10/18/2019 Pandemic Preparedness: Financing Responses in an Age of Uncertainty


Held at the Bloomberg School of Public Health, Pandemic Preparedness was attended by over 70 people from across JHU. The symposium explored how new complex financial products interface with global health management, particularly in the case of “pandemic bonds,” a financial product created in 2017 by the World Bank. The pandemic bond is meant to facilitate fast financing in the event of a crisis—the kind of financing that did not materialize during the West African Ebola Epidemic (2014-2016).

Nicholas King’s lecture, Pandemic Preparedness and Moral Economies of Global Health, presented on different kinds of logics one finds in the practice of global health management, to situate the pandemic bond in a long line of different philosophies. King started his presentation with a provocative definition of “global health” as “public health somewhere else.” Global health, accordingly, is public health in a community that’s not your own—the “you,” here, being the industrial West, including the corner of the world where we sit, at Johns Hopkins University. King finds that the justifications to “care” about public health somewhere else fall under four categories. The first one is “equity:” the moral kind of justification for intervention when health is distributed unequally (i.e. how long one lives depends on where one lives and what one will get sick and die from). This kind of justification, advocated by the likes of policy analyst Jeffrey Sachs, rests on the acknowledgement that the needs to address are urgent and that the money is there (i.e. all that the West needs to shoulder is $26 billion after the annual $54/person contribution by the poorest of countries).

The second kind of justification, “solidarity,” rests on a mixture of utilitarian and communitarian philosophies. It is based on the understanding that public health is the health of the global population, and that we must accept to share the risks, rights, and duties related to the protection and promotion of the health of every member of our global society. This, however, will surely not be upheld by decision-makers who do not necessarily subscribe to an egalitarian worldview, which brings us to the third kind of reasoning: “collective self-interest.” In collective self-interest, we see the acknowledgement that developed nations must simply look out for themselves, like they have since the colonial era when their presence in the colonies had disastrous effects on Indigenous mortality. A form of “enlightened self-interest,” the advocates of collective self-interest point out that global health management is key to enhance “our” economy, protect “our” citizens, and eliminate direct threats to “our” national security.

The pandemic bond falls under the fourth, most recent category of thinking: “Individual self-interest.” This sparks from the financial interests of extremely wealthy individuals, who now operate with the kinds of motives that nation-states once did. A version of what has been called philanthrocapitalism, “individual self-interest” rests on the understanding that entrepreneurial elites have the expertise to generate market-based solutions for the world’s pressing problems; they are also motivated to go beyond simply writing checks and invest their time and energy. The moral side to this argument is that markets are fundamentally non-discriminatory. The practical side is that markets harness individual self-interest for the greater social good. Markets, the argument goes, efficiently aggregate private information; what is more, it is the system we already have.

King argues that the $320 million investment in pandemic bonds was born in this context. The ebola bonds infamously haven’t paid out in the most recent case of the ebola outbreak in the Democratic Republic of Congo, while the investors cashed in. The bonds might have failed to address the needs created by the outbreak, but the analysts do not construe this failure as a failure, and instead continue to ask how the bonds can be tweaked to succeed. King, then, suggests provocatively that the bonds have indeed already succeeded; they were always meant to ensure that the investors would be rewarded. How did we expect otherwise?

The logic of the analysts’ argument is that urgency demands pragmatism, which is best addressed by short-term speculation (and not long-term investment). This logic then reduces the cash need for pandemic response to the practice of issuing high-yield bonds. King concluded his talk by a critique of this logic; the need and the urgency are real, he pointed out, but the logic leap from urgent need to speculation is not.

Dan Lucey’s paper, Pan-Epidemics in the Anthropocene: Frontlines, Policies, Museums, walked us through lessons on how to work with pandemics, drawing on Lucey’s long career as an infectious disease physician, working with diverse outbreaks from SARS, to H1N1 human flu, to MERS. He presented on the exhibit work he has led to make the matter of global health one of public concern at home in the US. Lucey often gets asked about what’s next in the epidemic world, to which he responds: “It’s already here. But we have not recognized it yet.” In many cases, epidemic workers find themselves studying and being exposed to different diseases than they thought they were. Lucey also touched upon the life-saving quality of training, which he illustrated with the case of ebola in Liberia 2014, where professionals had to create solutions where none existed, including partnering up with stronger patients to help weaker patients. Lucey’s discussion illuminated the on-the-ground work to eradicate infectious diseases, which stands in stark contrast with how removed pandemic bonds can be from the very problem they are meant to address.

Alexandre White, also the organizer of the symposium, presented a detailed account on pandemic bonds’ recent history. As White pointed out, the way the World Bank has structured these bonds is rooted in the response to the last ebola epidemic: the response of the WHO to the ebola epidemic of 2014-2016 was roundly criticized, because of the shortfalls and delays in the delivery of pledged funding for epidemic responses. This was partly due to the WHO’s limited resources. By the 31 of October 2015, only $5.9 billion of the $8.9 pledged had been disbursed. The WHO was late to declare an emergency and structurally unequipped to address it.

