If you get rid of patents and Medicare, the development just doesn't happen.
I'll give a concrete, hypothetical example with somewhat realistic numbers:
On average, every year, 15,000 elderly people are suffering from a moderately rare ailment known as Kiwi Syndrome that makes them slightly retarded. It's not going to kill them, but the retardation makes them annoying to deal with, and it also makes them fart a lot, which smells bad. They'd rather not have Kiwi Syndrome. Pfizer has an idea, a pill that mitigates this. Developing it and bringing it to production costs $1,500,000,000.
Recouping just the R&D will cost, per patient, $100,000. Typically you want to recoup a capital investment in 5 years, so $20,000 per year. Pfizer know ahead of time that Medicare will pay for it, so they develop the drug.
In a free market, nobody's paying twenty fucking thousand dollars a year to make Grandma fart less and be slightly less retarded. So Kiwi Syndrome goes untreated, and the economy redirects that capital into Fortnite skins.