Calls for more money as the threat looms ever larger

Nov 11th 2005
From The Economist Global Agenda

At a meeting in Geneva, development banks and health agencies have called for much more money to respond to the outbreak of bird flu and the threat of a human pandemic. Rich countries are working on their own plans in case the co-ordinated global response fails

IN RECENT weeks, the world’s public health officials have been afflicted with a sort of pandemic of meetings about bird flu. Much of this culminated, this week, in a meeting of officials from nations around the world at the headquarters of the World Health Organisation (WHO) in Geneva. Plans were hatched for how best to respond to the threat from a virus that is threatening poultry around the world and which, it is feared, may trigger a pandemic of human flu. And money was discussed. Lots of it.

The meeting revealed a broad consensus that the best short-term strategy was to tackle and eliminate the animal disease. Already, 150m birds have been culled around the world. Countries such as Japan and Malaysia have reacted quickly to eliminate outbreaks of highly pathogenic bird flu and have now been declared free from virus. However, poor countries in Asia such as Vietnam, Cambodia, Thailand and Laos have neither the veterinary facilities for surveillance, the laboratories to test samples, nor the ability to respond swiftly to eradicate outbreaks. It is increasingly clear that the world’s richer nations will have to pay for these countries to raise their capacity in these areas.

While everyone seems to agree that the best strategy for dealing with the threat of a human pandemic is to control flu in birds, little clarity emerged in Geneva on how money would be allocated. The World Bank said it would create a programme to make $500m available to countries in South-East Asia struggling to contain the outbreak; overall, the bank believes that up to $1 billion will be needed over the next three years to handle the poultry crisis. In addition, the Asian Development Bank said it could commit at least $470m (as a mixture of grants and loans) to support Asia’s response—a sum that also includes money to help countries stockpile drugs.

In the short term, international agencies such as the WHO, the Food and Agriculture Organisation (FAO) and the World Organisation for Animal Health (OIE) say they need about $35m to respond. They are worried that some countries appear to be overwhelmed by the disease. There is also great concern that flu might be carried to poor African nations by migrating birds. It has already spread to the edges of the European Union: last month, the deadly H5N1 strain of the virus was confirmed in poultry in Turkey and Romania. And on Friday, Kuwait announced the first confirmed case in the Middle East.

There is likely to be more clarity in January as to how all this money would be allocated, at yet another bird-flu meeting. However, some overlapping requirements are already emerging. The FAO and OIE have for some time had a largely unfunded global strategy for fighting avian flu. As the disease spreads to new countries, the costs of this plan are spiralling—from $100m earlier this year to $500m now. So far, less than a tenth of this has been made available. Instead, much of the money being discussed by the big international lenders will go directly to individual countries.

More information also emerged this week on the cost-effectiveness of such spending. Milan Brahmbhatt, lead economist for the East Asia and Pacific region at the World Bank, pointed out that while there were huge uncertainties over the severity of any future flu pandemic, the disruption caused by the SARS virus in 2003 led to $200 billion of economic losses in one three-month period. Because a human pandemic could easily cause disruption lasting a year, reports suggest it would cost some $800 billion in global losses; America alone could suffer losses of $100 billion-200 billion from a pandemic that made 50m people ill and killed between 100,000 and 200,000. The Asian Development Bank reckons that a demand shock from a severe outbreak would cause up to $283 billion in damage to Asia’s economies and could tip the world economy into recession.

Although the disease is currently a threat mainly to poultry, many are worried about the supply of anti-viral drugs and vaccines for a human pandemic. Some countries are reported to be stockpiling enough anti-virals for 25% of the population, while others have little or no access to such medicines because of their high costs or shortage of stocks.

So far, 50 countries have placed orders with Roche, a Swiss company, for its drug Tamiflu, which is one of two anti-viral treatments thought to be effective in protecting humans from bird flu. Margaret Chan, assistant director-general of communicable diseases at the WHO, hinted on Wednesday that further funding for new stockpiles of anti-virals was likely to be announced soon, including additional money from the World Bank.

Although the supply of Tamiflu currently outstrips demand, Roche is ramping up production in anticipation of a sharp rise in orders. This year, the company plans to produce 55m doses, a tenfold increase on its capacity in 1999; this is expected to rise to 150m in 2006 and 300m in 2007. Although Roche is delivering the drug on a first-come-first-served basis, there have been some notable exceptions to this rule: the company was quick to send tens of thousands of packs to Indonesia, Turkey and Romania during their recent outbreaks.

So far, Roche has been approached by 150 companies and countries that are interested in working with the firm to produce Tamiflu. Most, though, only have the capability to put the active ingredient into capsules, as opposed to making it themselves. Although there have been reports that Roche will supply ingredients and know-how to allow Vietnam to manufacture the drug, in fact the ongoing negotiations are only about encapsulation. Of the 64 people who have so far died of bird flu, 42 were infected in Vietnam.

Roche says it wants to select partners by the end of November to help it speed up its own processes and add production capacity. Some countries and companies have said they will reverse-engineer and produce Tamiflu without help from Roche; it emerged this week that Chinese government scientists are trying to develop their own version of the drug. A Roche spokesperson said on Wednesday it would do everything it can to avoid this, and that it was “not on a collision course with any government in the world”. The company currently charges governments in rich countries €15 ($18) per course of ten Tamiflu tablets, and those in poor countries €12. It says this is well below its normal price, and rules out further reductions.

The big question, though, is how prepared the world’s governments want to be. The level of 25% (of population covered by stockpiles) is based on previous pandemics that suggest about a quarter of all people would get sick. Some countries have ordered more than this so that emergency workers can take the drug continuously to prevent them catching the virus.

Last week, the United States revealed that it would spend $7.1 billion preparing for a flu pandemic. Much of this money will be spent on buying drugs, while only $250m will be made available for foreign assistance. Such a wide disparity between the finance available for national and international programmes is by no means unique. While the most rational way to tackle the problem is to focus resources on stamping out highly contagious bird flu in a co-ordinated global way, rich countries are obliged to draw up their own fall-back plans in case such a strategy fails. However, the costs of responding at home are far higher than elimination at source.

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