December 22, 2017

Zika's Costly Bite

Why it matters:

Carey Business School researchers answer an urgent call to measure the potentially multibillion-dollar impact of the mosquito-borne virus.

Carey Business School researchers answer an urgent call to measure the potentially multibillion-dollar impact of the mosquito-borne virus.

By Richard Byrne

In February 2016, the World Health Organization designated an outbreak of the Zika virus as a “Public Health Emergency of International Concern.” The previously obscure virus named Zika became prevalent in Brazil and spread rapidly to 48 countries in less than a year, most of them in Latin America and the Caribbean.

The costs of the Zika outbreak were not limited to the immediate financial burdens posed by research, testing, preventive measures, and health care for those who fell ill. Zika is associated with serious long-term conditions, including microcephaly and Guillain–Barré Syndrome. Regional tourism suffered greatly as the outbreak gained notoriety, and Zika loomed large over the $4.6 billion Olympic Games held in August 2016 in Rio de Janeiro.

Carey Business School researchers have been among those responding to the urgent call to get a better grip on the present and future economic impact of Zika. Their work must balance speed and scientific rigor to help stakeholders navigate an emerging public health threat projected to run into billions of dollars.

“If you overestimate, you take away too many resources to handle the problem,” says Mario Macis, an associate professor of economics at Carey who examines health care issues. “If you underestimate, you are making a mistake that costs not only resources but perhaps lives. We want policymakers to make the right choices.”

Macis and Emilia Simeonova, an assistant professor of economics at Carey who also focuses on health-related matters, were part of a team that examined the socio-economic impact of the Zika outbreak in Latin America and the Caribbean for the United Nations Development Program (UNDP) and the International Federation of Red Cross and Red Crescent Societies (IFRC). Their estimates of the short-term costs of Zika, which appeared in a report published in April 2017, were between $7 billion and $18 billion for the entire region for 2015-2017 alone.

Peter Sands, a research fellow at the Mossavar-Rahmani Center for Business and Government at Harvard University’s John F. Kennedy School of Government and the former chief executive officer at Standard Chartered, says behavioral changes in the wake of outbreaks – such as customers abstaining from travel or outings to restaurants and concerts, employees shunning contact with customers, or the closure of schools – can cause immense economic ripples. “You have all sorts of disruptions happening from both the production side and consumption side of business activity. And there are all sorts of cascading effects through the supply chain because modern economies depend on complex interactions.”

Sands studies public health crises such as Zika in his work as chair of the World Bank’s International Working Group on Financing Preparedness and as a research fellow at the Harvard Global Health Institute at the university’s T.H. Chan School of Public Health. “The overarching message is: Don’t think that the number of people dying gives you any clue to the scale of the economic impact,” he says.

“The contagion of fear is faster and more dramatic than the contagion of the disease,” Sands adds. “It’s fear of the disease that drives the economic impact, and that’s a much harder thing to model.”

Yet modeling the full range of costs from a Zika outbreak is essential if policymakers and governments want to deploy a quick and effective response.

The Centers for Disease Control and Prevention (CDC) tallied more than 42,000 Zika cases in the United States and its territories from January 1, 2015, through early October 2017. (About 13 percent of those cases were reported in the states, the rest in the territories.) Yet it took seven months for Congress to act on a February 2016 request of $1.9 billion from President Barack Obama to combat the spread of the disease. The fractious politics of an election year played a part, but there was also fierce debate about the proper size of the appropriation before legislators passed a $1.1 billion package in September 2016.

“A missing ingredient in the discussion [of the U.S. Zika budget] was an estimate of what the disease would cost the economy,” says Macis. “There should be a cost/benefit calculation behind the decision.”

The debate in the U.S. Congress also piqued the interest of Bruce Y. Lee, an associate professor of international health at the Johns Hopkins Bloomberg School of Public Health who holds a joint appointment at the Carey Business School.

Lee, who is also a medical doctor, leads a team that develops and deploys computer models to analyze the impact of outbreaks, such as those of Zika and Ebola, and assess possible interventions. He has collaborated with a wide array of organizations on such work, including the United States Department of Health and Human Services, the Bill and Melinda Gates Foundation, UNICEF, USAID, and the CDC.

Lee and his team of researchers used computer modeling to break down possible costs of a Zika outbreak of varying degrees of intensity in the continental United States.

“I wanted to better understand what the financial impact might be,” says Lee, “and inform some of the discussions about how much money to allocate for Zika.”

In a paper published in April 2017 in PLOS Neglected Tropical Diseases, Lee’s team estimated the costs of outbreaks of Zika in the Southeast U.S. and Texas at varying attack rates – which are the percentage of the population that eventually gets infected. In a mild outbreak with a 0.01 percent attack rate, the estimated costs are $183 million. With attack rates of infection at higher incremental levels, the costs balloon to $1.2 billion if 1 percent of the population was infected and $10.3 billion with 10 percent catching the virus.

