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This report discusses the possible role and limitations of innovation procurement as an innovation policy instrument. The report was funded by the Health Research Development Policy Research Unit of the English Department of Health.

The motivation for the report is the increasing interest of policy makers in procurement as an innovation policy measure, while the gap between the policy and economics literature is becoming bigger and bigger. Whereas the policy literature tends to take a relatively broad and sympathetic stance, the economics literature is typically more detailed and less enthusiastic.

The aim of the report is to narrow this gap by reviewing the two bodies of literature in the context of two very specific questions — aiming at the efficiency, effectiveness and value for money contributions of innovation procurement:

  • Can innovation procurement ensure that the pace and amount of innovation is maintained through optimal investment in R&D?
  • Can innovation procurement ensure that investment in innovation is distributed to where it will be most effective?

We believe this is useful, because bringing together the two bodies of literature — policy and economics — challenges some of the current thinking on these issues on both sides and possibly contributes to a more nuanced view on innovation procurement and its potential.

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The research described in this report was conducted with funding support from the Health Research and Development Policy Research Unit of the Department of Health (England) and was performed under the auspices of RAND Europe.

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