Pandemic Influenza: Science, Economics, and Foreign Policy: Session Two: The Economics

Friday, October 16, 2009

This session was part of a CFR symposium, Pandemic Influenza: Science, Economics, and Foreign Policy, which was cosponsored with Science Magazine.

LAURIE GARRETT (Senior Fellow for Global Health, Council on Foreign Relations): Welcome back, both to the webcast audience and to those of you here in the room. I give you Secretary Robert Rubin.

ROBERT RUBIN: I think Laurie was starting to get nervous. (Chuckles.) But one lesson, I think, is that you live in the richest country in the world, but if you're caught in a side street, it doesn't matter. You can't get through. (Laughter.)

Okay. Let me start by welcoming all of you. I'll be moderating this second panel of your symposium on pandemic flu. As you know, the second section will be on economic issues. We are very pleased that the council could be co-sponsoring this, as I'm sure Laurie's already said, with Science Magazine.

We have an outstanding panel. I will mention them in just one moment, but it is really an extraordinarily distinguished panel. Their material is in the -- or, their descriptions are in your material, so I won't go through that. Let me just, though, very briefly name them.

Yanzhong Huang, who is the director of the Center for Global Health Studies at Seton Hall University and an expert on macroeconomic effects of these kinds of events.

We have Andrew Jack, pharmaceutical correspondent for Financial Times, but has also covered many other areas in his times at the FT.

And Michael Osterholm, who is on the phone, somehow or other -- Michael, are you there?

MICHAEL OSTERHOLM: I'm here. Thank you.

RUBIN: Good. Okay, how are you?

OSTERHOLM: Good morning.

RUBIN: Michael I happen to know, and Michael's Center for -- the director of the Center for Infectious Disease Research and Policy at the University of Minnesota and truly an expert in these kinds of areas. He scared me to death a few years ago on the bird flu, so now he's prepared to do so again, I guess. (Laughter.)

What we're going to do is this. We're going to have a format of roughly 35 or 40 minutes in which I'll pose a few questions on the economic dimensions of pandemic, and we'll discuss those amongst the panel. And then we'll have about 30 minutes of questions from you all because also, as I'm sure Laurie's already said, we're being Webcast so you can Tweeter -- or Twitter, or -- what is that thing called?

(Scattered laughter.)

GARRETT: Twitter.

RUBIN: Twitter. (Chuckles.) Okay, whatever. If you've got a passenger pigeon, you can send it to us via Twitter. And the number, I gather, is -- oh. Number CFRQ&A. That's what I was told. Pound mark, CFRQ&A, and apparently that will find its way to us somehow or other.

We'll be on the record, as Laurie has already said. When we get to the questions, if you'd just please identify yourself. Cell phones, et cetera, should be turned off.

And I think with that, we are ready to begin.

Let me start at a simple level. I actually spent a fair bit of time on this. Laurie gave me a ton of material to read, which I figured I'd put my side and not read it. But once I got into it, I really did find it interesting.

And I must say, the more you learn about this, the more complex and uncertain -- at least to me -- the more complex and uncertain these issues become, and that the trade-offs become very difficult.

I thought to myself, if I were back at Treasury where I spent a long time at one time, I think I would have a very difficult time trying to figure out how to weigh and balance all this. And we'll get into that, into some of my later questions.

But I'd like to start with a very simple question, if I may.

If you take the mid-case in the probability of distribution, which I presume you've already discussed, PCAST or whoever else's projections you want to use, take the mid-range probability, whether in this wave or in another wave.

What are the kinds of economic consequences you think might flow from that, both directly -- the developments in the United States and also including supply chain and other kinds of effects from abroad? And why don't we do that. We can just start right here, I guess.

Professor Huang.

ANDREW YANZHONG HUANG: Okay. I guess when you to take the mid-range, that means the infection rate of the PCAST forecast is about 30 (percent) to 50 percent people who will be infected. So I take the 40 percent.

That means, I think -- if that is true, it is going to -- depends on the sustainability of the economic effects and the severity of the disease -- I think it's going to take a heavy toll on the economy at the global, regional and national levels.

Forty percent infection rate is going to cause, I think -- let's think about this, both sides -- the demand side and the supply side.

I think a pandemic is unlike SARS, which -- whose impact is mainly on the demand side. A pandemic is going to have a huge impact on the supply side because of its impact on the health of the labor force.

So according to a report of the Human Security Council a couple of years ago, if 25 percent of people who are sick, then the fuel and food supply will be severely impacted. And that is going to deal a serious blow to the -- to our national economy.

And now we are talking about 40 percent, so imagine how serious that impact is going to be like.

ANDREW JACK: Yeah. I mean -- there's always the impact, sort of, across the -- all across the range, aren't there? There's the direct health impacts -- both positive, if I can put it that way, for the pharmaceutical industry and those who are delivering products, but of course largely negative for most others.

You've seen, obviously, some industries -- face masks, hand gels, all those sorts of deliverers -- who've already done pretty well.

And it seems to me, just looking at the current pandemic, you've had very strong sort of multiplier effects, given actually the nature of the relatively mild severity of the infection so far, there's still been a huge uptick in, you know, demand for vaccines, in purchase of drugs, both antivirals, antibiotics and others.

What's still difficult to play out, but we've already seen some effects with the first wave of almost the -- well, it's now the downturn of the second wave in the States is, as it were, not just the natural effects, but the human-exaggerated effects -- you know, the quarantine measures, for example, the effects of school closures and what effect that's had on driving sometimes a working parent to stay at home, the disruption that causes.

You only need one or two little weak links in the chain. For example, it turns out with just-in-time production and delivery, whether it's goods into supermarkets or whatever, you'll suddenly find that one truck driver falls ill and the entire distribution system of food into grocery stores or, indeed, cash into cash machines can have a huge ripple-out effect for elsewhere.

And certainly, in the U.K., I know, going back a couple of years, there was a lot of scenario planning in the sense that if there's a problem with HUV, heavy-goods vehicle drivers, we can bring in the Army or whatever.

But of course -- (chuckles) -- most of the spare trained HGV drivers in the U.K. Army, for example, are in Iraq or Afghanistan at the moment. And so, very difficult to pull those out, so the system is stretched thin.

Then you add that, of course, to the economic downturn. Arguably, there should be more spare labor around. But on the other hand, so many companies have already cut back in other areas and looked for economy measures that it's a pretty bad time, obviously, to have extra demand.

So I think we're pretty fortunate that at least thus far this pandemic virus has been relatively mild.

RUBIN: Michael, do you want to add to that?

OSTERHOLM: Yeah. I think that Mr. Jack really did a nice job of laying out the current scenario.

One of the concerns we all have is that this pandemic is occurring on top of a global just-in-time economy. And I think that there are far too many times that we relate the severity of a pandemic in terms of deaths as to what it will do to the economy.

There really are two different categories of impacts that it might have on the global economy. One is, first, absenteeism. And while we hear about these large numbers of absenteeism figures out there, remember that's over time.

So that if we even talk about 40 (percent) or 50 percent of the population becoming infected, it's over weeks to months, and so that, at any one time, we shouldn't have large numbers.

Now, having said that, we've recently received reports from U.S.-based companies with plants in Indonesia that are reporting 30 percent absenteeism at some of their plants as a result of what they believe was the H1N1 situation.

