Mauricio Cárdenas on designing and funding future pandemic responses

By Mauricio Cárdenas

The world can’t afford another pandemic—literally. The global economy contracted by 3.5% in 2020, and is forecast to forego $22trn in lost output through 2025. Yet another pathogen with pandemic potential might emerge at any time. As things stand, we are unprepared and courting disaster. But there is a solution: invest now in preparations for pandemics and maintain a pool of capital in reserve to use if a crisis strikes.

This is one of those linchpin reforms that are sensible but hard to get adopted. Nobody wants to part with money—especially countries trying to restore economic growth following lockdowns. I know this all too well, as a former finance minister for an emerging country. Yet this form of investment is essential to avert potential calamities, and there are ways to argue effectively in its favour.

The idea is one of numerous recommendations issued this month from the Independent Panel for Pandemic Preparedness and Response on which I served, commissioned by the World Health Organisation (WHO). This week health ministers and some heads of state are meeting at the World Health Assembly, the WHO’s decision-making body, to consider the recommendations. Countries need to implement the package as a whole.

After spending eight months gathering evidence, the panel identified actions and inactions that contributed to the pandemic. Information-sharing was too slow at the outset. Many countries took a fatally-flawed wait-and-see approach. Co-ordinated, global leadership was absent. Years of warnings and in some cases preparations for how to respond were not heeded or invoked.

Most importantly, countries failed to stress test their ability to cope with pandemics (with notable exceptions such as Asian-Pacific countries with experience of SARS and west and central African states that had been through Ebola). Once covid-19 started spreading, dedicated financing was not available at the scale required to supply medical equipment, testing and treatment.

Not learning from mistakes would be foolish and irresponsible. There are basic things that governments can do to prepare for, and indeed prevent, another pandemic.

Countries need to perform simulation exercises, fund research into infectious diseases and develop test-and-trace systems. They need to ensure adequate stocks of personal protective equipment. (When emergency stockpiles were depleted in March 2020, the cost of ten N95 face masks, well under $5 before the pandemic, spiked to a market price of nearly $70.)

Moreover, health systems need to know how to convert ordinary hospital wards into intensive-care units, or how to build new temporary ones; what quantities of extra oxygen or respirators to keep in stock or how to order them quickly; whether to centralise or localise diagnostic testing. And they need to establish a centre for pandemic response, and decide who is to do the essential job of communicating with an anxious public, and how.

Schools need to be better prepared for remote learning, with the right tools and funds to buy tablets and smartphones for the kids. Airports need to know how to quarantine arriving passengers; businesses need to be confident they’d be aided if they were shut down. Most countries were making all this up as they went along in 2020. That can’t happen again.

I know from experience in government that hedging risks is not a priority for public officials. If a contingency does not occur, controlling agencies, watchdogs and opposition parties are fast to say that money spent on insurance has been wasted. Ministries and parliaments love to focus spending on projects that involve cutting ribbons and grand announcements. There aren’t immediate votes to be won in planning and preparation.

The pandemic has shown that this approach is fundamentally wrong. A lack of preparation turns an avoidable emergency into a full-blown disaster. Complacency begets tragedy. Preparedness does cost money, but not that much, and it offers great value when you think of what can be saved later in economic recovery costs and human lives lost.

The independent panel not only recommends overhauling the global pandemic preparedness and response system, but also offers ideas on how to fund it. It calls for an International Pandemic Financing Facility. The mechanics are simple. Each year countries would make contributions totalling $5bn to $10bn (for a middle-income country like Colombia this means making a contribution of up to $30m per year, which is manageable, but it could be less if wealthier countries take a larger share of the bill).

In normal times, these funds should help countries prepare by investing in technology, data management, contact-tracing systems and the like. If a crisis occurs, the facility will borrow against future contributions with the ability to disburse up to $50bn to $100bn at short notice. This should pay for the initial response in order to stop the spread of a virus.

Just as the 2008-9 global financial crisis led to the Financial Stability Board, an international body based in Basel, Switzerland to prevent future financial crises, the world needs to establish a health stability board. The panel calls it the Global Health Threats Council, composed of health experts and overseen by heads of government. This would not be a new UN agency, but a decision-making body with the task of allocating and monitoring pandemic-preparation funds to regional and global bodies.

How can we get governments to commit the resources?

Finance ministers should take the lead as this is about protecting the public coffers, not only saving lives. When I had that responsibility, Colombia decided to hedge the fiscal cost of earthquakes by jointly issuing a catastrophe bond with Chile, Mexico, and Peru for $1.4bn. When an earthquake hit Peru in 2019, the government received $60m, which more than covered the cost of the damage caused. The initiative was approved because it had technical merit and the presidents concerned were directly involved.

This holds a lesson for the discussions and diplomacy that will be held at regional and global levels in the coming months. The cost of preparedness and setting funds aside for response is minimal compared with the economic impact of an actual pandemic. The world needs to spend billions to save trillions.

Global health is a global public good. Individual countries can get more from working together than acting on their own. The world cannot afford another economy-crushing pandemic—yet it need not face one if it makes smart decisions today.
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Mauricio Cárdenas was Colombia’s finance minister from 2012 to 2018 and is a senior fellow at Columbia University’s Center on Global Energy Policy. He served on the Independent Panel for Pandemic Preparedness and Response.