This isn't arbitrage (there's only one market in play). It's just a straightforward instance of an Econ 101 monopoly: if a good has inelastic demand with a single seller, the seller can make more money by raising the price above its equilibrium value.
And monopolies are not economically efficient: they impose a deadweight loss. Say the drug costs $1 per pill to manufacture. There are people who would like to buy it at $20 per pill, but not any higher. This transaction is profitable, but will not take place because the price has been artificially set at $30. That's the inefficiency.
And monopolies are not economically efficient: they impose a deadweight loss. Say the drug costs $1 per pill to manufacture. There are people who would like to buy it at $20 per pill, but not any higher. This transaction is profitable, but will not take place because the price has been artificially set at $30. That's the inefficiency.