The reason why this is done is it is much easier to do than the experiments that should be done. It is like the old joke about the drunk looking for his keys under the street light because the light is better despite have lost them in dark alley behind.
The best suggestion I have seen is to make better use of all the millions of pets we have. Dogs and cats get cancer that is very similar to human cancer (much more so than mice) and these are all natural cancers. We need to encourage people to sign up their pets for cancer treatment and conduct many more trials in pets. The fact that we don’t do this at any scale is a sign that we are not too serious about curing cancer.
And research funding is probably conservative, since mice is the 'less bad' idea, money flow this way. Some competition may help changing habits.
More importantly this question has already been asked by researchers and most people are happy for their pets to participate in such trials especially when they know they are really helping cure cancer.