Council on Foreign Relations
New York, NY
KATHRYN PILGRIM: Ladies and gentlemen, we're ready to start session four.
Welcome to session four of the special meeting at the Council on Foreign Relations. I'm Kathryn Pilgrim, known as Kitty Pilgrim on TV.
In this segment we examine the role of the business community in anticipating and making sure that the systems are in place for a potential pandemic.
First order of business, cell phones off, BlackBerries off, meeting on the record, and we are joined by our colleagues in Washington, DC, and Elizabeth Prescott is joining us there.
So thank you for being with us, Washington.
Let me start with a short, personal comment about this. I reported extensively on the SARS epidemic and picked up fairly early on avian flu. From a medical standpoint, it was probably mid-game, but for the news business, it was pretty early. About a little less than two years ago, Japan, South Korea, Singapore temporarily banned chicken sales from the United States, and the Philippines and Hong Kong and Russia also banned chicken from Delaware only. And that's because in Delaware, 12,000 chickens had to be destroyed. It was the H-7 strain, and it's deadly to poultry, but not—you would know better, but it's probably—it doesn't affect humans.
Now the H-5 strain had been devastating poultry across Cambodia, China, Indonesia, Japan, South Korea, Laos, Thailand and Vietnam, and 50 million chickens and ducks had to be destroyed there.
So a little less than two years ago I dutifully explained all of this in a script, and my editor kept crossing out the H5N1, saying that's too much detail; that's too much detail. So I went on the air, and after much griping about how this was an obscure story, and I explained the risk of H5N1 a little bit as I understood it. And one of the anchors turned to me and he said, well, why should we be concerned? After all, Kitty, this is going on in Asia. And I was on TV, and the only thing I could think of to say back is because birds fly—(laughter)—which didn't go over that well. It seemed an obvious answer.
Now we're at the point where the entire world has moved beyond the obvious. Now we're into very granular details.
And joining me to talk about the business community's role on this is Richard Foster, who's a managing partner, Foster Health Partners; and Gerald Komisar, senior V.P., Global Risk Assessment of AIG; William Kinane, vice president with International Division of Guardsmark.
And gentlemen, thanks for being with us.
Let's just start with a brief statement from each and the perspective and then we'll go into Q&A and then we'll ask your question.
RICHARD FOSTER: Want me just to—
PILGRIM: Yes, why don't you start?
FOSTER: Let me—in preparation for this, I talked to several large corporations in the United States, mainly in the financial field and in the heath care field, about what they were doing. And the first question I put to them is how serious is this? And I think the answers came back and very much in the spirit of a answer I heard this morning, hope for the best and prepare for the worst. So there's quite a bit—at least among the very large corporations, quite a bit of preparation going on.
When we were talking earlier, Kitty was saying that she thinks of American corporations as being particularly paternalistic, and certainly one found that attitude when you talked to the folks that I did in American industry.
Everyone that I talked to had a major program underway. In all cases, the major program was organized within the administrative line of the corporation, whether that be the HR group or the medical group, depending on exactly where they fit. But it was generally the chief medical officer who was the person in charge.
In all cases, they were preparing on a global basis on a local level. So the idea was to identify best practice, which is often based on their experience with SARS, which they all would acknowledge is an extremely limited and probably flawed model for thinking about H5N1 because it doesn't scale to the level that people need.
But then the idea is to go to the local units—local units could be a city, but they might be organized on a regional basis—and get them all prepared. And getting them prepared means they teach them new standards of cleanliness for surfaces, for doorknobs, for their kitchen, for their lavatories, for food preparation, personal hygiene. And they also teach them such things as that I wouldn't necessarily think about—don't go swimming in places where there are wild fowl.
Now, I've never actually been swimming in a place where there are wild fowl when I'm traveling, but I guess maybe some people do. So they tell them not to do that.
So they all get together. They have tests, they have books, they have videos that they're sending out. They're also very concerned about travel restrictions, and they all have travel restriction plans in place. The operative word in business continuity. A minority of people talk about that as business risk reduction, but it is the same thing. And the most important part about business continuity is the travel restrictions. They have a central mechanism for calling these travel restrictions. It generally reports to the executive committee or the CEO, and it is the chief medical officer in general who makes the call in a recommendation to the CEO, who will then stop the travel.
No one has pulled the trigger so far on that ban.
So they're taking it very seriously. They want to do a good job.
What are some of the issues?
One of the big issues that you find them concerned about is what do we do with the families of our employees? If we're going to give Tamiflu—and by the way most of them don't think they will, and they don't think they will because they think, they're not certain they're going to be able to get enough. If they do get enough they're quite concerned that if the pandemic occurs, the government will confiscate the Tamiflu that they have. And they certainly will not get enough to treat families as well as the individuals, and they just don't know what to do about that.
They're quite concerned about the local health care systems being overwhelmed if the pandemic starts. The health care workers may be taken out early in the game, and they don't—therefore don't know how to handle that activity.
They're also concerned about the smaller and poorer countries that are less likely to put into place health care plans.
So they do have big worries, and I think most of them would say, if it occurs, we will be beyond our range of experience in how to handle this and we're just going to have to muddle through a little bit.
But that's the report of what I heard.
PILGRIM: All right.
WILLIAM KINANE : Okay. Well we at Guardsmark, we're a security firm, and we look upon the flu here as a security threat like the criminal or terrorist or an earthquake or something.
We are—our major focus is on the protection of our employees and also on the protection of our clients' employees. Our worst fear is that we would put an infected person in one of the facilities of our clients. We protect our people basically by education, as to the threat, the seriousness of it, we take this very seriously. We communicate both up and down. We are going to designate someone in the company to monitor the progress of this epidemic and to advise all our employees and our clients' employees how to react, to alleviate the anxiety. There'll be hotlines, e-mails. We're going to have, you know, all kinds of ways—videos, CD-ROMs to keep people advised about what is transpiring.
During the SARS epidemic—and I realize that that's, you know, a lesser threat than the avian flu—but what we did is we educated all our HR people; we had a questionnaire; we taught them about the symptoms of the disease, where the hot spots in the world were where people had been exposed to it. We interviewed—we passed this questionnaire out to potential employees and if the answers were such that they were sick or they had been in any of these places, we recommended that they see doctors and come back in about 14 days.
