Severe Flu Pandemic Would Move U.S. Into Recession, CBO Report Finds
A severe flu pandemic could cause a 5%, or $675 billion, reduction in U.S. gross domestic product and move the nation into a recession because of the loss of productivity and decrease in consumer spending, according to a Congressional Budget Office report released on Thursday during a speech by Senate Majority Leader Bill Frist (R-Tenn.), CQ HealthBeat reports (CQ HealthBeat , 12/9). The report, requested by Frist, marks the "government's first attempt at a detailed look" at the potential costs of a flu pandemic, the Philadelphia Inquirer reports (Pugh, Philadelphia Inquirer, 12/9).
Under the worst-case scenario -- for which the report estimates a risk of one-third of 1% annually -- 90 million U.S. residents would become ill, and two million would die (Freking, AP/South Florida Sun-Sentinel, 12/9). According to the report, about 30% of the work force would become ill and miss at least three weeks of work (Godfrey, Wall Street Journal, 12/9).
Lost productivity from a decreased workforce and disruptions in supply chains from quarantines or transportation shutdowns would result in a 3% annual reduction in GDP, according to the report. In addition, the report estimates that an 80% decrease in demand for entertainment, a 25% reduction in retail sales and a "dramatically reduced demand for travel services" would result in a 2% annual reduction in GDP (CQ HealthBeat , 12/9).
The report also estimates that a mild flu outbreak would infect 75 million U.S. residents, result in 100,000 deaths and cost about $160 billion, or 1.5% of GDP (Philadelphia Inquirer, 12/9).
Frist, who released the report during a speech at the National Press Club, "used the CBO study to tout six proposals that he said would reduce the economic impact of a pandemic," the AP/Sun-Sentinel reports (AP/South Florida Sun-Sentinel, 12/9). His proposals "closely track" those outlined by President Bush in November, CQ HealthBeat reports (CQ HealthBeat , 12/9). They include a $1 billion investment in disease surveillance systems and the stockpile of a supply of Tamiflu to treat 25% of the U.S. population at a cost of $1.35 billion.
In addition, the plan calls for the formation of a communications system that would update the public every six to eight hours about flu symptoms, cases and outbreaks to help "allay irrational fear," according to Frist (AP/South Florida Sun-Sentinel, 12/9). The plan also calls for an increase in the number of individuals whom the federal government recommends should receive vaccinations in the event of a flu pandemic. According to the Journal, the plan, which
Frist said would reduce the cost of a flu pandemic by 50%, focuses on efforts to improve the U.S. vaccine manufacturing system (Wall Street Journal, 12/9). The plan includes liability protections for vaccine manufacturers, which some experts maintain are necessary to "jump start the risky and often unprofitable vaccine business," according to CQ HealthBeat.
Frist said, "We have a dangerously inadequate vaccine manufacturing base in this country. Why? Bottom line: There's so little profit and so much uncertainty." Frist also said that he hopes to negotiate "fast, fair and equitable" compensation for patients injured by vaccines (CQ HealthBeat, 12/9). He also said that liability protections for vaccine manufacturers would remain "narrowly focused" and "only for specific countermeasures" (CongressDaily, 12/8).
"A nearly $700 billion hit to the economy -- almost half of which is brought on by fear and confusion --- gives us every reason to begin preparing a prescription and implementing a course of action," Frist said (Wall Street Journal, 12/9).
HHS Secretary Mike Leavitt said, "While the analysis estimates a $675 hit to the American economy, it is clear that this impact can be lessened by actions we take today. It is time for Congress to act on the President's request" (CQ HealthBeat , 12/9).
Public Citizen in a statement on Thursday said that the proposal by Frist "to immunize the drug industry from the legal accountability for death, disability or sickness caused by the use of pandemic flu vaccines and pharmaceuticals would be a gift to industry, but bad medicine for consumers," adding, "Frist's plan is especially troubling because it provides no means for victims who are seriously injured to seek compensation, unlike other federal vaccine programs" (Stanton, Roll Call, 12/8).
In related news, Leavitt, Department of Homeland Security Secretary Michael Chertoff and Department of Commerce Secretary Carlos Gutierrez on Wednesday released a checklist to help companies prepare for a potential flu pandemic.
The checklist recommends that companies determine how to communicate with employees during a flu pandemic and establish policies for infected workers. In addition, the checklist recommends that companies estimate employee absences from flu, determine how to handle employees who become ill at work, establish flexible worksites, distribute resources to help protect employees and communicate the status of employees to outside organizations (CQ HealthBeat , 12/9).
According to a survey of 200 Fortune 500 companies released by International SOS, only 26% of companies have begun to plan for a flu pandemic, and only 1% have completed their plans (Appleby, USA Today, 12/9).
At an avian flu preparedness conference in Washington, D.C., where the checklist was released, Tara O'Toole, CEO and director of the Center for Biosecurity at the University of Pittsburgh Medical Center, described a flu pandemic as "more difficult and worse than a large terrorist attack, bomb, dirty bomb or airplane slamming into a building" (Higgins, Washington Times, 12/9).
The federal government will release additional checklists for families, schools, community organizations and the travel industry in the next few weeks, CQ HealthBeat reports (CQ HealthBeat , 12/9).
Meanwhile, the House and Senate on Thursday continued to negotiate over how to fund the $7.1 Bush administration flu pandemic preparedness plan. According to CQ HealthBeat, the "most likely vehicle" for funds for the plan is the fiscal year 2006 Department of Defense appropriations bill (HR 2863).
Allison Dobson, a spokesperson for Sen. Tom Harkin (D-Iowa), said that congressional Republican leaders and negotiators might provide about $4 billion for the plan in the bill. She added, "We think that there should be funding for the full amount. We do think that $4 billion is certainly better than zero" (CQ HealthBeat , 12/9).
Sen. Chuck Schumer (D-N.Y.) on Thursday issued a press release that said Roche Holding -- which manufactures Tamiflu, the antiviral medication considered most effective against avian flu -- has "reached agreements with major domestic generic drug companies Teva Pharmaceuticals and Mylan Laboratories, as well as 13 other drug producers" to manufacture the treatment.
According to Schumer staff members, Roche approved the language in the release. However, a spokesperson for Roche only said that the company has entered "advanced discussions" with generic pharmaceutical companies interested in Tamiflu production.
A Mylan spokesperson confirmed that the company has entered "advanced discussions" with Roche, and Teva referred questions to Roche (USA Today, 12/9). Schumer said that Roche officials have reached agreements in principle with Mylan and Teva but added that they will not make commitments until they determine how much Tamiflu governments will order and whether the company requires outside manufacturers to meet the demand, the New York Times reports (Pollack, New York Times, 12/9).
Schumer said, "Roche has made the right decision. Instead of closely holding their patent rights and production techniques, in the face of a global health risk, they've moved swiftly to partner with multiple companies to dramatically increase production of this potentially life-saving drug" (Wall Street Journal, 12/9).
The CBO report is available online. Note: You must have Adobe Acrobat Reader to view the report.
National Geographic Channel on Sunday at 9 p.m. ET is scheduled to air "Race Against the Killer Flu," which examines efforts by epidemiologists and virologists worldwide to isolate the H5N1 virus and prevent an avian flu pandemic. A video excerpt of the program is available online (National Geographic release, 12/9).