People are missing the concept about private sector and public sector.
If their first medicine kills instead of heals, will they be held accountable? Or will the taxpayers have to shell out?
Sovereign immunity, baby. This is one way to regulate the kickbacks to the lawyers tort industry.
But seriously, I don't know. Can government doctors be sued for civil damages for malpractice?
Another benefit to government development labs is they can short-circuit or strongarm the regulatory oversight agencies. Quicker time to market, quicker return cash flow to cover the research, etc. If they are really serious, they will release all the developed drugs to generic manufacture, from day one. No patent royalties.