We have at our company a panel of about 14 physicians who are retained by us, and at least one or two is in the area of infectious diseases. And we get, you know, direction on an almost daily basis. We have daily bulletins that go out and e-mails within the company and also to all of our clients.
So basically we are taking this very seriously, and we're preparing for it. We have our risk assessment people doing contingency planning for companies that—in the event the flu reaches the United States in order to keep distribution roads open.
So basically, not to be redundant in what Richard said, that we are taking it serious, and we're taking steps to confront this problem.
GERALD KOMISAR: We weren't part of Dick's survey, but if we were, I think we probably would have responded to those questions the same way that your sampling did. A lot of commonality there and as you'll hear probably a lot of overlap.
We've been monitoring this situation for some time—most of this year certainly, monitoring it very closely. We've raised awareness of it to the highest levels of the corporation, who've taken ownership of it. They've asked me to drive the effort to make sure that we're prepared for this.
We recognize, as I'm sure the other—every other corporation has recognized that we have an obligation—a responsibility—to our employees, to our clients and, in fact, to the well-being of the global economy. If we get into a worse-case scenario here, that, of course, will be affected, what can we do to ameliorate that risk as well.
We felt we needed a plan—a crisis plan. The SARS plan would not do, and we thought we should focus our initial efforts in East Asia, where we have a very sizable presence and a lot of investments.
We took the approach, not surprisingly, I would say maybe three objectives. One, to protect our employees, as you've heard. We have 92,000 employees around the world and 130 counties and jurisdictions. And so the challenge is enormous, as you can imagine. With the focus in East Asia still, as this thing tracks around the world, we have presence in just about every nook and cranny of the world, and we don't want to leave anybody behind.
Second objective is to ensure that we have the wherewithal to service our clients. We write a lot of insurance in the world—a lot of life and accident and health insurance in Asia and business interruption insurance—and so there is a lot out there. We have a lot of clients that are going to be dependant on us in a scenario where they will need to file claims.
And the third is to look inwardly and to examine our own business exposures under different scenarios, from the benign to sort of a limited pandemic, if there is such a thing, to an extreme worst-case scenario—what are our exposures? Where could we be hurt as a corporation? What do we need to do to mitigate those particular risks?
So we're making a big investment in this. We think it's necessary, we think it's long term, and I also believe if you have a strong foundation, call it what you will—a crisis plan, a business continuity plan, whatever you, name you put on it—you have the foundation in place to adapt it to whatever crisis comes down the road in the future. Could be a major terrorism event; could be another kind of infectious disease; could be a natural catastrophe. I think if you have the pieces in place, you test it, you—you know, you train people on it, that it's easily adaptable to another crisis.
So that's where we are. I think you'll hear a lot of overlap in terms of the details of a crisis plan, but it's just the status of—
PILGRIM: Okay. Let's follow up a little bit on that.
We're talking about the decision-making process.
We have the awareness, which is good, in this country definitely the awareness is being establish in the corporations.
We have a plan being put in place.
Let's talk about the decision-making process and where that goes. When do you stop travel? When do you tell your employees to stay home? Do you have set goals on when that happens or are those decisions made on ad hoc basis?
FOSTER: I think what I heard was that the chief—let's talk about the chief medical officers, the one in charge just as a, for example. They are actively monitoring the international agencies to get their sense of how severe the threat is. So they work very closely with CDC; they work very closely with WHO; they work very closely with International SOS, the ones that we've seen.
They also recognize that it's very difficult to diagnose H5N1 when someone presents, and so they know they don't know that right now, and they're tending to be very cautious. So there is a series of symptoms that they have developed that if you—they're monitoring all people, I think, of the American employees going to Asia and coming back. They're monitoring all employees that come back for 10 days after they do that and looking for temperature, cough, sneezes, those sorts of things so they can get the earliest warning. They would love to see an early-warning device; they know that that isn't out there right now. But once they see that starting to move, then they believe that if it looks like it's going to effect more than three or four people are the numbers they're talking about, then they will make the recommendation to pull the trigger.
KINANE: Well, I agree with Richard, basically in our experiences is that we would speak with our medical experts, and the CEO would make the decision.
Again, we would be closely monitoring the disease as it approaches the United States or if it's already here, and the decisions, you know, would be made based on medical advice and also for the protection of our employees.
KOMISAR: We put a structure in place. We thought somebody needed to be in charge—there needed to be a clear line of command here. So we have a corporate committee comprised of the key stakeholders in AIG, the very senior people, and I report into our CEO and our COO.
We formed—broke the world up into 10 regions and we formed comparable committees in 10 of the regions with coordinators. And we wanted to do it to be a cross-functional operation so that it's not a line of business or HR or something else—it's cross-functional.
So we have that set up and what we do is we try to decide what items need a corporate decision. And one example is a major investment in information technology around the world to allow most of our key employees to work at home. Any kind of a scenario I can think of in any kind of a disaster, people are not going to be able to get to work, or they're not going to want to come to work or they're going to want to stay home and take care of their families, which they should do. We need to make it possible for those key people, for the three objectives I talked about, to be able to work at home.
So that kind of decision comes corporately. The Tamiflu issue or other kinds of medication is being considered corporately.
Other decisions, whether—and which kind of surgical mask to buy, and whether to have disinfectants at the door and, you know, wipe the handles of the door as we go in, we really need to leave that to the regions and the sub regions to figure that out.
Early warning, somebody mentioned, I think that's really a critical issue, and we've tried to get at that, and it doesn't seem to be any magic way, but the more intelligence you can get and the sooner you can get it, you're going to be ahead of the game.
We set up our plan to be triggered by, you know, sort of comparable to the WHOs phases, although we merged phase five and six because once you get to that level, you know, it's hit the fan. But we have a lot of people out in the field—in China, in Vietnam, in Indonesia—because a lot of the life business is face to face. And so we have sources who could report into us hospital admittances are they up and, you know, various kinds of indicators that we will take a look at and try to analyze and understand what the latest trend is in a given country or a given region.
But I think it's a critical issue, the more early warning you have the better equipped you're going to be to swing into the next phase of your operational plan.
