Policy Response to Pandemic Influenza: The Value of Collective Action

This paper examines positive externalities and complementarities in the use of antiviral pharmaceuticals to mitigate pandemic influenza. The paper demonstrates the presence of treatment externalities in simple epidemiological SIR models, and then through simulations of a Global Epidemiological Model, in which the pandemic spreads between cities through the international airline network, and between cities and rural areas through ground transport. While most treatment benefits are private, spillovers may mean that it is in the self-interest of rich countries to pay for some AV treatment in poor countries. The most cost-effective policy is for rich countries to donate doses to the outbreak source country; however, donating doses to poor countries in proportion to their populations may also be cost-effective. These results depend on the transmissibility of the flu strain, the efficacy of antivirals in reducing transmissibility and on the proportion of infectious that can be identified and treated.