A Global Deal for Our Pandemic Age

62. Our key financing proposals, taken as a whole, seek to ensure enhanced and predictable funding of pandemic PPR across the system. 

63. The Global Health Threats Board that we have proposed will have the responsibility of systemic oversight of finance for pandemic PPR, to ensure that funding gaps are addressed, and build support for each of the organizations’ resource mobilization strategies. (See Section B.)

• There is some parallel in how the G20 has played a role in building consensus for recent IMF quota review exercises. 

The Global Health Threats Board will also ensure coordination and joint accountability of the key organizations involved in pandemic PPR.

64. As set out above, the Panel has assessed that a minimum of US$75 billion in international support over the next five years (US$15 billion per year) will be needed for investments in global public goods for prevention and preparedness. 

• The Panel proposes that two-thirds of this additional amount, i.e. US$10 billion per year, should be pooled in a Global Health Threats Fund (Fund) to be deployed across the various organizations and global initiatives (Proposal 2). This new multilateral funding mechanism would enable effective and agile deployment across institutions and networks to meet the most critical priorities. 

• The remaining US$5 billion should go directly towards strengthening funding to existing institutions. This must include enhanced and predictable support for the WHO (Proposal 4), strengthening MDB resources for dedicated pandemic preparedness windows in IDA and other RDBs’ concessional bodies alongside their making better use of grant resources from the global health intermediaries (Proposal 5); and a step-up of bilateral and philanthropic funding for global health (Proposal 8).

65. We believe this would be an effective and sustainable approach to international financing for pandemic prevention and preparedness. Importantly, the new Fund must perform a catalytic function, so that it adds resources rather than substitutes for the necessary and sustained funding of the various organizations.

66. The IMF and the MDBs should also introduce pandemic response windows, building on their existing emergency lending instruments, to scale up funding quickly during a crisis (Proposal 5), with relaxed rules on country borrowing and automatic access for pre-qualified countries.

67. The strengthening of the international financing must be accompanied by an agenda of reform in many countries to mobilize and sustain additional domestic resources to enable investments in national capacities to prevent and contain pandemics as well as in the broader strengthening of public health systems. (Proposal 3).

68. The Panel proposes the establishment of a new, dedicated Global Health Threats Fund, aimed at mobilizing US$10 billion per year, to support and catalyze investments in global public goods for pandemic PPR.

69. The Fund would serve as a needed multilateral financing mechanism to pool resources internationally, based on pre-agreed contributions. This new Fund, at two-thirds of the minimum of US$15 billion in additional international resources required, brings three necessary features into the financing of global health security. 

• Together with an enhanced multilateral component of funding for the WHO, it would provide a stronger and more predictable layer of financing. 

• It would enable effective and agile deployment of funds across international and regional institutions and networks, to plug gaps swiftly and meet evolving priorities in pandemic prevention and preparedness. 

• It would also serve to catalyze investments by governments and the private and philanthropic sectors, for example through matching grants and co-investments. 

70. We must view this proposed mechanism against the weaknesses of the traditional system of international financing to address pandemic threats. Bilateral contributions, while valuable, have been unpredictable and collectively inadequate, while encouraging free-riding on the part of others. Further, replenishment of resources for the international institutions has been slow. The same system will not enable the world to avoid the next pandemic. 

71. The Fund would support the following major global actions to plug key gaps in global public goods for pandemic PPR:

• Building a transformed global network for surveillance of infectious disease threats. This will require a major scale-up of the network, combining pre-existing and new nodes of expertise at the national, regional and global levels, with the WHO at the center.

• Providing stronger grant financing to complement MDBs’ and the global health intermediaries’ support for country- and regional-level investments in global public goods. 

