone with domain knowledge. Sure people can be corrupt and evil or whatever, but that's why you have other checks in your system to deal with it. If you think it can't be done just because 'government', that's not a strong argument because literally any sort of person in any position in any org, public or private, could be corrupted, and the race to the bottom of this logic is to trust nothing and no one.
Where does this hate from government Congress from? Government funded research is how a lot of research is done in Europe. If you saw these academics and researchers salary you would laugh, but still they produce stuff without being in bed with anyone.
>The government is the worst tool for this job, because they would need to hire external experts to assess which disease should be studied, and those experts would be already in bed with the industry for a long time.
There's no need to "hire external experts". They could have their own pool.
Well, other countries managed to solve it, as they've managed to have schools without shootings, cities with public transport, no gerrymandering, and so on.
You'd be surprised, especially since most of the "new drugs developed in the US" are crap consumer oriented drugs with no real medicinal value (a trillion snake-oil industry) and differentiating qualities, and reiterations of existing stuff to get new patent leases...
> "new drugs developed in the US" are crap consumer oriented drugs with no real medicinal value (a trillion snake-oil industry)
This is true to some extent (not all drugs approved require more than just superiority vs placebo), but that reads like throwing the baby out with the water. There's a ton of great drugs developed every year that are clearly very innovative in terms of mode of action, and by far and large those come from the US.
You don't pay for the cost of the ingredients in pharmaceutical products (otherwise the cost of most drugs would be 1/10th of what they are or even less), but for the IP behind it. You need clinical trials to demonstrate that something works for a specific condition, and this is what gets an approved stamp by the FDA and integration with the reimbursement system, along with a negotiation on pricing.
If there were no such incentives, then nobody would do any kind of clinical trial for compounds that are already widely available in OTC form, and the only thing you would have is anecdotal evidence (i.e. noise) to know what works or not.
Whether this is the right way to incentivize research and development is a valid topic to discuss, however.