You know this brings us right into the next topic, which I would like to address to you, Gerald, is the perception of the American corporation is paternalistic. But for many people, it replaces the village green—the water cooler is where they get most of their information; this is where they exchange their game plan; their family game plan, and it's where corporate information gets to the family.
Do you have the same perception that Asian companies are doing this or doing as much as American companies and will we hit sort of a gap in preparedness between, say, a U.S. company based in Asia and an Asian company based in Asia? And after all, this is a global pandemic.
MR. : Well, I don't know. I think traditionally we have been paternalistic, for want of a better word, and protective, and we will—and our employees look to us for that kind of support.
Traditionally, the Asian companies aren't looked upon that way. It's usually the state that provides these kinds of support. And then I think you mentioned that in a crisis, you're almost certain that the state is going to take over a lot of the functions of crisis management.
We don't want to be in that position. We don't want to be in a position where we're dependent on a country in which we're resident to manage that. We want to manage that ourselves.
But I think you're right. There is a difference in approach and whether or not that will impede, you know, a smooth and rapid and effective response remains to be seen. I think what we've seen so far is a pretty aggressive response, probably at the instigation of the WHO and others.
But we're—the control measures and inoculations of chickens and all of that and culling has been very aggressive and very vocal so maybe that will change the calculus.
PILGRIM: And also, another follow up on the Asian question. Certainly, the flow of information is somewhat impeded by governments. Do you feel that your operations in Asia get the same amount of information from the local governments—and adequate information from local governments?
KINANE (?): We encourage them to maintain liaison with local health authorities, government officials, embassies—U.S. and others—corporate partners. Just get out there and network because there's nothing to be lost by sort of unrestricted sharing of information among ourselves and among willing partners.
I mean, there are very few proprietary issues involved here. And so we encourage that—get out. And if you have good enough contacts in a given government or a location they may pay off in the end. But you know, that's the approach we try to take.
FOSTER (?): In the informal world of monitoring these things, I've found that my friends that trade in the Hong Kong markets are very good sources of information about what's really going on over there. And that Hong Kong markets are gyrating like mad depending on how many ducks have died in ( Zhejiang?) province, or something. It's absolutely incredible. Hotel stocks are going up and down depending on these stories.
I haven't found a bookie yet that's willing to take a bet on exactly when this is going to strike, but I'm sure it's not too far away.
So there is the informal networks, as well, and they tend to be rather robust. There are lots of stories out there that are outside the official channels.
PILGRIM: Go ahead, William?
KINANE: Well, I'd just like to add to it, but here—I mean, it's like terrorism. We're all experts on terrorism now, and we're all experts on the Avian flu. I mean, you can't—every day in the news, the newspapers, CNN, you are bombarded by information about this. It's the hottest topic out there. So there's really no excuse for people not being fully aware of what's going on.
And, like, we have designated someone to monitor all of this information, analyze, put it together, bring it to the attention of CEOs or senior people who are in decision-making positions.
PILGRIM: Great—so this question—oh, go ahead.
KOMISAR (?): If I could add a footnote to that. What we're talking about is a lot of local-level contacts, but I think there's a lot going on at the higher levels as well. You've got an (APEC?) meeting taking place and our CEO/COO traveled throughout Asia twice in the past couple of months meeting with very senior people in countries and various governments. And they came back and told me that the number one issue they came up with avian flu.
So there's an awareness—a willingness—to try to do something on the part of these governments. And that's encouraging.
So it may well be happening at all levels.
PILGRIM: Last question—financial planning going into effect on this? The estimates on the hit to the world's economies is enormous. The World Bank estimate is mind boggling. Any kind of discussion of that going on in your corporations?
KOMISAR: I'm not an economist, but it sounds like a guessing game to me. I mean, there's so many variables involved here. It's—I've seen the models—the results of the models—from the Asian Development Bank and others. And when you factor in some of the variables, and maybe others can speak to this better than myself, the range of potential loss of human lives—the loss—or the impact on the economy, the loss of the labor force and particularly impactful on exporting countries in Asia.
I mean, you could come up with a wide, wide range of losses, none of which are good in a worst-case scenario.
FOSTER: From what I've heard, the companies almost split themselves. Those that have very significant Asian operations are much more alert, much more aware. And these tend to be the financial institutions. And then the health care companies that I talked to. They do some business in Asia, but in this particular case they didn't have supply chains that moved into Asia in a particularly important way. They have a few employees that travel. They were much less concerned about it.
But the financial institutions that have many people on the ground in Asia are certainly preparing contingency plans, because at the end of the day, they're going to have to pull the plug; they're going to have to make the travel restrictions, which are going to interrupt business as it normally exists. And at least from my discussions with them, they all say they recognize that and they're prepared to do that.
We'll see when it happens.
KOMISAR: I'd just to add that, you know, unless the worst case scenario eventuates—I mean, the supply chains of food and fuel and everything were to totally break down, the economy will come to a standstill and it will be impossible to measure, you know, the economic damage.
PILGRIM: Okay. Let's throw it open. Wait for the microphone.
QUESTIONER: I'm Dan Sharp with the Royal Institution World Science Assembly.
Our total efforts are on pandemic preparedness for the past year and a half.
And my question has to do with your links with government, not only for information. We have been asked as one of our major mandates from our partners in foundations and governments to help bring the private sector more thoroughly into coordination with government planning and exercises. You did mention that you have links for the exchange of information, which I was glad to hear.
But I'd be interested in your comment on the extent to which you feel that the private sector is taken fully into consideration in the government planning that we heard about earlier today and in your activities and what more, if anything, do you think there should be in the way of integrating the private sector with government planning?
KOMISAR: I wasn't here this morning, but—and I guess I don't have great insight into the depth of the—I know it's going on. To what degree and what depth, I couldn't speak to that.
But can the private sector put more—use more leverage with foreign governments? I think yes. And should they? I think probably yes.
But I really am not speaking from a pretty solid knowledge base here.
FOSTER: What I've understood is that the chief medical officers—at least around this part of the world—do have very frequent contact with each other and are exchanging information in a most productive way about how they're responding. And many of them seem to have connections to whether it's the CDC or the WHO or the International SOS or other organizations.