Now, that shouldn't be long-lived, if it, in essence, is sweeping through a community. But it can surely cause a problem there.

The second one, though, which I think is even more important, is the exaggerated response of governments or other organizations to the situation.

I mean, I've been involved in outbreaks where two cases of bacterial meningitis can literally freeze a community into inaction when it occurs in that community. And so that what we're concerned about is, is that we don't see border closings, quarantines or inhibition of trade and travel that would be exaggerated in regard to what the real risk is.

And that was what we clearly saw initially in the spring wave, where there were countries that wanted to shut borders, thinking they could keep out this virus -- which is like saying that you've fixed 12 of the 13 screen doors in your submarine. (Laughter.) It's going to get in, and I think people now realize that that's the case.

The final piece I would just add, though, is I don't think anyone really understands what it takes to basically put one rock in the gear of the global just-in-time economy.

We in the health-care area already are very concerned because the vast majority of critical pharmaceutical products -- devices that we use in the intensive care wards, the products that we use in infection control, like masks, respirators, gowns and gloves -- are largely made outside the United States.

And these supply chains are very thin. There's no redundancy, little surge capacity. And so if we do have a hiccup or an interruption in a foreign production site or the trade and travel that occurs with that, we surely could see big problems.

Let me just give close. In the state of Minnesota, for example, the average Minnesota hospital has about 34 days of money on hand. That's enough to pay one month's payroll. They don't invest in anything right now that doesn't have a payout in those first 30 days.

So we've stockpiled virtually nothing. We don't have supplies out here that we can use in light of a surge need, and that's a serious problem.

RUBIN: Michael, before -- actually, the next subject I was going to raise was the kinds of actions that should be considered now in preparation for the possibility of a pandemic, given cost-benefit analyses.

But before we get to that, you raised the Indonesia point. What about supply-chain problems that develop? Because even if we manage this issue reasonably well in the United States -- a big if -- developing countries are enormously less well equipped. And yet we have become tremendously dependent on developing countries across our economy, not just in the medical area that you mentioned.

Anybody want to pick up on that a little bit?

OSTERHOLM: Well, can I just add a piece to that? Because I think we heard in the previous session the issue of vaccine.

And I, like many, are very concerned that for at least the four coming weeks we're going to have very little vaccine out here. Because while the pipeline is starting to flow, at the end of that pipeline are a lot of rusty faucets out here for distribution.

So even in a country like the United States where extraordinary efforts have been made to get vaccine here in a relatively limited period of time compared to what we might expect to see, we're going to have a problem.

But we just did an analysis of the 15 largest importing countries into the United States. And if you just take the orders for vaccine by the governments of those 15 countries, we estimate that less than 3 percent of the citizens of those countries will ever even have access to vaccine. And again, those are going to be delayed.

So I think that the big impact that we're seeing out there, either -- whether or not they'll have intensive care medicine, they'll have vaccines, the developing world's on their own. And I think that's the critical point.

Let me just add just one sense of the importance of that. We've just completed a study where we interviewed a group of world-renowned pharmacists in all areas of medicine and said, what are those life-saving drugs that we have to have in this country every day, or people die? Not cancer drugs, not HIV-related drugs, but what's on the crash cart in the emergency room -- insulin, drugs like that?

And it turned out that over 95 percent of those drugs were generic drugs manufactured in the United States, and most of them were manufactured in India and China. So what happens in India and China? And what the implications are for the H1N1 there has tremendous implications here, because there's no stockpiles of those.

In Winnipeg, Canada, last summer they ran out of sedation medications for keeping people on these machines three different times. They just couldn't get it. And when we have a whole worldwide pandemic, everybody's drawing down those same resources at the same time, it's kind of a perfect storm.

So I think that is the implication that we really need to talk about today. What will the global supply chains mean when the developing world can't respond as, say, a country like ours can?

RUBIN: Yeah. I'm going to get to that. I'm glad you raised that, Michael, and I think that that, for policymakers in the U.S. and the (industrial ?) countries, it's going to pose an exceedingly complex question, which I'll get to in just one second.

But would anybody like to add to the comments Michael made?

I think you're heading into what is a second- or third-order kind of effect issue of immense importance. But --


HUANG: I think the pandemic is going to cause significant disruption to the highly integrated world economy. The difficulties in travel and trade will affect the flow of goods and services with cascading effects on the -- in the industries which are tightly linked to supply chains, that heavily depend upon the supplies, especially in affected countries.

I would add -- Michael probably is the expert on that -- most supplies of the base ingredient of Tamiflu actually are in China. The --

So if actually China, for example -- this is just a hypothetical scenario -- decided to nationalize or restricted the supply of this base ingredient, that would be something really that's going to affect our surge response capability here.

And also, if SARS can be of any guide in terms of economic impact, it's not as much the direct impact that is the medical cost associated with a disease or the lost productivity, but actually the disruption to the trade and travel, investment, the disruption to the supply chains and also the altered consumer -- the behavior changes in the consumers, travelers and businesses.

JACK: Three things, briefly. What about -- (inaudible) -- as the Heparin, the blood thinner, situation obviously illustrated very powerfully here a couple of years ago, striking how much out-sourcing, particularly of the raw ingredients for pharmaceuticals, is now made by third parties, particularly in India and China.

But I'd like to bring the focus back closer to home geographically. Seems to me the cross-border effects, even amongst developed countries, are very important. And if you have different pandemic scenario planning and different responses, that can create huge sort of confounding effects and broader effects, whether it's different approaches to treatment, to prophylactic, to vaccination, and you can get --

Let's say the Dutch cross over to Belgium, for example, and so on. Different nationalistic policies even, because of course in terms of vaccine and, for example, the antiviral manufacture, it's a very small number of plants in different countries.

And one could well see a scenario -- third point, bring you back to the U.S. --which, in the last two or three years, of course, after having a sort of witness to devastation of its vaccine industry, for example, started to reinvest or demand, as a condition for contracts, with international pharma companies that they place their plants within the U.S. Good for the U.S., bad for others.

And I know for quite a long time there was a period when the big drug companies that had lots of orders, investments, as it were, a green light to go ahead and scale up production on vaccines and drugs from parts of Europe and Canada, indeed, and elsewhere, the U.S. was holding back.

But there was always a feeling that the U.S. itself might, dare I say it, close its borders and refuse to allow international production made in the U.S. to go aboard until U.S. capacity had been met.

RUBIN: That gets us to a question I want to raise, and it is both a moral question, but I think an intensely practical question.

But before we get to that, it seems to me one point that that makes --- (chuckles) -- all of us have lived in arenas in which this question of interdependence and globalization and then international governance on transnational issues has become extremely important

It seems to me, in preparation for pandemic flu, having a plan that deals with these kinds of issues about border closings, transportation, transportation restrictions, in advance, rather than trying to do it ad hoc when this thing occurs, could be of enormous importance. Otherwise, it's not very difficult to see governments overreact, and then overreact in relation to each other and really go into some kind of a paralysis.

Let me ask you all a question. I was thinking about this the night before last.

There's a limited amount of vaccine; there's a limited amount of antiviral medication; there are limited number of gloves and gowns and masks and all these kind of things.

