Financing - a critical dimension for a Pandemic Agreement

This week the next INB meeting starts in Geneva. A key question will be around financing for pandemic preventions, preparedness, and response. Money always matters and money is power. The progress made in implementing the Paris Agreement and the climate convention underscores the pivotal role of financial resources in enabling implementation and securing political agreements. The same will be true for a Pandemic Agreement.

Critical questions arise: What should financial resources be intended for? Who shall bear the financial burden? Who oversees and controls the resources? What are the best options?

Before delving into these questions, it's crucial to ask why we should invest in pandemic preparedness and maintain rapidly available surge resources to cover the costs of the next pandemic.

The financial rationale is straightforward. The Covid-19 pandemic incurred global costs of at least USD 3 trillion in direct and indirect expenses. To be prepared with surge funds for next time, an easily accessible reserve of USD 50-100 billion is deemed necessary, with an estimated additional annual requirement of USD 10-15 billion for promotion and prevention. While this might seem substantial, compared to the cost of the Covid-19 pandemic, it should present a compelling investment case.

Regrettably, many governments and finance ministers worldwide seem more inclined to wait for the next pandemic than creating the right financial structure now and invest in prevention to avert it. This political reality often leads to overlooking recent devastating pandemics, as voters prefer to forget rather than advocate for necessary reforms and investments. There is a cynical attractiveness in providing forceful and immediate resources during a crisis, rather than proactively preventing one while managing another ongoing crisis.

Acknowledging these challenges, there is a strong case for action, especially in the ongoing negotiations for the potential pandemic agreement, presenting both opportunities and a need for some careful considerations.

What to finance?

The primary needs revolve around prevention, preparedness and readily available response resources for the next pandemic. However, defining the boundaries of what to include is challenging.

Investing in prevention is crucial, aiming to swiftly detect and contain future disease outbreaks with pandemic potential. Some considerations

Ø  Necessary national capacities as defined by the International Health Regulations (IHR). But are they enough? The experience from the Covid-19 pandemic clearly showed that that was not the case.

Ø  Taking a ONE health approach is promoted by many – this means investing not just in the health sector but also in agriculture and environment.

 Ø  Investing in social safety nets in societies at large – the outcome of the Covid-19 pandemic clearly showed us the importance of access to health services (UHC) but also the possibility to stay at home from work when you were sick without losing your salary.

When we are faced with the next pandemic substantive surge and response resources will be needed of different kinds.

Ø  Public health and Medical Countermeasures (including scaling up public health advice and communication, protective equipment, diagnostics, vaccines, treatments etc)

 Ø  Increased cost for health care and health care workers.

 Ø  Decline in trade and business resulting in need to providing safeguards for people losing their jobs as well as government with less strong financing losing revenues.

To this comes the direct costs for the convention, including the secretariat and COP, which should be covered similarly to the tobacco convention.

Who should pay?

Given that a pandemic is a global health treat and crisis the default strategy is that the needed resources need to come from aid and development budgets. There are some strong arguments against that position.

The latest pandemic affected high income countries more in terms of direct health impacts and their financial costs at large were also very high in absolute terms. Relatively seen, low- and middle-income countries suffered more economically and saw substantial indirect health effects. Without further discussions or details one can agree that a pandemic is global concern and not something affecting only LMIC.

It is also widely agreed that the domestic resources are the first alternative. For HIC it is a given but also in LMIC the relative importance of ODA is and should decline. But even more important is that to prevent and manage the next pandemic is not primarily a development and aid issue but a global health security and common goods and interest matter.

Options,  

1.       all countries investing domestic resources in prevention now and have a plan for how to quickly mobilise resources in the future when the next pandemic comes. 

 2.       an international finance modality (“insurance”) where ALL governments contribute based on ability to pay (a scale of assessment) with two windows for complementary resources. One, for providing additional resources countries who do not have the sufficient domestic resources to invest in prevention now but with the requirement of increased domestic resources as well and two, to have major response resources for the first 100 days ready to invest in development, procurement, and access to e.g. MCM, resources for health services and safety nets.

 3.       The fall back and unfortunately most likely option will be that the source of financing will be ODA.

What exist today?