Rapid Responses, Hidden Costs

Cost estimates for any public health emergency must be completed quickly to have maximum impact. But arriving at estimates for Zika is more vexing than doing so for most other viruses.

“Zika is a relatively new disease,” says Macis. “There is so much that we don’t know. And the extent of what we don’t know is actually shocking.”

These estimates must address the numerous factors that come into confluence to create an overall price tag, including testing, medical care, lost productivity, and impacts on tourism. Then they must tackle how these baseline numbers play out over varying degrees of intensity of outbreak.

The Zika virus poses unique challenges and, as Lee observes, “has many design aspects that facilitate its spread.” The virus is spread by unprotected sexual intercourse as well as by mosquitoes, which makes its spread more rapid and more widespread than other mosquito-borne viruses such as dengue, chikungunya, and West Nile.

The virus’s relatively mild onset also increases its transmission. A vast majority of those infected with Zika never develop symptoms. They can pass on Zika without knowing it. Many of the 20 percent who do fall ill get better quickly.

Zika also has more staying power than other similar viruses. Zika’s links to birth defects and lifelong disabilities such as microcephaly and Guillain–Barré Syndrome mean that estimates for treatment and care – and loss of productivity to the labor force – must be calculated into decades. There may be even more hidden shocks along the way.

“The long-term consequences of Zika and how these consequences manifest themselves are hard to grapple with,” says Simeonova. “They add significant additional costs.”

Working with the Barcelona-based global health consortium ISGlobal, Macis and Simeonova delivered a “rapid assessment study” – designed to deliver useable numbers in exigent circumstances – for the UNDP/ IFRC socio-economic report.

“In a public health emergency situation, you want to get a sense of the magnitude of the impact quickly,” says Macis.

Simeonova says that balancing the “extra insight” of well-grounded assumptions with transparency in methodology is vital to success in this sort of study.

“As a researcher, you have to weigh the costs and benefits of making an assumption,” she says. “Are the costs in Colombia going to be different than Peru? Good science requires that you be explicit in the assumptions that you make.”

Pallavi Yagnik, a health specialist at the UNDP, says the work of Macis and Simeonova is crucial to helping her agency make a case about the urgency of the crisis to the nations that the program supports.

“There are social and economic implications to the disease that can threaten development gains in the region,” says Yagnik. “We wanted to illustrate the impact to governments in terms of the costs of diagnosing and treating the disease, and the care needs of children with congenital Zika syndrome, which do have a social impact on the ground at a community level.”

Macis and Simeonova had the sizeable task of calculating potential economic fallout across the entire Latin American and Caribbean regions, predicting short-term and long-term costs of the outbreak from 2015 to 2017, over mild, medium, and high incidences of infection. The numbers were startling. Their estimate of short-term costs ranged from $7 billion to $18 billion.

They also put a price tag on long-term effects of the two major conditions now linked directly to Zika under the same conditions: $3 billion to $29 billion for microcephaly cases, and $242 million to $10 billion to address Guillain–Barré.

Getting accurate data about costs for a range of countries across Latin America and the Caribbean was often a concern. “We put together the data from multiple sources,” says Macis. “When cost information was not available for a particular country, we used data from other countries.”

Since the United States is the source of a wide array of medical supplies for the region, including testing kits for the virus, Macis and Simeonova often used U.S. data as a foundation.

With microcephaly “we used data from the United States to determine the cost of one case,” says Macis. “There are multiple inputs. It requires a lot of information. . . . For instance, there is the cost of providing special education to kids with microcephaly. This item is not available for almost all the countries that we considered.”

Simeonova says the lack of data for even basic questions was perplexing. “I was shocked at how little data exists, in this day and age, for female wages,” she says. “Average wages for women in Colombia – I thought that this was something we would know. Sometimes, even documenting fertility rates were a problem.”

The duo’s assessment focused on Zika’s macroeconomic costs at the national and regional level. But lurking behind the data are significant human costs. Public health emergencies wreak their greatest havoc upon the poor, who often lack resources and access to health care.

“It’s a universal fact across any kind of health shock,” says Simeonova, “that countries and people who live in countries that have a lower socio-economic status and fewer resources are going to bear the brunt of disease.”

For instance, their analysis foresees Caribbean nations that are dependent on tourism, such as Saint Lucia, Barbados, and Dominica, absorbing a loss of 1 percent of total gross domestic product. In the U.S. Virgin Islands, the loss could be up to 2 percent of GDP.

