The pandemic is not under control anywhere unless it is controlled everywhere

Chad P. Bown (PIIE), Monica de Bolle (PIIE) and Maurice Obstfeld (PIIE)

February 2, 2021 9:00 AM
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Economic Policy in a Pandemic Age

 

 

 

This essay is part of a PIIE series on Economic Policy for a Pandemic Age: How the World Must Prepare.

 

Having largely cornered global supplies of COVID-19 vaccines, countries in Europe are clashing with one another over hoarding their doses, while sending poor countries to the back of the line. Yet, rich, vaccine-manufacturing countries are deluding themselves if they think they can eradicate COVID-19 at home and speed their economic recoveries while the pandemic rages elsewhere, especially in developing economies. Epidemics anywhere threaten immunization efforts everywhere—not least because new viral variants are emerging around the globe.

Because a globally cooperative and better coordinated effort is needed, rich countries must stop their infighting and perhaps slow their own consumption of the currently limited stock of vaccines in order to deploy more to the world’s hotspots as soon as possible.[1]

The signs that such cooperation is in the offing are not good, however. European countries are threatening to restrict vaccine exports, echoing last year’s restrictions on personal protective equipment and other medical supplies. Before leaving town, the Trump administration established its own “America first” export deterrence policy “to ensure Americans have priority access to free, safe, and effective COVID-19 vaccines.” But the increasing risk of viral mutations around the world brings uncertainty and blunts consumption, investment, and ultimately growth. Rich countries need to confront a health and economic crisis that is global in scope. They remain vulnerable until the coronavirus is defeated worldwide.

The economic threat is clear. One recent study estimates that international supply chains and demand linkages guarantee that diseases in poor countries will spill across borders to rich countries, inflicting big economic costs even if the latter fully vaccinate their populations. The economic costs in rich countries could exceed the cost of helping poor countries get fully vaccinated by 10 to 100 times. Even these striking estimates are overoptimistic in assuming that rich countries can eliminate COVID-19 domestically while allowing it to continue to spread abroad.

However, hoarding vaccines is also likely to prolong the public health crisis within rich countries, even with full domestic vaccine coverage. In the interest of their own citizens’ health, rich countries must invest to scale up global vaccine production and distribution capacity that can respond flexibly to emerging threats. And, despite the obvious political realities, all countries would be better off if rich countries found ways to share existing vaccine supplies with those that cannot manufacture vaccines themselves.

COVID-19 science 101

The origin of novel variants of the SARS-CoV-2 virus, which causes COVID-19, has now been documented in such disparate places as the United Kingdom, South Africa, California, and the city of Manaus in Brazil. Their almost simultaneous eruption at the end of 2020 carried similar mutations likely associated with greater viral transmissibility, as well as greater capacity to evade immune responses and potentially cause reinfection in recovered patients. Some variants could become vaccine resistant, with deadlier consequences than the disease that has already caused more than 2 million deaths worldwide, a huge share of which was in rich countries. Health systems are in danger of becoming overwhelmed again.

The SARS-CoV-2 virus has recently accumulated potentially relevant mutations at an alarming pace. Scientists do not yet know why this is happening, but such changes were expected and may continue while the pandemic persists. A larger pool of infected people in countries where the pandemic remains uncontrolled provides a larger “laboratory” for viral variants vying for genetic dominance.

The cautionary tale from Brazil

Manaus, a city on the Amazon River of more than 2 million, illustrates the dangers of complacency. During the first wave of the pandemic, Manaus was one of the worst hit locations in the world. Tests in spring 2020 showed that over 60 percent of the population carried antibodies to the SARS-CoV-2 virus. Some policymakers speculated that “herd immunity”—the theory that infection rates fall after large population shares have been infected— had been attained. That belief was a mirage. A resurgence flared less than eight months later, flooding hospitals suffering from shortages of oxygen and other medical supplies. The pandemic’s second wave left more dead than the first.

Scientists discovered a novel variant in this second wave that went beyond the mutations identified in the United Kingdom and South Africa. This new variant, now denominated P.1, has since turned up in the United States, Japan, and Germany. Scientists speculate that high prevalence of antibodies in the first wave may have helped a more aggressive variant to propagate. The herd immunity theory turns out not to work if it cannot prevent the emergence of more infectious virus variants.

The policy response thus far

Almost from the beginning of the pandemic, it was clear that relying on markets and private incentives would not solve the COVID-19 vaccine problem, even in rich countries. Governments had to play a leadership role. The European Union offered subsidies for vaccine development, as did the United States through Operation Warp Speed. Scientists proceeded amazingly fast at inventing vaccines, sending them through expensive clinical trials, and gaining regulatory approval. Their efforts and successes should not be trivialized. Development teams of high repute—e.g., at Merck, Sanofi/GSK, and CSL/University of Queensland—also tried and failed.[2]

But thus far, most vaccine doses are going to rich countries.

