Return on Childhood: The Most Valuable Health Investment We Still Don’t Make

For all the rhetoric around health equity, unmet need, and population-level transformation, children remain the most structurally underserved demographic in healthcare. This is not a function of science, nor of clinical indifference, but of market design. The systems that define prioritization—venture capital allocation, regulatory sequencing, reimbursement logic, procurement pathways, and technology adoption—have been architected around adult physiology, adult timelines, and adult return profiles. Children sit outside this model not because they are niche, but because they do not conform to the economic incentives that drive innovation velocity.

The evidence is not subtle. Children represent a quarter of the world’s population, yet pediatric innovation accounts for a statistical rounding error in funding allocation of about 1.6% of total healthcare venture capital. Public and philanthropic funding fill some of the gaps, but the core investment engine that drives pipelines in oncology, cardiometabolic disease, and adult chronic care has largely treated pediatrics as an edge case. The result is a predictable pattern: underpowered pipelines, limited commercial infrastructure, and a slow, fragmented path from prototype to standard of care.

The clinical consequences are well documented. Across multiple studies and regions, roughly half of medicines prescribed to children are used off label, with estimates approaching 90% in neonatal intensive care units. This is not because mechanisms of action are unknown, or because the science is ambiguous, but because the economic incentives do not support dedicated paediatric trials, formulation work, or safety studies. Even where need is unarguable—oncology, critical care, neurodevelopmental disorders, chronic pain, trauma sequelae—the market continues to run on adult-first sequencing. Innovation designed for adults is retrofitted downwards, calibrated, resized, and repurposed for smaller bodies with profoundly different biology, metabolism, neurocognitive development, exposure vulnerability, and dosing logic. Children are not short adults. 

On the device side, most products are designed for adults and then co-opted for use for children, despite significant differences in physiology, growth, and developmental needs. The i4KIDS-EUROPE white paper estimates that pediatric medical devices in Europe reach clinical practice roughly ten years after their adult counterparts, with neonatology and rare disease particularly exposed to this lag.

Digital and AI follow the same trajectory. While the FDA has now cleared hundreds of AI- and ML-enabled medical devices—most of them in radiology and cardiology—only a minority are labeled for pediatric use, and an even smaller subset have been trained on robust pediatric data. Pediatric AI tools are often retrofitted from adult algorithms rather than built on child-specific imaging, physiology, or developmental patterns. That creates a credibility and safety gap: algorithms optimized for adult anatomy, disease prevalence, and comorbidity patterns are being stretched into use cases they were never designed to handle.

The innovation pipeline reality reflects the same logic. Even hospital innovation functions—the spaces designed to accelerate adoption and translation—remain disproportionately under-resourced in pediatrics, with reimbursement structures rarely configured to support long-term developmental outcomes, caregiver burden reduction, or compounding lifetime cost avoidance. The barrier is not imagination. It is infrastructure. The irony is that pediatrics is the only sector in which innovation generates exponential return. Every year of earlier intervention compounds over a lifetime. Neurodevelopmental stabilization, pain mitigation, trauma-informed care, and chronic disease delay alter educational attainment, labor participation, and population health costs decades into the future. No other segment delivers comparable yield. Yet no other segment is so consistently forced to operate downstream of adult innovation, funded last, approved later, and adopted slowest.

None of this is accidental. It is the logical outcome of an architecture built around adult markets. Regulatory pathways still treat children as a follow-on population. Labeling, trial design, and risk frameworks are anchored in adult dosing and adult endpoints, with pediatric requirements added as extensions and add-on regulatory exclusivity. Health technology assessment and reimbursement systems rarely model lifetime impact; they pay for short-term events, not decades of avoided morbidity. Hospitals and payers carry pediatric costs today, while the economic returns from healthier adults appear many years later in different budgets. The result is a structural mispricing of pediatric innovation: it is more complex to develop, harder to study, and poorly rewarded by current payment logic, despite offering the highest long-term yield. Without a change to the structure, the market will continue to produce exactly what it is designed to produce: adult-centric innovation with pediatric adjacencies.

