I agree with you OP. If the goal of the grading system is to rank those with the most knowledge (or at least best performance on tests) highest, then it is not a good system. Serviceable maybe, but definitely room for improvement. What I have come to realize is that grades in med school have very little correlation with knowledge/clinical skills, and more to do with how well you can game the system. Maybe being good at gaming the system makes you a better physician, I don't know.
I think there is so much apathy here because frankly most people don't give a **** about medical education. I would encourage your friend to start a discussion with the admins. Unless they are jerks, they probably won't care and will at least entertain with a discussion on why the grading system exists.