The question is why haven’t they already done this type of cost control with existing Medicare? People aged 65 and over are incredibly lucrative for Big Pharma and medical industry as a whole because by definition they will incur a lot of medical problems due to their age and need a lot of medication. So it’s a lucrative segment of the market that they can’t afford to lose. So the US govt should be in a great position to negotiate on costs but it doesn’t look like they have done much at all.
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.
Both can be true at the same time, the American market can subsidize research for the rest of the world, and one source of this subsidy could be US public programs leaving substantial cash on the table for big pharma.
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.
> The question is why haven’t they already done this type of cost control with existing Medicare
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 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.