I wouldn't be so sure about it. 8 years ago my dad was diagnosed with GIST, for which there was only one drug at the time - Glivec made by Novartis. He had to take 2 boxes a month, each one costing 5x the average national montly salary. Fortunately, the national health insurance in Poland covered the cost of the drug fully, so he never paid anything for it.

The point I am trying to make is that when he was diagnosed, there was 6 other people in Poland who have been diagnosed with the exact same type of cancer. By the time he died last year(thanks to Glivec he lived much longer than the original predicted 6-12 months with traditional chemotherapy) the total number of people with GIST in Poland taking Glivec was 30-40. That's in a country with 40 million citizens.

So sure, the drug is not affordable to pretty much anyone in Poland, if the national insurance wasn't paying for it. But even if it wasn't ultra-expensive, there still a very limited number of people who need it, so I can see why Novartis charges what they do to make at least some money back.

I doubt the insurance was actually paying the sticker price on that medicine anyway. It's all part of the illusion.

It's nationalised insurance. They don't need to mislead you to convince you there is a value in the service they provide. Since it's government the information is public. For example, when I buy medicine in France (also nationalised) it shows how much I pay and how much the government pays. So yes, they are paying whatever the receipt says.

If this is true, that is awful. That means nations are lining drug companies coffers for profit rather than just doing the research themselves and selling the fruits of research at the cost of manufacturing rather than arbitrarily insane prices due to state guaranteed monopolies.

No, the state negotiates as low price as possible because the national health service is given a certain budget that they have to fit in. The difference here is that in US your insurance company might say that they will pay 50% and you have to pay the remaining 50%. In Poland the national health service would never offer you such a deal. Either it's fully covered or it's not offered at all. Therefore companies are willing to lower their prices so that the government accepts their medicine at all, rather than having it rejected and not offered at any of the hospitals.

And the last time I checked the treatment with Glivec is a lot more expensive in US than it is here, so this system must be working at least partially.

Would you invest your money in a pharma company that returned below-the-market risk-adjusted returns?

No because the market is part of the problem. I would however invest (read as donate) in a non profit pharma with the sole goal of developing drugs and covering their development cost.

You can do that already, just donate to universities and public research institutions doing drug research.

Now, do you think that investors should be forced to invest in pharma companies offering lower-than-market returns?