I'm not sure if that's the case for drugs, but you're quite right that it's the case for medical devices. The producers are effectively competing for a governme

I'm not sure if that's the case for drugs, but you're quite right that it's the case for medical devices. The producers are effectively competing for a government contract to be one of the few Medicare-sanction producers for that particular medical device (and being sanctioned for Medicare rebates means that your device will be used by the majority of people who need such a device -- otherwise they won't get coverage for it through Medicare or even private insurance in most cases).