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NIH funding has been highly stagnant for sometime as well as NSF funding. Drug development and research timelines are much longer than any single politician's term. What successful government projects inspire your confidence that they would do a good job innovating for future medicines? Moon Landing? Look at NASA's budget changes to see the rewards for their efforts.

Has this been successful anywhere? What purely run state enterprises that are charged with creating new and innovate things have been success stories?

I think that while private enterprise has had a jaded role in healthcare, I'm not sure what the better alternative is.