Financing health innovation for economic prosperity
Investing in health is one of the smartest economic decisions a society can make, with every dollar spent creating a ripple effect that compounds over time. Could a new metrics-based framework recast innovation in healthcare as a pillar of economic strategy?
Dimitri Pouradier Duteil, director of policy research and economics, Europe, BMS
Chris James, senior economist, OECD
When health departments ask finance ministries for funding, the focus is often on the health outcomes that the spending will achieve. But at a roundtable discussion convened by Economist Enterprise and supported by Bristol Myers Squibb (BMS) on the sidelines of the World Health Assembly in Geneva on May 21st 2026, participants explored whether decisions about health budgets rest on too narrow a concept of what healthcare can achieve.
In a broader view, health spending is an investment that pays off through long-term gains in productivity and public finances. Chris James, a senior economist at the OECD, said finance ministries are receptive to the argument that “there are potential cost savings down the line from different types of intervention and innovation, particularly around things like preventive care.” Later, he and Dimitri Pouradier Duteil, who works on policy and economics for BMS, expanded on the case for investing in health, and how health systems should show they can spend well before they ask to spend more.
The case for investing in health
Governments tend to evaluate public investment in health using metrics such as lives saved, quality-adjusted life years and budget impact. But those measures do not always capture the wider value of public investment in health, says Mr Pouradier Duteil of BMS. His firm commissioned Charles River Associates (CRA), working in partnership with Margaret Kyle of Mines Paris-PSL, to build a framework capturing those wider effects.
The resulting report, “Rebalancing Resources for Healthcare and Medicines”, was published in May 2026 and sets out a vision in which spending should meet health needs and support innovation while also delivering “spillover benefits”. These can be socioeconomic, such as gains in productivity, labour-market participation and economic growth, or scientific and industrial, where investment in new therapies stimulates downstream investment in areas such as health infrastructure, skills and further research.
Economics is about more than just money. If we don’t explicitly name the full range of benefits, we won’t value them and are at risk of underinvesting.”
Dimitri Pouradier Duteil, director of policy research and economics, Europe, BMS
Mr Pouradier Duteil deliberately uses the word “socioeconomic” to describe the benefits of investing in health. Alongside effects that improve public finances, such as helping people return to paid work, he points to increased leisure time and reduced burdens on caregivers as things that rarely feature in discussion of health budgets. “Economics is about more than just money,” he says. “If we don’t explicitly name the full range of benefits, we won’t value them and are at risk of underinvesting.” Mr James of the OECD, who is involved in research on health spending, argues that “governments need to evaluate and use metrics on economic returns more,” and calls for a move from cost-effectiveness analysis to cost-benefit analysis that captures the human impact.
The CRA report argues that healthier populations are more productive, a benefit that matters to finance ministries and economic institutions. In the European Union, for example, investing in “human capital, including in health”, strengthens economic performance and productivity despite demographic pressures. According to research cited in the report, spending equivalent to 15.4% of GDP on healthcare labour and research would maximise welfare when assuming a high level of spillover benefits, or 12.4% in a baseline scenario. Total investment in healthcare would then be higher than today’s robust contributions in some western European countries: for example, OECD figures show Germany spends 12.3% of GDP on health.
The findings suggest that, up to a point, higher health spending yields strong returns. A recent study conducted by WifOR, a German economic research institute, found that the uptake of new medicines in Europe between 2014 and 2022 yielded nearly €5.7 in hospital savings and socioeconomic benefits for every €1 spent.
Spending well before spending more
Before they can spend more, finance ministries expect health departments to “get their house in order”, says Mr Pouradier Duteil, to show they are getting the most value from what they are spending. A report from 2017, “Tackling Wasteful Spending on Health”, says around one-fifth of spending in OECD countries “makes no or minimal contribution to good health” and “could be channelled towards better use”.
Mr James, who was among that report’s authors, is currently working on a refreshed analysis that will separate wasteful clinical care, which is low-value or leads to adverse events, from operational waste and governance-related waste arising from unnecessary administrative processes or integrity violations such as fraud and corruption. The update is timely, he says, because “most OECD countries are in the midst of multiple economic, geopolitical and other shocks, which limit the public funds available for health.”
Prevention is one area where money is poorly allocated. Mr James says OECD countries “spend 8.4% of their entire health budget on treating the consequences of unhealthy weight”, but prevention accounts for only around 3% of total spending. Even though a dollar spent on obesity prevention generates “up to $6 in economic impacts”—a sixfold return, similar to what WifOR attributes to spending on medicines—such highly productive investments struggle to attract funding because the returns take years to arrive.
We need a much stronger focus on reducing wasteful spending and increasing productivity, so that health systems can absorb rising demand without proportional cost increases.”
Chris James, senior economist, OECD
How to invest more effectively in health systems
“We need a much stronger focus on reducing wasteful spending and increasing productivity, so that health systems can absorb rising demand without proportional cost increases,” says Mr James. In the roundtable discussion on the WHA sidelines, participants suggested multi-year budgeting to encourage long-term thinking, ring-fenced prevention funds and wider use of health-technology assessment (HTA) for all health interventions as ways to make that shift.
Reframing health spending as investment and cutting waste are two parts of the same challenge. Mr Pouradier Duteil says the “logical thread” between the two is that broader measurement of the benefits strengthens the case for more funding, but only if health systems can first show they spend well. Mr James argues that the complex business of balancing fiscal sustainability, efficiency, equity and quality requires dialogue about where health systems should cut spending—and where they should invest more. With demographic change, resource constraints and geopolitical pressures all raising the costs of inaction, those conversations can no longer be postponed.
