The relationship of biomedical innovation and health care system including public health insurance is of critical significance, although this topic has not been discussed sufficiently in Japan. Currently, health care expenditures are growing very rapidly with aging population and the cutting-edge frontiers of scientific research are going into the domains of life sciences. In this article, the relationship of biomedical innovation and health care system is explored from broad perspectives with major attention to the cost-effectiveness of health care, allocations of health care resources and the sustainability of health systems.