This answer isn't to the question I asked. I asked who determines need, not how the plunder is allocated. Like I said earlier, this peer review process is like a committee of foxes determining which fox gets what part of the hen house. The hens aren't given any say in the matter.
For example, you may come up with a proposal that sounds fabulous to the grant committee. Like "under what conditions rats, monkeys, and humans bite and clench their jaws*" You may think that this is worth $500,000 of taxpayer money to support yourself while studying. I think it is an absolute waste of money.
You might think studying "the sexual behavior of Japanese quail under carefully controlled laboratory conditions.**" is absolutely essential to the survival of civilization as we know it and allocate $120,000 NSF taxpayer funded greenbacks to it. I think it's an absolute waste of resources.
Your questions "is it reasonable, etc." aren't being asked to the right people. To mix metaphors the peer review process is simply a bunch of hogs with both front trotters in the taxpayer trough deciding which hog gets the most slop. The people who provide the money ie. the taxpayers, aren't given a say in the process.
Drug companies bring drugs to the market after spending an average of $500 million to $1 billion on research and development. ... research group receiving a federal grant of a million or less a year
You get the Big Fat Non-sequitor award for this statement. Most of the expenses to drug companies are compliance costs in jumping through the FDA hoops to get a compound to market. Their actual research costs are equivalent or less than the university research costs. A centrifuge costs x dollars. A scintillation spectrometer costs y dollars. A building costs z dollars. These costs are approximately the same for all players in the research field. Labor costs are about the same, but academics have to spend time teaching, working on committees and asskissing the administration*** so are less productive than their commercial counterparts.
It's an entirely different thing from subsidizing women's studies programs.
Only from your viewpoint, not from the viewpoint of the taxpayer. To the taxpayer the money is looted and spent on something he doesn't want. The parasites in the taxpayer supported "womens studies" programs feel just as strongly about their pelf and feel that their "contribution" (to use the word advisedly)is just as "needed" by society as you think yours is.
The answer is to let the market determine where to spend the money. Let each individual make contributions to universities, research foundations, buy stocks in corporations etc. I would suspect that the dreary job of testing chemical compounds against cancer cell lines would continue (HeLa?). I wonder how many womens studies types would be out looking for a job more in keeping with their talents (making coffee washing floors)
*1975 golden fleece award for $500,000 taxpayer dollars squandered by NASA and NIH
**1988 NSF and NIH
***I believe it was Geroge Bernard Shaw who once said the reason academic politics are so vicious is that there is so very little at stake.