Pharmaceutical research in the US 2005 34.8B USD federal funds 41M USD. Thats less than 0.12%.
Pharmaceutical research in all likelyhood includes the cost of bringing drugs to market, currently around $800M per drug. Because of this high barrier, much of the Pharma energy goes into 'me too' drugs of a higher risk/reward ratio, again inflating the true spending on new research: http://freakonomics.blogs.nytimes.com/2008/01/24/what-dont-w...
The me-too phenomena is a problem but only because of two factors, pressure by pharma reps and the fact that the US is the only country I ever heard of that allows advertising of non over-the-counter meds.
Hiring doctors to travel the country, give lectures explaining how it works, renting conference centers, providing lunch, etc adds up. Learning how to use a new drug is not easy like learning software; trial and error doesn't work.
A drug is worthless if your doctor doesn't know what it does.
America is the one of the only countries that allows pharmaceutical companies to advertise directly to consumers. http://tinyurl.com/27y5df