How innovative financing will help prepare for future pandemics 

For the first time ever, governments across the world now understand the need to take pandemic preparedness seriously.

But while there may be broad consensus in the G7 and G20 about some of the measures needed to prevent — or at least mitigate — the next pandemic, one of the most pressing questions remains unanswered: how are we going to pay for it?

Given the economic repercussions of the war in Ukraine, and with many governments still reeling from the economic impact of COVID-19, is there a smart and pain-free way to achieve pandemic preparedness?

With innovative financing there is.

For more than a decade, such mechanisms have been used to optimize public and private sector funds and reduce financial risk, in order to accelerate access to health and medical interventions. This has already prevented millions of deaths. In fact, throughout this pandemic, innovative financing has protected hundreds of millions of people from COVID-19.

COVAX, the global and multilateral push to offer much-needed vaccines to people in all countries, would not have been possible without one such mechanism: the Gavi COVAX Advance Market Commitment (AMC). Supported by donors, the COVAX AMC was created to make doses equitably available to people in 91 lower-income countries that would otherwise struggle to access them. To date, the Gavi COVAX AMC has delivered more than 1.2 billion COVID-19 vaccine doses.

A new partnership between Gavi, MedAccess and the Open Society Foundations now aims to go further. The goal is to use innovative financing to help lower-income countries meet their national COVID vaccination targets.

By providing a $100 million procurement guarantee, MedAccess, with further callable support from the OSF, will enable COVAX to secure doses from manufacturers on behalf of partner countries as part of its cost-sharing agreements with AMC countries. Low-income countries will benefit from lower prices, while reducing the need for Gavi to hold donor funds to backstop country vaccine purchases through COVAX.

In a sense, this new partnership is all about pandemic preparedness — building tools and instruments that can be used to prepare for potential challenges we may face in trying to stamp out COVID-19. Because, even as countries with high vaccine coverage relax restrictions and reopen their societies, the risk of new variants emerging and triggering fresh resurgences remains. With 2.8 billion people worldwide still unvaccinated, that threat will persist until coverage increases in all countries.

The emergence of the Omicron variant of COVID-19, and the subsequent mutations to it that may have made it even more transmissible, is a testament to the urgency with which we should vaccinate the world.

It is absolutely critical that we prepare for the possibility of even deadlier variants by helping countries protect more of their citizens now.

With the Gavi-MedAccess partnership, lower-income countries can, for the first time, independently access vaccines through COVAX’s globally negotiated terms without needing wealthier countries to backstop the finances while deals are being concluded.

Those are deals that lower-income countries, due to their individual size or experience, would have struggled to strike on their own or with similar terms without COVAX’s support.

To prepare for future pandemics, other tried and tested innovative finance mechanisms already exist that could help take the financial sting out of the price of preparation.

Take the International Finance Facility for Immunisation (IFFIm). Since 2006, IFFIm has been accelerating access to childhood vaccines in lower-income countries by issuing vaccine bonds against long-term donor government pledges.

IFFIm uses an approach known as frontloading, in which government guarantees give the bonds a rate of return that is attractive to capital market investors. When they are purchased, these long-term funds are available to global health programs immediately. In this way, IFFIm has helped Gavi protect an additional 99 million children sooner from vaccine-preventable disease.

Given the current economic climate, this kind of frontloading could improve global pandemic preparedness now, while allowing donor governments to spread the cost.

The fact that the world now has an approved malaria vaccine ready for distribution is thanks, in part, to an innovative financing agreement. MedAccess underwrote Gavi’s risk in funding the production of the vaccine while the manufacturer, GSK, awaited key policy and funding decisions.

This malaria vaccine — a major step forward in preventing the deaths of hundreds of thousands of people every year — speaks to the potential of innovative financing in the healthcare field broadly, not just for COVID-19. Innovative finance could play a key role in unlocking funds that would accelerate the development of other medical and health innovations, such as new mRNA vaccines, diagnostics and therapeutics.

Similarly, we now have a global stockpile of Ebola vaccines thanks to a mechanism called an Advance Purchase Commitment (APC), created by Gavi. The APC provided strong incentives for manufacturers to develop and bring to market Ebola vaccines in the absence of a viable market. It also made it possible for doses of the investigational vaccine to be deployed during an outbreak, on a compassionate use basis, even before it was licensed.

This meant more than 300,000 people in the Democratic Republic of the Congo were protected during a large outbreak in North Kivu and Ituri provinces, which began in 2018 and threatened to spill over into neighbouring countries.

Making the vaccine swiftly available played a central role in bringing that epidemic to an end.

There is also huge untapped potential for innovative financing to prevent outbreaks long before they reach epidemic or pandemic proportions. By making fast and efficient use of funds to make health interventions available rapidly, we can put an early stop to outbreaks and protect countless lives and livelihoods.

This is not just a great idea. It is a concrete solution — one that is already saving millions of lives and donors millions of dollars.

But to be most effective, pandemic preparedness requires early investment. Given the $12.5 trillion cost of COVID to the global economy, governments now know that if they don’t invest the billions of dollars needed to achieve global pandemic preparedness, then they will surely pay for it later.

Innovative financing can make that essential investment more palatable by helping to spread the cost — not only for wealthier governments, but for poorer ones too.