Blog

The Center for Global Development (CGD) gathered a group of experts who’ve been working on pandemics and pandemic financing. The purpose of the event was to map out the next steps for the pandemic financing agenda, and identify some specific areas for policy and political action.

Below is a repost by P4H of the original article published on the CGD’s website.

As policymakers and financiers set their priorities for 2024, we gathered a group of experts who’ve been working on pandemics and pandemic financing from a range of perspectives including epidemiology, economics, insurance, policy, and advocacy. The purpose of our event was to map out the next steps for the pandemic financing agenda, and identify some specific and meaningful areas for policy and political action.

After the compounding crises of the past few years, political leaders and publics are understandably keen to put pandemics in the rearview mirror and focus on other issues. Yet the evidence is blinking red that delaying action to improve pandemic prevention, preparedness, and response will only increase the risk of catastrophic losses―in lives and economies―given a very high likelihood of another COVID-severe pandemic in our lifetime. This blog captures key points from our discussion and lays out an agenda for action on pandemic financing in 2024 for world leaders (please watch the full event).

Pandemics are not solely global development issues but also global security issues. The economic impact of pandemics is staggering. The global economy is estimated to have incurred costs of at least $13.8 trillion up to 2024 due to COVID-19. Moreover, the loss of over 20 million lives underscores the urgency of addressing pandemics from a security perspective. Investing in pandemic prevention, preparedness, and response is not only a moral imperative but also crucial for global security.

The global community must adopt a global goods perspective rather than only a country-by-country approach to pandemic financing. Existing funding mechanisms operate primarily on a country-by-country basis, but pandemics can originate anywhere and quickly spread globally. Therefore, funding mechanisms need to prioritize global and regional outcomes rather than individual country interests, although implementation of most preparedness and response activities will typically be carried out at the country level. Investments such as those made by the Coalition for Preparedness Innovations (CEPI) in developing vaccines for various pathogens exemplify the importance of this global perspective.

A new working paper released by the Center for Global Development and the Disease Control Priorities (DCP-4) estimated epidemic and pandemic risk, to provide policymakers with a framework for prioritizing investments in pandemic preparedness. The main message is that future pandemic risk is more substantial than generally believed and dominated by respiratory pathogens.

Madhav and colleagues estimated the global average annual loss from future epidemics and pandemics to be around 2.5 million deaths. This figure, comparable to the annual mortality from lower respiratory tract infections prior to COVID-19, underscores the gravity of the situation.

Contrary to popular belief, events on the scale of COVID-19 are not once-in-a-century occurrences. In any given year, there is a 2 to 3 percent chance of a COVID-level event occurring, translating to a more than 50 percent chance over a 25-year period. Moreover, these estimates are conservative, as they only consider a subset of potential pandemics, excluding other pathogens and factors such as the increasing frequency and severity of events caused by zoonotic viruses, non-natural sources of risk like bio-error and bioterror, and potential non-mortality impacts, such as morbidity or societal disruption.

Strategic investments in pandemic prevention, preparedness, and response can substantially reduce this risk. Despite notable progress, current monitoring infrastructure (for so-called ‘pandemic surveillance’) falls short of providing comprehensive data flows necessary for timely and informed decision-making.

Continuous monitoring systems and diagnostic capacity must be strengthened globally, with investments aligned with bolstering health systems to ensure resilience. Emerging technologies, such as wastewater and genomic surveillance, offer promising avenues for enhancing early warning systems and averting potential pandemics.

Additionally, prioritizing prevention initiatives, particularly targeting geographical hotspots, may also have particularly high returns that accrue globally rather than to specific countries, necessitating investment as global public goods. It is also key to align incentives to reduce the penalties of countries which report.

The good news is that leaders have taken some steps forward to improve the pandemic financing landscape in the wake of COVID-19 to address the global security threat posed by pandemics. Reflecting on the findings of the report of the G20 high-level independent panel on financing in July 2021, one key initiative that emerged was the creation of the Pandemic Fund, established by the G20 in late 2022 to help close the significant gap in external financing required for low- and middle-income countries (LMICs) strengthen their capacities for pandemic prevention and proactive preparedness.

