Governing Pandemics Snapshot: Is Financing Losing on All Fronts?
Countries increased their spending on health during the pandemic. Building interest for investing in pandemic preparedness is proving more difficult.

With a drop in government spending on preparedness and woefully inadequate donor pledges, how can the ambitious new commitments envisioned for a WHO Pandemic Accord ever be financed? This second issue of Governing Pandemics Snapshot, looks at this conundrum and possible solutions, including creative forms of debt relief for low-income nations. 

This issue also provides updates on negotiations over the WHO Pandemic Accord and parallel talks on amendments to the International Health Regulations. Finally, it provides fascinating insights into the thorny question of how “medical countermeasures” might be handled in either accord, where North-South divides persist. In addition there are questions about who might manage a new global countermeasures platform – the G7, G20 or WHO? 

Later this month, the Pandemic Fund Governing Board is due to meet in Washington D.C. to make the first round of decisions on disbursement of some $300-350 million in initial funding for pandemic preparedness. However, due to a woeful shortfall in funds so far raised for the fund, hosted by the World Bank, most of the requests submitted by some 129 low- and middle-income countries will likely be denied.

The first two years of the pandemic saw a sharp rise in government spending for health while the general government expenditure trends remained mostly constant, indicating a great political will at country level to fund a response to an urgent health crisis. 

However, in 2022 as inflation drove increased costs of living in energy and food, trends shifted, with a decline in governments’ health spending – over which the World Bank has expressed concerns.

That has once more left health systems vulnerable, and unable to plan for future crises. Although pandemics and their governance continue to attract attention in Geneva, in relation to the ongoing negotiations over for a pandemic treaty and amendments to the International Health Regulations, recent developments suggest that countries are perhaps not as committed to Pandemic Prevention, Preparedness and Response (PPPR) financing as they initially seemed.

The Pandemic fund – status today  

G7 leaders in Hiroshima, Japan.

The ambitious Pandemic Fund, created late last year within the World Bank, has so far raised around $2 billion including the recently pledged $250 million by the United States, announced at the recent G7 Leaders Summit in Hiroshima. 

But this is far short of the $10.5 billion estimated annual gap in PPPR donor requirement. After the first round of calls for proposals, requests for funding amounting to $2.5 billion have been submitted in some 180 applications from 129 low- and middle-income countries.

All of these requests are competing for the relatively minuscule $300-350 million that the Fund currently has to disperse – meaning that most countries will likely not receive any funding at all – or very minimal funding at best.

Although the Fund may be able to raise more money through replenishment rounds, one recent study by the US-based Center for Policy Impact and University of Leeds, has concluded that “total donor funding requirement is closer to US$ 15.5 billion, rather than US$ 10.5 billion; WHO and WB assume that donors are already providing 100% and 60% of the LIC and LMIC PPR costs respectively, which we believe does not hold outside of pandemic times.” 

Nonetheless, even sticking with the US$ 10.5 billion and under the most favorable scenario of donors increasing the percentage of their GNI given to ODA by 2.5% each year – a mean of US$ 213 billion over 6 years, the PPPR donor requirement gap could not be filled.

PPPR funding in draft treaty – heavily referenced with few real commitments  

WHO member states discuss new pandemic convention or treaty, 18 July 2022.

PPPR financing represents a significant theme in negotiations over a pandemic accord.  In the latest text released by the Bureau guiding the negotiations of the Intergovernmental Negotiation Body, Article 19.3(a) on “financing” refers to a fund  “to be funded, inter alia, through the following sources: i. Annual contributions by Parties to the CA+, within their respective means and resources; ii. Contributions from pandemic-related product manufacturers; iii. Voluntary contribution by Parties and other stakeholders”.  

Additionally, the draft Article 19.3(b) calls for the creation of a second separate “voluntary fund”, which would rely entirely on voluntary contributions by “all relevant sectors that benefit from good public health (travel, trade, tourism, transport)” foreseeing a considerable role of both public and private actors.

Article 19 also seems to privilege voluntary options over binding financing obligations, so it’s unclear whether this fund could realistically be filled. Additionally, it remains unclear if the disbursement of monies from the two funds foreseen by the Bureau’s text would be somehow linked with another key set of issues raised by developing country demands – for example, the sharing of “benefits” derived by pharma from their sharing of data on new and emerging pathogens. 

National and ODA commitments to fund PPPR also watered down 

Furthermore, the Bureau’s text has significantly diluted certain States’ obligations included in the previous Zero Draft text. 

For instance, following the suggestion of more than 60 countries, the document no longer includes the commitment by state parties to allocate a certain proportion of their domestic resources to PPPR. In fact, the obligation to dedicate 5% of their “current health expenditure” to PPPR (art. 19.1.c) was deleted from the most recent version of the text. 

Likewise, more than 30 -mostly high-income- countries successfully lobbied for the removal of language on a parallel obligation by countries to allocate a specific percentage of GDP to international cooperation and assistance for PPPR (art. 19.1.d).

Converting debt repayments into pandemic preparedness investments 

Barbados Prime Minister Mia Mottley.

A new, promising financing option that has been included for consideration in the Bureau’s text is the conversion of a portion of countries’ debt repayment installments into PPPR investments. 

A clause referring to this, Option A in Article 19.6 would establish a programme to “convert debt re-payment into pandemic prevention, preparedness, response, and recovery investments in health”

Creative refinancing of developing country debt has become a rallying cry of Barbados Prime Minister Mia Mottley in her Bridgetown Initiative. Speaking at a recent conference on Noncommunicable Diseases in Small Island Developing States, Mottley stressed that the approach should be used to make badly needed investments in health as well as in climate mitigation and adaptation. 

According to the World Bank’s International Debt Statistics 2022, low-income countries’ debt rose by 12% in two years (2020-2022) as a result of the pandemic. 

Debt burdens hinder the ability of countries to recover and rebuild capacities and further distract resources away from the health sector. A recent OXFAM report revealed how development finance channeled billions into expensive for-profit hospitals in lower-income countries that deny access to healthcare to patients who cannot afford to pay.

WHO budget boost is one optimistic signal 

The World Health Organization operates on a shoe-string budget relative to its mandate.

Against this worrisome context, one optimistic note was sounded at the recently concluded 76th World Health Assembly in May that approved the organization’s programme budget for 2024-2025, including a historic 20% increase in member states’ assessed contributions to the agency’s budget. Although these funds will not be specifically for PPPR, they lay the ground for a more predictable and sustainable WHO’s financial model which will hopefully strengthen its role and capacities in, inter alia, the PPPR domain. 

In conclusion, the landscape for PPPR financing remains unclear and, to some extent, worrisome. There is no guarantee that the Pandemic Fund will be able to secure significantly more resources and the current options inside the pandemic instrument lack strong national and international commitments, while inflation and debt continue to rise. 

As such, financing PPPR is faced with a multiplicity of challenges and risks of being underfunded once again. It takes strong political will and innovative thinking to raise sufficient resources and use them in the most efficient manner.

For more coverage of the negotiation over WHO Pandemic Accord and parallel talks on amendments to the International Health Regulations, see the complete  Governing Pandemics Snapshot.

Image Credits: US Mission Geneva.

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