Global value chains and the "value" health economy

Here is a profound fact. Sixty-two people own 50% of the world's global assets. Listening to The London School of Economics and Political Science public lecture Power and Inequality in the Global Political Economy I was interested by parallels with our own value-frameworks around healthcare. The language we use is derived from a broader global value chain pattern of global and regional production, and coordination. Think about where the value is created and who benefits from the "savings' in the end.

The United Nations Conference on Trade and Development (UNCTAD) estimates that 80% of total global trade flows through global chains controlled by transnational corporations. What are global value chains? Loosely defined, a GVC includes all of the different stages of development coordinated across geographies. Basically it is a cost saving strategy allowing optimization of production by coordinating development across a variety of sites. In our modern age, approximately 1 in 5 companies are linked to production in GVC. This framework explains why the US bears the majority of costs in the pharmaceutical markets--and I would argue a huge net of profits.

The structure of GVCs harness asymmetric power relations within value chains to control how, where, and by whom value is created and captured. The 3 dimensions of asymmetric power necessary to understand GVC dynamics are market power, social power, and political power. The example of the iPhone is often used to represent value in global networks--where are the cost inputs--and who profits.

The increasing complexity of global value networks creates ongoing challenges for both corporate strategists and national or regional regulators in a transnational market access scenario. The strategist guides on-going reconfigurations of networks to maximize value for stakeholders. The example of India reflects similar asymmetric power frameworks as demonstrated by the iPhone example above.

To understand the pharmaceutical value chain and appreciation of costs incurred, a global awareness of specific markets and their supply chain efficiency and commercial practices is necessary. Think of the iPhone graphic. Understanding where the costs and profits are captured informs the power of global value chains and production.

Thoughtful discussions about data, words, illustrations, and outcomes analytics that apply principles and frameworks of health policy and economics to persistent and perplexing health and health care problems...