There are times where the government, can, and should drop in and buy the entire IP associated with a medication. This price should be set with a council of various representatives, and it should not be something that the drug manufacturing company can reject.
Most of the research here is already partially funded by the tax payer through Government funds of colleges, etc etc anyway.
This isn't even something unheard of. The US has the power to unilaterally cancel patents.
And the research is not paid for by the taxpayer. The NIH budget is $20B per year. Pharma R&D is $200B per year.
And you have to be very careful about what counts as R&D, for example Merck reported $30B in R&D, but one half of that was actual for mergers and acquisitions (of research related companies). I have yet to find anyone who has good numbers on this, which is why the study in this article is interesting: it sounds like the article is going to be very transparent about what it means.
And for absolute candor here, you have to remember that once the NIH grants arrive at a university somewhere between 15% and 60% (really, it varies wildly) is taken off the top for University expenses, some of which are related to the research (e.g.: building costs), and some of which are not (arguably: university administration).
Acquired companies in drug development are essentially spending investor money on R&D until: a) they get to market standalone (unlikely, risky, too expensive), b) the clinical trials fail hopelessly early on, or c) they get acquired by a drug company with a large balance sheet and expertise to finish trials and commercialize the drug.
Because M&A includes likely profits for the sellers?
As a simple example using unrealistically low figures: if I spend $100 developing a drug, and the drug is so good that you decide it's worth buying the patent from me for $1M, you surely wouldn't argue that $1M has been spent on R&D?
But before you complain about that, R&D paid to universities also include overhead for the universities, and it is quite significant. In US it is over 50%. The universities partly act like investors in this way, the administration invest money (e.g. start-up grants, some professor salary) into research groups and expect them to bring external grants, and the overhead partially pays for that.
Depending on what you want to measure, you need to include the cost of people and resources involved in the production of the thing you want, and not just the marginal unit cost of the thing. It may not be easy to draw the line, but you have roughly two choices:
1. Deduct a reasonable percentage from both university grants and M&A
2. Accept that without profit, people would not have funded certain research (which carries risks and requires selection), so you include those as costs of doing business in your assessment
Another way to think about it is that the money you spend on research itself containts other people's profits too. If you buy equipment, the equipment company makes a profit. Staff has savings. The govt always takes a cut. It's profit all the way down.