Alexandre White delivering his paper

In 2014, Dr. Jim Yong Kim, then-head of the World Bank, announced that the WB would pursue an aggressive and creative strategy to apply large-scale solutions to help states manage, prepare for, recover from pandemic risks. The bonds were created in this context and came online in May 2016. They had a two-fold structure: a cash window that can pay out up to $50 million to support early response to escalating epidemic crises and a much larger insurance window providing up to $425 million. The bonds were supposedly designed to limit the deadly delays and false promises of country pledges to support epidemic response and provide swift funding within a matter of days. However, when faced with the 2018-19 ebola epidemic in the Democratic Republic of Congo, nothing had been contributed to the effort to control the spread of the disease.

What was the reason for the failure? White detailed the nature of the pandemic bond as a mutation of a catastrophe bond—a financial instrument that ultimately exists to protect insurance. The catastrophe bond was partly a response to Hurricane Andrew, a Category 5 hurricane that hit the Bahamas, Florida, and Louisiana in 1992. The catastrophe was expected to produce insurance claims payout totaling $15.5 billion (in 1992 prices), but the insured losses maxed out at $4-5 billion, which led to numerous insurers and reinsurer insolvencies. In other words, the aftermath of the climate and humanitarian catastrophe precipitated a corporate one. The creators of the catastrophe bond reasoned that acute natural disasters and catastrophes represent the possibility for losses far greater than the financial capacity of the greater insurance market. The bond ultimately amounted to a transference of insurance risk out of the hands and accounts of a reinsurance company to capital markets. The market for these bonds is now massive.

The pandemic bond emerged from the application of this logic to pandemics. As White detailed at length, the WB works with a third party company, AIR Worldwide, which has written the rules for the activation of the bond. An event has to be designated by the WHO, which acts as the reporting source, to trigger the bond’s release. AIR then assesses whether the event has exceeded the parameters. The bonds are later released in tranches. In cases where the activation does not occur, like in the latest case of ebola in the DRC, the investors are handsomely paid (e.g., monthly coupons that provide an annual return of 6.5%). One reason why the activation criteria are limited is that they were designed with the West Africa ebola outbreak in mind—the parameters of outbreak for small countries with porous borders did not account for how outbreaks progress in large countries like the DRC.

White has concluded his paper by critiquing the bonds for creating a market speculating on the mortality of populations in the Global South.

Alexis Walker, whose doctoral work was in the health programs of the WB (especially the regular loan work of WB) started the discussion. Based on her own research experience, Walker mainly challenged the notion that the WB’s expertise necessarily translates to real world practice, and drew attention to cases where that translation might not occur. Walker asked the speakers to elaborate on the relationship between states and markets—how, for instance, direct donation from governments fits in this picture. She also pointed out, based on her research, that the WB situates its health work within the desire to recuperate from its structural adjustment image and an explicit disavowal of the Washington Consensus. She asked the participants to perhaps situate the bond within this context of trying to move on from the neoliberalism of the 1980s.

Alexis Walker discussing the papers

In a lively discussion period, audience members asked questions around the morality of the pandemic bonds. One participant wanted to clarify whether the speakers’ critique assumed that global health management was a zero-sum game—whether the pandemic bonds had prevented money from being released to public health projects it could have gone to. King maintained that the investors are not interested in preventing pandemics, while White clarified that the bonds needed a nuanced critique to distinguish, for instance, the benefits of the cash window from the perils of the insurance window. Others problematized the relationship between developed and developing countries; while some were interested in how to get the world’s wealthiest non-state entities to become part of the solution, others found it fundamentally dubious that epidemics in West Africa could be addressed by financial interests in Euro-America. More participants, including physicians in the audience, elaborated on the disparity between the developed and the developing, and problematized that these solutions were created unilaterally in the developed countries without input from those whose problems were purportedly being solved.

Finally, some audience members addressed the question of where science and research sat in this landscape. King offered that the science was in the prediction models and that research was, sadly, moving gradually to the side of finance and insurance (e.g., the smartest epidemiologists at Hopkins will be, in the near future, employed by reinsurers.) The bonds, in other words, sets up a universe in which the smartest people and the best predictions will have an incentive to switch to that side, rather than the WHO. An audience member and White both pointed out that both the science and the finance parts of the equation were concerned overtly with the spread of the disease to the West. White reminded us that the ebola in the DRC was the symptom of a longer health problem going back to Belgium and colonialism. Yet, instead of addressing the outbreaks for the damage they are doing to affected communities, we focus on the emergency of their threat to the US. It is, then, part of the problem to create a market that specifically fetishizes that kind of emergency.

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