Rubin Sept 2806

Overview of the Congressional Budget Report of December 2005 HARVEY RUBIN, M.D., Ph.D. Director, Institute for Strategic Threat Analysis and Response University of Pennsylvania rubinh@mail.med.upenn.edu

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A useful definition of national security

• That pandemics are now recognized as national security threats reflects the dramatic change in theories of national security.

Richard Ullman, of Princeton University, observed in Redefining Security in 1983 that national security threats are: “actions that can degrade the quality of life for the inhabitants of a state or significantly narrow the range of policy options available to the government or private citizens of a state” • This broadened notion of national security is now commonplace The Global Infectious Disease Threat and Its Implications for the United States, National Intelligence Council, 2000 The Darker Bioweapons Future--“the effects of engineered biological agents could be worse that any disease known...” unclassified CIA document, 2003

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Pandemic realities • Approximately 40 million people worldwide are infected with HIV, which killed 3.9 million people in 2005 • In Russia, Vladimir Putin just recommended financial incentives to citizens to increase fertility because the death rate outstrips the birth rate. While cardiovascular deaths lead the list, the incidence of HIV/AIDS and tuberculosis are on the rise. In recognition of this demographic nightmare, Russia will make the prevention and control of infectious diseases one of the priorities of the upcoming G8 summit in St. Petersburg

• Some lethal pandemics are still not as well known to the general public. For example, an ongoing cholera pandemic started in Indonesia in 1961 is causing close to 120,000 deaths per year.

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Pandemic realities • Each year 300 million cases of malaria kill two million people • An estimated 3% of the world’s population - 170 million people are chronically infected with hepatitis C virus. About four million people are newly infected each year, 80% of whom will progress to a chronic infection associated with cirrhosis in about 20% and liver cancer in about 5% • One third of the world is infected with the bacterium that causes tuberculosis with 10 million cases every year accounting for two million deaths.

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Daunting challenge of the 21st century •

The problem calls for solutions that integrate new ideas in science and technology with social and political realities

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involves optimizing the tradeoffs in the dense interplay between – international security, – tracking, preventing, detecting, and treating naturally occurring infectious diseases on the global dimension, – the potential for nefarious use of existing or newly engineered biological agents, – the need for vigilance in laboratory bio-safety, – maintaining and enhancing the positive role of modern molecular biology on the economy and health of the developing world, – stimulating the creation and open dissemination of new knowledge

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It is a vexing problem indeed raised quite clearly in the 2006 National Security Strategy: “Public health challenges like pandemics (HIV/AIDS, avian influenza) ... recognize no borders. The risks to social order are so great that traditional public health approaches may be inadequate, necessitating new strategies and responses (italics added).�

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Two sets of model parameters 1. A severe pandemic, similar to the 1918-1919 episode, that could infect 90 million people in the United States and cause the deaths of more than 2 million

2. A mild pandemic that resembled the 1957 and 1968 outbreaks, which might be expected to infect 75 million people and cause roughly 100,000 deaths in the United States.

Both scenarios presume that effective vaccines are not available in time to significantly alter the pandemic’s course.

CBO Dec 2005

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“Shock� to the economy

1. the demand- and supply-side effects in the short run 2. longer-term supply-side effects

CBO Dec 2005

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Supply side short-term effects • The most immediate impact of a pandemic would be a surge in demand for medical services.

• During a severe pandemic, hospitals, clinics, and doctors’ offices would be overwhelmed, and surveillance would be difficult.

• Health care workers would be exposed to the disease, resulting in further strains on the health care system’s capacity, as some workers became sick and others stayed home to care for family members or to avoid becoming ill.

• Care for nonacute health problems would be sharply curtailed.

CBO Dec 2005

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Supply side short-term effects • As the pandemic progressed, international travel would dramatically decline, as people avoided avian flu “hotspots” and governments restricted travel.

• Complete cessation of domestic and international air travel would be unlikely • As a point of reference, at the peak of the SARS outbreak in April 2003, airline passenger arrivals in Hong Kong declined by nearly two-thirds relative to their levels in March CBO Dec 2005

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Supply side short-term effects • • •

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In all likelihood, people would quarantine themselves and their families by staying at home more.

Nonessential activities that required social contact would be sharply cut, leading to significant declines in retail trade.

People would avoid public places, such as shopping malls, community centers, places of worship, and public transit.

Attendance at theaters, sporting events, museums, and restaurants would decline.

It seems likely that many schools would close, and even if they did not, attendance would fall dramatically as parents kept their children at home.

Large-scale school closings would lead to a spike in workplace absences because parents would stay home to care for their children even if they were not sick.

CBO Dec 2005

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Supply side short-term effects • The general slowdown in economic activity would reduce gross domestic product (GDP) • Business confidence would be dented, the supply of labor would be restricted owing to illness, mortality, and absenteeism spurred by fear of contracting the disease • Supply chains would be strained as transportation systems were disrupted, and arrears and default rates on consumer and business debt would probably rise • It seems quite likely that the stock market would fall initially and then rebound later, as it did in Hong Kong during the SARS episode.

