Health Policy www.thelancet.com Published online October 24, 2012 http://dx.doi.org/10.1016/S0140-6736(12)61460-3 1 Published Online October 24, 2012 http://dx.doi.org/10.1016/ S0140-6736(12)61460-3 The Business School and Faculty of Medicine, Imperial College London, London, UK (Prof R Atun FRCP); Harvard Global Equity Initiative, Boston, MA, USA (F Knaul PhD); Mexican Health Foundation, Mexico City, Mexico (F Knaul); The Global Fund to Fight AIDS, Tuberculosis and Malaria, Geneva, Switzerland (Y Akachi PhD); and Harvard School of Public Health, Boston, MA, USA (J Frenk PhD) Correspondence to: Prof Rifat Atun, The Business School and Faculty of Medicine, South Kensington Campus, Imperial College London, London SW7 2AZ, UK r.atun@imperial.ac.uk Innovative financing for health: what is truly innovative? Rifat Atun, Felicia Marie Knaul, Yoko Akachi, Julio Frenk Development assistance for health has increased every year between 2000 and 2010, particularly for HIV/AIDS, tuberculosis, and malaria, to reach US$26·66 billion in 2010. The continued global economic crisis means that increased external financing from traditional donors is unlikely in the near term. Hence, new funding has to be sought from innovative financing sources to sustain the gains made in global health, to achieve the health Millennium Development Goals, and to address the emerging burden from non-communicable diseases. We use the value chain approach to conceptualise innovative financing. With this framework, we identify three integrated innovative financing mechanisms—GAVI, Global Fund, and UNITAID—that have reached a global scale. These three financing mechanisms have innovated along each step of the innovative finance value chain—namely resource mobilisation, pooling, channelling, resource allocation, and implementation—and integrated these steps to channel large amounts of funding rapidly to low-income and middle-income countries to address HIV/AIDS, malaria, tuberculosis, and vaccine-preventable diseases. However, resources mobilised from international innovative financing sources are relatively modest compared with donor assistance from traditional sources. Instead, the real innovation has been establishment of new organisational forms as integrated financing mechanisms that link elements of the financing value chain to more effectively and efficiently mobilise, pool, allocate, and channel financial resources to low-income and middle-income countries and to create incentives to improve implementation and performance of national programmes. These mechanisms provide platforms for health funding in the future, especially as efforts to grow innovative financing have faltered. The lessons learnt from these mechanisms can be used to develop and expand innovative financing from international sources to address health needs in low-income and middle-income countries. Introduction Development assistance for health (DAH) has increased every year from 2000, particularly for HIV/AIDS, tuber- culosis, and malaria, to reach US$26·66 billion in 2010; however, in 2011, the rate of growth decreased because of economic difficulties experienced by donor countries. Total public domestic spending in low-income and middle-income countries on health increased from $368·46 billion in 2008, to $410·50 billion in 2009. 1 In 2009, sub-Saharan Africa received the largest amount of DAH ($7·61 billion; 30%) followed by south Asia ($1·85 billion; 7·2%), east Asia and the Pacific ($1·48 billion; 5·8%), and north Africa and the Middle East ($554·98 million; 2·2%). 1 Between 2003 and 2008, official development assistance (ODA) for maternal, newborn, and child health increased by 105%, from $2·632 billion to $5·395 billion. The Global Fund to Fight AIDS, Tuberculosis and Malaria (Global Fund) and GAVI were largely responsible for the increases in DAH for HIV/AIDS (together with PEPFAR [US President’s Emergency Plan For AIDS Relief]), tuberculosis, malaria, and maternal and child health. 2 Increased DAH has enabled remarkable global progress towards the health Millennium Development Goals (MDGs). However, between 2008 and 2009, despite funding needs to sustain the health gains, 3 reduced growth of HIV/AIDS funding led to a slower rise in DAH to sub-Saharan Africa than to other regions. 1 Funding projections from traditional donor sources and the present trajectory of progress in achievement of MDGs suggest that these goals will not be met in sub-Saharan Africa and south Asia—two regions that have the greatest burden of communicable diseases and maternal and child deaths, and that face the emerging challenge of non-communicable diseases (NCDs). 4 Continued global economic crisis means that increased financing from traditional donors is unlikely in the near term. Innovative financing is crucial to generate add- itional finances and to channel funds effectively from established and new sources to sustain health gains, achieve the MDGs, and address the NCD burden in low- income and middle-income countries. 5,6 The term innovative financing—which gained prom- inence in 2002, when concerns were raised about the resources needed to achieve the MDGs 7 —has been variously defined to describe new financing from non- traditional sources and incentives to mobilise them, albeit without a conceptual model that brings together these definitions. A unified definition of innovative financing is challenging because of the varied views on what is innovation or innovative. In the 1930s, Schumpeter 8 distinguished between invention and innovation to define innovation in terms of production function with reference to new inputs, introduction of a new product (or a qualitative change in an existing product), a new form of organisation, or the opening of a new market. Innovation is viewed in terms of new products and processes. 9 Innovation is dynamic, discontinuous, incremental, interdependent, and affected by factors such as a network of stakeholders, availability of resources, incentive systems, and constraints. 10 Innovation creates ongoing renewal. Hence, what is innovative today may soon become redundant, as new inputs, processes, org- anisational forms, products, and services emerge. In this report we use the value chain framework 11 to conceptualise innovative financing. We review published