So there is a ready-made vehicle there for any government agency who thinks that their views are not currently being taken well enough into account. I would urge them to get a hold of any of the medical directors, probably half a dozen or more are in this room today, and they can be put right in the network very quickly.
KINANE: Well, there's a—I mean, there's a tremendous amount of information out there and where it's available we can subscribe to all kinds of linkages to get it.
However, on the—when it gets down to the private sector—I mean, we have to take the responsibility to protect our employees again and we do what's necessary. I mean, we can't be—you know, in the absence of a cure, we can't be relying on the government.
QUESTIONER: Mike Osterholm.
This is really for all three of you, but specifically maybe to you, Richard.
My sense is that most American companies really don't have a real clue as to how deep the supply chain happens to be for many of the products that they actually depend on every day for business, one area being health care, for example. Many of the critical pharmaceutical products, medical devices, things we talked about this morning, all have origins in Asia, India and so forth.
And so our experience has been that when they say they don't have a real concern because they don't have employees over there, they don't realize that that supplier that they have in New York City or Chicago or Minneapolis isn't where the product's made, where it's store, where inventory is accessed. In fact, it's somewhere outside the United States and that in a very short period of time, that very small inventory would be completely gone.
Do you have a sense of that, any of you, for American companies? I think there's a certain naivete about where upstream in their supply chain their vulnerabilities are at. They just know the person they buy it from and that's it.
FOSTER: I don't have any comprehensive sense. I do have a pretty detailed sense in a few cases, and I wouldn't agree with that characterization. They have an extremely precise sense of where it goes all the way back to the plant that's waged in ( Laos?) someplace. So I think they do have a good sense of that and the supply chain interruption.
I think they're focused mainly on their own employees and moving all those people around as opposed to goods.
Now Laurie has talked about before if you really decide at some point that the pandemic is going to spread and you shut down the world's airlines and then you have the military start carrying us around then that's a wholly different scenario.
And I don't know how much of the contingency planning that they've done for that, actually, but it's—not that I'm skeptical, it's just that I simply don't know.
But these fellows—the ones in the large corporations that I've talked to—I think are very sophisticated and very knowledgeable.
KINANE: In the circles I move in, I feel that most of the people are aware of the supply chain and aware of the problem, but I don't think they have solutions.
And I don't know where they're going to look for them or find them, but there are—that's the problem.
KOMISAR: I think there's some truth to that. I—you know—the major corporations have looked and examined it and understand where the vulnerabilities are, but I've been in situations where giving presentations on terrorism, for example, and there's a parallel here.
And somebody in the audience says, well, you expect me to think that my little plant here in Wichita is going to be hit by a terrorist attack? And the answer is no, probably not, but do you really know where else you can get hurt outside of Wichita? And you start stimulating some thinking there that may not have gone on before. That's been my experience over the past year doing those kinds of briefings.
And the bigger companies probably know full well, but there are some others out there who just don't realize the risks of the Straits of Malacca or what goes on if the Port of Los Angeles is closed down.
QUESTIONER: I'm David Fedson.
Much of what you gentlemen have had to say so far has really focused on the response of corporations to a situation and taking care of your own kind. And that's understandable.
But do you, individually or collectively, think that there is any role for business in general, collectively, to play in talking with governments and stimulating them to do more of what they need to be—needs to be done?
For example, on a global scale, corporations that have operations in over a hundred companies might find that the World Economic Forum could provide a collective voice globally to call attention to what governments need to do to prepare for a pandemic.
The United States, for example, is investing hundreds of millions of dollars in pandemic preparedness and the tools for fighting a pandemic with vaccines and antivirals.
There's not a commitment of a single euro or pound sterling by any of the major European vaccine manufacturing countries to stimulate clinical trials of vaccines produced by their companies in those European countries. And yet, those companies are the only suppliers of influenza vaccines to 88 percent of the global population.
And so this is an issue that European governments need to pay attention to. They're not paying attention to it, and maybe if corporations would say please pay more attention to this it would be helpful.
In the United States, is there a role for corporations in general to, with one voice, say to the United States government your 350-page pandemic preparedness plan has nothing in there on how you're going to distribute vaccine to this country.
Don't you think that this logistic consideration deserves more attention? We and our corporations pay a lot of attention to logistics, why can't you?
FOSTER: Good question.
PILGRIM: Who wants to take it?
FOSTER: Yes, that's quite a question.
Two things that strike me. First is that if I think locally here the—if some of the forecasts that Michael and others have made about the possible consequences here in the city, it will be very tough times here in the city. And I've been impressed with the little I've learned about the emergency prepared—the Office of Emergency Preparedness here in New York and the degree to which they're coordinating with the major hospitals here in New York.
We only have 28,000 beds and that's nothing compared to what the nature of the threat must be, particularly if one thinks that for every person who actually comes down with H5N1, there are at least 10 who think they have it. And they're the ones that go to the doctors. And that can very quickly overwhelm our system.
So I think there's a major threat here from everything—I have no reason to believe it's not being well addressed, but if I were to encourage corporations to look at a place where they could play a helpful role, where the chain of command is clearly established and has to be absolutely, totally transparently clear, it would be here and in Chicago and San Francisco and every other major city that we have.
And the other question that you raised about vaccines—you know, 30 or 40 years ago, we had upwards of 40 vaccine companies in the United States. They've all gone away. The economics—the risk-rewards—of developing and producing vaccines, have headed in a very unproductive direction since we got overconfident about our ability to handle and manage infectious diseases.
So with the cost of putting these plants up in the hundreds of millions of dollars, with the lawsuit exposures being virtually unlimited in this country if you give a flu vaccine and someone ends up with Guillain-Barre Syndrome and the endless lawsuits that can result from that as well as price controls on government purchases of vaccines—this is not a business that anybody wants to be in.
Well, that seems completely goofy to me. I mean, here we are. We're just at the beginning of this infectious diseases era, with drug resistance all the things that we can imagine going forward. We need a very robust infectious disease community here, and we don't have the legal structures to allow that to happen. And I would like to see industry and government work together to come up a sensible plan for letting the market work in this case.
PILGRIM: More on this or shall we move on? All right, we'll move on. Sir?
QUESTIONER: Bob Overman with Guardsmark.
Health insurance costs have been a major concern for corporations over the years, and health coverage and health care has escalated in double digits and I think it's projected to do that again this year.
