The money health insurance currently pays to pharma companies. It might not be more efficient than the current model (but maybe it is, I'm not very knowledgeable about the current process), but I think it would be fairer.
It might also have the side effect that we'd get more drugs that are currently not produced because it wouldn't profitable (eg antibiotics) and fewer drugs with dubious efficacy that are very profitable (eg anti-depressants).
That's a good point, more relevant to the US than RoW, but still a good point. The main issue is that you run into a chicken/egg problem: to lower the cost the government needs to develop alternative drugs, but won't have the money to do so unless you lower the cost.
It might also have the side effect that we'd get more drugs that are currently not produced because it wouldn't profitable (eg antibiotics) and fewer drugs with dubious efficacy that are very profitable (eg anti-depressants).