For example, if the generic option reduces the burden of disease by 10 DALYs and costs essentially ~0$ it will be fully covered, any other patented option with a 15 DALY average benefit will be covered up to a financial ceiling given by the total funding available and the extra 5DALY benefit it brings. A patented option that does not fit that ceiling will require patients to pay from their pocket, therefore cratering sales, therefore strongly incentivizing the pharmaceutical company to lower the price to fit the ceiling.
This is how other advanced countries lower spending on drugs without infringing on intellectual property - by forcing all manufacturers of all drugs for all diseases to compete on price, or risk selling basically nothing in that country until their patents expire. Since the marginal production cost of drugs is close to zero, it' always better to have some sales at some lower prices instead of no sales at a very profitable price.
I think in a way Americans are actually subsidizing pharmaceuticals for consumers in other countries because pharmaceutical companies are willing to sell the same product for less to them because as you said their marginal production costs are minimal and they have already recuperated a great return on their R&D investment from American consumers.
Another perspective is that this extra spending is more closely correlated with global pharmaceutical profits and the spending by these companies for their US sales and lobby apparatus (which influences Medicare prescribing physicians just as well), and much less with actual fundamental research and clinical study spending required to bring these drugs to market. So it's relatively speaking "wastage" compared to direct medical research spending - perhaps through a global research institution funded by major economies. Hey, we can dream.
As to why would Medicare leave these untold billions on the table, I don't know the details of how they decide what to treat, but it's a very tricky political problem. Once you start to deal with things like DALYs, QALYs and micromorts, you are plowing straight into the "death panels" controversy. So all pharma has to do is refuse to play ball, continue to sell most of their products into the open market, and watch their Madicare centralized buyers quickly fold. You can only force Pharma to play if you institute a national monopsony; a single program, even a big one, can't possibly work since by acquiescing they would threaten profits in the rest of the market. For the same reason, a single US state could not go at it alone, pharma would just refuse to sell to that state at the imposed ceilings; it needs to be a nation wide program.
Because drug lobbyists got the law changed to make drug price negotiation illegal. It's called the "noninterference clause". The inflation reduction act allowed some exceptions to this, but I don't expect this to last.
I’d bet the $800/mo eyedrops this poor lady is relying on don’t cost that much in any other country (and I don’t mean poor countries - I mean in other rich countries like Japan, Singapore or Australia). So when she switches to Medicare as soon as she turns 65, how much are the US taxpayers paying for these eyedrops? It’s just wealth transfer from US taxpayers to the US medical industry complex.
So I fear “Medicare for All” would simply mean we pay even more taxes than we already do now and the US government will keep spending insane amounts of money on healthcare as compared to every other developed nation in the world with no better outcomes.