And in a market economy, these would get allocated by who can afford to pay for them, in which event the industrial countries would get virtually all of them, plus the elite, the absolute elite in the developing countries.

So number one, is that a moral issue that we should be concerned about? Number two, leaving aside the moral issue, if we go that route and developing countries, as a consequence, have enormous pandemics, that -- could it even cause political instability? How does that affect our economy?

For example, oil from Nigeria, to say nothing of -- you were talking about the medical supplies -- but oil from Nigeria or all the various other kinds of --

Well, virtually every supply chain in the United States today is very dependent on developing countries. If that's the case, then how do we think about the practical aspects of this?

And should the American political system be thinking of some way of rationing -- or the industrial countries' political systems, say -- of rationing vaccines and then the antiviral medicines and all the other kinds of supplies that are needed? And if so, what should the criteria be?

And how do they explain, how would an American politician explain to the American people that we are going to choose to protect less lives in the United States in order to protect more lives in Nigeria because we need Nigerian oil?

Who wants to take that up? (Laughter.)

OSTERHOLM: Well, first of all, I think a really important point here is is that we want to make sure that when we come away from this meeting today, at least we have a status of where we are today.

And I think the good news is is that there has been a lot of work done -- by the WHO and by various governments, that in April, when this first emerged in Mexico and the first calls came out for shutting borders, the public health community and governments alike basically said, no, that that was not going to be an effective way to respond to this. And that has been the case to date. And so I think that while we have isolated events that we think were needless, or out of proportion to what the risk of the disease was, in fact, that's the case.

If could maybe frame this, because it really hit me head-on: I was on CNN live one morning, juxtaposed to Vice President Biden when he was on the "Today" show, and he said he was not going to ride the subway or get in airplanes. And they came right to me and said, so is he right or is he wrong? And my, of course, reaction was, well, this is not a good one -- (laughter) -- to take live here. But I said, he is right and he's wrong. If 10,000 people a day are dying in New York, he's right. If it's what we have now, he's not.

And I think that what we have to do is, first of all, set up a response that is proportional to the risk of what's happening. And if 10,000 people a day are dying in New York, it doesn't matter what we tell governments to do, or what moral contracts we've written, people are going to hunker down and we're going to see major impacts on society. But we haven't seen that. And I think that what we're really asking here is is how do we ramp that up? When is it proportional and what do we do?

And then I think the question that you asked, Mr. Secretary, which is really key, is then what are those things that we have to have? For example, in the United States -- just forget the international piece, coal supplies half the electricity we have in this country. Until the recent economic downturn, coal was a just-in-time delivery product, where we had plants that literally got down to three to five days of coal and almost ran out. And yet we had no plan, internally, for how to prioritize if those 5,000 miners in the Wyoming-Montana area, that supply half the coal in the United States, were to get infected. They were not even on anyone's vaccine priority list.

So I think we need to take a step back and say -- what are those things in society that sustain us? What are those things that we'd like to have, that are nice, but are not critical? And what are those things that are just plain luxury? That would be the first step to then to deciding, how do we deal not only in -- domestically, but how do we deal internationally? Is a computer chip from Indonesia as important as a lifesaving drug is from India? And I think we'd all agree, no.

RUBIN: Well, (I suppose it ?) depends on what that computer chip is used for. It might be used for things that have a tremendous effect on life.

OSTERHOLM: Well, it could on life, but I can guarantee you if that lifesaving drug isn't there right away, the person dies. The computer chip, if it's there, "maybe" they could die. And so, I mean, this is exactly the discussion that we need to have so that we help governments around the world orient to what we're going to do.

You know, there are 50,000 fast freighters out there, that are -- you know, from Shanghai to Long Beach in 10 days, moving things to this country. They're on nobody's radar screen right now for any of the pandemic vaccines. They're not on anybody's radar screen, owned by any country, as "this is something that's a critical asset to our country we have to take care of." Imagine if those 50,000 fast freighters were to be impacted by a more severe pandemic, or by a government action that wouldn't let them in or out of port?

I think that's the kinds of things we haven't thought about that are going to be critical. And I think if the current pandemic stays at the level that it is, we won't have to think about those, because I don't think people are going to feel like it's rising -- is rising to the level of concern where that would be the situation.

RUBIN: Well, I remember a few years ago you talked about the same thing.

Why doesn't the Financial Times, for example -- just since you happen to be here -- (laughs) -- since all of us agree that advanced planning, of the kind of questions that you just raised, Michael, is much better, so that you have a plan in advance, not internationally but transnationally -- and, of course, transnational planning is extremely difficult to do, given the state of global governance, but nevertheless, that that's much better than to arrive at the situation and have to make ad hoc decisions -- why doesn't a respected publication like the FT, on an ongoing basis, alert the people of the world to this problem, so as to try to catalyze that kind of planning?

JACK: Well, I'd like to think --

RUBIN: Or do you just think it doesn't matter, and it's --

JACK: No, no. I mean, I'd like to think that we do. We have, actually, you know, done quite a lot, particularly -- personally, on (some ?) pandemic planning -- for example, scenarios, strategies, and so on like that, and try to debate a lot of those, a lot of those issues. But, of course, there's always room for more.

I mean, coming on to your point about, you know, donations, the moral question and so on, you know, on the one hand it's interesting to me, following the farm industry these days, because they produce something that is so obviously lifesaving -- there is an extraordinary demand -- there's a pressure, you know, that they give it away for free.

But, you know, we don't necessarily expect Citibank, because it's got branches in Africa, to hand out money for free. We don't expect Proctor & Gamble to hand out food for free. But we, sort of, do expect the drug companies to basically sort of hand stuff out. And there obviously has to be a balance reflecting the costs and the risks of development.

But that said, you know, now you see some of these companies that are doing extraordinarily well, out of a very mild pandemic. You know, you has to feel -- you have to feel that there's a, there's both a, you know, there is a moral obligation, I think, to some degree, that they share on that.

And it's kind of ironic to me that, looking in the U.S. case, for example -- you know, we have now this recent initiative led by the White House on vaccine donation, but isn't it interesting, it only came after the tests seemed to show that a single shot of vaccine would actually deliver the job currently. You know, in other words, we will definitely look after ourselves first before we start thinking beyond our boundaries.

But there is maybe a way to -- there's a broader issue, and a moral one. There is a, you know, broader issue of self-interest if we don't provide some degree of structures for greater cooperation. We talked about supply chains and so on, a classic -- a standard example in vaccines, of course, is what happened in Indonesia, where we've got this ongoing battle over the sharing of viruses for flu. And it's quite difficult, sometimes terrifying, exactly what Indonesia's negotiating position is, and keeping it constant.

But that said, you know, this was clearly a case of, you know, here was a country that said, "We should have some of the rights" -- the commercial rights, effectively, or at least the moral rights to benefit from viruses isolated, developed within Indonesia. Of course, the danger of that sort of tit-for-tat approach is, you know, if everyone takes that view we'll never create -- you know, we'll never have the broadest possible range of viruses to analyze and share for the broader global community.

So everyone, developing as well as developed countries, have an obligation to share to some degree. And we haven't worked out what those real mechanisms are.

RUBIN: Well, you keep using the word "obligation." I guess one would -- (inaudible) -- obligation I suppose, or you could just call it self-interest.

