More than two years since the start of COVID-19, the world needs to ask itself whether it has the collective capacity to detect, diagnose, alert, and contain the next emerging or reemerging communicable disease.

The capacity of countries varies widely. In mid-July 2022, the Worldometer reported a wide variation of national mortality rates, the lowest—in several small countries—being zero, surprisingly only four deaths per million people in China, and more than six thousand per million in Peru. Many doubt the ability of low- and middle-income countries (LMICs) to accurately collect and report data because of their lack of testing capacity, which ranges from only about five thousand to twenty-two million tests per million people. Some countries do not even report the number of tests conducted.

The economic losses due to COVID-19 are enormous. The UN Department of Economic and Social Affairs estimates that COVID-19 will slash global economic output by $8.5 trillion over the next two years, about 10 percent of the 2019 global economy. COVID-19 generates huge externalities across the world regardless of the strengths of national health systems, as seen in the greater economic toll in high-income countries (HICs) than in LMICs.

The world is facing an epidemic of policy prescriptions to meet these challenges. In its role as Group of Twenty (G20) president, Indonesia is proposing a new global health architecture to ensure adequate global funding to prevent a similar global health disaster. In a previous Council of Councils Global Memo, Paola Testori Coggi and Carlos Javier Regazzoni, among others, recommended that the G20 and WHO pursue negotiations on a binding or nonbinding pandemic treaty at the G20 summit in Bali. Japan, which holds the Group of Seven (G7) presidency in 2023, has also proposed an agenda to make the global health system more resilient. On June 20, 2022, the G20 Health and Finance Ministerial meeting in Yogyakarta, Indonesia agreed to establish a Financial Intermediary Fund (FIF) and collected pledge of more than $1 billion for Pandemic Prevention, Preparedness and Response (P3R).

One of the biggest challenges remains financing pandemic preparedness and responses. For example, the WHO’s Contingency Fund for Emergencies and 2021 Strategic Preparedness and Response Plan were funded at only about $2 billion, almost $1 billion short of what was needed to help address COVID-19. The question is whether the more than six million deaths and trillions of dollars in lost global economic output from COVID-19 are due to a lack of effective and equitable funding in prevention and countermeasures, or whether the world simply lacked the necessary technology, coordination, and cooperation to address the pandemic.

COVID-19’s Global Externalities and Inequities

The COVID-19 pandemic clearly demonstrates the huge global externalities of communicable diseases. Infectious diseases require complex and high-cost prevention plans and countermeasures. Current medical and public health technologies are inadequate for responding to the rapid spread of communicable diseases such as COVID-19. Given the mobility of the world’s population, any attempt to prevent people’s movements around the world in response to infectious diseases exacerbates the risks of severe economic damage. During the Spanish flu pandemic in 1918 and 1919, about one-third of the world’s 1.8 billion people were affected. Global mobility was much lower then; travel from London to New York took three and a half days relative to only seven to eight hours now. Today’s faster and more frequent global travel intensifies the risk of all countries’ being affected by an infectious disease. People in LMICs currently have more opportunities to travel to HICs, increasing the risk of transmission in HICs. The three variants of COVID-19 spread from three LMICs—China, India, and South Africa—but the HICs saw considerably larger economic losses.

The world is fortunate that advancements in medical and pharmaceutical technologies allow for far more rapid production of diagnostics, vaccines, and drugs than was possible a century ago. But COVID-19 has revealed wide social and economic disparities across countries. By July 2022, although 66.7 percent of the world population had received at least one dose of a COVID-19 vaccine, only 19.4 percent of those in LMICs had received the first dose of any vaccine. The combination of intellectual property rights, donor preferences, and the inability to purchase enough vaccines has created an inequitable global distribution of necessary interventions for COVID-19 prevention and treatment. This increases the risks of new variants or new diseases in lower-income countries that will threaten the health security of wealthier nations. HICs should therefore have a strong interest in and be responsible for ensuring adequate funding and capacity for prevention, diagnosis, testing, and even treating health risks elsewhere.

Equitable Funding for the Pandemic

Current global health funds are financed on a voluntary basis from countries and corporations. Voluntary contributions lead to disproportionate and inadequate funding to meet the needs of high-risk countries. Political interference in funding and distribution of existing global health funds is also a huge risk. The United Nations was established after World War II to unite the world to overcome and prevent man-made global threats. COVID-19 should thus unite the world to overcome and prevent catastrophic global health risks.

Fortunately, in June 2022, G20 finance and health ministers agreed to establish a FIF to address the financing gap for P3R. Next steps should specify the actions to be funded, amount of funds needed, nature and level of contributions, criteria for use, and distribution.  Many questions on equity, fairness, and risks also need to be answered, including the trade-offs of open borders and detecting and deterring transmission, who is ultimately responsible for transmission, and how countries can most effectively prevent domestic and global transmission.

Modeling from Social Health Insurance

At a country level, health funds have been established based on the concept of social health insurance. The concept has unique characteristics proven to sustainably and equitably meet national health needs. To overcome global health threats, a similar concept could be established globally. It could be managed by an agent under the WHO or by a new entity established for the purpose. The ultimate choice should be examined based on the effectiveness, absence of discrimination, and efficiency of the fund.

A global public health fund based on a social health insurance scheme should have the following characteristics:

1. National contributions should be mandated as a proportion of national gross domestic product (GDP). For example, if COVID-19 reduced the global economic output by about 3 percent, an annual contribution of 0.003 percent of national GDP could be economically justifiable to prevent another significant loss in the future.
2. Funds should be limited to specific actions—for example, to detect, diagnose, or develop new diagnostic instruments and reagents; develop vaccines and or drugs without intellectual property rights; establish a global warning system; and prevent the spread of emerging or reemerging serious communicable diseases. The scope of benefits could be expanded based on health needs with cross-border externalities.
3. Funds should adequately cover these described costs in addition to the human resources and all related administrative costs in member countries affected by prospective global threats.
4. The use of funds should depend solely on the public health needs of the member country whose exposure to an infectious disease could threaten significant economic losses in other countries. No political, geopolitical, social, or economic criteria should limit a member country’s use of the fund.
5. A council should be established to calculate the amount of necessary funds, the proportion of GDP to be assessed for contributions, and how the funds are distributed.
6. No funds should be used to finance ordinary health programs that address health risks resulting from personal behavior.
7. Funds could be used to conduct research of new tools, instruments, information technology programs, diagnostic practices, reagents, vaccines, or drugs for defined benefits without intellectual property rights to ensure that even poor member countries would be able to use any cost-effective interventions. The global community would thus have the benefit of being protected from an outbreak.
8. Additional features of the fund could be discussed and fleshed out during the G20 or combined G20 and G7 meetings within the coming two years.