What is innovative finance?
Innovative finance is a range of financial solutions and mechanisms that can be used to bridge the gap between traditional forms of development funding and the financing required to achieve development goals.
Innovative finance includes a range of financial products, from advance market commitments and development bonds to matching funds and guarantees.
Innovative financing is central to the pursuit of the Sustainable Development Goals (SDGs). The UN estimates that up to $5-7 trillion is needed every year to achieve the goals. Official development assistance stands at less than $200 billion per year and domestic finances have been under severe pressure since the COVID-19 pandemic.
How innovative finance has been used in global health
Innovative finance has helped to improve the health of millions of people. Here we look at how it has been used to tackle childhood diseases, HIV, and COVID-19.
A volume guarantee provided by the Bill & Melinda Gates Foundation increased access to a single-pill treatment for HIV. Working with partners, the Gates Foundation provided the guarantee to Mylan in return for a lower ceiling price for the first fixed-dose combination HIV treatment containing dolutegravir. The guarantee secured a price of $75 per person per year in more than 90 low- and middle-income countries, with expected procurement savings of more than $1 billion.
Billions of dollars have been unlocked for vaccine procurement through the Innovative Finance Facility for Immunisation (IFFIm). The Facility is a funding vehicle to provide predictable and flexible funding for Gavi, the Vaccine Alliance. Vaccine bonds are offered to investors by using long-term donor pledges as collateral. The money raised through the bonds is provided to Gavi as a crucial and immediate source of funding for new vaccine programmes. Investors realise an attractive and secure rate of return while helping to save young lives. To date, IFFIm has raised almost $8 billion from investors for Gavi-supported programmes, enabling the vaccine alliance to accelerate higher volume vaccine procurement at lower prices.
Examples from others
MedAccess is learning from more than two decades of our partners’ experimentation and learning in innovative finance for global health.
See our innovative finance products
MedAccess uses guarantees and debt finance to accelerate access to medical innovations. Our $200 million capital enables us to make agreements that impact the lives of millions of people.
We recognise that complex global health challenges often require bespoke solutions. We tailor our agreements so that they meet the needs of all partners, whilst staying focused on our three development impact principles – changing lives, saving money and shaping markets.