In anticipation of this problem, a trio of international organizations coordinated in an attempt to create a solution. By mid-2020, the Coalition for Epidemic Preparedness Innovations (CEPI) and Gavi (the Vaccine Alliance), both independent organizations, joined with the World Health Organization (WHO) to create a framework for vaccine acquisition and distribution called COVAX. CEPI established relationships and provided seed funding to a variety of pharmaceutical companies and researchers to create a diversified portfolio of vaccine candidates. The WHO provided regulatory oversight and quality control on safety and effectiveness. And Gavi networked to sign up customers around the world. COVAX was committed to procuring vaccines and distributing them equitably to 2 billion people worldwide by the end of 2021, an estimated 20 percent of each participating country’s population, including frontline health care workers and some of the most vulnerable.

The problem with COVAX was not its institutional design but that most of the rich countries where the vaccines would be manufactured refused to use it to secure their own allocations. Instead, the United States, United Kingdom, European Union, and others signed advance purchase orders directly with vaccine manufacturers. Though these contracts may have accelerated some vaccine development by assuring manufacturers of large markets, CEPI’s collaborative efforts provided an alternative model for promoting the same sort of progress. The important unintended consequence of those rich-country advance orders for today is distributional: Vaccine deliveries to COVAX and thus most developing economies, including current COVID-19 hotspots, have been pushed much later into 2021, after the rich countries have first taken their share.

Adapting manufacturing and distribution in response to genomic surveillance

There is increasing evidence that rich countries may face the prospect of new virus mutations developing faster than science can adapt vaccines. More adaptive approaches to manufacturing and distributing vaccines are needed than those currently in use, approaches more informed by a global perspective on public health and by enhanced genomic surveillance.

Unfortunately, the United States, Europe, and others have compounded this problem through their unwillingness to assure trading partners that they would not impose export limits on vaccines manufactured within their borders.

In its first week in office, the Biden administration took a positive first step by supporting COVAX financially. But the United States and other rich countries must do more than simply committing to finance the COVAX distributional goals, which have little practical impact if the facility has too few vials to allocate.

Now that effective vaccines have emerged, governments must coordinate and devote more resources to scale up vaccine manufacturing capacity in more places around the world. And as more vaccine candidates—with different pluses and minuses—gain regulatory approval, policymakers need to set priorities cooperatively on how much and what to manufacture where. Countries must share information on production capabilities and supplies but also cooperate to adjust their priorities based on the latest scientific evidence and experience on the ground. All the more reason why smoothly functioning medical supply chains are vital.

The emergence of variants creates a mandate for policymakers to focus on the demands of global, and not just local, public health. And as the science continues to evolve, so must the distribution model.

Some vaccines may lead to better health outcomes, or fewer side effects, for one sub-population relative to others, and some may be more practical than others for certain populations. For example, the mRNA vaccines of Moderna and Pfizer/BioNTech have been more effective than others thus far, but they also require high levels of refrigeration, making them more complicated and costly to store and transport. Candidates from AstraZeneca/Oxford and Novavax may be potentially cheaper to manufacture and transport, as well as more robust to storage conditions. The Johnson & Johnson candidate, in addition to sharing those advantages, is also the only single dose vaccine that will likely become available soon. A single dose vaccine can provide coverage more quickly while making fewer demands on vaccination infrastructure.

Finally, shifting events on the ground means countries must also now prioritize collaboration on the genomic surveillance needed to trace novel variants that could affect vaccine effectiveness. For example, at the national level, the COVID-19 Genomics UK Consortium (COG-UK) has been able to track novel variants emerging in the United Kingdom, informing public health policy. But many countries lack a similarly well-established surveillance network. Policymakers need to help poor countries develop networks of their own and create a global information clearinghouse to ultimately facilitate adaptation of the underlying vaccines, their manufacturing, and their distribution.

Conclusion

The considerable benefits of a multilateral approach should compel the United States, European Union, and other rich countries to commit to vaccine distribution based on global public health. Yet, overcoming the collective action problem will not be possible unless it includes most or all of the major economies, especially those with manufacturing capacity.

The Group of Twenty (G20) may, therefore, be the right venue for coordinating global policymaking progress. The G20 would bring not only China and potentially Russia to the table with the United States and Europe but also, more importantly, India. The Serum Institute of India has the capacity to generate hundreds of millions of doses annually. The Serum Institute has been engaged with COVAX, has contracts in place to manufacture both the AstraZeneca/Oxford and Novavax vaccines, and has already begun distributing vials to its neighbor countries, including Nepal.

As for the need for rich countries to slow their own distribution of vaccines in order to get them to the world’s hotspots, that may demand some tough political decisions and honesty with their citizens. But the truth is that the pandemic is not under control anywhere unless it is under control everywhere.

Notes

1. According to Our World in Data, of the COVID-19 vaccine doses administered by January 31, 2021, 31 percent had gone to the United States, 13 percent to the European Union, and 10 percent to the United Kingdom. In contrast, all of South America accounted for only 2.5 percent of global doses and less than 0.2 percent had gone to Africa. 

2. While all vaccines protect against the disease, none was designed specifically to protect against infection.

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Chad P. Bown Senior Research Staff
Monica de Bolle Senior Research Staff
Maurice Obstfeld Senior Research Staff

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