• Ensuring enhanced and reliable funding to enable public-private partnerships for supply capacity: the rapid development, manufacturing and delivery of medical countermeasures on a global scale, so we can preclude severe shortages anywhere and avoid prolonging a pandemic everywhere. 
  • The Fund would provide a critical layer of multilateral support for a new, permanent, end-to-end supply ecosystem that will build on the lessons learned from the ACT-A coalition of health partners. (See Section B.)
  • Public investment, through a combination of push and pull contracts⁴⁴, is needed to share risks and enable private investments in R&D and manufacturing capacity ahead of a pandemic, and ahead of product use authorization, so that medical countermeasures can be quickly scaled up in a pandemic.
  • Sufficient capacity is needed to ensure rapid and equitable global access, including by the LICs and LMICs, which is critical to containing a pandemic everywhere. This will require global support. In order to fund these contracts, a pool of flexibly deployable funds will be needed. 
• Supporting research and breakthrough innovations that can achieve transformational change in efforts to prevent and contain future pandemics, complementing existing global R&D funding mechanisms like CEPI.

72. The new Fund would ensure that these gaps are addressed swiftly, and have the flexibility to deploy funds across these functions based on emerging priorities. It would aim to augment the existing international organizations, as well as regional and non-state actors that are performing important roles. The Fund should complement, and not substitute for, the other sources of financing noted in this report, in particular the concessional windows of MDBs and funding for the existing global health organizations. The functions of the Fund should be defined to ensure complementarity and additionality in relation to financing for the various other institutions.

73. The Fund will also seek to incentivize joined-up actions by the different organizations to enable forceful and coherent preparedness and response plans. Funding must also drive progress on accountability for global health outcomes, while not creating duplicative or onerous structures for reporting. 

• The Global Environment Facility (GEF), which is a financial mechanism for five conventions including the UNFCCC and Convention on Biological Diversity, is a useful reference in how countries have come together to finance the global commons, in an institutional landscape with many actors⁴⁵.

74. The Panel proposes the Fund be structured as a Financial Intermediary Fund (FIF)⁴⁶ at the World Bank. The Bank would perform the treasury functions, and could also leverage contributions on the market, as it does for other FIFs that it hosts – for example, Global Environment Facility and key global health intermediaries like the Global Fund, Gavi and CEPI. 

75. Governance of the Fund will operate independently of the World Bank, as with other FIFs, and under an Investment Board of its own.

• This is necessary as the World Bank may be among the organizations that will receive funds.

• The Investment Board could be constituted as a committee of the Global Health Threats Board, to ensure that its operations are consistent with the Global Health Threats Board’s identification of priorities and gaps.

• The Investment Board should also tap on specialist and expert advice on detailed financing.

• The Investment Board should ensure transparency on the allocation and usage of funds and their outcomes, and provide updates to the Global Health Threats Board. 

76. As it may take time to reach a formal system of binding international commitments to the Fund, resources should be kickstarted by direct contributions by G20 and other governments, ideally in amounts equivalent to an assessed contribution scheme, as well as philanthropic and corporate contributions. 

77. The Panel considered carefully the scope for the Fund to contribute to the surge financing that will be required for response to a pandemic, in particular by borrowing resources from financial markets. This option could entail borrowing against guarantees of repayment from future national contributions. The Panel’s assessment is that the surge financing role, and the associated market borrowing to support this, would be more effectively placed at the World Bank. The World Bank has the balance sheet and market presence to raise funds more quickly, and the institutional muscles to disburse funds to countries more flexibly in a crisis. (See Proposal 6.) The Global Health Threats Board’s role in systemic financial oversight will be essential in coordinating actions with the World Bank to raise funds swiftly when a pandemic strikes.

78. National actions remain the foundation of global efforts to prevent and prepare for future pandemics. The Panel calls on governments everywhere to significantly scale up national capabilities for surveillance, detection and containment of any new outbreaks. These should ensure that they meet existing and new WHO, OIE, FAO and other international standards for preparedness and global health security.

