Washington Editor

WASHINGTON - Beyond the health risks, the economic impact of avian influenza also would be widely damaging, largely because of the global system in which the world operates.

That was the take-home message from a number of speakers who recently addressed the matter at a one-day conference convened by the Center for Health Transformation, an advocacy organization founded by former House Speaker Newt Gingrich, who himself asserted that "the threat of avian flu is real." As everyone's health is vulnerable to a bird flu-borne pandemic - several speakers at the meeting predicted the deaths of millions around the world - everyone also is financially susceptible because of the tenuous monetary links that exist in the world today.

Recent estimates from the Congressional Budget Office predict that a pandemic could cost $675 billion to the U.S. economy. Further forecasting the financial ramifications of a pandemic, Michael Osterholm, a professor in the University of Minnesota's school of public health, predicted a "12- to 18-month global blizzard," a period of prolonged economic uncertainty that would cascade into trade disruptions felt in every nation.

Because such a worldwide downturn would seem an inevitable consequence of a pandemic, Osterholm warned that U.S. policy-makers cannot afford to make plans with an overly narrow America-centric focus because of the country's intricate supply links to the rest of the world.

"We will see a collapse of the world economy," he said at the conference, later adding that "it matters what happens to the rest of the world."

Not All See Durable Downturn

Others aren't so sure, and sounding a more cautious tone was Peter Morici, a business professor at the University of Maryland. He noted that the severity of any financial downturn remains dependent on the scope of the pandemic.

"If you're talking about 20 percent of the population getting sick, that would have rather disastrous consequences on the economy," he told BioWorld Today, especially if an outbreak is geographically concentrated and proves highly lethal. "But if those people got well, would the economy recover? Absolutely."

Morici, who was not associated with the meeting, attributed that recovery ability to an economic resilience and added that a pandemic wouldn't damage infrastructure in the ways that natural disasters do.

"Nothing is all that concentrated anymore in the U.S. economy," he said, later adding that negative market reactions would only last as long an economic reaction. Initial investor panic is inevitable, Morici said, because "the market herds a lot."

But he predicted a quick rebound, as the economy would handle any pandemic-borne slowdown and move forward. "Blows to the U.S. economy tend to get absorbed and then recycled out," he said.

For drug makers, a ripple of negative effects from world trade troubles is possible, acknowledged Christopher Colwell, the Biotechnology Industry Organization's director of health care regulatory affairs. That's because many of them depend on international trade for a range of services, from product components to manufacturing, and from development partnerships to investments.

Governmental Action Still Pending

Part of the proposed pandemic preparedness legislation addresses those concerns, with the intent of returning vaccine manufacturing stateside. But there remains uncertainty on Capitol Hill as to whether the legislation will move before the session ends in advance of Dec. 25. Other issues related to hurricane relief, taxes and troop movements abroad have taken precedence, said Rep. Michael Burgess (R-Texas), a member of the House of Representatives subcommittee that is tackling the matter, although it was to be discussed in conference last weekend in the context of a defense appropriations bill.

Many finger pointers, including vocal members of both parties, are laying blame at the feet of a group of House Republicans who fear the cost of President Bush's $7.1 billion plan is too high. Osterholm criticized the perceived lack of movement and said that "we're getting much more in the way of rhetoric out for Congress right now and not action." But others, including Gingrich, accused Democrats of holding up progress.

The public surprisingly remains largely nonplussed about the pandemic planning efforts. Poll results released during the meeting showed that almost half of respondents felt the pandemic threat to be exaggerated, which means that legislators aren't being pushed by the majority of their constituents to move more quickly. Still, Bill McInturff, a partner for the polling firm Public Opinion Strategies, praised policy-makers for generally working ahead of public awareness on the issue. Nevertheless, Colwell stressed that "we need to get started now," and Burgess urged the audience to keep pressure on the politicians.

The congressman, a physician who was elected to office four years ago, agreed that money must be spent, but said it should be spent wisely to stockpile antivirals and improve vaccine manufacturing techniques in order to create the kind of surge capacity public health officials say would be necessary to ramp up production in short order. Gingrich's group, which advocates improving health care by updating medical practices with 21st century technology, noted that all pandemic preparations would lay the groundwork for a far more advanced health care system - "a dual-use investment," he said, even if bird flu fears never become reality.

Morici, who is skeptical about the doomsday predictions, nonetheless agreed that the future benefit of updating vaccine production techniques outweighs inaction. "If this gives us impetus to take a hard look at this industry and make it more resilient," he said, "that's a good thing for public health. What's good for public health is good for the economy."

Burgess echoed the drug industry's longstanding push for liability protection, and also called for updated antitrust laws to allow those companies to communicate with each other without fear of collusion charges.

He also said compensation funds should be available for people who take vaccines, in particular to ensure that first responders get inoculated without worrying about a lack of indemnity. But merging manufacturer liability protection with compensation funds remain an obstacle on Capitol Hill.

Predicting Initial Impact

Should a pandemic emerge, the immediate effects are likely to arise from behavioral changes, as people seek to avoid exposure to others. Service industries, such as transportation and tourism, would slow first. More broadly, sectors dependent on discretionary spending would be hit the hardest.

That scenario played out just two years ago, with the rapid spread of severe acute respiratory syndrome in Southeast Asia and Toronto. Milan Brahmbhatt, an economist for the World Bank, said East Asia absorbed a 2 percent loss in gross domestic product in a single quarter during the SARS outbreak, but cautioned a 2 percent worldwide GDP loss as a result of bird flu "is likely to be an underestimate." Instead, he pointed to higher projections of 4 percent to 5 percent over the course of a year, equal to about $1.5 trillion.

Morici wasn't sure of that figure, but conceded that there could be "great harm to the economy if you take out critical people, and you take out large numbers of them." But because he said they tend to be geographically scattered, and given government plans to protect such individuals, "the combination of the two makes it unlikely that we'll have a disaster scenario."

Still, Morici and others agreed with Gingrich's assessment that while the pandemic threat remains "indeterminate," the planning and preparations are "not an exercise in futility."