But I think -- I must say, having spent six-and-a-half years in government myself, and tried to explain things that I thought were sensible but were very difficult to get (across ?), explaining this politically -- as to why we're going to accept having more deaths in the United States in order to protect people in Indonesia, because we need Indonesian "X," whatever X is, is not going to be a simple task for politicians.

HUANG: No, it is not, I believe, actually. There are strategic economic, political, economic reasons for the developed world to share the vaccines, antiviral drugs to the developing world. But in the meantime, there are practical (difficulties ?) for us to do so.

And, a, we know that the vaccine production capabilities are mostly concentrated in the developed world; and b, while we can say, you know, that during the threat of the -- when we were facing the threat of H5N1, we could say those countries -- the front-line countries, they're more vulnerable to the potential pandemic. But H1N1, they already affecting almost every country in the world., so you cannot say that these countries in the developing world are more vulnerable than us, in terms of the impact of the pandemic.

And thirdly, I want to point it out that while the revised international health regulations make the sample-sharing mandatory, they haven't made the vaccine-sharing mandatory. So it is still -- (laughs) -- the market purchasing agreements that will determine who gets what -- you know, how the vaccine will be distributed. And that, of course, we know will favor the, naturally, the developed world.

That being said, I believe that we still, actually, can make that happen, because, a, we have sufficient vaccines available -- actually, sufficient enough for us to earmark a proportion of that to the developing world. To my knowledge, that the United States has ordered 250 million doses of vaccines. But according to a recent study published by the Science Magazine, modeling on the 1957 pandemic, with only 63 million doses, we (can ?) extinguish a pandemic.

And also that depends, of course, on optimal vaccine rationing, a prioritizing strategy that is focused on the age group -- the groups that, aged between five and 19, and 30 to 39, instead of the current CDC strategy of prioritizing age groups from five months to 25 (years). If we reorient that strategy, I believe we can actually free a significant proportion of the vaccines, making them available to the developing world. And this, in combination with the strategic reasons, I think should actually convince the American public that this is the right thing to do.

RUBIN: Could I ask you a question? If you do what you just said -- I'm older than the group you just (mentioned ?). Does that mean you would not let me buy the vaccine to protect myself?

HUANG: No, it's not that. Actually, this deal that the --

RUBIN: (Inaudible) -- (my life would ?) be sacrificed for the benefit of your model? (Laughter.)

HUANG: (Laughs.)

RUBIN: No, I'm just curious. Is that --

HUANG: The assumption is, actually this --

RUBIN: I understand probabilistically you're taking less risk, but I'm --

HUANG: No, we're not saying that the elderly people should not be protected, they should not receive the vaccine -- (laughter) -- It's just that -- (laughs) --

RUBIN: Elderly? (Laughter.)

HUANG: (Laughs.) I'm not -- I'm sorry, Bob, I should --

RUBIN: No, no, you -- I'm just trying to understand your model.

HUANG: Just based on epidemiological data, you know, people who --

RUBIN: I understand the -- I understand the probabilistic distribution question. I guess, I think, it's going to be -- is it a question, I don't know, maybe I'm wrong, but I just think that in the American political system the idea of rationing medicine in accordance with a probabilistic model -- given that there's not no risk for the people outside the ranges of that model, has its own issues. Optimizing --

HUANG: Yeah -- (laughs) --

RUBIN: -- is going to be very difficult, I think.

HUANG: Yeah, of course, this -- I believe that a lot of this is going to be an ethical issue, a moral issue involved in rationing. I mean, actually we are a market economy; do not like this term "rationing." You know, it's from the efficiency perspective -- (laughs) -- I think, you know, if we were given a limited supply of the vaccine, this is the optimal strategy.

OSTERHOLM: You know, if I could just add a piece here. We actually have a relatively interesting history on the distribution of influenza vaccines in the United States, which I think speak to this.

In previous years, when we've had vaccine shortages, coincidental with increased news reporting of deaths due to influenza, we've seen the elderly literally sit outside in lines for over an hour, in below zero weather, to get their immunization. And then, as soon as there's a perception that it's not a problem anymore, or that there is enough vaccine, nobody wants it and we end up throwing away millions of doses every year with seasonal flu.

So I think the term "optimization" has to have an equal-sign next to "emotion," because in the end, it's really all about what do people perceive to be the problem. And when they can't get it, and it's a problem, they want it really badly. When they can get it, or it's not a problem, "okay, so what?" And I think that's the issue.

I mean, we've already -- I've already received a number of media calls, just in the last 12 hours, about a plan that Massachusetts announced yesterday to put their prisoners who are at high risk of severe disease at the top of the -- one of the tops of the priority lists for how they're going to distribute vaccine in Massachusetts. And there's already an outcry about "this as unfair," and this isn't even a foreign country.

So I think that it really does, I think, Mr. Secretary, come back to what you said, models are going to be meaningless. It's going to be, what's the emotion at the time, and how severe is the problem. And if it's not a severe problem, it's not going to be a problem. If it's a severe problem, there is no allocation plan -- moral or immoral -- that's going to be satisfactory to everyone in this country, and, I think, for most people around the world.

RUBIN: Let me ask a final question before turning to the audience.

Let me ask each of you to very briefly say, what are a few things -- in a sense we've covered some of this already, but what are a few things that you would do now?

Let's assume that this wave sort of peters out, and it's not -- it doesn't have the level of seriousness that many people feared. Nevertheless, you can have another wave, unpredictably, so, we're not through this -- we may very well not be through the thing.

What are a few things that you would do now to prepare -- to be best prepared to deal with the next wave, assuming it is -- if it is a serious wave, taking into effect -- into account the cost-benefit analysis, that is to say, each thing you do has a cost?

We'll start with anybody.

Dr. Huang.

HUANG: Sure.

If we adopt, again, what the, sort of, worst scenario case -- that is, you have 90 million people who need medical service, then I think that this is going to stretch our -- I mean, the United States' surge response capabilities, especially our capability to treat severe cases.

Based on a study, I think, conducted in 2008, the current capability would be sufficient to handle a mild outbreak -- a mild pandemic. But when you talk about a severe pandemic, with 90 million people who need medical attention -- medical assistance, then the conclusion is that we -- that it's going to use 38 percent of the hospital beds, 92 percent of the ICU units, and 40 percent of the ventilators.

And, given that our hospital units usually run at 80 percent of their capability, so I think the focus now should really -- focus our capability to handle the severe cases, especially we need (to) probably consider adding more ICU units.

RUBIN: Well, the 80 percent number, I think, relates to ICUs, right?

HUANG: Yeah.

RUBIN: Yeah. But a billion ICUs is a very expensive proposition. Your thought would be, on a cost-benefit analysis, we should build a substantial additional number of ICUs.

HUANG: Yeah, in that sense, yes.

JACK: Yeah, I mean, I think we should be very fortunate, first of all, that we do have -- first of all that we do have what is a bit of a dry run for a scenario that could be much worse.

So, clearly, the message overall is to really analyze, scrutinize, debate and share, really looking at the real-time experience that we've had, which is unprecedented in pretty much every way, in terms of this virus -- understanding the science of it, testing the systems to respond, and so on.

