6
Building a Framework for Global Health Security

The world needs a stronger, more resilient framework for global health security. The Ebola crisis revealed deficiencies in almost every aspect of how we defend humankind against the threat of infectious diseases. Disease surveillance was inadequate, and outbreak alerts were slow. Local health systems were quickly overwhelmed. Local communities lost trust. The World Health Organization (WHO) was slow to respond and lacked capabilities and resources. The broader international response took too long and was poorly coordinated. There were gaps and shortfalls in diagnostics, therapeutics, vaccines, and protective equipment; there were inadequacies in logistics, communications, and governance. Ultimately, we will contain Ebola, but at far too great a cost in lives, resources, and economic disruption.

The next potential pandemic may be far more contagious and far more fatal. So, while the memories of Ebola are fresh—and we should not forget that the epidemic is not yet over—we should grasp the opportunity to shore up our defenses. We must create a global health risk framework capable of protecting human lives and livelihoods worldwide from the threat of infectious disease. We have neglected this aspect of global security for far too long.

First, we must recognize the scale of the risk. As we argued in Chapter 2, infectious diseases represent a massive threat to human life and economic well-being. Given the increasing rate of emergence of new infectious diseases and the increasing inter-connectivity of people and economic activity, the underlying risks and potential impact are probably increasing. We need to understand and counter the risks across the whole spectrum of infectious diseases—from emergence and outbreak to epidemics and, ultimately, pandemics. Second, we must acknowledge the degree to which we have neglected this risk. Compared with other threats to human security or economic security, such as war, terrorism, or financial crises, we have devoted far less resources to countering the threat of potential pandemics. We are underinvested and underprepared in almost every dimension, from national capacities and infrastructure to global capabilities and coordination to product research and development.

Creating a resilient framework that better protects humankind will require determined leadership. As we set out in Chapters 4 and 5, it will require leadership at the global level to make WHO much more effective, to enhance the role of the multilaterals and the United Nations in this arena, and to mobilize the funds required to improve the core capacities of poorer countries and accelerate research and development (R&D). As we outlined in Chapter 3, it will require leadership at the national government level to build and sustain effective public health infrastructure and capabilities as core foundation of the overall health system. If ensuring the security of the public is the first duty of a government, then protecting against infectious disease is a security imperative.

Creating this framework will also require money. We believe the global community should commit to spend about $4.5 billion¹ per year to rectify deficiencies in local health systems, enhance global capabilities and coordination, and accelerate R&D. This is not a small sum, but compared with the cost of potential pandemics, and compared with what we spend on other risks,

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¹ All monetary figures in U.S. dollars.

the investment case is certainly compelling. Moreover, the framework we propose will yield benefits beyond countering the threat of infectious diseases. More resilient local health systems and a more effective global health architecture will also fortify against other pressing global health challenges, such as antimicrobial resistance (AMR) and endemic diseases like malaria.

Infectious diseases represent an enormous threat to humankind. Few other events can kill as many people or destroy an economy so quickly. We have neglected this risk. Our ability to identify, prevent, and respond to potential pandemics is full of flaws and weaknesses. Yet this is a solvable problem. With leadership and a commitment of roughly $4.5 billion per year, we can make the world much safer.

In this chapter, we gather the threads of the financing discussion to show how the figure of $4.5 billion is derived and how it could be sourced. We then close with a brief discussion of what should happen next.

THE OVERALL FINANCING CHALLENGE

To make the world much safer from the threat of pandemics, the global community should commit to investing roughly $4.5 billion per year in prevention, detection, and preparedness efforts, including research and development. Put differently, for an annual investment of approximately 65 cents per person, we could substantially improve our defenses against one of the biggest threats facing humankind.

To arrive at the figure of $4.5 billion in required incremental funding, we aggregated four components:

1. The upper end of the World Bank’s 2012 estimated range of $1.9–$3.4 billion for the cost of upgrading national pandemic preparedness capabilities (World Bank, 2012).
2. Our proposed figure of $1 billion per year for infectious disease prevention and response R&D (see Chapter 5).
3. A 5 percent increase in the WHO core assessment to fund the Center for Health Emergency Preparedness and Response (CHEPR), which would amount to approximately $25 million per year (see Chapter 4).
4. A stylized funding cost of WHO’s Contingency Fund for Emergencies (CFE) of roughly 25–30 percent, which assumes net funding costs of 2 percent and full drawdown on a non-repayment basis, plus subsequent replenishment of the fund every 4 years. For the proposed contingency fund of $100 million, this amounts to about $25–$30 million per year.²
5. A stylized funding cost of the World Bank’s Pandemic Emergency Financing Facility (PEF) of 8–10 percent, based on an effective net funding cost of 2 percent plus annualized deployment costs of 6–8 percent, assuming that PEF loans are made as a mixture of concessionary loans and grants every 4 years; or, alternatively, that the PEF is funded through an insurance mechanism with premiums around this level. For the proposed PEF of $1 billion, this amounts to about $80–$100 million per year.³

The amount of incremental spending proposed is not precise, for four principal reasons.

