According to some sources I've read, government grants only cover a small percentage of the R&D cost for new drugs. There's still a lot of expense in testing as well as building and certifying the production facilities. Most drugs are a lot more complicated than simply mixing some chemicals together. Some drugs take weeks or even months to produce a batch.

While no one likes paying a lot for drugs, I can understand some of the drug companys' complaints. Canada has price controls on medicine. That means they force the price to be artifically low. As a hypothetical example, suppose a drug costs $100 a bottle here in the US but only $30 in Canada due to the price controls. That suggests Canada isn't paying the fair price for R&D, leading to higher prices here. The R&D money has to come from somewhere, and as far as I know, profit has not (yet) been outlawed in the US.

It's a similar situation to what many hospitals face when they're forced to write off medical bills for patients who can't pay. Under the law, anyone can go to the hospital in the US and the hospital has to treat them. If they can't pay, then the hospital passes the costs along to those who can pay. Similarily, when the hospital is reembursed at lower than full price for Medicare patients (and that's what Congress has done), then insurance companies are charged higher prices to make up the difference. In my wife's workplace (outpatient surgery center), Medicare only pays about 25% as much as private insurance for the exact same procedure. Guess why many doctors refuse to take on any new Medicare patients.