Inside the World Bank's Pandemic Emergency Facility

By Jeff Tyson 23 May 2016

James Cooper, Sunday Bondo and Patrick Lappaya work together to take a sample swab to help determine the death of a woman at the C.H. Rennie Hospital in Kakata, Margibi County in Liberia. The World Bank’s new financing mechanism to prevent and respond to global pandemics launched this weekend. Photo by: Dominic Chavez / World Bank / CC BY-NC-ND

World Bank President Jim Yong Kim’s plan to prevent future pandemics is one step closer to reality.

On Saturday, the World Bank Group officially launched its much anticipated Pandemic Emergency Financing Facility — a financing mechanism designed to quickly mobilize funds to tackle global disease outbreaks and create a new insurance market for pandemic risk. Questions linger about how effective the new mechanism will be, how much money it can leverage, and whether it can stand the test of time against pandemics that are growing more frequent and more costly.

The international community struggled to effectively mobilize funds to bring an end to the Ebola virus outbreak that ravaged West Africa in 2014, killing thousands. The latest global health emergency to grip the world’s attention — the Zika virus — is highlighting again just how ill-prepared the international community is to fund cross-border outbreak response. Three months after the U.S. White House requested $1.9 billion for Zika, the U.S. Congress is still arguing over the sum.

According to the World Bank president, the Pandemic Emergency Facility will bring much needed coordination and speed to future global disease outbreak response efforts.

World Bank ramps up discussions on Zika response

As Zika virus continues to spread through Latin America and the Caribbean, the World Bank is working to develop its response to the outbreak.

“As an infectious disease physician, I can say with confidence that if we had had the PEF up and running in mid-2014, the Ebola outbreak would have looked very different,” Kim told reporters Friday. “The facility would have released an initial $100 million as early as the beginning of July 2014, when there were fewer than 500 deaths from Ebola.”

The launch of the PEF over the weekend prefaced the G-7 Summit in Ise-Shima, Japan. The Japanese government became the first donor to the new initiative, committing $50 million. Their commitment indicates that the PEF is “now a viable instrument,” Kim told reporters, adding that it will be operational by the end of 2016.

Pandemic insurance

Kim first announced his plan to develop a Pandemic Emergency Facility in early 2015, but the idea was discussed internally at the bank during the height of the Ebola crisis, Keith Hansen, vice president for human development at the World Bank, told Devex.

Hansen described a “recurrent and growing frustration at the lack of adequate mechanisms” for responding to epidemics and said that during the Ebola outbreak, it was clear that a “global gap in readiness” needed to be filled.

The PEF, which the World Bank designed in collaboration with the World Health Organization, reinsurance companies Swiss Re and Munich Re and other partners, is meant to work almost like an insurance policy, but one that protects against deadly disease outbreaks by ensuring “surge funding” to response efforts. PEF funding will be disbursed according to a complex “trigger” mechanism and activation criteria based on four categories of infectious diseases.

Low-income countries eligible for International Development Association loans would be eligible to receive financing from the insurance window of the PEF if they are affected by an infectious disease outbreak that — based on the category of the disease — spreads at a certain rate or causes a certain number of deaths. The PEF can also fund certain agencies that are involved in response efforts.

In addition to its insurance component, the PEF will also have a “cash window,” designed to account for diseases that are not covered under the activation criteria and are harder to predict. Zika would fit this description.

The PEF’s complexity and multiple funding windows are drawing criticism from some global health and development experts eager to see something a bit more straightforward.

“Now we have all these blended finance mechanisms that have become chic in the global health world and the development world, and it’s just really, really hard to understand,” Laurie Garrett, senior fellow for global health at the Council on Foreign Relations, said of the new funding facility.

Garrett also worries the facility won’t be financially sustainable. “Anything less than a very substantial amount of money in the billions is going to be inadequate, and it will be spent down so rapidly,” she said.

The insurance component of the PEF will have an initial size of $500 million for a period of three years, and the cash window will likely be in the hundred million dollar range, although that number hasn’t yet been determined, according to Kim. Others agree there will still be a pandemic funding gap even after the new facility takes off.