I suspect that the -- you know, what we've got actually is a scenario -- just thinking about vaccinations, and going back to the previous one, is we're going to have excess supply in the U.S. and a lot of the developed world, which is going to look pretty tragic, actually, you know, with sorts of money that was spent on, ultimately, on vaccines that will be thrown away.

And we're going to have, you know, excess on that demand from the developing world. And actually, one thing that explains -- combines the two is actually what I might call "distribution on health system issues." You know, whether it's about -- both the practical issues of distribution, and that's a big issue in the U.S. -- even more than, dare I say it, in Europe, which has probably a stronger public health system, and therefore easier, you know, systems for access to do massive vaccinations.

There's also a question of, you know, as we talked earlier, the issue of public perception, and cultural understanding of vaccinations, and so on. And those things span along with resources, developing- and developed-world challenges for the future.

OSTERHOLM: You know, let me just take a step back here -- I will answer the question you asked. But, I think, following up on the first panel session, and where we're going, at the risk of sounding like I am throwing some gasoline on the fire here, I don't think that even if this virus doesn't change -- it stays the same, we're out of the woods yet in how we're going to be handling this over the next weeks to months.

If any of you -- and I'm sure many of you in the audience did read either The New England Journal series of articles last Friday, or the JAMA articles on Monday, you saw that, for example, in the Southern Hemisphere, although it did not receive widespread attention, there was a 15-fold increase in the number of hospitalizations to the ICU units in New Zealand and Australia during their winter months -- our past summer, which literally stretched that health care system to the brink.

If you read about what happened even with the relatively minor -- and I say minor in the sense of what it could be "peak" in Winnepeg, you saw that in Manitoba in the month of July every intensive-care bed that was available was used, and it actually rivaled the experience that Toronto had with SARS in 2003.

Now, I would suggest that the pandemic, at worst, has, you know, stayed well "below the top of the levee," you might say, in terms of flooding. But if the virus just continues at the same rate of causing severe disease in the population, but more people get infected as this wave increases -- and we have every evidence right now that over the next weeks, in the absence of lots of vaccine out there, and it's not forthcoming in the next weeks, we could very well go over the top of the levee, in terms of the number of cases.

Meaning, if we just increased by 30 percent the number of cases at any one moment, over what we saw in June and July, we are going to overrun intensive care units in this country. And when that happens, that's where communities can tip. Even though it doesn't fundamentally change the overall perspective of the pandemic -- you know, whether it's 10 deaths, or 50 deaths; whether it's, you know, three more deaths in this community, versus 10 more deaths in this community, again, my public health experience has shown me, time and time again, it's the emotion of how people react.

And I believe that we have to be very careful here because, on one hand, we want to make this be a mild pandemic -- and for the vast majority of people it is, it is absolutely that, but if we suddenly find in communities in this country that, in fact, we can't provide adequate intensive-care medicine to the people who need it, and people start dying -- even if it's just a few a day in large communities, I think you're going to see a very different response in how people react.

And I think what kills us, versus what really hurts us, versus what worries us, versus what panics us, (are ?) often very different. And so I just want to add that note here, because that could have a big impact on business -- will people go to work; will schools continue to be in session? I hope that doesn't happen, but I think that we're not out of the woods on that yet, and I think that far too many people just assumed, "Okay, this one's not so bad. We're done."

Now, to answer your question, "What do we do on priorities," health care right now has to be huge. We have in this country, for example, a major discussion about ventilators. And yet, right now it's not about the ventilator, it's a thing called the "circuit" that attaches to the ventilator. We are seeing shortages emerge there -- people not getting those.

We need to shore up, in the short-term even, not just the long-term pandemic, what are we going to do for the next four to six weeks, to 12 weeks, on medical equipment? Go on any of your supply orderers today, and you can't get circuits. You can't get mass gloves and gowns. You can't get a lot of the medications.

So I think we even have this immediate issue, Mr. Secretary, where we really have to yet solidify that, then we can start talking about, 'what are the long-term solutions?'

RUBIN: And, who in our -- and then we'll turn to the audience, who in our political system, who in our governmental system has responsibility for trying to stockpile, and those kinds of -- ?

OSTERHOLM: Well, first of all, none of it is being stockpiled. The traditional stockpile mind-set has been largely that of around of a bioterrorism event, which has been good. And I must say, we have made tremendous inroads in our government's activities, both in the previous administration and the current administration, around that construct.

But those are typically tied to a single event. New York gets hit, Chicago gets hit, what can we do there?

This is an all-city, all-county. I mean, what distinguishes a pandemic from any other catastrophic event -- a Katrina, even -- is that every village, town, city, county, state and whole nations are in the soup at the same time. And you can't stretch those resources that way.

So it does take on another approach. We have to allocate or we have to limit the amount that we have in terms of any one community getting help from anybody. And then that sets up a whole other set of questions, and we have not addressed those. Trust me, we haven't. And I think that's, from a business standpoint with the health side, that's still going to be a very, very critical one that's wide open in terms of, how do we handle that if we run out of masks, gloves and gowns, ventilators, et cetera? We haven't answered those questions.

RUBIN: Okay. With that, let's open the -- to whoever -- yes, sir. Just state your name, affiliation and a brief question, if you will.

QUESTIONER: I'm Dan Sharp with the Royal Institution World Science Assembly. And I'd like to direct this question to Mike.

The answer to your final question, Secretary Rubin, had been at the macro-national level.

And I'd like to ask you, Mike, since I know you bring together a CIDRP the leaders of corporations and other organizations, to assess the extent to which, at the micro level, the companies are adequately prepared. And what are the principal gaps in preparedness that you would urge leaders of organizations to address as a counterpart to what the country is doing?

OSTERHOLM: Thank you, Dan. I appreciate that. And in fact, as some of you may know, we just held a national summit on business preparedness and pandemic flu two and a half weeks ago here in the twin cities. And a number of the Fortune 500 as well as a number of smaller companies were there.

First of all, one of the things that was very clear and abundant is this economic recession took a big hit on preparedness, because preparedness, in a company's financial page, doesn't show anything incoming, it's all outgoing. And we saw a number of companies that downsized or postponed any kind of preparedness work activity or, in many cases, even let staff go. So we came into this lean.

Second of all is, is that it was amazing. And the Harvard School of Public Health, Bob Landon's group, did a remarkable survey showing roughly that about four-fifths of U.S. companies really were ill-prepared to even begin to address this -- simple issues of just human resource questions about, how do we keep sick people away from home if we're not -- out of work work and keep them home if we're not going to pay them for that? It's a double hit there. They're going to want to come to work and then transmit the virus more.

So I think there are a lot of issues that we're learning, and people are really kind of making it up as we go.

Now, the good thing is this has largely been mild. And for those few patients that have been seriously ill, it has not dramatically impacted the workforce yet. But I think what it points out is is that preparing for a catastrophic event of a localized nature, like a Katrina or a terrorism event, is very different than one that impacts the entire world, the entire country at the same time.

And I think businesses are going to learn a lot from that. And if anything, I think what we're going to try to bring out of this is, what were the critical supply-chain questions? What were the issues around worker communication and worker safety and maintaining your workforce? And how do you just keep your business going during a time like this?

RUBIN: Yes, sir.