The conversation must therefore shift from moral argument to structural redesign. Children are not an equity sub-category nor a corporate ESG talking point; they are the only population in which time functions as a multiplier rather than a drag coefficient. Intervening early is not compassionate—it is economically rational, system-stabilizing, and innovation-amplifying. The question is not whether pediatric innovation is important, but why the healthcare economy continues to function as though it is optional.

What comes next will depend on whether we treat pediatrics as a parallel system worthy of primary investment, regulatory specificity, clinical trial architecture, procurement reform, and value-based reimbursement- or whether we continue to graft it onto adult pipelines and declare the shortfall inevitable.

Yet the story is not uniformly negative. There are early signals of what a more intentional pediatric innovation ecosystem can look like. In the United States, the FDA’s Pediatric Device Consortia Grants Program has created a network of nonprofit consortia that provide regulatory, engineering, and commercialization support to device innovators focused on children. Since its inception, the program has supported hundreds of projects and helped bring dozens of pediatric devices to market that might not otherwise have cleared the technical and regulatory hurdles. Centers such as the UCSF–Stanford Consortium for Technology and Innovation in Pediatrics and the CTIP network have received multi-year grants to de-risk early development and connect innovators with clinical partners. These are not silver bullets, but they demonstrate that when pediatric innovation is given dedicated infrastructure rather than squeezed into adult pathways, the pipeline responds.

Europe is beginning to build analogous capacity. The i4KIDS Pediatric Innovation Hub in Barcelona has established a regional and now European platform that scouts, validates, and accelerates pediatric and maternal health solutions, with structured support around clinical validation, regulatory planning, and commercialization. Through initiatives such as Impact4kids, the hub and its partners have started to surface a new generation of pediatric-focused ventures in medical devices, diagnostics, and digital health- ranging from neuromodulation for neurodevelopmental disorders to AI-supported neonatal imaging and clinical decision support for low-resource settings.  These are still early-stage projects, but they represent precisely the type of pipeline that does not emerge by accident.

At the clinical trial layer, the conect4children (c4c) network is another structural innovation worth watching. Backed initially by the Innovative Medicines Initiative, c4c has built a pan-European pediatric trial infrastructure that links trial-ready sites, methodological experts, and patient advisory groups across more than 20 countries. Its objective is straightforward: make it faster, cheaper, and more predictable to run high-quality pediatric trials, so developers have fewer excuses to defer or dilute pediatric programs. By reducing friction across study start-up, recruitment, and execution, networks like c4c begin to close one of the most cited bottlenecks in pediatric R&D.

These examples are still exceptions relative to the size of the need. But they point to an emerging pattern. When pediatrics is treated as its own strategic category—with dedicated funding, infrastructure, and regulatory engagement— the usual narrative of fragmentation and delay starts to bend. The question for the broader ecosystem is whether these efforts remain islands, or whether payers, regulators, and industry incumbents choose to scale the underlying logic.

From an economic perspective, the case is straightforward. Early, child-specific intervention is the only point in the life course where innovation reliably generates exponential return. Stabilizing chronic conditions in childhood alters decades of healthcare utilization. Preventing or mitigating pain, trauma, and developmental disruption changes educational trajectories, workforce participation, and social care burden. Yet current reimbursement frameworks rarely model those long arcs. Value-based care arrangements and outcome-based contracts have started to reshape adult chronic disease management; applying the same tools to pediatrics would mean explicitly valuing the avoided costs and productivity losses that occur far beyond a typical contract period.

Children are not a peripheral market; they are where the health system’s future is written.

For HLTH’s community of payers, providers, life sciences companies, and digital health innovators the choice is binary. Pediatric innovation can continue to function as a residual category, downstream of adult priorities, permanently undercapitalized and structurally delayed. Or it can be treated as a parallel architecture with its own rails, from venture theses and grant programs to clinical networks and reimbursement logic. The early successes in consortia funding, European hubs, and specialized trial platforms show that when those rails exist, innovators show up.