Chapter 3.5 reflects on how to use payment mechanisms to support the integration of care. Integrated care is about better management of the care patients receive in different settings (primary, secondary) and from different specialists and teams. It is particularly important for patients with multi-morbidity and chronic long-term needs, and as populations age. Key learning includes that

• Health systems’ payment models can play an important role in incentivizing integrated care.

• Purchasers are now testing innovative payment models (e.g. pay-for-coordination or P4C) which explore how to foster better coordination. These models include

• – Appointing a ‘budget holder’ for a patient so a case manager and /or multidisciplinary team has oversight of all care

• – Bundling payments to single providers so that the multiple services a patient uses are better linked and

• – Bundling payments for patients being treated by multiple providers, creating joint budget responsibility and a need to work together and avoid duplication.

• Policy-makers would do well to focus on careful design of information systems to underpin payment schemes because

• – Information sharing supports clinical effectiveness

• – Quality indicators allow purchasers to tie bonuses or penalties to integration

• – Monitoring activity and health outcomes helps assess value for money

• – Tracking the distributional consequences of incentive schemes is crucial in protecting equity

• – Robust evaluation tools allow immediate lessons to be shared and will capture changes over time and across the healthcare system.

• Health systems need to embed financial incentives as part of a broader system approach. Critical elements include

• – Committed leadership

• – Effective communication among providers

• – Structural integration, either through coordinating mechanisms that link provider roles or by the formation of new entities with single management teams.

Chapter 3.8 highlights the importance of funding as a tool for preparing for and responding to pandemics. A pandemic can wreak health, societal and economic havoc. Prioritizing common and global public goods for health and specifically for pandemic planning is complex and requires financing mechanisms at national, regional and supranational levels. Key learning, including from COVID-19, is that

• – Pandemic preparedness is subject to inherent market and collective action failures and is often underfunded.

• – Governments need clear strategies for funding preparedness.

• – Preparedness depends on strong health system foundations and contingency funding mechanisms that go beyond simply setting funds aside. It is crucial that funds can be mobilized quickly and in a coordinated fashion.

• – Key steps for planning responses include

• Assessing existing activities and mapping value for money

• Agreeing the need for public financing for population-based functions (i.e. common goods)

• Identifying appropriate types of financing that reflect the complexity of determining resource needs and allow for nuanced cost estimation

• Developing context-specific financing tools that include flexible funds and address accountability

• Holding transparent discussions about trade-offs

• Improving budget transfer mechanisms

• Integrating domestic finance into multiyear budgets, and

• Managing and strengthening international collaboration

• International guidance and learning from COVID-19 can help inform preparations. Organizations including the WHO and World Bank offer tools to help decision-makers. It is crucial that these are assessed for suitability to context and customized to the national and local setting.

The chapter focuses on Marx and Young, and on Marshall’s work that exhibits evolutionary flavour. In extending Smith’s DoLop analysis, Marx separated the organisation of manufactures into two fundamental forms, organic/serial and heterogeneous. He also examined the emergence of the modern science of technology. In extending Smith, Young focused on the DoL among industries, especially through industrial differentiation, a process that Marx was also aware of. Thus, as in-firm DoLop extends, operations that share commonalities could be spotted, across firms in the same or different industries, as ‘scattered’ (Marx) or ‘segregated’ (Young). New firms/industries might emerge to cater to the common production needs, achieving technological convergence (Rosenberg) and industrial differentiation. Marshall described this as subsidiary industries arising to meet the ‘special wants’ of firms in other industries, where the firms could be ‘localised’ in a district or nation. In contrast with the marginalist flavour injected into DoLfg analysis, the three illustrated that DoLop analysis entails evolving production complementarities, where the history of development is defined by that evolution.

Chapter 3.4 explores how pharmaceutical care is financed. Paying for medicines includes how the end-purchase of existing medicines is managed but also the way investment in research and development (R&D) is handled. Key learning includes that

• Pharmaceutical innovation draws on substantial public and private resources.

• – The public sector primarily supports early-stage research, regulates the industry and incentivizes development.

• – The private sector is typically central to development, commercialization, manufacture and marketing. It seeks high profit margins and is not always transparent or responsive to policy priorities.

• Novel and specialized therapeutics as well as population ageing are likely to accelerate medicines expenditures. This requires careful management of pricing and reimbursement.

• Policy-makers can leverage a mix of push and pull strategies to align industry efforts with societal need including through

• – Clear communication of health system priorities

• – Transparent incentive and pricing systems and measures to enhance R&D efficiency

• – Payment mechanisms that foster equity and sustainability

• – Cross-country collaboration including on preparedness, procurement and pricing transparency.

Chapter 3.10 evaluates innovative financing for neglected diseases. Neglected diseases (NDs) account for about a fifth of the global burden of disease and affect over a billion people. They are neglected because the pharmaceutical sector does not consider it profitable to develop treatments for them. This reflects that fact that NDs are most prevalent in low- and middle-income countries with relatively low purchasing potential. Key learning includes that

• Global pharmaceutical research and development (R&D) invests a disproportionate share of innovation, activity and resources in low burden diseases and fosters significant inequities.

