The Government never pays out on 28 USC 1498 claims (Government infringement of a patent) either. I once filed FOIA requests to get data on this.[1] The administrative claim procedure is useless. You have to file suit in the Court of Claims to collect.

One reason for this turns out to be that if the agency settles, it comes out of their budget, but if the agency loses in the Court of Claims, it comes out of a separate Treasury fund for claims against the Government.

[1] http://www.animats.com/foia/index.html

An inventor in that position doesn't have any negotiating power that's the why.

One possible reason is it's very hard to prove the market value of something that you never sold.

You can say that your product is worth $1bn until you're blue in the face, but there won't be any evidence of that without any buyers.

I think it's more basic than that. The company has no BATNA (Best Alternative To Negotiated Agreement).

Could he denounce his US citizenship and move to, say, Moscow or China?

If he were willing to put himself in the a position where the US government could claim he had broken the law sure he could do whatever he wants. That would arguably make his bargaining position worse though because then he has the US government after him for what they will likely frame as espionage and he would be dependent on the good will of some other government which effectively puts him in an Assange Snowden style predicament.

Development is the risk involved in that business no? After you have a contract you are guaranteed to sell a certain number of units and the risk disappears. Seems like a good way to private the gains and socialize the losses.