The cost of producing something doesn’t change depending on who you sell it to. Charging anything beyond cost + some reasonable profit margin is unethical profiteering.
Sure, in the same way it’s the government’s “fault” for removing your option to, say, run a protection racket, or agree to a contract of indentured servitude, or sell baby formula with melamine in it. There are lots of abusive or exploitative business models that the government removes your option to engage in! And the government is right to do it.