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03/09/2007

H5N1, Part II

In his essay for the March/April edition of Foreign Affairs,
infectious disease expert Michael Osterholm addresses the issue
of preparedness against the avian flu, H5N1. While President
George W. Bush and other government officials finally banged
the drum in 2005 and got Congress to appropriate some funds, by
2006 the discussion was largely over and in the ’06
congressional campaign, for example, there were no debates or
position papers. In fact, Osterholm did a LexisNexis search of
general news articles on H5N1 in 50 major international
newspapers and found more than 850 articles for October 2005
but fewer than 75 for November 2006. And while there has been
a surge in documented cases of the virus in early 2007, it doesn’t
appear the coverage has picked up any.

Osterholm:

“Some public health experts had anticipated that planning fatigue
would quickly set in if a pandemic did not materialize shortly
after the first warnings. Lassitude is a normal reaction to the
perception that public health experts have been crying wolf and
to the challenge of staying on high alert over a sustained period
of time. But the price of such apathy will be very high, because
avoiding the consideration of key issues will compound the
devastating effects of the next pandemic. For one thing, not
enough attention is being paid to developing an effective vaccine
and an effective way to produce it and deliver it to both
developed and developing countries. For another, little thought
is being given to what effects the structure of the world economy
will have on the spread of a pandemic – and, in turn, what effects
a pandemic will have on the basic functioning of the world
economy. Meanwhile, the private sector has been largely left to
its own devices as it prepares for a calamity, even though its
collaboration with the public sector will be critical to any
prevention campaign or emergency response.”

Unfortunately, an effective vaccine is years away. More than a
dozen drug companies are researching new ones, but Osterholm
claims they will result in “antiquated first-generation vaccines
used over the last 50 years.”

I know some of you are dabbling in companies that may be
working on these vaccines, so perhaps you want to keep the
following technical analysis from Osterholm in mind.

“Cell-culture vaccines, like egg-culture vaccines, provide
maximum protection against a pandemic when they are produced
using the virus strain causing it. This means that although cell-
culture vaccines can supplement egg-culture vaccines during the
first three or four months of a pandemic, no production can start
until after the pandemic itself has begun. And it will take years
of research and clinical trials before cell-culture vaccines are
approved and years after than before they can be widely
produced.”

Plus, since the H5N1 strain is rapidly changing, chances are the
vaccines now in research will be based on those strains already
circulating in Vietnam and Indonesia, for example, and thus may
not provide protection against any new strains.

Michael Osterholm notes that in the United States and elsewhere,
not only is the government failing to fund production capacity
for the day it’s needed, “they are treating vaccine research and
development as though it were about business as usual, not a
pending catastrophe.” [Total spending on developing new
vaccines, worldwide, is just $2.5 billion.]

There is some good news. Pharmaceutical giant Roche
announced it will be able to produce up to 400 million doses per
year of Tamiflu beginning in 2007. Tamiflu has shown
effectiveness in preventing H5N1 infections in animal subjects
when taken before exposure; but it’s effectiveness on humans
during an outbreak isn’t known.

But even if the right kind of vaccines were available, there is
another dire issue. Many healthcare systems, including in the
United States, are ailing. More than 30% of hospitals in the U.S.,
for example, are losing money. Emergency rooms are
increasingly over capacity. “100,000 additional registered nurses
are needed.” In other words, a mild pandemic would overwhelm
the system.

Then there’s this:

“The interconnectedness of the global economy today could
make the next influenza pandemic more devastating than the
ones before it. Even the slightest disruption in the availability of
workers, electricity, water, petroleum-based products, and other
products or parts could bring many aspects of contemporary life
to a halt. The global economy has required wringing excess
costs out of the production, transport, and sale of products.
Inventories are kept to a minimum. Virtually no production
surge capacity exists. As a consequence, most of the developed
world depends on the last-minute delivery of many critical
products (such as pharmaceuticals, medical supplies, food and
equipment parts) and services (such as communications support).
In the United States, approximately 80% of all prescription drugs
come from offshore and are delivered to pharmacies just hours
before they are dispensed .With such long supply chains, a
pandemic that closed borders, caused worker attrition, and
suspended travel or the transport of commercial goods would
seriously disrupt the delivery of everyday essentials.”