CBO Dec 2005

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Supply side short-term effects • Effects Under a Severe Pandemic Scenario. To calculate the supply-side impact of a severe pandemic, CBO combined a rough estimate of the loss of employee work days with an estimate of average productivity per worker.

For most sectors of the economy, CBO assumed: • on average, 30 percent of the workers in each sector would become ill and of those workers, 2.5 percent would die • those who survived would miss three weeks of work, either because they were sick, because they feared the risk of infection at work, or because they needed to care for family or friends CBO Dec 2005

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Supply side short-term effects

For the farm sector, where the work generally requires less social interaction CBO assumed the impact would be milder: • one-tenth of workers would be affected • survivors would miss only a single week of work • the case fatality rate would be the same.

CBO Dec 2005

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Supply side short-term effects

CBO Dec 2005

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Supply side short-term effects • CBO used average productivity per worker, by sector, for 2004 to compute the impact on GDP of the employment lost to the pandemic • Under the assumptions detailed above, GDP would be more than 3 percent lower in the year in which the pandemic occurred

CBO Dec 2005

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Demand side short-term effects • CBO examined GDP by industry and assumed different declines in demand for different industries, based loosely on Hong Kong’s experience with SARS. • Those assumed effects were based on judgments about the degree of social interaction required in different industries and are extremely rough.

• CBO assumed that a pandemic’s effects would be especially severe among industries whose products required that customers congregate; examples include the entertainment, arts, recreation, lodging, and restaurant industries.

• Other industries, including retail trade, were assumed to suffer a smaller decline in demand, • One industry, health care, was assumed to experience an increase in demand because of the surge in demand for medical care.

CBO Dec 2005

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CBO Dec 2005

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Demand side short-term effects • The estimated demand-side impacts sum to about 2 percent of GDP • Combining them with the supply-side impacts implies about a 5 percent reduction in GDP in the year of the pandemic CBO Dec 2005

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Long-Term Effects

The most important long-term impact of a pandemic is the reduction that would persist in the population and in the labor force after overall demand in the economy returned to normal.

The effects of that drop in the population would depend, in part, on the characteristics of the outbreak.

– If, for example, mortality was concentrated among the very young and the very old, then a pandemic would have relatively small effects on the subsequent growth of GDP. – By contrast, if the disease struck workers who were in their prime working years more heavily, then the effects on GDP growth during the years following the pandemic would be more significant.

– A one-time reduction in the labor force would raise the ratio of capital to labor and lower the rate of return to capital, thus slowing the pace of capital accumulation and GDP growth for many years.

– However, under other types of analyses that include the influence of human capital, reduction in the labor supply would encourage investment in human capital, which would tend to speed the growth of per-capita output during the transition period, when the economy was recovering from the shock.

CBO Dec 2005

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Long-Term Effects •

In 2004, the labor force totaled 147.4 million people. Under the assumption of an attack rate of 30 percent and a case fatality rate of 2.5 percent—the same assumptions applied to the population as a whole—a severe pandemic would cause the deaths of more than 1 million labor force participants, or about 0.75 percent of the labor force • Since growth in the labor force averaged 1.6 percent during the 1948-2005 period, losing 0.75 percent of the labor force would be equivalent to a pause of one-half year in the growth of the work force.

• Under the assumptions for infection and mortality associated with the mild-pandemic scenario—an attack rate of 25 percent and a fatality rate of just over 0.1 percent—the number of workers killed would be 50,000, or 0.03 percent of the labor force.

CBO Dec 2005

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Current Policies and Options for the Future • Preparedness for a flu pandemic lies within the nation’s overall capacity to address public health emergencies. .

• Options for addressing potential pandemics in the near and long term fall into four broad categories: – detecting and controlling viruses at their source – developing and using vaccines to prevent diseases – developing and using treatments with antiviral drugs and other medications – building the capacity of the health care system (facilities, equipment, and people) to deliver care CBO Dec 2005

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Problems in the Market for Influenza Vaccine

• Planning, production, and distribution of influenza vaccine follow an annual cycle.

• The CDC and the WHO run flu surveillance programs to monitor flu internationally, culminating in a decision about which strains of flu should be included in that year’s seasonal vaccine.

• The WHO Collaborating Centers for Influenza, the FDA, and other agencies’ laboratories prepare candidate high-growth seed strains and provide them to manufacturers licensed by the FDA. • The manufacturers report back to the WHO Collaborating Centers and the FDA on the candidates’ suitability for vaccine production.

• Sometime between February and March, FDA announces the selected strains to be included in the vaccine for the upcoming flu season.

• Manufacturers must then produce enough vaccine for the market by October to November (the optimal time for vaccinations), using a process that can take six months or more and is based on growing the viruses in fertilized chicken eggs.

