Health Affairs November 26, 2025
Introduction
Policy debates on trade and health care innovation often rest on the idea that the United States finances the world’s R&D, with high domestic drug spending underwriting discoveries that benefit patients globally. This view emphasizes US-funded research and the reinvestment of manufacturer revenues at home.1 However, it overlooks another crucial reality: the global capital markets that shape innovation well before products reach the market. For early-stage, high-risk startups, venture capital (VC)—not product revenues—is the critical lifeline, determining both the pace and direction of research.2,3 These investments increasingly flow across borders, connecting international investors with US startups and linking US investors to companies abroad. Shifts in trade policy, including tariffs and restrictions on foreign investment, risk disrupting these channels of...
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