How do you plan for it all? One expert told Osterholm off-the-
record at Harvard University, “Planning for a pandemic is so
different from anything we’ve done in business before that we’re
writing the book as we go – and it won’t be finished until the
virus is finished.”

Some of the questions that businesses face include:

“Would consumers willingly pay a higher price for products sold
by a company that invested substantially in pandemic
preparedness, or would competitors gain market share by taking
advantage of its increased costs? How should the stockpiling of
critical emergency products be promoted in this global just-in-
time economy? If solutions to these problems cannot be
developed, expectations about how much can be done should be
revised.” [Osterholm]

Michael Osterholm’s conclusion is that each community will be
largely on its own. It’s up to us to make sure our elected officials
have some sort of plan in place. Of course they don’t, one must
assume.

I live in New Jersey, in a community about 20 miles from
Manhattan as the crow flies, and I’m amazed that each and every
resident in the tri-state area does not have a little card in their
possession telling them where to go in the event of a nuclear or
chemical explosion. Literally, something reading ‘if the wind is
blowing one way, do this’; ‘if it’s blowing another, do this.’ I’ve
written this for years in my “Week in Review” commentary. I’m
not saying you can prevent panic, but at least it would be orderly
panic, wrote the editor with a wry grin.

It all comes down to the words of Winston Churchill, who
Osterholm quotes.

“It is no use saying, ‘We are doing our best.’ You have got to
succeed in doing what is necessary.”

And when it comes to vaccines, Osterholm adds we must come
up with an initiative as bold as John F. Kennedy’s man-on-the-
moon agenda back in 1961.

Wall Street History returns next week.

Brian Trumbore



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Wall Street History

03/09/2007

H5N1, Part II

In his essay for the March/April edition of Foreign Affairs,
infectious disease expert Michael Osterholm addresses the issue
of preparedness against the avian flu, H5N1. While President
George W. Bush and other government officials finally banged
the drum in 2005 and got Congress to appropriate some funds, by
2006 the discussion was largely over and in the ’06
congressional campaign, for example, there were no debates or
position papers. In fact, Osterholm did a LexisNexis search of
general news articles on H5N1 in 50 major international
newspapers and found more than 850 articles for October 2005
but fewer than 75 for November 2006. And while there has been
a surge in documented cases of the virus in early 2007, it doesn’t
appear the coverage has picked up any.

Osterholm:

“Some public health experts had anticipated that planning fatigue
would quickly set in if a pandemic did not materialize shortly
after the first warnings. Lassitude is a normal reaction to the
perception that public health experts have been crying wolf and
to the challenge of staying on high alert over a sustained period
of time. But the price of such apathy will be very high, because
avoiding the consideration of key issues will compound the
devastating effects of the next pandemic. For one thing, not
enough attention is being paid to developing an effective vaccine
and an effective way to produce it and deliver it to both
developed and developing countries. For another, little thought
is being given to what effects the structure of the world economy
will have on the spread of a pandemic – and, in turn, what effects
a pandemic will have on the basic functioning of the world
economy. Meanwhile, the private sector has been largely left to
its own devices as it prepares for a calamity, even though its
collaboration with the public sector will be critical to any
prevention campaign or emergency response.”

Unfortunately, an effective vaccine is years away. More than a
dozen drug companies are researching new ones, but Osterholm
claims they will result in “antiquated first-generation vaccines
used over the last 50 years.”

I know some of you are dabbling in companies that may be
working on these vaccines, so perhaps you want to keep the
following technical analysis from Osterholm in mind.

