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The World Bank and Money for Flu

In response to:

Flu Warning: Beware the Drug Companies! from the May 12, 2011 issue

To the Editors:

In her article “Flu Warning: Beware of the Drug Companies” [NYR, May 12], Helen Epstein writes that “some governments even took out loans worth tens of millions of dollars from the World Bank’s Avian and Human Influenza Facility to purchase [Tamiflu].” This is not true. In fact, no funds from the AHI Facility can be used to buy antivirals. This provision applied because of the very modest size of the AHI Facility (which had $127 million for help with pandemic prevention, preparedness, and response in more than a hundred developing countries), relative to the expense of the antivirals (up to $15 per dose).

Also, “panic” is said to have been encouraged because in the spring of 2009 “World Bank economists suggested that the total cost of such a pandemic—counting lost business and increased health spending—could even reach 4.8 percent of global GDP.” This is only partially true. The World Bank first published these estimates in June 2006 and then updated them in September 2008, well before the H1N1 (2009) flu virus emerged. No “panic” ensued.

The World Bank paper describes impacts ranging from 0.7 percent to 4.8 percent of GDP depending on the severity of a flu pandemic and notes that other independent analysts have reached similar conclusions. The paper also shows that only a very small part of these costs would be health spending, since impacts in other sectors would predominate. Luckily, the economic impact of the H1N1 (2009) flu pandemic was very small. But unfortunately, this will not necessarily be the case with the next pandemic. A severe scenario, costing the world $3 trillion, remains a possibility.

Ms. Epstein argues that much money was “wasted” on pandemic preparedness. This raises the question of how much to spend to prevent and to prepare for a low-probability catastrophic disaster. Pandemic preparedness has much in common with disaster preparedness more broadly. Thus, regular exercises in business continuity can be enormously helpful in the event of major earthquakes, floods, hurricanes, or terrorist attacks. Most countries, businesses, and households are underprepared, which means that a disaster will be more costly than it had to be.

Current spending on pandemic prevention (through surveillance and control of the virus at its animal source in developing countries) is about five thousand times less than the potential global impact of a severe pandemic. This effort is grossly inadequate in light of the potential costs, because we collectively underestimate the odds and systematically underspend on prevention. Money is “wasted” on prevention only when the expected benefits are small relative to the costs.

The World Health Organization (WHO), the Food and Agriculture Organization (FAO), the World Organization for Animal Health, and the World Bank have calculated that external assistance to developing countries of about $1.6 billion per year would bring disease surveillance and control capacity to a minimum standard that would thwart the spread of animal-borne pathogens, which damage livelihoods and health of the poor in developing countries and trigger pandemics that threaten all. This amounts to about $1.30 per person in rich countries. Rich-country citizens would probably pay this price to protect themselves and their families, seeing it as very low-cost insurance.

Finally, the risks from animal-borne diseases that also infect humans are rising because of growing densities of livestock in developing countries and incursions of people into wildlife habitats. If readers may have understood from the article that too much has been spent on prevention and preparedness, this would have been a most unfortunate error.

Olga B. Jonas
Coordinator, Operational Response to Avian and Human Influenzas
The World Bank

Washington, D.C.

Helen Epstein replies:

According to documents available on the World Bank’s website, in 2009 and 2010, the agency lent Argentina $24 million for the purchase of Tamiflu and Mexico $2.6 million (plus $5.8 million for Zanamivir, a similar antiviral drug produced by GlaxoSmithKline).1 If this money didn’t come from the bank’s Avian and Human Influenza Facility, I apologize for the error. But the money came from somewhere in the bank, and was therefore worth reporting.

The bank first published estimates of the cost of an influenza pandemic in 2006, but reissued this estimate in 2009, after H1N1 appeared.2 It was this second estimate that was widely reported in the press, contributing to the panic that did indeed ensue: overflowing emergency rooms in New York, a three-day shutdown of Mexico; border nurses screening arrivals in airports from China to Africa, etc.

In “Flu Warning” I certainly don’t attribute this “panic” to the World Bank’s cost statement alone. It was sparked by statements from the World Health Organization and the US Centers for Disease Control.

The problem with our current approach to disaster preparedness is that it prepares us for the wrong things. In June 2009, when the WHO declared that a “pandemic” of H1N1 was underway, outbreak investigations had already shown that the virus was mild. Why were governments and international agencies like the World Bank so well prepared for this relatively innocuous threat, and yet remain so poorly prepared for such real disasters as the financial crisis, global warming, and looming worldwide shortages of food and water? This is just conjecture, but perhaps when profit-generating technologies like Tamiflu are presented as the solution, they prepare; when real political will is required, they argue and prevaricate.

  1. 1

    Emergency Project Paper on a Proposed Loan in the Amount of US$491 Million to the United Mexican States for an Influenza Prevention and Control Project, November 4, 2009; and Emergency Project Paper on a Proposed Loan in the Amount of US$229 Million to the Argentine Republic for an Emergency Project for the Prevention and Management of Influenza Type Illness and Strengthening of Argentina’s Epidemiological System, January 26, 2010. 

  2. 2

    Global Development Finance 2009: Charting a Global Recovery (The World Bank, 2009), p. 32; available at siteresources.worldbank.org/INTGDF2009/Resources/gdf_combined_web.pdf. 

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