[true_religion]

> If that money dries up, is it possible that will stifle innovation?

I think its a complicated question. Most of the money spent by drug companies is on advertising and not R&D. If they are in an environment where profits are guaranteed via government contracts, and advertisements are banned, then where else can they spend their money except admin and R&D.

Will people invest as much into drug companies if they aren't seen as volitile anymore?

R&D costs are primarily because of having to navigate the legal structure of drug trials. If the government is more involved in the industry, how will this change? If for instance, the government foots the bill then costs go down, and the only downside is that time-to-market is increased due to government bottlenecking and inefficiencies.