First, we do not have a robust assessment of the gaps in national core capacities for infectious disease prevention and detection. The World Bank’s 2012 estimate of $1.9–$3.4 billion was the result of a very extensive process of consultation and data gathering around what would be needed to upgrade low- and middle-income countries’ capacities to the level required to be compliant with International Health Regulations (IHR) (World Bank, 2012). This is obviously quite a wide range, and it excludes any upgrading that might be required in more advanced economies, as well as investments in health systems that extend beyond those strictly required by the IHR guidelines. It also excludes increases in relevant spending at a national level since 2012, including the international response to the Ebola epidemic and the Global Health Security Agenda.

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² Annualized funding costs for the CFE and PEF were calculated using the following assumptions. For the CFE, net funding costs were estimated at 2 percent (calculated as 3 percent minus 1 percent yield on undeployed funds), and all funds were assumed to be spent in year 4. Thus, over a 4-year cycle, a $100 million contingency fund would cost 100 × .02 × 4 = $8 million. Further, assuming that the full $100 million is spent over a 4-year cycle, this brings the total to $108 million, annualized as $27 million.

³ For the PEF, net funding costs were again estimated at 2 percent, and the full amount of the fund ($1 billion) was assumed to be loaned out every 4 years, for 1 year (i.e., to year 5). Thus, the funding cost over 5 years for the PEF is 1,000 × .02 × 5 = $100 million. Note that this approach treats money loaned in year 5 as new money, because the first tranche will be deployed at end of year 4. Additionally, we deduct the return on investment for the year in which the funds are disbursed, adding 1,000 × .03 × 1 = $30 million. Finally, we allow for 25–35 percent of the value of the $1 billion fund being written off every time it is deployed, totalling $250–$350 million. These inputs give a 5-year cost of $380–$480 million, annualized to $74–$96 million.

Second, much of the incremental spending on national health systems relates to capabilities and infrastructure (such as laboratory networks and surveillance tools) that are also required to mount an effective response to other health issues, such as AMR and endemic diseases like malaria. As a consequence, the World Bank’s estimate of the cost of upgrading health systems capabilities effectively double-counts the cost of some components.

Third, some elements of the incremental spending proposed are necessarily subjective, with a large element of uncertainty in their determination. This is most obvious with the proposals for incremental expenditure on the R&D component. We are confident that it makes sense to spend more than is currently being allotted to product R&D in the infectious disease arena, and that the increase in expenditure would have to be substantial in order to make any meaningful difference. However, there is clearly no formula that converts a quantum of incremental investment into specific product outcomes with certainty. That said, comparison with other publicly funded R&D efforts suggests that our figure of $1 billion is not unreasonable. For example, global funding for HIV prevention research was $1.25 billion as of 2014 (RTWG, 2015).

Finally, the cost of the WHO contingency fund and the World Bank PEF depend on the financing structure, how often they are utilized (and subsequently replenished), and whether the funds are deployed as loans or grants. As a result of this uncertainty, we have made stylized estimates of their annualized costs to enable us to create an overall aggregate figure for the cost of these funding facilities. However, when compared with our proposals for annual spending on health systems strengthening and R&D, these numbers are relatively small contributors to the overall cost figure. As a result, the impact of this uncertainty on the total will be small.

These considerations and caveats notwithstanding, providing an indicative single overall figure—$4.5 billion per year—gives a sense of the scale of the financing challenge. Moreover, this number is grounded in current best evidence as to the costs of health systems improvement and is comparable to other R&D efforts of comparable scale.

There are good reasons to believe that investment to reduce the global threat posed by pandemics represents exceptional value for money, when health and economic returns on investment are considered. Analysis of the response to the Ebola outbreak in Sierra Leone highlights the health gains that come from being able to respond more rapidly to infectious disease outbreaks. A recent study found that international support to Sierra Leone helped avert more than 50,000 cases of Ebola, with the potential to avert a further 12,500 had this support been mobilized 1 month earlier (Kucharski et al., 2015). Considering only the benefits to economic growth (rather than human life), estimates by the World Bank suggest that investment to strengthen national health systems to IHR standards would yield a positive return on investment in all plausible scenarios (World Bank, 2012). Likewise, swift deployment of funds to fight an outbreak can yield extraordinary returns. For example, Nigeria spent approximately $13 million responding to the Ebola outbreak, and, while Guinea, Liberia, and Sierra Leone each lost several percentage points of gross domestic product (GDP) as a result of Ebola, Nigeria suffered minimal economic losses (World Bank, 2014). A 2 percent reduction in Nigeria’s 2014 GDP would have translated to an economic loss of nearly $12 billion (World Bank, 2015).

