Pandemic Preparedness: Roadmap to a More Prepared Future

THE COWEN INSIGHT

The U.S should be better prepared for the next pandemic. We’ve analyzed public health infrastructure, response, and macro policies resulting from COVID-19; surveyed consumers and epidemiologists; and curated a list of priorities for government and private entities that supports a more prepared, coordinated response for the future. In our view, failure to adapt and respond is not an option.

THE ROADMAP FOR PANDEMIC PREPAREDNESS

The lack of preparedness for COVID-19 caused calamity across the world in lives lost, increased morbidity due to infection, economic turmoil, and more. With a myriad of resources at its disposal, the U.S. must do better in the future to avoid an economic shutdown while protecting Americans from infection and spread. Given the severe and extended impact that COVID-19 had on the global economy, investors should have a detailed roadmap to determine progress on governmental response to future public health crises. We hope this report fills that void.

Much focus centers on an overhaul of the CDC, which we find is necessary but not sufficient; there is ample blame to be spread across government agencies, particularly at the doorstep of HHS. But there are also successes to build upon at DOD, FDA, and across the private sector, including hospitals and biopharma companies. Ultimately, we have curated a list of top actions the government and private sector can, and in some cases, are already doing to respond to future pandemics.

Hospitals and medical products companies played special roles in their response to COVID-19, with important lessons learned that they are already building on for future pandemics. We view hospitals as in a better position with respect to supply chain and inventory stocking for future pandemics and moving into a better spot with strategies to combat and mitigate existing and/or future staffing challenges. Biopharma companies brought their pipelines to bear, refocusing efforts to collaborate on vaccine and therapeutic candidate development as well as shoring up manufacturing capacity. Our look at potential future threats finds a handful of companies developing candidates for pathogens such as Nipah virus, pandemic influenza, and other highly infectious respiratory viruses, but we also find some gaps in the development of novel antimicrobials to avoid potential antibiotic-resistant outbreaks – a key concern among epidemiologists.

PAVING THE ROAD FOR PANDEMIC PREPAREDNESS

Our full report analyzes the public health and biodefense infrastructure and response leading up to and during the pandemic. We also delve into macro policy decisions and contributions from the private sector, marrying it with forward-looking actions and policies that can enable a more coordinated, direct, and swift response to future pandemics and public health crises. It also includes a proprietary survey of 20 epidemiologists and insights from our monthly consumer survey, as well as interviews with seven KOLs with expertise in infectious disease, epidemiology, federal agency operations (including a former director of the strategic national stockpile), and the FDA. We detail the current legislative slate of bills that could seek to improve our preparedness for future pandemics and their likelihood of passage and opine upon the potential ramifications of the midterm elections on future pandemic preparedness policies at the federal level. We also combed through the pipeline of our covered companies for potential product candidates that could be used in the event of another infectious disease outbreak.

WHAT TO WATCH

Macro Policy

• Unemployment and Inflation: COVID marked the greatest bolus of government spending ever. However, as the report details, these actions could have lasting impacts on inflation, the deficit, and unemployment levels.
• The Great Migration: The pandemic and actions taken by various state and local governments resulted in the displacement (voluntarily for the most part) of a significant proportion of individuals from Blue states, fleeing to Red states, with implications for state budgets, revenues, and deficits.
• Public Health Becoming a Political Football: Midterm election messaging and fights over future pandemic dollars are clear examples of a partisan overhang into public health.

DOD

• Biodefense Posture Review: DOD is currently undergoing its first-ever posture review of its biodefense efforts. With this anticipated to wrap up this fall, we will be looking to see what, if any, major changes they make. This report could recommend organizational, operational, and spending adjustments or increases and recommend changes that Congress will need to support.
• Integration of COVID-19 Responses into DOD Standard Practices: The DOD was seen among our KOLs and survey respondents as one of the more capable departments throughout the pandemic. We will be watching to see how the DOD adjusts or adapts, if it all, its current biodefense practices to incorporate greater preparedness spending and training, as well as its efforts to participate more in interagency pandemic preparedness efforts
• National Security Workforce: Considering the pandemic’s impact on our national security workforce, including uniformed, civilian, government contractors, and companies in the national defense supply chain; and how COVID-19 policies around quarantine, treatments, vaccine adoption (mandatory), PPE use, etc. had an impact on the people employed for national defense (and their families), pandemic response policies should consider ways to make national security worker safety a priority to ensure national defense and response support.

FDA

• Building on COVID Successes: Within HHS, the FDA was seen as the star student, and our consultants believe that the agency will aim to enhance its strengths in emergency reviews for therapeutics, vaccines, and tests.
• Room For Improvement: Our regulatory consultant believes that the FDA needs to refine its communication strategy, particularly in times of pandemic and public health emergency, to convey important, timely information in an easily understandable format. Communications challenged every federal agency, but the poor marks to the FDA fall on its inability to quickly transition out of its more scientific/medical regulatory speak to one that is more conscious of the key, high-level information consumers need to make treatment and vaccination decisions for themselves

CDC

• Reorganization Watch: The CDC has announced an overhaul in how it addresses pandemics. While no specific timeline has been disclosed, our KOLs noted that a transition of the CDC away from an ‘academic’ mindset to a more ‘rapid response’ way of doing things could/should dramatically improve our handling of the next pandemic.
• CDC Director As Confirmed Position: The PREVENT Pandemics Act in the Senate would seek to make the CDC Director a Senate-confirmed position. We believe that the chances of that portion of the bill surviving are above 50% and expect action on the bill in the lame duck or in the first half of 2023.
• CDC Data Overhaul: The CDC was awarded $4B as part of the COVID relief bills to overhaul its data infrastructure, a key shortcoming mentioned by several of our KOLs. We will be watching to see how this is rolled out and if data reporting for future or ongoing outbreaks is improved.

THE OTHER PUBLIC HEALTH CRISES CREATED BY COVID-19

The pandemic upended traditional healthcare, with surgeries delayed or canceled, well-child visits put off, annual health exams canceled, and a growing increase in vaccine hesitation. Additionally, the health impacts of COVID-19, including potential scarring of the lungs and residual infection, created a new, potentially chronic condition – Long COVID. As a result, we asked our 20 infectious disease epidemiologists in August to rank their greatest concerns about the “knock-on” effects from COVID-19. Across the board, Long COVID emerged as the greatest concern, followed by increased morbidity due to delayed care and a decrease in childhood vaccination rates. We will be watching the evolution of these conditions and their implications for biopharma companies.

HOSPITAL PREPAREDNESS

Our company, along with KOL checks, reassured us that most hospitals have recovered and put new inventory control and supply chain processes in place to avoid critical shortages of most medical products in the event of future public health crises. While they’ve also developed new practices to address staffing shortages (team nursing, mental health benefits, etc.), it has come at a price of increased labor costs. While these have started to stabilize, we will continue to monitor labor cost trends in our monthly hospital survey.