• A range of push and pull incentive mechanisms have been developed to delink the cost of research from market profitability and promote innovation in areas of need.

• – Reduce the upfront costs by subsidizing R&D pre-discovery (push incentives) and

• – Offer a reward post-discovery (pull incentives)

• The evidence on the effectiveness and reach of incentive schemes is scant and more needs to be done to understand the relative cost-effectiveness of the different incentive mechanisms and the extent to which they mitigate inequalities in innovation and access to new medicines.

• A global, unified governance framework for needs assessment and resource allocation could usefully

• – Carry out systematic comparison of the relative needs associated with NDs globally

• – Assess the costs and benefits of addressing these

• – Set priorities for the coordinated global allocation of funding and targeted incentive mechanisms, and

• – Consider payment mechanisms that will translate research into market launches.

The chapter sums up the systematic dialogue proposed between research streams examined in the earlier chapters that adopt a DoLop, or production-centred, approach to IP formulation, and it makes comparison with the DoLfg-based approach. The IP debate should discard misguided labels like free trade versus protectionism, or IS versus EP, or joining GVCs while ignoring domestic economic integration. The neoclassical notion of market failure is too narrow and static to address uneven development. Processes of circular and cumulative causation call attention to interlinked market and institutional weaknesses in many less-DCs that are exploited by Northern firms that wield tremendous market power. The extremely simple learning-by-doing that mainstream economists believe to be sufficient to bring about development is ill-conceived. Complex interactive learning in contexts of DoLop will need to be facilitated by broad-based IPs to enable purposeful technology acquisitions that initially largely involve existing-, but which gradually progress to new-, technology convergence. The chapter ends with a consideration of development pursuit in an increasingly turbulent geopolitical environment.

Chapter 2.2 investigates the design and implementation of health benefits packages in different contexts. A benefits package is the range of health care goods and services that people covered by a system or scheme are entitled to or should be able to access. Key learning includes that

• All health systems have budgetary constraints and set some limits to entitlement, and therefore have some kind of benefits package.

• Benefits packages may be explicitly defined or implicit only, with the latter more common in high income countries and the former more common in low and middle income countries.

• What is included or excluded, and the ways these decisions are made, vary widely but well-designed benefit packages should address population health needs and ensure the efficient use of health system resources

• Defining a package of care is complex and often highly sensitive – using evidence and economic evaluation to determine what to include (or exclude) supports efficiency and equity and allows policy-makers to explain and defend their choices.

• There are a range of evidence-led instruments that can support policy choices such as health technology assessment (HTA), which incorporates economic evaluation.

• Any decision-making process should

• – Gain agreement and buy-in from key stakeholders on the ultimate goals of the benefits package and the level of explicitness.

• – Take into account the specific characteristics of the setting where the benefits package will be implemented including its cultural values, market configuration, political system and wealth.

Chapter 2.5 sets out how long term care is provided and how it is paid for. Long-term care (LTC) refers to a broad package of personal, social and medical services provided over extended periods of time which may be delivered by care professionals or by informal care givers. Key learning includes that

• Population ageing, particularly in advanced economies, creates growing demands for LTC.

• There are inequities in the need for and access to LTC. Older people, women, those with lower incomes and lower levels of education are all more likely to need care, but less likely to have access to it.

• Funding arrangements for LTC are problematic in many countries

• – Voluntary insurance and out of pocket payments commonly fill public coverage gaps but create inequities.

• – Asset-tests for eligibility for publicly funded care are essentially regressive wealth taxes due to the unequal distribution of LTC needs.

• – Encouraging for-profit provision theoretically fosters competition, availability and responsiveness but the pressures to generate profits can jeopardize quality and safety.

• Countries face urgent pressures on LTC and could usefully consider

• – Increasing public expenditure and broadening the funding mix for LTC

• – Better, fairer pooling of resources across generations

• – Revenue sources independent of payroll contributions since labour markets as a revenue base will shrink at the same time that demand for ageing-related LTC increases

• – Better data and indicators to assess access, quality, and value for money

• – Patient-centred and coordinated approaches to LTC.

Through his concept of production linkages (PLs), especially joint-PLs or intermediate-product convergence, Hirschman extended DoLop analysis. The richness/paucity of PLs varies by sectors. He initially thought their activation simply depends on market size but soon realised that technological alienness could deter it and exacerbate Southern enclave development, limiting trickle-down while worsening polarisation effects. IPs are possible elements of fiscal linkages, mutually interacting with consumption linkages to enlarge market size for more PLs. The Appendix shows rejection of DoLfg analysis and expression of concern with uneven development by Prebisch (centre–periphery disparities), Singer (international dualism) and Myrdal (as backwash dominate over spread effects). Knowing the drawbacks of excessive reliance on trade protection, the IP considered by them as well as Hirschman is not restricted to import substitution but is interweaved with export promotion. They also emphasised the importance of deliberate technology acquisition, with supportive institutional changes, to enhance Southern ‘technological density’ (Prebisch) or to narrow South–North technological gaps (Singer).