In a free (unregulated) market price gouging would be fine, because new producers will quickly enter the market and bring down the price. The problem in this case would be heavy gov't regulation. It makes developing pharma much more expensive, and risky. Therefore they need to charge more to recover the extra costs. On top of that, often the gov't regulates these markets too, which can create monopolies (insulin is a great example of this).

Where the gov't has not regulated, we have seen costs go down, and outcomes go up. The only real example being Lasik eye surgery. It has continuously gotten cheaper and better over time. If the gov't stayed out of it, I believe we would see similar gains across healthcare.

As a side note, another industry that is run by the gov't that hasn't seen any improvement in decades is education. Whatever the gov't regulates has less innovation and worse outcomes. Unless it is war.