There are several existing instruments and suggested modalities or relevance and to learn from both in the health sphere and beyond. During the informal WHO/INB briefing sometime back three structures were presented as points of references.

Ø  The Global Environmental Facility (GEF). Established 30 years ago. Serves as the financial mechanism for four international conventions. Has its own secretariat and board but also links and directions from the COP’s for the conventions. Financed through voluntary contributions and replenishment rounds. Hosted and managed by the World Bank. Funding based on country allocations and country requests. Relevant as a point of reference for what is needed for the pandemic convention. Does not fund PPR today and is not an option for doing so but as a point of reference.

 Ø  The Pandemic Fund. Established 1 year ago at the US initiative. Financed through voluntary donations (aid). Totally raise around USD 2 billion this far. Dominated by the US and EC. Board modelled on the board of the GFATM. Struggling with similar challenges in terms of the relative influence for LMIC visa vi the donors. Secretariat hosted by the World Bank but heavily influenced by WHO. WHO also chairs the Technical Advisor Committee who advice on priorities and approval of funding proposals. WHO is the implementing partner for 12 of 19 projects approved in the first round. (conflict of interest?).

 Ø  The World bank group is also a major funder of health but mainly through loans at different conditions (only 7% grants). Business model is based on country envelops and countries deciding on priorities. The Bank has an important role to play also beyond the health sector and in time of economic crisis. As has IMF. At the WHO/INB briefing nothing was mentioned by the representative from the bank about on-going internal reforms which will enable to bank not only to fund through the country modalities but also to fund global common goods such as vaccines in a time of a crisis.

At WHO the continuous emergency fund exists but it is relatively small and more of specific WHO instrument for early and rapid funding in all types of emergencies.

Options for the INB process

First there will be a need for budget for the Secretariat, the COP, advisory functions similar to what exist for the Tobacco convention. The signatories of an Agreement should pay according to a scale of assessment.

Second is the question how to also make financing for the implementation of an Agreement available. Options

1.       A new additional funding mechanism directly linked to the convention as suggested in the draft text. The suggested scope is vague, broad and all-inclusive and the sources of financing a combination of annual contributions from the parties to the convention and voluntary contributions. The Fund would be managed and controlled by the Secretariat (i.e. WHO). The INB text also indicates that this fund would cover the costs of the Secretariat.

 2.       Restructure the Pandemic Fund so it becomes more linked to the convention like the GEF. Some member states would most likely not like this but not impossible. Would be like the GFATM based on voluntary contributions and ODA mainly.

 3.       A Financing modality as suggested by IPPPR and the G20 Finance high-level  panel. Like an insurance where all countries who would like to benefit contributes but according to ability. Would mostly follow a UN scale of assessment model. Resources both for prevention and first 100 days response. The present Pandemic Fund could potentially be transformed into such modality.

 4.       Relying more on the World bank, the regional development banks and IMF as the key IFIs

 5.       A combination of some of the above options but coordinated through a platform and PPR finance coordinating group.

My reflections

Health landscape is complicated with too many organisations competing for increasingly more limited ODA resources. So, the option of creating a new fund as suggested in the INB text is less likely to be accepted and not the best option.

A priority should be to make the funding for Pandemic Preparedness and Response not an ODA issue (compare with e.g. the huge UN budget for peace keeping operations). The financing needs to be seen as a priority for the Ministries of Finance to ensure health security and stability in the same way as measures have been put in place to ensure global financial stability.

The most realistic option would be to transform the Pandemic Fund either according to option 3 above (preferred) or option 2 and have a separate more limited budget for the Secretariat and the COP.

Finally, it is important to see that many LMIC refers to and rely on WHO as here they have “one country one vote” in terms of formal decision making and power. WHO very deliberately use this in terms of positioning themselves as the best option for also managing the resources (both financial and eg MCM).

There are two main problems with the WHO option and approach. First, WHO is not set up for managing financial support/large contributions to countries at all (nor supplies). WHO is and should be technical agency providing technical support. Mission creep dilutes the quality of that work. Second, the reality is also that money is still power and also a responsibility that the countries who will provide most of the financial resources will not abdicate from (compare also to the WB and IMF)