THE COWEN INSIGHT
As part of Cowen’s COVID-19 Virtual Conference Series, we hosted Dr. David Katz to discuss his proposed ideas around the “risk-stratification” of members of the population as it relates to developing severe COVID-19 infections and potential considerations for easing the reopening of the economy. Below we discuss our key takeaways.
Conference Call With Dr. David L. Katz
We hosted Dr. David Katz to discuss his view on risk-stratifying members of the population in accordance with their susceptibility to severe COVID-19 infections and his thoughts on potential strategies going forward. Recall, Dr. Katz has published his ideas on a “Total Harm Minimization” strategy during the COVID-19 pandemic and has proposed different potential measures to enable a gradual transition of certain members of the US population back into the workforce.
Key topics discussed were:
- Strategies for reopening the economy and allowing certain portions of the population to return to the workforce
- His optimistic outlook for returning to normalcy in hospital settings
- How risk-stratification of individuals may affect patient access to COVID-19 related therapies
- Broader thoughts on the proportion of the US population that actually represent “lowrisk” individuals and the need for additional data
A Way To Open The Economy Safely
Rick Weissenstein, Cowen Washington Research Group
As President Trump and state leaders begin to move toward reopening the economy, there are a number of ways it could be done.
Dr. David L. Katz, in an op-ed in the New York Times on March 20 just as the number of deaths began to ramp up, proposed a plan that he called, “vertical risk based interdiction.” The idea was that resources should be targeted to vulnerable populations, including the elderly or those with pre-existing conditions, while allowing healthier populations to continue more “normal” lives.
Now as we move toward reopening the economy, Dr. Katz was more bullish than some health officials, noting that by using a “data pyramid” that could be used by federal and state leaders or even employers would allow them to determine how many people have the virus, what proportion ended up in the hospital, how many ended up in the ICU, and how many died.
With that and better testing, Dr. Katz said that, “The phase return to normalcy can begin almost immediately.” Governments could begin by allowing the healthiest group to return.
“It’s pretty clear that people under 50 without a major chronic disease are at very low risk of severe infection, and we could just say every household where you’ve got nobody over age 50 and nobody has heart disease or diabetes, back to the world,” Dr. Katz said. Then move on to other groups that data showed were less vulnerable. That would allow the government to create a “High-level model that looks at both the risks of the workforce based on age and health and the priority of the work based on its role in supply chain, services, goods and economic importance. And you can essentially devise a strategy for returning any given population to the world early based on the confluence of those two. So where you’ve got highest-priority work and lowest-risk workers, that group should be back to the world very soon.”
Our Expert Is Optimistic on Elective Procedure Timeline & Return to Normalcy in Hospitals
Charles Rhyee, Cowen Health Care Technology Analyst
Elective procedures have largely been canceled in the interim, and in contrast with some more draconian projections that the bulk of elective procedures could be delayed until 4Q, our expert believes that hospitals could be returning to significant levels of normalcy within the next few weeks. For one, our expert cited anecdotal evidence that the surge capacity in NY hospitals are greatly exceeding needs. Specifically, he noted that one NY hospital has significantly more ICU beds than what they’re using and that the Javits Center, which has been converted into a medical facility, is operating well below capacity – even at the peak of the crisis. However, we note that there is roughly a 3- to 4-week lag between peak cases and hospital admissions, based on discussions in a recent conference call. This means that even if hospitals have excess capacity now, hospitalizations could very well step up in the next few weeks, even as cases decline.
Another key consideration is that edicts to cancel elective procedures from government officials and politicians could remain in place, making it harder for hospitals to restart elective procedures. When asked about this, our expert pointed to how quickly state and local governments mobilized to shut everything down, suggesting that decisions could be pushed through bureaucracy. However, we think politicians and hospital administrators could be more conservative when it comes to elective procedures given the potential for public backlash if patients begin to contract the virus in the hospital setting. Our expert also noted that the risk of resurgence in the fall could be lowered if we allow exposure now to the virus in a phased process based on those with lowest risk first to build herd immunity. In his view, herd immunity could also help phase in the return to normalcy within hospitals. While this isn’t a novel concept and makes sense, we note there have been some concerns on whether or not people can be reinfected with COVID-19. We think this could give government officials some concerns.
Overall, we recognize that estimating when elective procedures can restart is challenging given uncertainty around a potential resurgence in the fall and divergent responses to COVID-19 by region, among other factors. While our expert did not give a precise timeline for restarting procedures beyond “within the next few weeks”, he was much more optimistic than most industry experts we’ve spoken with thus far.
Dr. Katz Expects Risk Stratification May Factor in to Access to Therapy If Drugs Are Initially in Short Supply
Ritu Baral, Cowen Biotechnology Analyst
Dr. Katz noted there does not currently appear to be a shortage of drugs (i.e. azithromycin, hydroxychloroquine, etc.), though some biologic agents may end up being in a more rate-limiting supply. However, Dr. Katz anticipates that risk-stratification may come into play across the board if limitations do arise (especially for novel COVID-19 treatments and vaccines) with those at a higher risk of developing a severe COVID-19 infection potentially being a priority to receive certain treatments first. As vaccine candidates progress through development, it will be hard to predict whether there may be limitations in supply given the evolving landscape. If early supply of a vaccine does end up being limited, the portion of the population at the highest risk for an infection may receive a higher priority in accessing the therapy, according to Dr. Katz. It is possible that individuals at a greater risk of infection (due to underlying health status, geographic location, etc.) could also be a higher priority for receiving the vaccine. We believe it is important to highlight that the efficacy of vaccines is also driven by their administration to a large proportion of the population. Therefore, we expect that if a vaccine was to reach the market, substantial efforts would be made to have it readily available to as many people as possible.
Optimization of Risk-Based Interventions Will Require Data Gathering…and Involvement of Politicians
Marc Frahm, Cowen Biotechnology Analyst
Dr. Katz outlined that his model of high, medium, and low-risk populations is currently based upon the presence of any risk factor such as age, underlying lung disease, cardiac disease, or diabetes. Based upon our current understanding of these risk factors, he felt ~45% of the U.S. population would qualify as high-risk under his protocol. As our understanding of COVID-19 risk factors increases, he is particularly interested to learn about the interplay of these risk factors. For example, should a young diabetic be considered high risk because they are a diabetic or low-risk because they are young? Once this data is gathered, he believed a smaller portion of the U.S. population would be identified as the true high-risk population allowing a greater number of subjects to be released from social distancing and/or a smaller population being the focus of therapeutic/ vaccine-based interventions. Conversely, the focus population is likely to be increased by the presence of mixed-risk households where low-risk citizens will require more significant interventions in order to protect their high-risk family members. We would note that this raises particularly difficult political/social welfare questions regarding how these families should be supported. What is an “acceptable” level of COVID-19 risk to ask citizens to expose themselves to? Should the government pay for alternative housing arrangements to reduce the number of mixed-risk households? Should enhanced unemployment benefits be maintained for high-risk households? Would employers be required to hold open jobs for employees that require social distancing? Would an employer with many high-risk employees be offered extended government support? Dr. Katz acknowledges that additional data is needed to really develop a more concrete framework for potentially implementing these strategies given the complexity of this situation. It is important to note that input from a variety of technical specialists and the political sphere will be needed to develop strategies for answering these questions and defining potential paths forward.
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