Was Europe Prepared?

Just finished reviewing a remarkable research by the London Business School on the “Economics of a Pandemic – the case of COVID-19.”  In this first part of my two-part article, I will deal with the science of the pandemic and the health policies being adopted by various countries to decrease the replication number of the disease. In the second part of my article, I will deal with the economic emergency that will certainly follow this pandemic.

Assuming that the London Business School got it right, the following are the main takeaways from this research:

·        In the context of the conjecture around its origin, the London Business School assert that the enemy had its origin in the wet animal market in Wuhan, China, early Dec 2019.

·        COVID-19 is a strain of the same virus as SARS-CoV-1, which affected 8,000 people in 2002/03.

·        There is 96% DNA match between bat coronavirus and human found in a study from February 2020.

·        The virus is made of four proteins and a strand of RNA (molecule which can store genetic information).

·        The virus enters through nose, mouth, or eyes and attaches to cells in the respiratory tract producing a protein called ACE2.

·        It fuses with the cell and releases the RNA; the hijacked infected cell will produce proteins based on the “instructions” from the virus’ RNA.

·        Each infected cell can release millions of copies of the virus before dying.

·        The virus affects the upper respiratory tract (airways from nose to vocal chords) and can spread to the lungs.

·        In serious cases, the immune system can overreact and attack lung cells; in some cases, the infection leads to acute respiratory distress syndrome and possibly death.

·        The virus can also end up in droplets that escape the lungs through coughing or sneezing; this leads to contagion directly to other humans, or indirectly through contaminated surfaces.

·        Soap destroys the virus because its molecules can wedge themselves into the membrane and break it down.

·        The virus appears highly transmissible; average patient can infect 1.6 to 2.4 other people.

·        The virus disproportionately affects older patients; fatality rate in the 70s is 3-4 times larger than the average. Under 40 seems to be just around 0.2%.

·        The young are far more likely to be infected, but the old are more likely to die.

·        Men are twice more likely to be infected than women.

·        Many factors are still unclear: for example, why are some cases undetected, mild or have no symptoms? whether asymptomatic individuals can transmit the virus and how long is the incubation period, whether recovery implies immunity, and for how long, whether the virus is seasonal and will decrease during spring and summer.

·        The promising drugs that are being considered for the treatment of COVID-19 include drugs that are used for the treatment of malaria, HIV, Hepatitis-C, Influenza and Rheumatoid Arthritis.

·        Hong Kong, Singapore, Japan and South Korea are the countries that best dealt with the risk of contagion.

·        So far, Italy and Spain have had more deaths attributed to COVID-19 than China at the same stage.

The general consensus on how best to combat the spread of the virus is to flatten the curve. Although this may sound scientifically complex, it is essentially a strategy that slows down the speed of contagion to avoid an excessive demand on the healthcare system.  This is necessary because the average number of critical care beds in Europe per 100,000 people is only 12.5. Clearly, the number of critical care beds in most European countries cannot cope with the spread of the disease if the peak is high.

Germany, Luxembourg and Austria have the highest number of critical care beds per 100,000 people Italy has twice the number of critical care beds as the U.K.  Greece, Sweden and Portugal have the lowest number. There is only one domestic manufacturer of ventilators in Italy that produces 125 ventilators per month at a cost of €17,000 per ventilator. Germany has ordered 10,000 ventilators.

There are essentially two strategies that can be adopted to curb the spread of COVID-19 – containment or suppression. Containment is the strategy adopted by the U.K. This strategy is much less effective in flattening the curve and, initially, causes a much bigger strain on the capacity of the healthcare system. The benefit of this strategy is that immunity builds up faster and so population becomes less vulnerable in the medium term. With the U.K. having just 6.6 critical care beds per 100,000 population, it is doubtful that this strategy will be successful.

On the other hand, the suppression strategy aims to delay the spread of the virus in the short-run thus relieving the pressure on a country’s healthcare system. The downside is that this strategy slows down the build-up of herd immunity and the population may be vulnerable to new outbreaks in the medium term. If a vaccine can be found in the next six months (and the scientific community seems to agree this looks very unlikely), then suppression (i.e. lock downs) is clearly the more dominant strategy.

Malta has so far adopted the suppression strategy with remarkable success.

An Imperial College report predicts that, if no prevention measures are taken there will be c. 510,000 deaths in the U.K. and 2,200,000 in the U.S. Suppression would still lead to >40,000 critical care beds needed at peak (vs an actual capacity of ~5,000).

The London Business School estimate that 86% of all infections were undocumented prior to 23 January 2020 travel restrictions. This means preventive policies are being designed on highly incomplete evidence/information.

South Korea had a sharp increase in cases during February but has managed to slow the spread in March. The death rate in South Korea as at March 15th was particularly low: 0.9% (vs 7.2% in Italy). Furthermore, South Korea up-scaled testing to 5,500 for every one million people compared to 750 for every one million people in the UK. Tests in South Korea were made readily available free of charge with a doctor’s prescription. The cost for private testing was reimbursed if result was positive. In South Korea testing the asymptomatic, that is persons showing no symptoms, proved key to limit very significantly the death toll.

If six months are not enough for finding the right vaccine, there will be a very significant death toll, either way. The containment strategy fronts load causalities, the curve does not flatten but people should develop immunity earlier although this is a big unknown because, to date, it is not known with certainty that recovered cases will be actually immune from being infected again. On the other hand, suppression back load causalities, the curve flattens but people are likely to remain exposed when the strategy ends.

The alternative is a prolonged policy of conditional suppression until a vaccine for mass production is ready. This is certainly not a free lunch as such a strategy is likely to generate pervasive social unrest if the policy lasts over a long period.

These findings by the London Business School highlight three important vulnerabilities in European healthcare systems. Firstly, there is great disparity  between the levels and standards of healthcare systems across Europe. Secondly, European heath care systems appear to be far less resilient to emergencies than those in Asia. Thirdly, Europe was far less prepared in how to combat the spread and contagion of COVID-19 than its Asian counterparts with Hong Kong, Singapore, Japan and South Korea setting the benchmarks. Europe became the epicentre of the health crisis in a matter of weeks. Clearly, Europe was not prepared and much more is expected from Europe in regard to the healthcare of its citizens.  

David G. Curmi

Source: “The economics of a Pandemic - the case of Covid-19” Paolo Surico and Andrea Galeotti Professors of Economics at London Business School