GOVERNING PANDEMICS

FINANCING

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WHAT IS THE ISSUE?

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Financing for infectious disease outbreak preparedness and response is characterized by at least three problems: it is insufficient, irregular and difficult to track. Health crises funding is characterized by periods of panic, with robust national and international funding during emergencies, followed by neglect. The estimated costs of global preparedness, around 4.5 billion USD annually, are a fraction of those of health emergencies (the West African Ebola crisis and SARS cost an estimated 53 and 60 billion USD, respectively). A complete picture is not yet clear, but some estimates have put the economic losses caused by Covid-19 at 4.7 trillion USD. Sustained financing is also needed for global public goods (or global common goods) that can potentially benefit all countries, such as the operating costs of WHO and countermeasure R&D, but arrangements to do so largely rely on discretionary, voluntary contributions that are neither sufficient nor reliable.

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Furthermore, tracking financial flows for preparedness and response is challenging. At the national level, spending often spans many different budget lines and ministries, and is not comprehensively tracked in most countries. At international level, it is difficult to get detailed, thorough and timely information on the many channels of relevant public and private financial flows.

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WHAT WAS DONE BEFORE COVID-19 TO ADDRESS THIS ISSUE?

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Several new financing mechanisms were launched in recent years, such as CEPI, the WHO’s Contingency Fund for Emergencies (CFE), and the World Bank’s Pandemic Emergency Financing Facility (PEF). However, all of them largely depend on voluntary contributions from the same small group of governments, and cannot guarantee adequate or sustainable financing.

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This occurs partly because they were created under the assumption that lower-income countries would be the ones most in need of financial assistance in health emergencies, whereas the economic fallout from Covid-19 has affected all countries. In high-income countries, domestic economic rescue packages amounting to trillions of US dollars were approved. The World Bank pledged to make 160 billion USD available to countries in need of external financing. The IMF also provided 109 million USD in financial assistance and 726 million USD in debt relief, and G20 finance ministers announced countries could request to suspend debt payments until December 2021.

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In terms of monitoring financial flows internationally, the Georgetown Global Health Security Tracking project offers expansive and detailed information on investments that it counts as contributing to “global health security.” However, there is no single international definition of the types of spending that should or should not qualify as contributing to preparedness or response.

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WHAT HAVE COVID-19 INTERNATIONAL REVIEW PANELS RECOMMENDED TO ADDRESS THIS PROBLEM? *

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At the national level, reform panels agree that countries must establish channels of predictable and sustainable financing for preparedness and response¹ ² ⁴. Regarding the patchy and unstable global health financing system, some panels recommend the creation of a financing mechanism for pandemic preparedness based on ability to pay and separate from development assistance¹ ². All highlight the importance of increasing and ensuring stable financing for global-level institutions. The need for a replenishment mechanism of the CFE and for a redesign of its disbursement criteria was also proposed³.

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Regarding the mechanisms created to address the Covid-19 pandemic, it has been recommended that countries commit to fully financing initiatives such as the ACT-Accelerator, including Covax¹ ². However, contributions are discretionary and unpredictable. As of June 2021, the ACT-A had US$ 17.7 billion in funding commitments, which still left a gap of US$ 16.8 billion for 2021.

 

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WHICH REFORMS ARE UNDER DISCUSSION?

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As Covid-19 has exposed many weaknesses in national health systems, discussions on how to strengthen the financing of national capacities have gained momentum in WHO and other international bodies. 

 

At the global level, discussions have focused on financing WHO and pandemic preparedness and response more broadly. Regarding WHO financing: WHA resolution 74.7 urged Member States to secure adequate and sustainable financing for the WHO, including its Health Emergencies Programme. It also encouraged both the Director-General and Member States to, respectively, support and follow the recommendations of the WHO Working Group on Sustainable Financing, which was created in January 2021. It also requested the DG to assess the role and strategy of the Contingency Fund for Emergencies (CFE) and consider implementing a sustainable financing and replenishment mechanism for it.

 

The Working Group on Sustainable Financing developed a proposal in January 2022 to increase assessed contributions to the WHO. However, eight countries opposed the proposal, notably including the United States. A new draft of the proposal was circulated in April 2022, recommending that increases in assessed contributions after 2025 should be conditional on reforms to improve WHO’s efficiency.  The Working Group reportedly reached consensus on 27 April 2022 on a package of recommendations that will be submitted to the 75th WHA at the end of May 2022, including aiming to reach the 50% target for assessed contributions by 2028-9.

 

In July 2021, the G20 High Level Independent Panel (HLIP) on Financing the Global Commons for Pandemic Preparedness and Response released its findings, calling for $15 billion per year in additional international public investment including through the creation of a Global Health Threats Fund. In September 2021 at the UN General Assembly, the U.S. called for the creation of a separate new Financial Intermediary Fund to be housed at the World Bank. As of April 2022, the G20 has reached a consensus to establish such a fund, with the goal to finalize the new finance mechanism before the G20 Health Ministerial level meeting in June. The World Bank Board of Directors approved the establishment of a Financial Intermediary Fund (FIF) for Pandemic Prevention, Preparedness and Response on 30 June 2022. The inaugural meeting of the FIF Governing Board, which officially established the new fund, was held on 8-9 September 2022. Visit the website worldbank.org/pandemicfund to find out more. 

Finally, debates on a possible legally-binding instrument for pandemic preparedness and response include consideration of possible financing mechanisms. However, the outcome of the negotiations and the extent to which countries will commit to binding financing obligations remains to be seen.

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* This section is derived from a systematic comparison (available here) of recommendations from four international reviews: ¹ the Global Preparedness Monitoring Board (GPMB), ² the Independent Panel for Pandemic Preparedness and Response (IPPPR), ³ the Independent Oversight and Advisory Committee (IOAC) for the WHO Health Emergencies Programme, and ⁴ the International Health Regulations (2005) Review Committee.

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Quick Links​​​

• Coalition for Epidemic Preparedness Innovations (CEPI)

• G20 High-Level Independent Panel on Financing the Global Commons for Pandemic Preparedness and Response

• Georgetown’s Global Health Security Tracking

• WHO’s Contingency Fund for Emergencies

• WHO Working Group on Sustainable Financing

• Press Release: World Bank Approves New Fund for Pandemic Prevention, Preparedness and Response

• Press Release: New Fund for Pandemic Prevention, Preparedness and Response Formally Established

• Pandemic Action Network: Global Pandemic Fund Tracker

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RESOURCES

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