Most of the alternatives to patent-supported drug research would involve direct commitments of public funding. The obvious place to begin is by creating a system of publicly funded clinical trials.
It is silly to talk about a "place to begin" public funding of drug research. There is already public funding of drug research via the NIH (this includes a specific program of pharmaceutical (small molecule) development although most NIH funded research is either fairly pure or development of biologicals (in practice monoclonal antibodies and peptide hormones).
The NIH also finances clinical trials including the huge phase III clinical trials. It is true that a large part of what pharmaceutical companies do is run clinical trials, but it is also true that there are huge publicly funded clinical trials.
Results of some clinical trials are available on the clinical trial registry. OK so there are only 1374 studies with results reported on the registry out of 52723 closed studies so he has a point there.
Finally, the stimulus already included a large amount of extra money for the NIH. I mean it's been done.