79. Besides investing in the public goods directly related to pandemics, governments should also work towards more resilient health systems, as they provide foundational supports in avoiding future pandemics and minimize excess mortality in pandemic conditions. These include broader investments in national healthcare and public health systems to address ongoing endemic diseases and improve basic sanitation. Governments should also design safety nets able to expand in response to pandemic shocks.

80. To achieve this, we need a long-term strategy to enhance domestic resource mobilization for national and global public goods, complemented by international financial support for the LICs and LMICs especially. 

81. The mix of domestic and international financing reflects the different levels of global public goods needed to reduce pandemic risk:

• A system of globally networked surveillance and research requires both international and country-level capacities, but the benefits are mainly not internalized by individual countries. In the case of LICs and LMICs in particular, these should be largely financed by collective mechanisms.

• Strengthened national capacities to stop the spread of infectious diseases have clear benefits for individual countries, but nonetheless have positive externalities for the global community. Domestic financing by national authorities must remain the primary source, augmented by external financing support for the LICs and LMICs. 

82. The challenges today are considerably larger than they already were before the current pandemic. Poorer countries have very limited capacity to buffer their populations and economies through fiscal and monetary policies, apart from their scarce access to diagnostic tools and vaccines resulting in a much more prolonged crisis. Further, many entered the crisis with elevated debt levels, and are vulnerable to increased debt servicing costs in the years to come. 

83. There is now also a significant risk of lasting health and economic damage in poorer nations over the medium term, more so than they experienced after the Global Financial Crisis. This will make it harder for them to cope with an endemic COVID-19 pandemic, as well as future outbreaks. Further, the consequences of increased poverty, conflict and displacement will not be purely economic, nor contained within individual nations.

84. Governments working with the IFIs must embark on a major agenda of reform to mobilize and sustain additional domestic resources to invest in the key capacities needed to prevent and contain future pandemic risks, integrated with efforts to strengthen national health systems and achieve Universal Health Coverage⁴⁷, while enabling their economies to return to durable growth. Low- and middle-income countries will need to add about 1% of GDP to public spending on health over the next five years.

• The IFIs should work with national governments to develop a plan for more resilient tax revenues over the medium term. Efforts to improve tax collection capacity, plug tax loopholes, and strengthen enforcement against illicit financial flows and other leakages must remain critical priorities. Taxing tobacco products and other ‘health bads’ to reflect their full health and economic costs remains a promising option in many countries. 

• Governments should clearly define and track budgetary expenditures on outbreak prevention and preparedness, building on newly established expenditure categories for preparedness as part of national health accounts at the OECD and WHO, and how these enable them to meet the WHO’s IHR, with consistency across different levels of government. 

• Building on the findings of the proposed Health Security Assessment Program (HSAP) to be conducted by the WHO and the World Bank, and other metrics such as the JEEs, State Party Self-Assessment Annual Reporting (SPAR), and GHS Index, every country should prioritize the development, costing and implementation of a national action plan for health security to identify gaps and financing requirements. Finance and Health Ministries should be full partners in this effort. 
  • This must include a concerted plan to develop the skilled human resources needed for both surveillance of emerging infectious diseases and resilience in healthcare and public health systems. 
  • Performance-based budget policies and matching fund schemes between national and sub-national governments are promising strategies. They can incentivize more accurate, timely, complete, and open reporting of pathogens, diseases and deaths in human and animal populations, if accompanied by independent verification or audit of sub-nationally reported figures. 
  • Increased resources to prevent and contain infectious disease outbreaks are necessary, to avoid crowding out other critical healthcare needs. Evidence from COVID-19 shows a sharp rise in deaths from non-communicable diseases equal in some cases to COVID-19 deaths, due to delays or a lack of care for persons with other illnesses.
  • These expenditures must however be regularly assessed for value for money – for example, defining the minimum samples needed to representatively conduct genomic surveillance. 

• The IFIs, together with the WHO, bilateral development partners, and global health intermediaries like the Global Fund, should work with governments to develop these strategies, provide technical assistance and ensure the necessary external financial assistance to complement governments’ efforts to enhance national domestic financing. 

