The White House’s $65 billion pandemic preparedness plan falls short

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President Biden signed Executive Order 13987 on the day he took office, ordering White House staff to complete in 180 days a review of emerging domestic and global biological risks and national bio-preparedness policies and make recommendations concerning them. That review, whether derailed by the Delta variant of COVID-19 or the Kabul debacle during our withdrawal of troops from Afghanistan, didn’t happen. 

Instead, on the Friday afternoon before the Labor Day weekend, when White House press offices often take out the trash, the White House released a report, “American Pandemic Preparedness: Transforming Our Capabilities.” The report announced that the administration is engaged in a whole-of-government review and update of U.S. national bio-preparedness policies. The work will culminate in the release later this year of the administration’s “strategy on biodefense and pandemic readiness.” Don’t hold your breath. 

The report is big on new budget needs — $65 billion over seven to 10 years, including some $15 billion already pitched to Congress — but short on ideas and analysis. President Biden’s executive order appropriately stated that the 180-day review and recommended actions “shall incorporate lessons from the COVID-19 pandemic.” Regarding lessons learned from COVID, the report declared to the contrary that, “While there are important lessons to be learned from COVID-19, we must not fall into the trap of preparing for yesterday’s war.” A critic might conclude that the report was written largely by the same experts who led pandemic preparedness efforts prior to COVID.  

After all, one key lesson of COVID-19 that public health experts are having a hard time processing is this: The pandemic flourished not because people were unaware of the threat, but because they lacked actionable information necessary to justify appropriate investments in safety. 

Hollywood, of all places, demonstrated this widespread public awareness of public-health threats. Blockbuster movies such as “Outbreak” (1995), “I Am Legend” (2007), and “Contagion” (2011) made the public aware of apocalyptic pandemics, serving as an unlikely portent of problems to come. 

But it wasn’t just the film industry. A 2018 Washington Post story reported that Bill Gates, a vocal advocate and global health philanthropist, had urged former President Trump to prepare for a pandemic that could kill tens of millions. Later, Lisa Monaco and Vin Gupta published an essay in Foreign Policy entitled “The Next Pandemic Will Be Arriving Shortly.” In September 2019, Laurie Garrett, formerly of the Council on Foreign Relations, wrote that “The World Knows an Apocalyptic Pandemic is Coming: But Nobody is Interested in Doing Anything About It.”

The problem is that these warnings and reports from the Centers for Disease Control and Prevention (CDC) and the World Health Organization (WHO) provided little actionable information useful to people deciding how much money to invest to keep workers and customers safe. Such decisions, to be sensible, generally require some information about the probability of a pandemic of given severity occurring by a specific date — something missing from experts’ warnings and those of the CDC and WHO. 

With the Biden administration’s $65 billion proposal from last week, history threatens to repeat itself. Failing to “incorporate lessons from the COVID-19 pandemic,” as the January executive order promised to do, means replicating the blunders from which Americans have suffered these past 18 months. In other words, yesterday’s war could be tomorrow’s, too, without specific, concrete recommendations for improvement.

So, what should the White House report have covered? Two distinct policies are needed. First, the federal government must recognize that improved surveillance and monitoring and reporting of emerging diseases is insufficient. Federal preparedness policy should seek to provide actionable information — credible estimates of probabilities of pandemics of given severity by specific dates. 

One approach to generating such estimates is to promote development of event contracts for pandemics and robust prediction markets such as those recently launched by Kalshi, a designated contract market regulated by the Commodities and Futures Exchange Commission. Such markets, which would benefit investors by allowing hedging, also would benefit policymakers and the public by providing a credible and transparent estimate of the probability of a specific pandemic outcome by a given date. 

A second approach is to develop estimates of the risks of pandemics based on repeated use of expert judgment methods — carefully designed surveys of identifiable experts who are asked their judgments about the probabilities of specified potential future events. 

A third approach is a Big Data early warning system, sketched briefly in the White House report, and building on the now-defunct PREDICT program of the U.S. Agency for International Development (USAID). The program sought to identify where pathogens are most likely to spill over to humans, where they will amplify, and who is at risk. It also sought to provide information on which pathogens are most likely to become pandemic and which control strategies can be most effective. Funding for PREDICT should be restored and increased and, importantly, the program’s goals should be expanded to include developing by target dates credible estimates of the probabilities of new pandemics or outbreaks of new diseases of given severity.  

The second distinct policy the report should have included is the need to facilitate the creation of financial instruments, including prediction markets (a.k.a., event contracts) and catastrophe bonds that enable private-sector hedging of risks associated with pandemics. Prediction markets exist for sundry events but, peculiarly, not for the arrival of the next pandemic, perhaps because of a lack of consensus about a definition that is objective and easily and quickly verifiable. Cat bonds put the risk of a pandemic on the bond holder. In the event of a pandemic that meets the specified level of severity, the cat bond holder would lose some coupon payments and potentially some capital. In compensation for this risk, in the more likely event that no pandemic occurs, the bond holder would expect to get coupon payments substantially above the risk-free rate.

The Biden administration and Congress should take steps now to ensure that federal pandemic preparedness focuses on providing actionable estimates of the likelihood of future pandemics. They also should work to remove regulatory and legal obstacles to the existence and growth of robust prediction markets for pandemic events and cat bonds to allow hedging of pandemic risks by private parties. 

A new wave of Hollywood films may soon arrive, depicting the past 18 months of lockdown in America with varying degrees of focus and aplomb. But with enough careful planning and private-sector entrepreneurship, such films no longer need to be prescient for future crises to come. Unfortunately, the latest White House report on pandemic preparedness, which fails to make good on the promises of Biden’s executive order, doesn’t reassure. 

Randall Lutter, a senior fellow at the Manhattan Institute, served as senior science and regulatory adviser in the Food and Drug Administration’s Office of the Commissioner from 2017 to 2020.

Tags Centers for Disease Control and Prevention COVID-19 pandemic Donald Trump Health Joe Biden pandemic preparedness

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