VOL. 15

Financing Mechanisms for Health Security—Challenges and Lessons for the Future_____________________________________________
Haruka Sakamoto
Associate Professor, Department of Hygiene and Public Health, Tokyo Women’s MedicalUniversity

Overview of existing financing mechanisms for health security
When a health crisis emerges, the speed of the response in the early stages to prevent the crisis
from further spreading is extremely important. But to do so, there must be a flexible and agile
allocation of sufficient funding to WHO and other organizations that handle crisis management.
Various funding mechanisms for health security have been established to date, especially after
the 2013 Ebola outbreak in West Africa. The most representative is the WHO Contingency
Fund for Emergencies (CFE),1 which was established in 2015 for the purpose of enabling aswift response. Contributions from donor countries to the CFE are collected and pooled inadvance so that the funds can be immediately allocated when an actual health emergency
breaks out. There is usually a time lag between the outbreak of a health crisis and the time thefunding arrives from donors, but this lag time is expected to be minimized by allocating
funding that was contributed and pooled in advance. The following shows contributions to theCFE since it was established in 2015. Japan’s contributions in 2016 and 2019 make it one of
the main donors.

1

For more on the CFE, see https://www.who.int/emergencies/funding/contingency-fund-for-emergencies.

1Likewise, another funding mechanism that relies mostly on contributions from donors is theUnited Nations Central Emergency Response Fund (CERF). 2 CERF is a mechanism
established to allocate funds to UN humanitarian agencies for two objectives: 1) rapid
response—covering the initial resources necessary for emergency humanitarian aid when alarge-scale disaster or conflict strikes in order to contain damage to the minimum level; and2) underfunded emergencies—supporting humanitarian response activities within anunderfunded humanitarian emergency (so-called “forgotten crises”). The secretariat is locatedwithin the UN Office for the Coordination of Humanitarian Affairs (OCHA). There is a similar
fund called the Country Based Pooled Fund (CBPF), 3 which allows donors to pool theircontributions into single, unearmarked funds to deliver timely assistance when a newhumanitarian crisis arises, or when an existing emergency significantly deteriorates. Andfinally, another major funding mechanism is the Pandemic Emergency Financing Facility(PEF), housed at the World Bank.4 Although this mechanism has already been closed, it was
one of the key funding mechanisms at the initial stage of COVID-19. The PEF was launchedin 2017 to rapidly and smoothly mobilize funding to help prevent disease outbreaks frombecoming pandemics. To do so, the World Bank conducts derivative transactions withinsurance companies and issues pandemic bonds for investors. In contrast to conventional
funding mechanisms like the CFE and CERF that rely on contribution from donors, the PEF
was highly anticipated as an innovative insurance-based mechanism to draw in money fromthe capital market to help respond to health emergency outbreaks.

For more on CERF, see https://cerf.un.org/.
For more on the CBPF, see https://www.unocha.org/our-work/humanitarian-financing/country-based-pooled-funds-cbpf
4 For more on the World Ban’s PEF, seehttps://www.worldbank.org/en/topic/pandemics/brief/pandemic-emergencyfinancing-facility.
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The limits of the CFE, PEF, and other mechanisms in responding toCOVID-19
Like many other health crises, a large amount of funding was required to fight the COVID-19
pandemic that suddenly emerged toward the end of 2019, and a certain level of funding wasallocated from the mechanisms described above. For example, the CFE allocated US$13million,5 while the CERF and CBPF allocated a total of US$490 million (CBPF US$250
million + CERF US$241 million).6 In addition, World Bank’s PEF funded a total of US$195.8
million (as of April 2021 for PEF and as of February 2022 for all the other mechanisms). 7
These figures demonstrate that existing funding mechanisms played a substantial role infighting the crisis, but when a global pandemic of the size of the COVID-19 strikes, theavailable funding is far from sufficient. At the same time, this experience also revealed thevarious challenges facing the existing mechanisms.
For example, mechanisms such as the CERF, CBPF, and CFE pool contributions fromdonors in advance so that they can immediately release their funds to ensure rapid responsewhen actual health crises occur, but because they are completely reliant on donors and theircontributions, the amount of funding they can secure is small (this is especially true for theWHO’s CFE). Moreover, when a crisis becomes protracted, as in the case of the COVID-19
pandemic, funds start to deplete and the WHO itself must put a great deal of effort into
fundraising. In principle, however, it is much more desirable to have a system in place wherefunding rapidly flows into the WHO when a global health crisis strikes, so that the WHO will
not have to expend time on fundraising but rather can devote its full capacity to the crisis
response. In light of the mission of the CFE, which is to focus exclusively on the initial
response (the CFE funds are to be used within the first three months after the onset of anemergency, in principle), it is not appropriate to turn to the CFE to handle a protracted healthcrisis that grows more serious as time passes, as has been the case with COVID-19. As is thecase with many mechanisms that rely on contributions from donors, it has been noted thatwhile rapid and flexible funding is desirable in responding to a crisis, many donors prefer toearmark their contributions, and therefore detailed coordination with the donors is required
before and after the funding is used. Some also point out that while there are other departments
within the WHO (such as the WHO Emergency Programme) with budgets that can be used for
health crisis response, the budgets of different internal departments were not appropriately
coordinated.8
With regard to the PEF, the length of time required before funding is disbursed and therigidity of the activation criteria have been raised as issues. For example, during the 2018
outbreak of the Ebola virus in the Democratic Republic of the Congo (DRC), which resulted
https://cdn.who.int/media/docs/default-source/documents/emergencies/cfe-allocations-2015-2022feb22.pdf?sfvrsn=716ec302_5 (Only the total of CFE allocations whose purpose was described as response to “COVID-19”
or “Novel Coronavirus” as of end of February 2022)
6 https://data.humdata.org/dataset/cerf-covid-19-allocations
7 https://www.worldbank.org/en/topic/pandemics/brief/fact-sheet-pandemic-emergency-financing-facility
8 Jain V, Duse A, Bausch DG. Planning for large epidemics and pandemics: challenges from a policy perspective. Curr
Opin Infect Dis. 2018;31(4):316–24; Lawson ML. Foreign aid: international donor coordination of development assistance.
2013.
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in over 2,000 deaths, the PEF could not be activated because the outbreak did not satisfy thecriteria of more than 20 fatalities in two countries other than the DRC. During the COVID-19pandemic, the PEF was not activated until April 17, 2020, three months after the first patient
was reported in China in December 2019. This was because the PEF required that “at least 12weeks had passed from the start of the outbreak” in addition to other criteria on “the rolling(or ongoing) total case amount.” There is a contradiction here: despite the fact that a rapid
initial response is critical to health security, the PEF cannot mobilize funds until the pandemic
has already progressed to a certain extent. Although this may be a rather technical issue,depending on the pathogen, infectious diseases are diverse in terms of their pathology andimpact, transmission routes, rate of severe cases, fatality rate, and speed of spread. Therefore,
triggers that were put in place with an infection like Ebola in mind may be inappropriate for
COVID-19 or other diseases. This is quite different from responding to natural disasters inwhich the damage is relatively easier to assume. Another difference is that, in the case ofnatural disasters, the damage is basically greatest at the outset and does not rapidly spread withtime. In the case of infections, however, as was seen in the case of COVID-19, the overall
picture of the damage is hard to grasp in the initial phase of the outbreak, and waves of thepandemic recur in a cycle of every several months, making it very difficult to design aninsurance product.

