Ironically, insulin is a great example of why your premise is false:
Insulin replacement was developed a century ago, being first discovered by a government entity (U of Toronto). Private companies commercialized the treatments in the 1940s and 1950s, developing long acting forms that could be administered in a single injection per day. Since then, pharmaceutical companies have made continuous improvements with fewer side effects: https://www.hopkinsmedicine.org/news/media/releases/why_peop...
Note that nobody is proposing to give people the versions of the drugs developed by public entities, or even the long out-of-patent earlier versions of the drugs. That’s strong evidence of the fact that the improvements developed by private companies were really important.
Moreover, the only thing stopping companies from making cheap generic insulin is the government itself:
> Patents on the first synthetic insulin expired in 2014, but these newer forms are harder to copy, so the unpatented versions will go through a lengthy Food and Drug Administration approval process and cost more to make. When these insulins come on the market, they may cost just 20 to 40 percent less than the patented versions, Riggs and Greene write.
Instead of “scrapping” the industry, wouldn’t it make more sense to, as a first step, get rid of regulatory roadblocks that prevent competitors from producing out of patent drugs?
Moreover, as to your claim that “other countries” do things differently—your only example is India, which does essentially no pharmaceutical R&D. Western European countries also rely on for-profit pharmaceutical development. Pharmaceutical spending as a percentage of GDP is about 2% in the US and Japan, 1.8% in Canada, and 1.5-1.6% in Germany or France: https://data.oecd.org/healthres/pharmaceutical-spending.htm. European countries negotiate hard on drugs like insulin, but for the most part they pay a lot too.
As to your broader point of “why do we need private businesses to do this?” It’s a mistake to mix up the products being made with the process by which the products are developed. Just because people need drugs more than search engines doesn’t mean that the government is more qualified to develop drugs than search engines. It’s two completely different things. Drug development is high tech work. If the government could do it well, while squeezing out the profit margins, there would be no reason for the government not to run Google or Netflix.
After all, why do we need a “private business” like Apple to develop iPhones with 50% margins “when the tax payer could do it at nearly 0% margin?”