Experts cite Ebola’s indirect cost, urge public-private partnerships

By Jin Wu

Chicago health care and economic experts said the indirect cost of Ebola is enormous and partnerships between public and private sectors could be a solution for “the market failures” in Ebola prevention and treatment.

Dozens of people attended a public conversation called “The Cost of Health Crisis” Wednesday night at Chicago’s Harold Washington Library, discussing about the economics of pandemics, in this case, Ebola.

Emergency legislation gives the National Institutes of Health (NIH) $238 million for Ebola research and vaccine development as part of a government-wide $5.2 billion appropriation to strengthen U.S. public health service and also contain the outbreak in West Africa.

However, one key idea that was repeatedly raised in the panel was the indirect cost of public risk aversion caused by Ebola, which may generate far more economic damage than the direct expenditures, both in epidemic areas and elsewhere.

“Costs of pandemics like Ebola include both direct and indirect ones,” said Robert A. Weinstein, MD, former chair of medicine at the Cook County Health and Hospitals System. “Direct ones are hospitals’ investment and patients’ payments. However, it cannot be ignored that there is an enormous amount of indirect cost on the whole society including life loss, lost productivity and reduced quality of life.”

“Irrational behavior caused by unfounded fear,” as Northwestern Feinberg School of Medicine Dr. Catherine Belling put it, threatens human identity and human connection in individual daily life. As a recent World Bank Ebola report stated, this cost of fear may be the most expensive result of the Ebola crisis.

“Ebola [is] scary because people make it scary,” said Dr. Weinstein. “Currently the most important thing is the trust of the population. It will be one of the key factors that decide the economic cost of Ebola, and leaders should think about how to gain that trust.”

The Dow Jones Industrial Average dropped from 16981.3 on Oct. 8, 2014 to 16119.3 on Oct. 16, 2014 when media coverage volume about Ebola reached the peak point.  (Bloomberg)
The Dow Jones Industrial Average dropped from 16981.3 on Oct. 8, 2014 to 16119.3 on Oct. 16, 2014 when media coverage volume about Ebola reached the peak point. (Bloomberg)

An examination of last fall’s stock market trading reveals an apparent correlation between Dow Jones Industrial Average and Ebola media coverage. Investors’ concern about the economy may not be the only reason behind the big drop in mid-October 2014; susceptible productivity in West Africa could be another one.

“There are a handful of commodities [that are] largely produced in West Africa which are hardest hit by Ebola such as cocoa beans,” said Dr. Rena Conti, assistant professor of hematology and oncology at the University of Chicago. “They are largely related to labor who work in the field to produce materials. Thus the Ebola outbreak has economic applications on the stock market.”

Dr. Rena Conti, assistant professor of hematology and oncology at the University of Chicago, talks about the economic implications of Ebola prevention and treatment.
Dr. Rena Conti, assistant professor of hematology and oncology at the University of Chicago, talks about the economic implications of Ebola prevention and treatment at the panel Wednesday night. (Jin Wu/Medill)

Dr. Conti also recommended partnerships between the public and private sectors. Experimental biopharmaceutical drug ZMapp® was cited as a result of corporations partnering with government to produce Ebola vaccine.

“The companies have the unique friendship with the U.S. government to ramp up supplies of the drug so that they will be more available for enrollment and clinical trials, in the medium term and also in the long term,” Dr. Conti said. “It’s a very nice example. Hopefully it will succeed.”

Drugmakers such as Mapp Biopharmaceutical Inc., Johnson & Johnson and logistics company Pacific Architects & Engineers Inc. are part of a $2 billion government contract to develop vaccines and drugs, and transport medical facilities.

The $2 billion one-year contract between the U.S. government and pharmaceutical and logistics companies for Ebola response.  (Bloomberg / Jin Wu, Medill)
The $2 billion one-year contract between the U.S. government and pharmaceutical and logistics companies for Ebola response. (Bloomberg / Jin Wu, Medill)

According to Dr. Conti, the partnership between the U.S. government and corporations could be a solution for what she termed “the market failures.”

“Governments face time-inconsistent incentives,” she said. “Before a vaccine or drug is developed, the purchasers want producers to invest in research and development and establish large-scale production facilities. But once a vaccine or drug is developed, purchasers want the vaccine to be sold at the lowest possible price. Therefore, firms that produce the vaccine or drug are reluctant to make the requisite R&D investments in the first place.”

Maria DeTolve Donoghue, an independent healthcare consultant in the audience added, “I think it’s the combination of failures in what should have been mainstream [healthcare] and then you put your hope with this startup to form those kind of public private partnerships Dr. Conti referred to. … The costs are so high, resources are so limited so that we have to have new paradigms. New paradigms for using clinical data, new paradigms for product trials, new paradigms for partnerships and alliances.”

Family nurse practitioner Karen Heffernan, also in the audience, commented, “What I learned is that public health is public wealth. But I think what the panelists missed to mention is the integration of non-profit organizations in fighting Ebola such as the Gates Foundation and Doctors Without Borders.”