No massive amount come from the private sector. Almost all the money used to get a hypothetically effective drug through the approval and trial process is private.

Right, to be clear:

If the initial research is funded by government grants or at Uni or whatever, the overwhelming majority of the cost is still in Phase 2 and 3 trials.

This is why certain drugs don't get developed anymore - if it's a naturally occurring substance that can't be patented, nobody's gonna foot the gallion-dollar bill to go through trials.

Yes, but they probably wouldn't be without patents to ensure income for the government's partners.