QUESTIONER: Good morning. Assemblyman Rory Lancman. I actually chair the Subcommittee on Workplace Safety in the assembly, and we've been looking at H1N1 and its impact on the workplace.

And what we've found is that employers, both public sector and private sector, are completely unprepared for a pandemic or anything that's even slightly more serious than what we're facing now.

If I showed you, for example, the MTA's plan for dealing with H1N1, you'd be shocked and appalled.

You know, last spring, we had schools that were closing. Can you imagine if, instead of the pandemic kind of circulating in the schools or some of the more tragic incidents of people dying not being in the schools but in the subway system or in some other critical infrastructure, you could see the whole economy seizing up.

My question -- and you know, I apologize for the focus on the United States -- but who would you see or designate at the national level coordinating some kind of preparedness plan? Is it the CDC? Would it be FEMA? Would it be some other agency? But I can tell you, one of the things that, you know, prompted me to come this morning is just the lack of preparedness in the public and private sector workplaces.

RUBIN: I'll give you a response to your question, but let me ask you a question first. Who in New York state has been designated to coordinate in the same way you just described?

QUESTIONER: I'm smiling, because I suspect that you're asking that question because you suspect that no one has, and you are right. (Laughter.) You'd be --

RUBIN: I will acknowledge that it occurred to me that was possible.

QUESTIONER: You'd be surprised at the difficulty in coordination between the state Department of Health, the state Department of Labor on such simple issues as vaccination priorities, mandatory vaccinations, personal protective equipment, et cetera.

And in New York state, for example, workplaces are regulated -- the public sector workplaces are regulated by the state Department of Labor, but the private sector is regulated by OSHA. OSHA doesn't even have a director that's been confirmed.

And so the short answer is, there's a lack of coordination, even at the state level.

RUBIN: Look, I think one of the complexities you have in the United States, and one of these documents made the point, is that we have such a distributed system, if you will, where cities have responsibilities, states have responsibilities, counties have responsibilities, federal government has responsibilities, and how do you get all that -- and of course, private sector -- how do you get all that coordinated?

I think it's a very important one.

I think PCAST recommended that it be the Homeland Security adviser, if I remember correctly. The problem with that is -- and I'm not being disrespectful to anybody -- Homeland Security, as a department, it is not universally thought that it has completely figured out how to perform well its current functions to a reasonable degree of effectiveness. And now you're saying take on this additional function.

I'm sure it will do marvelous under its new administration, Governor Napolitano. But in the little time that it's existed, there are a lot of questions about how well all that has worked.

So that's what PCAST recommended. When I read that, and having spent six and a half years in an administration, I had a somewhat different view of how I think I would recommend that it be coordinated. But that was there.

Does anybody else have any ideas?

JACK: Yeah. I mean, going back to the previous sort of thought just, you know, during lessons where we come to the end of this pandemic wave, one of the many things, if only you could normalize for the other confounding factors, will be actually the relative performance of federal systems versus more centralized systems.

Actually, you know, I think, in Europe, for example, of Germany, where I know as well it's been very difficult to get all the different regions to coordinate. They all have, you know -- it's kind of a real-time exercise with a single national system of then testing how that's interpreted and implemented by legislators and regulators and regional authorities. Same in Canada, same in the U.S. It would be interesting to compare, dare I say, with Britain and France and some other more centralized systems, whether that does lead to a more coherent response.

I'm not sure it will, by any times, you know, because it all sort of implies the best information is decided centrally and then that does get rolled out consistently. But it's one extra confounder that we really need to look at in a few months' time, I think.

OSTERHOLM: Well, you know, I think one of the issues we have here, as we well know, the vast majority of critical infrastructure in the United States is actually in the hands of the private sector. It's not in the hands of government.

Now, having said that, I think the government -- and you asked who -- think the CDC has tried very hard to move the workplace agenda forward, but it is within what you might call tangled mess of Washington bureaucracy, whether it's Department of Labor, Department of Commerce, whether it's the White House, whether it's Homeland Security. And I can go on and on and on.

But I think that one of the issues that we have to fundamentally wrestle with is redundancy in search capacity. We have nothing in the private sector today that pays you for that.

So you know, when we have, for example, the classic, you know, government expenditure for this, the Minneapolis-St. Paul International Airport Fire Department, one of the best, well-funded fire departments in the state of Minnesota, it has never had a major plane crash there on-site since its inception more than 70 years ago. And we pay for that every day, though, because as a society we've made that decision to do that.

Companies can't and won't do that. I mean, you would go under if you basically put your balance sheet around widespread redundancy or capability during a plan like this.

So I think we need a whole new discussion about what are those critical things that we have to maintain, whether they're from a foreign source or a domestic source, during times like that, and then have a discussion. Who's going to pay for it? That's why we're in the problem we are with vaccine.

And no vaccine manufacturer is going to sit there and build tremendous capacity so that it can be used once every 40 years and pay for that on their own during that 40-year period.

So I think there's a fundamental question that pandemics beg as to, what is necessary, what is critical and who pays for it to have it there when you need it, like that fire department at the airport?

RUBIN: You know, just to make that more complicated, Michael, if it's something from the supply chain that comes from the developing world, how do you deal with that? Do we stockpile it here? Or do we try to build redundant -- when we try to somehow or other catalyze redundant manufacturing capability in the developing world, and if so, who pays for that, and how does that get paid for?

I suspect not simple questions.

OSTERHOLM: You know, and I think to even follow up on that, I could just add one piece. We tried for a period of several years to get into the mix the discussion why it was strategically critical to talk about moving vaccine quickly from the U.S., the U.S. vaccine stockpile of whatever flu vaccine we had during a pandemic, if in fact we needed to support those supply chains coming from another country.

And that got nowhere, because we saw ourselves as so American-centric that everything was about what was inside our borders. On the one hand, we realized the global economy, but yet we don't when it comes to issues like this.

And so even if you're not trying to be altruistic, if it's not a moral issue, just a straightforward, strategic question, we never have addressed that about, when would it be better -- as you asked the question earlier, Mr. Secretary -- about maybe not you getting the vaccine because you're not in a risk group right now to get severe disease but moving it to Indonesia or moving it to India or China, totally for a strategic standpoint?

Much as we talk about with our military all the time, I mean, imagine if we only considered our military within the borders of our country.

RUBIN: You know, I agree with that, Michael, but I think that if an administration were to be serious about this and take it on -- and I'm not saying they aren't, because I actually have no knowledge what the administration is doing -- I think that you would find that one challenge is the procedure challenge, the substantive planning challenge. But the other is just an immense political challenge.

OSTERHOLM: Well, I agree with that. I'm merely pointing out, if we really want to address it, though, we're going to have to bring that up. And I think you're right, I think, from a reality standpoint, unless you can show direct impact to somebody, you know, in Lake Woebegone that what you did in Indonesia changed their life, they're going to say, keep it in Lake Woebegone.

RUBIN: It's an enormous challenge. By the way, you asked me where I would have put the -- I would have put the coordination not in Homeland Security. PCAST is better qualified to judge this than I did, and that was their judgment. But just having spent six and a half years in an administration, I think I would have been inclined to find some way to do it in the White House. But that's just my view, and it's probably wrong.

Other questions? Yes, sir.

QUESTIONER: I'm Charlie MacCormack, the CEO of Save the Children.