And I was wondering—and there's been a lot of cost shifting from—with the employer's burden shifted to the employee.
I was wondering if any of the plans that you've all encountered have considered the health care coverage for their employees in light of this pandemic?
KINANE: Well, you know, we have health care coverage for all employees. And you know, we see that as a tremendous advantage. At least all of these people won't be overwhelming the public health service so they can go to their own private doctors.
I mean, that's—I realize there's large numbers of people uninsured and this would be a real problem.
PILGRIM: Health coverage—are you changing it in any way? Any adjustments?
KOMISAR: We haven't made any changes.
PILGRIM: None so far? Okay. Move on to the next question. Go ahead?
QUESTIONER: What are you gentlemen doing about your employees who are expats in impacted countries and they decide—let's say your in a pandemic phase four and they want to leave town before the airports and borders close down.
Number one, what do you say to them? And what is the trigger to allow that to happen?
And then what do you say to those employees who are residents of the impacted country? You're now creating a dual system, where you're leaving them to the local health care system and you're allowing the expats to come back to the states or to London, wherever.
PILGRIM: As part of the decision-making process where do you start bringing people home, restrict travel—when do you make those decisions?
KINANE: Well, I mean, these decisions again are made—I mean, the government may step in and tell us who can come and who can go. I don't know the radical, Draconian move to inhibit the movement of American citizens.
But the companies, you know, with their own medical advisers—you would definitely advise people as to what to do, and hopefully they'll cooperate.
KOMISAR: It really depends on the situation in the country. I think that probably dependants would be the first to go if they wanted to leave and bring them home. Expats, if they were not essential and we felt that it made more sense to have them operate somewhere else.
The reality is a lot of the indigenous workforce will probably want to stay in their own country to be with their own families. And they will probably carry the load in terms of running the businesses.
PILGRIM: (My hat's gone?) – Laurie, go ahead?
GARRETT: Just to add a little bit about the experience to that set of questions with SARS.
One of the countries that took a huge hit with its companies was Japan. Sixty thousand companies in Japan reported negative economic impact from SARS, though Japan did not have a single SARS case.
And one of the big problems was that the Japanese pulled most of their expatriate management—managers out of China leaving the factories in the hands of indigenous workforce in China. The quality of the products that were produced deteriorated, and they had to absorb the cost and not sell them once they got back to China when SARS had died out and they realized what they were stuck with.
And I think generally this question of what do you do about your management class now that we have globalized industries is under evaluated—under thought—by most companies. It tends to be a knee-jerk response. You have Charlie in Hong Kong screaming to his boss in New York I'm getting out of here. I'm bringing the wife and kids. We're on the next plane before they shut the airport down. And back in New York they're, well, looks like we're losing our Hong Kong operation.
So it sounds like it still is a bit on the ad hoc level here. Am I misreading it, or is that more developed as an analysis of when you do say, let's pull the plug. Let's get you out of here. Let's get you home before the airport closes.
KOMISAR: Well, we will have a strategy in place, trigger points, when you go through this. I mean, it's not ad hoc. But that's going to take a lot of coordination and a lot of discussion with the business units that are out in the field in how we do that—how they maintain their operations? Who can they not be without?
So that's going to be an involved process for us.
FOSTER: I think what I would infer from the people I have talked to is that what they have accomplished so far is they have put into place a working decision-making system that has the capacity for taking whatever decisions arise and processing them reasonably quickly and getting it right to the top of the corporation for adjudication or decision and then back.
I haven't heard that specific case, although it's quite easy for me to imagine it. But neither have I really talked to these folks about the nitty-gritty of all the possible contingencies they have come up with.
But I'm reasonably convinced that the larger corporations that I've talked to—and I don't know whether this is true in smaller corporations or not—but in the larger corporations, they are quite prepared for a very large volume of the decision-making. And they have the flows and the channels and the priorities (worked full ?).
I think it's a great question. I don't know the answer, but my guess is the mechanisms are now in place, where a year ago they wouldn't have been in place to do that.
QUESTIONER: Hi. I'm Steve Aldrich. I'm the president of Bio Economic Research Associates.
We've been servicing large corporate companies—Fortune 500 companies—for a couple of years in pandemic planning and preparedness. We testified recently before the Senate Foreign Relations Committee on the economic risks associated with an influenza pandemic.
And I have a slightly different impression than what we've heard about where corporate America is. I think corporate America, at least based on our work with these companies, has started to address the issue. And in that sense, I think it's good news.
But to promote the idea that the kinds of problems that Laurie (ph) has just raised have been thoroughly addressed and the decision criteria have been worked out I would say is absolutely not in my experience so far with these corporations.
One of the themes that I think is very important—it gets to David's comment about, you know, what can corporate America do in conjunction with government to minimize the impact of pandemic? And one of the biggest assumptions that we hear all the time is that, in the early stages of a pandemic, almost certainly trade and travel would shut down. That's often the thing that's raised. And it may be exactly the wrong prescription for what's needed. It could compound dramatically the problems of disease management on the ground as well as the supply chain disruptions that we've heard Michael talk about again and again.
So I would wonder or ask the panel whether they have thought about working closely with governments to try to understand, in advance, what will happen to trade and travel if a pandemic of highly transmissible H5N1 virus breaks out, because we have two pandemic scenarios we work with—one called breaking apart, in which governments and private industry don't coordinate. They have no pre-awareness of what will happen. So the uncertainty is very high. And we know from the SARS experience that disease economic effects really occur in two waves.
The first is a wave of fear-driven reaction to the anticipation of the disease's arrival, which is often the much larger wave and more damaging. And then that's followed later on by the actual disease itself.
I think we can manage the disease itself, but I think it's going to take governments and private industry to come together about what will happen in the event of a pandemic to reduce the uncertainty, reduce the level of fear.
And I'd just ask anyone to comment on that.
PILGRIM: Yeah, you may get a mixed message. You may have an orange level of alert and please carry on normally from government, so.
QUESTIONER: The need for the coordination.
FOSTER: I think it's a good point. And the interviewing I've done, you know, it (says ?) that they've put in a decision-making mechanism. That's it. And the simplest kinds of decisions on travel restrictions and all of that they've thought through.
