These companies could focus on pure research, and leave manufacturing to others. Their income would be more predictable too.
Cost could be shared among countries, proportional to their wealth. Research is very expensive, but it's a fixed cost. No reason to reinvent the wheel twice.
No more "convincing" doctors with "gifts" to use their products. No more money wasted on publicity. No more fake studies to boost sales.
Effort could be aimed towards deadly, rare or specially awful diseases, instead of profitable ones.
I guess patent lawyers would lose.
This system is far from perfect, as we know there is a lot of corruption in getting government contracts. But I still think it would be an improvement on what we have today. Medical research is already very difficult. No reason to make things worse with an outdated, inefficient and sometimes just outright evil funding mechanism.
http://www.technologyreview.com/news/506916/economist-propos...
It's basically a fund that would develop drugs in a portfolio-based fashion, to take some of the uncertainty out of drug development by aggregating risk over a set of efforts.
This scheme might preserve some of the benefits of the market-based system we have now, but promote development of a class of drugs that is hard for the market to develop.