“The PEF does not assure sustainable resources scalable to potentially huge needs,” Lawrence Gostin, director of the O’Neil Institute for National and Global Health Law at Georgetown University and director of the WHO Collaborating Center on Public Health Law and Human Rights, wrote in an email to Devex. “There is no assurance of long term financing from donors or the continuing engagement of the reinsurance industry.”

When the PEF was still on the drawing board, one alternative proposal was simply to develop a contingency fund for global health emergencies that donors could contribute to, Hansen said.

The problem with a contingency fund, according to Hansen, is that it raises difficult questions about who is responsible for funding it, and how replenishment of the fund would occur. It would also be difficult to ensure that funds would flow quickly, Hansen said, “especially in an environment where resources are tight.”

The World Bank’s role in pandemic response

The World Bank’s creation of the PEF represents an important shift in the way the global financial institution approaches global health emergencies — and signals new leadership in pandemic response that many in the global health community are quick to welcome.

“The fact that [the PEF] actually has become something that is concrete ... in and of itself represents a sort of success, because there’s nothing like it for health emergencies,” Josh Michaud, associate director with the Global Health Policy Team at the Kaiser Family Foundation told Devex.

“Because it’s the first [mechanism of its kind], it clearly is going to have a lot of issues and unanswered questions and they’re going to be working out the kinks as they go,” Michaud added.

Gostin too, added his praise, writing in an email, “this is a vital and innovative initiative, and I congratulate Jim Kim who has personally led this effort in a tireless manner.”

But even those who congratulate the World Bank for its proactivity have stopped to ask what it says about the broader international health security architecture. Why isn’t the World Health Organization the lead organization on pandemic preparedness and response, some have wondered. “The PEF appears to circumvent WHO,” Gostin pointed out.

For Garrett, that could present a problem, considering what she called the World Bank’s, “spotty record, at best, of determining health priorities and expenditures.”

The responsibility of directing large scale responses and assessments of global disease outbreaks should fall to a “semi-autonomous unit located within WHO but capable of operating independently,” she said.

This unit would be like “a plasmid moving in and out of a cell,” Garrett added, and it would have its own budget and board of directors.

Still, the PEF’s model is designed to be collaborative, and the facility has so far been met with praise from its peer institutions. The WHO plays a key role in data collection for the activation criteria and “trigger” mechanism, and WHO Director-General Margaret Chan welcomed the new facility, calling it a “critical contribution to global health security and a crucial line of defence against high-threat pathogens.”

World Bank officials too are quick to defend the bank’s unique position in pandemic response and the institution’s close collaboration with its partners, including the WHO.

“We are exercising our responsibility as part of the global system along with our partners in the U.N. system, among other multilaterals, bilateral support and NGOs,” Hansen said, adding that financing for global disease outbreaks requires “an understanding of the private sector, of insurance markets ... experience in health responses and tight links to the U.N. system, above all, WHO.”

“The bank had a responsibility to use our unique relationship to all those different entities to try to bring this forth,” Hansen said. “But it was very much done hand in glove with the WHO and the other partners ... because this is how the bank contributes to the larger effort.”

In the months ahead the architects of the PEF will be tasked with explaining their new facility to policymakers, health professionals, private sector leaders, and donors. Bank officials hope that part of the PEF’s success will be the creation of a new market for pandemic insurance, similar to that of other types of risk insurance that cover catastrophes or natural disasters.

“It may be some time before we can demonstrate that we’ve had an impact,” Hansen said. “But even long before we get there, the sheer fact of having genuine binding insurance and the knowledge that this money could flow within days rather than months is in itself an achievement. It’s something we’ve never had before.”

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About the author

Jeff tyson 400x400  1
Jeff Tyson@jtyson21

Jeff is a global development reporter for Devex. Based in Washington, DC, he covers multilateral affairs, U.S. aid and international development trends. He has worked with human rights organizations in both Senegal and the United States, and prior to joining Devex worked as a production assistant at National Public Radio. He holds a master's degree in journalism from Columbia University and a bachelor’s degree in international relations and French from the University of Rochester.


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