Most of the drug development costs come from the byzantine approval and regulatory process.
And for the government to pay for it by going around granting monopolies to private institutions is a very inefficient and plain insidious way of doing things, as can be seen with how new drugs are just old drugs with the smallest possible change to grant a new patent which come out exactly when the old patent expires, and many other ways big pharma exploits the system to create a oligopoly.
And this is not any grand conspiracy, is the natural result of regulatory capture and the incentives created by the patent system.
Going up one level though - how much has society truly benefitted from the billions (trillions?) of dollars that have been spent on developing new drugs? This is admittedly a field I know very little about, but to what extent are improvements in quality of life / life expectancy in the U.S. in the past 40 years due to new drugs, vs better diet, exercise, reductions in smoking, better emergency medicine, occupational safety regulations, safer cars, etc?
http://www.sciencedaily.com/releases/2008/01/080105140107.ht...
Well the obvious answer would be through some form of tax based scheme that then plows the money into research primarily based on clinical need, which funnily enough is how a hell of a lot of the drugs that are actually useful get developed currently. But expanding these kind of solutions is very unpopular in the states from what I gather, apart from in the case of weaponry, so how about some form of kickstarter for medical research? People throw loads of money at products that don't and may never exist on there, so you should be able to get tonnes of cash by just repeating the word "cancer" a lot.
[edit] I went off and found some figures on this:
"In 1999 the National Cancer Policy Board conducted a survey of federal and nonfederal sources of cancer research funding [ 11]. The board found, for the fiscal year 1996/1997, that the total amount spent on cancer research funding was US$5.165 billion. The three major contributors were (1) federal funding, US$3.060 billion (almost entirely from National Cancer Institute); (2) industry funding, US$1.6 billion; and (3) funding by nonprofit organisations (e.g., Howard Hughes Medical Institute, American Cancer Society, Komen Foundation), US$305 million."
http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1513045/
So, for cancer at least, government and charity funding combined, dwarfs the amount spent by the pharmaceutical industry on research in the US.
You can't sell medication without FDA approval. Right now patents don't factor in to it, but if patents were eliminated the FDA could implement a similar scheme exclusively for medication.
How about taxes? Drugs that are useful for millions of people can be subsidized --internationally even.
It will make the system even less commercialized (i.e prone to go for quick bucks and BS drugs instead of proper medicine).
Most of the more expensive drugs are of marginal utility anyway. Basic sanitation, running water, staple vaccination and such have much more to do with the general health and long living than even much touted breakthroughs like "heart surgery".
Not to mention that billions have been spent for BS like Viagra and ADD (non)drugs, while 60% of the world's population doesn't even have basic food and vaccines.
That last fact is particularly disturbing when you consider that many doctor end up learning most of what they know about new drugs entering the market from the marketing literature sent to them by pharmaceutical companies. That literature is regulated, and in most cases accurate, but it is also biased.
What "ample evidence"? The USSR? For one, they had a mighty fine space program.
Second, one example of central planning, that also carried other kinds of rubbish with it (cutthroat politics at the top level, being enforced on a backwards, non adequately industrialized country, dogmatic ideology, and having to fight a foreign superpower) does not "ample evidence" constitute.
Central planning != 20th century communism. We have much better examples of central planning, successful ones, in the western world.