Transcript Congressional Budget Office

A Potential Influenza Pandemic:
Possible Macroeconomic Effects and
Policy Issues
Julie Somers
Congressional Budget Office
Prepared for the Ninth Annual
Pipeline Project Conference,
July 15, 2006
CBO’s Mission
Budget projections under current laws and
policies
Analysis of the President’s budgetary
proposals
Estimates of budgetary costs of legislation
approved by Congressional committees
Reports that analyze issues that are
significant for the budget
CBO’s Work on Pandemic
Influenza
December 2005 with update May 2006
Requested by Senate Majority Leader, Frist
Update requested by Frist and Senator
Gregg, Chairman of the Senate Budget
Committee
Pandemic Influenza
Background
Influenza pandemics - caused by new flu
viruses that have adapted to efficient
human to human transmission
Three pandemics occurred in previous
century
“Spanish Influenza” in 1918
“Asian Influenza” in 1957
“Hong Kong Influenza” in 1968
Avian Influenza Background
Avian Influenza – large group of different
flu viruses that primarily affects birds
H5N1 strain has pandemic potential
In 1997, H5N1 jumped to humans – 18
cases; 6 deaths
Since then, H5N1 has spread among birds
throughout Asia, to Europe and Africa (229
human cases and 131 deaths)
Possible Macroeconomic
Effects: Assumptions
Severe Scenario
Comparable to pandemic of 1918
Attack Rate = 30%; Case Fatality Rate = 2.5%
90 million infected; 2 million deaths
Mild Scenario
Comparable to pandemics of 1957 and 1968
Attack Rate = 25%; Case Fatality Rate = ~0.1%
75 million infected; 100,000 deaths
Possible Macroeconomic
Effects: Results
Severe Scenario – GDP declines 5%, relative to
baseline
Supply-Side: workers who take ill miss 3 weeks of
work.
Demand-Side: 80% falloff in entertainment industries
(for one quarter); 10% for retail trade and
manufacturing
Mild Scenario – GDP declines 1.5%, relative to
baseline
Supply-Side: workers who take ill miss ~4 days of
work
Demand-Side: 20% falloff in entertainment industries;
3% for retail trade and manufacturing
Options to Prevent or Mitigate
Flu Pandemic
Options fall into Four Broad Categories
Detecting and controlling viruses at their
source,
Developing and using vaccines,
Developing and using antiviral drugs and other
medications, and
Building the capacity of the health care system
(facilities, equipment, and people).
Options to Prevent or Mitigate
Flu Pandemic
Risk of Inaction and Risk of Action
Risk of Inaction: Pandemic occurs that could
have been prevented or mitigated
Risk of Action: Cost, diverts resources from
other priorities, and could be damaging by
itself
Challenges in the Flu Vaccine
Market
Vaccine Supply
Vaccine Demand
Vaccine Allocation
Challenges in the Flu Vaccine
Market
Vaccine Supply
Declining numbers of manufacturers,
shortages, slow pace of technical improvement
Egg-based production process requires 6-9
month
Production cannot be scaled up quickly
Challenges in the Flu Vaccine
Market
Vaccine Supply
Vaccines are biologics (made from living cells),
production process vulnerable to
contamination
High regulatory costs
Vaccine non storable – flu strains change from
year to year
Challenges in the Flu Vaccine
Market
Vaccine Demand
Hard to predict from year to year
Smaller than socially optimal
Vaccine Allocation
Priority Groups
CDC rather than market incentives allocates flu
vaccine in times of shortage discouraging the
establishment of reserve capacity
Threat of a pandemic
exacerbates challenges
U.S. demand will jump from ~86 million to
~300 million
Current U.S. domestic production capacity
could produce pandemic vaccine for only 8
million people, less than 3% of the
population.
Production lag → vaccinating survivors
Administration’s plan
Requested $7.1 billion (FY06 – FY08)
Congress provided
$3.8 billion for FY2006
$2.3 billion for FY2007
?? FY2008
Administration’s plan
Stockpile prepandemic vaccines adequate
to immunize 20 million persons against
influenza strains that present a pandemic
threat (Address production lag)
Develop domestic production capacity by
2011 sufficient to provide vaccine for the
entire U.S. population within 6 months of a
pandemic outbreak (Address capacity
limitation)
Stockpiling Prepandemic
Vaccines
8 million doses purchased for $240 million
Not a perfect match, hope for crossprotection
Increase manufacturers’ experience
Rate of stockpiling slow
Shelf life 12 to 18 months – restocked or
used
Develop Domestic Production
Capacity
Egg-Based Vaccine Production
Goal - 20% of future capacity
Would have to increase sevenfold
$531 million of FY2006 funds
Develop Domestic Production
Capacity
Cell-Based Vaccine Production
Goal – 80% of future capacity
Readily scalable
~$1 billion of FY2006 funds
Future funding to companies successful in first
round
Develop Domestic Production
Capacity
Cell-Based Vaccine Production
May take much longer to develop
May delay adoption of better techniques
Adjuvants
DNA-based vaccines
Requires on-going government support
Universal vaccination against seasonal flu
Stockpiles of prepandemic vaccine
Provide seasonal flu vaccine to developing countries
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