Insuring the Flu: Vaccines for All?

Reuters recently reported that the global health community is beginning to explore potential insurance mechanisms and risk management products to finance pandemic flu vaccines for developing countries, in addition to a new vaccine stockpile supported by GSK and other manufacturers:

The World Health Organization made a unique proposition [at the Pacific Health Summit on June 13, 2007] - what if big donors pooled resources to take out private insurance to pay for vaccines in the case of a bird flu pandemic?

WHO Director-General Dr. Margaret Chan said the organization had been given more preparation time than it could have hoped for ahead of an influenza pandemic [and that] the WHO was using that time to study various financing options to allow poor developing nations to receive vaccines and prevent a pandemic catastrophe that could kill millions of people.

"I am sure the insurance industry can underwrite a policy for that," said Chan, speaking during a panel discussion at the Pacific Health Summit in Seattle. Taking donations to buy vaccines before an outbreak may not please cost-conscious donors, said Chan, but it may make more sense to have organizations donate money to pay for an insurance policy premium.

"Is the world prepared to buy an insurance for an event which is low probability and extremely high risk?" said Chan. "I am not sure it will work, but clearly we need to think outside the box."

Out-of-the-box thinking is certainly what we need, and it's very likely that we are not using possible risk-management methods to their best advantage, but it's not clear that the idea now being floated makes much sense. Aside from the fact that it must seem odd to potential insurers to hear that pandemic flu is a "low probability" from the head of an agency predicting public health doom, there are a few devilish details to think through. For example:

• If such an insurance mechanism were put into place, would we create a situation in which heavy demands would be placed on insurers if and when bird flu emerges, just at the time when a global economic downturn would be inevitable? Ideally, the risk management instrument would be structured so that the global wins and losses would balance; for instance, if donors are unwilling or unable to guarantee purchase of a certain number of units of vaccine, maybe an insurance instrument could be developed for manufacturers that would be provide a pay-out in the event that the demand is lower than anticipated. This would give manufacturers greater ability to invest in scale-up of manufacturing, and only kick-in in the happy eventuality that the vaccines are not required.
• Would we unintentionally undermine the much needed preparatory actions by creating a false sense of security that "we have insurance, it's taken care of"? The problem of moral hazard is a real one, and can act in subtle ways on decisionmaking at both global and national levels. We need to make sure that in redistributing risks we are strengthening the signals to do the right thing, not diluting a sense of responsibility.
• Is the core problem really about how to buy the vaccines, or about how to ensure that a portion of the (limited) manufacturing capacity is set aside for developing country needs, or about whether it's even possible to organize a mass vaccination program for adults in developing countries? The implementation issue is really quite critical because there is currently limited ability to detect early emergence of a problem, and weak infrastructure for vaccine delivery in the places where new strains are likely to emerge. The debates about how to scrape together the money to buy vaccines shouldn't distract from the bigger, more important and more costly challenges about how to build up delivery capacity.

If we're being asked to think "out of the box," maybe the box we should think out of is the "health box." As I wrote in "A Cure for the Asian Flu," we have to look for fundamentally new ways to think about the level and type of resources required to tackle global infectious disease outbreaks. We could think about pandemic flu as a natural disasters, for instance: predictable in that it will happen; unpredictable in that we don't know when or how severely; and when it happens the affected countries will be vulnerable to very bad consequences in part because of the wide ranging economic effects. If we start to think about funding the preparation for and mitigation of pandemic flu in the "disaster box," then we could get together with others who have been exploring revolving funds, insurance instruments and other ways to mobilize resources and distribute risks over time and between those at greater and lesser risk today.

See also: Owen Barder previously blogged about disaster insurance and failure of the public sector here.