Why would it collapse? Can limit govt holdings to say 25% of each company to maintain profit motive. I think this would attract other investment - front running the govt money - and greatly increase the ability to research new drugs. Can also direct some research money into drugs with significant benefit but little profit. Over time increased investment would allow lower prices. Over time compounding would help fund medicare.
It collapses because by the time it is the majority owner the state will pay for it's own "profits".