• Multilateral and bilateral development partners can also incentivize investments in pandemic prevention and preparedness at the country level, via various financial instruments. (See also Proposal 5.) These include:
  • Making lending for pandemic preparedness more concessional 
  • Complementing grants and greater concessionality in financing (e.g. IBRD rate buydowns) with existing instruments such as results-based and programmatic lending to support progress towards standards 
  • Incentivizing governments by requiring that grants are co-matched by national fiscal commitments

85. We need enhanced, reliable and sustainable financing for WHO and its One Health partners to perform their critical functions.

• The WHO plays a key role in each of the three major gaps we have identified in this report.
  • Surveillance. The WHO must be at the center of a global network of expertise for genomic and epidemiological surveillance. The One Health approach must be supported, with the WHO ensuring that there are no gaps in the surveillance-to-action loop. 
  • Resilient national systems. The WHO, through its IHR, provides guidance to countries to develop whole-of-government health security plans, with the IHR serving as a benchmark against which to track progress. 
  • Supply of medical countermeasures. WHO has a leading role within the ACT-A coalition of health partners. 

• The WHO is heavily dependent on voluntary funding. It is also under-resourced and lacks predictable funding to meet its key functions in global health⁴⁸. The Panel agrees with the IPPPR’s assessment on the weaknesses of the funding for WHO, and its proposal to enhance the share of multilateral funding for the WHO through increased assessment-based contributions – with Member States’ fees to be increased from the current one-quarter to two-thirds of the budget for the WHO base program, and an organized replenishment process for the remainder of the budget.
  • The latest two-year budget for the WHO is about US$4.8 billion⁴⁹, of which its base program comprises about US$3.8 billion.
  • Increasing assessed contributions to two-thirds of the WHO’s base program will represent more than a US$1.5 billion increase, or an additional US$0.8 billion per year.
  • This increase can be funded in part by a reallocation of existing voluntary contributions from countries, but will also require modest increased contributions from most countries⁵⁰. 

• Our proposed overall financing framework for global health security calls for strengthened funding to be channeled towards the WHO and other existing institutions, as well as the effective and agile deployment of funds by the Global Health Threats Fund across international and regional institutions and networks to ensure that gaps are plugged on a timely basis and to meet evolving priorities in pandemic PPR.

86. G20 leaders should work with other shareholders to make global public goods part of the core mandate of the MDBs. 

87. The MDBs are uniquely placed to do so, by their ability to:

• Mobilize international resources

• Leverage capital or guarantees

• Incentivize countries to invest in global public goods, as part of their broader country operations

• Support country and regional investments with direct development impact as well as global health security benefits

• Provide multi-sectoral coverage and activate robust crisis response mechanisms

• Catalyze private investments

They are also moving towards working with other development partners in country and regional platforms.

88. Pandemic PPR should be incorporated as a core activity of the WBG, akin to climate.

• The World Bank Board should set IBRD lending and performance targets for pandemic prevention and preparedness that are then assessed and tracked as a matter of routine.

• IDA donors should establish a dedicated pandemic prevention and preparedness window in an expanded IDA, as part of a successful IDA20 replenishment and leading to a more permanent mechanism. This would ensure that lending for pandemic prevention and preparedness programs is not constrained by country-specific IDA allocations. To ensure that the funds for this are both additional to regular IDA contributions and on sufficiently concessional terms, funding of this window should rely more heavily on new grant contributions from IDA donors. 

• RDB Boards should ask for each institution’s strategy to support pandemic preparedness and reduce risks, including through dedicated strategies and lending targets/windows as appropriate.

89. In deploying funds, World Bank and other MDBs have a suite of financial instruments that can incentivize investments in pandemic prevention and preparedness at the country level. 

• Make lending for pandemic preparedness more concessional. IBRD lending for these projects could be made more concessional through accompanying grants which could be provided through the proposed Global Health Threats Fund. IDA lending for this purpose could rely more heavily on grants provided under the new IDA pandemic preparedness window. 