Challenges of existing mechanisms revealed by the COVID-19 pandemic
The sections above have looked at existing funding mechanisms for health security, mainly
focusing on the CFE and PEF, but a more fundamental issue should also be noted: thedefinition of “funding necessary for health security” has not yet been clearly defined. The term
“health security” is very broad and vague, and as a result, the overall picture of the total amountof funds needed to respond to health crises, the amount of contributions from donors, and thefunding gaps that have arisen remain unclear. In other words, the transparency of funding is
not ensured, and in fact, countries affected by health crises are experiencing inefficiencies suchas shortages or duplication of funding. Funding inefficiencies in emergency situations impose
an unnecessary burden on both the donor and recipient countries, making it difficult to achieve
the outcomes that could otherwise have been realized, and moreover, the tendency forcontributions to concentrate on areas that are easy for donors to understand can lead to funding
shortages in more complex but necessary areas such as highly specialized or innovativetechniques.9
As noted above, the WHO’s CFE was unable to adequately fulfill its role during the COVID19 pandemic, but that of course does not mean that the CFE is unnecessary. Since the CFE
was established in 2016, it has rapidly and effectively funded initial responses to a number oflocal outbreaks in low- to middle-income countries, helping to contain the spread of suchoutbreaks, and the CFE will continue to be useful for responding to local outbreaks in low- toVageesh Jain, “Financing Global Health Emergency Response: Outbreaks, Not Agencies,” Journal of Public HealthPolicy 41, no. 2 (2020): 196–205.
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middle-income countries as was originally envisaged. However, in order to fight a global
pandemic that is on a completely different scale in terms of the damage it inflects, like thecurrent COVID-19 pandemic, we will need to go back to square one and devise an entirely
new mechanism. The conventional funding mechanisms that rely on donor contributions isclearly not enough and we will need to dramatically increase the overall scale of funding bydrawing on private funds. In that sense, we have a lot to learn from the experiences of the PEF,
which is a mechanism designed to promptly mobilize working capital. Although PEF has
already closed on April 2021, the outcomes and lessons should continue to be examined.
From the viewpoint of the rapid mobilization of market funds, another initiative of note
was the COVID-19 Solidarity Response Fund, which was established under the leadership ofWHO Director General Dr. Tedros Adhanom to fight the current COVID-19 pandemic.10 This
was a fund to collect donations widely not only from WHO member states but also fromprivate organizations and individuals, and it marks the first time that the WHO has called for
donations from individuals. The Solidarity Fund has succeeded in raising more than US$256
million in total. However, the Solidarity Fund is basically a mechanism to raise funds throughdonations, and as the COVID-19 pandemic stretches on, the pace of fundraising is slowing
down. To achieve the necessary magnitude and speed of funding and flexibility of spending,
we need to explore new funding mechanisms that do not rely solely on donor contributions.

※This is the English translation of the original Japanese version published on March 11, 2022 at:https://www.jcie.or.jp/japan/report/activity-report-15213/.

This policy brief series is the product of a joint research project conducted by the Japan Center forInternational Exchange (JCIE) and the Tokyo University Institute for Future Initiatives (IFI) toprovide analyses on global and regional health governance systems and structures and to offer
concrete recommendations about the role Japan should play in the field of global health.

10

https://www.who.int/emergencies/diseases/novel-coronavirus-2019/donate

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