The government isn't bargaining at all. It's dictating prices at that point. But price controls break everything. If you set the price too low you reduce supply. If a company knows they'll have to charge $5000/patient for a drug in order to recover the billion dollars they spend developing it but they also know the government will only pay $1000/patient, they don't bother to develop it. Meanwhile if their lobbyists can convince the government to let them charge $10,000/patient then they're in fat city on the back of the taxpayer.

Calibrating that balance correctly is the exact thing markets are good at. When you're spending your own money, you may be willing to pay $4000 more for a better drug, but only if it's $4000 better.

So when a big customer like Apple or Walmart applies pricing pressure on a component supplier, how do they pick a number?

>because they get a good deal for that $1.

That's not usually how government works in my experience.

Sounds like you need a better government!