• Grants and greater concessionality in financing (e.g. IBRD rate buydowns) can be complemented with existing instruments such as results-based and programmatic lending to support progress towards agreed global standards on preparedness. The World Bank should develop a strategy to effect this through its lending and technical assistance. This would facilitate tracking of progress towards agreed global standards on preparedness.

• IDA support for pandemic prevention and preparedness should also be made more concessional and should seek to incentivize domestic investments through matching grants to LIC governments. 

• The MDBs must also work in concert with other grant-making mechanisms including the global health intermediaries like Global Fund and Gavi, bilateral aid agencies, and the new, multilateral Global Health Threats Fund, to leverage each other’s funding for investments that will strengthen health system resilience. This would build on existing co-financing framework agreements, e.g. between World Bank and Global Fund.

90. Shareholders should be prepared to provide MDBs with additional capital and concessional resources to enhance their role in pandemic PPR:

• An immediate priority is to ensure the successful completion of the upcoming replenishment of IDA, and other concessional financing windows, at a level that is able to respond to the heightened needs of LICs in the post-COVID recovery. 

• The MDBs should explore greater leveraging of their shareholder capital. The Panel calls on the G20 to commission an independent review of the scope for doing so. This will determine the needed scale of future capital increases which should then be forthcoming as required.

• MDB capital requirements can also be met by more innovative mechanisms along the lines of IFFEd⁵¹, which uses donor guarantees to enable MDBs to raise resources on the capital markets, and go above their lending limits. This will enable donors to leverage their grant contributions by an estimated 27 times, much higher than the IBRD loan to paid-in capital ratio of at most five times. (See Annex I.)

• Existing trust funds at the MDB for preparedness should also be increased and used to leverage and complement greater IDA and IBRD lending for this purpose.

91. We need at-ready surge financing mechanisms to respond effectively to a pandemic.

• Unlike the resourcing needs for pandemic prevention and preparedness (discussed above), we do not know in advance the scale of financing required in a pandemic. 
  • The size of the resource needs depends on the nature and spread of the pandemic.

• Funding for pandemic response must include both health-related funding needs as well as the more traditional fiscal and balance of payments support. 
  • The latter is fundamentally important as countries lacking access to funding cannot provide an adequate health response. 
  • It would be short-sighted to force countries to meet these pandemic costs by cutting other vital expenditures in education, social protection, etc.

• The MDBs have a major role in supporting countries to respond to a pandemic.
  • In the Panel’s view, the World Bank and other MDBs should substantially scale up net financial flows to borrowing countries during a pandemic. They should do so with the assurance of shareholders that the resulting requirements for replenishments of concessional funding or for capital increases will be addressed in a timely way. To this end, single borrower and other country lending limits and IDA country allocation ceilings need to be relaxed during a pandemic period.
  • The World Bank should support countries to participate in pooled global procurement mechanisms for medical countermeasures, through its grants and lending programs. Ensuring guaranteed access to such financing would enable countries without adequate fiscal resources to still enter into advance purchase contracts in the early phase of a pandemic. 
  • Access to MDB crisis response windows should be simplified and made more automatic. The World Bank and many RDBs have existing financing instruments or mechanisms to provide rapid support in response to natural disasters or other catastrophes. 
  • The World Bank should use its resources to support countries’ safety net surge responses – to enable lockdown and other pandemic response measures – as it has done in the current crisis. Supporting the establishment of scalable cash transfer and other safety net mechanisms in at least 50 countries within five years should be a feasible target for the institution. 
  • The World Bank and RDBs should work to complement each other’s efforts in financing pandemic response. The RDBs have stepped up their roles in the current crisis and are preparing to do more in a future pandemic. 
  • MDBs should be enabled to raise funds immediately on the market should their resources need augmenting during a pandemic. They should do sp with the assurance that any borrowing over and above their regular market operations would result in associated capital increases or be taken off their balance sheets through shareholder guarantees⁵². The World Bank and other MDBs are well-placed to undertake borrowing from the market during a pandemic, leveraging their triple-A ratings.