Although the Fund is still in its infancy, it has shown considerable promise, with demand for its grants far exceeding available resources. Yet to date, it has attracted only $2 billion in pledges against a target $10.5 billion annual assessed need—literally equivalent to pennies or a rounding error when considering the trillions of dollars of economic losses as a result of the COVID-19 pandemic. The additional grant financing that the Fund can provide is particularly crucial for those countries facing severe fiscal constraints and debt distress exacerbated by the pandemic-induced economic downturn. The Pandemic Fund is currently in the process of preparing its medium-term strategy and is expected to hold a pledging moment later this year alongside the G20 meetings in Brazil. Existing sovereign contributors—starting with the G7—can and should commit much more to the Fund, while more countries, philanthropies, and the private sector should join and invest in this global public good.

In addition to investing in preparedness and prevention, the global community still needs to prioritize day-zero financing, which refers to funding that can be activated at the onset of a deadly outbreak with pandemic potential. The early and swift release of financing is critical in pandemic response, as delays can significantly impact the effectiveness of interventions. Delays in vaccine purchasing during COVID-19 were partly responsible for the slow rollout of vaccines in many LMICs, which in turn contributed to prolonging the pandemic and its negative health and economic impacts and even the development and spread of variants.

The design of any future surge pandemic financing mechanism must be informed by learnings from past experiences and principles for effectiveness. Despite the many justifiable critiques and design flaws of the Pandemic Emergency Financing Facility of the World Bank, which was set up in 2016 in response to the lessons learned from Ebola in West Africa, it remains to date the only large-scale, sovereign-level pre-arranged financial instrument ever developed to respond to severe epidemic and pandemic events in World Bank International Development Association-recipient countries. Its wholesale discontinuation in 2021 left a gap in the financial architecture for response in terms of pre-arranged finance. Early-phase analysis conducted by The Centre for Disaster Protection suggests that more than 85 percent of epidemic response finance in recent years has been channeled through instruments not dedicated specifically to pandemic and epidemic response nor pre-arranged ahead of an outbreak.

In 2023, the G7 Health Ministers’ communiqué emphasized the importance of surge financing and proactively addressing future pandemic risk, with a proposal for a new three-layer financial approach for early-stage containment of pandemics to deploy funds quickly and efficiently without accumulating idle cash, similar to mechanisms in disaster finance. G20 leaders have also agreed that an early surge finance mechanism is necessary, and 2024 is the time to get it done.

To ensure the effectiveness of any new surge finance mechanism, however, several principles must be upheld. First, funds need to be activated early, ideally within days and weeks rather than months, to initiate early response measures and reduce transmission. This activation process should be pre-agreed between providers and recipients of finance and could resemble similar trigger mechanisms used in the insurance industry, signaling the occurrence of an epidemic event and providing proof of loss or sustained transmission. These triggers need to be undisputable, transparent, and reliable in the long-term to be an effective signal for early response.

Second, building an evidence base is essential to understand and calculate the impact of early finance and identify the best-positioned interventions, and more work is needed in this area. Finally, there is the difference between commitments and disbursements: Response finance mechanisms can only be viable if proper national-level mechanisms and plans are first established to hold and absorb finance dedicated to response. Better alignment is needed around reliable conditions for funds release in advance, as well as the conditions for activation and the coordination mechanisms between international actors.

To strengthen pandemic risk financing, policymakers and financial leaders should also ensure that the existing financial instruments are fit for purpose and better utilized, starting with the multilateral development banks (MDBs). Pandemic preparedness should be a top priority for financing from the World Bank’s International Development Association (IDA21), which is the world’s largest source of concessional financing for low-income countries and is asking donors to contribute to a record-high 21st replenishment this year.

To strengthen pandemic risk financing, policymakers and financial leaders should also ensure that the existing financial instruments are fit for purpose and better utilized, starting with the multilateral development banks (MDBs). Pandemic preparedness should be a top priority for financing from the World Bank’s International Development Association (IDA21), which is the world’s largest source of concessional financing for low-income countries and is asking donors to contribute to a record-high 21st replenishment this year.