"They can make it more profitable but only helps a smaller subset of people because is better to sell 1000 $10 needless than 10000 $1 needles (transportation, packaging, liability, etc);"
You implicitly make the error that the same person faces the choice of selling a few expensive needles or lots of cheap ones. In a free market, if one person tries the former, someone else can do the latter.
The medical market is not very free, unfortunately, and the proposed solutions to the resulting problems are always to make it even less free. The results are so boringly predictable it hardly seems sporting to talk about them. Shortages, inefficiencies, you name the usual consequence of centralized planning and meddling and our medical systems are full of them, but ever and always the solution is to increase centralization. Pity we must once again grind ourselves to dust on the alter of government control en masse again.
The data I see does not match your assertion. For all people bitch about the US, and for all our neutering of the free market advantages we are desperately trying to jam into our system to keep up with the Euro-Joneses, it still has better outcomes than Europe in many key areas. I'm sure that will change soon enough, though.