But I don't think any of the people I've talked to would say that they're in phase four of figuring all this out. I think they'd be the first to say that this is—you know, we have the bare bones of a structure now to start considering the very important kinds of issues, exactly the issues, that you're raising, that Laurie (ph) raised.
And I think they would all agree that that's what the next phase of this planning. None of them are sitting back on their progress and saying we are now ready. But they are ready to move into phase-two planning, I would say.
I quite agree with your comment.
KOMISAR: I think, too, these are good questions. And I think Dick is right. I mean, we may not have an action plan to deal with each of these contingencies, these trigger points, but we're listening. And we will work this out to the field and say, okay, we need to determine time lines for this or trigger points that do that and who's going to be in charge and who's going to be running the place?
But that, I think, is still evolving, to be honest. I think Dick is absolutely right. But probably very few corporations have gotten to that degree of detailed planning, which has really got to be a part of this.
But pushing it down and getting some local decision-making and, as I said, reserving some decision-making on the larger corporate-wide issues reserved to the headquarters office is sort of the way we bifurcated it.
PILGRIM: Oh—Washington. Why don't we try—is there a question there?
MS. ELIZABETH PRESCOTT: Yes, we do have probably some more questions. I have one first.
You stated that you have a long-term commitment to avian influenza, which I think is great to hear and to hear the planning that's going around it now.
Is there—do you think there will be a broader recognition of the importance of public health overall to business practices, not only just for employees, but also for your consumers?
And in the markets that are developing, if there is an interest of the private sector in actually working towards better public health overall?
And I'm wondering if you think that this issue might—once it's been established and plans have been put in place, will there be more integration into the private sector of the global health implications of disease?
PILGRIM: No one has an opinion on that?
But we do have an opinion—
MR. : Definitely.
PILGRIM: Go ahead. Hang on one second. We do have some comments.
OSTERHOLM: Since I'm one of the few public health people here, I think today of saying the time—
PILGRIM: Michael, we (truly?)—
MICHAEL OSTERHOLM (Director, Center for Infectious Disease Research and Policy, University of Minnesota): Mike Osterholm, thank you. You know, first of all I think that even a moderately severe pandemic influenza will fundamentally change our medical care system. Somebody asked the question earlier about the cost of medical care for a pandemic. It won't be very much because we won't have high-tech medicine to provide.
How much does a cot cost in a gymnasium to have somebody there who just basically tries to give you water when there's no IV bags to give IVs. There aren't any antibiotics. There is no ventilator. There is no—(inaudible). It doesn't cost a lot.
That's unfortunately where we're at and that may sound extreme, but when you understand the tipping point of our health care system today, where we have been contracting intensive care beds for the last five years, we don't have any excess capacity. We're going to have to move off site. We don't have any extra kinds of medical products there.
So people are going to understand that community-based health—public health—as you were just talking about, really is going to be a critical piece of this. We don't know who's going to provide health care because right now we're running on the fringe anyway with not having enough nurses and doctors for what we do have. We won't be going to our private doctor because they, too, will be sick. They, too, will not have the ability in many instances to provide that care.
And already we're looking at can we get recovered volunteers—people who have already been infected who have survived—they might be a truck driver; they might be a high school janitor; they might be a restaurant cook—but they're willing to come and help, like we saw with hurricane responses. And they can at least sit there by that cot.
That may sound extreme, but those who are actually planning right now for even a moderate pandemic will tell you that's what they're planning for. They're looking at taking over Superdomes or Metrodomes or Astrodomes and using that as their base.
So I think that will so fundamentally change how we now look at modern health care. That the point that was just raised about how do you integrate that into public health overall and what do we mean by community health will really be a major change.
So I would say that I think that we are in for a sea change in a lot of things per the pandemic. It will be before- and post-pandemic ideas.
PRESCOTT: I think my question was asking for will the business and private sector take more of a stake in the developing country's public health. So I think, you know, we can look at how this will play out in developed health care—(inaudible)—but will it matter that in India there isn't basic provision of health care, and they're—but those are your consumers of your products?
And I'm really trying to understand more how the private sector's thinking about the impact of disease in these countries en masse. And is it in their interest to care about the health of people in China or people in India or people in these growing markets, not only because it may make developed country people sick, but because these are the markets they're in?
OSTERHOLM: And they're still not—(inaudible). (Laughter.)
MR. : Good question.
PILGRIM: Do we care about the rest of the world—
Not to trivialize it, but—
MR. : Yes.
PILGRIM: Okay. Go ahead.
QUESTIONER: I have a question.
PILGRIM: Go ahead.
QUESTIONER: John O'Connor (sp).
Dick, in your checking with people, what I'm hearing back is a fairly routine and, frankly, relatively passive set of responses, when I think the comments that were just made are quite accurate. And, as you know, I've got a little bit of awareness of this, where I would have thought that more corporations were prepared for an activist response in terms of saying, look, we cannot sit back passively and presume the existence of a fully functional health care system that will be the organizing framework.
In your discussions, did anyone say, yeah, we're thinking about opening up the cafeteria; we're thinking about child care because the schools are going to close first; we're thinking about elder care; we're thinking about all these things, because a lot of the important functionality will actually stop functioning before the actual sick employee becomes the problem. And will the corporations step up and either fill the gap of—okay, we'll have 5,000 cots, or just sit back and be told what to do? Have you heard any people taking the activist role?
FOSTER: Yeah, I would think that all these people would think about themselves as being responsible activists, actually, but the operative word is "responsible." They—certainly they're aware that the other side of the equation is panicking their employees, and they don't want to panic their employees, and they certainly don't want to panic them if—
If, for example, when you ask the question, is the pandemic going to occur this year? Don't know. Is it going to occur in the next three years? Don't know. What's the urgency of carrying out some of these things? Don't know. Do we have a decision-making process in place that can handle, in rapid-fire way, changes in the circumstances? Yes, we do. Are we spending a lot of time trying to figure out early awareness and getting further upstream on early awareness? Yes, we are.