• The IMF has a primary role in ensuring a rapid and adequately sized financial response to help countries deal with a pandemic. 
  • The IMF should establish a pandemic response window that provides rapid, automatic and sizeable financing to members in good standing. This window could be established as part of its rapid financing facilities – Rapid Credit Facility (RCF)/Rapid Financing Instrument (RFI) – and would be automatically triggered, for example, upon the WHO’s declaration of a PHEIC.
    • The IMF can use this window to make available up to 100% of quota for all members in good standing
    • Financing would be made upon demand on presentation of the health situation. It would be concessional and low on conditionality other than health conditionality. The financial conditions would be comparable to existing RCF and RFI lending. In some cases, additional measures might be needed to limit the impact on countries’ debt sustainability. 
    • Loans disbursed through this window would not be subject to surcharges based on other outstanding IMF loans to the borrowing country, nor would the amount accessed under this emergency financing count towards the calculation of surcharges on other loans.
  • Access limits for regular IMF facilities should also be relaxed during a pandemic. The IMF Board should also consider whether the policies on surcharges linked to the duration and size of outstanding IMF loans need to be relaxed during a pandemic.
  • While the best use has to be made of the currently proposed IMF SDR allocation, its utility in future crises should be principally to respond to a global need for liquidity. As currently constituted, SDRs are a blunt instrument for supporting the liquidity needs of developing countries because of their small share in total SDR allocations. 

• Appropriately designed debt service relief by other creditors should complement surge lending by the IFIs in responding to future pandemics. The G20 sponsored Debt Service Suspension Initiative (DSSI) made a significant contribution from bilateral official creditors to helping (mostly) low-income countries during this pandemic. However, delays in reaching agreement on its scope and application slowed down the flow of relief and limited its impact because of the non-participation of some hybrid and most private creditors. Learning from this experience, the G20 should ask the IMF, working with the relevant stakeholders, to propose a framework to involve the participation of all creditors – official, hybrid and private – in restructurings to be instituted in future pandemics.

92. Multilateral efforts should leverage and tighten coordination with targeted bilateral funding.

• Bilateral funding has historically been a source of support to pandemic PPR, and finances technical assistance and know-how exchange in field epidemiology, lab safety, disease surveillance, and general preparedness. 

• Further, much of the capacity that exists today in preparedness is the result of several decades of bilateral investments in cross-cutting functions under the auspices of HIV/AIDS and Ebola focused programs of funding.

• Bilateral funding should continue to play an important catalytic role, such as providing seed money as incentive for LICs and LMICs to make the necessary investments, providing a grant element to complement multilateral funding, and mitigating risks to attract private sector participation.

• However, bilateral funding must be better coordinated, so each bilateral development partner’s efforts are situated within a broader international framework, with a proper division of responsibilities, to avoid gaps and overlaps.

• This will mean tighter coordination within country and regional platforms – led by the relevant authorities – and mobilizing multilateral and bilateral development partners, the private sector and philanthropies. 

• This will continue to recognize the contributions of each development partner, but generate greater development impact.

93. We have to ensure too that other critical development needs are still met, and targeted bilateral funding is not diverted away from them to fund better pandemic preparedness, prevention and response, which is a global public good. 

• It would be short-sighted to bolster our efforts for pandemic prevention and preparedness by reallocating resources from other critical development priorities in poverty alleviation and human capital development. 

• This is particularly as the crisis has escalated the challenges facing the developing world.

• Doing so will roll back the gains we have made on the Sustainable Development Goals, and impose larger costs on the international community eventually. 

• Scarce ODA should only be used for investments that primarily benefit LICs and LMICs, while investments that benefit the world as a whole or primarily HICs or UMICs should be funded from non-ODA budgets and the private sector.

