Based only on the timing, it appears the initial drug development (which pre-dates COVID - drug was developed to treat other infections) was funded by the gover

Based only on the timing, it appears the initial drug development (which pre-dates COVID - drug was developed to treat other infections) was funded by the government. Ridgeback licensed the drug, then ran COVID trials. Merck then licensed it and plans to market and produce it. The COVID trials had costs. Marketing had/has costs. But do those costs come anywhere near 40x the production cost? That I don't know, but I doubt it. As you note, the government should retain some ownership in drugs it funds. Or, the contract language should ensure the drug is sold for a reasonable cost. That would prevent this from happening.