Set against the scale of the threat to lives and the global economy, there is a compelling case for investing the incremental $4.5 billion per year we propose to prevent, detect, and better prepare to respond to pandemics. Even if the investments we recommend were to reduce our estimate of the expected economic loss from pandemics of more than $60 billion by only 10 percent, which seems extremely conservative, spending $4.5 billion per year would reduce expected losses by more than $6 billion. Moreover, as argued earlier, these investments would also contribute to the achievement of other health goals, such as countering the threat of AMR and containing endemic diseases like malaria and tuberculosis.

Set in contrast to what the world spends on other risks to human lives and livelihoods, the case gets even stronger. As we pointed out in Chapter 2, the risk is not that that we will spend too much; the risk is that we will continue to spend too little—with potentially disastrous consequences.

In the rest of this section, we briefly summarize the approach to determining each of these five components of expenditure and present potential funding options.

Financing Stronger National Core Capacities

In Chapter 3, we argued that reinforcing core capacities and infrastructure at the national level so that countries

are better able to prevent infectious disease outbreaks (or detect outbreaks and respond before they escalate to the level of an epidemic or pandemic) is a top priority. Doing so will require significant incremental expenditure and is the largest component of our recommendations.

As explained in Chapter 3, estimating the scale of the required incremental investment is difficult, because information about each country’s current status is far from perfect and benchmark definition is insufficiently precise. The best analysis of the costs of reinforcing national capabilities and infrastructure to achieve IHR compliance stems from a World Bank (2012) study, People, Pathogens and Our Planet. This study concluded that achieving compliance for low- and middle-income countries would cost $1.9–$3.4 billion per year.

In considering how to meet this gap, a key requirement is sustainability. Health systems resilience is an ongoing commitment, not a one-off effort. Moreover, given that it is the foundation of health security, spending on public health infrastructure and capabilities should be seen as a central component of national security expenditures, an integral part of a government’s fundamental duty to protect its people. As set out in Chapter 3, we therefore recommend:

• High-income and upper-middle-income countries must make achievement of the IHR core capacities a core part of the government’s expenditure. Civil society can hold governments accountable through the mechanism of independent assessment described in Chapter 3. Such countries should also establish emergency contingency funds.
• Lower-middle-income and low-income countries should determine, in dialogue with multilateral and bilateral partners, the appropriate balance of domestic resource mobilization and external support (which might be directed at helping upgrade capabilities and infrastructure, contingent on local governments’ commitments to maintain support thereafter). The World Bank should work with other multilaterals and bilateral donors to catalyze and coordinate such support.
• For fragile and failed states, the UN, the World Bank, and WHO should work together to determine appropriate strategies for sustaining health systems infrastructure and capabilities to the extent possible.

Across all countries, incremental investment in health systems should be guided by:

• a clear definition of the core capacities required (as set out in Recommendation B.1);
• rigorous, objective, and transparent assessment of current performance against these defined capacities (as envisioned in Recommendation B.2); and
• clear and detailed plans to rectify gaps, including the costs of upgrading core capacities and a model for fulfilling the funding needs (as required by Recommendation B.6).

Funding Stronger Global Coordination, Preparedness, and Response

In Chapter 4, we argued that, in addition to reinforcing national capabilities and infrastructure, it is necessary to strengthen regional and global capacities to enable better coordination and response. Among other things, we recommend the formation of the WHO CHEPR and support the establishment of the WHO CFE and the World Bank’s PEF. These three elements require the following incremental financing:

• WHO CHEPR: Although the discussion around WHO’s core funding involves considerations beyond the remit of this Commission, we recommend that the CHEPR be financed through an increment to assessed contribution, rather than via voluntary contributions, because we see the CHEPR as essential to WHO’s fulfillment of a core part of its mandate. We have not sought to develop an independent estimate of the incremental funding requirement for the CHEPR, but have taken as an estimate the 5 percent figure suggested by the Report of the Ebola Interim Assessment Panel (WHO, 2015a) and consistent with the additional funding for “preparedness, surveillance and response” in WHO’s Proposed Programme Budget for 2016–2017 (WHO, 2015b). This amounts to about $25 million per year.
• WHO CFE: We support the creation of WHO’s CFE as a highly flexible, immediately available fund of $100 million. As outlined in Chapter 4, we believe the most appropriate way of funding the CFE would be through one-off initial contributions, assessed pro rata with the core assessed contributions, in the form of either actual cash contributions or binding contingent commitments.