So I think it's that balance, John, going back and forth, that they're trying to do. I would think—and some of them are here in this room here, and they can probably tell you later on. None of them think of themselves as passive, and this is—this is not a pabulum response at all. This is a responsible response. There are a dozen—scores—of people involved in these networks of decision-making. They've worked all these things out, and it does get raised at the executive-committee level. And were it to break out this afternoon, if we had a human-to-human communal transmission this afternoon in Vietnam, they would be on it tonight. I have no doubt about that whatsoever. But they don't want to panic their employees, and they don't want to panic their customers, and they don't want shareholders—(inaudible word)—either.
So I think they're trying to make all those trade-offs, would be my response.
QUESTIONER: Isaac White-Hughes (sp), New York City Department of Health.
I share your concern that we in government can use some private enterprise expertise. For example, vaccine distribution is an issue that we are working with and dealing with; however, you know, the real experts in logistics and distribution of goods are actually in the private sector, not in the public sector. And so you can give me your card afterwards, and I'll be happy to talk through that. But I think that that's the kind of enterprise that we should be jointly talking about.
My question is on a little different topic. You guys all seem to be part of, or attached to, multinational corporations that have very deep pockets and medical officers. But what should governments do in getting in touch with dealing with smaller-size businesses that don't have those resources?
In a city like New York City, it's—you know, we need businesses to keep on going so we can keep on supporting daily life in our city. But dealing with AIG and, you know, hearing about your employees in Vietnam is great, but it's not going to really do the trick in terms of on-the-ground here in the city.
So what should we do to deal with the smaller business—businesses that may not reach the level of multinational corporations?
PILGRIM: Who would like to—what can you tell small businesses?
KINANE (?): I don't know. Do you have mechanisms where you have outreach contacts with the business community that can be used—fora for that kind of dialogue?
QUESTIONER: We have some mechanisms, but I think the people coming forward seem to be the larger groups, and how do you get the—you know, the next level down involved? The question is how to get the next level down. We do have some, and we're—we have done some; we're setting up some. But, you know, is there—are there suggestions that you have for the, you know, less-than-multinational corporation? Because these are important businesses, you know, in—I don't know percentage of, you know, economic activity is done by small businesses. I suspect collectively it's a lot. But we can't neglect them, but yet I don't see them really sort of coming forward to, you know, discuss these issues.
PILGRIM: Anyone want to take it?
FOSTER: Just a quick comment. Number one, I think you need John O'Connor's (sp) card more than my card, because he's working on the first issue already.
Secondly, it strikes me that it is a huge business opportunity for medical practices here in New York, because all the large company responses I've seen have placed a lot of responsibility on the medical departments. It's not that that's the only department, but they are crucially in this, and many small companies don't have medical departments. So the first thing to do would be to get them in touch with private practices that might be able to help them in this regard.
MS. : I think this is a time where business expertise is urgently needed and that we need to recognize that we're in all of this together and we have to share best practices. So I think it's important to recommend, because if you go to pandemicflu.gov, which is our guidance from the government on this, there's one page that talks about what the individual, the business, the family, should do, and we really need to expand this arena so that small businesses can go and get some information. We need a vehicle for you to be able to feed in your best practices, if you will.
MS. : And we need to, really, I think, convene a meeting of businesses to come up with some guidelines that can be put on this and other websites and other vehicles to get out, at least, the questions that companies should be asking, to help them with their planning, so that small companies who don't have the resources don't have to rediscover the wheel.
FOSTER: Very good idea.
MS. : Obviously, there are no immediate solutions, but to start planning and being prepared, I think, is the cornerstone to what Michael was saying. I mean, we don't know what the next threat is going to be, but prevention and preparedness is the cornerstone. We tend to be treatment-oriented societies, not prevention-oriented societies. We do anything once there's a bioterrorist attack or a heart attack, but we spend so little in preventing and preparing.
So anyway, I will take that recommendation back to the government and—
KOMISAR: Just an observation, I don't think there is enough integration, at this point, between private sector and public sector, and maybe it's just beginning, with the national strategy that's out. There are roles and responsibilities for the private sector as well as federal, local. So it may be a greater effort to integrate those.
We're reaching out to clients, who include a lot of small businesses, a lot of medium-level businesses and offering them counseling and consulting advice—best practices, as you said—because there is no real secrets to hold back. I mean, if we know something that works, we should—we want to be in a position to share it with our clients, and we are trying to do that. But I think there needs to be more integration.
FOSTER: I think it's a great idea, and both these last two ideas, I think, are—have common elements. And if there was a way to utilize this network—this informal network of medical directors of large corporations—at least that I'm aware of around here, that might be a wonderful vehicle for funneling some of these activities and doing just exactly—
My guess is many of them would be very happy to share their best practices on a website and—
KOMISAR: And getting to those other questions that are very difficult; how to get other governments to pay more attention and to work with us. I think a greater effort of private/public sector would help achieve that better—more effectively.
QUESTIONER: Thank you. Ted Sattler, the Phillips-Van Heusen Company. This is really directed at Gerald, but anyone should feel free to pitch in. In the risk assessment you've done, what countries—might be an obvious question—what countries and regions of those countries have you established both for yourself and your clients as the most risky?
KOMISAR: Well, you know, I read reports that come out, talk to Laurie (ph) and—you know, we're looking at Asia as probably the front lines, but then talk to some experts and they're saying maybe things will happen in Africa, because of the conditions in Africa. But then our business exposures aren't as great in Africa as they are in Asia. So we are concentrating on that.
We just have networks of information, and there's more being written on this now than—by far—than what's been out there three months ago, even. So we go through all of this and we try to determine where the greatest risk is and what industries are likely to be hit the hardest. And like everyone, we determine the aviation and—and by the way, we have a company that leases aircraft. And if the airlines stop flying, then the leases don't get paid and we have an exposure there. Hospitality services, discretionary spending, all those kinds of things. We have credit cards throughout Asia. Will people be able to pay their bills if they're not working or if they're in the hospital?
So we sort of look at it from the inside out. These are our exposures, these are areas we can get hit, and by extension we find those industries that would probably be impacted the most, and a lot of them, of course, are our clients and customers. And we're trying to, increasingly, you know, have contacts with them and work with them and advise them, as a value-added service. It's not—it's like I say, there's no restrictions on sharing that kind of information that we have—best practices and so forth.
QUESTIONER: (Name inaudible.)
