If the illegal drugs were legalized and regulated, wouldn't competition bring the price down?

No. The red tape, government this, regulation that, ADA approval and FDA meddling would actually drive the cost up, not down. And you can probably buy it off the street illegally right now easier than you could buy the damn stuff if it were legal. You'd have to be 21, you'd have to show ten forms of picture ID, your original birth certificate, a passport whether or not you need one, register or log any felony convictions, the list goes on and on.