• World Bank PEF: We also support the creation of the World Bank’s PEF of $1 billion. As with WHO’s CFE, we see binding contingent commitments as being the most cost-effective way of funding this facility, although we recognize that such mechanisms can pose problems for some partner governments. Innovative insurance and capital market solutions could be attractive, if demonstrated to be economic and practical.

Financing Accelerated Product Research, Development, and Delivery

In Chapter 5, the Commission recommends targeting incremental spending of $1 billion per year to reinforce the global ability to respond to infectious disease threats through science. The objectives are to enhance our capacity to detect infectious disease outbreaks through better diagnostics, strengthen our ability to control such outbreaks through better containment and protection tools, and accelerate our ability to respond through faster development and deployment of vaccines and therapeutics. This differs from conventional pharmaceutical R&D, in a number of ways:

• It includes equipment, instruments, and tools, such as low-cost diagnostic kits, surveillance systems, protective equipment, and delivery mechanisms.
• It incorporates investment and innovation in product development infrastructure to facilitate accelerated clinical trials and approval processes.
• It encompasses sustainment of flexible manufacturing capacity and deployment mechanisms, because rapid scale-up of vaccine manufacture and quick delivery to the field are likely to be critical.

The figure of $1 billion is indicative rather than precise. The scope and priorities of the overall program will have to be defined by the Pandemic Product Development Committee (PPDC) we describe in Chapter 5. This will also have to take account of concurrent initiatives, such as the proposed Global Vaccine-Development Fund and AMR efforts. Yet while the $1 billion figure might be indicative, the need for significantly greater spending is definitive. Ebola revealed deficiencies in many aspects of our product armory, including diagnostics, protective equipment, therapeutics, and vaccines—and we have known about Ebola for nearly 40 years.

We anticipate that the $1 billion will comprise a mixture of pooled funding, from which contributors will delegate deployment to the PPDC, and coordinated funding, where contributors retain control over funds deployment but collaborate through the PPDC to achieve better coordination. The Commission envisions that the $1 billion for R&D could be drawn from five potential sources:

1. direct contributions from national governments, foundations, and the private sector;
2. from R&D budgets devoted to national security;
3. from existing public, philanthropic, and university R&D budgets in the health arena;
4. by catalyzing private-sector R&D; and
5. by generating new sources of private finance from outside the health care sector, such as the life insurance, travel, and tourism and meat and poultry trade sectors. Here, there is scope for exploring innovative financing solutions.

Conclusion on Financing

The Commission believes that there is a powerful argument for committing greater resources to counter the threat of pandemics. For around $4.5 billion per year, we could make the world much safer. At more than $3 billion, by far the biggest component of this incremental spending arises from the imperative to upgrade the public health infrastructure and capabilities of national health systems. We are convinced that greater investment in prevention, identification, and preparedness offers compelling returns. Most of this funding should derive from local domestic resources, both because health security should be a key priority for any government and because this will ensure long-term sustainability. However, low- and lower-middle-income countries, as well as failed and fragile states, will require international support to fill the gaps in required infrastructure and capabilities. The second largest component of the $4.5 billion is the proposed incremental $1 billion for product R&D. To have stronger weapons with which to fight new or reemerging infectious diseases, we need to step up the pace of R&D, and do so in a coordinated manner. Finally, there is the need to reinforce and refocus WHO, so that it can play a more effective leadership role, and to ensure that WHO and the World Bank are ready and able to deploy funds quickly when a crisis occurs.

REVERSING NEGLECT: THE CHALLENGE OF ACTION

Pandemics represent too big a threat to ignore. Yet the world has largely done so. Taking a hard look at what we have actually achieved in terms of prevention, preparedness, and response, it is hard to escape the conclusion that we have neglected this aspect of global security. The time has come to reverse this. Doing so will require determined leadership, funding, and collaboration. We must seize this opportunity to make the world safer.

Yet we know that political commitment to devoting resources to such a task will wane as memories of the last infectious disease crisis fade. This is why we believe global leaders should commit now to commissioning an independent report in 2017, and again 3 years later. This is how we can be held accountable for what we deliver and what we let slip.

The actions we recommend are achievable. The funding we envision remains a fraction of what is spent on other risks. A much stronger, more resilient global framework to combat the threat of infectious disease is within our reach. The challenge is whether we have the leadership to make it happen.

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