The problem with this is it doesn't give any consideration to the feasibility of alternatives or timelines to change things. If you just drop a blanket "every product must include it's cleanup costs", you're telling the public that their current life essentials are now unbelievably expensive.

Vs selectively picking products which have easy alternatives and providing phase out periods which match the difficulty of replacing them. If you tell the public you are going to make car tires cost millions of dollars, you'll be voted out. If you tell them that plastic confetti will be replaced with paper confetti in 12 months you'll make real progress.

This doesn't prevent innovation. Scientists will still do research, develop new recycling tech and processes.

The trouble is that the market allocation of funding is dependent on the valuation of goods and services. Until the externalized costs are accurately represented, the market will under-allocate capital toward solving the problem. To push the transition to happen faster without internalizing costs, you'd have to subsidize development with significantly more cash than the market would be willing to allocate with accurately internalized costs. Which I'm not sure is possible.

There are definitely reasons to subsidize some products - medical devices, for instance - as you say, things without readily available alternatives. I'm not writing a detailed transition plan here, just pointing out observations.