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Pandemic Bonds: Future Funding for Outbreak Response? Public Health Watch Report

JUL 05, 2017 | BRIAN P. DUNLEAVY
As the commercial tagline says, “What happens in Vegas, stays in Vegas.”
 
However, you don’t have to travel to Nevada’s “Sin City” to place a bet on pandemic infectious diseases.
 
At a time when President Trump and the Republican-led Congress are seemingly betting against there being an outbreak of an infectious disease that affects the United States, either directly or indirectly—by cutting nearly $1 billion in annual funding earmarked for the implementation of vaccination programs and other prevention-related initiatives as part of the proposed American Health Care Act legislation currently being debated in the US Senate, other world leaders are taking a decidedly different, and arguably more creative, approach.
 
According to a report by business news website Quartz, on June 28, 2017, the World Bank announced that it plans to issue $425 million in so-called “pandemic bonds and derivatives” to help fund its planned $500 million Pandemic Emergency Finance Facility (PEF), which will “channel surge funding” to at-risk countries in the developing world. Quartz compares the pandemic bonds to catastrophe bonds, which insurance companies use to “shift risks” of natural disasters to the financial markets. Artemis, which tracks sales of catastrophe bonds, says the market for them exceeds $90 billion annually.
 
“With this new facility, we have taken a momentous step that has the potential to save millions of lives and entire economies from one of the greatest systemic threats we face,” World Bank Group President Jim Yong Kim said in a statement released by the institution. “We are moving away from the cycle of panic and neglect that has characterized so much of our approach to pandemics. We are leveraging our capital market expertise, our deep understanding of the health sector, our experience overcoming development challenges, and our strong relationships with donors and the insurance industry to serve the world’s poorest people.”


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