94. The scale of financing for pandemic PPR requires significant and sustained increases in resources from every source – public, private and philanthropic. 

95. However, we need a different construct for partnerships as well as policy, with the official sector engaging the private and philanthropic sectors continuously, not only once a pandemic strikes.

96. The private sector has a key role to play in several dimensions of pandemic PPR.

• First, in working with governments and international organizations, through public-private-philanthropic partnerships, to scale up global manufacturing capacity and end-to-end supply chains for vaccines and other medical countermeasures, and other critical supplies. 
  • We set out the need for a major scale-up of at-ready manufacturing capacity through partnerships with the private sector in Section B (Item 3) of the Report. These partnerships are critically required in order to make adequate capacity in the non-pandemic years viable, and will give extremely high social returns. In particular, the payoffs to having sufficient at-ready capacity for multiple vaccine candidates are very large. 
  • Six months into the current pandemic, global demand for ventilators and face masks was ten times higher than supply. Even 18 months on, PPE and oxygen cylinders and concentrators remain in grossly short supply.
  • The IFC and the private sector arms of other MDBs have the tools to catalyze private sector investments in capacity for medical supplies, and should scale this up. 
    • A good example during the current pandemic has been the IFC’s US$4 billion Global Health Platform (US$2 billion from its own account and an additional US$2 billion from its private sector partners), aimed at increasing access to critical healthcare supplies required to fight the pandemic, including masks, ventilators, test kits, and vaccines⁵³.
  • Countries should work with the MDBs and other organizations like UNICEF to mobilize private sector resources to develop the whole delivery system needed within countries to receive and transport medical supplies, including cold chain infrastructure, and provide the necessary technical training.

• Second, in broadening access to care. Pandemic PPR plans must consider all health providers in the sector, and the ways in which people can most readily access care. In most LICs and LMICs, private sector providers are important sources of care. They have to be mobilized and properly regulated in support of public policy objectives, even as governments working with external partners seek to build up more resilient national healthcare systems over the longer term.

• Third, there is scope to develop private contingency financing tools to help governments to pool and manage pandemic risks (Proposal 9). 

97. Beyond the private sector role in pandemic PPR itself, there is need for a very significant increase in private sector investments in broader development financing, especially for infrastructure. There is significant scope for expanding the use of risk mitigation tools, including appropriately designed blended finance instruments, to crowd in and augment private investment and optimize official balance sheets for investments in both global public goods and economic development (Proposal 5).

• The private sector has had very limited involvement in investing in infrastructure in Africa in particular, where the scale of future infrastructure needs will overwhelm the capacity of the public sector. 

• If we do not make bold changes in strategies of governments and MDBs to mobilize private financing for infrastructure, we face a permanent reduction in economic growth, a slowdown in poverty alleviation, and a neglect of critical public investments for pandemic PPR and other public goods in a large part of the developing world. With well-designed and transparent risk-sharing features and strengthened regulatory capacity, governments can maximize the efficiency and impact of public incentives. 

98. The major philanthropic foundations have been playing a critical role in supporting investments with high-risk and/or low-commercial incentives. However, the major scale-up of research on infectious diseases and countermeasures needed will have to involve stronger partnerships between the public, private and philanthropic sectors, nationally and globally.

• These include early-stage investments, e.g. the search for vaccines and therapeutics that can provide broad protection against a range of pathogens; and interventions that can address the rising threat of drug resistance. 

• They could also be strong partners in supporting research for interventions where commercial interest is low, including many ongoing regional epidemics for which global demand is weak. 

99. Governments and international organizations must seek to broaden the base, incentivize and leverage philanthropic foundations that are engaged in supporting discovery science and R&D that contribute to national health resilience and pandemic PPR. 

• CEPI is an example of a philanthropy inspired, public-private partnership working at the interface between science, R&D, and manufacturing for global public goods.

100. De-risking by philanthropic and official funders can potentially mobilize significant resources from patient capital, including pension funds and sovereign wealth funds, for R&D and other longer-term investments.