In America, where there's a large number of uninsured, plus a large number of illegal immigrants, how do you reach this large population? Would you try to do it through the schools and use the schools as a—education, because they have to be looked at, or they'll make the system run amok?
PILGRIM: It's a—it's the application of business, perhaps. Anyone like to take it? (Inaudible.) It's a great question; it's just maybe outside of the range of this panel, perhaps; although—
KOMISAR (?): You got an answer. (Chuckles.)
QUESTIONER: (Off mike.) Could I just ask a follow-up question? When you were addressing just now the risk by the world, was—what were the assumptions you were using? Because those of us in public health use the assumption once human transmission occurs anywhere, it'll occur everywhere, and that there is no region, there is no continent, there is no city that is going to necessarily be any different. It may be just which wave they're in, and—to the severity of the problem.
So I think that one of the things I worry about is I see business planning around Asia, where ground zero might be, but ground zero becomes irrelevant in the first weeks after transmission goes worldwide. And maybe if—could you articulate on that? I mean, do you have a sense business understands that?
KOMISAR: I don't know the science behind it, but you're right. I mean, one of the big trigger points—the first instance of a human-to-human transmission, then how quickly after that do we have a full-blown pandemic, and does it matter where it really starts?
For our planning, we're just looking at Asia as the most logical place for the start, but we're organized regionally. And, you know, you get people far away, in Europe and elsewhere, who seem to be extremely sensitized to the threat. They understand, and we don't have to really proselytize too much. They understand that once this thing takes off, it will explode around the globe.
And so—but we're looking for that trigger, in the hopes that it gives us some time, in any case, to get better prepared elsewhere. We're not ignoring any area, or any corner of any area, but we just happen to think it's more likely to happen in Asia, based on what I've seen.
PILGRIM: (Inaudible.) Ah, here we are.
QUESTIONER: Hi, I'm Julie McCashin with International SOS.
And following up on that, I'm working with about two dozen corporations, helping them develop their pandemic preparedness plan, and I hear that message every time. They all start off thinking Asia, and I think there's two pieces. It's because the early transmission is there, and because of the SARS experience. And I have to spend half a day bringing them back to the fact that this will very quickly multiply and be global. And so I think the message that we have to get out is, don't just focus on Asia. Asia is more keenly aware.
And there was an earlier question about how Asia businesses are prepared compared to American businesses. I think some of the larger Asian businesses are very prepared, because they had the SARS experience; they saw the impact on business continuity, and many of them are actually ahead of the game, some of the larger businesses.
KOMISAR: I think that's a fair point, but, you know, the conditions in Asia, in addition to the SARS and the other things you mentioned, in some places in Asia the conditions are rather unique and highly conducive to a contagion that'll happen overnight. And you may not get that in Western Europe, for example. Not—I agree with you, we shouldn't ignore other parts of the world. But you look at the conditions in Asia, I think they're just more conducive to an outbreak and to a rapid spread, and it makes—
And again, the other variable is, okay, what's your presence there? What's your presence in various parts of the world? What's your exposure? And it happens to be, for us, Asia, and probably for a lot of corporations that's the case.
PILGRIM: And we have a question in the back.
QUESTIONER: Thank you. My name is Theresa Agavino (sp).
And this question is for Dick. You mentioned earlier companies not wanting—medical companies—not wanting to get involved because of price controls, liability issues. What kind of guarantees do you think they want from the government before they'll really start getting back into the vaccine business, more into antiviral medicines, figuring that maybe the public doesn't want to give them complete immunity from lawsuits. What do they want before we'll see a really robust interest in this area?
FOSTER: Yeah, I don't think it's so much a question of wanting any guarantees. They'd like to have some of the restrictions, as they perceive them now, and the ones that I mentioned before, taken off. So government price controls are one thing, or at least the levels of the prices and the pricing mechanisms.
So to return to an open market competitive situation, as opposed to a monopsonistic situation, where the prices are dictated to you.
The thing that isn't going to change, in all probability—well, that's probably not true—may not be true—I was going to say, is the capital intensity of this industry. But with new innovation, that might very directly be a focus of innovative research, and we've heard some questions earlier in the day around those things.
But I think if we were able to solve the legal liability—put a constraint on the legal liabilities—of this thing and solve the pricing problems, it would go a long way to opening up the demand. I think everybody sees the demand.
One thing that's quite different, in my mind, from five or seven years ago is that the younger research doctors coming out of the universities now, today, want to move into infectious disease. Ten years ago, they didn't, because it was over. Now you get a lot of the very brightest minds wanting to go into that area.
So I think the raw power is there, and if we took care of those two issues, I think it would help unlock the enormous potential of this business—just a personal view.
QUESTIONER: I think there's been a lot of discussion—David Fedson again.
There's been a lot of discussion about what's wrong with the vaccine industry in the United States, but there's been very little discussion about what's unique about what's wrong with the vaccine industry in the United States. (Scattered laughter.)
I think it's a reflection of our business culture here in the fact that our vaccine companies are small arms of pharmaceutical companies that expect gigantic returns on their sales and investments. If you go to Europe, you find that the concerns that animate people in the United States and are reflected in some of your comments simply are not major considerations. States purchase vaccines, by and large, and set prices, in Europe, and yet companies haven't left the market.
If you go to Europe, you find the vaccine companies that are based there are engaged in very, very vigorous international trade in vaccines within Europe and throughout the world. If we did not have Sanofi Pasteur, a French company; if we did not have GSK, a British-based company that makes its vaccines in several places in Europe, the rest of the world would not have a lot of these vaccines. And, in fact, many of the vaccines that are used in the world are made in developing countries. Seventy percent of the measles vaccines distributed each year are made in India and Indonesia.
The problem is, in the United States—is very, I think, unique to the United States. The American companies are not players in the international vaccine scene. They just focus on the United States and are only beginning, in a few vaccines, to spread out. I think we have to take a look at our culture, not just our specific legal problems—all of which are real; I don't doubt that for a moment. But what we have to say is these reflect our culture as much as anything else, and other countries don't see things in quite the same way and don't have the same problems.
PILGRIM: I think we have time for one more; if we have one more. It appears we don't. We have exhausted the topic.
Thank you very much for joining us today for this panel. I'd like to thank Richard Foster, Gerald Komisar and William Kinane. Thank you.
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