The vast majority of drug development costs are are in phase-3 human clinical trials. That's not just regulation, it's essential to prove safety and efficiency. The government provides very little funding for those trials. Stop making things up.
A lot of the reason efficacy is so regulated is that people shouldn't go into debt for snake oil. If on the other hand there is no cost to the patient and minimal cost to the taxpayer the downside for inefficacy is much less and doctors would be freer let patients take a chance. It would also help more drugs get tested faster on more people.