And my question, the takeaway will be about lessons learned. Are any possible? And how will they get rolled out a year from now?

But as background, we have been working at Save the Children on pandemic preparedness in developing countries and monitoring and so on and so forth, for two or three years since the avian influenza issue came up.

But it's a huge effort to keep people focused on this and to keep the supplies in place and, you know, they expire, and you have to go back out and so on and so forth.

So tragically, in some ways, you know, it would almost be better if this is fairly severe enough to get everybody's attention and to be serious about the downstream consequences so that we can actually get the global governance processes in place -- not that I would want to see that -- but is there any way, absent this being serious enough to really get the attention of political decision-makers, to roll out the kinds of recommendations that are made here today?

Because quite tragically, really, so far, the takeaway is, it's not going to happen.

RUBIN: Anybody want to respond to that?

OSTERHOLM: Well, let me just say -- first of all, Charlie, I think you raise a very important point. And let me just give you two examples. I have heard a number of individuals want to disconnect the current discussion about pandemic flu response in this country from health reform, because they're afraid that, you know, if we can't adequately handle pandemic flu, how will the government ever handle health reform?

And I think it's just the opposite. I think the fact that we have such a system that is as stretched as easily as it is right now says something about the whole question of, what do we have for health care in this country?

And I'm afraid that part's going to get missed. Because unless we go back and do what the Aussies and the New Zealanders did to summarize their experience there, people won't really realize that there are major lessons to be learned about our capacity. And what does it really take to take it over the top? And it's not nearly as much as people thought.

I think the second piece that you raise is just this idea of, how do we respond? My worst fear is is that what was going to happen is this wave will continue in through the fall. As we heard in the first panel, we surely could have another wave in the winter, into next spring.

But if we don't have that, and much of this vaccine does not arrive into our local communities until mid-November or later, we're going to end up early next spring with lots of vaccine left over. And people are going to wonder, why did we spend all that money for that vaccine which we didn't use, which will actually set vaccine programs back. It won't help us; it will actually hurt us.

And that instead of more capacity, we're going to talk about less capacity. Why do we even need that? And not realizing that we missed the prevention opportunity, because if we had had a better vaccine and more capacity, we would have had it to people before the pandemic really peaked, not after.

Now, I don't know that will occur, but I'm sure that that's going to be at least one area that we're going to have to watch carefully.

So I think, if anything, I'm more concerned about the negative pieces that are going to come out of this, where people are going to go back and say, one, you scared us needlessly, because everybody thought it was going to be H5N1 and 2 to 50 percent of people were going to die, which we've never said, but that's the case.

The second thing, even in this experience, we didn't learn when we could have from the health-care setting issues. And second of all, with the vaccine, we spent money we didn't need to spend. Why did we do that?

RUBIN: Yeah, I'd just add one thing, if I may. I think it's very hard to persuade the American people to think probabilistically. And secondly, it's very hard in our democracy, unfortunately, to react to things other than in response to crisis. And you can see with our fiscal situation today where we have a horrendous long-term fiscal situation, but we don't want to deal with the very difficult trade-off and judgments that are made to deal with it. I mean, we can't do it right now anyway because the economy is weak. But we don't want to do the kind of things we could do to get ready for that when we have a somewhat stronger economy.

Other questions? Yes, ma'am.

I think your points are well-taken.

QUESTIONER: Thank you. Liz Wishnick from Montclair State University in Columbia.

We've been talking about this pandemic in terms of emergency response. And I wonder, what about the preventive aspects? When we look at the case of bird flu and SARS in Asia, one of the big issues was that the people who didn't have access to health care were the most vulnerable -- the rural populations, the people outside of the health-care system.

So I just wonder, you know, in terms of our country, now in the midst of a bitter health-care debate, why isn't the pandemic issue brought more into this debate as a reason for expanding access? Because if 15 percent of the people are not in the health-care system, that will accentuate any pandemic.

RUBIN: Anybody want to try to take a shot at that?

OSTERHOLM: I think, Mr. Secretary, that's yours. (Laughter.)

RUBIN: Well, Michael, you spend all your time at this.

OSTERHOLM: Well, I think, I mean, I think the issue is around -- the health-care reform issue is one that is remarkable in of its own. And so I think access and cost and all these things are there. And you know, we all obviously want to create the idea of a system.

But on the other hand, what does that mean, and what is that going to cost? And I think you just alluded to the cost issue.

You know, I heard a very sobering figure several weeks ago at a meeting that I was at, that last year the increase in health-care costs in our country exceeded all the revenues of the entertainment industry. And so, you know, we do have a need to talk about cost and who's going to pay for it, whether it's our generation -- which it isn't -- it's our children's generation -- versus access.

So I think pandemic needs to fit into that. And capacity surely is part of it. But this is a much bigger, much more complicated issue that I don't think pandemic influenza is going to be even a hair in the tail of the dog in terms of the overall discussion piece.

HUANG: Well, I think prevention is certainly very important if we agree that this concept of surge capacity is a cornerstone of pandemic preparedness, because the surge response capability is a function both of the surge on the demand side and the surge capacity on the supply side.

On the demand side, the surge can be reduced by all these prevention measures, including a well-functioning disease surveillance and reporting system, well-developed laboratory and epidemiological capabilities, availability of the prophylactic and non-prophylactic measures, a functioning health-care system. This is all very important to actually reduce the surge, therefore maximize our surge capabilities.

RUBIN: Laurie.

QUESTIONER: Laurie Garrett from the council. Just in response to this question about linkage to the health-reform debate.

Actually, we do see very strong linkage being made, but it's being made by the opponents of vaccination, who are arguing -- the Glenn Becks, the Rush Limbaughs of the world -- who are arguing that this is another example of the Nazi totalitarian Obama regime trying to force you to do something, in this case get vaccinated. And they have linked it with health reform.

The constituency that has failed to do so is public health and the advocates of vaccination.

I just have a quick question for Yanzhong Huang. Secretary Rubin suggested that we might think, how would this be different in a more, shall we say, top-down society, compared to a federalist society, as we have in the United States and, in particular, on issues of organizing supply chain and maintaining productivity in the midst of an epidemic?

So how does this look from the Beijing point of view?

HUANG: Thank you, Laurie, for that. I think it's a tough question. And if you want to do the comparison between the U.S. approach and the Chinese approach and the people who say that Obama has totalitarian approach, I think would find the Chinese approach even more interesting if you talk about the Chinese response to the recent -- to the spring H1N1 outbreak. (Laughs.) It's very much a Orwellian approach to public health, you know, that the --

RUBIN: It's a what?

HUANG: The Orwellian --

RUBIN: Orwellian.

HUANG: -- also totalitarian in a way -- approach to public health. The government mobilized a very significant proportion of the state operators, from the central government to the local government, the public health departments, CDCs, public security departments, street-level, residential committees. They mobilized all the state operators, sort of launched a witch hunt of all those, you know, suspected of having the swine flu or having close contact with the swine flu cases.

They are very efficient. And the state reach was indeed very impressive. And I found actually a report basically that said, on April 3rd, you know, a passenger on a flight, they happened to find one case there, arrived home in a remote village of -- (inaudible) -- province only to find the CDC officials already waiting for them. (Laughs.)

