Do the private companies get some special IP rights on the public sector research? It seems like in a competitive market, those private companies would have thin margins. What stops a lower cost competitor from using the same public IP? I’m clearly missing something important here.

I suspect that's due to the misleading nature of the 'public research, privitized profits' trope. The reality is that publically-funded biomedical (for the lack of better word) science does not generate anything production-ready.

Academia produces tens of thousands of papers per year; many of these are garbage, p-hacking or low value - the rest are often contradictory, misleading, hard to interpret or just report a giant body of raw-ish data. It is a very valuable process - despite all the waste - but the result of this is too raw to be actionable.

This body of raw 'science' is the necessary substrate for biotechnology and drug development - it needs to be understood, processed, and conceptualised into a hypothesis (which most likely fail) strong enough to invest billions of dollars into.

Pharmaceutical industry is the market-based approach to prioritising investment into drug development (what is it, 100B$ p/y?) - and even a leftist who might want to debate in favour of a different economic model would have to agree that this job is hard, important, and needs to be done.

> then the US government gives it to the private sector, privatizing whatever medical advances were paid by tax-dollars.

This should be changed to

“Then the US government fails to fund the billions of dollars required for medicinal trials needed to get FDA approval”

No one is stopping the US government from doing all the necessary work to verify the medicines work and put them in the public domain.

And yet a big portion of my paycheck is still going right into the private companies hands. Let that be clear: the government takes money from you and siphons it off to corporations and earns itself backchannel $$$ from those corporations.