Society would collectively decide to fund drug development because it betters all of humanity. There are ways to innovate without fucking over everyone for the sake of profit, you know.
Then you have to solve a very difficult resource allocation problem. Capitalism solved it with a distributed scalable universal reward mechanism (profit). At least in European societies drug discovery is then still financed by society because there exists universal healthcare, which is subsidized by the state for underprivileged people.
Profitability funds the next generation of drugs. It pays the salaries of researchers and clinicians and funds human trials.
E.g. A drug like Kadcyla that gives six months to late stage breast cancer patients. 20 years ago that option wasn't available but now it is an option, in part, due to profits of other drugs.