“Cell-culture vaccines, like egg-culture vaccines, provide
maximum protection against a pandemic when they are produced
using the virus strain causing it. This means that although cell-
culture vaccines can supplement egg-culture vaccines during the
first three or four months of a pandemic, no production can start
until after the pandemic itself has begun. And it will take years
of research and clinical trials before cell-culture vaccines are
approved and years after than before they can be widely
produced.”

Plus, since the H5N1 strain is rapidly changing, chances are the
vaccines now in research will be based on those strains already
circulating in Vietnam and Indonesia, for example, and thus may
not provide protection against any new strains.

Michael Osterholm notes that in the United States and elsewhere,
not only is the government failing to fund production capacity
for the day it’s needed, “they are treating vaccine research and
development as though it were about business as usual, not a
pending catastrophe.” [Total spending on developing new
vaccines, worldwide, is just $2.5 billion.]

There is some good news. Pharmaceutical giant Roche
announced it will be able to produce up to 400 million doses per
year of Tamiflu beginning in 2007. Tamiflu has shown
effectiveness in preventing H5N1 infections in animal subjects
when taken before exposure; but it’s effectiveness on humans
during an outbreak isn’t known.

But even if the right kind of vaccines were available, there is
another dire issue. Many healthcare systems, including in the
United States, are ailing. More than 30% of hospitals in the U.S.,
for example, are losing money. Emergency rooms are
increasingly over capacity. “100,000 additional registered nurses
are needed.” In other words, a mild pandemic would overwhelm
the system.

Then there’s this:

“The interconnectedness of the global economy today could
make the next influenza pandemic more devastating than the
ones before it. Even the slightest disruption in the availability of
workers, electricity, water, petroleum-based products, and other
products or parts could bring many aspects of contemporary life
to a halt. The global economy has required wringing excess
costs out of the production, transport, and sale of products.
Inventories are kept to a minimum. Virtually no production
surge capacity exists. As a consequence, most of the developed
world depends on the last-minute delivery of many critical
products (such as pharmaceuticals, medical supplies, food and
equipment parts) and services (such as communications support).
In the United States, approximately 80% of all prescription drugs
come from offshore and are delivered to pharmacies just hours
before they are dispensed .With such long supply chains, a
pandemic that closed borders, caused worker attrition, and
suspended travel or the transport of commercial goods would
seriously disrupt the delivery of everyday essentials.”

How do you plan for it all? One expert told Osterholm off-the-
record at Harvard University, “Planning for a pandemic is so
different from anything we’ve done in business before that we’re
writing the book as we go – and it won’t be finished until the
virus is finished.”

Some of the questions that businesses face include:

“Would consumers willingly pay a higher price for products sold
by a company that invested substantially in pandemic
preparedness, or would competitors gain market share by taking
advantage of its increased costs? How should the stockpiling of
critical emergency products be promoted in this global just-in-
time economy? If solutions to these problems cannot be
developed, expectations about how much can be done should be
revised.” [Osterholm]

Michael Osterholm’s conclusion is that each community will be
largely on its own. It’s up to us to make sure our elected officials
have some sort of plan in place. Of course they don’t, one must
assume.

I live in New Jersey, in a community about 20 miles from
Manhattan as the crow flies, and I’m amazed that each and every
resident in the tri-state area does not have a little card in their
possession telling them where to go in the event of a nuclear or
chemical explosion. Literally, something reading ‘if the wind is
blowing one way, do this’; ‘if it’s blowing another, do this.’ I’ve
written this for years in my “Week in Review” commentary. I’m
not saying you can prevent panic, but at least it would be orderly
panic, wrote the editor with a wry grin.

It all comes down to the words of Winston Churchill, who
Osterholm quotes.

“It is no use saying, ‘We are doing our best.’ You have got to
succeed in doing what is necessary.”

And when it comes to vaccines, Osterholm adds we must come
up with an initiative as bold as John F. Kennedy’s man-on-the-
moon agenda back in 1961.

Wall Street History returns next week.

Brian Trumbore