Zika’s negative impacts on a most vulnerable segment of any population – women and their newborn children – add another fear. “Where Zika becomes especially scary is in what it does to embryos,” says Macis. “This creates a burden, psychologically and economically, on pregnant women.”

Macis says those costs for women never really recede. “The average life expectancy with microcephaly is 30 to 35 years,” he observes. “So you are talking a lifetime essentially devoted to taking care of this child. There is a human capital cost.”

Preparing for the Worst

As the summer of 2017 and the mosquito population faded, the virus also has receded from headlines. The course of any future spread of Zika in the population – and its ultimate global impact – are difficult to predict.

Yet one of the largest takeaways from the research done by Macis, Simeonova, and Lee is that an ounce of prevention is worth a pound or more of cure. In the case of Zika, that means greater public education about the various ways that the virus spreads, building better infrastructure to care for mothers and children exposed to it, and intensifying efforts to surveil and control the Zika virus and the Aedes aegypti mosquito.

Lee says that asserting “the great value of public health investments” is at the heart of his research. “The best way to prevent disease costs,” Lee says, “is to prevent disease in the first place.”

The political impasse in the United States over Zika funding played out against a genuine threat. While most of the 5,000-plus cases reported inside the United States were acquired overseas, the CDC identified more than 200 cases in which Zika was transmitted to humans by mosquitoes in Florida and Texas. The number of infections in the Miami area was sufficient for the state of Florida to declare “Zika zones” in August 2016.

“The impact of a disease may not be immediate,” observes Lee, “but may manifest over time. That’s the problem with thinking in [fiscal] quarters. We tend to forget that without health, and without protecting against and preventing public health threats, nothing we accomplish in other aspects of society would be possible.”

Putting the necessity and prudence of prevention into dollars and cents is a major aspect of this research. The analysis performed by Lee and his team, for example, suggests that preventing a third of the costs associated with an outbreak in the middle range of their analysis (estimated at $1.2 billion) would justify investments in the $1 billion range.

“You want to show at what point the potential costs of Zika go beyond the amounts being requested,” says Lee. “You don’t really have to have a tremendous amount of spread [of the virus] until the potential costs outweigh how much funding was being discussed.”

Significant long-term costs of the 2016 outbreak and subsequent cases will burden economies for decades. And Macis points to emerging research from the CDC establishing a higher rate of birth defects in women infected with Zika than was previously thought.

“These studies are showing between 5 to 10 percent of Zika-infected pregnancies result in microcephaly in the baby,” Macis notes. “These are terrifying proportions, much higher than the probability we use in the report. If the CDC estimates are real, the costs will be much greater than we stated.”

Yet the speedy but rigorous estimates of Zika’s potential human and financial toll are already having a positive impact as the battle against the virus – and similar health threats – goes forward.

Yagnik of the U.N. Development Program says she hopes these economic assessments will spur even larger thinking about public health risks.

“The conversation needs to shift,” she says. “The focus should be less on Zika and more about emerging mosquito-borne diseases as a whole. The Aedes aegypti mosquito has wreaked havoc. Instead of treating each disease as it comes, there needs to be an integrated, longer-term approach that considers socio-economic factors.”

SIDEBAR: Long-Term Burden

If the Zika virus has such a low fatality rate, why did the World Health Organization declare it a “Public Health Emergency of International Concern” in 2016?

Zika has alarmed public health officials because the virus targets one of the most vulnerable segments of the population: young women and their babies. Researchers have linked Zika to a range of birth defects, most notably microcephaly – a condition in which an infant is born with a smaller head than is normal. Microcephaly can cause learning disabilities, seizures, and problems with hearing, vision, movement, and development.

Carey economist Emilia Simeonova observes that we may not yet even know the full extent of the birth defects caused by Zika. “Exposure to negative health shocks in utero has very long-term important effects,” she observes. “A lot of things programmed in utero don’t manifest until you are at reproductive age.”

In a “rapid assessment study” of Zika’s possible economic impact in Latin America and the Caribbean conducted by Simeonova and Carey economist Mario Macis, the two calculated the long-term costs of Zika-based microcephaly cases. These cases included not only care and special education for children affected by the birth defect but also factors including lost productivity among caregivers. They pegged the regional costs at $3 billion in a baseline outbreak, and as high as $28.9 billion in a scenario with high rates of infection.

Zika has also been linked to Guillain-Barré Syndrome – a rare condition in which a person’s immune system attacks nerve cells. Depending on the severity, the symptoms can vary from muscle weakness to paralysis.

When Macis and Simeonova also calculated the potential regional costs of Guillain-Barré in similar scenarios, they put the totals at $242 million for a mild outbreak and $10 billion for a severe outbreak. -- Richard Byrne

This story originally appeared in the fall 2017 issue of Carey Business.


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