Dean Baker makes the case for the government being the primary funder of medical research:
The place to start is through public financing of clinical drug trials. This is by far the most corrupt part of the drug development process, since clinical test results are most immediately associated with the approval and marketing of drugs. If the tests can be taken out the control of drug companies who have a direct material stake in their outcome, it will remove the major source of corruption in the prescription drug industry.A more honest system with fewer incentives to cheat.
The government can appropriate a sum of money approximately equal to what the industry now spends on clinical trials (around $20bn a year). It can then arrange long-term contracts (10-12 years) with independent testing firms, who would then decide which drugs to test. Renewal and expansion of the contracts would depend on the effectiveness of the contractor in finding and testing new drugs and preventing unsafe drugs from coming to market.
The government should impose strict rules on the contractors to prevent the sort of abuses that we currently see in the industry. First, there should be no overlap of financial interests between the firms doing the testing and the drug companies. All communications between the two, for example petitions to test a particular drug, should be in the form of public documents posted on the internet. Any other contact should be treated the same way as if a lawyer contacts a sitting juror in a pending case - it's called "jury tampering" and you spend years in jail for doing it.
Also, all the data from the tests must be publicly posted on the internet. This will allow any researcher anywhere in the world to independently analyze the data. This should substantially reduce the likelihood of mistakes or misrepresentations of results.
It would also enormously facilitate comparative effectiveness assessments of different drugs. This will allow for much better and more timely research.
An important additional argument, I think, is that such a system could also be a big improvement on the current state of play where rewards to investment in research on new medication are provided primarily through patents. By allowing companies that develop drugs monopoly pricing for a period of time, patents are supposed to provide incentives to research and allow drug companies to recuperate the costs of such research. Yet, patents contribute to grossly inflated prices for new drugs (such as Herceptin) and also to critically needed medication being denied to the world's poor.
If we were to nationalise the research process this would remove the needs for patents. And the problems that come with them.