CBO Dec 2005 http://www.istar.upenn.edu

Problems in the Market for Influenza Vaccine •

Experience in both the 2000-2001 and 2004-2005 flu seasons makes it clear that much can and does disrupt that annual cycle.

– lengthy egg-based manufacturing process means that production cannot be scaled up quickly if flu vaccine demand is higher than predicted.

– demand is hard to predict and can depend on such things as the timing and media coverage of the current flu season and the severity of previous flu seasons – people may also choose not to get vaccinated if they believe that everyone with whom they come in contact will be vaccinated—the “free rider” effect CBO Dec 2005

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Problems in the Market for Influenza Vaccine – flu vaccine cannot be stored from one flu season to the next because flu strains change from year to year; if manufacturers supply more vaccine than demanded, the excess vaccine is destroyed – the manufacturing process is prone to contamination, which will cause vaccine to be withheld from the market – the government accounts for less than 20 percent of the market for flu vaccine – in the event of shortages, the CDC recommends that vaccine be given only to people in priority groups – if market incentives were allowed to determine the allocation of vaccine during periods of scarcity, manufacturers would have a greater incentive to increase their production capacity.

– people in priority groups who were unwilling to pay enough might not get vaccinated “Because of those risky market conditions, few manufacturers of flu vaccine serve the U.S. market, which makes that market vulnerable to supply disruptions.”

CBO Dec 2005

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We propose a new approach

International Compact for Infectious Diseases 1) Establishment, maintenance and monitoring of international standards for surveillance and reporting of infectious diseases using advanced information technology to ensure timeliness, interoperability and security; 2) Establishment, maintenance and monitoring of international standards for best laboratory practices; 3) Expansion of capabilities for the production of vaccines and therapeutics expressly for emerging and reemerging infections; and 4) Establishment, maintenance and monitoring of a network of international research centers for microbial threats

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Co-signers • • • • •

• • • • • • • • • • •

Harvey Rubin, M.D, Ph.D., Professor of Medicine, Microbiology and Computer Science, Director, University of Pennsylvania Institute for Strategic Threat Analysis and Response (ISTAR). rubinh@mail.med.upenn.edu Martin J. Blaser, M.D., Frederick H. King Professor of Internal Medicine, Chair, Department of Medicine, Professor of Microbiology, New York University School of Medicine William W. Burke-White, Assistant Professor of Law, University of Pennsylvania, Member, Government of Rwanda, Constitutional Commission, Member, International Criminal Tribunal for Yugoslavia, The Hague.

Arturo Casadevall, MD, PhD. Professor, Medicine, Microbiology & Immunology, Chair, Department of Microbiology & Immunology, Leo and Julia Forchheimer Professor of Microbiology & Immunology Abdallah S. Daar D.PHIL(OXON), FRCP(LON), FRCS(ENG.&ED.), FRCSC, FRS(C). Professor of Public Health Sciences and of Surgery at the University of Toronto, Director of the Program in Applied Ethics and Biotechnology, co-Director of the Canadian Program on Genomics and Global Health and Director of Ethics and Policy at the McLaughlin Centre for Molecular Medicine.

David Franz, DVM. PhD, Senior Biological Scientist, Midwest Research Institute and Director of the National Agricultural Biosecurity Center at Kansas State University Sir Lawrence Freedman, Professor of War Studies and Vice Principal (Research), King's College London Malcolm Gillis, PhD. Zingler Professor of Economics and University Professor, Rice University Manfred S Green MD, PhD. Director, Israel Center for Disease Control , Professor of Epidemiology and Preventive Medicine in the Sackler Faculty of Medicine at Tel Aviv University Dr. Green’s views do not necessarily reflect the views of the Israel Ministry of Health.

Phillip A. Griffiths, PhD. Professor of Mathematics and Former Director, Institute for Advanced Study, Princeton NJ. J. Tomas Hexner, MBA. Director Science Initiative Group. Cambridge, Massachusetts Chung W. Kim, PhD. Director Emeritus, Korea Institute for Advanced Studies, Emeritus Professor, Physics and Astronomy, Johns Hopkins University Stuart B. Levy M.D., Professor of Molecular Biology and Microbiology and of Medicine and the Director of the Center for Adaptation Genetics and Drug Resistance at Tufts University, School of Medicine, Boston, Massachusetts Adel Mahmoud M.D. PhD., President of Merck Vaccines (retired).

Erwann Michel-Kerjan, PhD., Managing Director of the Risk Management and Decision Processes Center at the Wharton School, University of Pennsylvania Peter A. Singer, MD, MPH, FRCPC , Co-Director of the Canadian Program in Genomics and Global Health; Senior Scientist at the McLaughlin Centre for Molecular Medicine; Professor of Medicine at University of Toronto and University Health Network; and a Distinguished Investigator of the Canadian Institutes of Health Research.

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