• These investments may have high social returns but will often be beyond the risk appetite of institutional investors. Public and philanthropic participation can bridge this risk gap.

• For instance, a project to develop a new tuberculosis vaccine could be organized with commercial discipline, while partly financed by philanthropy, and with official entities contributing to de-risk the project.

101. The best insurance for the world against pandemic risks is to invest in global public goods for pandemic prevention and preparedness, as we have laid out in this report. The investments required to avoid a pandemic amount to a miniscule proportion of the financial costs to governments in a pandemic, not counting the costs of human lives lost, long-term health impairment and broader economic and social costs.

102. Insurance solutions should also be developed to cover adverse effects associated with medical countermeasures. 

• Where vaccines and treatments are developed and regulated using emergency authorization, manufacturers are not generally able to obtain insurance in the usual way that would happen if a product has been licensed under non-emergency arrangements.

• To address this constraint during the COVID-19 pandemic, COVAX used donor funds to enable a vaccine injury compensation program through a contract with private insurers – the first of its nature on an international scale. The COVAX No-Fault Compensation Program offers eligible people in 92 LICs and LMICs compensation for rare but serious adverse effects associated with COVID-19 vaccines distributed through COVAX, thereby protecting participating governments and providers as well as vaccine manufacturers from liability. However, this scheme only applies to vaccines acquired through COVAX. A more comprehensive scheme does not exist today.

• While high-income countries have been able to waive manufacturer liability by law and regulation, and cover the costs of compensation of adverse events directly, other country governments do not have the arrangements or financing in place. Indeed, for various bilateral procurement deals in COVID-19, vaccine manufacturers have asked governments to grant them immunity from civil liability arising from adverse events that could result from the use of the vaccines. 
  • A number of jurisdictions had given vaccine manufacturers indemnity from covering adverse events, placing national assets as collateral.

103. The MDBs should work with countries and private insurers to develop risk financing solutions to cover adverse compensation events, particularly in the form of no-fault compensation schemes or an explicit compensation fund with pre-determined compensation awards. 

• These schemes can be pooled internationally, including amongst G20 governments, and could be put in place in the inter-pandemic period, supported by international financing. 

104. We have also considered the broader application of insurance solutions to better manage pandemic risks. 

• The experience with the World Bank Pandemic Emergency Facility (PEF)⁵⁴ points to the significant difficulties in deploying insurance solutions, including the need for transparency, better design of risk triggers, and a rigorous assessment of whether the benefits of protection outweigh the costs.

• Any viable insurance solution will require that we first do much better at improving the data, science, surveillance and analytics needed to forecast, assess, and price pandemic risks.
  • The data to model risks in most countries is not available. There is potential for innovative methods for capturing this data, for example via social media.
  • More work is needed to develop better data and models over time, to quantify pandemic risks and the potential impact of future pandemics.

• There may be risk pooling solutions between countries⁵⁵ that can enable better management of pandemic risk:
  • Risk Diversification. Risk pools can achieve some degree of diversification, as there may be more localized/regional outbreaks requiring a quick fiscal response, especially in the earlier stages of a pandemic.
  • Risk Reduction and Tranching. In a risk pooling agreement, governments need to be ready to manage the impact of such residual risks through pre-agreed post-disaster plans, backed by pre-planned financing. The process of developing such post-disaster actions plans and identifying related costs can also generate risk information and create incentives to step up investments in prevention and adaptation to reduce risks in the first place⁵⁶. The incentive to reduce the cost of insurance premiums by voluntarily reducing exposure to risk is particularly compelling and insurance can therefore contribute to a positive risk-reducing feedback loop⁵⁷.
  • Cost Efficiencies. The pooling of risk also has the advantage of improving the affordability of coverage through lowering costs of reinsurance, and sharing of fixed costs (e.g. cost of capital, operating costs and cost of risk information)⁵⁸.