So yeah, they are very effective in actually hunting down or tracking down the people who are infected. So that is indeed a top-down approach. But that top-down approach had had actually a big price tag attached, that is they spent a lot on that, I think $731 million at the central level alone. That is twice the money they spent on SARS.

That also means a large percentage of the population, because of that contaminant-based approach, a large percentage of the population was basically not exposed to the virus. You know, I'm not recommending, you know, the flu parties deliberately exposing the virus. But because of the lack of exposure, that caused the problems for the (hurt immunity ?). That is, a lot of people failed to build up this natural immunity.

You know, once the government stringent measures were (begun ?), we found this, you know, dramatic increase of the cases in China, especially since the early September.

RUBIN: Laurie, I just returned from China Tuesday or Wednesday, whatever day it was. I've lost track a little bit. And I was -- we did raise this actually with public officials and even with the premier.

They seem to feel that their system was quite well-suited to making allocation decisions. (Laughter.)


QUESTIONER: Hello. Kathy Tayler (sp), Benefit Allocation Systems. Thank you for your time today.

We've spoken about the international and the national impact potentially of a pandemic. And I'm wondering if you could talk about whether you think there are risks in the variability with which U.S. states, particularly in a challenging budget environment for states, potentially it causes economically.

And if I could just give you a very, very anecdotal but illustrative example as to why I ask this. A friend in Ohio, who has a 13-year-old daughter who came down last week with H1N1, she was told there's no vaccines in the state if you're under the, I might be off a year or so, under 4 or over 60 or sick or pregnant. And there's also no Tamiflu. So she's told to stay home and suffer through it, which she's doing just fine. The message there is not such a big deal, this illness, you'll be fine.

In New York, I have another friend, who walked into a Soho doctor, with her husband and two kids, vaccinated right then. The message there, much more important to be vaccinated and to be proactive.

And so I'm interested in the variability with which we're handling this from a state level and where you think that impact is.

RUBIN: Who would like to take that?

OSTERHOLM: Well, let me just talk a bit about the vaccine issue, because I've spent the better part of my public health career being that shock absorber between things like vaccine being available and the public getting it.

And I think the experience you just provided us is one that is just a function of where the current vaccine distribution situation is at. We've already said several times in this meeting, we have really witnessed almost heroic efforts by governments of the world, particularly the U.S., and the vaccine manufacturers to make this vaccine safely but quicker than we've ever done before.

You know, but the problem is, when you have a vaccine that takes longer to make than it does to plant, grow and harvest corn in Iowa, then you know you've got a problem. And what we're seeing right now is is that we're just getting that vaccine out just now.

So the physician in New York may have had access to the very first doses of vaccine coming out; the physician in Ohio did not.

What's going to happen, though, is that pipeline is attached to a very, very rusty faucet. Public health has just let go 10,000 people in the last year in this country, from jobs. We have really very little capacity out there to suddenly set up a brand-new vaccine program.

Second of all, we've watched the health-care system, which now has never had a vaccine for adults program -- it has had for children -- suddenly be charged with getting this vaccine out. We have clinics around the country, large health-care systems that have let go 4 (hundred) to 6 hundred people in the last year -- nurses and nurses aides -- just to try to make budget. And so they have no elasticity.

And then when you look at the issue of the private sector, whether it's the commercial pharmacy companies, et cetera, when they get vaccine and how they get it and how they allocate it, it's all a problem.

So I wouldn't look at this as a state-by-state issue. This is a function of where, why are we in the state we are with getting vaccine and getting it distributed in a timely way? That's the problem.

I think the second point you raised, though, the different recommendations of who got Tamiflu or who didn't, also gets back to what your health care is. I happen to have a wonderfully robust health plan at the University of Minnesota. But I, you know, have kids, who are young adults now, who are struggling, trying to get health care, because they don't have jobs and so forth, and it's a very different situation.

So part of it is is universal benefits, when should we get it or not? So I'm not sure that it's a state-by-state issue as much as it is just the state of the reality of vaccine and how to get it out there and just health-care access in general.

RUBIN: Yeah. We'll be taxing your robust plan pretty soon. (Laughter.)

OSTERHOLM: Thank you, Mr. Secretary.

RUBIN: We have time for one more question, I think.

Anybody have one more question? Yes, sir.

And then I'll make one quick concluding --

QUESTIONER: Jon Cohen with Science.

The one thing that we haven't talked about at all is 1976. And I think the lesson from '76 was not that vaccine was made, it was that it was used when it wasn't needed.

And so when Mike was bringing up this notion of there being an excess of vaccine at the end of all of this, I'm just curious, might that be exactly what we want? That could be a very good thing, in a sense.

In '76, had they made vaccine and not used it, it would be just like those firetrucks that don't have to clean up after the plane crash. They're there if we need them. And maybe the lesson from this is that we need to prepare the public to make something that isn't necessarily all used up.

But I'm curious what you all think.

OSTERHOLM: Well, Jon, let me just say, first of all, I think that the difference between '76 and today are the differences between night and day.

In '76, we didn't see widespread opposition to vaccine, in general. Clearly, there were concerns expressed by some small subsegments of our population, but it wasn't on the news every night. It wasn't in the blogosphere, et cetera. It was a different world back then.

I think today, we have people, including in the health-care industry, who are opposed to being mandatorially vaccinated; so therefore, they're trying to find any reason also that they can basically be against vaccination, waiting for this program to fail so that they can say, see, we were right, or whatever.

And I think that, from a financial standpoint, I've already heard it. You know, if we don't use all this vaccine, it was a waste of money. They don't understand that investment.

In '76, we just didn't have that mind-set. So I think your point is right on target. I think you're right about that, we should actually be able to say that was a success. But on the other hand, I think today that's going to be seen as a programmatic issue where it will be a failure.

What I think was the failure of 1976 versus today was we never did figure out what happened in '76. And the long shadow of that experience is overriding today's experience. We answer that question many times a day. Why did that happen? Could it happen again?

And if there was any lesson we learned, just like every time there's an aviation disaster, we cannot rest until we find out exactly why it happened and assure the public it will never happen again, because we can't do that today.

RUBIN: I think we've -- yes, I think we've finished up our time. Let me just two comments if I may.

One, whatever -- I actually don't know the experience of '76 -- but whatever effects pandemics had in the past, the global economy today is so much more interdependent than it ever was before, the supply side effects, the just-in-time inventory effects. The potential for economic impact today has got to be, I would guess -- I haven't tried to model this, obviously -- but it's got to be some, I would guess, substantially multiple of what it was before.

And I think that's what most troubles me. And I read a bunch of stuff Laurie gave me to get ready for this. And then we just had this discussion, and it sort of came out again. It seems to me that if the United States and then, more broadly, the global economy is going to be moderately well-prepared to deal with this, there has to be an enormous amount of planning and an agreed-upon regiment, you know, agreed-upon processes, regiments, decisions before the thing hits. And that is very difficult to do.

And my impression, because I did ask around a little bit, is that precious little of this has gone on. And I don't know how you raise the level of concerns that this takes place. But that's very, very difficult to do in a disparate and complicated political systems we have today.

So with that, we thank you all for being here. And I think the next session on foreign policy should be really fascinating, because all of this very naturally leads into the enormously complicated foreign policy question this raises.

Thank you very much.








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