Most drug discovery and development is done in the private sector. Think 60%+.
Of the stuff that is gov't funded, it's basic research, not the development that actually gets a drug to market and that's what costs so much money.
EDIT: Wanted to provide some numbers.
252 drug were approved by the FDA from 1998 to 2007[1]. Where did they come from?
58% from pharmaceutical companies
18% from biotech companies..
16% from universities, transferred to biotech.
8% from universities, transferred to pharma.
During this same period, 118 drugs were considered to have scientific novelty. Where did those come from?
44% were from pharmaceutical companies.
25% were from biotech companies, and
31% were from universities (transferred to either biotech or pharma).
You need to dig a little deeper than that. Of the 252 drugs, how many where minor modifications of existing drugs. And how many where targeted based on government funded research.
Click on the link I provided and read the details. I even quoted the relevant numbers.
Of the 252 drugs that were approved, 118 were regarded as "scientifically novel" (not me-too drugs or minor modifications of existing drugs). They also did another cut where they looked at FDA "priority approvals", which basically means the FDA was willing to fast track the approval because the disease the drug was treating had no effective treatment.
As to your second question, over 60% of the scientifically novel therapies were discovered by pharma/biotech. They would have received no government funding for their research. The remaining 40% or so were discovered in university labs, of which a certain percentage were discovered via gov't funding (don't forget that industry-academic partnerships also make up a certain percentage of university funding).
A minor nitpic Drug R&D has a defacto subsidy in the tax code. see: "For purposes of section 38, the research credit determined under this section for the taxable year shall be an amount equal to the sum of" () As well as several other direct and indirect subsidies.
Most drug discovery and development is done in the private sector. Think 60%+.
Of the stuff that is gov't funded, it's basic research, not the development that actually gets a drug to market and that's what costs so much money.
EDIT: Wanted to provide some numbers.
252 drug were approved by the FDA from 1998 to 2007[1]. Where did they come from?
58% from pharmaceutical companies 18% from biotech companies.. 16% from universities, transferred to biotech. 8% from universities, transferred to pharma.
During this same period, 118 drugs were considered to have scientific novelty. Where did those come from?
44% were from pharmaceutical companies. 25% were from biotech companies, and 31% were from universities (transferred to either biotech or pharma).
[1]http://pipeline.corante.com/archives/2010/11/04/where_drugs_...