Scott's got a pair of good posts about the totally-unsurprising fact that the pharmaceutical industry is totally uninterested in developing and testing a drug that they aren't guaranteed a patent on. Which, when you understand the industry that we've built, is totally understandable on their part -- aside from being soulless and evil, that is.
Here's a question for those better-informed than me. It's my understanding that human testing is, by far, the most time- and money-intensive part of drug development. We also know that the results of human trials are often fudged or hidden outright when they indicate problems with the drugs.
So why not simply have the government take over the human testing -- not the research or manufacturing, at least not initially (insert conspiratorial Marxist laugh here) -- for drug developers? You socialize the risk in the most expensive part of their operation, but in exchange you require the government be allowed to independently verify all of Big Pharma's claims about any drug. The public then has the chance to get early warnings on any problems.
It also lets you face situations like this: the government can, if it chooses, pursue the occasional drug that the private market won't.